G.R. No. L-33088 August 31, 1971
EMILIANO U. ESCOTO, petitioner, vs. ANUNCIACION VDA. DE GRANADA and THE PUBLIC SERVICE COMMISSION, respondents.

FACTS

Private respondent Anunciacion Vda. de Granada obtained a final judgment for damages against Rosita Natividad, a public utility operator, for the death of her husband. While execution of this judgment was pending, Natividad and petitioner Emiliano U. Escoto applied to the Public Service Commission (PSC) for approval of the sale of Natividad’s certificates of public convenience and jitneys to Escoto. Their application, filed in 1970, was based on a deed of sale allegedly executed in 1964. The application did not disclose the existing judgment against Natividad. No opposition was filed, and the PSC approved the transfer in August 1970.
Upon discovering the transfer, Granada petitioned the PSC to reopen the case and set aside its approval, alleging the sale was simulated and in fraud of creditors. Escoto opposed, arguing Granada lacked legal personality, the PSC decision was final, and the issue was judicial, not administrative. The PSC granted the reopening, found the transfer presumptively fraudulent under Article 1387 of the Civil Code due to the concealed judgment, and revoked its prior approval, canceling Escoto’s certificates.

ISSUE

Whether the Public Service Commission committed grave abuse of discretion or acted without jurisdiction in reopening the case and revoking its prior approval of the transfer of certificates.

RULING

The Supreme Court ruled that the Public Service Commission acted within its jurisdiction and did not commit grave abuse of discretion. The legal logic is anchored on the PSC’s statutory power and the duty of candor owed to it by applicants. Under Section 16(m) of Commonwealth Act No. 146, the PSC may cancel a certificate when the facts upon which it was issued have been misrepresented. The concealment of the material fact of the final judgment against the transferor, Natividad, constituted such a misrepresentation. Had this been disclosed, the PSC could have rightly denied approval, as a transfer subject to rescission for fraud disrupts public service stability and implicates the Commission in a potentially fraudulent transaction.
The Court rejected Escoto’s arguments. Granada, as a judgment creditor immediately endangered by the transfer, had sufficient interest to seek reopening. The finality of the PSC’s approval order did not bar its cancellation due to the foundational misrepresentation. The issue of fraud, while ultimately judicial, was directly relevant to the PSC’s administrative duty to ensure transfers are legitimate and not detrimental to public interest. The PSC’s action to correct its own order, procured by concealment, was a proper exercise of its regulatory authority to protect the integrity of its processes and the public it serves. The order was affirmed.