VOL. 191, NOVEMBER 22, 1990 581: Pantranco South Express, Inc. vs. Board of Transportation

10/10/21, 12:04 AM SUPREME COURT REPORTS ANNOTATED VOLUME 191
VOL. 191, NOVEMBER 22, 1990 581

Pantranco South Express, Inc. vs. Board of Transportation
*
G.R. Nos. 49664-67. November 22, 1990.
PANTRANCO SOUTH EXPRESS, INC., petitioner, vs.

BOARD OF TRANSPORTATION and BATANGAS
LAGUNA TAYABAS BUS CO., INC., respondents.
Transportation; Public Service Law; BOT has ample power

and discretion to decree or refuse the cancellation of a certificate of
public convenience issued to an operator as long as there is
evidence to support its action.—There can be no dispute that the
law (Section 16(n) of the Public Service Act) gives to the BOT
(successor of the Public Service Commission) ample power and
discretion to decree or refuse the cancellation of a certificate of
public convenience issued to an operator as long as there is
evidence to support its action, as held by this Court in a long line
of cases, wherein it was even intimated that in matters of this
nature so long as the action is justified this Court will not
substitute its discretion for that of the BOT.
Same; Same; Same; BOT has the power to take into
consideration the result of its own observation and investigation of
the matter submitted to it for decision in connection with other
evidence presented at the hearing of a case.—As We have ruled
before, the BOT is particularly a fact-finding body whose decisions
on questions regarding certificates of public convenience are
influenced not only by the facts as disclosed by the evidence in the
case before it but also by the reports of its field
_______________
* FIRST DIVISION.
582
582 SUPREME COURT REPORTS ANNOTATED
https://central.com.ph/sfsreader/session/0000017c65d1bd476bc13b4e000d00d40059004a/t/?o=False 1/11
agents and inspectors that are periodically submitted to it (see La

Mallorca and Pampanga Bus Co., Inc. v. Mercado, G.R. No. L-
19120, November 29, 1965, 15 SCRA 343). Likewise, the BOT has
the power to take into consideration the result of its own
observation and investigation of the matter submitted to it for
decision, in connection with other evidence presented at the
hearing of a case.
Same; Same; Same; Mere failure to operate temporarily
should not be a ground for cancellation especially as when in the
case at bar, the suspension of the service was directly caused by
circumstances beyond the operator’s control.—Taking into
consideration BLTB’s letter dated September 18, 1972, it acted in
good faith when it did not immediately operate on those lines and
not because of a design to prejudice public interest. Certificates of
public convenience involve investment of a big amount of capital,
both in securing the certificate and in maintaining the operation
of the lines covered thereby, and mere failure to operate
temporarily should not be a ground for cancellation, especially as
when, in the case at bar, the suspension of the service was
directly caused by circumstances beyond the operator’s control.
Same; Same; Same; In the exercise of its power to grant or
cancel certificates of public convenience, the BOT is guided by
public necessity and convenience as primary considerations.—In
the absence of showing that there is willful and contumacious
violation on the part of the utility operator, no certificate of public
convenience may be validly revoked (Manzanal v. Ausejo, et al.,
G.R. No. L-31056, August 4, 1988, 164 SCRA 36). More
importantly, what cannot be ignored is that the needs of the
public are paramount, as elucidated by the BOT in its order. In
the exercise of its power to grant or cancel certificates of public
convenience, the BOT is guided by public necessity and
convenience as primary considerations.
PETITION for certiorari and/or prohibition to review the

order of the Board of Transportation.
The facts are stated in the opinion of the Court.

Parco, Sabillo, Regondola & Maronilla for petitioner.
Pablito A. Gahol for BLTB Co.
MEDIALDEA, J.:
This is a petition for certiorari and/or prohibition with

prayer for the issuance of a restraining order seeking to
annul the order of public respondent Board of
Transportation dated Janu-
583
VOL. 191, NOVEMBER 22, 1990 583

ary 4, 1979.
The antecedent facts, as culled from the pleadings, are
as follows:
On August 5, 1971, the then Public Service Commission
granted certificates of public convenience to private
respondent Batangas Laguna Tayabas Bus Co., Inc.
(BLTB) for the operation of twelve (12) bus units on the
Pasay City—Legaspi City line (Case No. 70-5749); six (6)
bus units on the Pasay City—Bulan, Sorsogon line (Case
No. 70-5750), and ten (10) bus units on the Pasay City—
Sorsogon line (Case No. 70-5751) (pp. 59-64, Rollo).
On April 4, 1975, petitioner Pantranco South Express,
Inc. (PANTRANCO) filed a complaint against BLTB before
public respondent Board of Transportation (BOT), docketed
as Case No. 75-31-C, charging it with abandonment of
services on said lines from August, 1971 to April, 1975 and
praying for the cancellation of BLTB’s certificates of public
convenience (pp. 69-70, Rollo).
On March 24, 1976, in Cases Nos. 70-5749, 70-5750 and
70-5751, PANTRANCO filed an urgent petition charging
BLTB with abandoning said services from March, 1975 to
March, 1976 and reiterating its prayer for the cancellation
of the certificates
of public convenience (pp. 77-78, Rollo). BLTB did not
file any written answer either to the complaint in Case No.
75-31-C or to the urgent petition in Cases Nos. 70-5749, 70-
5750, and 70-5751. Rather, in a Motion dated July 26,
1978, BLTB, referring to hearings before the BOT on
March 24, 1977 and April 13, 1977, alleged (pp. 126-128,
Rollo):
“3. At said hearings, Respondent admitted non-operation of

the bus services authorized in Cases Nos. 70-5749, 70-
5750 and 70-5751 and thus the need for Complainant to
present evidence in both proceedings may be dispensed
with.
“4. At the said hearings, Respondent advanced affirmative
defenses on Complainant’s Urgent Motion of March 24,
1977 (sic) which Respondent, in its Rejoinder of May 5,
1977, adopted also as its affirmative defenses with respect
to Case No. 75-31-C.
“Briefly, these affirmative defenses are:

(a) Respondent actually registered under PUB denomination all the

twenty eight (28) buses authorized for operation under the
certificates sought to be cancelled (Annex ‘A’);
584

(b) The following supervening factors which are beyond Respondent’s

control however, arose and prevented Respondent from operating
the lines at issue:
(1) The gasoline crises starting 1971;

(2) The destructive big floods in 1972 and 1974;
(3) The general troubled conditions of peace and order in 1971 and
1972 leading to the declaration of martial law;
(4) Starting 1973 and on to 1974, 1975 and 1976 the nearly
prohibitive cost of units and spare parts (if available at all), the
higher costs of operations and acute tire shortages particularly in
1974;
(5) All these, which are of general public knowledge and known to
the Board, brought the whole land transportation industry in
what might be termed as in extremis condition causing the
bankruptcy of many operators, big and small; and
(6) Complainant Pantranco South Express, Inc. was not spared the
ill effects of these adverse conditions to the extent that up to the
present it has not registered all the buses required for its regular
bus operations (Annex ‘B’, ‘B-1’).
“5. At the said hearings also, Respondent prayed that these

incidents in these proceedings be considered and decided in the
light of present conditions which are:
(a) The certificates of public convenience of Respondent are

still valid;
(b) Respondent is willing and desirous to operate (sic) the said
certificates;
(c) Respondent has the capability to operate, in fact, has
ready the full twenty-eight (28) buses needed for full
operation of the authorized services;
(d) Complainant is not operating all its authorized bus
services for lack of sufficient rolling stock;
(e) The need for the services sought to be cancelled is patent,
in fact, urgent at the present time; and
(f) That the public interest is paramount against other
considerations such as the incidents in these cases.”
On January 4, 1979, the BOT issued an order, the

dispositive portion of which reads (p. 133, Rollo):
585
VOL. 191, NOVEMBER 22, 1990 585

“In view of all the foregoing, this Board, in addition to its rulings
mentioned above—
“1. Orders respondent to operate within fifteen (15) days from

date hereof the whole complement of twenty-eight (28)
units authorized under the said certificates, utilizing for
the purpose such units presently authorized as
RESERVES and inform the Board within ten (10) days
from commencement of operation, the makes and motor
numbers of the units to be operated for each line and the
case numbers under which they are authorized for
appropriate entry in the records of the above-entitled
cases, and
“2. Orders the fine of P10,000.00 imposed above to be paid to
this Board within ten (10) days from receipt by it of a copy
of this Order and declares the consolidated complaints
filed in the above-entitled cases closed and terminated.
“Failure of respondent/applicant to comply with any of the

foregoing requirements shall be considered sufficient cause for
this Board to withdraw the authority herein granted.
“SO ORDERED.”
It rationalized the non-cancellation of BLTB’s certificates of

public convenience, as follows (pp. 128 A-133, Rollo):
“Obviously, cancellation of a certificate of public convenience is a

penalty of the severest degree. Its consequences are suffered not
exclusively by the operator; it extends to the travelling public
whose needs for transportation facilities would further be
aggravated by a diminution of needed services. Consequently,
where such a penalty is prayed for, this Board requires the
evidence to be strong. Less than that this Board must apply the
less severe penalties provided for by law, but equally disciplinary
in nature.
“Sec. 16 (n) of the Public Service Law empowers this Board ‘to
suspend or revoke any certificate x x whenever the holder thereof
has violated or wilfully (sic) and contumaciously refused to comply
with any order, rule or regulation of the Board or any provision of
this Act. x x x.’
“Sec. 21 of the same law provides that ‘every public service

violating or failing to comply with the terms and conditions of any
certificate or any orders, decisions or regulations of the
Commission shall be subject to a fine not exceeding two hundred
pesos per day for every day of service during which such default
or violation continues x x x’
“A reading of both provisions would show that failure to comply
with the terms and conditions of any certificate of public
convenience
586

is basically punished with a fine, unless the violation is willful or

contumacious, in which case the penalty of suspension, or
cancellation may be imposed.
“Judged by the foregoing standards, this Board declares the
evidence of the complainant to be sadly lacking in elements that
would qualify the respondent’s failure to operate as wilful and
contumacious. True the respondent did not operate on its
certificate from the time it was granted on August 4, 1971 up to
the present. It had not justified its non-operation from said date
up to September 2, 1972. But on September 2, 1972, the
respondent justified its non-operation by writing to the Board,
that because of unfinished portions of the road it could not render
the service authorized by the Board to be rendered. The Board
never overruled the respondent.
“x x x.
“At this point, it must be borne in mind that whether in the
case of application for new services, or for the cancellation of lines
already granted, this Board must determine what the public need
is.
“This leads us into discussing what the public need is in the
areas covered by the certificates of public convenience in question.
“The Board, in its desire to be responsive to public need, has
always kept itself informed of actual and latest transportation
conditions in the provinces, including the Bicol region. Thru
reports/complaints from the general public, from reports of its
fieldmen, and from its own personal observations acquired thru
inspection trips, this Board is aware that buses which are
operating are very much less than what has been authorized. This
was officially confirmed in a meeting of provincial and Metro-
Manila bus operators held in Malacañang Palace on June 21,
1976, presided over by His Excellency, President Ferdinand E.
Marcos himself.
“In Bicol region, for instance, in the past four years (1974,
1975, 1976 and 1977) PSEI (PANTRANCO) registered and
operated less than 50% of its authorized units:
Year Authorized Units Registered

1974 466 159 units
1975 (not available) 162 units
1976 453 227 units
1977 464 221 units
and among the lines not so operated or only partially operated,

either through expiration of certificates, petitioned suspension of
operation or for sheer lack of units are long distance lines from
Manila to the provinces of Quezon, Camarines Norte, Camarines
Sur, Albay and
587
VOL. 191, NOVEMBER 22, 1990 587

Sorsogon aside from lines serving inter-provincial and local needs

in Quezon province and the whole Bicol Region. Among them are
the following lines which are concurrent in whole or in portions of
the lines Pasay City—Legaspi City, Pasay—Sorsogon and Pasay
—Bulan, all the said lines requiring the operation of some two
hundred twenty seven (227) buses:
“x x x.
“The non-operation by PSEI (PANTRANCO) of these more
than two hundred (200) buses clearly requires the entry or
operation of an equal number of buses. Any prohibition against an
effort to fill up a public need would be contrary to public interest.
“Public interest will better be served if respondent is allowed to
operate the service authorized in its certificate of public
convenience. To cancel these certificates at a time when the
clamor and demand for such service have been increasing day to
day, prodded by the people’s desire to avail of the excellent road
conditions, which in turn conduces to fast and convenient travel,
would be to negate and turn back the clock of progress which has
been seeping steadily and constantly to the long neglected vast
communal area that is the Bicol Region. To authorize the
operation of these services will complement the government’s
multi-purpose development effort to hasten the Socio-Economic
growth of these areas, notable among which are the Philippines-
Japan Friendship Highway, of which the routes covered by
applicant/respondent’s certificates traverse and the Bicol River
Basin Development Project, a program designed to tap the rich

natural resources of the region.”
Hence, the present petition.

On January 15, 1979, We issued a temporary
restraining order enjoining the BOT from enforcing its
January 4, 1979 order (pp. 147-148, Rollo).
In this petition, PANTRANCO imputes grave abuse of
discretion, acting without or in excess of jurisdiction on the
part of the BOT when it issued the questioned order, as
indicated by several circumstance that it enumerated.
Among these, only the following deserve discussion:
1) refusal to cancel the certificates of public

convenience of BLTB despite its abandonment
and/or non-operation on the subject lines since
August 5, 1971 up to the present;
2) using as basis for its questioned order BLTB’s letter
dated September 2, 1972 (wherein it justified its
non-operation on account of unfinished portions of
the road) which is not part
588

of the records of the case; and

3) resorting to extraneous facts not supported by
competent evidence as basis for its conclusion that
the demand of public need would be more
paramount than the need to penalize BLTB.
For its part, BLTB contends that:
1) the cancellation or non-cancellation of its

certificates of public convenience is addressed to the
sound discretion of the BOT;
2) its letter dated September 18, 1972 (erroneously
referred to as the letter dated September 2, 1972)
forms part of the BOT’s records; and
3) the BOT acted correctly in the exercise of its sound
discretion and within its jurisdiction when it found
that the demand of public need would be
paramount than the need to penalize it (BLTB).
There can be no dispute that the law (Section 16 (n) of the

Public Service Act) gives **to the BOT (successor of the
Public Service Commission) ample power and discretion to
decree or refuse the cancellation of a certificate of public
convenience issued to an operator as long as there is
evidence to support its action, as held by this Court in a
long line of cases, wherein it was even intimated that in
matters of this nature so long as the action is justified this
Court will not substitute its discretion for that of the BOT
(see Javier, et al. v. de Leon, et al., 109 Phil. 751; Santiago
Ice Plant and Co. v. Lahoz, 87 Phil. 221; Raymundo
Transportation Co. v. Cedra, 99 Phil. 99; Manila Yellow
Taxicab Co., Inc. v. Castelo, 108 Phil. 394; Dagupan Ice
Plant Co., Inc. v. de Lucero, et al. citing Manila Yellow
Taxicab Co., Inc., et al., v. Araullo, 34 O.G. 241; Sambrano
v. Northern Luzon Transportation Co., 35 O.G. 2271). The
BOT, in refusing to cancel the
_______________
** On September 23, 1972, Presidential Decree No. 1 was promulgated

reorganizing the executive branch of the national government. The Public
Service Commission was then abolished. Its functions were transferred to
three specialized regulatory boards, namely, the Board of Transportation,
Board of Communications and Board of Power and Waterworks. On June
19, 1987 Executive Order No. 202 was issued creating the Land
Transportation Franchising and Regulatory Board (LTFRB) which now
exercises the powers and functions of the BOT.
589
VOL. 191, NOVEMBER 22, 1990 589

certificates of public convenience of BLTB, relied on these

pieces of evidence; (1) the letter of BLTB dated September
18, 1972; (2) reports/complaints from the general public; (3)
reports of its fieldmen; and (4) its own observations
acquired thru inspection trips, all of which form part of its
records. As We have ruled before, the BOT is particularly a
fact-finding body whose decisions on questions regarding
certificates of public convenience are influenced not only by
the facts as disclosed by the evidence in the case before it
but also by the reports of its field agents and inspectors
that are periodically submitted to it (see La Mallorca and
Pampanga Bus Co., Inc. v. Mercado, G.R. No. L-19120,
November 29, 1965, 15 SCRA 343). Likewise, the BOT has
the power to take into consideration the result of its own
observation and investigation of the matter submitted to it

for decision, in connection with other evidence presented at
the hearing of a case (Manila Yellow Taxicab Co., Inc., et
al. v. N. & B. Stables Co., Inc., 60 Phil. 851 citing Manila
Yellow Taxicab Co., Inc., et al. v. Danon, 58 Phil. 75;
Manila Electric Co. v. Balagtas, 58 Phil. 429).
Taking into consideration BLTB’s letter dated
September 18, 1972, it acted in good faith when it did not
immediately operate on those lines and not because of a
design to prejudice public interest. Certificates of public
convenience involve investment of a big amount of capital,
both in securing the certificate and in maintaining the
operation of the lines covered thereby, and mere failure to
operate temporarily should not be a ground for
cancellation, especially as when, in the case at bar, the
suspension of the service was directly caused by
circumstances beyond the operator’s control (Pangasinan
Transportation Co. v. F.F. Halili, et al., 95 Phil. 694). In the
absence of showing that there is willful and contumacious
violation on the part of the utility operator, no certificate of
public convenience may be validly revoked (Manzanal v.
Ausejo, et al., G.R. No. L-31056, August 4, 1988, 164 SCRA
36). More importantly, what cannot be ignored is that the
needs of the public are paramount, as elucidated by the
BOT in its order. In the exercise of its power to grant or
cancel certificates of public convenience, the BOT is guided
by public necessity and convenience as primary
considerations (see Dizon v. Public Service Commission, et
al., G.R. No. L-34820, April 30, 1973, 50 SCRA 500).
590

Apparently, PANTRANCO’s purpose in instituting the

proceedings for cancellation of BLTB’s certificates of public
convenience is to remove it (BLTB) as a competitor in the
business in which they are both engaged (see Pangasinan
Transportation Co. v. F.F. Halili, et al., supra), which is
detestable. Experience has demonstrated that healthy
competition always redounds to the benefit of the
commuters and the development of transportation as a
whole.
ACCORDINGLY, the petition is hereby DISMISSED.
The order of the Board of Transportation dated January 4,
1979 is AFFIRMED. The temporary restraining order
issued on January 15, 1979 is LIFTED.
SO ORDERED.
Narvasa (Chairman), Cruz, Gancayco and Griño-

Aquino, JJ., concur.
Petition dismissed. Order affirmed.
Note.—Franchise being merely a privilege emanating

from the state’s sovereign power is subject to the regulation
by the state itself by virtue of its police power. (Radio
Communications of the Philippines Inc. vs. National
Telecommunications Commission, 150 SCRA 450.)
——o0o——
591
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VOL. 191, NOVEMBER 22, 1990 581: Pantranco South Express, Inc. vs. Board of Transportation

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VOL. 191, NOVEMBER 22, 1990 581: Pantranco South Express, Inc. vs. Board of Transportation

Uploaded by

10/10/21, 12:04 AM SUPREME COURT REPORTS ANNOTATED VOLUME 191

VOL. 191, NOVEMBER 22, 1990 581

PANTRANCO SOUTH EXPRESS, INC., petitioner, vs.

Transportation; Public Service Law; BOT has ample power

582 SUPREME COURT REPORTS ANNOTATED

Pantranco South Express, Inc. vs. Board of Transportation

agents and inspectors that are periodically submitted to it (see La

PETITION for certiorari and/or prohibition to review the

The facts are stated in the opinion of the Court.

This is a petition for certiorari and/or prohibition with

VOL. 191, NOVEMBER 22, 1990 583

“3. At said hearings, Respondent admitted non-operation of

“Briefly, these affirmative defenses are:

(a) Respondent actually registered under PUB denomination all the

584 SUPREME COURT REPORTS ANNOTATED

(b) The following supervening factors which are beyond Respondent’s

(1) The gasoline crises starting 1971;

“5. At the said hearings also, Respondent prayed that these

(a) The certificates of public convenience of Respondent are

On January 4, 1979, the BOT issued an order, the

VOL. 191, NOVEMBER 22, 1990 585

“1. Orders respondent to operate within fifteen (15) days from

“Failure of respondent/applicant to comply with any of the

It rationalized the non-cancellation of BLTB’s certificates of

“Obviously, cancellation of a certificate of public convenience is a

“Sec. 21 of the same law provides that ‘every public service

586 SUPREME COURT REPORTS ANNOTATED

is basically punished with a fine, unless the violation is willful or

Year Authorized Units Registered

and among the lines not so operated or only partially operated,

VOL. 191, NOVEMBER 22, 1990 587

Sorsogon aside from lines serving inter-provincial and local needs

Basin Development Project, a program designed to tap the rich

Hence, the present petition.

1) refusal to cancel the certificates of public

588 SUPREME COURT REPORTS ANNOTATED

of the records of the case; and

For its part, BLTB contends that:

1) the cancellation or non-cancellation of its

There can be no dispute that the law (Section 16 (n) of the

** On September 23, 1972, Presidential Decree No. 1 was promulgated

VOL. 191, NOVEMBER 22, 1990 589

certificates of public convenience of BLTB, relied on these

observation and investigation of the matter submitted to it

590 SUPREME COURT REPORTS ANNOTATED

Apparently, PANTRANCO’s purpose in instituting the

Narvasa (Chairman), Cruz, Gancayco and Griño-

Petition dismissed. Order affirmed.

Note.—Franchise being merely a privilege emanating

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