ANTONIO HERAS AND VICENTE HERAS, PETITIONERS, VS. PEDRO DE GUIA, RESPONDENT.

Heras versus De Guia

The Case

This is the story of two bus operators who tried to stop a competitor from moving his route. Antonio Heras and Vicente Heras, existing operators in the San Juan and Manila area, opposed the application of Pedro de Guia before the Public Service Commission for a change of route and termini. De Guia wanted to abandon his old line and open a new one from the corner of Lieutenant Artiaga and N. Domingo Street up to Divisoria. The Heras brothers claimed the new service was unnecessary and would breed wasteful and ruinous competition. The case matters because it teaches the standard for granting a certificate of public convenience over a new route, the effect of an application to change route upon the old certificate, and the deference owed to the factual findings of the Public Service Commission.

Procedural History

Pedro de Guia filed with the Public Service Commission an application for a change of route and termini of his authorized operation. Antonio Heras and Vicente Heras, operators in the same region, opposed it. Of the twenty or more operators notified of the application and the hearing, only the two Heras brothers prosecuted their opposition. After due hearing, the Public Service Commission rendered a decision granting the authority sought and ordering that the certificate of public convenience prayed for be issued. The Heras brothers appealed to the Supreme Court, assigning three errors: that the Commission exceeded its powers in allowing an unnecessary new service, that it abused its discretion in permitting de Guia to abandon his old line without first securing cancellation of his old certificate, and that it allowed wasteful and ruinous competition.

Facts

Pedro de Guia was an authorized operator between San Juan and Manila. His existing route ran from the intersection of N. Domingo and Blumentritt Streets, via Mandaluyong, up to Quiapo. He applied to change that route and its termini. The proposed new line would start at the corner of Lieutenant Artiaga and N. Domingo, about one kilometer from his present starting point, and run up to Divisoria. He would use the same five units already authorized under his old certificate.

The Heras brothers operated in the same region, with about seventeen units between Boston and City Hall and between N. Domingo and Quiapo. They insisted that the present service was sufficient and that approval would only cause wasteful or ruinous competition. The records, however, showed no concrete evidence of such competition. The Commission found that there was no direct authorized service from Lieutenant Artiaga to Divisoria, and that illegal operators were plying that line precisely because the need existed. It also found that the Heras routes were entirely different and distinct from the proposed route: their starting points and their terminals did not coincide with de Guia's, and passengers bound for Divisoria had to transfer to other buses.

On the question of abandonment, the Commission found that even without de Guia's service on his old route, nineteen units operated by other operators would remain, so the public would not be prejudiced. On these findings the Commission approved the application.

Issues

• Whether or not the Public Service Commission erred and exceeded its powers in allowing the respondent to establish a new service on a new route alleged to be already adequately served, without clear and convincing evidence.
• Whether or not the Commission abused its discretion in permitting the respondent to discontinue his old line and use his remaining five units on the new service without first securing cancellation of the certificate of public convenience issued for the old route.
• Whether or not the Commission abused its discretion in allowing wasteful and ruinous competition.

Applicable Provisions

The decision does not quote any statutory provision. It rests on the settled rule that findings of fact of the Public Service Commission, when borne out by the records, are conclusive upon the Supreme Court. The Court states the governing principle in its own words:

Apart from being borne out by the records, the foregoing findings of fact are conclusive upon this Court.

This principle disposes of the first assignment of error, which raised only questions of fact.

Ruling

On the first issue, the Court held that the assignment of error involved questions of fact, and that the findings of the Commission were borne out by the records and therefore conclusive upon the Court. The first assignment of error was devoid of merit.

On the second issue, the Court ruled that the application for a change of route amounted to a petition for cancellation of the authority to operate on the original route, simultaneously with the grant of authority to operate on the new route. When the new route was approved, the Commission in effect withdrew the authority to operate on the old route. The Court put it thus:

No legal provision or authority has been cited in support of the theory that the former certificate of public convenience must be cancelled before a new one, for a modified route, could be applied for.

The Court also rejected the argument that the oppositors should first have been given an opportunity to improve their service, because their service was entirely different and distinct from that of the applicant.

On the third issue, the Court held that it was a mere corollary of those already disposed of and needed no further discussion. There was no concrete evidence of wasteful or ruinous competition, and the prevalence of illegal operations on the proposed line indicated the need for the service.

Doctrine

A Bar candidate should retain three rules. First, the findings of fact of the Public Service Commission, when supported by the records, are conclusive upon the Supreme Court and will not be disturbed on appeal. Second, an application for a change of route operates as a petition for cancellation of the old authority, and the approval of the new route in effect withdraws the old certificate; no prior cancellation of the former certificate is required before a new one for a modified route may be applied for. Third, the grant of a certificate of public convenience does not require proof of wasteful or ruinous competition where the applicant's service is entirely different and distinct from that of the oppositors, and where the evidence shows a public need for the proposed direct service.

Disposition

The Supreme Court affirmed the decision of the Public Service Commission in its entirety, with costs against the appellants Antonio Heras and Vicente Heras.

Remember This

Memorize this line: an application for a change of route is itself a petition for cancellation of the old authority, so no separate cancellation is needed before the new certificate is granted. Examiners use this case to test the conclusiveness of the factual findings of the Public Service Commission and the standard for proving wasteful or ruinous competition.