G.R. No. L-18459 September 29, 1962
NARCEO SAMBRANO and/or MAURA TRANSIT CO., INC., petitioners, vs. PUBLIC SERVICE COMMISSION and PHILIPPINE RABBIT BUS LINES, INC., respondents.

FACTS

Petitioners Narceo Sambrano and Maura Transit Co., Inc. filed a complaint with the Public Service Commission (PSC) seeking the cancellation of three certificates of public convenience held by respondent Philippine Rabbit Bus Lines, Inc. for auto-truck transportation on the Laoag-Aparri, Aparri-Laoag, and Bacnotan-Aparri lines. The complaint alleged that the Laoag-Aparri line had not been operated by the respondent’s predecessor-in-interest, the Estate of Florencio P. Buan, since November 1956, and that the respondent itself only began operating it around July 1960. It further alleged that the other two lines had never been operated since their issuance in the early 1950s until July 1960, constituting violations of the certificates’ terms.
In its answer, Philippine Rabbit invoked the 60-day prescription period under Section 28 of the Public Service Act, which states that violations of certificate terms prescribe after sixty days. It also claimed it acquired the lines through a Commission-approved sale in February 1960, issued a new consolidated certificate, and denied knowledge of its predecessor’s alleged non-operation. The PSC, during the hearing, issued a ruling limiting the petitioners to presenting evidence only on violations committed by the respondent within the sixty days immediately preceding the filing of the complaint.

ISSUE

The primary issues were: (1) whether petitioners could prove abandonment and non-user of the certificates committed outside the 60-day prescriptive period; and (2) whether petitioners could prove abandonment and non-user committed by the respondent’s predecessor-in-interest.

RULING

The Supreme Court modified the PSC’s order. It held that the 60-day prescriptive period in Section 28 of the Public Service Act applies only to criminal or penal proceedings under Chapter IV of the Act, as established in prior jurisprudence. Administrative proceedings for the cancellation or modification of a certificate under Section 16(m) of the Act are not penal in character. Their primary purpose is to ensure adequate public service and protect the public from operator malfeasance. Therefore, the PSC erred in refusing to admit evidence of violations committed by the respondent Philippine Rabbit Bus Lines, Inc., even if the complaint for those violations was filed beyond the 60-day period. Such evidence is admissible to determine if the operator has faithfully kept the conditions of its certificate.
However, the Court agreed with the PSC’s exclusion of evidence regarding violations committed by the respondent’s predecessor-in-interest, the Estate of Florencio P. Buan. In a proceeding for cancellation under Section 16(m), a purchaser of a certificate should not be held answerable for the unrecorded violations of its predecessor that were not brought to the Commission’s attention either within the 60-day period or during the hearing for the transfer’s approval. It would be inequitable to burden the purchaser with violations of which it had no notice and could not have ascertained from the PSC records. The purchaser is entitled to an opportunity to improve the service. The records were ordered returned to the PSC for further proceedings consistent with this opinion.