1. G.R. No.

112702, September 26, 1997

NATIONAL POWER CORPORATION, PETITIONER, VS. COURT OF APPEALS AND CAGAYAN ELECTRIC POWER AND
LIGHT CO., INC. (CEPALCO), RESPONDENTS.

[G.R. NO. 113613. SEPTEMBER 26, 1997]

PHIVIDEC INDUSTRIAL AUTHORITY, PETITIONER, VS. COURT OF APPEALS AND CAGAYAN ELECTRIC POWER AND
LIGHTCO., INC. (CEPALCO), RESPONDENTS.

Nature of the case:

Offered for resolution in these consolidated petitions for review on certiorari

Facts:

On June 17, 1961, the Cagayan Electric and Power Light Company (CEPALCO) was enfranchised by Republic Act No. 3247 "to
construct, maintain and operate an electric light, heat and power system for the purpose of generating and/or distributing electric
light, heat and/or power for sale within the City of Cagayan de Oro and its suburbs" for fifty (50) years. Republic Act No. 3570,
approved on June 21, 1963, expanded the area of coverage of the franchise to include the municipalities of Tagoloan and Opol,
both in the Province of Misamis Oriental. On August 4, 1969, Republic Act No. 6020 further amended the same franchise to include
in the areas of CEPALCO's authority of "generating and distributing electric light and power for sale," the municipalities of Villanueva
and Jasaan, also of the said province.

Presidential Decree No. 243, issued on July 12, 1973, created a "body corporate and politic" to be known as the Philippine Veterans
Investment Development Corporation (PHIVIDEC) vested with authority to engage in "commercial, industrial, mining, agricultural
and other enterprises" among other powers[1] and "to allow the full and continued employment of the productive capabilities of
and investment of the veterans and retirees of the Armed Forces of the Philippines." On August 13, 1974, Presidential Decree No.
538 was promulgated to create the PHIVIDEC Industrial Authority (PIA), a subsidiary of PHIVIDEC, to carry out the government
policy "to encourage, promote and sustain the economic and social growth of the country and that the establishment of
professionalized management of well-planned industrial areas shall further this objective."[2] Under Sec. 3 of P.D. No. 538, the
first area for development shall be located in the municipalities of Tagoloan and Villanueva.[3] This area forms part of the PHIVIDEC
Industrial Estate Misamis Oriental (PIE-MO).

As manager of PIE-MO, PIA granted the Ferrochrome Philippines, Inc. (FPI) and Metal Alloys Corporation (MAC) authority to
operate in its area of development. On July 6, 1979, PIA granted CEPALCO a temporary authority to retail electric power to the
industries operating within the PIE-MO.[4] The Agreement executed by PIA and CEPALCO authorized CEPALCO "to operate,
administer, construct and distribute electric power within the PHIVIDEC Industrial Estate, Misamis Oriental, such authority to be
co-extensive with the territorial jurisdiction of PHIVIDEC Industrial Estate, as defined in Sec. 3 of P.D. No. 538 and shall be for a
period of five (5) years, renewable for another five (5) years at the option of CEPALCO." The parties provided further that:

9. At the end of the fifth year, or at the end of the 10th year, should this Agreement be thus renewed, PIA has the option to take
over the operation of the electric service and acquire by purchase CEPALCO's assets within PIE-MO. This option shall be
communicated to CEPALCO in writing at least 24 months before the date of acquistion of assets and takeover of operation by PIA.
Should PIA exercise its option to purchase the assets of CEPALCO in PIE-MO, PIA shall respect the right of ownership of and
maintenance by CEPALCO of those assets inside PIE-MO not covered by such purchase. x x x."

According to PIA,[5] CEPALCO proved no match to the power demands of the industries in PIE-MO that most of these companies
operating therein closed shop.[6] Impelled by a "desire to provide cheap power costs to power-intensive industries operating within
the Estate," PIA applied with the National Power Corporation (NPC) for direct power connection which the latter in due course
approved.[7] One of the companies which entered into an agreement with the NPC for a direct sale and supply of power was the
Ferrochrome Phils., Inc. (FPI).
Contending that the said agreement violated its right as the authorized operator of an electric light and power system in the area
and the national electrification policy, CEPALCO filed Civil Case No. Q-35945, a petition for prohibition, mandamus and Injunction
before the Regional Trial Court of Quezon City against the NPC. Notwithstanding NPC's claim that it was authorized by its Charter
to sell electric power "in bulk" to industrial enterprises, the lower court rendered a decision on May 2, 1984, restraining the NPC
from supplying power directly to FPI upon the ground that such direct sale, supply and delivery of electric power by the NPC to FPI
was violative of the rights of CEPALCO under its legislative franchise. Hence, the lower court ordered the NPC to "permanently
desist" from effecting direct supply of power to the FPI and "from entering into and/or implementing any agreement or arrangement
for such direct power connection, unless coursed through the power line" of CEPALCO.

Eventually, the case reached this Court through G.R. No. 72085.[8] On December 28, 1989, the Court denied the appeal interposed
by NPC on the ground that the statutory authority given to the NPC as regards direct supply of power to BOI-registered enterprises
"should always be subordinate to the 'total-electrification-of-the-entire-country-on-an-area-coverage basis policy' enunciated in P.
D. No. 40."[9] We held further that:

Nor should we lose sight of the factual findings of the court a quo that petitioner-appellee CEPALCO had not only been authorized
by the Phividec Industrial Authority to provide electrical power to the Phividec Industrial Estate within which the FPI plant is located,
but that petitioner-appellee CEPALCO had in fact, supplied the latter's power requirements for the construction of its plant, upon
FPI's application therefor as early as October 17, 1980.

It bears emphasis then that 'it is only after a hearing (or an opportunity for such a hearing) where it is established that the affected
private franchise holder is incapable or unwilling to match the reliability and rates of NPC that a direct connection with NPC may
be granted.' Here, petitioner-appellee's reliability as a power supplier and ability to match the NPC rates were never put in issue.

It is immaterial that petitioner-appellee's franchise was not exclusive. A privilege to sell within specified territory, even if not
exclusive, is a valuable property right entitled to protection against unauthorized competition."[10]

Notwithstanding said decision, in September 1990, FPI filed a new application for the direct supply of electric power from NPC.
The Hearing Committee of the NPC had started hearing the application but CEPALCO filed with the Regional Trial Court of Quezon
City a petition for contempt against NPC officials led by Ernesto Aboitiz. On August 10, 1992, the trial court found the respondents
in direct contempt of court and accordingly imposed upon them a fine of 500.00 each.

The respondent NPC officials challenged before this Court the judgment holding them in contempt of court through G.R. No.
107809, (Aboitiz v. Regino).[11] In the Decision of July 5, 1993, the Court upheld the contempt ruling and, after quoting the lower
court's decision of May 2, 1984 which the Court upheld in G.R. No. 72085, said:

These directives show that the lower court (and this Court) intended the arrangment between FPI and CEPALCO to be permanent
and free from NAPOCOR's influence or intervention. Any attempt on the part of NAPOCOR or its officers and/or employees to
strike a deal with FPI would be a clear and direct disobedience to a lawful order and therefore contemptuous.

The petitioners call the attention of the Court to the statement of CEPALCO that 'NAPOCOR has already implemented in full' the
May 2, 1984 decision of the lower court as affirmed by this Court. They suggest that in view of this, the decision no longer has any
binding effect upon the parties, or to put it another way, has become Functus Officio. Consequently, when they entertained the re-
application of FPI for direct power connection to NAPOCOR, they were not disobeying the May 2, 1984 order of the trial court and
so should not be held in contempt.
This argument must be rejected in view of our finding of the permanence and comprehensiveness of the challenged order of the
trial court. 'Permanent' is not a difficult word to understand. It means 'lasting or intended to last indefinitely without change.' As for
the scope of the order, NAPOCOR was directed to 'desist from effecting, causing, and continuing the direct supply, sale and
delivery of electricity from its power line to the plant of Ferrochrome Philippines, Inc., and from entering into and/or implementing
any agreement or arrangement for such direct power connection, unless coursed through the power line of petitioner."
(Underscoring supplied.)

Meanwhile, the NPC Hearing Committee[12] proceeded with its hearings. CEPALCO was duly notified thereof but it opted to
question the committee's jurisdiction. It did not submit any evidence. Consequently, in its Report and Recommendation dated
September 27, 1991, the committee gave weight to the evidence presented by FPI that CEPALCO charged higher rates than what
the NPC would if allowed to supply power directly to FPI. Although the committee considered as unfounded FPI's claim of
CEPALCO's unreliability as a power supplier,[13] it nonetheless held that:

Form (sic) the foregoing and on the basis of the decision of the Supreme Court in the case of National Power Corporation and Fine
Chemicals (Phils.) Inc. v. The Court of Appeals and the Manila Electric Company, G.R. No. 84695, May 8, 1990, FPI is entitled to
a direct connection to NPC as applied for considering that CEPALCO is unwilling to match the rates of NPC for directly serving FPI
and that FPI is a duly registered BOI registered enterprises (sic). The Supreme Court in the aforestated case has ruled as follows:

'As consistently ruled by the Court pursuant to P.D. No. 380 as amended by P.D. No. 395, NPC is statutorily empowered to directly
service all the requirements of a BOI registered enterprise provided that, first, any affected private franchise holder is afforded an
opportunity to be heard on the application therefor and second, from such a hearing, it is established that said private franchise
holder is incapable or unwilling to match the reliability and rates of NPC for directly serving the latter (National Power Corporation
v. Jacinto, 134 SCRA 435 [1985]. National Power Corporation v. Court of Appeals, 161 SCRA 103 [1988]).'"[14]

However, considering the "better and priority right" of PIA, the committee recommended that instead of a direct power connection
by the NPC to FPI, the connection should be made to PIA "as a utility user for its industrial Estate at Tagoloan, Misamis
Oriental."[15]

For its part, on November 3, 1989, CEPALCO filed with the Energy Regulatory Board (ERB) a petition praying that the ERB "order
the discontinuance of all existing direct supply of power by the NPC within petitioner's franchise area" (ERB Case No. 89-430). On
July 17, 1992, the ERB ruled that CEPALCO "is relatively efficient and reliable as manifested by its very low system losses (far
from the 14% standard) and very high power factors" and therefore CEPALCO is technically capable "to distribute power to its
consumers within its franchise area, particularly the industrial customers." It disposed of the petition as follows:

Issue:

Whether or not the National Power Corporation (NPC) has jurisdiction to determine whether it may supply electric power directly
to the facilities of an industrial corporation in areas where there is an existing and operating electric power franchisee.

WHEREFORE, in view of the foregoing premises, when the petitioner has been proven to be capable of distributing power to its
industrial consumers and having passed the secondary considerations with a passing mark of 85%, judgment is hereby rendered
granting the relief prayed for. Accordingly, it is hereby declared that all direct connection of industries to NPC within the franchise
area of CEPALCO is no longer necessary. Therefore, all existing NPC direct supply of power to industrial consumers within the
franchise area of CEPALCO is hereby ordered discontinued. x x x."[16]

However, during the pendency of the Aboitiz case in this Court or on August 3, 1992, PIA contracted the NPC for the construction
of a 138 kilovolt (KV) transmission line from Namutulan substation to the receiving and/or substation of PIA.[17]
As expected, on February 17, 1993, CEPALCO filed in the Regional Trial Court of Pasig (Branch 68), a petition for certiorari,
prohibition, mandamus and Injunction against the NPC and some officials of both the NPC and PIA.[18] Docketed as SCA No.
290, the petition specifically sought the issuance of a temporary restraining order. However, after hearing, the prayer for the
temporary restraining order was denied by the court in its order of March 12, 1993.[19] CEPALCO filed a motion for the
reconsideration of said order while NPC and PIA moved for the dismissal of the petition.[20]

On June 23, 1993, noting the cases filed by CEPALCO all seeking exclusivity in the distribution of electric power to areas covered
by its franchise, the court[21] ruled that "the right of petitioner to supply electric power in the aforesaid area to the exclusion of
other entities had been settled once and for all by the Regional Trial Court of Quezon City wherein petitioner obtained a favorable
judgment." Hence, the petition was dismissed on the ground of res judicata.[22]

Forthwith, CEPALCO elevated the case to this Court through a petition for certiorari, prohibition and Injunction with prayer for the
issuance of a preliminary Injunction or a temporary restraining order. The petition was docketed as G.R. No. 110686 but on August
18, 1993, the Court referred it to the Court of Appeals pursuant to Sec. 9, paragraph 1 of B.P. Blg. 129 conferring upon the appellate
court original jurisdiction to issue writs of prohibition and certiorari and auxiliary writs.[23] In the Court of Appeals, the petition was
docketed as CA-G.R. No. 31935-SP.

On September 10, 1993, the Fifteenth Division of the Court of Appeals issued a resolution[24] denying the prayer for the issuance
of a temporary restraining order on the strength of Sec. 1 of P.D. No. 1818. It ruled that since the NPC is a public utility, it "enjoys
the protective mantle" of said decree prohibiting courts from issuing restraining orders or preliminary injunctions in cases involving
infrastructure and natural resource development projects of, and operated by, the government.[25]

However, on September 17, 1993, upon a motion for reconsideration filed by CEPALCO and a re-evaluation of the provisions of
P.D. No. 1818, the Court of Appeals set aside its resolution of September 10, 1993 and held that:

x x x the project intended by respondent NPC, which is the construction, completion and operation of the 138-kv line, is not in
consonance with the intendment of said Decree which is to protect public utilities and their projects and activities intended for public
convenience and necessity. The project of respondent NPC is intended to serve exclusively the needs of private entities, Metal
Alloys Corporation and Ferrochrome Philippine in Tagoloan, Misamis Oriental."

Accordingly, the Court of Appeals issued a temporary restraining order directing the private respondents therein "to immediately
cease and desist from proceeding with the construction, completion and operation of the 138-kv line subject of the petition." The
NPC, PIA and the officers of both were directed to explain why the preliminary Injunction prayed for should not issue.[26]

In due course, the Court of Appeals rendered the decision[27] of November 15, 1993 assailed herein. After ruling that the lower
court gravely abused its discretion in dismissing the petition below on the grounds of res judicata and litis pendentia, the Court of
Appeals confronted squarely the issue of whether or not "the NPC itself has the power to determine the propriety of direct power
connection from its lines to any entity located within the franchise area of another public utility."[28]

Elucidating that the ruling of this Court in both G.R. No. 78609 (NPC v. Court of Appeals)[29] and G.R. No. 87697 (Del Monte
[Philippines], Inc. v. Hon. Felix M. de Guzman, etc., et al.)[30] categorically held that before a direct connection to the NPC may
be granted, a proper administrative body must conduct a hearing "to determine which entity, the franchise holder or the NPC, has
the right to supply electric power to the entity applying for direct connection," the Court of Appeals declared:
"We have no doubt that the ERB, and not the NPC, is the administrative body referred to by the Supreme Court where the hearing
is to be conducted to determine the propriety of direct connection. The charter of the ERB (PD 1206 in relation to EO 172) is clear
on this:

"The Board shall, after due notice and hearing, exercise the following powers and functions, among others:

e. Issue Certificate of Public Convenience for the operation of electric power utilities and services, ... including the establishment
and regulation of areas of operation of particular operators of public power utilities and services, the fixing of standards and
specifications in all cases related to the issued Certificate of Public Convenience ..."

Moreover, NPC is not an administrative body as jurisprudentially defined, and that the NPC cannot usurp a power it has never
been conferred by its charter or by other law -- the power to determine the validity of direct connection agreement it enters into in
violation of a power distributor's franchise.

Thus, considering that PIA professes to be and intends to engage in the business of a public power utility, it must first apply for a
public convenience and necessity (conferment of operating authority) with the ERB. This may have been the opportune time for
ERB to determine whether to allow PIA to directly connect with NPC, with notice and opportunity for CEPALCO considering that,
as the latter alleges, this new line which NPC is installing duplicates that existing Cepalco 138 kv line which NPC itself turned over
to Cepalco and for which it was paid in full."

Consequently, the Court of Appeals affirmed the dismissal of the petition, annulled and set aside the decision of the Hearing
Committee of the NPC on direct connection with PIA, and ordered the NPC "to desist from continuing the construction of that NPC-
Natumulan-Phividec 138 kv transmission line."[31]

Without filing a motion for the reconsideration of said Decision, NPC filed in this Court on December 9, 1993, a motion for an
extension of time within which to file "the proper petition." The motion which was docketed as G.R. No. 112702, was granted on
December 20, 1993 with warning that no further extension would be granted. Thereafter, NPC filed a motion praying that it be
excused from filing the petition on account of the filing by PIA in the Court of Appeals of a motion for the reconsideration of the
Decision of November 15, 1993. In the Resolution of February 2, 1994, the Court noted and granted petitioner's motion and
considered the case "closed and terminated."[32] This resolution was withdrawn in the Resolution of February 8, 1995[33] in view
of the "inadvertent clerical error" terminating the case, after the NPC had mailed its petition for review on certiorari on February 21,
1994.[34]

In the meantime, PIA filed a motion for reconsideration of the appellate court's Decision of November 15, 1993 arguing in the main
that, not being a party to previous cases between CEPALCO and NPC, it was not bound by decisions of this Court. The Court of
Appeals denied the motion on January 28, 1994 on the basis of stare decisis where once the court has laid down a principle of law
as applicable to a certain state of facts, it will adhere to and apply the principle to all future cases where the facts are substantially
the same.[35] Hence, PIA filed a petition for review on certiorari which was docketed as G.R. No. 113613.

G.R. Nos. 112702 and 113613 were consolidated on June 15, 1994.[36]

In G.R. No. 112702, petitioner NPC contends that private respondent CEPALCO is not entitled to relief because it has been forum-
shopping. Private respondent had filed Civil Case No. Q-93-14597 in the Regional Trial Court of Quezon City which had been
forwarded to it by the Regional Trial Court of Pasig. Said case and the instant case (SCA No. 290) deal with the same issue of
restoring CEPALCO's right to supply power to FPI and MAC. Petitioner thus contends that because the principle of litis pendentia
applies, although other parties are involved in the case before the Quezon City court, there is no basis for granting relief to private
respondent CEPALCO "(s)ince the dismissal for lack of jurisdiction was affirmed by the respondent court."[37] Corollarily, petitioner
asserts that because the main case herein was dismissed "without trial," the respondent appellate court should not have accorded
private respondent affirmative relief.[38]

Petitioner NPC's contention is based on the fact that on October 6, 1992, private respondent CEPALCO filed against the NPC in
the Regional Trial Court of Pasig, Civil Case No. 62490, an action for specific performance and damages with prayer for preliminary
mandatory Injunction directing the NPC to immediately restore to CEPALCO the distribution of power pertaining to MAC's
consumption.[39] However, no summons was served and the ex-parte writ prayed for was not issued. Nevertheless, the case was
forwarded to the Regional Trial Court of Quezon City where it was docketed as Civil Case No. 93-14597. That case was pending
when SCA No. 290 was filed before the Regional Trial Court of Pasig.

The Court of Appeals affirmed the lower court's dismissal of the case neither on the grounds of res judicata nor litis pendentia but
on the "only one unresolved issue, which is whether the NPC itself has the power to determine the propriety of direct power
connection from its lines to any entity located within the franchise area of another public utility."[40] The Court of Appeals opined
that the effects of litis pendentia could not have resulted in the dismissal of SCA No. 290 because Civil Case No. Q-35945 which
became G.R. No. 72085 was based on facts totally different from that of SCA No. 290.

In invoking litis pendentia, however, petitioner NPC refers to this case, SCA No. 290, and Civil Case No. 93-14597. SCA No. 290
and Civil Case No. 93-14597 may both have the same objective, the restoration of CEPALCO's right to distribute power to PIE-
MO areas under its franchise aside from the fact that the cases involve practically the same parties. However, litis pendentia may
not be successfully invoked to cause the dismissal of SCA No. 290.

In order to constitute a ground for the abatement or dismissal of an action, litis pendentia must exhibit the concurrence of the
following requisites: (a) identity of parties, or at least such as representing the same interest in both actions; (b) identity of rights
asserted and relief prayed for, the relief being founded on the same facts, and (c) identity in the two (2) cases should be such that
the judgment that may be rendered in the pending case would, regardless of which party is successful, amount to res judicata in
the other.[41] As a rule, the second case filed should be abated under the maxim qui prior est tempore, potior est jure. However,
this rule is not a hard and fast one. The "priority-in-time rule" may give way to the criterion of "more appropriate action." More
recently, the criterion used was the "interest of justice rule."[42]

We hold that the last criterion should be the basis for resolving this case, although it was filed later than Civil Case No. 62490
which, upon its transfer, became Civil Case No. 93-14795. In so doing, we shall avoid multiplicity of suits which is the matrix upon
which litis pendentia is anchored and eventually bring about the final settlement of the recurring issue of whether or not the NPC
may supply power directly to the industries within PIE-MO, notwithstanding the operation of franchisee CEPALCO in the same
area.

It should be noted that there is yet pending another case, namely, Civil Case No. 91-383, instituted by PIA against CEPALCO in
the Regional Trial Court of Misamis Oriental which apparently deals with a related issue - PIA's franchise or authority to provide
power to enterprises within the PIE-MO.[43] Hence, the principle of litis pendentia which ordinarily demands the dismissal of an
action filed later than another, should be considered under the primordial concept of "interest of justice," in order that a recurrent
issue common to all cases may be definitively resolved.

The principal and common question raised in these consolidated cases is: whether or not the NPC may supply power directly to
PIA in the PIE-MO area where CEPALCO has a franchise. Petitioner PIA in G.R. No. 113613 asserts that it may receive power
directly from the NPC because it is a public utility. It avers that P.D. No. 538, as amended, empowers PIA "as and to be a public
utility to operate and serve the power needs within PIE-MO, i.e., a specific area constituting a small portion of petitioner's franchise
coverage," without, however, specifying the particular provision which so empowers PIA.[44]

A "public utility" is a 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.[45] The term implies public use and
service.[46]

Petitioner PIA is a subsidiary of the PHIVIDEC with "governmental and proprietary functions."[47] Sec. 4 of P.D. No. 538 specifically
confers upon it the following powers:

a. To operate, administer and manage the PHIVIDEC Industrial Areas and other areas which shall hereafter be proclaimed,
designated and specified in subsequent Presidential Proclamation; to construct acquire, own, lease, operate and maintain
infrastructure facilities, factory buildings, warehouses, dams, reservoirs, water distribution, electric light and power systems,
telecommunications and transportation networks, or such other facilities and services necessary or useful in the conduct of industry
and commerce or in the attainment of the purposes and objectives of this Decree;" (Underscoring supplied.)

Clearly then, the PIA is authorized to render indirect service to the public by its administration of the PHIVIDEC industrial areas
like the PIE-MO and may, therefore, be considered a public utility. As it is expressly authorized by law to perform the functions of
a public utility, a certificate of public convenience, as suggested by the Court of Appeals, is not necessary for it to avail of a direct
power connection from the NPC. However, such authority to be a public utility may not be exercised in such a manner as to
prejudice the rights of existing franchisees. In fact, by its actions, PIA recognized the rights of the franchisees in the area.

Accordingly, in pursuit of its powers "to grant such franchise for and to operate and maintain within the Areas electric light, heat or
power systems," etc. under Sec. 4 (i) of P.D. No. 538 and its rule-making power under Sec. 4 (l) of the same law, on July 20, 1979,
the PIA Board of Directors promulgated the "Rules and Regulations To Implement the Intent and Provisions of Presidential Decree
No. 538."[48] Rule XI thereof on "Utilities and Services" provides as follows:

SECTION 1. Utilities - It is the responsibility of the Authority to provide all required utilities and services inside the Estate:

a) Contracts for the purchase of public utilities and/or services shall be subject to the prior approval of the Authority; Provided,
however, that similar contract(s) existing prior to the effectivity of this Rules and Regulations shall continue to be in full force and
effect.

It should be noted that the Rules and Regulations took effect thirty (30) days after its publication in the Official Gazette on
September 24, 1979 or more than three (3) months after the July 6, 1979 contract between PIA and CEPALCO was entered into.
As such, the Rules and Regulations itself allowed the continuance of the supply of electric power to PIE-MO by CEPALCO.

That the contract of July 6, 1979 was not renewed by the parties after the expiration of the five-year period stipulated therein did
not change the fact that within that five-year period, in violation of both the contract and its Rules and Regulations, PIA applied
with the NPC for direct power connection. The matter was aggravated by NPC's favorable action on the application, totally
unmindful of the extent of its powers under the law which, in National Power Corporation v. Court of Appeals,[49] the Court delimits
as follows:

x x x. It is immaterial whether the direct connection is merely an improvement or an increase in existing voltage, as alleged by
petitioner, or a totally new and separate electric service as claimed by private respondent. The law on the matter is clear. PD 40
promulgated on 7 November 1972 expressly provides that the generation of electric power shall be undertaken solely by the NPC.
However, Section 3 of the same decree also provides that the distribution of electric power shall be undertaken by cooperatives,
private utilities (such as the CEPALCO), local governments and other entities duly authorized, subject to state regulation.
(Underscoring supplied.)

The same case ruled that "(i)t is only after a hearing (or an opportunity for such a hearing) where it is established that the affected
private franchise holder is incapable or unwilling to match the reliability and rates of NPC that a direct connection with NPC may
be granted."[50] As earlier stated, the Court arrived at the same ruling in the later cases of G.R. Nos. 72085, 84695 and 87697.

Petitioner NPC attempted to abide by these rulings when it conducted a hearing to determine whether it may supply power directly
to PIA. While it notified CEPALCO of the hearing, the NPC is not the proper authority referred to by this Court in the aforementioned
earlier decisions, not only because the subject of the hearing is a matter involving the NPC itself, but also because the law has
created the proper administrative body vested with authority to conduct a hearing.

CEPALCO shares the view of the Court of Appeals that the Energy Regulatory Board (ERB) is the proper administrative body for
such hearings. However, a recent legislative development has overtaken said view.

The ERB, which used to be the Board of Energy, is tasked with the following powers and functions by Executive Order No. 172
which took effect immediately after its issuance on May 8, 1987:

SEC. 3. Jurisdiction, Powers and Functions of the Board. - When warranted and only when public necessity requires, the Board
may regulate the business of importing, exporting, re-exporting, shipping, transporting, processing, refining, marketing and
distributing energy resources. x x x.

The Board shall, upon prior notice and hearing, exercise the following, among other powers and functions:

(a) Fix and regulate the prices of petroleum products;

(b) Fix and regulate the rate schedule or prices of piped gas to be charged by duly franchised gas companies which distribute gas
by means of underground pipe system;

(c) Fix and regulate the rates of pipeline concessionaires under the provisions of Republic Act No. 387, as amended, otherwise
known as the 'Petroleum Act of 1949,' as amended by Presidential Decree No. 1700;

(d) Regulate the capacities of new refineries or additional capacities of existing refineries and license refineries that may be
organized after the issuance of this Executive Order, under such terms and conditions as are consistent with the national interest;

(e) Whenever the Board has determined that there is a shortage or any petroleum product, or when public interest so requires, it
may take such steps as it may consider necessary, including the temporary adjustment of the levels of prices of petroleum products
and the payment to the Oil Price Stabilization Fund created under Presidential Decree No. 1956 by persons or entities engaged in
the petroleum industry of such amounts as may be determined by the Board, which will enable the importer to recover its cost of
importation."
As may be gleaned from said provisions, the ERB is basically a price or rate-fixing agency. Apparently recognizing this basic
function, Republic Act No. 7638 (An Act Creating the Department of Energy, Rationalizing the Organization and Functions of
Government Agencies Related to Energy, and for Other Purposes),[51] which was approved on December 9, 1992 and which took
effect fifteen days after its complete publication in at least two (2) national newspapers of general circulation, specifically provides
as follows:

SEC. 18. Rationalization or Transfer of Functions of Attached or Related Agencies.- The non-price regulatory jurisdiction, powers,
and functions of the Energy Regulatory Board as provided for in Section 3 of Executive Order No. 172 are hereby transferred to
the Department.

The foregoing transfer of powers and functions shall include all applicable funds and appropriations, records, equipment, property,
and such personnel as may be necessary. Provided, That only such amount of funds and appropriations of the Board as well as
only the personnel thereof which are completely or primarily involved in the exercise by said Board of its non-price regulatory
powers and functions shall be affected by such transfer.

The power of the NPC to determine, fix, and prescribe the rates being charged to its customers under Section 4 of Republic Act
No. 6395, as amended, as well as the power of electric cooperatives to fix rates under Section 16 (o), Chapter II of Presidential
Decree No. 269, as amended, are hereby transferred to the Energy Regulatory Board. The Board shall exercise its new powers
only after due notice and hearing and under the same procedure provided for in Executive Order No. 172."

Upon the effectivity of Republic Act No. 7638, then Acting Chairman of the Energy Coordinating Council Delfin Lazaro transmitted
to the Department of Justice the query of whether or not the "non-power rate powers and functions" of the ERB are included in the
"jurisdiction, powers and functions transferred to the Department of Energy." Answering the query in the affirmative, the Department
of Justice rendered Opinion No. 22 dated February 12, 1993 the pertinent portion of which states:

x x x we believe that since the provision of Section 18 on the transfer of certain powers and functions from ERB to DOE is clear
and unequivocal, and devoid of any ambiguity, in the sense that it categorically refers to 'non-price jurisdiction, powers and
functions' of ERB under Section 3 of E.O. No. 172, there is no room for interpretation, but only for application, of the law. This is a
cardinal rule of statutory construction.

Clearly, the parameters of the transfer of functions from ERB to DOE pursuant to Section 18, are circumscribed by the provision
of Section 3 of E.O. No. 172 alone, so that, if there are other 'related' functions of ERB under other provisions of E.O. No. 172 or
other energy laws, these 'related' functions, which may conceivably refer to what you call 'non-power rate powers and functions' of
ERB, are clearly not contemplated by Section 18 and are, therefore, not to be deemed included in the transfer of functions from
ERB to DOE under the said provision.

It may be argued that Section 26 of R.A. No. 7638 contains a repealing clause which provides that:

'All laws, presidential decrees, executive orders, rules and regulations or parts thereof, inconsistent with the provisions of this Act,
are hereby repealed or modified accordingly. x x x.'

and, therefore, all provisions of E.O. No. 172 and related laws which are inconsistent with the policy, purpose and intent of R.A.
No. 7638 are deemed repealed. It has been said, however, that a general repealing clause of such nature does not operate as an
express repeal because it fails to identify or designate the act or acts that are intended to be repealed. Rather, it is a clause which
predicates the intended repeal upon the condition that a substantial conflict must be found on existing and prior acts of the same
subject matter. Such being the case, the presumption against implied repeals and the rule on strict construction regarding implied
repeals shall apply ex propio vigore. For the legislature is presumed to know the existing laws so that, if repeal of particular or
specific laws is intended, the proper step is to so express it. The failure to add a specific repealing clause particularly mentioning
the statute to be repealed indicates that the intent was not to repeal any existing law on the matter, unless an irreconcilable
inconsistency and repugnancy exists in the terms of the new and the old laws (Iloilo Palay and Corn Planters Association, Inc. vs.
Feliciano, 13 SCRA 377; City of Naga vs. Agna, 71 SCRA 176, cited in Agpalo, Statutory Construction, 1990 Edition, pp. 191-192).

In view of the foregoing, it is our opinion that only the non-price regulatory functions of ERB under Section 3 of E.O. 172 are
transferred to the DOE. All other powers of ERB which are not within the purview of its 'non-price regulatory jurisdiction, powers
and functions' as defined in Section 3 are not so transferred to DOE and accordingly remain vested in ERB."

The determination of which of two public utilities has the right to supply electric power to an area which is within the coverage of
both is certainly not a rate-fixing function which should remain with the ERB. It deals with the regulation of the distribution of energy
resources which, under Executive Order No. 172, was expressly a function of ERB. However, with the enactment of Republic Act
No. 7638, the Department of Energy took over such function. Hence, it is this Department which shall then determine whether
CEPALCO or PIA should supply power to PIE-MO.

Clearly, petitioner NPC's assertion that its "authority to entertain and hear direct connection applications is a necessary incident of
its express authority to sell electric power in bulk" is now baseless.[52] Even without the new legislation affecting its power to
conduct hearings, it is certainly irregular, if not downright anomalous for the NPC itself to determine whether it should supply power
directly to the PIA or the industries within the PIE-MO. It simply cannot arrogate unto itself the authority to exercise non-rate fixing
powers which now devolves upon the Department of Energy and to hear and eventually grant itself the right to supply power in
bulk.[53]

On the other hand, ventilating the issue in a public hearing would not unduly prejudice CEPALCO although it was enfranchised by
law earlier than the PIA. Exclusivity of any public franchise has not been favored by this Court such that in most, if not all, grants
by the government to private corporations, the interpretation of rights, privileges or franchises is taken against the grantee. Thus
in Alger Electric, Inc. v. Court of Appeals,[54] the Court said:

x x x Exclusivity is given by law with the understanding that the company enjoying it is self-sufficient and capable of supplying the
needed service or product at moderate or reasonable prices. It would be against public interest where the firm granted a monopoly
is merely an unnecessary conduit of electric power, jacking up prices as a superfluous middleman or an inefficient producer which
cannot supply cheap electricity to power intensive industries. It is in the public interest when industries dependent on heavy use of
electricity are given reliable and direct power at the lower costs thus enabling the sale of nationally marketed products at prices
within the reach of the masses. x x x."

WHEREFORE, both petitions in G.R. No. 112702 and 113613 are hereby DENIED. The Department of Energy is directed to
conduct a hearing with utmost dispatch to determine whether it is the Cagayan Electric Power and Light Co., Inc. or the National
Power Corporation, through the PHIVIDEC Industrial Authority, which should supply electric power to the industries in the
PHIVIDEC Industrial Estate-Misamis Oriental. This Decision is immediately executory.

(Npc vs. Ca G.R. No. 112702 September 26, 1997)

This decision, and more, can be found at https://www.digest.ph/decisions/npc-vs-ca-13

2. The Iloilo Ice and Cold Storage Company v. Public Utility Board (G.R. No. L-19857)

Facts:

Petitioner maintains and operates a plant for the manufacture and sale of ice in the City of Iloilo. The business of petitioner has
been carried on with selected customers only. Sec of Public Utility Commission upon investigation reported that petitioner should
be considered a public utility. Petitioner alleges that it is and has always been operating as a private enterprise.

Issue:
Whether or not petitioner is a public utility.

Ruling: NO.

The criterion by which to judge of the character of the use is whether the public may enjoy it by right or only by permission. The
essential feature of a public use is that it is not confined to privileged individuals, but is open to the indefinite public. The use is
public if all persons have the right to the use under the same circumstances. If the company did in truth sell ice to all persons
seeking its service, it would be a public utility. But if on the other hand, it was organized solely for particular persons under strictly
private contracts, and never was devoted by its owners to public use, it could not be held to be a public utility without violating the
due process of law clause of the Constitution. And the apparent and continued purpose of the Iloilo Ice and Storage Company has
been, and is, to remain a private enterprise and to avoid submitting to the Public Utility law.

“Public use” means the same as “use by the public.” The essential feature of the public use is that it is not confined to privileged
individuals, but is open to the indefinite public. It is this indefinite or unrestricted quality that gives it its public character. In
determining whether a use is public, we must look not only to the character of the business to be done, but also to the proposed
mode of doing it. If the use is merely optional with the owners, or the public benefit is merely incidental, it is not a public use,
authorizing the exercise of the jurisdiction of the public utility commission. There must be, in general, a right which the law compels
the owner to give to the general public. It is not enough that the general prosperity of the public is promoted. Public use is not
synonymous with public interest. The true criterion by which to judge of the character of the use is whether the public may enjoy it
by right or only by permission.

3. G.R. No. 83551 July 11, 1989

Albano vs. Reyes (175 SCRA 264)

RODOLFO B. ALBANO, vs. HON. RAINERIO O. REYES, PHILIPPINE PORTS AUTHORITY, INTERNATIONAL CONTAINER
TERMINAL SERVICES, INC., E. RAZON, INC., ANSCOR CONTAINER CORPORATION, and SEALAND SERVICES. LTD.,

Facts:
On April 20, 1987, the PPA ( Philippine Ports Authority ) Board adopted its Resolution No. 850 directing PPA management to
prepare the Invitation to Bid and all relevant documents and technical requirements necessary for the public bidding of the
development, management and operation for the MICT ( leasing as well as to implement this project. Respondent Secretary Reyes
created a 7 man “Special MICT Bidding Committee” charged with all bid proposals.

After evaluation of the seven companies that submitted bids, the committee recommended the award of the contract to ICTSI for
having offered the best technical and financial proposal. However, before the MICT contract could be signed, 2 cases were filed
against respondents which assailed the legality and regularity of the bidding. But on May 18, 1988, the President of the Philippines
approved the proposed MICT Contract with specific directives on the part of the PPA and the contractor ICTSI.

Meanwhile, Rodolfo Albano, the petitioner filed a petition assailing the award of the MICT contract to ICTSI claiming that the former
is a public utility and therefore needs a legislative franchise before it can legally operate as a public utility, pursuant to Article 12,
Sec 11 of the 1987 Constitution.

Issue:
Whether or not the MICT needs a legislative franchise from Congress to legally operate as a public utility?

Held:
NO. EO No. 30 dated July16, 1986 provides for the immediate recall of the franchise granted to the Manila International Port
Terminals Inc., and authorize the PPA to take over, manage and operate the Manila International Port Complex at North Harbor,
Manila and undertake the provision of cargo handling and port related services thereat, in accordance with PD 857 and other
applicable laws and regulations.

Sec. 6 of PD 857 otherwise known as the Revised Charter of the PPA provides as one of the corporate duties of the PPA is to
provide services ( whether on its own, by contract, or otherwise ) within the Port Districts and the approaches thereof including but
not limited to…
As stated above, PPA has been tasked under EO No. 30, with the management and operation of the Manila International Port
Complex in accordance with PD 857 and other applicable laws and regulations. However, PD 857 itself authorizes the PPA to
perform the service by itself, by contracting it out, or through other means. Reading EO No. 30 and PD 857 together, the
inescapable conclusion is that the lawmaker has empowered the PPA to undertake by itself the operation and management of the
MICP or to authorize its operation and management by another by contract or other means at its option. The latter power having
been delegated to the PPA, a franchise from Congress to authorize an entity other than the PPA to operate and manage the MICP
becomes unnecessary.

Therefore, PPA’s act of privatizing the MICT and awarding the Contract to ICTSI are wholly within its jurisdiction under its Charter
which empowers the PPA to “supervise, control, regulate, construct, maintain, operate and provide such facilities necessary in the
ports vested”.

4. DEMOSTHENES P. AGAN v. PHILIPPINE INTERNATIONAL AIR TERMINALS CO., GR No. 155001, 2003-05-05

Facts:
Petitioners filed instant petitions for prohibition seeking to prohibit the Manila International Airport Authority (MIAA) and the
Department of Transportation and Communications (DOTC) and its Secretary from implementing the following agreements
executed by the Philippine Government through the DOTC and the MIAA and the Philippine International Air Terminals Co., Inc.
(PIATCO): (1) the Concession Agreement signed on July 12, 1997, (2) the Amended and Restated Concession Agreement dated
November 26, 1999, (3) the First Supplement to the Amended and Restated Concession Agreement dated August 27, 1999, (4)
the Second Supplement to the Amended and Restated Concession Agreement dated September 4, 2000, and (5) the Third
Supplement to the Amended and Restated Concession Agreement dated June 22, 2001 (collectively, the PIATCO Contracts).

Issue:
Whether or not petitioning employees has legal standing to raise validity of the PIATCO contracts?
Decision:
Petition granted and contracts declared null and void. Petitioner’s have direct and substantial interest to protect by reason of the
implementation of the PIATCO contracts. They stand to lose their source of livelihood, a property right which is protected by the
Constitution. Subsisting agreements between MIA and petitioners stand to be terminated by the PIATCO contracts. The financial
prejudice brought about by the PIATCO contract to petitioners is legitimate interests sufficient to give them legal standing to file
the petition.

5. FRANCISCO S. TATAD, JOHN H. OSMENA and RODOLFO G. BIAZON, petitioners,

vs.
HON. JESUS B. GARCIA, JR

NATURE:

This is a petition under Rule 65 of the Revised Rules of Court to prohibit respondents from further implementing and enforcing
the "Revised and Restated Agreement to Build, Lease and Transfer a Light Rail Transit System for EDSA" dated April 22, 1992,
and the "Supplemental Agreement to the 22 April 1992 Revised and Restated Agreement To Build, Lease and Transfer a Light
Rail Transit System for EDSA" dated May 6, 1993.
Facts:

DOTC planned to construct a light railway transit line along EDSA (EDSA LRT III) to provide a mass transit system and alleviate
the congestion and growing transportation problem in the metropolis. RA 6957 was enacted allowing for the financing,
construction and operation of government projects through private initiative and investment. Accordingly, prequalification and
bidding was made and EDSA LRT Corporation (organized under HK laws) was recommended to be awarded with the contract.
The President approved the awarding of the contract. Petitioners are senators praying for the prohibition of respondents from
further implementing and enforcing the contract.

Issue:

Whether or not the EDSA LRT III, a public utility, can be owned by a foreign corporation.

Ruling: YES.

The Constitution, in no uncertain terms, requires a franchise for the operation of a public utility. However, it does not require a

franchise before one can own the facilities needed to operate a public utility so long as it does not operate them to serve the public.

In law, there is a clear distinction between the “operation” of a public utility and the ownership of the facilities and equipment used

to serve the public. 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. 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. 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.

In sum, private respondent will not run the light rail vehicles and collect fees from the riding public. It will have no dealings with the

public and the public will have no right to demand any services from it. Even the mere formation of a public utility corporation does

not ipso facto characterize the corporation as one 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.

6. G.R. No. L-15122 March 10, 1920

THE UNITED STATES, plaintiff-appellee,
vs.
TAN PIACO, VENTURA ESTUYA, PEDRO HOMERES, MAXIMINO GALSA and EMILIO LEOPANDO, defendants.
TAN PIACO, appellant.
Recaredo Ma. Calvo for appellant.
Attorney-General Paredes for appellee.
JOHNSON, J.:
Said defendants were charged with a violation of the Public Utility Law (Act No. 2307 as amended by Acts Nos. 2362 and 2694),
in that they were operating a public utility without permission from the Public Utility Commissioner.
Upon the complain presented each of said defendants were arrested and brought to trial. After hearing the evidence the
Honorable Cayetano Lukban, judge, found that the evidence was insufficient to support the charges against Ventura Estuya,
Pedro Homeres, Maximino Galsa and Emilio Leopando, and absolved them from all liability under the complaint and discharged
them from all liability under the complaint and discharged them from the custody of the law. The lower court found the defendant
Tan Piaco guilty of the crime charged in the complaint and sentence him to pay a fine of P100, and, in case of insolvency, to
suffer subsidiary imprisonment, and to pay one-fifth part of the costs. From that sentence Tan Piaco appealed to this court.
The facts proved during the trial of the cause may be stated as follows:
The appellant rented two automobile trucks and was using them upon the highways of the Province of Leyte for the purpose of
carrying some passengers and freight; that he carried passengers and freight under a special contract in each case; that he had
not held himself out to carry all passengers and all freight for all persons who might offer passengers and freight.
The Attorney-General, in a carefully prepared brief, says: "The question is whether the appellant, under the above facts, was
a public utility under the foregoing definitions," and was therefore subject to the control and regulation of the Public Utility
Commission. "We have not found anything in the evidence showing that the appellant operated the trucks in question for public
use. These trucks, so far as indicated by the evidence and as far as the appellant is concerned, furnished service under special
agreements to carry particular persons and property. . . . For all that we can deduce from the evidence, these passengers, or the
owners of the freight, may have controlled the whole vehicles 'both as to content, direction, and time of use,' which facts, under
all the circumstances of the case, would, in our opinion, take away the defendant's business from the provisions of the Public
Utility Act."
In support of the conclusion of the Attorney-General, he cites the case of Terminal Taxicab Co. vs. Kutz (241 U. S.. 252). In that
case the Terminal Taxicab Co. furnished automobiles from its central garage on special orders and did not hold itself out to
accommodate any and all persons. The plaintiff reserve to itself the right to refuse service. The Supreme Court of the United
States, speaking through Mr. Justice Holmes, said: "The bargains made by the plaintiff are individual, and however much they
may tend towards uniformity in price, probably have not the mechanical fixity of charges that attend the use of taxicabs from the
stations to the hotels. The court is of the opinion that that part of the business is not to be regarded as a public utility. It is true
that all business, and for the matter of that, every life in all its details, has a public aspect, some bearing upon the welfare of the
country in which it is passed." The court held that by virtue of the fact that said company did not hold itself out to serve any and
all persons, it was not a public utility and was not subject to the jurisdiction of the public utility commission.
Upon the facts adduced during the trial of the cause, and for the foregoing reasons, the Attorney-General recommends that the
sentence of the lower court be revoked and that the appellant be absolved from all liability under the complaint.
Section 14 of Act No. 2307, as amended by section 9 of Act No. 2694, provides that: "The Public Utility Commission or
Commissioners shall have general supervision and regulation of, jurisdiction and control over, all public utilities. . . . The term
'public utility' is hereby defined to include every individual, copartnership, association, corporation or joint stock company, etc.,
etc., that now or hereafter may own, operate, managed, or control any common carrier, railroad, street railway, etc., etc.,
engaged in the transportation of passengers, cargo, etc., etc., for public use."
Under the provisions of said section, two things are necessary: (a) The individual, copartnership, etc., etc., must be a public
utility; and (b) the business in which such individual, copartnership, etc. etc., is engaged must be for public use. So long as the
individual or copartnership, etc., etc., is engaged in a purely private enterprise, without attempting to render service to all who
may apply, he can in no sense be considered a public utility, for public use.
"Public use" means the same as "use by the public." The essential feature of the public use is that it is not confined to privilege
individuals, but is open to the indefinite public. It is this indefinite or unrestricted quality that gives it its public character. In
determining whether a use is public, we must look not only the character of the business to be done, but also to the proposed
mode of doing it. If the use is merely optional with the owners, or the public benefit is merely incidental, it is not a public use,
authorizing the exercise of the jurisdiction of the public utility commission. There must be, in general, a right which the law
compels the power to give to the general public. It is not enough that the general prosperity of the public is promoted. Public use
is not synonymous with public interest. The true criterion by which to judge of the character of the use is whether the public may
enjoy it by right or only by permission.
For all of the foregoing reasons, we agree with the Attorney-General that the appellant was not operating a public utility, for
public use, and was not, therefore, subject to the jurisdiction of the Public Utility Commission.
Therefore, the sentence of the lower court is hereby revoked, and it is hereby ordered and decreed that the complaint be
dismissed and that the defendant be absolved from all liability under the same, and that he be discharged from the custody of the
law, without any finding as to costs. So ordered.

7. G.R. No. L-43668 March 31, 1938

LA PAZ ICE PLANT & COLD STORAGE CO., INC., plaintiff-appellee,

vs.
JOHN BORDMAN and ILOILO COMMERCIAL & ICE CO., defendants-appellants.
John Bordman for appellants.
Jose F. Orozco for appellee.

IMPERIAL, J.:

The plaintiff commenced this action to enjoin the defendants from continuing to exploit the ice factory which they have
established in the City of Iloilo, Province of Iloilo, because they have not provided themselves with the certificate of public
convenience required by Act No. 3108 and its amendments. The defendants appealed from the decision making permanent the
writ of preliminary injunction which was issued therein, prohibiting them from continuing to exploit the said ice factory, but holding
that the said injunction will be lifted as soon as the defendants obtain the corresponding certificate of public convenience from
the Public Service Commission.

In the amended complaint it was alleged that the defendants were operating the ice factory, established in the City of Iloilo,
without having a certificate of public convenience thereby engaging in ruinous competition with the plaintiff resulting in an alleged
daily loss of P50 in its business consisting in another ice factory, situated in the municipality of La Paz of the same province. In
their answer the defendants denied each and every material allegation of the amended complaint and interposed the special
defense that the Public Service Commission had neither jurisdiction nor control over their ice factory and that the part of Act No.
3108 and its amendments requiring that the defendant corporation be provided with a certificate of public convenience to operate
an ice plant is unconstitutional and void. In counterclaim they alleged that the preliminary injunction issued was obtained by the
plaintiff without any justification as a result of which they suffered and continue to suffer damages which they asked the court that
they be permitted to proved in the proceeding, but after the decision is rendered.

In 1908, Iloilo Ice & Cold Storage Co., established the ice plant in the City of Iloilo and sold its products by means of tickets to a
limited number of consumers. In 1923 the corporation changed its name and became known as the Iloilo Commercial & Ice Co.
Since then they began to sell their products to the general public and upon agreement entered into with the manager of the
plaintiff, it was selling of ice produced by its factory at the same price as that of the latter entity. Having established its factory
prior to the enforcement of Act No. 3108, which went into effect on March 19, 1923, and believing that the business does come
under the jurisdiction or authority of the Public Service Commission, the defendants did not provide themselves with a certificate
of public convenience. The plaintiff is the operator of another ice plant established in the municipality of La Paz, provided with a
certificate of public convenience No. 11282, with authority to sell ice in the municipalities of Iloilo, La Paz and Jaro. The plaintiff
required the defendants to provide themselves with a certificate of public convenience to avoid ruinous competition between both
factories, but they refused to do so and to submit to the jurisdiction and authority of the Public Service Commission.

1. The defendants contend in their first assigned error that the court erred in not holding Act No. 3108 as amended
unconstitutional and void in so far as it requires a certificate of public convenience to engage in a lawful business or
when a property is devoted to the public service. The provisions of said law hearing upon the question at issue are the
following:

SEC. 13. The Commission shall have general supervision and regulation of, jurisdiction and control over, all
public utilities, and also over their property, property rights, equipment, facilities and franchises so far as may
be necessary for the purposes of carrying out the provisions of this Act. The term "public utility" is hereby
defined to include every individual, co-partnership, association, corporation, or joint-stock company, whether
domestic or foreign, their lessee, trustees, or receivers appointed by any court whatsoever, or any
municipality, province, or other department of the Government of the Philippine Island, that now or hereafter
may own, operate, manage, or control within the Philippine Islands any common carrier, railroad, street
railway, traction railway, steamboat or steamship line, small water crafts, such as bancas, virays, lorchas,
and others, engaged in the transportation of passengers or cargo, freight and of passenger motor vehicles,
with or without fixed route shipyard, marine railway, marine repair shop, ferry, freight or any other car service,
public warehouse, public wharf or dock not under the jurisdiction of the Insular Collector of Customs, ice
refrigeration, cold storage, canal, irrigation, express, subway, pipe line, gas, electric light, heat, power, water,
oil, sewer, telephone, wire or wireless telegraph system, plant or equipment, for public use: Provided, That as
regards such common carries, by land or by water, whose equipment is used principally or secondarily in
furtherance of their private business, the net earnings of the latter business shall be considered in connection
with their common carrier business for the purposes of rate fixing: Provided, further, That the Commission
shall have no jurisdiction over ice plants, cold storage plants, or any other kind of public utilities operated by
 the Federal Government exclusively for its own and not for public use: And provided, lastly, That the Public
Utility Commission shall not exercise any control or supervision over the Manila Railroad Company so long
as the same shall be controlled by the Government of the Philippine Islands, except with regard to its rates.

xxx xxx xxx

ART. 15. . . . .

(i) No public utility as herein defined shall operate in the Philippine Islands without having first secured from
the Commission a certificate, which shall be known as Certificate of Public Convenience to the effect that the
operation of said public utility and the authorization to do business will promote the public interests in a
proper and suitable manner. Every public utility existing on the date of the approval of this Act shall pay the
fees herein prescribed for the issuance of the proper certificate of public convenience or public necessity and
convenience, as the case may be, in the same manner as said fees shall be payable by any new public utility
subject to the provisions of this Act, within sixty days from the date of the approval of this Act: Provided,
however, That in the case of a public utility for the operation of whose business it is necessary to obtained a
franchise from either a municipal government, or a provincial government, under the provisions Numbered
Six hundred and sixty-seven, as amended by Act Numbered Ten hundred and twenty-two, or from the
Philippine Legislature, such public utility share secure a certificate to be known as Certificate of Public
Necessity and Convenience, as required by section twenty-two of this Act. The duty to secure such
certificates of public convenience of certificate of public necessity and convenience by public utilities or to
pay the fees herein prescribed by the public utilities already existing is a mandatory character and
noncompliance herewith may, in the judgment of the Public Utility Commission, be sufficient ground for the
revocation and cancellation of any vested right and for the imposition of the penalty provided for in this Act.

The first question to be determined is whether said Act No. 3108 as amended, should be applied to the present case,
notwithstanding the enactment of Commonwealth Act No. 146 which took effect on November 7, 1936.

While section 46 of the Commonwealth Act No. 146 expressly repeals Act No. 3108 and its amendments, nowhere
does it provide that it has retroactive effect. In the absence of any express provision to this effect, the general rule
should prevail that laws do not have retroactive effect, unless otherwise expressly provided. "Retrospective or
retroactive legislation is not favored. Hence it is a well settled and fundamental rule of statutory construction, variously
stated that all statutes are to be construed as having only prospective operation, and not as operating retrospectively. It
is equally well-settled as a fundamental rule of statutory construction supported and established by numerous judicial
decisions that the statutes are not to be construed as having a retroactive effect." (59 C. J., sec. 692, pp. 1159-1162;
U. S. vs. Magnolia Petroleum Co., 276 U. S., 160; U. S. vs. St. Louis, S. F.& T. Ry Co., 270 U. S., 1; Burden, Smith &
Co. vs. U. S., 32 F. [2d], 830; Warner vs. Walsh, 27 F. [2d], 952; U. S. vs. Russell, 22 F. [2d], 249; Conklin vs. United
States, 21 F. [2d], 141; United States vs. United Shoe Machinery Co., 264 F., 138; U. S. vs. Atchison, etc., R. Co., 142
F., 176; Hathaway vs. New York Mut. L. Ins. Co., 99 F., 534; Northwestern Mut. Life Ins. Co. vs. Seaman, 80 F.,
357/359; Humboldt Lumber Manufacturer's Assoc. vs. Christopherson, 73 F., 239, In re Billings, 3 F. Cas. No. 1,408;
Shecnck vs. Peay, 21 Cas. No. 12,450; uckenbach S.S. Co. vs. U. S., 66 Ct. Cl., 679; Penick & Ford vs. United Stated,
12 Cust. App., 218.) And this rule is the more applicable to the present case because the defendants have acquired
rights under the former law which should be protected. "Retroactive legislation changing rights is not favored, and the
rule that statutes are not to be construed retrospectively unless such construction was plainly by the legislature applies
with peculiar force. Hence, in so far as affecting vested rights, a statute will be construed as prospective only, and not
as operating retrospectively or retroactively, unless that intention is made manifest either by express words or by a
clear, distinct, necessary plain, strong, unmistakable, implication." ( 59 C. J., sec. 696, pp. 1171, 1172; Forsyth vs.
Marbury, R. M. Charlt. [Ga.], 324; Davidson vs. Gaston, 16 Minn., 230; Bunk vs. Knight, 187 N. Y. S., 747; In re Frost's
Estate, 175 N. Y. S., 723; Hester & Roberts vs. Donna Irr. Dist. Hidalgo County No. 1, 239 S. W. 992; School
Corporation of Andrews vs. Heiney 98 N. E., 628; City of Chicago vs. Collin 134 N. E., 751; American Surety Co. of
New York vs. Axtell Co., 36 S. W. [2d] 715; Chew Heong vs. U. S., 112 U. S. 536; Barrington vs. Barrington 76 So. 81.)
We, therefore, hold that Commonwealth Act No. 146 is not applicable to the present case and that the defendants'
rights, in connection with the certificate of public convenience for the ice factory operated by them, should be governed
by Act No. 3108, as amended.
 The next question which we have to answer is whether the defendants are under a duty to provide themselves with a
certificate of public convenience in order to continue operating the ice factory which they have in the City of Iloilo.

In the case of Iloilo Ice and Cold Storage Company vs. Public Utility Board (decided on March 2, 1923, 44 Phil., 551 et
seq.), we said that under the established facts and circumstances the defendant's ice factory was not them a public
utility because it was not an enterprise devoted to the public. But the proven facts in the case before us now
conclusively show that the aforesaid factory, after the said decision was promulgated, has been converted into a public
service because, as the defendant Bordman himself admitted, the ice which it produces is sold to the public for a
compensation and for a price which for sometime has been the same as that which the plaintiff charged for the ice
which it produced.

Subsection (i) of section 15 of Act No. 3108 as amended by section 2 of Act No. 4033 contains an exception providing
that public services existing before its approval, instead of providing themselves with a certificate of public convenience
or with a certificate of public necessity and convenience, as the case may be, shall only pay the fees fixed by law for
the issuance of said certificates. The factory operated by the defendants is within the purview of the proviso, and under
the law, it is not under a duty to provide itself with a certificate of public convenience but only to pay the required fees
for the issuance of said certificate. We therefore hold that the defendants are not bound to provide themselves with a
certificate of public convenience to continue operating their ice plant but they should pay within a reasonable time the
fees required for said certificate.

The foregoing should not be interpreted to mean that the defendants are not subject to the jurisdiction and authority of
the Public Service Commission. After paying the aforesaid fees the commission shall issue to them the corresponding
certificate of public convenience, which may be regulated, modified or cancelled for just cause, and in its operation and
exploitation the defendants' factory shall be subject to the jurisdiction and authority of the commission, like any new
enterprise, in accordance with the provisions of the Commonwealth Act No. 146.

The defendants invoke in support of their contention that Act No. 3108 and its amendments are unconstitutional and
void the doctrine enunciated by the Supreme Court of the United States in the case of New State Ice Company vs.
Liebman (285 U. S., 262 et seq.), wherein it was held that the manufacture of ice is a private business in the State of
Oklahoma, for which reason it is not subject to the jurisdiction and authority of the Public Utility Commission. We have
carefully read the decision rendered in the said case and we hold that the facts supporting the legal conclusions laid
down therein are entirely distinct from those found established in the present case. Under our law and the facts
admitted by the defendants in this case the ice factory which the defendants operate is a public service because the
ice it produces is sold to the public for a price by way of compensation.

2. In view of what has been said, it would be profitless to discuss the second assignment of error wherein the
defendants allege that the plaintiff has not brought the present suit with clean hands.

3. The defendants insist in their third and last assignment of error that the court erred in not holding the plaintiff liable
for damages caused by the unjustified issuance of the preliminary injunction which to date is in force.

Resolving this point, we hold that the injunction was issued for a just cause because it is established and admitted by the
defendants themselves that they operated the ice plant without paying the fees required by law, payment which should have
been made within sixty days following the approval of the law.

For the foregoing reasons, the appealed decision is reversed, and it is ordered that the defendants, within thirty days from notice
of this decision, pay to the Public Service Commission the fees fixed by law for the issuance of the certificate of public
convenience for their factory, and that upon such payment the commission issue to them the certificate of public convenience;
provided, however, that the defendant Iloilo Commercial & Ice Co., as operator of the public service which it exploits, is subject to
the jurisdiction and authority of the Public Service Commission. After the defendant corporation has obtained the certificate of
public convenience, the preliminary injunction which has been issued shall be cancelled as well as the bond filed by the plaintiff;
without special pronouncement as to the costs in this instance. So ordered.

Avanceña, C.J., Villa-Real, Abad Santos, Diaz, Laurel and Concepcion, JJ., concur.
8. NORTH NEGROS SUGAR CO vs. SERAFIN HIDALGO
Posted on July 1, 2013 by winnieclaire
Standard
G.R. No. L-42334 October 31, 1936

Facts: North Negros Sugar Co. (NNSC) is the owner of a site known as the “mill site.” It is where its sugar central, with its factory
building and residence for its employees and laborers are located. It also owns the adjoining sugar plantation known as
Hacienda “Begoña.” Across its properties NNSC constructed a road connecting the “mill site” with the provincial highway.
Through this road it allowed vehicles to pass upon payment of a toll charge of P0.15 for each truck or automobile. Pedestrians
are allowed free passage through it.
Immediately adjoining the above-mentioned “mill site” of the NNSC is the hacienda of Luciano Aguirre, known as Hacienda
“Sañgay,” where the Hidalgo has a billiard hall and a tuba saloon. Like other people in and about the place, Hidalgo used to pass
through the said road of the NNSC because it was his only means of access to the Hacienda “Sañgay”. Later on, by order of the
NNSC , every time that the Hidalgo passed driving his automobile with a cargo of tuba plaintiff ,the gatekeeper would stop him
and prevent him from passing through said road. Hidalgo in such cases merely deviated from said road and continued on his
way to Hacienda “Sañgay” across the fields of Hacienda “Begoña,” likewise belonging to the NNSC.

Issue: Whether or not NNSC can enjoin Hidalgo from passing the property.

Ruling: NO.
We, therefore, have the case of an easement of way voluntarily constituted in favor of a community. Civil Code articles 531 and
594 read:
ART. 531. Easements may also be established for the benefit of one or more persons or of a community to whom the
encumbered estate does not belong.
xxxxxxxxx
ART. 594. The owner of an estate may burden it with such easements as he may deem fit, and in such manner and form as he
may consider desirable, provided he does not violate the law or public order.
As may be seen from the language of article 594, in cases of voluntary easement, the owner is given ample liberty to establish
them: “as he may deem fit, and in such manner and form as he may consider desirable.” The plaintiff “considered it desirable” to
open this road to the public in general, without imposing any condition save the payment of a fifteen-centavo toll by motor
vehicles, and it may not now go back on this and deny the existence of an easement. Voluntary easements under article 594 are
not contractual in nature; they constitute the act of the owner. If he exacts any condition, like the payment of a certain indemnity
for the use of the easement, any person who is willing to pay it may make use of the easement. If the contention be made that a
contract is necessary, it may be stated that a contract exits from the time all those who desire to make use of the easement are
disposed to pay the required indemnity.The plaintiff contends that the easement of way is intermittent in nature and can only be
acquired by virtue of a title under article 539. The defendant, however, does not lay claim to it by prescription. The title in this
case consists in the fact that the plaintiff has offered the use of this road to the general public upon payment of a certain sum as
passage fee in case of motor vehicles.
The cases of Roman Catholic Archbishop of Manila vs. Roxas (22 Phil., 450), and Cuaycong vs. Benedicto (37 Phil., 781), are
not controlling, as there the attempt was to establish that the right to an easement of way had been acquired by prescription.
Here defendant’s contention is, that while the road in question remains open to the public, he has a right to its use upon paying
the passage fees required by the plaintiff. Indeed the latter may close it at its pleasure, as no period has been fixed when the
easement was voluntarily constituted, but while the road is thrown open, the plaintiff may not capriciously exclude the defendant
from its use.
Furthermore, plaintiff’s evidence discloses the existence of a forcible right of way in favor of the owner and occupants of the
Hacienda “Sañgay” under the Civil Code, article 564, because, according to said evidence, those living in Hacienda “Sañgay”
have no access to the provincial road except thru the road in question.

9. PANGASINAN TRANSPORTATION CO., INC. vs. THE PUBLIC SERVICE COMMISSION G.R.
No. 47065 June 26, 1940
FACTS:
Pangasinan Transportation Company Inc. (PTI) has been engaged for 20 years in the
business of transporting passengers in Pangasinan, Tarlac and Nueva Ecija through TPU buses
in accordance with the terms and conditions of the certificates of public convenience issued by
the Public Utility Commission (later called Public Service Commission). The company applied
for an authorization to operate ten additional Brockway trucks on the ground that they were
needed to comply with the terms and conditions of its existing certificates and as a result of the
application of the Eight Hour Labor Law. PSC agreed to grant the authorization, but with two
conditions as provided for by section 1 of Commonwealth Act No. 454: First, that the certificates
of authorization issued to it would be valid only for a period of 25 years counted from the date of
promulgation; and second, that the company may be acquired by the Philippine Commonwealth
with proper payment of the cost price of its equipment, taking into account reasonable
depreciation to be fixed by the Commission at the time of it acquisition. PTI did not agree with
the conditions, and instead asked the Supreme Court to declare Commonwealth Act No. 454.

ISSUE:
Whether or not Commonwealth Act No. 454 is unconstitutional for being undue
delegation of legislative power on the ground that without limitation, guide or rule except the
unfettered discretion and judgment of the Commission, constitute a complete and total
abdication by the Legislature of its functions in the premises, and for that reason, the Act, in so
far as those powers are concerned.

HELD:
No, the law is not unconstitutional. The law is made subject to a sufficient standard that
the PSC must strictly follow. 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.) The Supreme Court had earlier ruled that "public interest"
furnishes a sufficient standard.

10. PHILIPPINE AIRLINES, INC. vs.

CIVIL AERONAUTICS BOARD and GRAND INTERNATIONAL AIRWAYS, INC.
G.R. No. 11952; March 26, 1997

FACTS:
This Special Civil Action seeks to prohibit respondent Civil Aeronautics Board from exercising jurisdiction over private
respondent’s Application for the issuance of a Certificate of Public Convenience and Necessity, and to annul and set aside a
temporary operating permit issued by the Civil Aeronautics Board in favor of Grand International Airways, allowing the same to
engage in scheduled domestic air transportation services, particularly the Manila-Cebu, Manila-Davao, and converse routes.
Philippine Airlines, Inc. (PAL) alleges that GrandAir does not possess a legislative franchise authorizing it to engage in air
transportation service within the Philippines or elsewhere. Such franchise is, as argued, a requisite for the issuance of a
Certificate of Public Convenience or Necessity by the respondent Board, as mandated under Section 11, Article XII of the
Constitution.

Respondent GrandAir, on the other hand, posits that a legislative franchise is no longer a requirement for the issuance of a
Certificate of Public Convenience and Necessity or a Temporary Operating Permit, following the Court’s pronouncements in
various jurisprudential cases.

ISSUE:
Whether or not Congress, in enacting Republic Act 776, has delegated the authority to authorize the operation of domestic air
transport services to the respondent Board, such that Congressional mandate for the approval of such authority is no longer
necessary.

HELD:
It is generally recognized that a franchise may be derived indirectly from the state through a duly designated agency, and to this
extent, the power to grant franchises has frequently been delegated, even to agencies other than those of a legislative nature. In
pursuance of this, it has been held that privileges conferred by a grant by local authorities as agents for the state constitute as
much a legislative franchise as though the grant had been made by an act of the Legislature. The trend of modern legislation is
to vest the Public Service Commissioner with the power to regulate and control the operation of public services under reasonable
rules and regulations, and as a general rule, courts will not interfere with the exercise of that discretion when it is just and
reasonable and founded upon a legal right.

The Civil Aeronautics Board has the authority to issue a Certificate of Public Convenience and Necessity, or Temporary
Operating Permit to a domestic air transport operator, who, though not possessing a legislative franchise, meets all the other
requirements prescribed by the law. Such requirements were enumerated in Section 21 of R.A. 776. There is nothing in the law
nor in the Constitution, which indicates that a legislative franchise is an indispensable requirement for an entity to operate as a
domestic air transport operator. Although Section 11 of Article XII recognizes Congress’ control over any franchise, certificate or
authority to operate a public utility, it does not mean Congress has exclusive authority to issue the same. Franchises issued by
Congress are not required before each and every public utility may operate. In many instances, Congress has seen it fit to
delegate this function to government agencies, particularly specialized in their respective areas of public service.

11. Luque v Villegas

Facts:
Petitioners ( who are passengers from Cavite and Batangas who ride on buses to and from their province and Manila) and some
public service operators of buses and jeeps assail the validity of Ordinance 4986and Administrative Order 1.

Ordinance 4986 states that PUB and PUJs shall be allowed to enter Manila only from 6:30am to 8:30pm every day except
Sundays and holidays.

Petitioners contend that since they possess a valid CPC, they have already acquired a vested right to operate.

Administrative Order 1 issued by Commissioner of Public Service states that all jeeps authorized to operate from Manila to any
point in Luzon, beyond the perimeter of Greater Manila, shall carry the words "For Provincial Operation".

Issue:
1. Whether or not the said regulations are valid.
2. Whether or not Ordinance 4986 destroys vested rights to operate in Manila.

Held:
1. YES! Using the doctrine in Lagman vs. City of Manila, Petitioner's Certificate of Public Convenience was issued subject to the
condition that operators shall observe and comply with all the rules and regulations of the PSC relative to PUB service.

The purpose of the ban is to minimize the problem in Manila and the traffic congestion, delays and accidents resulting from the
free entry into the streets of Manila and the operation around said streets.

Both Ordinance 4986 and AO 1 fit into the concept of promotion and regulation of general welfare.

2. NO! A vested right is some right or interest in the property which has become fixed and established and is no longer open to
doubt or controversy. As far as the State is concerned, a CPC constitutes neither a franchise nor a contract, confers no property
right, and is a mere license or privilege.

The holder does not acquire a property right in the route covered, nor does it confer upon the holder any proprietary
right/interest/franchise in the public highways.

Neither do bus passengers have a vested right to be transported directly to Manila. The alleged right is dependent upon the
manner public services are allowed to operate within a given area. It is no argument that the passengers enjoyed the privilege of
having been continuously transported even before outbreak of war. Times have changed and vehicles have increased. Traffic
congestion has moved from worse to critical. Hence, there is a need to regulate the operation of public services.
12. G.R. Nos. L-39902, L-39903 November 29, 1933
DOMINADOR RAYMUNDO, petitioner-appellant,
vs.
LUNETA MOTOR CO., ET AL., respondents-appellees.
A.M. Zarate for appellant.
Jose Agbulos for appellee Luneta Motor Co.
No appearance for the other appellee.
MALCOLM, J.:
The question squarely raised in these concerns the forced sales of certificates of public convinced held by public service
operators and the liability to execution of such certificates.
Breaking into the narration of the facts at the proper point, we find Nicanor de Guzman, signing as Guzco Transit, purchasing
trucks from the Luneta Motor Co. and to pay for them executing a series of promissory notes guaranteed by a chattel mortgage
on several trucks. On failure of De Guzman or Guzco Transit to pay the promissory notes, suit was brought in the Court of First
Instance of Manila for the collection of the amount outstanding and unpaid. When the complaint was presented, a writ of
attachment was obtained against the properties of the Guzco Transit, and as a consequence garnishment was served on the
Secretary of the Public Service Commission attacking the right, title, and participation of the Guzco Transit in the certificates of
public convenience issued in cases Nos. 25635, 23914 and 24255 covering the bus transportation lines between Manila and
Cardona, Rizal, and between Manila and Pililla, Rizal. These certificates were ordered sold by the Court of First Instance of
Manila, and in fact the certificates of public convenience Nos. 25635 and 23914 were sold to the Luneta Motor Co. as the highest
bidder. The approval of the sheriff's sale was prayed for before the Public Service Commission, and is one of the cases under
review.
Going back a moment, it is necessary to insert in the statement of facts that on July 16, 1932, or nine days after the certificates
were attached by the Luneta Motor Co., the same certificates, together with certificate No. 25951 and several trucks, were sold
by De Guzman for the Guzco Transit to Dominador Raymundo. The approval of this sale was sought from the Public Service
commission, and is the other case now under review. On the two cases being heard together, the commission in its decision
approved the sale at public auction in favor of the Luneta Motor Co., and disapproved the sale made to Dominador Raymundo,
reserving to Raymundo the right to present another petition for the approval of the sale of certificate of public convenience No.
25951 which was not included in the sale in favor of the Luneta Motor Co.
Sweeping incidental matters to one side, the prime question need not be complicated by determining if a sale of a certificate of
public convenience without any equipment may be the object of execution and garnishment sale, for this is matter of policy to be
determined by the Public Service Commission, and it appears that sale of certificates of public convenience without equipment
have been approved by the commission. Also it is evident that the articles of incorporation of the Luneta Motor Co. are broad
enough in scope to authorize the company, if it so desires, to engage in the autotruck business, and if not, there would be
nothing to preclude the company from transferring the certificates to a third party with the approval of the Public Service
Commission. Further, the nature of the partnership which may have been entered into by Nicanor de Guzman and Agapito C.
Correa cannot now be discussed, considering that the promissory notes were signed Guzco Transit, by Nicanor de Guzman, and
considering that the judgment against Guzco Transit in the Court of First Instance of Manila has become final. Finally, the
dismissal in case No. 33033 pertaining to certificate No. 25951 was without prejudice, and the appellees disclaim any interest in
this certificate. Therefore, the question to be decided on this appeal is, which of the two sales, the one at public auction by virtue
of an attachment, or two voluntary sale made after the property had been levied upon, should prevail, and a decision on this
question is dependent on a decision relative to the liability to execution of certificates of public convenience.
The Public Service Law, Act No. 3108, as amended, authorizes certificates of public convenience to be secured by public service
operators from the Public Service Commission. (Sec. 15 [i].) A certificate of public convenience granted to the owner or operator
of public service motor vehicles, it has been held, grants a right in the nature of a limited franchise. (Public Utilities
Commission vs. Garviloch [191], 54 Utah, 406.)
The Code of Civil Procedure establishes the general rule that "property, both real and personal, or any interest therein of the
judgment debtor, not exempt by law, and all property and rights of property seized and held under attachment in the action, shall
be liable to execution." (Sec. 450.) The statutory exemptions do not include franchises or certificates of public convenience. (Sec.
452.) The word "property" as used in section 450 of the Code of Civil Procedure comprehends every species of title, inchoate or
complete, legal or equitable. The test by which to determine whether or not property can be attached and sold upon execution is
whether the judgment debtor has such a beneficial interest therein that he can sell or otherwise dispose of it for value. (Reyes vs.
Grey [1911], 21 Phil., 73.)
It will be noted that the Public Service Law and the Code of Civil Procedure are silent on the question at issue, that is, silent in
the sense of not containing specific provisions on the right to attach certificates of public convenience. The same attitude was not
assumed in the enactment of Act No. 667, section 10, as amended, which gave authority for the mortgage and sale under
foreclosure proceedings of franchises granted by Provincial and municipal governments. A similar tendency was evident in the
Corporation Law, for in section 56 and following thereof express provisions were made for the sale on execution used in
connection with them. Should the legislative intention thus evidenced be taken as meaning that the generality of the language
used by the Code of Civil Procedure was too vague to permit of forced sales of franchises and certificates of public convenience,
or notwithstanding the provisions to be found in these special laws, is the language of the code of Civil Procedure broad enough
to include certificates of public convenience? We lean to the latter proposition, and will now proceed to elucidate our viewpoint.
The test to be applied was announced by our Supreme Court in Reyes vs. Grey, supra, and there is nothing in Tufexis vs.
Olaguera and Municipal Council of Guinobatan ( [1915], 32 Phil., 654), cited by appellant, which sanctions a contrary test. That
rule it will be recalled tested the liability of property to execution by determining if the interest of the judgment debtor in the case
can be sold or conveyed to another in any way. Now the Public Service Law permits the Public Service Commission to approved
the sale, alienation, mortgaging, encumbering, or leasing of property, franchises, privileges, or rights or any part thereof (sec. 16
[h]), and in practice the purchase and sale of certificates of public convenience has been permitted by the Public Service
Commission. If the holder of a certificate of public convenience can sell it voluntarily, there is no valid reason why the same
certificate cannot be taken and sold involuntarily pursuant to process.
If this was all that there was to the case, we might hesitate to approve attachments of certificates of public convenience. But
there is more. Certificates of public convenience have come to have considerable material value. They are valuable assets. In
many cases the certificates are the cornerstones on which are builded the business of bus transportation. The United States
Supreme Court considers a franchise granted in consideration of the performance of public service as constituting property within
the protection of the Fourteenth Amendment to the United States Constitution. (Frost vs. Corporation Commission of Oklahoma
[1929], 278 U.S., 515.) If the holder of the certificate of public convenience can thus be protected in his constitutional rights, we
see no reason why the certificate of public convenience should not assume corresponding responsibilities and be susceptible as
property or an interest therein of being liable to execution. In at least one State, the certificate of the railroad commission
permitting the operation of a bus line has been held to be included in the term "property" in the broad sense of the term. If thus is
true, the certificate under our law, considered as a species of property, would be liable to execution. (Willis vs. Buck [1928], 81
Mont., 472.)
As has been intimated herein before, a practice has grown up in the Public Service Commission of permitting the alienation of
certificates of public convenience and in so doing approval has been given to the sale through foreclosure proceedings of the
certificates of public convenience to third parties. The very decision in the two cases before us is an illustration of this practice.
The same tendency is to be noted in the lower courts. As an example in the instant record, there is a previous foreclosure of a
mortgage apparently uncontested, Not only this, but tacit approval to the attachment of certificates of public convenience either
through chattel mortgages or court writs has been given by this court. (Orlanes & Banaag Transportation Co. vs. Public Service
Commission [1932], 57 Phil., 634; Manila Electric Company vs. Orlanes & Banaag Transportation Co. [1933], 57 Phil., 805; Nos.
39525 and 39531, Red Line Transportation Co. vs. Rural Transit Co. and Bachrach Motor Co., November 17, 1933. 1)
When the motion of the plaintiff praying that the certificates of public convenience granted by the Public Service Commission
which were attached be sold at public auction and the answer opposing the granting of the motion on the ground that franchises
can not be the subject of attachment and sale by garnishment came before the Court of First Instance of Manila, the presiding
Judge Anacleto Diaz, promulgated an order which sustained the right of the plaintiff to attachment and garnishment. That order
gains particular force because a later judgment by consent was taken and no appeal was attempted to this court. It is true that
the sale further required the approval of the Public Service Commission, but the Public Service Commission respected the
decision of the court and so we have the concurrence of the court and the commission on this question. In the order in first
instance appears the following well considered language:
It remains to be determined whether, under the law, certificates of public convenience are liable to attachment and seizure by
legal process. The law is silent as to this matter. It can not be denied that such franchises are valuable. They are subject to being
sold for a consideration as much as any other property. They are even more valuable than ordinary properties, taking into
consideration than that they are not granted to every one who applies for them but only to those who undertake to furnish
satisfactory and convenient service to the public. It may also be said that dealers in motor vehicles even extend credit to owners
of such certificates or franchises. The law permits the seizure by means of a writ of attachment not only of chattels but also for
shares and credits. While these franchises may be said to be intangible character, they are however of value and are considered
properties which can be seized through legal process.
For all the foregoing, the court is of the opinion that the plaintiff is entitled to the remedy it prays for in its motion which is hereby
granted.lawphil.net
The ruling of the Supreme Court on the question raised by the record and the assignments of error is this: Certificates of public
convenience secured by public service operators are liable to execution, and the Public Service Commission is authorized to
approve the transfer of the certificates of public convenience to the execution creditor. As a consequence, the decision brought
on review will be affirmed, with costs against the appellant.
Avanceña, C.J., Villa-Real, Hull, and Imperial, JJ., concur.

13. KILUSANG MAYO UNO LABOR CENTER, petitioner,

vs.

HON. JESUS B. GARCIA, JR., the LAND TRANSPORTATION FRANCHISING AND REGULATORY BOARD, and the
PROVINCIAL BUS OPERATORS ASSOCIATION OF THE PHILIPPINES, respondents.

.G.R. No. 115381 December 23, 1994

FACTS:
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.

14. Luzon Stevedoring v. Public Service Commission (G.R. No. L-5458)

Facts:
Petitioners are corporations mainly engaged in the stevedoring or lighterage and harbor towage business. At the same time, they
are also engaged 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, for which service petitioners charge freightage, but only
serving a limited portion of the public. Respondent Philippine Shipowners Association complains that petitioners were engaged in
the transportation of cargo for hire or compensation without authority or approval of the Commission, having adopted, filed and
collected freight charges which said rates resulted in ruinous competition. PSC restrained petitioners “from further operating their
watercraft to transport goods for hire or compensation between points in the Philippines until the rates they propose to charge are
approved by this Commission.”

Issue:

Whether or not petitioners can be considered public service.

Ruling: YES.

It is not necessary, under this definition, that one holds himself out as serving or willing to serve the public in order to be considered
public service.

Commonwealth Act No. 146 declares in unequivocal language that an enterprise of any of the kinds therein enumerated is a public
service if conducted for hire or compensation even if the operator deals only with a portion of the public or limited clientele.

It has been seen that public utility, even where the term is not defined by statute, is not determined by the number of people actually
served. Nor does the mere fact that service is rendered only under contract prevent a company from being a public utility. On the
other hand, casual or incidental service devoid of public character and interest, it must be admitted, is not brought within the
category of public utility. The demarcation line is not susceptible of exact description or definitions, each case being governed by
its peculiar circumstances.

The transportation service which was the subject of complaint was not casual or incidental. It had been carried on regularly for
years at almost uniform rates of charges. Although the number of the petitioners’ customers was limited, the value of goods
transported was not inconsiderable. Petitioners did not have the same customers all the time embraced in the complaint, and there
was no reason to believe that they would not accept, and there was nothing to prevent them from accepting, new customers that
might be willing to avail of their service to the extent of their capacity.

15.JG Summit Holdings INC. vs. Court of Appeals | G.R. No. 124293 January 31, 2005

Facts: The National Investment and Development Corporation (NIDC), a government corporation, entered into a Joint Venture
Agreement (JVA) with Kawasaki Heavy Industries, Ltd. of Kobe, Japan (KAWASAKI) for the construction, operation and
management of the Subic National Shipyard Inc., (SNS) which subsequently became the Philippine Shipyard and Engineering
Corporation (PHILSECO).

Under the JVA, the NDC and KAWASAKI will contribute P330M for the capitalization of PHILSECO in the proportion of 60%-40%
respectively. One of its salient features is the grant to the parties of the right of first refusal should either of them decide to sell,
assign or transfer its interest in the joint venture.
NIDC transferred all its rights, title and interest in PHILSECO to the Philippine National Bank (PNB). Such interests were
subsequently transferred to the National Government pursuant to an Administrative Order.
When the former President Aquino issued Proclamation No. 50 establishing the Committee on Privatization (COP) and the Asset
Privatization Trust (APT) to take title to, and possession of, conserve, manage and dispose of non-performing assets of the
National Government, a trust agreement was entered into between the National Government and the APT wherein the latter was
named the trustee of the National Government’s share in PHILSECO.

In the interest of the national economy and the government, the COP and the APT deemed it best to sell the National
Government’s share in PHILSECO to private entities. After a series of negotiations between the APT and KAWASAKI , they
agreed that the latter’s right of first refusal under the JVA be “exchanged” for the right to top by 5%, the highest bid for the said
shares. They further agreed that KAWASAKI woul.d be entitled to name a company in which it was a stockholder, which could
exercise the right to top. KAWASAKI then informed APT that Philyards Holdings, Inc. (PHI) would exercise its right to top.

At the public bidding, petitioner J.G. Summit Holdings Inc. submitted a bid of Two Billion and Thirty Million Pesos
(Php2,030,000,000.00) with an acknowledgement of KAWASAKI/PHILYARDS right to top.
As petitioner was declared the highest bidder, the COP approved the sale “subject to the right of Kawasaki Heavy Industries, Inc.
/ PHILYARDS Holdings Inc. to top JG’s bid by 5% as specified in the bidding rules.”
On the other hand, the respondent by virtue of right to top by 5%, the highest bid for the said shares timely exercised the same.

Petitioners, in their motion for reconsideration, raised, inter alia, the issue on the maintenance of the 60%-40% relationship
between the NIDC and KAWASAKI arising from the Constitution because PHILSECO is a landholding corporation and need not
be a public utility to be bound by the 60%-40% constitutional limitation.

ISSUE: Whether under the 1977 Joint Venture Agreement, KAWASAKI can purchase only a maximum of 40% of PHILSECO’s
total capitalization.

The right of first refusal is meant to protect the original or remaining joint venturer(s) or shareholder(s) from the entry of third
persons who are not acceptable to it as co-venturer(s) or co-shareholder(s). The joint venture between the Philippine Government
and KAWASAKI is in the nature of a partnership36 which, unlike an ordinary corporation, is based on delectus personae.37 No one
can become a member of the partnership association without the consent of all the other associates. The right of first refusal thus
ensures that the parties are given control over who may become a new partner in substitution of or in addition to the original
partners. Should the selling partner decide to dispose all its shares, the non-selling partner may acquire all these shares and
terminate the partnership. No person or corporation can be compelled to remain or to continue the partnership. Of course, this
presupposes that there are no other restrictions in the maximum allowable share that the non-selling partner may acquire such as
the constitutional restriction on foreign ownership in public utility. The theory that KAWASAKI can acquire, as a maximum, only
40% of PHILSECO’s shares is correct only if a shipyard is a public utility. In such instance, the non-selling partner who is an alien
can acquire only a maximum of 40% of the total capitalization of a public utility despite the grant of first refusal. The partners
cannot, by mere agreement, avoid the constitutional proscription. But as afore-discussed, PHILSECO is not a public utility and no
other restriction is present that would limit the right of KAWASAKI to purchase the Government’s share to 40% of Philseco’s total
capitalization.
Furthermore, the phrase “under the same terms” in section 1.4 cannot be given an interpretation that would limit the right of
KAWASAKI to purchase PHILSECO shares only to the extent of its original proportionate contribution of 40% to the total
capitalization of the PHILSECO. Taken together with the whole of section 1.4, the phrase “under the same terms” means that a
partner to the joint venture that decides to sell its shares to a third party shall make a similar offer to the non-selling partner. The
selling partner cannot make a different or a more onerous offer to the non-selling partner.
The exercise of first refusal presupposes that the non-selling partner is aware of the terms of the conditions attendant to the
sale for it to have a guided choice. While the right of first refusal protects the non-selling partner from the entry of third persons, it
cannot also deprive the other partner the right to sell its shares to third persons if, under the same offer, it does not buy the shares.
Apart from the right of first refusal, the parties also have preemptive rights under section 1.5 in the unissued shares of Philseco.
Unlike the former, this situation does not contemplate transfer of a partner’s shares to third parties but the issuance of new Philseco
shares. The grant of preemptive rights preserves the proportionate shares of the original partners so as not to dilute their respective
interests with the issuance of the new shares. Unlike the right of first refusal, a preemptive right gives a partner a preferential right
over the newly issued shares only to the extent that it retains its original proportionate share in the joint venture.
The case at bar does not concern the issuance of new shares but the transfer of a partner’s share in the joint venture. Verily,
the operative protective mechanism is the right of first refusal which does not impose any limitation in the maximum shares that
the non-selling partner may acquire.

RULING: The court upheld the validity of the mutual rights of first refusal under the JVA between KAWASAKI and NIDC.

The right of first refusal is a property right of PHILSECO shareholders, KAWASAKI and NIDC, under the terms of their JVA. This
right allows them to purchase the shares of their co-shareholder before they are offered to a third party. The agreement of co-
shareholders to mutually grant this right to each other, by itself, does not constitute a violation of the provisions of the
Constitution limiting land ownership to Filipinos and Filipino corporations. As PHILYARDS correctly puts it, if PHILSECO still
owns the land, the right of first refusal can be validly assigned to a qualified Filipino entity in order to maintain the 60%-40%
ration. This transfer by itself, does not amount to a violation of the Anti-Dummy Laws, absent proof of any fraudulent intent. The
transfer could be made either to a nominee or such other party which the holder of the right of first refusal feels it can comfortably
do business with.
Alternatively, PHILSECO may divest of its landholdings, in which case KAWASAKI, in exercising its right of first refusal, can
exceed 40% of PHILSECO’s equity. In fact, in can even be said that if the foreign shareholdings of a landholding corporation
exeeds 40%, it is not the foreign stockholders’ ownership of the shares which is adversely affected but the capacity of the
corporation to won land—that is, the corporation becomes disqualified to own land.

This finds support under the basic corporate law principle that the corporation and its stockholders are separate judicial
entities. In this vein, the right of first refusal over shares pertains to the shareholders whereas the capacity to own land pertains
to the corporation. Hence, the fact that PHILSECO owns land cannot deprive stockholders of their right of first refusal. No law
disqualifies a person from purchasing shares in a landholding corporation even if the latter will exceed the allowed foreign equity,
what the law disqualifies is the corporation from owning land.

16. G.R. No. L-21061 June 27, 1968

FORTUNATO F. HALILI, petitioner,

vs.
RUPERTO CRUZ, respondent.

Amado A. Amador for petitioner.

Benjamin S. Somera for respondent.

ZALDIVAR, J.:

This is a petition for review of the decision of the Public Service Commission, in its Case No. 61-6113, granting to respondent-
appellee Ruperto Cruz a certificate of public convenience to operate a transportation service for passengers and freight, with
authority to operate ten units on the line he applied for.

Herein respondent filed, on September 19, 1961, with the Public Service Commission an application, praying for the grant of a
certificate of public convenience to operate, under PUB denomination, ten buses between Norzagaray (Bulacan) and Piers
(Manila), via Novaliches Road, A. Bonifacio Road, Blumentritt Street, Rizal Avenue, MacArthur Bridge, Aduana and 13th Streets;
and on the return trip, via Boston Street, MacArthur Bridge, Rizal Avenue, Blumentritt Street, A. Bonifacio Road, and Novaliches
Road. The application was opposed by De Dios Transportation Co., Inc., Raymundo Transportation Co., Inc., PDP Transit Inc.,
Villa Rey Transit, Inc., and by herein petitioner-appellant Fortunato F. Halili who was the operator of the transportation service
known as "Halili Transit." Petitioner, in his opposition alleged, substantially, that he was an operator of a bus service on the line
applied for, enumerating at the same time the other lines he operated which were traversed by the route mentioned in
respondent's application; that his service, as well as that of other bus operators on the route, was more than adequate to meet
the demands of the traveling public; that the grant of the application would merely result in wasteful and ruinous competition, and
that the respondent was not financially capable of operating and maintaining the service proposed by him.

After several hearings in which the parties presented their evidence, oral and documentary, the Public Service Commission
rendered a decision, on February 13, 1963, granting a certificate of public convenience to respondent Ruperto Cruz to operate
ten buses under PUB denomination on the line Norzagaray (Bulacan) — Piers (Manila) passing through the routes applied for.
The decision states, among others, as follows:

After a careful study of the evidence presented by the contesting parties, we find the following facts established; that
applicant is applying for a service from Norzagaray to Piers and vice-versa; that not one of the oppositors herein
operate a service up to Piers — most of them go up to Divisoria and the rest up to Folgueras; that there are commuters
starting from Norzagaray up to Piers; that applicant has the experience in the operation of a PUB service and that
applicant has the means with which to operate and maintain the service herein applied for.

From the facts in evidence, this Commission is of the belief that the weight of evidence tips in favor of the applicant.
 It appearing, therefore, that applicant is a Filipino citizen, that he is financially capable to operate and maintain the
service herein applied for, and that public convenience and necessity will be promoted by the approval of this
application, and furthermore, that the oppositions of the oppositors herein are without merit, the same are overruled
and the instant application APPROVED.

It is the above-mentioned decision of the Public Service Commission that is now sought to be reviewed by this Court.

Petitioner contends that:

1. "The finding of the Public Service Commission that there was a public need for the operation by respondent of ten
buses on the line of Norzagaray (Bulacan) - Piers (Manila) is not supported by the evidence;

2. "The Public Service Commission erred when it did not recognize the fact that petitioner-appellant was rendering
sufficient and adequate service on the line in question; and

3. "The Public Service Commission erred in failing to give petitioner-appellant the right of protection to investment to
which petitioner-appellant is entitled."

In support of his first two contentions petitioner argues that the 500 passengers found by the Commission as commuting daily
from Norzagaray to Manila could easily be accommodated in the buses of existing operators; that the existing operators were
authorized to operate 31 buses which made around 100 round trips a day; that since a bus could accommodate about 50
passengers, the existing authorized services could easily accommodate not only the 500 but even 5000 passengers a day.
Petitioner also asserted that the Commission failed to consider that 200 of the 500 commuters worked in the Republic Cement
Factory located at Norzagaray and so there were really only 300 commuters daily traveling on the Norzagaray — Manila line.
Petitioner further claimed that the new terminal proposed in the application was not based on actual need, because there were
no importing firms, or business establishments, or manufacturing concerns, in Norzagaray, whose employees had to make trips
to the piers at the south harbor in a Manila. On the question of public necessity, petitioner pointed out that the evidence
presented by the respondent consisted only of the testimony of two witnesses who did not make any formal or systematic study
of the movement and frequency of public utility buses, so that their testimonies were based only on casual observations. On the
other hand, as petitioner pointed out, the oppositors presented five witnesses, two of whom made meticulous, systematic and
daily observations on the line applied for. Petitioner urged that according to Exhibits "1", "1-A" to "1-R", consisting of different
pages of entries in a checkbook at the various PSC checkpoints in the proposed line, buses passing the checkpoints were
carrying only from 1 to 5 passengers — which fact proved that the existing operators more than adequately served the needs of
the public.

Petitioner likewise asserted that public necessity did not require the operation of the ten buses applied for by the respondent
because of the fact that on December 20, 1961, the Public Service Commission granted to herein petitioner, in Case No. 61-
5807, authority to operate only 10 buses on the line Norzagaray — Manila, even if he had applied for 20 buses; and that out of
the many application to operate buses from Paradise Farms (Bulacan) to Manila, only 10 buses were authorized.

The first two contentions of petitioner raise questions of fact. This Court has repeatedly held that where the Public Service
Commission has reached a finding, after weighing the conflicting evidence, that public necessity and convenience warrant the
operation of additional public utility service, the finding must not be disturbed as long as there is evidence reasonably supporting
such finding.1 In reviewing the decision of the Commission, this Court is not even required to examine the proof de novo and
determine for itself whether or not the preponderance of evidence really justifies the decision. The only function of this Court is to
determine whether or not there is evidence before the Commission upon which its decision might reasonably be based. 2

The Commission stated in its decision that "after a careful study of the evidence presented by the contesting parties ... the
Commission is of the belief that the weight of evidence tips in favor of the application." There is evidence on record that there are
numerous students, professionals, merchants, and employees in both government and private concerns, that commute daily
between Norzagaray and Manila and the intermediate points along the line;3 that along the same line have emerged numerous
centers of population, residential subdivisions and housing projects, industrial projects like the Republic Cement Factory, Angat
River Dam Hydro-electric Power Project, and hollow blocks manufacturing establishments;4 that commuters experienced
difficulties in getting accommodated on buses traveling between Norzagaray and Manila; that the Villa Rey Transit used to make
two trips from Angat to Manila via Norzagaray, the La Mallorca Pambusco also two trips from Norzagaray to Manila via Sta.
Maria, and the Halili Transit likewise two trips from Norzagaray to Manila via the Novaliches Road; that said trips were fully
loaded at Norzagaray such that many commuters from Norzagaray had to take jeeps which brought them only up to Sta. Maria
and Bocaue and there waited for other means of transportation to bring them to Manila;5 and that commuters from Manila to
Norzagaray also had to resort to broken trips for lack of direct trips.6 We are persuaded that the evidence in the record support
the decision appealed from.

Petitioner claims that the Public Service Commission did not consider the checker's reports (Exhs. 1, 1-A, to 1-R), on the face of
which it appears that there was no overcrowding in the buses checked at the various checkpoints. The Commission, however,
states in its decision that it had arrived at the finding "after a careful study of the evidence presented by the contesting parties,"
— and necessarily the evidence thus studied included the checker's reports. But assuming, gratia argumenti, that said reports
were not considered the failure of the Commission to consider the reports would not constitute a reversible error, because we
find that the reports refer to trips of buses from Manila to Ipo, Sapang Palay, San Jose and back, and from upland to lowland and
back, and none of the buses checked had trips along Norzagaray-Manila or Manila-Norzagaray line. The relative weight of these
checker's reports as evidence must have been considered by the Commission before making its decision. As we have stated, the
finding of fact of the Public Service Commission is conclusive on this Court. Thus, in a case, this Court said:

It appearing that the main issues raised by petitioner merely affect questions of fact which by their very nature involve
an evaluation of the relative weight of the evidence of both parties, or the credibility of witnesses who testified before
the Commission, following the law and jurisprudence applicable to the matter in this jurisdiction, said questions are now
conclusive upon this Court, and cannot be looked into, it appearing that there is sufficient evidence to support its
findings.7

The claim of petitioner, that he was rendering adequate services on the line in question as would preclude the necessity of
another operator, is untenable. In the first place, as shown in the record, petitioner does not have a direct line from Norzagaray to
the Piers — the line that is applied for by respondent. In the second place, there is evidence to the effect that oppositor Halili was
authorized 48 trips between Norzagaray and Folgueras,8 but it was making two trips only.9 This circumstance indicated that there
was shortage of transportation units or facilities, and that the line was not adequately serviced by the petitioner. Thus, in a case
concerning the non-operation of authorized units, this Court said:

Apart from the existence of competent evidence in support of these findings, certain undisputed facts therein contained
reveal that the assignment of error under consideration is manifestly untenable. We refer to the circumstance that, of
the 75 buses that the Raytranco is authorized to operate in all its lines, its right with respect to 30 has been leased, 14
to Rizman and 16 to Laguna-Tayabas Bus Company. Again, though still entitled to operate 45 units in its remaining
lines, the Raytranco has registered only 17 buses, aside from the circumstance that such buses are not in continuous
operation. These facts lead to the conclusion that there must be a shortage of transportation facilities in the lines
aforementioned and that the Raytranco is unable to meet fully the demands of public convenience therein.10

Petitioner claims, in his third contention, that the Public Service Commission failed to give him the protection that he is entitled to,
being an old and established public service operator. As a general principle public utility operators must be protected from
ruinous competition, such that before permitting a new operator to serve in a territory already served by another operator, the
latter should first be given opportunity to improve his equipment and service. This principle, however, is subject to justifiable
exceptions. The primary consideration in the grant of a certificate of public convenience must always be public convenience.
Thus, this Court said:

While it is the duty of the government as far as possible to protect public utility operators against unfair and unjustified
competition, it is nevertheless obvious that public convenience must have the first consideration.... 11

The public convenience is properly served if passengers who take buses at points in one part of a line are able to proceed
beyond those points without having to change buses. On this point this Court said:

It is the convenience of the public that must be taken into account, other things being equal, and that convenience would be
effectuated by passengers who take buses at points in one part of a line being able to proceed beyond those points without
having to change buses and to wait the arrival of buses of a competitive operator. We can perceive how under such conditions
one public utility could gain business at the expense of a rival.12
In the instant case, public convenience would be properly served if commuters from Norzagaray going to the Piers in Manila
could go to their destination without the need of changing buses. Certainly the Public Service Commission has power to grant a
certificate of public convenience to a new operator, and the old operator cannot with reason complain that it had not been given
opportunity to improve its equipment and service, if it is shown that the old operator has not placed in the service all the units of
equipment that it had been authorized to operate, and also when the old operator has violated, or has not complied with,
important conditions in its certificate. 13 In the instant case, it has been shown that petitioner had not operated all the units that it
was authorized to operate.

IN VIEW OF THE FOREGOING, the decision of the Public Service Commission, sought to be reviewed, is affirmed; with costs
against petitioner-appellant. It is so ordered.

17. G.R. No. L-38586 August 18, 1933

TEODORO R. YANGCO, petitioner-appellant,

vs.
SIMPLICIO ESTEBAN, respondent-appellee.

Jose D. Cortes for appellant.

Juan Nabong and Gregorio Anonas for appellee.

HULL, J.:

This is an appeal from orders of the Public Service Commission in which it finally permitted respondent-appellee to operate one
Ford truck once a day between Subic and Olongapo, Philippine Islands. Both parties are operators of trucks under certificates of
public convinience and necessity within the Province of Zambales. There is also another operators between the points in
question.

This question has been repeatedly before the Public Service Commission. On a complaint of petitioner-appellant, the Public
Service Commission dismissed the complaint, in other words permitted the operation. Subsequently, the Public Service
Commission ordered respondent-appellee to stop operating over these eleven kilometers, and that order became final.
Subsequently, he asked permission to operate one truck one trip a day over this route, which was granted by the commission.
On reconsideration, the Public Service Commission denied it, and on reconsideration, it regranted it.

That the Public Service Commission should be confronted with the necessity of making six decisions on the question whether
one Ford truck should be allowed to make one trip a day over eleven kilometers, shows a most peculiar and unjustified abuse of
the privileges of litigation. The evidence clearly shows that the two operators now on this territory often operate their busses
virtually empty. One of the operators,
petitioner-appellant, stands ready to increase his service should the Public Service Commission decide that it is for the interest of
the Public so to do.

Where two operators are more than serving the public, there is no reason to permit a third operator to engage in competition with
them. The fact that it is only one trip and of little consequence, is not a sufficient reason to grant it.

There is a real public interest in this matter which seems to have been lost sight of. The Public Service Commission and the
courts are maintained at considerable expenses to the public at large, Litigious and contentious applicants for the right of using
our highways for the purpose of carrying a few passengers should not be permitted so to monopolize the time of the Public
Service Commission as to render it difficult for that body to attend to the many important and complicated questions involving
real public interest presented to it for action.

The last orders in this case are without real foundation in the evidence of record and are contrary to the principles this court has
enunciated in Batangas Transportation Co. vs. Orlanes (52 Phil., 455), and Visayan Rapid Transit Company vs. Viajante Interino
Co., G.R. No. 36262.1

The orders appealed from are therefore reversed with costs against the appellee. So ordered.
Avanceña, C.J., Malcolm, Villa-Real, and Imperial, JJ., concur.

18. BATANGAS V. ORLANES

Facts:
In his application for a permit, Cayetano Orlanes alleges that:
a. he is the holder of a certificate of public convenience (PC) issued by the Public Service Commission (PSC) in case No.
7306, to operate an autobus line
i. from Taal to Lucena, passing through Batangas, Bolbok and Bantilan (in the Province of Batangas), and Candelaria and
Sariaya (in the Province of Tayabas), without any fixed schedule
ii. however, he could not accept passengers from intermediate points in which Batangas Transportation Co. (Batranco) has
authority to operate by virtue of a prior license
b. he then has applied for a fixed schedule for those lines in which his license is limited and requests that he be converted into
a regular operator on a fixed schedule, thereby submitting a proposed schedule to PSC

Batranco appeared and filed an application for a permit, praying that the petition of Orlanes be denied, alleging that:
a. it is operating a regular service of auto trucks between Batangas and some parts in Tayabas
b. since 1918, it has been operating a regular service between Taal and Rosario, and in 1920, its service was extended to the
municipality of San Juan de Bolbok, with a certificate of PC issued
c. in 1925, Orlanes obtained from PSC a certificate of PC, as aforementioned
d. Orlanes inaugurated operations in March of 1926, but maintained it on the part between Taal and Bantilan for only about
three months, when he abandoned it in June; he did not renew it until five days before the hearing of case No. 10301
e. said case 10301 was filed by Batranco praying that:
i. its number of trip hours within the areas (conflicting routes) over which Orlanes likewise prays to be a regular operator be
increased, and/or
ii. all irregular operators be prohibited from operating their respective licenses, unless they should observe an interval of two
hours before, or one hour after, the regular hours of Batranco
f. from June, 1926, Orlanes and Batranco were jointly operating a regular service between Bantilan and Lucena, with trips
every half an hour
g. Orlanes not having asked for a regular service between Bantilan and Taal, Batranco remedied this under authority and
increased its trips between Bantilan and Tayabas to make due and timely connections in Bantilan to all other points in the
Province of Batangas
h. the service maintained by Batranco is sufficient to satisfy the convenience of the public
i. the PC does not require the granting of the permit for the service which Orlanes applied for, since to do so would result in
ruinous competition and grave prejudice of the company without any benefit to the public

PSC granted the petition of Orlanes, as prayed for. Batranco filed a motion for rehearing, which was denied. It then appealed to
the SC.
Issue:

Whether a certificate of PC to operate a public utility be issued to an applicant (Orlanes) thereof in a field where a person is
already granted a license (Batranco)?

Held:

The decision of the PSC is revoked and set aside, the case being remanded for further proceedings. So long as an operator
under a prior license complies with the terms and conditions of his license and reasonable rules and regulation for its operation
and meets the reasonable demands of the public, it is the duty of PSC to protect rather than to destroy his investment by the
granting of a subsequent license to another for the same thing over the same route of travel. The granting of such a license does
not serve its convenience or promote the interests of the public.
The questions presented involve a legal construction of the powers and duties of the PSC, and the purpose and intent for which
it was created, and the legal rights and privileges of a public utility operating under a prior license.

1. An autobus line is a public utility, a common carrier, and an important factor in the business conditions of the Islands, which
is daily branching out and growing very fast.
It must apply for and obtain a license or permit from the PSC, and comply with defined terms and conditions before such a
business can be operated. When license is granted, the operator must conform to, and comply with, all reasonable rules and
regulations of the PSC.

2. The object and purpose of PSC, among others, is to look out for, and protect, the interests of the public, and, in the instant
case, to provide it with safe and suitable means of travel over the highways in question, in like manner that a railroad would be
operated under like terms and conditions. For many and different reasons, it has never been the policy of a PSC to grant a
license for the operation of a new line of railroad which parallels and covers the same field and territory of another old
established line, for the simple reason that it would result in ruinous competition, and would not be of any benefit or convenience
to the public.

The PSC has ample power and authority to make any and all reasonable rules and regulations for the operation of any public
utility and to enforce compliance therewith, failure of which permits the PSC to revoke the license. It also has ample power to
specify and define what a reasonable compensation is for the services rendered to the public.

The fact that PSC has previously granted a license to any person to operate a bus line over a given highway and thereafter
refuses to grant a similar license to another over the same highway, does not in the least create a monopoly in the person of the
licensee, for the reason that the PSC has, at all times, the powers enumerated previously.

Act No. 3108, as amended by Act No. 3316, created the PSC. The supervision and control of public utilities under said law is
very broad and comprehensive.

Section 15 of Act No. 3108 provides that the Commission shall have power, after hearing, upon notice, by order in writing to
require every public utility:
a. To comply with the laws of the Philippine Islands;
b. To furnish safe, adequate, and proper service as regards the manner of furnishing the same as well as the maintenance of
the necessary material equipment, etc;
c. To establish, construct, maintain, and operate any reasonable extension of its existing facilities, where such extension is
reasonable and practicable and will furnish sufficient business to justify the construction and maintenance of the same;
d. To keep a uniform system of books, records and accounts;
e. To make specific answer with regard to any point on which the Commission requires information, and to furnish annual
reports of finance and operations;
f. To carry, whenever the Commission may require, a proper and adequate depreciation account;
g. To notify the Commission of all accidents;
h. That when any public utility purposes to increase or reduce any existing individual rates, it shall give the Commission written
notice thirty days prior to the proposed change; and
i. No public utility as herein defined shall operate in the Philippine Islands without having first secured from the Commission a
certificate, which shall be known as Certificate of Public Convenience, to the effect that the operation of said public utility and the
authorization to do business will promote the public interest in a proper and suitable manner. (emphasis supplied)
The power of the Commission to issue a certificate of PC depends on the condition precedent that, after a full hearing and
investigation, the Commission shall have found as a fact that the operation of the proposed public service and its authority to do
business is for the convenience of the public.

3. In the Philippines, the certificate of public convenience shows:

CERTIFICATE OF PUBLIC CONVENIENCE

To whom it may concern:
THIS IS TO CERTIFY, That in pursuance of the power and authority conferred upon it by subsection (i) of section 15 of Act No.
3108 of the Philippine Legislature,
THE PUBLIC SERVICE COMMISSION OF THE PHILIPPINE ISLANDS, after having duly considered the application of
................. for a certificate of public convenience the operation of ........................ in connection with the evidence submitted in
support thereof, has rendered its decision on................, 192...., in case No. ............, declaring that the operation by the applicant
...................... of the business above described will promote the public interests in a proper and suitable manner, and
granting................. to this effect the corresponding authority, subject to the conditions prescribed in said decision.
Given at Manila Philippine Islands, this ......... day of ....................., 192 .....
PUBLIC SERVICE COMMISSION OF THE PHILIPPINE ISLANDS
By..................................
Commissioner
Attested:
.....................................
Secretary

4. The certificate of PC granted to Orlanes expressly recites that it “will promote the public interests in a proper and suitable
manner.” Yet no such finding of fact was made by the Commission.

There is no claim or pretense that:

a. Batranco has violated any of the terms and conditions of its license
b. PSC found the grant of a license to Orlanes as a regular operator over the conflicting routes is required or necessary for the
convenience of the traveling public
c. The services of Batranco over the conflicting routes is subject to any complaint or criticism by the public

5. Where an operator is rendering good, sufficient and adequate service to the public, that the convenience does not require
and the public interests will not be promoted in a proper and suitable manner by giving another operator a certificate of public
convenience to operate a competing line over the same route.

It does not appear that the public has ever made any complaint of Batranco, yet on its own volition and to meet the increase of its
business, it has applied to the PSC for authority to increase the number of daily trips, thus showing a spirit that ought to be
commended.

6. The petition of Orlanes to become regular over the conflicting routes is largely based upon the growing demands of the
public, as evidenced by the application of Batranco in case No. 10301.

However, Batranco operated its line five years before Orlanes ever turned a wheel, yet the legal effect of the decision of the PSC
is to give an irregular operator, who was the last in the field, a preferential right over a regular operator, who was the first in the
field. That is not the law, and there is no legal principle upon which it can be sustained.

So long as the first licensee keeps and performs the terms and conditions of its license and complies with the reasonable rules
and regulations of the Commission and meets the reasonable demands of the public, it should have more or less of a vested and
preferential right over a person who seeks to acquire another and a later license over the same route. This is for the protection
on his investment, and for avoiding ruinous competition.

7. On the issue of the existence of monopoly if the certificate of PC is issued only to one operator:

In the National Coal Company case, the Philippine SC said: “When there is no monopoly. – There is no such thing as a
monopoly where a property is operated as a public utility under the rules and regulations of the Public Utility Commission and the
terms and provision of the Public Utility Act.” (emphasis supplied)

Section 775 of Pond on Public Utilities, recognized as a standard authority: “The policy of regulation, upon which our present
public utility commission plan is based and which tends to do away with competition among public utilities as they are natural
monopolies, is at once reason and the justification for the holding of our courts that the regulation of an existing system of
transportation, which is properly serving a given field, or may be required to do so, is to be preferred to competition among
several independent systems. x x x The prime object and real purpose of commission control is to secure adequate sustained
service for the public at the least possible cost, and to protect and conserve investments already made for this purpose.
Experience has demonstrated beyond any question that competition among natural monopolies is wasteful economically and
results finally in insufficient and unsatisfactory service and extravagant rates.

8. No additional certificate of PC is necessary (citing various US jurisprudence), where:

a. existing certificate holders was not given an opportunity to render additional service desired
b. there is no complaint as to existing rates and the present company is rendering adequate service
c. one bus service would be ample for all requirements
d. no clear and affirmative showing that an existing is unable or has refused to maintain adequate and satisfactory service
e. existing operators equipped adequately to accommodate the public, no complaints having been received in regard to service
rendered
f. after years of effort, an operator would be deprived of the fruits of his labor and of the capital he has invested by a larger
concern desiring to operate between the same points
g. the admission of another operator into the territory served by present licensees would render their licensee oppressive and
confiscatory because of further division and depletion of revenues and would defeat the purpose of the statue and disorganize
the public service
h. the service within the territory proposed to be served appeared to be adequate and it was the policy of the Commission to
protect the established line in the enjoyment of business which it had built, and in view of the further fact that it was very
uncertain whether the applicant could secure sufficient business to enable him to operate profitably
i. it is not shown that the utility desiring to enter a competitive field can give such service as will be a positive advantage to the
public, provided that the existing utility furnishing adequate service at reasonable rates at the time of the threatened competition
j. the existing service is reasonable, safe, and adequate as required by statue
k. no necessity is shown for additional service
l. the route is adequately served by a railroad and other bus line, although the proposed service would be an added
convenience to the territory

19. G.R. No. L-24701 December 16, 1970

INTESTATE TESTATE OF TEOFILO M. TIONGSON, petitioner,

vs.
THE PUBLIC SERVICE COMMISSION and MARIO Z. LANUZA, respondents.

Graciano C. Regala and Associates for petitioner.

E. R. Castro and D. A. Guzman for respondents.

MAKALINTAL, J.:

On May 11, 1965 the Public Service Commission decided its Case No. 124626, approving the application of Mario Z. Lanuza for
a certificate of public convenience to install and operate a 20-ton daily capacity ice-plant in Pagsanjan, Laguna, and to sell the
ice to be produced in said municipality as well as in the municipalities of Longos, Paete, Pakil, Pangil, Siniloan, Famy, Sta. Maria,
Cavinti, Magdalena, Majayjay, Nagcarlan, Rizal, Lilio, Sta. Cruz, Lumban, Pila and Victoria, all in the province of Laguna.

Three existing operators had opposed the application. One of them, Victorino de Peña, who has an ice-plant in Mauban,
Quezon, withdrew his opposition after the applicant excluded the municipality of Luisiana from the territory originally applied for.
Another oppositor, Emilio Gomez, did not appeal from the decision of the Public Service Commission. The petitioner here, the
Estate of Teofilo M. Tiongson, remains the only oppositor in the present appeal.

The petitioner is the grantee of a certificate of public convenience to maintain and operate a 30-ton (increased to 40 tons in 1960
and then to 70 tons in 1964) ice plant in San Pablo City, with authority to sell ice therein as well as in the municipalities of Sta.
Cruz, Rizal, Nagcarlan, Calauan, Victoria, Pila, Lumban, Paete, Pakil, Pangil, Cavinti, Siniloan and Alaminos.

There is no question as to the applicant's financial capacity. The principal issue is whether there is sufficient need for ice in the
places stated in the decision to justify the establishment of a plant in Pagsanjan with the daily capacity authorized by the
Commission. This issue is essentially one of fact on which, as a rule, the findings of the Commission are binding on this Court
unless it clearly appears that there is no evidence to reasonably support them.1 Such findings in this case, and the conclusion
derived therefrom, are as follows:

At one of the hearings of this case, applicant, a businessman and Filipino citizen, manifested that at present
there is no ice plant in Pagsanjan, Laguna; that there was formerly one in that municipality but it was
transferred to San Pablo City; that the nearest ice plant is located in Kalayaan (Longos, Laguna) which is
about 10 kilometers from Pagsanjan, Laguna; that there is a demand for ice by the people of Pagsanjan and
of the towns proposed to be served by the applicant because the present supply of ice coming from ice plant
operators and distributed by ice dealers is inadequate; that in the territory proposed to be served by
applicant, ice is needed for "halo-halo," for cooling soft drinks and drinking water, and for the preservation of
the fish caught by fishermen; that aside from these refreshment parlors, there are "sari-sari" stores selling
soft drinks; that along Laguna de Bay from Lumban to Sta. Maria, Laguna, from 30% to 50% of the people
are engaged in fishing throughout the year; that fishes caught consist of "dalag," "hito," "carpa", "banak," and
"shrimps" and to preserve these fishes from the time they are caught until they are sold or disposed of, ice is
needed; that ice is also needed in movie houses where soft drinks are sold, in homes, clinics and hospitals
that in a small town where there are about 20 stores, about 6 blocks of ice of 300 lbs. each are consumed
during the day, and in a big town like Sta. Cruz, the consumption is about 20 blocks of ice of 300 lbs. each
during the rainy season and the consumption is about double during the dry season; and that due to the
inadequacy of ice supply in the towns proposed to be served by applicant, an ice block of ice of 300 lbs.
costs from P5.00 to P8.00.

xxx xxx xxx

Applicant presented the following witnesses: Manuel Zaide, a fish dealer of Paete, Laguna; Willie Limlengco,
a businessman and sari-sari store owner of Pagsanjan Laguna; Conrado Almario, a refreshment parlor and
sari-sari store owner of Lumban, Laguna; Alfonso Rebong, Municipal Mayor of Victoria, Laguna; and Ernesto
Marina, business (sic) and sari-sari store owner of Pila, Laguna.

All witnesses presented at the hearings of this case manifest that there is shortage of ice supply in the
territory proposed to be served by the applicant, especially during summer months; that the fish dealers do
not get their ice requirements so that most often fish are not preserved in ice when sent to other places to be
sold like Sta. Maria, San Pablo City, or Manila; and that when the ice supply is inadequate, shrimps which
are shipped to Manila are often cooked to minimize spoilage.

The oppositors to this application have not established to the satisfaction of the Commission the adequacy of
the service rendered by them in the eighteen (18) municipalities proposed to be served by the applicant,
considering that most of these municipalities are far from the locations of their ice plants.

After a thorough examination of the evidence submitted by the parties and after a careful consideration of our
records on existing service in the territory applied for, and considering that an ice plant which manufactures
its ice in the locality where it sells that commodity is more advantageous and convenient to the general public
in that locality than ice plant located some kilometers away, and that applicant is financially capable of
undertaking the installation, and maintaining the operation of the proposed service, the Commission believes
that the oppositions filed by Emilio Gomez, operator of an ice plant in San Juan, Longos, Laguna, and Teofilo
 Tiongson, operator of an ice plant in San Pablo City, in this case should be, as these are hereby overruled
and that the application herein filed may be, as it is hereby, APPROVED.

The foregoing findings are assailed on two grounds: (1) that only eight witnesses were presented by the applicant, who
individually testified as to the need for ice in each of only seven of the municipalities included in the application; and (2) that their
testimony even as to those referred to by them is deficient. We have gone over the record in this regard and found enough
support therein for the decision appealed from. Manuel Zaide is a fish dealer in Paete, Willie Limlengco is a sari-sari and
refreshment store-owner in Pagsanjan; Conrado Almario has a similar business in Lumban; Alfonso Rebong was the municipal
mayor of Victoria since 1960; Ernesto Marina is a businessman in Pila; Jose Acuiza is a businessman and fisherman in Pakil;
Jose Maceda was the municipal secretary of Pagsanjan; and Eligio Lorenzo is a grocery merchant in Sta. Cruz. They all affirmed
the inadequacy and frequent lack of ice supply in their respective localities not only for home consumption but also for
restaurants and refreshment parlors as well as for the fishing industry or occupation of the inhabitants, particularly in the regions
bordering Laguna Bay. It is true their combined testimony did not cover all the municipalities applied for, but the applicant
himself, respondent here, demonstrated sufficient familiarity with the entire area to be able to give evidence, as he did, on the
ice-supply situation in everyone of them. He did a lot of traveling as owner of three movie houses in Pagsanjan, Sta. Cruz and
Pila, and in connection with his application in this case personally conducted a thorough investigation of the local demands for
ice in the municipalities covered by said application. That he is the applicant does not necessarily affect his credibility; on the
contrary, such an investigation was necessary and called for by sound business policy, for no one would invest capital in the
production and sale of any commodity without first ascertaining the needs of the prospective market.

One significant fact may be noted insofar as the petitioner's existing ice plant in San Pablo is concerned. The petitioner formerly
operated another plant in Pagsanjan, and in each of them it had one delivery truck to service the customers in different
municipalities. The Pagsanjan plant, however, was closed in 1952 and transferred to San Pablo, and since then the petitioner
has been maintaining only one delivery-truck service, with a single dealer-employee in charge. Under the circumstances the
Public Service Commission correctly remarked that "the oppositors have not established ... the adequacy of the service rendered
by them in the eighteen (18) municipalities proposed to be served by the applicant, considering that most of these municipalities
are far from the locations of their ice-plants.

The "prior operator" and "protection of investment" rules cited by petitioner cannot take precedence over the convenience of the
public. There is no ice plant at present in Pagsanjan; and from the testimony of the witnesses for the applicant there exists a
great demand for ice not only there but also in certain neighboring municipalities. There is nothing in the record to show that the
petitioner had exerted efforts to meet this demand before the respondent made his offer to service the areas where ice was
needed.2 Moreover the respondent is authorized to produce only 20 tons of ice daily, whereas the petitioner has been allowed to
increase its daily capacity from 30 to 40 tons in 1960, and recently, in 1964, to 70 tons. This only proves that there is indeed a
great demand for ice in the area applied for by the respondent, and negates the probability of ruinous competition. On the
contrary the resulting competition will undoubtedly benefit the public through improvement in the service and reduction in retail
prices.

On the whole, we find no reason to deviate from the rule heretofore consistently applied that findings and conclusions of fact
made by the Public Service Commission, when supported by evidence, are binding upon this Court.

WHEREFORE, the decision appealed is affirmed, with costs against the petitioner.