EMILIANO U. ESCOTO, PETITIONER, VS. ANUNCIACION VDA. DE GRANADA AND THE PUBLIC SERVICE COMMISSION, RESPONDENTS.

Emiliano U. Escoto petitions for a review of the order of the Public
Service Commission dated 7 December 1970 (Petition, Annex “H”)
revoking its de­cision of 5 August 1970 that approved the transfer of five (5)
certificates of public convenience from Rosita H. Natividad to Emiliano U.
Escoto, and cancelling the certificates issued in the name of the latter.

The background facts, virtually conceded by pe­titioner Escoto,
are the following:

Private respondent Anunciacion Vda. de Granada had instituted an
action in 31 March 1964 against Rosita Natividad, former holder of the
certificates in question, and operator of several PUJ jitneys, to recover
damages for the death of her husband, who was hit by one of said vehicles. The driver had been criminally convicted and
in the civil suit Mrs. Granada was awarded an indemnity of P70,000, plus 10%
attorney’s fees, by the Court of First Instance of Iloilo on 11 September 1965,
and execution pending appeal was ordered. The judgment was affirmed by the Court of Appeals (CA-G.R. No. 37340-R)
and ultimately became final upon this Supreme Court denying review (G. R. No.
L-32157) on 2 July 1970.

Meanwhile, Rosita Natividad and Emiliano U. Escoto, on 27 April
1970, applied to the Public Service Commission for approval of the sale for
P40,000 of the 77 jitneys and the public service certificates owned by the
former to the latter, pursuant to a deed allegedly executed on 3 June 1964,
almost six (6) years prior to the petition to the Public Service Commission
(Case No. 70-2754). No objection having
been filed, despite publication, the Public Service Commission approved the
transfer, as aforesaid, on 5 August 1970.

On 23 September 1970, Mrs. Granada petitioned the Public Service
Commission for a reopening of the case and the setting aside of approval of the
transfer of the equipment and certificates to Escoto, pleading the foregoing
facts; that the sale by Natividad to Escoto was simulated and fictitious; and
that Mrs. Granada had not discovered the transfer until 16 September 1970. Escoto opposed the reopening of the case on
the grounds (a) that Mrs. Granada, not being a party in interest, had no
personality to ask for the case’s reopening; (b) that the decision sought to be
reopened had already become final and inalterable; and (c) that the issues
raised by Mrs. Granada were judicial issues not within the jurisdiction of the
Public Service Commission.

As noted at the beginning of this opinion, the Public Service Com­mission
granted the petition to reopen and, after hearing both parties, found that the
sale of the Natividad certificates to Escoto was presump­tively in fraud of
creditors under Article 1387 of the New Civil Code, providing that:

“ART. 1387. All
contracts by virtue of which the debtor alienates property by gratuitous title
are presumed to have been entered into in fraud of creditors, when the donor
did not reserve sufficient property to pay all debts contracted before the
donation.

“Alienations by onerous title are also presumed fraudulent
when made by persons against whom some judgment has been rendered in
any instance or some writ of attachment has been issued. The decision or attachment need not refer to
the property alienated, and need not have been obtained by the party seeking
the rescission.

“In addition to these presumptions, the design to defraud
creditors may be proved in any other manner recognized by the law of evi­dence.”
(Emphasis supplied)

The Public Service Commission likewise
found that Mrs. Granada had no previous knowledge of the petition for the
Public Service Commission to approve the transfer and that she had sustained,
or was in immediate danger of sustaining, injury as a result of the transfer,
and, in view thereof, revoked its previous approval of the sale and ordered
that Escoto’s certi­ficates be cancelled. Unable to secure reconsideration, Escoto came to this Court on appeal by
certiorari, claiming lack of jurisdiction and or grave abuse of
discretion.

We find the petitioner’s claim untenable. There is no denying that in petitioning the
Commission for the approval of the transfer of Natividad’s units and service
certificates to Escoto, the applicants did not disclose to the Public Service
Commission that a judgment had been previously obtained by Mrs. Granada against
the transferor, nor that a writ of execution had been issued against her,
thereby rendering the transfer presumptively fraudulent as against the judgment
creditor (see Petition, Annex “B”). Nor is it doubtful that had the foregoing circums­tances been revealed,
the Public Service Commission could very well have refused to approve the transfer,
since the latter was subject to rescission by the regular courts, leading to a
consequent disruption of the public services transferred, to the detriment of
the general public. Moreover, the
Commission could not but view with disfavor a petition for its approval of a
transaction of doubtful correctness, for such approbation tended to place the
Commission’s acts and reputation in a derogatory light, making it appear as if
it were cooperating to defraud a creditor.

Under the circumstances, the Public Service Commission had
authority to revoke its approval, because under the Public Service law (Section
16(m), Commonwealth Act No. 146), it could cancel or revoke a certificate
“when­ever the facts and circumstances on the strength of which a
certificate was issued have been misrepresented or materially changed“,
concealment of material facts being in effect a misrepresentation. The order complained of in the case before
us is proof that the Public Service regarded the facts concealed from it as
material and that, if known, would have caused it to withhold or deny approval
of the transfer in question. In Pecson
vs. Pecson, 78 Phil. 522, this Court upheld the Commission’s power to cancel a
certificate of public convenience upon proof that the holder was a mere dummy
of the transferor. The case at bar
being very similar in nature, it should be governed by the same principle.

The non-appearance of respondent Mrs. Granada in the initial case
(PSC No. 70-2754) was due to the petitioner’s con­cealment of the preceding
judgment in her favor, for which she is not to blame. Likewise, the lapse of the period to appeal the Public Service
Commission order approving a transfer of certificates can not bar its
cancellation for misrepresentation of actual facts.

WHEREFORE, the order appealed from is affirmed, with costs
against petitioner.

Concepcion, C.J., Makalintal, Zaldivar, Castro, Fernando,
Teehankee, Barredo, Villamor, and Makasiar,
JJ., concur.

Dizon, J., did not take part.