NOTES & DIGESTS IN
TRANSPORTATION LAW
CHAPTER 21 PUBLIC SERVICE REGULATIONS
PUBLIC UTILITY
 Business or service engaged in regularly supplying the
public with some commodity or service of public
consequence such as electricity, gas, water,
transportation, telephone or telegraph service
 Implies public USE and SERVICE
 [Kilusang Mayo Uno Labor Center V Hon Jesus Garcia
Jr] Public utilities are privately owned and operated
businesses whose service are essential to the general
public. They are enterprises which specially cater to
the needs of the public and conduce to their comfort
and convenience. As such, public utility services are
impressed with public interest and concern. The same
is true with respect to the business of common carrier
which holds such a peculiar relation to the public
interest that there is superinduced upon it the right of
public regulation when private properties are affected
with public interest, hence, they cease to be juris
privati only. When, therefore, one devotes his property
to a use in which the public has an interest, he, in effect
grants to the public an interest in that use, and must
submit to the control by the public for the common
good, to the extent of the interest he has thus created.
UNDER PSA (PUBLIC SERVICE ACT: CA 146)
 Public service is included in the broad concept of public
utilities
 Sec 13 CA 146 - (b) The term “public service” includes
every person that now or hereafter may own, operate,
manage, or control in the Philippines, for hire or
compensation, with general or limited clientele,
whether permanent, occasional or accidental, and
done for general use business purposes, any common
carrier, railroad, street railway, traction railway, sub-
way motor vehicle, either for freight or passenger, or
both with or without fixed route and whatever may be
its classification, freight or carrier service of any class,
express service, steamboat, or steamship line ,
pontines, ferries, and water craft, engaged in the
transportation of passengers or freight or both,
shipyard, marine railway, marine repair shop, wharf or
dock, ice plant, ice-refrigeration plant, canal, irrigation
system, gas, electric light, heat and power, water
supply and power, petroleum, sewerage system, wire
or wireless communications system, wire or wireless
broadcasting stations and other similar public services:
Provided, however, That a person engaged in
agriculture, not otherwise a public service, who owns a
motor vehicle and uses it personally and/or enters into
a special contract whereby said motor vehicle is
offered for hire or compensation to a third party or third
parties engaged in agriculture, not itself or themselves
a public service, for operation by the latter for a limited
time and for specific purpose directly connected with
the cultivation of his or their farm, the transportation,
processing, and marketing of agricultural products of
such third party or third parties shall not be considered
as operating a public service for the purpose of this
Act.
ELEMENTS
BESARIO, DE GRANO, DUMLAO, MARAÑON|2018
 1. The person must own, operate, manage or control
in the PH public services which may include
distribution of goods or rendering of services to the
public (such as common carrier, railroad, street
railway, traction railway, subway motor vehicle, either
for freight or passenger, shipyard, marine railways,
marine repair shop [warehouse] wharf or dock, ice
plant, ice refrigeration plant, canal, irrigation system,
gas, electric light, heat and power water supply and
power, petroleum, sewerage system, wire or wireless
communications system, wire or wireless broadcasting
stations)
 2. The ownership, operation, management or control
must be for hire or compensation
 3. The ownership, operation, management or control
must be done for general business purposes
 The characteristics of public service include the
following if:
o 1. It is NOT required that the business is permanent
because the operation may be permanent,
occasional or accidental
o 2. The business may be with general or limited
clientele.
 With respect to carriers, they are considered
public service if:
o 1. They transport either freight or passenger or both
o 2. Their service is with or without fixed route
o 3. Their classification may be freight or carrier
service of any class, express service, steamboat or
steamship line, pontines, ferries, and water craft
 “GENERAL BUSINESS PURPOSE”
o [BUREAU OF TELECOMM v THE PUBLIC
SERVICE COMMISSION]
 Caro vs. Rilloraza, described a "business" as
"the means by which a party habitually or
regularly earns a livelihood of some gain,"
whereas,
 in Collector of Internal Revenue vs. Manila
Lodge, we declared that "the plain, ordinary
meaning of business is restricted to activities or
affairs where profit is the purpose, or livelihood
is the motive."
 Collector of Internal Revenue vs. St. Paul's
Hospital in which it was held that business is
"that which occupies time, attention, and labor
of men for the purpose of livelihood or profit."
 SC: although the Bureau of
Telecommunications (BOT) operated as a
telephone system it is neither a publ.ic service
nor engaged in the operation of telephone
services for general business purposes.
 The BOT was created by Executive Order of
the President
 The fact that the EO transferred to the
Bureau all personnel, powers, functions,
activities. Appropriations, properties,
equipment, supplies, records and documents
pertaining to intended for the electrical
communication service under the Bureau of
NOTES & DIGESTS IN
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Posts, the duties and functions of which, as
well as those enumerated therein to the BOT,
do NOT indicate that the latter has been
created for genera business purposes
 its rates are much lower than those of the
Company and, although 20% to 30% of its
telephone subscribers are private
subscribers, the services given thereto are
merely incidental to its governmental
function, to meet the telecommunication
needs of the Government and the people
 There is no allegation in the complaint of the
Company that the Bureau is engaged in
telephone operation, either for the purpose of
gain or profit, or as a means of livelihood. In
fact, the Bureau is not even authorized to use
its income, or any part thereof, and its
expenses are met through annual
appropriations made by Congress. Indeed,
the Bureau has no corporate existence and it
is admittedly "discharging a governmental or
State responsibility" or functions, which, as
such, "is not business.
o [CRUZ DE SYQUIA v BOARD OF POWER AND
WATER WORKS]
 FACTS: certain tenants filed 3 separate
complaints with the then Board of Power and
Waterworks (BPW) charging petitioner as
administrator of the South Syquia Apartments at
Malate with the offense of selling electricity
without permit or franchise issued by BPW
 Petitioner allegedly billed complainants
various specified amounts for their electricity
consumption at their respective apartments
in excess of the Meralco rates authorized by
BPW.
 SC: BPW acquired no jurisdiction over
petitioner’s contractual relations with
respondent complainants as her tenants, since
petitioner is NOT engaged in public service nor
in the sale of electricity without permit or
franchise
 the petitioner did NOT operate, manage or
control the power plant and electricity is
directly and uninterruptedly supplied to the
end-user THUS petitioner is NOT selling
electricity nor a middleman in the electric
power business
 the question of proportionate amount that
each tenant should bear for the additional
electricity cost for common facilities of the
apartment building used by the tenants in
common is PURELY CIVIL IN CHARACTER
(lease bet. Tenant and landlord) to be
adjudged under the applicable civil laws
exclusively by the regular courts of general
jurisdiction and is beyond the jurisdiction of
respondent board
o [LUZON STEVEDORING CO INC v PUBLIC
SERVICE COMMISSION]
BESARIO, DE GRANO, DUMLAO, MARAÑON|2018
 Petitioners were engaged in stevedoring or
lighterage and harbor towage business and
 also in interisland service which consists of
hauling cargoes such as sugar, oil, fertilizer and
other commercial commodities which are loaded
in their barges and towed by their tugboats from
Manila to various points in the Visayan Islands,
particularly in the Provinces of Negros
Occidental and Capiz, and from said places to
Manila
 respondents charge freightage on a unit price
with rates
 SC: respondent was a public utility even if it was
serving a limited clientele
o WATER DISTRICTS – fall under the term public
utility because its primary function is to construct,
maintain and operate water reservoirs and
waterworks for the purpose of supplying water to
the inhabitants as well as consolidate and
centralize all water supplies and drainage systems
in the PH [METROPOLITAN CEBU WATER
DISTRICT v ADALA]
NOT A PUBLIC UTILITY BY LAW
 RA 9136 (EPIRA) electric Power Reform Act of 2001
– power generators such as independent power
producers are NOT public utilities
o Sec 29 – any law contrary notwithstanding, supply
of electricity to the contestable market shall NOT be
considered a public utility operation
o [INITIATIVE FOR DIALOGUE AND
EMPOWERMENT THROUGH ALTERNATIVE
LEGAL SERVICES INC (IDEALS INC) ET AL v
POWER SECTOR ASSETS AND LIABILITIES
MANAGEMENT CORP (PSALM) ET AL]
 Under the EPIRA, the generation of electric
power, a business affected with public interest,
was opened to private sector and any new
generation company is required to secure a
certificate of compliance from the Energy
Regulatory Commission (ERC), as well as
health, safety and environmental clearances
from the concerned government agencies.
Power generation shall not be considered a
public utility operation, and hence no franchise
is necessary. Foreign investors are likewise
allowed entry into the electric power industry.
 With the advent of privatization of the electric
power industry which resulted in its segregation
into four sectors -- generation, transmission,
distribution and supply – NPC’s generation and
transmission functions were unbundled. Power
generation and transmission were treated as
separate sectors governed by distinct rules
under the new regulatory framework introduced
by EPIRA. The National Transmission
Corporation (TRANSCO) was created to own
and operate the transmission assets and
perform the transmission functions previously
under NPC. While the NPC continues to
undertake missionary electrification programs
NOTES & DIGESTS IN
TRANSPORTATION LAW
through the SPUG, PSALM was also created to
liquidate the assets and liabilities of NPC.
o [LUZON STEVEDORING CO INC v PUBLIC
SERVICE COMMISSION]
 legislature may not "declare a company or
enterprise to be a public utility when it is not
inherently such nor declare a company or
enterprise as NOT a public utility or NOT
engaged in the operation of a public utility if it is
inherently such
 Specific provision in the law that states that an
entity is NOT a public utility is NOT binding on
the SC. SC may still declare that the
determination of the legislature that a business
is not a public utility is inconsistent with the intent
of Constitutional provisions on public utility
 Provision limiting foreign ownership of public
utilities Sec 11 Art XII of 1987 COnsti
 Framers have a concept of public utility in
mind when they adopted the provision.
 If a special law will declare that common
carriers are NOT public utilities with the result
of removing common carriers from the
operation of said provision then SC may
declare that same provision as
unconstitutional because the clear intent of
the Constitutional Commission is that
common carriers are included in the concept
of public utilities under the same provision
o The reclassification of a business that is originally
regarded as public utility into one that is NOT
through a concession agreement or contract with a
government instrumentality, is NOT binding on the
courts and may be declared unconstitutional
o Mere fact that service is rendered only under a
contract does NOT prevent a company from being
considered a public utility
o Mere fact that the concessionaire operates under a
contract does NOT remove it from the concept of
public utility if it is inherently so. it is for the court to
decide if it is inherently such
CONSTITUTIONAL PROVISIONS (Art. XII)
 Section 1. The goals of the national economy are a
more equitable distribution of opportunities, income,
and wealth; a sustained increase in the amount of
goods and services produced by the nation for the
benefit of the people; and an expanding productivity as
the key to raising the quality of life for all, especially the
under-privileged.
The State shall promote industrialization and full
employment based on sound agricultural development and
agrarian reform, through industries that make full and
efficient use of human and natural resources, and which are
competitive in both domestic and foreign markets. However,
the State shall protect Filipino enterprises against unfair
foreign competition and trade practices.
In the pursuit of these goals, all sectors of the economy and
all regions of the country shall be given optimum opportunity
to develop. Private enterprises, including corporations,
BESARIO, DE GRANO, DUMLAO, MARAÑON|2018
cooperatives, and similar collective organizations, shall be
encouraged to broaden the base of their ownership.
 Section 6. The use of property bears a social function,
and all economic agents shall contribute to the
common good. Individuals and private groups,
including corporations, cooperatives, and similar
collective organizations, shall have the right to own,
establish, and operate economic enterprises, subject
to the duty of the State to promote distributive justice
and to intervene when the common good so demands.
 Section 11. No franchise, certificate, or any other form
of authorization for the operation of a public utility shall
be granted except to citizens of the Philippines or to
corporations or associations organized under the laws
of the Philippines, at least sixty per centum of whose
capital is owned by such citizens; nor shall such
franchise, certificate, or authorization be exclusive in
character or for a longer period than fifty years. Neither
shall any such franchise or right be granted except
under the condition that it shall be subject to
amendment, alteration, or repeal by the Congress
when the common good so requires. The State shall
encourage equity participation in public utilities by the
general public. The participation of foreign investors in
the governing body of any public utility enterprise shall
be limited to their proportionate share in its capital, and
all the executive and managing officers of such
corporation or association must be citizens of the
Philippines.
 Section 17. In times of national emergency, when the
public interest so requires, the State may, during the
emergency and under reasonable terms prescribed by
it, temporarily take over or direct the operation of any
privately-owned public utility or business affected with
public interest.
 Section 18. The State may, in the interest of national
welfare or defense, establish and operate vital
industries and, upon payment of just compensation,
transfer to public ownership utilities and other private
enterprises to be operated by the Government.
 Section 19. The State shall regulate or prohibit
monopolies when the public interest so requires. No
combinations in restraint of trade or unfair competition
shall be allowed.
 Section 22. Acts which circumvent or negate any of
the provisions of this Article shall be considered
inimical to the national interest and subject to criminal
and civil sanctions, as may be provided by law.
CONSTITUTIONAL LIMITATIONS
 1. No franchise, certificate, or any other form of
authorization for the operation of a public utility shall be
granted except to citizens of the PH or to corporations
or associations organized under the laws of the PH at
least 60% of whose capital is owned by such citizens
 2. No franchise, certificate, or authorization shall be
EXCLUSIVE in character
 3 No franchise, certificate, or authorization shall be for
a PERIOD LONGER THAN 50 YRS
NOTES & DIGESTS IN
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 4. A franchise or a right shall be granted only under the
condition that it shall be subject to amendment,
alteration, or repeal by the Congress when the
common good so requires
 5. The State shall encourage equity participation in
public utilities by the general public
 6 The participation of foreign investors in the governing
body of any public utility enterprise shall be LIMITED
TO THEIR PROPORTIONATE SHARE IN ITS
CAPITA
 7. All the executive and managing officers of such
corporation or association must be citizens of the PH
 8. In times of national emergency, when the public
interest so requires, the State may, during the
emergency and under reasonable terms prescribed by
it, temporarily take over or direct the operation of any
privately owned public utility or business affected with
public interest
 9. The State may, in the interest of national welfare or
defense, upon payment of just compensation transfer
to public ownership utilities and other private
enterprises to be operated by the Government
 10. The State shall regulate or prohibit monopolies
when the public interest so requires
 11. Combination in restrain of trade or unfair
competition are NOT allowed
REGULATORY AGENCIES
 ON PSA AS GOVERNING LAW
o Were there serious doubts, the courts should still
be reluctant to invalidate the Public Service Law or
any provision thereof. Although the legislature can
not, by its mere declaration, make something a
public utility which is not in fact such, "the public
policy of the state as announced by the legislature
will be given due weight, and the determination of
the legislature that a particular business is subject
to the regulatory power, because the public welfare
is dependent upon its proper conduct and
regulation, will not lightly be disregarded by the
courts."
o However, many of its provisions (i.e. concerning
organization and administration of Public Service
Commission) have been repealed by subsequent
issuances
 POWERS OF PSC ARE NOW DISTRIBUTED TO
THE FF GOVERNMENT AGENCIES:
o 1. Department of Transportation and
Communications — other agencies are under this
department and it is the agency that issues
certificates of public convenience for operation of
national railroad carriers
o 2. LTFRB Land Transportation Franchising
Regulatory Board – land transportation
o 3. LTO Land Transportation Office – registration of
drivers and motor vehicles
o 4. MARINA Marine Industry Authority – water
transportation
o 5. Philippine Coast Guard – safety in water
transportation
BESARIO, DE GRANO, DUMLAO, MARAÑON|2018
o 6. National Telecommunications Commission –
communication utilities and services, radio
communication systems, wire or wireless telephone
and telegraph systems, radio and television
broadcasting systems and other similar public
utilities
o 7. Energy Regulatory Commission – electric or
power distribution companies
o 8. National Water Resources Council – water
resources
o 9. Civil Aeronautics Board – air transportation
particularly its economic aspects
o 10. Civil Aviation Authority of the PH – maintenance
and operation of airports and other similar facilities;
registers aircrafts and other incidents concerning
the same and provides safety regulations in air
transportation
o 11. Philippine Ports Authority – wharves and ports
o 12. Local Water Utilities Administration – water
districts
o 13. Toll Regulatory Board – toll operators
 There are also specific laws that apply to the different
agencies and the different public utilities that they
operate.
BASES OF REGULATION OF PUBLIC UTILITIES
 Police power of the State
 Justified because whenever private property is used
for a public purpose and is affected with public interest,
it ceases to be juris private only and becomes subject
to regulation.
 The regulation is to promote the common good.
Submission to regulation may be withdraw by the
owner by discontinuing use; but as long as use of the
property is continued, the same is subject to public
regulation
 Sec 6 Article XII (See above)
OWNERSHIP OF PUBLIC UTILITIES
 Subject to regulation of the State
 Government agencies may impose certain
requirements to persons or entities who wish to
operate as public utilities (e.g. capitalization
requirement)
 Sec 11 Art. XII – 60% Filipino owned (see provision
above)
TIME WHEN OWNERSHIP MUST COMMENCE
 [TATAD v GARCIA] even mere formation of a public
utility corporation does NOT ipso facto characterize the
corporation as one operating as a public utility. The
moment for determination is when the entity
APPLIES for a franchise, certificate or any other
form of authorization for that purpose
 [PEOPLE v QUASHA] the Constitution does not
prohibit the mere formation of a public utility
corporation without the required formation of
Filipino capital. What it does prohibit is the
granting of a franchise or other form of
authorization for the operation of a public utility to
a corporation already in existence but without the
requisite proportion of Filipino capital. This is
NOTES & DIGESTS IN
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obvious from the context, for the constitutional
provision in question qualifies the terms " franchise",
"certificate", or "any other form of authorization" with
the phrase "for the operation of a public utility," thereby
making it clear that the franchise meant is not the
"primary franchise" that invest a body of men with
corporate existence but the "secondary franchise" or
the privilege to operate as a public utility after the
corporation has already come into being.
o If the Constitution does not prohibit the mere
formation of a public utility corporation with the alien
capital, then how can the accused be charged with
having wrongfully intended to circumvent that
fundamental law by not revealing in the articles of
incorporation that Baylon was a mere trustee of his
American co-incorporation and that for that reason
the subscribed capital stock of the corporation was
wholly American? For the mere formation of the
corporation such revelation was not essential, and
the Corporation Law does not require it. Defendant
was, therefore, under no obligation to make it. In the
absence of such obligation and of the allege
wrongful intent, defendant cannot be legally
convicted of the crime with which he is charged.
o For a corporation to be entitled to operate a
public utility it is not necessary that it be
organized with 60 per cent of its capital owned
by Filipinos from the start. A corporation
formed with capital that is entirely alien may
subsequently change the nationality of its
capital through transfer of shares to Filipino
citizens. conversely, a corporation originally
formed with Filipino capital may subsequently
change the national status of said capital
through transfer of shares to foreigners. What
need is there then for a corporation that intends to
operate a public utility to have, at the time of its
formation, 60 per cent of its capital owned by
Filipinos alone? That condition may anytime be
attained thru the necessary transfer of stocks. The
moment for determining whether a corporation is
entitled to operate as a public utility is when it
applies for a franchise, certificate, or any other form
of authorization for that purpose. And that can be
done after the corporation has already come into
being and not while it is still being formed. And at
that moment, the corporation must show that it has
complied not only with the requirement of the
Constitution as to the nationality of its capital, but
also with the requirements of the Civil Aviation Law
if it is a common carrier by air, the Revised
Administrative Code if it is a common carrier by
water, and the Public Service Law if it is a common
carrier by land or other kind of public service.
VOTING CONTROL TEST AND BENEFICIAL
OWNERSHIP TEST
 [GAMBOA v TEVEZ] both tests must be applied to
determine whether a corporation is a PH national
o Full beneficial ownership of the stocks, coupled
with voting rights is essential
BESARIO, DE GRANO, DUMLAO, MARAÑON|2018
o We shall illustrate the glaring anomaly in giving a
broad definition to the term capital. Let us assume
that a corporation has 100 common shares owned
by foreigners and 1,000,000 non-voting preferred
shares owned by Filipinos, with both classes of
share having a par value of one peso (P1.00) per
share. Under the broad definition of the term
capital, such corporation would be considered
compliant with the 40 percent constitutional limit on
foreign equity of public utilities since the
overwhelming majority, or more than 99.999
percent, of the total outstanding capital stock is
Filipino owned. This is obviously absurd.
o In the example given, only the foreigners holding
the common shares have voting rights in the
election of directors, even if they hold only 100
shares. The foreigners, with a minuscule equity of
less than 0.001 percent, exercise control over the
public utility. On the other hand, the Filipinos,
holding more than 99.999 percent of the equity,
cannot vote in the election of directors and hence,
have no control over the public utility. This starkly
circumvents the intent of the framers of the
Constitution, as well as the clear language of the
Constitution, to place the control of public utilities in
the hands of Filipinos. It also renders illusory the
State policy of an independent national
economy effectively controlled by Filipinos.
o the 60 percent Filipino ownership required by the
Constitution to engage in certain economic
activities applies not only to voting control of the
corporation, but also to the beneficial ownership of
the corporation, it is therefore imperative that such
requirement apply uniformly and across the board
to all classes of shares, regardless of nomenclature
and category, comprising the capital of a
corporation.
o the 60-40 ownership requirement in favor of Filipino
citizens must apply separately to each class of
shares, whether common, preferred non-voting,
preferred voting or any other class of shares.
o Even non-voting shares are still entitled to vote on
8 specific corporate matters
o Across the board application s, regardless of
differences in voting rights, privileges and
restrictions, guarantees effective Filipino control of
public utilities, as mandated by the Constitution.
OWNERSHIP OF FACILITIES
 [TATAD v GARCIA] the limit imposed by Consti on
foreigh equity applies only to the operation of a
public utility and not to ownership of the facilities
o Ownership is defined as a relation in law by virtue
of which a thing pertaining to one person is
completely subjected to his will in everything not
prohibited by law or the concurrence with the rights
of another
o The exercise of the rights encompassed in
ownership is limited by law so that a property
cannot be operated and used to serve the public as
a public utility unless the operator has a franchise.
NOTES & DIGESTS IN
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The operation of a rail system as a public utility
includes the transportation of passengers from one
point to another point, their loading and unloading
at designated places and the movement of the
trains at pre-scheduled times
o The right to operate a public utility may exist
independently and separately from the
ownership of the facilities thereof. One can own
said facilities without operating them as a
public utility, or conversely, one may operate a
public utility without owning the facilities used
to serve the public. The devotion of property to
serve the public may be done by the owner or
by the person in control thereof who may not
necessarily be the owner thereof.
o This dichotomy between the operation of a public
utility and the ownership of the facilities used to
serve the public can be very well appreciated when
we consider the transportation industry.
Enfranchised airline and shipping companies may
lease their aircraft and vessels instead of owning
them themselves
o a mere owner and lessor of the facilities used by a
public utility is not a public utility
o Neither are owners of tank, refrigerator, wine,
poultry and beer cars who supply cars under
contract to railroad companies considered as public
utilities
 A Corporation is NOT subject to the 60-40 rule if it
will just own the equipment or properties that will
be used by another entity which shall operate as
public utility
[TATAD v GARCIA]
 In 1989, the government planned to build a railway
transit line along EDSA. No bidding was made but
certain corporations were invited to prequalify. The
only corporation to qualify was the EDSA LRT
Consortium which was obviously formed for this
particular undertaking. An agreement was then made
between the government, through the Department of
Transportation and Communication (DOTC), and
EDSA LRT Consortium. The agreement was based on
the Build-Operate-Transfer scheme provided for by
law (RA 6957, amended by RA 7718). Under the
agreement, EDSA LRT Consortium shall build the
facilities, i.e., railways, and shall supply the train cabs.
Every phase that is completed shall be turned over to
the DOTC and the latter shall pay rent for the same for
25 years. By the end of 25 years, it was projected that
the government shall have fully paid EDSA LRT
Consortium. Thereafter, EDSA LRT Consortium shall
sell the facilities to the government for $1.00.
 However, Senators Francisco Tatad, John Osmeña,
and Rodolfo Biazon opposed the implementation of
said agreement as they averred that EDSA LRT
Consortium is a foreign corporation as it was organized
under Hongkong laws; that as such, it cannot own a
public utility such as the EDSA railway transit because
this falls under the nationalized areas of activities. The
BESARIO, DE GRANO, DUMLAO, MARAÑON|2018
petition was filed against Jesus Garcia, Jr. in his
capacity as DOTC Secretary.
 ISSUE: Whether or not the petition shall prosper.
 HELD: No. The Supreme Court made a clarification.
The SC ruled that EDSA LRT Consortium, under the
agreement, does not and will not become the owner of
a public utility hence, the question of its nationality is
misplaced. It is true that a foreign corporation cannot
own a public utility but in this case what EDSA LRT
Consortium will be owning are the facilities that it will
be building for the EDSA railway project. There is no
prohibition against a foreign corporation to own
facilities used for a public utility. Further, it cannot
be said that EDSA LRT Consortium will be the one
operating the public utility for it will be DOTC that will
operate the railway transit. DOTC will be the one
exacting fees from the people for the use of the railway
and from the proceeds, it shall be paying the rent due
to EDSA LRT Consortium. All that EDSA LRT
Consortium has to do is to build the facilities and
receive rent from the use thereof by the government
for 25 years – it will not operate the railway transit.
Although EDSA LRT Consortium is a corporation
formed for the purpose of building a public utility it does
not automatically mean that it is operating a public
utility. The moment for determining the requisite
Filipino nationality is when the entity applies for a
franchise, certificate or any other form of authorization
for that purpose.
[KILOSBAYAN INC v GUINGONA]
 PGMC (PH Gaming Management Corp) entered into a
Contract of Lease with PCSO prescribed under
PCSO’s charter. PGMC obliged itself to build at its own
expense all the facilities necessary to operate and
maintain a nationwide online lottery system form whom
PCSO was to lease the facilities and operate the same.
Court found out that PGMC’s participation was not
confined to construction and setting up but spilled over
to the actual operation, becoming indispensable to the
continuance of the highly technical and sophisticated
lottery system. Is PGMC required to meet the 60-40
rule?
 YES. It involves not only the ownership of the facilities
that will be used in the operation. PCSO leased out its
franchise to PGMC that actually operated and
managed the same. What was entered into was a
collaboration or joint venture agreement whereby
operation of the business will be taken by the PGMC
DEFINITE TERM
 50 yrs at any given time. However, the appropriate
government agency may extend the franchise
 As there is a relation between the first and second
paragraphs of said section 15, the two provisions must
be read and interpreted together. That is to say, in
issuing a certificate, the Commission must necessarily
be satisfied that the operation of the service under said
certificate during a definite period fixed therein "will
NOTES & DIGESTS IN
TRANSPORTATION LAW
promote the public interests in a proper and suitable
manner." Under section 16 (a) of Commonwealth Act.
No. 146 which is a complement of section 15, the
Commission is empowered to issue certificates of
public convenience whenever it "finds that the
operation of the public service proposed and the
authorization to do business will promote the public
interests in a proper and suitable manner." Inasmuch
as the period to be fixed by the Commission under
section 15 is inseparable from the certificate itself, said
period cannot be disregarded by the Commission in
determining the question whether the issuance of the
certificate will promote the public interests in a proper
and suitable manner. Conversely, in determining "a
definite period of time," the Commission will be guided
by "public interests," the only limitation to its power
being that said period shall not exceed fifty years (sec.
16 (a), Commonwealth Act No. 146; Constitution, Art.
XIII, sec. 8.) We have already ruled that "public
interest" furnishes a sufficient standard.
 Section 8 of Article XIII of the Constitution provides,
among other things, that no franchise, certificate, or
any other form of authorization for the operation of a
public utility shall be "for a longer period than fifty
years," and when it was ordained, in section 15 of
Commonwealth Act No. 146, as amended by
Commonwealth Act No. 454, that the Public Service
Commission may prescribed as a condition for the
issuance of a certificate that it "shall be valid only for a
definite period of time" and, in section 16 (a) that "no
such certificates shall be issued for a period of more
than fifty years," the National Assembly meant to give
effect to the aforesaid constitutional mandate. More
than this, it has thereby also declared its will that the
period to be fixed by the Public Service Commission
shall not be longer than fifty years. All that has been
delegated to the Commission, therefore, is the
administrative function, involving the use discretion, to
carry out the will of the National Assembly having in
view, in addition, the promotion of "public interests in a
proper and suitable manner." The fact that the National
Assembly may itself exercise the function and authority
thus conferred upon the Public Service Commission
does not make the provision in question
constitutionally objectionable.
NON-EXCLUSIVITY
 Franchise CANNOT be exclusive
 Sec 47 of PD 198 was declared null and void because
it made the franchise of water exclusive
o “no franchise shall be granted to any other person
or agency for domestic, industrial or commercial
water service within the district or any portion
thereof UNLESS and EXCEPT to the extent that the
board of directors of said district consents thereto
by resolution duly adopted, such resolution,
however shall be subject to review by the
Administration”
 Plain words do not require explanation. The 1935,
1973 and 1987 Constitutions are clear -- franchises for
the operation of a public utility cannot be exclusive in
BESARIO, DE GRANO, DUMLAO, MARAÑON|2018
character. The 1935, 1973 and 1987 Constitutions
expressly and clearly state that, "nor shall such
franchise x x x be exclusive in character." There is
no exception.
 the President, Congress and the Court cannot create
directly franchises that are exclusive in character.
What the President, Congress and the Court cannot
legally do directly they cannot do indirectly. Thus, the
President, Congress and the Court cannot create
indirectly franchises that are exclusive in character by
allowing the Board of Directors (BOD) of a water
district and the Local Water Utilities Administration
(LWUA) to create franchises that are exclusive in
character.
 Police power does not include the power to violate the
Constitution. Police power is the plenary power vested
in Congress to make laws not repugnant to the
Constitution. This rule is basic.
SUBJECT TO MODIFICATION OR AMENDMENT
 A franchise or right shall be granted only under the
condition that it shall be subject to amendment,
alteration or repeal by the Congress when the common
good so requires
 [ABS CBN BROADCASTING CORP v PH
MUTIMEDIA SYSTEM INC ET AL] SC sustained the
validity of the “Must Carry Rule” imposed on
operator of cable and satellite television by the NTC
under which these operators are required to carry local
channels
o No infringement of the intellectual property rights of
the petitioner and other local channels because
what happens is a retransmission and NOT
rebroadcasting of shows.
o ABS CBN creates and transmits its own signals;
respondent PMSI merely carries such signals that
the viewers receive in its unaltered form
o PMSI does NOT produce, select or determine the
programs to be shown in petitioner’s channels
o Must carry rule as well as the legislative franchises
granted to both are in consonance with state
policies in the COnsti (Secs. 9, 17, 24 of Art II of
COnsti) ALSO THE AMENDMENT OF
FRANCHISES FOR THE COMMON GOOD
 [TELECOM v BROADCAST ATTYS. OF THE PH INC
v COMELEC] franchise is a mere privilege that may be
reasonably burdened with some form of public service
o All broadcasting, whether by radio or by television
stations, is licensed by the government. Airwave
frequencies have to be allocated as there are more
individuals who want to broadcast than there are
frequencies to assign. A franchise is thus a
privilege subject, among other things, to
amendment by Congress in accordance with the
constitutional provision that any such franchise or
right granted . . . shall be subject to amendment,
alteration or repeal by the Congress when the
common good so requires
o What better measure can be conceived for the
common good than one for free air time for the
benefit not only of candidates but even more of
NOTES & DIGESTS IN
TRANSPORTATION LAW
the public, particularly the voters, so that they
will be fully informed of the issues in an
election? [I]t is the right of the viewers and
listeners, not the right of the broadcasters,
which is paramount.
o Nor indeed can there be any constitutional
objection to the requirement that broadcast
stations give free air time. Even in the United
States, there are responsible scholars who believe
that government controls on broadcast media can
constitutionally be instituted to ensure diversity of
views and attention to public affairs to further the
system of free expression. For this purpose,
broadcast stations may be required to give free air
time to candidates in an election
o radio and television broadcasting companies,
which are given franchises, do not own the
airwaves and frequencies through which they
transmit broadcast signals and images. They
are merely given the temporary privilege of
using them. Since a franchise is a mere
privilege, the exercise of the privilege may
reasonably be burdened with the performance
by the grantee of some form of public service.
TAKE-OVER OF PUBLIC UTILITIES
 take-over by the Govt may be temporary or permanent
 PERMANENT TAKEOVER – when the public utilities
are expropriated subject to payment of just
compensation (in the interest of national welfare or
defense)
 TEMPORARY TAKEOVER – in times of national
emergencies
o When the public interest so requires, the State may
during the emergency and under reasonable terms
prescribed by it, temporarily take over or direct the
operation of any privately owned public utility or
business affected with public interest.
 [PROF RANDOLF S DAVID ET AL v GLORIA
MACAPAGAL ARROYO]
o Considering that Section 17 of Article XII and
Section 23 of Article VI, previously quoted, relate to
national emergencies, they must be read together
to determine the limitation of the exercise of
emergency powers.
o Generally, Congress is the repository of
emergency powers. This is evident in the tenor of
Section 23 (2), Article VI authorizing it to delegate
such powers to the President. Certainly, a body
cannot delegate a power not reposed upon
it. However, knowing that during grave
emergencies, it may not be possible or practicable
for Congress to meet and exercise its powers, the
Framers of our Constitution deemed it wise to allow
Congress to grant emergency powers to the
President, subject to certain conditions, thus:
 (1) There must be a war or other emergency.
 (2) The delegation must be for a limited
period only.
 (3) The delegation must be subject to such
restrictions as the Congress may prescribe.
BESARIO, DE GRANO, DUMLAO, MARAÑON|2018
 (4) The emergency powers must be exercised
to carry out a national policydeclared by
Congress.
o Section 17, Article XII must be understood as an
aspect of the emergency powers clause. The
taking over of private business affected with public
interest is just another facet of the emergency
powers generally reposed upon Congress.
o “EMERGENCY” - Emergency, as a generic term,
connotes the existence of conditions suddenly
intensifying the degree of existing danger to life or
well-being beyond that which is accepted as
normal. Implicit in this definitions are the elements
of intensity, variety, and perception. Emergencies,
as perceived by legislature or executive in the
United Sates since 1933, have been occasioned by
a wide range of situations, classifiable under three
(3) principal heads: a) economic, b) natural
disaster, and c) national security.
 Emergency, as contemplated in our
Constitution, is of the same breadth. It may
include rebellion, economic crisis, pestilence or
epidemic, typhoon, flood, or other similar
catastrophe of nationwide proportions or effect
 It may be argued that when there is national
emergency, Congress may not be able to
convene and, therefore, unable to delegate to
the President the power to take over privately-
owned public utility or business affected with
public interest.
o while the President alone can declare a state of
national emergency, however, without legislation,
he has no power to take over privately-owned
public utility or business affected with public
interest. The President cannot decide whether
exceptional circumstances exist warranting the
take over of privately-owned public utility or
business affected with public interest. Nor can he
determine when such exceptional circumstances
have ceased. Likewise, without legislation, the
President has no power to point out the types of
businesses affected with public interest that should
be taken over. In short, the President has no
absolute authority to exercise all the powers of the
State under Section 17, Article VII in the absence
of an emergency powers act passed by Congress.
MONOPOLIES AND UNFAIR COMPETITION
 State shall regulate or prohibit monopolies when the
public interest so requires. Combinations in restraint or
trade or unfair competition are NOT allowed
 HOWEVER, in [OROPORT CARGOHANDLING
SERVICES INC v PHIVIDEC INDUSTRIAL
AUTHORITY] court ruled that the law authorizing
Philippine Ports Authority to “take over arrastre
and stevedoring services in government-owned
ports and cancel permits issued to private
operators is a valid exercise of police power; it
does not violate due process of law as the exercise
of police power is paramount over the right against
non-impairment of contracts. Moreover, a
NOTES & DIGESTS IN
TRANSPORTATION LAW
regulated monopoly is not proscribed in industries
affected with public interest such as in port
rendition of arrastre/stevedoring services in
Philippine ports
o Private monopolies are NOT necessarily prohibited
by the COnsti
o Certain public utilities must be given franchises that
do not violate the law against monopolies
o there is no unfair competition as PIA
 (1) is not a competitor of Oroport;
 (2) imposes the same tariff rates as Oroport; and
 (3) is operating in an entirely separate and
distinct port.
 [PH LONG DISTANCE TELEPHONE COMPANY v
NTC] interconnection that was required was a valid
form of intervention with property rights dictated by the
objective of the got to promote rapid expansion of
telecommunications services in all areas of the PH, to
maximize the use of telecom facilities available, in
recognition of the vital role of communications in nation
building and to ensure that all other users of the public
telecom service have access to all other users of the
service have access to all other users of the service
wherever they may be within the PH at an acceptable
service at a reasonable cost.
o The NTC as the regulatory agency of the State,
merely exercised its delegated authority to
regulate the use of telecom networks when it
decreed interconnection
o The decisive consideration are: PUBLIC NEED,
PUBLIC INTEREST, AND COMMON GOOD
o Despite the fact that there is a virtual monopoly of
the telephone system in the country at present.
service is sadly inadequate. Customer demands
are hardly met, whether fixed or mobile. There is a
unanimous cry to hasten the development of a
modern, efficient, satisfactory and continuous
telecommunications service not only in Metro
Manila but throughout the archipelago. The need
therefor was dramatically emphasized by the
destructive earthquake of 16 July 1990. It may be
that users of the cellular mobile telephone would
initially be limited to a few and to highly
commercialized areas. However, it is a step in the
right direction towards the enhancement of the
telecommunications infrastructure, the expansion
of telecommunications services in, hopefully, all
areas of the country, with chances of complete
disruption of communications minimized. It will thus
impact on, the total development of the country's
telecommunications systems and redound to the
benefit of even those who may not be able to
subscribe to ETCI.
o Free competition in the industry may also provide
the answer to a much-desired improvement in the
quality and delivery of this type of public utility, to
improved technology, fast and handy mobile
service, and reduced user dissatisfaction. After all,
neither PLDT nor any other public utility has a
constitutional right to a monopoly position in view of
BESARIO, DE GRANO, DUMLAO, MARAÑON|2018
the Constitutional proscription that no franchise
certificate or authorization shall be exclusive in
character or shall last longer than fifty (50) years
(ibid., Section 11; Article XIV Section 5, 1973
Constitution; Article XIV, Section 8, 1935
Constitution). Additionally, the State is empowered
to decide whether public interest demands that
monopolies be regulated or prohibited (1987
Constitution. Article XII, Section 19).
REGULATION OF RATES
 In line with the policy of the STAte to protect the public
against arbitrary and excessive rates while maintaining
the efficiency and quality of services rendered
 Sec. 16 (c) PSA - (c) To fix and determine individual
or joint rates, toll, charges, classifications, or
schedules thereof, as well as commutation, mileage,
kilometrage, and other special rates which shall be
imposed, observed, and followed thereafter by any
public service: Provided, That the Commission may, in
its discretion, approve rates proposed by public
services provisionally and without necessity of any
hearing; but it shall call a hearing thereon within thirty
days thereafter, upon publication and notice to the
concerns operating in the territory affected: Provided,
further, That in case the public service equipment of an
operator is used principally or secondarily for the
promotion of a private business, the net profits of said
private business shall be considered in relation with the
public service of such operator of the purpose of fixing
the rates.
PUBLIC INTEREST v RETURN OF INVESTMENT
 Power to regulate does NOT give State the power
to prescribe rates that are so low as to deprive the
public utility of a reasonable ROI.
 Rates prescribed must thus be one that yields a fair
return on the public utility upon the value of the
property performing the service and one that is
reasonable to the public for the services rendered. The
fixing of a just and reasonable rates involves
Balancing of the investor and the consumer
interests
POLICE POWER
 State in the exercise of Police power can regulate rates
imposed by a public utility
 Rate regulation includes the granting of a provisional
rate increase, increase of rates or directing the public
utility to refund its over-recoveries based on the
applicable provisions of law. In making such order, the
admin agency is simply performing its mandate to
protect the public interest imbued in those rates
NON-DELEGATION
 Power to fix rates is a power already delegated to the
regulatory admin agencies thus CANNOT BE
FURTHER DELEGATED.
 Public service may propose new rates but it cannot
lawfully make said new rates effective without the
approval of the said rates by the regulatory agency like
PSC, and the regulatory agency itself cannot authorize
a public service to enforce rates without the prior
NOTES & DIGESTS IN
TRANSPORTATION LAW
approval of said rates by the Commission. The
regulatory agency must approve new rates when they
are submitted to it, if the evidence shows them to be
just and reasonable, otherwise it must disapprove
them. Clearly, the commission cannot determine in
advance whether or not the new rates of the Philippine
Railway Co, will be just and reasonable, because it
does not know what those rates will be.
 [KILUSANG MAYO UNO LABOR CENTER v HON.
JESUS GARCIA]
o In the case at bench, the authority given by the
LTFRB to the provincial bus operators to set a
fare range over and above the authorized
existing fare, is illegal and invalid as it is
tantamount to an undue delegation of
legislative authority. Potestas delegata non
delegari potest. What has been delegated cannot
be delegated. This doctrine is based on the ethical
principle that such a delegated power constitutes
not only a right but a duty to be performed by the
delegate through the instrumentality of his own
judgment and not through the intervening mind of
another.10 A further delegation of such power would
indeed constitute a negation of the duty in violation
of the trust reposed in the delegate mandated to
discharge it directly. The policy of allowing the
provincial bus operators to change and increase
their fares at will would result not only to a chaotic
situation but to an anarchic state of affairs. This
would leave the riding public at the mercy of
transport operators who may increase fares every
hour, every day, every month or every year,
whenever it pleases them or whenever they deem
it "necessary" to do so.
o One veritable consequence of the deregulation of
transport fares is a compounded fare. If transport
operators will be authorized to impose and
collect an additional amount equivalent to 20%
over and above the authorized fare over a
period of time, this will unduly prejudice a
commuter who will be made to pay a fare that
has been computed in a manner similar to those
of compounded bank interest rates.
o Given the complexity of the nature of the function of
rate-fixing and its far-reaching effects on millions of
commuters, government must not relinquish this
important function in favor of those who would
benefit and profit from the industry. Neither should
the requisite notice and hearing be done away with.
The people, represented by reputable oppositors,
deserve to be given full opportunity to be heard in
their opposition to any fare increase.
o To do away with such a procedure and allow just
one party, an interested party at that, to determine
what the rate should be, will undermine the right of
the other parties to due process. The purpose of a
hearing is precisely to determine what a just and
reasonable rate is.
[PANAY AUTOBUS CO v PH RAILWAY CO]
BESARIO, DE GRANO, DUMLAO, MARAÑON|2018
 Public Service Commission granted the Phil. Railway
Co. the power to fix its own rates in order to compete
with the rates of road trucks and auto buses. Such
grant is invalid. The Legislature delegated to the PSC
the power of fixing rates of public services but it was
not authorized by law to delegate to Phil. Railway Co.
the power to alter its freight rates whenever it should
find it necessary to do so, because the PSC cannot
determine whether such new rates will be just and
reasonable.
[KILUSANG MAYO UNO LABOR CENTER v HON. JESUS
GARCIA]
 In 1990, DOTC Sec. Oscar Orbos issued Memo
Circular to LTFRB Chair Remedios Fernando to allow
provincial bus to change passenger rates w/in a fare
range of 15% above or below the LTFRB official rate
for a 1yr. period. This is in line with the liberalization of
regulation in the transport sector which the
government intends to implement and to make
progress towards greater reliance on free market
forces. Fernando respectfully called attention of DOTC
Sec. that the Public Service Act requires publication
and notice to concerned parties and public hearing. In
Dec. 1990, Provincial Bus Operators Assoc. of the
Phils. (PBOAP) filed an application for across the
board fare rate increase, which was granted by
LTFRB. In 1992, then DOTC Sec. Garcia issued a
memo to LTFRB suggesting a swift action on adoption
of procedures to implement the Department Order & to
lay down deregulation policies. Pursuant to LTFRB
Guideline, PBOAP, w/o benefit of public hearing
announced a 20% fare rate increase. Petitioner
Kilusang Mayo Uno (KMU) opposed the move and filed
a petition before LTFRB w/c was denied. Hence the
instant petition for certiorari w/ urgent prayer for a TRO,
w/c was readily granted by the Supreme Court.
 ISSUE: Whether the authority granted by LTFB to
provincial buses to set a fare range above existing
authorized fare range is unconstitutional and invalid.
 HELD: The grant of power by LTFRB of its delegated
authority is unconstitutional. The doctrine of Potestas
delegate non delegari (what has been delegated
cannot be delegated) is applicable because a
delegated power constitutes not only a right but a duty
to be performed by the delegate thru instrumentality of
his own judgment. To delegate this power is a negation
of the duty in violation of the trust reposed in the
delegate mandated to discharge such duty. Also, to
give provincial buses the power to charge their fare
rates will result to a chaotic state of affairs ad this
would leave the riding public at the mercy of transport
operators who can increase their rates arbitrarily
whenever it pleases or when they deem it necessary.
DEREGULATION OF DOMESTIC SHIPPING RATES
 EO 213 Nov 28, 1994 – instituted the deregulation of
domestic shipping rates
 MC 153 Dec 16, 1999 by MARINA – further
implements deregulation
 Also in Sec. 8 of RA 9295 May 1994
NOTES & DIGESTS IN
TRANSPORTATION LAW
PROHIBITION AGAINST DISCRIMINATION [US v LUIS
QUINAJON AND EUGENIO QUITORIO]
 The law prohibits any common carrier from making or
giving any unnecessary or unreasonable preference or
advantage to any particular person, company, firm,
corporation or locality, or any particular kind of traffic,
or to subject any particular person, company, firm,
corporation, or locality, or any particular kind of traffic,
to any undue or unreasonable prejudice or
discrimination whatsoever.
 It will be noted that the law requires common carriers
to carry for all persons, either passengers or property,
for exactly the same charge for a like or
contemporaneous service in the transportation of like
kind of traffic under substantially similar circumstances
or conditions. The law prohibits common carriers from
subjecting any person, etc., or locality, or any particular
kind of traffic, to any undue or unreasonable prejudice
or discrimination whatsoever. The law does not require
that the same charge shall be made for the carrying of
passengers or property, unless all the conditions are
alike and contemporaneous. It is not believed that the
law prohibits the charging of a different rate for the
carrying of passengers or property when the actual
cost of handling and transporting the same is different.
it is not believed that the law intended to require
common carriers to carry the same kind of
merchandise, even at the same price, under different
and unlike conditions and where the actual cost is
different.
 Quinajon and Quitorano have been engaged in the
transportation of passengers and merchandise in the
port of Currimao by means of virayes. They charged
and collected from some shippers and merchants, a
certain price for each package of merchandise, loaded
or unloaded, according to a certain schedule.
 They collected 6 centavos for each package, of
whatever kind of merchandise, large or small, heavy or
light, from those merchants only with whom they had a
special contract. From other merchants, with whom
they had not made said special contract, as well as the
Province of Ilocos Norte, they collected a different rate
(10 centavos).
 They were charged with violation of Act. No. 98 of the
Civil Commission which compels common carriers to
render to all persons exactly the same or analogous
service for exactly the same price, to the end that there
may be no unjust advantage or
unreasonablediscrimination.
 The law provides that no common carrier shall directly
or indirectly, by any special rate, rebate, drawback, or
other device, charge, demand collect, or receive from
any person or persons, a greater or less compensation
for any service rendered in the transportation of
passengers or property,between points in the
Philippine Islands, than he charges, demands,
collects, or receives from any other person or persons,
for doing a like or contemporaneous service, under
substantially similar conditions or circumstances.
BESARIO, DE GRANO, DUMLAO, MARAÑON|2018
 The law prohibits any common carrier from making or
giving any unnecessary orunreasonable preference or
advantage to any particular person, company,
firm,corporation or locality, or any particular kind of
traffic, or to subject any particular person, company,
firm, corporation, or locality, or any particular kind of
traffic, to any undue or unreasonable prejudice or
discrimination whatsoever.
 ISSUE: WON Quinajon and Quitorano violated Act No.
98
 HELD: No. The law does not require that the same
charge shall be made for the carrying of passengers or
property, unless all the conditions are alike and
contemporaneous. It is not believed that the law
prohibits the charging of a different rate for the carrying
of passengers or property when the actual cost of
handling and transporting the same is different. It is not
believed that the law intended to require common
carriers to carry the same kind of merchandise, even
at the same price, under different and unlike conditions
and where the actual cost is different.
 A common carrier may enter into special agreements
for handling and transporting merchandise, whereby
advantage may accrue to individuals, when it is made
clearly to appear that by such agreements the common
carrier has only its interests and the legitimate increase
of its profits in view, and when the consideration given
to the individuals for the interest of the common carrier
alone, and when the common carrier gives all shippers
exactly the same rate, under the same conditions.
REASONABLE AND JUST STANDARD IN FIXING RATES
[REPUBLIC v MANILA ELECTRIC CO]
 Reasonable rates for public utilities are the ultimate
object. The extent of judicial interference is protection
against unreasonable rates. The public utility is entitled
to a just compensation and a fair return upon the value
of its property while it is being used by the public.
 ONLY STANDARD – that the rate be reasonable
and just.
o Question of fact calling for the exercise of
discretion, good sense, and a fair, enlightened
and independent judgment. The requirement of
reasonableness comprehends such rates which
must not be so low as to be confiscatory, or too high
as to be oppressive. In determining whether a rate
is confiscatory, it is essential also to consider the
given situation, requirements and opportunities of
the utility
o Fair return upon the value of the property to
public utility
o goal of rate-making is to arrive at a just and
reasonable rate for both the public utility and the
public which avails of the formers products and
services. However, what is a just and reasonable
rate cannot be fixed by any immutable method or
formula. Hence, it has been held that no public
utility has a vested right to any particular method of
valuation. Accordingly, with respect to a
determination of the proper method to be used in
NOTES & DIGESTS IN
TRANSPORTATION LAW
the valuation of property and equipment used by a
public utility for rate-making purposes, the
administrative agency is not bound to apply any one
particular formula or method simply because the
same method has been previously used and
applied.
o Founded upon condition which are fair and
reasonable both to the owner and the public
o Public utility must prove its allegations that the rates
prescribed are unjust or confiscatory as to deprive
its stockholders a reasonable ROI
o [YNCHAUSTI SS CO v PUBLIC UTILITY
COMMISSIONER] there is a presumption that the
rates fixed by an admin agency are reasonable
and must be conceded that the fixing of rates of
the Govt, through its authorized agents,
involves the exercise of reasonable discretion
and UNLESS there is abuse of that discretion,
the courts will not interfere.
OPERATING EXPENSES [REPUBLIC v MANILA
ELECTRIC CO]
 Included in the determination of a just and reasonable
rate
 operating expenses should be a requisite of or
necessary in the operation of a utility, recurring, and
that it redounds to the service or benefit of customers.
 The principle behind the inclusion of operating
expenses in the determination of a just and reasonable
rate is to allow the public utility to recoup the
reasonable amount of expenses it has incurred in
connection with the services it provides. It does not
give the public utility the license to indiscriminately
charge any and all types of expenses incurred without
regard to the nature thereof, i.e., whether or not the
expense is attributable to the production of services by
the public utility. To charge consumers for expenses
incurred by a public utility which are not related to the
service or benefit derived by the customers from the
public utility is unjustified and inequitable.
 In determining whether or not a rate yields a fair return
to the utility, the operating expenses of the utility must
be considered. The return allowed to a public utility in
accordance with the prescribed rate must be sufficient
to provide for the payment of such reasonable
operating expenses incurred by the public utility in the
provision of its services to the public. Thus, the public
utility is allowed a return on capital over and above
operating expenses. However, only such expenses
and in such amounts as are reasonable for the efficient
operation of the utility should be allowed for
determination of the rates to be charged by a public
utility.
 INCOME TAX NOT INCLUDED
o Inconsistent with the nature of operating expenses
o operating expenses are those which are
reasonably incurred in connection with business
operations to yield revenue or income. They are
items of expenses which contribute or are
attributable to the production of income or revenue
BESARIO, DE GRANO, DUMLAO, MARAÑON|2018
o Income tax, it should be stressed, is imposed on an
individual or entity as a form of excise tax or a tax
on the privilege of earning income. The burden of
paying income tax should be Meralcos alone and
should not be shifted to the consumers by including
the same in the computation of its operating
expenses.
FIXING RATES FOR ELECTRIC COMPANIES [REPUBLIC
v MANILA ELECTRIC CO]
 three major factors are considered by the
regulating agency: a) rate of return; b) rate base
and c) the return itself or the computed revenue to
be earned by the public utility based on the rate of
return and rate base. The rate of return is a judgment
percentage which, if multiplied with the rate base,
provides a fair return on the public utility for the use of
its property for service to the public. The rate of return
of a public utility is not prescribed by statute but by
administrative and judicial pronouncements.
 This Court has consistently adopted a 12% rate of
return for public utilities. The rate base, on the other
hand, is an evaluation of the property devoted by the
utility to the public service or the value of invested
capital or property which the utility is entitled to a return
 ERC JURISDICTION – original and exclusive
jurisdiction under Rule 43 (u) of EPIRA over all cases
contesting rates, fees, fines, and penalties imposed by
the ERC in the exercise of its powers, functions and
responsibilities, and over all cases involving disputes
between and among participants or players in the
energy sector
LTFRB
 Fare rates determination is one of the major functions
of the Board to avoid cut-throat competition and to
insure that the public safety and comfort are not
sacrificed.
 Factors to be considered: price of gasoline, spare
parts, boundary, and other operating expenses
 Balance between affordability of the riding public
and the viability of the operator without detriment
to public safety
 TWO METHODS IN RATE DETERMINATION
o Add-on method- adding the established minimum
fare to the fare per succeeding km multiplied by the
distance travelled in excess of 4 km and 5 km
respectively
o Straight computation method – actual distance
travelled is multiplied by the authorized fare per
succeeding km
PROVISIONAL INCREASE
 Admin agency may approve provisionally When
demanded by urgent public need, rates of public
utilities without a hearing.
 RATIO: only temporary and subject to adjustment in
conformity with the definitive rates approved after final
hearing
PROVISIONAL RATE INCREASE UNDER EPIRA
 1. Publication of the application itself, not merely the
notice of hearing issued by ERC, in a newspaper of
NOTES & DIGESTS IN
TRANSPORTATION LAW
general circulation in the locality where the applicant
operates
 2. Need for the ERC to consider the comments or
pleadings of the customers and LGU concerned in its
action on the application or motion for provisional rate
adjustment
 UNDER SECTION 4(e) RULE 3 OF IRR OF EPIRA
o (1) The applicant must file with the ERC a verified
application/petition for rate adjustment. It must
indicate that a copy thereof was received by the
legislative body of the LGU concerned. It must also
include a certification of the notice of publication
thereof in a newspaper of general circulation in the
same locality.
o (2) Within 30 days from receipt of the
application/petition or the publication thereof, any
consumer affected by the proposed rate adjustment
or the LGU concerned may file its comment on the
application/petition, as well as on the motion for
provisional rate adjustment.
o (3) If such comment is filed, the ERC must consider
it in its action on the motion for provisional rate
adjustment, together with the documents submitted
by the applicant in support of its application/petition.
If no such comment is filed within the 30-day period,
then and only then may the ERC resolve the motion
for provisional rate adjustment on the basis of the
documents submitted by the applicant.
o (4) However, the ERC need not conduct a hearing
on the motion for provisional rate adjustment. It is
sufficient that it consider the written comment, if
there is any.
o (5) The ERC must resolve the motion for provisional
rate adjustment within 75 days from the filing of the
application/petition.
o (6) Thereafter, the ERC must conduct a full-blown
hearing on the application/petition not later than 30
days from the date of issuance of the provisional
order and must resolve the application/petition not
later than 12 months from the issuance of the
provisional order. Effectively, this provision limits
the lifetime of the provisional order to only 12
months.
COLLECTION
 After the proper regulatory body approves the rate of
the public utility, the public utility is obligated to collect
only the rates agreed upon. Overcharging is prohibited
 The public utility may be required to refund the amount
that is in excess of the approved rates
 In some cases, the public utility may even be required
to refund certain amounts even if the rate was
previously apprived if the approval is against the
COnsti precepts or statutory rules. The court may
declare null and void the approval that was already
made by theses govt agencies
 Carriers in Land Transport. Part of the condition of
issuance of Certificate of Public Convenience to a PUV
is that is shall charge the passenger and freight rates
only as authorized by the Board. The PUV operator
BESARIO, DE GRANO, DUMLAO, MARAÑON|2018
shall post a copy of the Fare Matrix in a conspicuous
place at his/her office, terminal, or waiting stations and
in the interior of each motor vehicle which is in actual
service
o Taxi – operators thereof must make sure that their
meters accurately reflect the correct fare. All taxi
meters with receipt shall be presented to the Board
2x a yr for testing and sealing
 Electric Distribution Companies
o Meters must be accurate
o [MANILA ELECTRIC COMPANY v MACRO
TEXTILE MILLS CORP] cannot sanction a situation
wherein the defects in the electric meter are
allowed to continue indefinitely until suddenly
the public utilities demand payment for the
unrecorded electricity utilized when they could have
remedied the situation immediately. MERALCOs
failure to do so may encourage neglect of public
utilities to the detriment of the consuming public.
 Imperative duty to make a reasonable and
proper inspection of its apparatus and
equipment to ensure that they do not
malfunction, and the due diligence to discover
and repair the defects therein. Failure to perform
such duties = negligence = utilities run the risk
of forfeiting amounts originally due from their
customers
o The electric company can disconnect the service if
the failure of electric meter to reflect the correct
usage was due to the malicious act of the customer.
But electric company must follow procedure
prescribed by law and appropriate govt agency i.e.
ERB
[QUISUMBING v MANILA ELECTRIC COMPANY] the
action of the defendant in maliciously disconnecting the
electric service constitutes a breach of public policy. For
public utilities, broad as their powers are, have a clear duty
to see to it that they do not violate nor transgress the rights
of the consumers. Any act on their part that militates against
the ordinary norms of justice and fair play is considered an
infraction that gives rise to an action for damages.
AUTHORITY TO OPERATE AS PUBLIC UTILITY
 The power to authorize and control the operation of
a public utility is admittedly a prerogative of the
legislature, since Congress is that branch of
government vested with plenary powers of
legislation.
 The franchise is a legislative grant; it binds the
public, and is, directly or indirectly, the act of the
state.
 It is up to Congress whether it will delegate the
power to authorize the operation of public utilities.
Philippine Airlines v. CAB
o There is a constantly growing tendency towards the
delegation of greater powers by the legislature, and
towards the approval of the practice by the courts.
NOTES & DIGESTS IN
TRANSPORTATION LAW
FRANCHISE AND CERTIFICATE OF PUBLIC
CONVENIENCE
Radio Communication of the Philippines, Inc. v. NTC
o Legislative franchise was distinguished from a CPC
o LEGISLATIVE FRANCHISE – grant or privilege
from the sovereign power
- Started out as a royal privilege
- Being merely a privilege emanating from the
sovereign power of the state and owing its
existence to a grant, is subject to regulation by
the state itself by virtue of its police power
through its administrative agencies.
o CPC – form of regulation through the administrative
agencies
 To be valid, the delegation itself must be
circumscribed by legislative restrictions, not a
‘roving commission’ that will give the delegate
unlimited legislative authority. Otherwise, the
delegation is in legal effect an abdication of
legislative authority, a total surrender by the
legislature of its prerogatives in favor of the
delegate.
 Privileges conferred by grant by administrative
agencies as agents for the state constitute as much
a legislative franchise as though the grant had been
made by an act of the Legislature.
Albano v. Reyes
o Wharf or a dock as contemplated under the PSA is
a public utility.
o Even if the Manila International Container Port may
be considered a public utility, or a public service, its
operation would not necessarily call for a franchise
from the Legislative Branch. Franchises issued by
Congress are not required before each and every
public utility may operate. The law has granted
certain administrative agencies the power to grant
licenses for or to authorize the operation of certain
public utilities.
 SC cautioned that although the trend is not to
require a legislative franchise, the call to dispense
with the requisite legislative franchise must,
however, be addressed to Congress as the
lawmaker of the land for the Court’s function is to
interpret and not to rewrite the law.
WHEN LEGISLATIVE FRANCHISE IS NECESSARY
 Even if there was already a delegation of authority
to a specific administrative agency to issue CPC, it
does not follow that a legislative franchise is no
longer necessary. It would still depend of the
enabling law.
 The law creating or authorizing the
administrative body may still require a
legislative franchise. However, A CPC is
not necessary for the issuance of a
legislative franchise. Example: Section 27
BESARIO, DE GRANO, DUMLAO, MARAÑON|2018
of EPIRA law provides that the power to
grant franchises to persons engaged in the
transmission and distribution of electricity
shall be vested exclusively in the Congress
of the PH.
 Requirement is not only a legislative
franchise but also a license or a CPC from
a government agency.
Associated Communications & Wireless
Services – legislative franchise is necessary
before a CPC can be issued to operate
radio and television broadcasting
companies.
 Divinagracia v. Consolidated Broadcasting
System, Inc. – there is a dual
franchise/license CPC requirement with
respect to broadcast media.
 Collateral attack on a legislative franchise is not
allowed.
 More properly the subject of a quo warranto, the
right to assert which, as a rule, belongs to the State
upon complaint or otherwise, the reason being that
the abuse of franchise is a public wrong and not a
private injury.
CERTIFICATE OF PUBLIC CONVENIENCE AND
NECESSITY
 CPCN requires prior issuance of municipal franchise
while CPC does not.
 Rule on CPCN as contemplated under Section 16
(b) is now obsolete.
 Hence, cities and municipalities no longer issue
CPCNs contemplated under the PSA.
DELEGATION TO LGUs.
 Cities and municipalities are likewise given
delegated authorities to grant franchise to certain
public utilities including franchise of tricycle
operators, ferries and wharves.
 Thus, the LGC provides that the Sanggunian Bayan
is empowered to:
 Subject to guidelines by DOTC, regulate
operation of tricycles and grant franchises
thereof within the territorial jurisdiction of the
municipality.
 Approval by a majority vote of all the
members of SB, grant a franchise to any
person, partnership … to establish,
construct … ferries, wharves, markets or
slaughterhouses, or such other similar
activities within the municipality. Provided,
that cooperatives shall be given preference
in the grant of such franchise.
 The power granted to cities and municipalities is
specific.
 While a public market is a public service or utility, it
is not one that falls under the jurisdiction of the PSC,
NOTES & DIGESTS IN
TRANSPORTATION LAW
not being ejusdem generis with those public
services enumerated in Section 13(b) of the PSA
over which the PSC has jurisdiction.
 Thus, LGUs can fix the fees for the use of its public
markets without the approval of any administrative
regulatory agency.
BASIC RULES ON ISSUANCE OF CPC UNDER THE
PSA
Section 15 summary
 No public service shall operate in the PH without
possessing a CPC and CPCN
 Commission may prescribe as a condition for
the issuance of CPC or CPCN
1. Service can be acquired by the RP or any
instrumentality thereof upon payment of the
cost price of its useful equipment, less
reasonable depreciation.
2. Valid only for a definite period of time.
3. Violation of these conditions will produce
the immediate cancellation of the certificate.
 In estimating depreciation, the ff. shall be taken
into consideration:
1. Effect of use of the equipment
2. Actual condition
3. Age of the model
4. Other circumstances affecting its value
 Applicable to any extension or amendment of
certificates actually in force and to those which
may hereafter be issued
1. To permit to modify itineraries and time
schedules of public services
2. Renew and increase equipment and
properties.
Section 16 summary
 The commission shall have power, upon
proper notice and hearing:
1. Issue CPC and CPCN – granted only to
citizens of the PH or of the US or
corporations, etc. constituted under the
laws of the PH; 60% of the stock belong
entirely to citizens of PH or US. No such
certificates shall be issued for a period
of more than 50 years.
2. Approve subject to constitutional
limitations… properly conserve the
public interests, impose such conditions
as to construction, equipment,
maintenance, etc.
BASIC REQUIREMENTS
 Above rules are now modified by the Constitution.
 CPC still requires concurrence of the following
requisites
1. Filipino citizen; 60% of stock belong entirely to
Filipino citizens.
2. Financially capable of undertaking the proposed
service and meeting the responsibilities incident
to its operations
BESARIO, DE GRANO, DUMLAO, MARAÑON|2018
3. Prove that the operation of the public service
proposed and the authorization to do business
will promote public interest in a proper and
suitable manner.
 Regulatory agency’s authority is broad in its scope
as to factual matters.
 The fact that the applicant-operator had no
corporate existence on the day the franchise was
granted in its name does not render the franchise
invalid, because later applicant obtained its
certificate of incorporation and then accepted the
franchise in accordance with the terms and
conditions thereof. Rizal Light & Ice Cp., Inc. v.
Municipality of Morong Rizal
PUBLIC INTEREST IS OVERRIDING PRINCIPLE
 Overriding principle: public interest, necessity and
convenience.
 Something fitting or suited to the public need
 Public convenience and necessity exists when the
proposed facility or service meets a reasonable want
of the public and supply a need that the existing
facilities do not adequately supply.
 Question of fact; must be established by evidence in
a public hearing conducted for that purpose.
OTHER RULES AND POLICIES
PRIOR OPERATOR RULE
- The regulating agency protects the first
licensee’s investment and will not be subjected
to ruinous competition.
- PSC will not issue a CPC to a second operator
if there is a first operator who is rendering
sufficient, adequate and satisfactory service,
and who in all things and respects is complying
with the rules and regulations of the
Commission.
THIRD OPERATOR RULE
- Variation of the prior operator rule
- Instead of one prior operator, there are two prior
operators who are rendering sufficient service.
- Where two operators are more than serving the
public there is no reason to permit a third
operator to engage in competition with them.
PROTECTION OF INVESTMENT RULE
- Law aims not only to protect the public but the
operators as well.
- It is the duty of the government to protect the
investment of the operators of public utilities.
- It is the duty of the government to protect said
operators from unfair, unjustified and ruinous
competition.
PRIOR APPLICANT RULE
- Priority in the filing of the CPC is, other
conditions being equal, an important factor in
determining the rights if the public service
companies.
NOTES & DIGESTS IN
TRANSPORTATION LAW
 Prior operator rule is not absolute, for nobody has
exclusive right to secure a franchise or a CPC. To
apply the rule unqualifiedly is to encourage violation
or disregard of the terms and conditions of the
certificate.
 Paramount consideration should always be the
public interest and public convenience.
 Duty of regulatory agency is to protect investment of
a public utility operator refers only to operators of
good standing.
 The prior operator rule requires for its application
that the old operator offers to meet the increase in
the demand the moment it arises and not when
another operator, even a new one, had made the
offer to serve the public needs.
Section 2. Declaration of Policy.— It is hereby
declared the policy of the Government of the
Philippines to:
(a) Develop and maintain a Philippine
Metropolitan Marine composed of well-
equipped, safe and modern vessels most
suited for, Philippine requirements and
conditions, manned by qualified Filipino
officers and crew, and owned and operated
under the Philippine flag by citizens of the
Philippines or by associations or corporations
organized under the laws of the Philippines,
at least sixty percent (60%) of the capital of
which is owned by citizens of the Philippines;
(b) Assist in the development, recovery and
expansion of Philippine overseas shipping
capable of meeting the requirements of the
expanding international trade of the
Philippines;
(c) Provide assistance to Philippine Shipping
enterprises and encourage the long range
vessel acquisition development
modernization and expansion through private
investments without direct government
financial assistance; and
(d) Create a Healthy climate to attract private
enterprises.
FREE COMPETITION
 Monopoly is eschewed and the aim to deliver
adequate service to serve the public takes
precedence.
NATURE OF CPC
 Insofar as the State is considered a CPC constitutes
neither a franchises nor a contract, confers no
property right, and is a mere license of privilege.
BESARIO, DE GRANO, DUMLAO, MARAÑON|2018
 Common carrier does nor acquire a property right in
the route covered thereby. No vested right will be
affected if the government decides to re-route the
traffic thereby changing the route of the carrier.
 Does not confer upon the holder any proprietary
right or interest or franchise in the public highways.
 New and additional burdens, alteration of the
certificate and even revocation thereof are reserved
to the State.
 In a broad sense, may also be considered property:
“a CPC can be sold by the holder thereof because it
has considerable material value and is considered
as a valuable asset.”
- State: no proprietary right; other persons and
other public utilities, a CPC may be considered
a property which cannot be taken without due
process of law.
IMPOSITION OF TERMS AND CONDITIONS
 PSC and successor agencies has the power to
specify and define the terms and conditions upon
which the public utility shall be operated, and to
make reasonable rules and regulations for its
operation and the compensation, and for any failure
to comply with rules or the violation, the Commission
has ample power to enforce the provisions of the
license or even revoke it.
PROVISIONAL AUTHORITY
 Certain public utilities may be allowed to operate
pending the issuance of a CPC by acquiring a
provisional authority.
 DEFINITION: refers to an authority given to an entity
qualified to operate a public utility for a limited period
during the pendency of its application for, or before
the issuance of its Certificate of Public Convenience
(CPC). It has a general scope because it is akin to a
provisional CPC in that it gives a public utility
provider power to operate as such and be bound by
the laws and rules governing public utilities, pending
the issuance of its actual CPC.
 PU granted a PA is already allowed to operate.
 Lifetime of the PA is limited and may be revoked by
the agency at any time in accordance with law and
subject to the final action on the main application for
a CPC.
 PA is a temporary authority to operate pending the
issuance of a CPC.
 See page 769 (b) for examples of PA.
DISTINGUISHED FROM TEMPORARY PERMITS
 A PA is not the equivalent of a temporary permit.
 DEFINITION OF TP: a document containing the call
sign, authorized power, frequency/channel, class
station, hours of operation, points of communication
and equipment particulars granted to an authorized
public utility. Its scope is more specific than a P.A.
because it contains details and specifications under
NOTES & DIGESTS IN
TRANSPORTATION LAW
which a public utility…should operate…pursuant to
a previously updated P.A.
 The operational validity of a TP flows only from a
previously updated PA.
 There should be an effective PA before a TP is
issued.
INSTANCES WHEN CPC IS NOT REQUIRED
Section 14. The following are exempted from
the provisions of the preceding section:
(a) Warehouses;
(b) Vehicles drawn by animals and bancas
moved by oar or sail, and tugboats and
lighters;
(c) Airships within the Philippines except as
regards the fixing of their maximum rates on
freight and passengers;
(d) Radio companies except with respect to
the fixing of rates;
(e) Public services owned or operated by any
instrumentality of the National Government or
by any government-owned or controlled
corporation, except with respect to the fixing
of rates. (As amended by Com. Act 454, RA
No. 2031, and RA No. 2677)
 Airlines are now under the CAB (economic aspect),
CAAP (regulates civil aviation).
 Radio companies are under the NTC.
TRANSFER OF CERTIFICATE
 The applicable state may deny or grant to the
operator the right to transfer a franchise.
(g) To sell, alienate, mortgage, encumber or
lease its property, franchises, certificates,
privileges, or rights or any part thereof; or merge
or consolidate its property, franchises privileges
or rights, or any part thereof, with those of any
other public service. The approval herein
required shall be given, after notice to the public
and hearing the persons interested at a public
hearing, if it be shown that there are just and
reasonable grounds for making the mortgaged
or encumbrance, for liabilities of more than one
year maturity, or the sale, alienation, lease,
merger, or consolidation to be approved, and
that the same are not detrimental to the public
interest, and in case of a sale, the date on which
the same is to be consummated shall be fixed in
the order of approval: Provided, however, that
nothing herein contained shall be construed to
prevent the transaction from being negotiated or
BESARIO, DE GRANO, DUMLAO, MARAÑON|2018
completed before its approval or to prevent the
sale, alienation, or lease by any public service of
any of its property in the ordinary course of its
business.
 The Registered Owner Rule applies if the transfer of
the franchise was not approved by the regulating
agency.
 The transfer of the franchise is prohibited if the
transfer is for an illegal purpose. Thus, the transfer
should be denied and the CPC can even be
canceled if the transfer is pursuant to the illegal
practice called “trafficking” by the former PSC.
- TRAFFICKING – case of parties who apply for
and are authorized to operate taxi cab units, not
to render service to the public but to engage in
speculation by thereafter selling said units and
thereafter ask for authority to operate additional
ones.
OTHER TRANSACTIONS
1. Sale or any alienation
2. Mortgage
3. Encumbrance
4. Lease
5. Merger or consolidation
- Cover not only CPC but also its property or
privileges, or rights or any part thereof.
REVOCATION OR CANCELLATION OF CERTIFICATE
(n) To suspend or revoke any certificate issued under
the provisions of this Act whenever the holder thereof
has violated or willfully and contumaciously refused to
comply with any order rule or regulation of the
Commission or any provision of this Act: Provided, That
the Commission, for good cause, may prior to the
hearing suspend for a period not to exceed thirty days
any certificate or the exercise of any right or authority
issued or granted under this Act by order of the
Commission, whenever such step shall in the judgment
of the Commission be necessary to avoid serious and
irreparable damage or inconvenience to the public or to
private interests.
 SC sustained the cancellation of the CPC:
1. Where the holder is a mere dummy
2. Where the operator ceased the operations and
placed his vehicles in storage
3. Where the operator totally abandoned the
service.
 Letters b and c are repetitions 
 CPC can properly be cancelled on the ground of
misrepresentation.
 To allow a public service to continue its operation
notwithstanding several violations would be to
sacrifice public interest and convenience in favor of
private interest.
NOTES & DIGESTS IN
TRANSPORTATION LAW BESARIO, DE GRANO, DUMLAO, MARAÑON|2018
 Revocation of CPC is not justified if there is no
showing of willful and contumacious violation of the
law and rules.

Manzanal v. Ausejo
The cancellation of the certificate of authority cannot be
justified by the mere fact that escaping hold-uppers used the
taxicab.
 Mere failure to operate temporarily should likewise
not be a ground for cancellation.

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TRANSFERS OF SHARES OF STOCKS

(h) To sell or register in its books the transfer or sale of
shares of its capital stock, if the result of that sale in
itself or in connection with another previous sale, shall
be to vest in the transferee more than forty per centum
of the subscribed capital of said public service. Any
transfer made in violation of this provision shall be void
and of no effect and shall not be registered in the books
of the public service corporation. Nothing herein
contained shall be construed to prevent the holding of
shares lawfully acquired. (As amended by Com. Act No.
454.)

WHEN NO HEARING IS REQUIRED

Section 17

ADMINISTRATIVE FINES
Section 21. 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 of not exceeding
two hundred pesos per day for every day during which
such default or violation continues; and the
Commission is hereby authorized and empowered to
impose such fine, after due notice and hearing.

The fines so imposed shall be paid to the Government

of the Philippines through the Commission, and failure
to pay the fine in any case within the same specified in
the order or decision of the Commission shall be
deemed good and sufficient reason for the suspension
of the certificate of said public service until payment
shall be made. Payment may also be enforced by
appropriate action brought in a court of competent
jurisdiction. The remedy provided in this section shall
not be a bar to, or affect any other remedy provided in
this Act but shall be cumulative and additional to such
remedy or remedies.