DEADLINE: FEB.

4, 9 PM

A. PUBLIC UTILITIES

Kilusang Mayo Uno Labor TOPIC: PUBLIC UTILITIES

Centers v. Garcia, 239 SCRA
PETITIONERS: KILUSANG MAYO UNO LABOR CENTER
386
RESPONDENTS: HON. JESUS B. GARCIA, JR., the LAND TRANSPORTATION FRANCHISING AND
MENDOZA REGULATORY BOARD, and the PROVINCIAL BUS OPERATORS ASSOCIATION OF THE PHILIPPINES

FACTS:

The instant petition for certiorari assails the constitutionality and validity of certain memoranda, circulars and/or orders of
the DOTC and the LTFRB which, among others, (a) authorize provincial bus and jeepney operators to increase or decrease
the prescribed transportation fares without application therefor with the LTFRB and without hearing and approval thereof
by said agency in violation of Sec. 16(c) of Commonwealth Act No. 146, as amended, otherwise known as the Public
Service Act, and in derogation of LTFRB's duty to fix and determine just and reasonable fares by delegating that function
to bus operators, and (b) establish a presumption of public need in favor of applicants for certificates of public convenience
(CPC) and place on the oppositor the burden of proving that there is no need for the proposed service, in patent violation
not only of Sec. 16(c) of CA 146, as amended, but also of Sec. 20(a) of the same Act mandating that fares should be "just
and reasonable." It is, likewise, violative of the Rules of Court which places upon each party the burden to prove his own
affirmative allegations.3 The offending provisions contained in the questioned issuances pointed out by petitioner, have
resulted in the introduction into our highways and thoroughfares thousands of old and smoke-belching buses, many of
which are right-hand driven, and have exposed our consumers to the burden of spiraling costs of public transportation
without hearing and due process.

ISSUE: W/N the issuances of DOTC and LTFRB are valid.

RULING: NO.
[ON FARE RANGE SCHEME]

Under Sec. 16(c) of the Public Service Act, the Legislature delegated to the defunct Public Service Commission the power
of fixing the rates of public services. LTFRB, the existing regulatory body today, is likewise vested with the same under
Executive Order No. 202 dated June 19, 1987. Section 5(c) of the said executive order authorizes LTFRB "to determine,
prescribe, approve and periodically review and adjust, reasonable fares, rates and other related charges, relative to the
operation of public land transportation services provided by motorized vehicles." Such delegation of legislative power to an
administrative agency is permitted in order to adapt to the increasing complexity of modern life. As subjects for
governmental regulation multiply, so does the difficulty of administering the laws. Hence, specialization even in legislation
has become necessary. Given the task of determining sensitive and delicate matters as route-fixing and rate-making for the
transport sector, the responsible regulatory body is entrusted with the power of subordinate legislation. With this authority,
an administrative body and in this case, the LTFRB, may implement broad policies laid down in a statute by "filling in" the
details which the Legislature may neither have time or competence to provide. However, nowhere under the aforesaid
provisions of law are the regulatory bodies, the PSC and LTFRB alike, authorized to delegate that power to a common
carrier, a transport operator, or other public service.

In the case at bench, the authority given by the LTFRB to the provincial bus operators to set a fare range over and above the
authorized existing fare, is illegal and invalid as it is tantamount to an undue delegation of legislative authority. Potestas
delegata non delegari potest. What has been delegated cannot be delegated. This doctrine is based on the ethical principle
that such a delegated power constitutes not only a right but a duty to be performed by the delegate through the
instrumentality of his own judgment and not through the intervening mind of another. A further delegation of such power
would indeed constitute a negation of the duty in violation of the trust reposed in the delegate mandated to discharge it
directly. The policy of allowing the provincial bus operators to change and increase their fares at will would result not only
to a chaotic situation but to an anarchic state of affairs. This would leave the riding public at the mercy of transport
operators who may increase fares every hour, every day, every month or every year, whenever it pleases them or whenever
they deem it "necessary" to do so.

One veritable consequence of the deregulation of transport fares is a compounded fare. If transport operators will be
authorized to impose and collect an additional amount equivalent to 20% over and above the authorized fare over a period
of time, this will unduly prejudice a commuter who will be made to pay a fare that has been computed in a manner similar
to those of compounded bank interest rates. Moreover, rate making or rate fixing is not an easy task. It is a delicate and
sensitive government function that requires dexterity of judgment and sound discretion with the settled goal of arriving at a
just and reasonable rate acceptable to both the public utility and the public. Several factors, in fact, have to be taken into
consideration before a balance could be achieved. A rate should not be confiscatory as would place an operator in a
situation where he will continue to operate at a loss. Hence, the rate should enable public utilities to generate revenues
sufficient to cover operational costs and provide reasonable return on the investments. On the other hand, a rate which is
too high becomes discriminatory. It is contrary to public interest. A rate, therefore, must be reasonable and fair and must be
affordable to the end user who will utilize the services.

Given the complexity of the nature of the function of rate-fixing and its far-reaching effects on millions of commuters,
government must not relinquish this important function in favor of those who would benefit and profit from the industry.
Neither should the requisite notice and hearing be done away with. The people, represented by reputable oppositors,
deserve to be given full opportunity to be heard in their opposition to any fare increase.

[ON PRESUMPTION OF PUBLIC NEED]

A certificate of public convenience (CPC) is an authorization granted by the LTFRB for the operation of land transportation
services for public use as required by law. Pursuant to Section 16(a) of the Public Service Act, as amended, the following
requirements must be met before a CPC may be granted, to wit: (i) the applicant must be a citizen of the Philippines, or a
corporation or co-partnership, association or joint-stock company constituted and organized under the laws of the
Philippines, at least 60 per centum of its stock or paid-up capital must belong entirely to citizens of the Philippines; (ii) the
applicant must be financially capable of undertaking the proposed service and meeting the responsibilities incident to its
operation; and (iii) the applicant must prove that the operation of the public service proposed and the authorization to do
business will promote the public interest in a proper and suitable manner. It is understood that there must be proper notice
and hearing before the PSC can exercise its power to issue a CPC.

LTFRB Memorandum Circular No. 92-009, Part IV, provides for yet incongruous and contradictory policy guidelines on
the issuance of a CPC. The guidelines states:

The issuance of a Certificate of Public Convenience is determined by public need. The presumption of public need
for a service shall be deemed in favor of the applicant, while the burden of proving that there is no need for the
proposed service shall be the oppositor's.

The above-quoted provision is entirely incompatible and inconsistent with Section 16(c)(iii) of the Public Service Act
which requires that before a CPC will be issued, the applicant must prove by proper notice and hearing that the operation of
the public service proposed will promote public interest in a proper and suitable manner. On the contrary, the policy
guideline states that the presumption of public need for a public service shall be deemed in favor of the applicant. In case of
conflict between a statute and an administrative order, the former must prevail.

By its terms, public convenience or necessity generally means something fitting or suited to the public need. As one of the
basic requirements for the grant of a CPC, public convenience and necessity exists when the proposed facility or service
meets a reasonable want of the public and supply a need which the existing facilities do not adequately supply. The
existence or non-existence of public convenience and necessity is therefore a question of fact that must be established by
evidence, real and/or testimonial; empirical data; statistics and such other means necessary, in a public hearing conducted
for that purpose. The object and purpose of such procedure, among other things, is to look out for, and protect, the interests
of both the public and the existing transport operators.

Basic convenience is the primary consideration for which a CPC is issued, and that fact alone must be consistently borne in
mind. Also, existing operators in subject routes must be given an opportunity to offer proof and oppose the application.
Therefore, an applicant must, at all times, be required to prove his capacity and capability to furnish the service which he
has undertaken to render. And all this will be possible only if a public hearing were conducted for that purpose. Otherwise
stated, the establishment of public need in favor of an applicant reverses well-settled and institutionalized judicial,
quasi-judicial and administrative procedures. It allows the party who initiates the proceedings to prove, by mere
application, his affirmative allegations. Moreover, the offending provisions of the LTFRB memorandum circular in
question would in effect amend the Rules of Court by adding another disputable presumption in the enumeration of 37
presumptions under Rule 131, Section 5 of the Rules of Court. Such usurpation of this Court's authority cannot be
 countenanced as only this Court is mandated by law to promulgate rules concerning pleading, practice and procedure.

DISPOSITIVE PORTION: WHEREFORE, in view of the foregoing, the instant petition is hereby GRANTED and the
challenged administrative issuances and orders, namely: DOTC Department Order No. 92-587, LTFRB Memorandum
Circular No. 92-009, and the order dated March 24, 1994 issued by respondent LTFRB are hereby DECLARED contrary to
law and invalid insofar as they affect provisions therein (a) delegating to provincial bus and jeepney operators the authority
to increase or decrease the duly prescribed transportation fares; and (b) creating a presumption of public need for a service
in favor of the applicant for a certificate of public convenience and placing the burden of proving that there is no need for
the proposed service to the oppositor.

The Temporary Restraining Order issued on June 20, 1994 is hereby MADE PERMANENT insofar as it enjoined the bus
fare rate increase granted under the provisions of the aforementioned administrative circulars, memoranda and/or orders
declared invalid.

No pronouncement as to costs.

SO ORDERED.

Albano v. Reyes, 175 SCRA TOPIC: PUBLIC UTILITIES

264
PETITIONERS: RODOLFO B. ALBANO
BERNABE RESPONDENTS: HON. RAINERIO O. REYES, PHILIPPINE PORTS AUTHORITY, INTERNATIONAL CONTAINER
TERMINAL SERVICES, INC., E. RAZON, INC., ANSCOR CONTAINER CORPORATION, and SEALAND
SERVICES. LTD.,

FACTS:
The Philippine Ports Authority (PPA) board directed the PPA management to prepare for the public bidding of the
development, management and operation of the Manila International Container Terminal (MICT) at the Port of Manila. A
Bidding Committee was formed by the DOTC for the public bidding. After evaluation of several bids, the Bidding
Committee recommended the award of the contract to respondent International Container Terminal Services, Inc. (ICTSI).
Accordingly, Rainerio Reyes, then DOTC secretary, declared the ICTSI consortium as the winning bidder.

On May 18, 1988, the President of the Philippines approved the same with directives that PPA shall still have the
responsibility for planning, detailed engineering, construction, expansion, rehabilitation and capital dredging of the port, as
well as the determination of how the revenues of the port system shall be allocated for future works; and the contractor
shall not collect taxes and duties except that in the case of wharfage or tonnage dues.
 Petitioner Albano, as taxpayer and Congressman, assailed the legality of the award and claimed that since the MICT is a
public utility, it needs a legislative franchise before it can legally operate as a public utility.

ISSUE: W/N a franchise is needed for the operation of the MICT.

RULING: NO. While the PPA has been tasked under E.O. No. 30 with the management and operation of the MICT and to
undertake the provision of cargo handling and port related services thereat, the law provides that such shall be “in
accordance with P.D. 857 and other applicable laws and regulations”. P.D. 857 expressly empowers the PPA to provide
services within Port Districts “whether on its own, by contract, or otherwise”.

Even if the MICT is considered a public utility, its operation would not necessarily need a franchise from the legislature
because the law has granted certain administrative agencies the power to grant licenses for or to authorize the operation of
public utilities. Reading E.O. 30 and P.D. 857 together, it is clear 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.

Doctrine: The law granted certain administrative agencies the power to grant licenses for the operation of public utilities.
Theory that MICT is a “wharf” or a “dock”, as contemplated under the Public Service Act, would not necessarily call for a
franchise from the Legislative Branch.

DISPOSITIVE PORTION: WHEREFORE, the petition is hereby DISMISSED.

SO ORDERED.

Phil. Airlines, Inc. v. Civil TOPIC: *This falls under C. Regulation of transportation industry
Aeronautics Board, 270 SCRA
PETITIONERS:PHILIPPINE AIRLINES, INC
538
RESPONDENTS: CIVIL AERONAUTICS BOARD and GRAND INTERNATIONAL AIRWAYS, INC
BIGOL
FACTS:

Private respondent GrandAir applied for a Certificate of Public Convenience and Necessity with the Civil Aeronautics
Board (CAB) allowing them to engage in scheduled domestic air transportation services particularly the Manila-Cebu,
Manila-Davao and converse routes. This application was opposed by petitioner PAL which is a holder of a legislative
franchise to operate air transport services alleging that that the CAB had no jurisdiction to hear the petitioner’s application
until GrandAir had first obtained a franchise to operate from Congress.

ISSUE: WON the CAB had the jurisdiction to hear the application because GrandAir did not possess a legislative
 franchise.

RULING: The Civil Aeronautics Board has jurisdiction over GrandAir’s Application for a Temporary Operating Permit.
This rule has been established in the case of Philippine Air Lines Inc., vs. Civil Aeronautics Board, promulgated on June
13, 1968. The Board is expressly authorized by Republic Act No. 776 to issue a temporary operating permit or Certificate
of Public Convenience and Necessity, and nothing contained in the said law negates the power to issue said permit before
the completion of the applicant’s evidence and that of the oppositor thereto on the main petition. Indeed, the CAB’s
authority to grant a temporary permit “upon its own initiative” strongly suggests the power to exercise said authority, even
before the presentation of said evidence has begun. Assuming arguendo that a legislative franchise is prerequisite to the
issuance of a permit, the absence of the same does not affect the jurisdiction of the Board to hear the application, but tolls
only upon the ultimate issuance of the requested permit.

Congress has granted certain administrative agencies the power to grant licenses for, or to authorize the operation of,
certain public utilities. With the growing complexity of modern life, the multiplication of the subjects of governmental
regulation, and the increased difficulty of administering the laws, there is a constantly growing tendency towards the
delegation of greater powers by the legislature, and towards the approval of the practice by the courts. 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 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.

here 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, specialized
particularly in their respective areas of public service.

DISPOSITIVE PORTION: ACCORDINGLY, in view of the foregoing considerations, the Court RESOLVED to
DISMISS the instant petition for lack of merit. The respondent Civil Aeronautics Board is hereby DIRECTED to
CONTINUE hearing the application of respondent Grand International Airways, Inc. for the issuance of a Certificate of
Public Convenience and Necessity.

Republic v. Express TOPIC: PUBLIC UTILITIES

Telecommunications, 373
PETITIONERS & RESPONDENTS:
SCRA 316
REPUBLIC OF THE PHILIPPINES, represented by NATIONAL TELECOMMUNICATIONS COMMISSION, petitioner,
vs.
ATIENZA EXPRESS TELECOMMUNICATION CO., INC. and BAYAN TELECOMMUNICATIONS CO., INC., respondents.
x------x
BAYAN TELECOMMUNICATIONS (Bayantel), INC., petitioner,
vs.
EXPRESS TELECOMMUNICATION CO., INC. (Extelcom), respondent.

FACTS:
In 1992, International Communications Corporations (now Bayantel) filed an application with the NTC for Certificate of
Public Convenience or Necessity (CPCN) to install, operate, and maintain a digital Cellular Mobile Telephone
System/Service (CMTS) with a prayer for Provisional Authority. Shortly after, NTC issued a memorandum directing all
interested applicants for nationwide or regional CMTS to file their application on or before FEb. 15, 1993, and deferring
the acceptance of any application after the said date. Bayantel subsequently filed a motion to admit an amended application.
On May 17, 1993, the notice of hearing issued by the NTC with respect to this amended application was published in the
Manila Chronicle. Copies of the application as well as the notice of hearing were mailed to all affected parties.
Subsequently, hearings were conducted on the amended application. But before Bayantel could complete the presentation
of its evidence, the NTC issued an Order archiving Bayantel’s application in view of the grants of PAs to ISLACOM and
GMCR, Inc. which resulted in the closing out of all available frequencies.

Due to reallocation of MHz of CMTS, Bayantel filed an ex-parte motion to revive the case. This was opposed by Extelcom
on the ground that the archived application was almost 8 years old and thus the documentary evidence and the allegations
of Bayantel are all outdated. Moreover, it argues that there was no public need for the service applied as there are already 5
CMTSs. Further, it argues that there were no more available radio frequencies that could accommodate a new CMTS
operator. NTC issued an order granting Pa to Bayantel.

Extelcom filed a petition for certiorari and prohibition with the CA seeking the annulment of the Order reviving Bayantel’s
application, granting PA to Bayantel, and allocations of frequency bands to new public telecommunication entities. CA
granted the petition.

ISSUE: W/N th revival of the archived application and the grant of PA by the NTC are tantamount to grave abuse of
discretion.

RULING: NO. The NTC was created pursuant to Executive Order No. 546, promulgated on July 23, 1979. It assumed the
functions formerly assigned to the Board of Communications and the Telecommunications Control Bureau, which were
both abolished under the said Executive Order. Previously, the NTC's functions were merely those of the defunct Public
Service Commission (PSC), created under Commonwealth Act No. 146, as amended, otherwise known as the Public
Service Act, considering that the Board of Communications was the successor-in-interest of the PSC. Under Executive
Order No. 125-A, issued in April 1987, the NTC became an attached agency of the Department of Transportation and
Communications.
In the regulatory telecommunications industry, the NTC has the sole authority to issue Certificates of Public Convenience
and Necessity (CPCN) for the installation, operation, and maintenance of communications facilities and services, radio
communications systems, telephone and telegraph systems. Such power includes the authority to determine the areas of
operations of applicants for telecommunications services. Specifically, Section 16 of the Public Service Act authorizes the
then PSC, upon notice and hearing, to issue Certificates of Public Convenience for the operation of public services within
the Philippines "whenever the Commission finds that the operation of the public service proposed and the authorization to
do business will promote the public interests in a proper and suitable manner."

The records show that the amended application filed by Bayantel in fact included a motion for the issuance of a provisional
authority. Hence, it cannot be said that the NTC granted the provisional authority motu proprio. The Court of Appeals,
therefore, erred when it found that the NTC issued its Order of May 3, 2000 on its own initiative.
The Court of Appeals ruled that the NTC committed grave abuse of discretion when it revived Bayantel's application based
on an ex-parte motion. In this regard, the pertinent provisions of the NTC Rules:

Sec. 5. Ex-parte Motions. --- Except for motions for provisional authorization of proposed services and increase of
rates, ex-parte motions shall be acted upon by the Board only upon showing of urgent necessity therefor and the
right of the opposing party is not substantially impaired.

Thus, in cases which do not involve either an application for rate increase or an application for a provisional authority, the
NTC may entertain ex-parte motions only where there is an urgent necessity to do so and no rights of the opposing parties
are impaired.

The Court of Appeals ruled that there was a violation of the fundamental right of Extelcom to due process when it was not
afforded the opportunity to question the motion for the revival of the application. However, it must be noted that said Order
referred to a simple revival of the archived application of Bayantel in NTC Case No. 92-426. At this stage, it cannot be said
that Extelcom's right to procedural due process was prejudiced. It will still have the opportunity to be heard during the
full-blown adversarial hearings that will follow. In fact, the records show that the NTC has scheduled several hearing dates
for this purpose, at which all interested parties shall be allowed to register their opposition. We have ruled that there is no
denial of due process where full-blown adversarial proceedings are conducted before an administrative body.34 With
Extelcom having fully participated in the proceedings, and indeed, given the opportunity to file its opposition to the
application, there was clearly no denial of its right to due process.

The requirements of notice and publication of the application is no longer necessary inasmuch as the application is a mere
revival of an application which has already been published earlier. At any rate, the records show that all of the five (5)
CMTS operators in the country were duly notified and were allowed to raise their respective oppositions to Bayantel's
application through the NTC's Order dated February 1, 2000.

It should be borne in mind that among the declared national policies under Republic Act No. 7925, otherwise known as the
Public Telecommunications Policy Act of the Philippines, is the healthy competition among telecommunications carriers.
 The NTC is clothed with sufficient discretion to act on matters solely within its competence. Clearly, the need for a healthy
competitive environment in telecommunications is sufficient impetus for the NTC to consider all those applicants who are
willing to offer competition, develop the market and provide the environment necessary for greater public service. This was
the intention that came to light with the issuance of Memorandum Circular 9-3-2000, allocating new frequency bands for
use of CMTS.

DISPOSITIVE PORTION: WHEREFORE, in view of the foregoing, the consolidated petitions are GRANTED. The
Court of Appeals' Decision dated September 13, 2000 and Resolution dated February 9, 2001 are REVERSED and SET
ASIDE. The permanent injunction issued by the Court of Appeals is LIFTED. The Orders of the NTC dated February 1,
2000 and May 3, 2000 are REINSTATED. No pronouncement as to costs.

SO ORDERED.

Calvo v. UCPB General TOPIC: PUBLIC UTILITIES/COMMON CARRIER/PUBLIC SERVICE

Insurance, G.R. 148496, 19
PETITIONERS: VIRGINES CALVO doing business under the name and style TRANSORIENT CONTAINER
March 2002
TERMINAL SERVICES, INC.

AREVALO RESPONDENTS: UCPB GENERAL INSURANCE CO., INC. (formerly Allied Guarantee Ins. Co., Inc.)

FACTS:
● Virgines Calvo is the owner of Transorient Container Terminal Services, a sole proprietorship customs broker.
Calvo entered into a contract with San Miguel Corporation for the transfer of shipment from Port of Manila to San
Miguel’s warehouse. The cargo was insured by UCPB Gen. Insurance, respondent.
● When the goods arrived in the Port of Manila, Calvo withdrew the cargo from arrastre operator and delivered it to
the warehouse. When the goods were inspected by surveyors, it was damaged.
● San Miguel collected payment from UCPB Insurance. In turn, UCPB brought a suit against Calvo for collection of
Money.
● One of the Contention raised by Calvo is that she is not a common carrier but a private carrier, customs broker and
warehouseman. Any damage to the cargo she agrees to transport cannot be presumed to have been due to her fault
or negligence.
● RTC and CA ruled that Virgines Calvo is a common carrier not as a private or special carrier who do not hold its
services to the public.

ISSUE: Whether the business of Virgines Calvo is considered as common carrier

RULING: Yes.
● The concept of "common carrier" under Article 1732 may be seen to coincide neatly with the notion of "public
service," under the Public Service Act (Commonwealth Act No. 1416, as amended) which at least partially
 supplements the law on common carriers set forth in the Civil Code. Under Section 13, paragraph (b) of the Public
Service Act, "public service" includes:

" x x x every person that now or hereafter may own, operate, manage, or control in the Philippines, for hire or
compensation, with general or limited clientele, whether permanent, occasional or accidental, and done for
general business purposes, any common carrier, railroad, street railway, traction railway, subway motor vehicle,
either for freight or passenger, or both, with or without fixed route and whatever may be its classification, freight
or carrier service of any class, express service, steamboat, or steamship line, pontines, ferries and water craft,
engaged in the transportation of passengers or freight or both, shipyard, marine repair shop, wharf or dock, ice
plant, ice-refrigeration plant, canal, irrigation system, gas, electric light, heat and power, water supply and power
petroleum, sewerage system, wire or wireless communications systems, wire or wireless broadcasting stations and
other similar public services. x x x"

● The SC held that the transportation of goods is an integral part of her business. Based on the survey report made
by Surveyor, when petitioner's employees withdrew the cargo from the arrastre operator, they did so without
exception or protest either with regard to the condition of container vans or their contents. She is bound to observe
extraordinary diligence in the vigilance over the goods and for the safety of the passengers.

DISPOSITIVE PORTION: WHEREFORE, the decision of the Court of Appeals, dated May 31, 2001, is AFFIRMED.

B. Transportation

Olongapo Electric Light and TOPIC: Transportation: Public Nature

Power Corp. v. National Power
PETITIONERS:Olongapo Electric Light and Power Corporation
Corp., 149 SCRA 153
RESPONDENTS: National Power Corporation, Municipality of Olongapo
GOYENA
FACTS:

● Olongapo was once part of the United States Naval Base at Subic Bay
● When the US turned over Olongapo to the Philippines, the US also turned over the electric power facilities used
by the United States Navy in the area
● The petitioner in this case Olongapo Electric Light and Power Corporation, was granted a legislative franchise to
install, operate and maintain an electric light, heat and power system in the municipality of Olongapo
 ● Petitioner wrote a letter to NPC with the desire to buy electric power
● NPC and petitioner both reached an agreement with this sale, and a contract was subsequently perfected
between them
● The Municipal Council of Olongapo then allowed petitioner, through a Resolution, to make use of or avail of its
legislative franchise with the municipality of Olongapo
● However, this did not end favorably, because the Resolution was revoked, and the Municipality resolved
to maintain and operate an electric and power system itself.
● The Municipality then executed and perfected a contract with the NPC for the purchase and sale of electric power
and energy.
● The petitioner learned of this, and filed before the CFI an action to declare null and void the contract between
NPC and the Municipality, contending that the contract was executed against the Public Service Law, which
provides that ‘it shall be unlawful for a municipality to engage in any public service business without having first
secured from the PSCA a certificate of public convenience.

ISSUE:
Whether or not it is necessary for the Municipality of Olongapo to first obtain a CPC to operate a public service business

RULING:

● The Court ruled in the negative, and affirmed the RTC ruling in toto.
● The contract between NPC and the Municipality is valid, because it was merely a contract for the sale of electric
power and energy, and to the law, it is not unlawful for a public utility operator to buy electric power and energy.
Here the Municipality cannot be said to be engaged in a public service business, since it is not itself selling the
power to customers.
● Next, under the the Public Service Act as amended, the Public Service Commission has already been divested of
its authority over public services owned or operated by any instrumentality of the National Government or
government-owned or controlled corporation
● But before this amendment, a municipality must first secure a certificate of public convenience before
operating a public service, otherwise it would be violating the provisions of Section 18 of said law.
● But as the law now stands, government entities are no longer required to secure certificate of public
convenience before commencing operations.
● Also the execution of the contract between NPC and the municipality was made necessary, since public interest
was at stake.
● Finally, petitioner cannot invoke, in this instance, the prior operator rule, for the same requires for its application
that the old operator offers to meet the increase in the demand the moment it arises and not when another
operator, even a new one, had made an offer to serve the public needs.
Radio Communications of the
Philippines v. Philippine
Telegraph and Telephone
Corp., 184 SCRA 517
BONUS
TOPIC: Transportation: Public Nature
PETITIONERS: Radio Communications of the Philippines
RESPONDENTS: NATIONAL TELECOMMUNICATIONS COMMISSION and KAYUMANGGI RADIO NETWORK
INCORPORATED
FACTS:
● Petitioner has been operating a radio communications system since 1957 under its legislative franchise granted by
Republic Act No. 2036 which was enacted in 1957.
● The petitioner established a radio telegraph service in Sorsogon, Sorsogon (1968) in San Jose, Mindoro (1971),
and Catarman, Samar (1983).
● In a decision in NTC case, private respondent Kayumanggi Radio Network Incorporated was authorized by the
public respondent to operate radio communications systems in Catarman, Samar and in San Jose, Mindoro.
● On December 14, 1983, the private respondent filed a complaint with the NTC alleging that the petitioner was
operating in Catarman, Samar and in San Jose, Mindoro without a certificate of public convenience and necessity.
● The petitioner, on the other hand, counter-alleged that its telephone services in the places subject of the complaint
are covered by the legislative franchise recognized by both the public respondent and its predecessor, the Public
Service Commission.
● After conducting a hearing, NTC, in its decision dated August 22, 1984 ordered petitioner RCPI to immediately
cease or desist from the operation of its radio telephone services in Catarman Northern Samar; San Jose,
Occidental Mindoro; and Sorsogon, Sorsogon stating that under Executive Order No. 546, a certificate of public
convenience and necessity is mandatory for the operation of communication utilities and services including radio
communications.
ISSUE: W/N petitioner RCPI, a grantee of a legislative franchise to operate a radio company, is required to secure a
certificate of public convenience and necessity before it can validly operate its radio stations.
RULING: YES, petitioner should first secure the certificate of public convenience and necessity before validly
operating its radio stations.
[The petitioner's main argument states that the abolition of the Public Service Commission under Presidential Decree No. 1
and the creation of the National Telecommunications Commission under Executive Order No. 546 to replace the defunct
Public Service Commission did not affect sections 14 and 15 of the Public Service Law (Commonwealth Act. No. 146, as
amended).] – no merit.
- The provisions of the Public Service Law pertinent to the petitioner's allegation are as follows:

Section 13. (a) the Commission shall have jurisdiction, supervision, and control over all public services
and their franchises, equipment and other properties, and in the exercise of its authority, it shall have the
necessary powers and the aid of public force: ...

- Presidential Decree No. 1- the Public Service Commission was abolished and its functions were transferred to three
specialized regulatory boards, as follows: the Board of Transportation, the Board of Communications and the Board of
Power and Waterworks. The functions so transferred were still subject to the limitations provided in sections 14 and 15 of
the Public Service Law, as amended.

Section 14. The following are exempted from the provisions of the preceding section:

xxx xxx xxx

(d) Radio companies except with respect to the fixing of rates;

xxx xxx xxx

Section 15. With the exception of those enumerated in the preceding section, no public service shall
operate in the Philippines without possessing a valid and subsisting certificate from the Public Service
Commission, known as "certificate of public convenience," or "certificate of convenience and public
necessity," as the case may be, to the effect that the operation of said service and the authorization to do
business will promote the public interests in a proper and suitable manner.

- With the enactment of Executive Order No. 546 on July 23, 1979 implementing P.D. No.1, the Board of
Communications and the Telecommunications Control Bureau were abolished and their functions were transferred to the
National Telecommunications Commission.

- The exemption enjoyed by radio companies from the jurisdiction of the Public Service Commission and the Board of
Communications no longer exists because of the changes effected by the Reorganization Law and implementing executive
orders.

- Before, a franchise started out of royal privilege, but, Today, a franchise, being merely a privilege emanating from the
sovereign power of the state and owing its existence to a grant, is subject to regulation by the state itself by virtue of its
police power through its administrative agencies.

- Executive Order No. 546, being an implementing measure of P.D. No. I insofar as it amends the Public Service Law
(CA No. 146, as amended) is applicable to the petitioner who must be bound by its provisions. The petitioner cannot install
 and operate radio telephone services on the basis of its legislative franchise alone.

- Thus, in the words of R.A. No. 2036 itself, approval of the then Secretary of Public Works and Communications was
a precondition before the petitioner could put up radio stations in areas where it desires to operate.

- Under the circumstances of this case, the mere fact that the petitioner possesses a franchise to put up and operate a
radio communications system in certain areas is not an insuperable obstacle to the public respondent's issuing the proper
certificate to an applicant desiring to extend the same services to those areas.

§ The Constitution mandates that a franchise cannot be exclusive in nature nor can a franchise
be granted except that it must be subject to amendment, alteration, or even repeal by the
legislature when the common good so requires. (Art. XII, sec. 11 of the 1986 Constitution).
There is an express provision in the petitioner's franchise which provides compliance with the
above mandate R.A. 2036, sec. 15).

DISPOSITIVE PORTION: WHEREFORE, the challenged order of the public respondent dated August 22, 1984 is
hereby AFFIRMED. The petition is dismissed for lack of merit.

LTO v. City of Butuan, 322 TOPIC: Transportation; Public Nature; Public Service Act
SCRA 805
PETITIONERS: LAND TRANSPORTATION OFFICE
MACAINAG RESPONDENTS: CITY OF BUTUAN

FACTS: Relying on the fiscal autonomy granted to LGU's by the Constitution and the provisions of the Local
Government Code, the Sangguniang Panglunsod of the City of Butuan enacted an ordinance "Regulating the Operation of
Tricycles-for-Hire, providing mechanism for the issuance of Franchise, Registration and Permit, and Imposing Penalties
for Violations thereof and for other Purposes." The ordinance provided for, among other things, the payment of franchise
fees for the grant of the franchise of tricycles-for-hire, fees for the registration of the vehicle, and fees for the issuance of a
permit for the driving thereof.

Petitioner LTO explains that one of the functions of the national government that, indeed, has been transferred to local
government units is the franchising authority over tricycles-for-hire of the Land Transportation Franchising and Regulatory
Board ("LTFRB") but not, it asseverates, the authority of LTO to register all motor vehicles and to issue to qualified
persons of licenses to drive such vehicles.

The RTC and CA ruled that the power to give registration and license for driving tricycles has been devolved to LGU's.
 ISSUE: W/n the registration of tricycles was given to LGU's, thus, making the ordinance a valid exercise of police power

RULING: NO. Under the law, LGUs indubitably now have the power to regulate the operation of tricycles-for-hire and to
grant franchises for the operation thereof. "To regulate" means to fix, establish, or control; to adjust by rule, method, or
established mode; to direct by rule or restriction; or to subject to governing principles or laws. A franchise is defined to be
a special privilege to do certain things conferred by government on an individual or corporation, and which does not
belong to citizens generally of common right. On the other hand, "to register" means to record formally and exactly, to
enroll, or to enter precisely in a list or the like, and a "driver's license" is the certificate or license issued by the government
which authorizes a person to operate a motor vehicle. The devolution of the functions of the DOTC, performed by the
LTFRB, to the LGUs, is aimed at curbing the alarming increase of accidents in national highways involving tricycles. It
has been the perception that LGUs are in good position to achieve the end desired by the law-making body because of their
proximity to the situation that can enable them to address that serious concern better than the national government.

The reliance made by respondents on the broad taxing power of local government units, specifically under Sec. 133 of the
LGC, is tangential. Police power and taxation, along with eminent domain, are inherent powers of sovereignty which the
State might share with local government units by delegation given under a constitutional or a statutory fiat. All these
inherent powers are for a public purpose and legislative in nature but the similarities just about end there. The basic aim of
police power is public good and welfare. Taxation, in its case, focuses an the power of government to raise revenue in
order to support its existence and carry out its legitimate objectives. Although correlative to each other in many respects,
the grant of one does not necessarily carry with it the grant of the other. The two powers are, by tradition and
jurisprudence, separate and distinct powers, varying in their respective concepts, character, scopes and limitations. To
construe the tax provisions of Sec. 133(1) indistinctively would result in the repeal to that extent of LTO's regulatory
power which evidently has not been intended.

DISPOSITIVE PORTION: WHEREFORE, the assailed decision which enjoins the Land Transportation Office from
requiring the due registration of tricycles and a license for the driving thereof is REVERSED and SET ASIDE.

Raymundo v. Luneta Moto, 58 TOPIC: The Certificate of Convenience (CPC), the Certificate of Public Convenience and Necessity (CPCN) and
Phil 889 the "Prior Operation Rule"

PETITIONERS: DOMINADOR RAYMUNDO

PALENZUELA
RESPONDENTS: LUNETA MOTOR CO.

FACTS:

1. The question squarely raised in these two cases concerns the forced sales of certificates of public convenience
held by public service operators and the liability to execution of such certificates.
 2. Nicanor de Guzman, signing as Guzco Transit, purchased trucks from the Luneta Motor Co. to which the
former executed series of promissory notes guaranteed by a chattel mortgage on several trucks. On failure to pay,
suit was brought in the Court of First Instance of Manila for the collection of the amount outstanding and unpaid.

3. 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 attaching
the right, title, and participation of the Guzco Transit in the certificates of public convenience covering the bus
transportation lines. These certificates were ordered sold by the Court of First Instance of Manila, and in fact the
certificates of public convenience were sold to the Luneta Motor Co. as the highest bidder.

4. However, nine days after the certificates were attached by the Luneta Motor Co., the same certificates were sold
by De Guzman for the Guzco Transit to Dominador Raymundo.

5. The Public Service Commission approved the sale at public auction in favor of the Luneta Motor Co., and
disapproved the sale made to Dominador Raymundo.

ISSUE:

1. Whether or not a sale of a certificate of public convenience without any equipment may be the object of
execution and garnishment sale. - YES

2. Whether, under the law, certificates of public convenience are liable to attachment and seizure by legal process.
- YES

RULING:

1. The law is silent as to this matter. It cannot 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 that they are not granted to everyone who applies for them but only to those who undertake to
furnish satisfactory and convenient service to the public.

2. The law permits the seizure by means of a writ of attachment not only of chattels but also of shares and credits.
While these franchises may be said to be of intangible character, they are however of value and are considered
properties which can be seized through legal process.

3. The Public Service Law permits the Public Service Commission to approve 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 court process.

4. Certificates of public convenience have come to have considerable material value. They are valuable assets. In
many cases the certificates are the cornerstones which built the business of bus transportation. 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.

DISPOSITIVE PORTION: 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.

Batangas Trans. V. Orlanes, 52 TOPIC: The Certificate of Convenience (CPC)

Phil 455
PETITIONERS: BATANGAS TRANSPORTATION CO
BORDADO RESPONDENTS: CAYETANO ORLANES

FACTS:
Orlanes sought to have a Certificate of Public Convenience (CPC) to operate a line of auto trucks with fixed times of
departure between Taal and Bantilan, with the right to receive passengers and freight from intermediate points.

At the time of his application, Orlanes was an irregular operator between Bantilan and Taal, and that Batangas
Transportation Co. (BTC) was a regular operator between Batangas and Rosario. Orlanes sought to have his irregular
operation changed into a regular operation, and to set aside and nullify the prohibition against him in his CPC that he shall
not have or receive any passengers or freight at any of the points served by the BTC which holds a prior license from the
Public Service Commission (PSC). His petition is based on the fact that to comply with the growing demands of the
public, the BTC applied for a permit to increase the no. of trip hours at and between the same places and for an order that
all irregular operators be prohibited from operating unless they should observe an interval of 2 hours before or one hour
after the regular hours of the BTC.

PSC granted the petition of Orlanes. Thus, this petition for review.

ISSUE: Should a CPC be issued to a second operator in a field where, and in competition with, a first operator who is
already operating a sufficient, adequate and satisfactory service?
 RULING: NO. Decision of PSC is revoked.

The PSC has the power to specify and define the terms and conditions upon which any public utility shall operate and to
make reasonable rules and regulations for its operation, and to fix the compensation that it shall receive for its service to
the public, and for good cause may suspend or even revoke a license granted

It is not the policy of the law for the PSC to issue a CPC to a second operator to cover the same field and in competition
with a first operator who is rendering sufficient, adequate and satisfactory service, and who in all things and respects is
complying with the rules and regulations of the PSC.

The power of the PSC to issue a CPC is founded on the condition precedent that after a full hearing and investigation, it
shall find as a fact that the proposed operation is for the convenience of the public. So long as the first operator keeps and
performs his terms and conditions of its license and complies with the reasonable demands of the public, it has more or
less of a vested and preferential right over another who seeks to acquire a later license to operate over the same route.

To carry out the purpose and intent for which the PSC was created, the law contemplates that the first license will be
protected in his investment and will not be subjected to ruinous competition. The primary purpose of the PSC is to secure
adequate, sustained service for the public at the least possible cost and to protect and conserve investments which have
already been made for that purpose.

A CPC for the operation of an auto truck line in occupied territory should not be granted where there is no complaint as to
existing rates and the company in the field is rendering adequate service. It is the duty of the PSC to protect rather than to
destroy the investment of a public utility.

The policy of regulation upon which the 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 the reason 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. While requiring a proper service from a single system for a territory in
consideration for protecting it as a monopoly for all the service required and in conserving its resources, no economic
waste results and service may be furnished at a minimum cost.

DISPOSITIVE PORTION: The decision of the Public Service Commission, granting to Orlanes the license in question,
is revoked and set aside, and the case is remanded to the Commission for such other and further proceedings as are not
inconsistent with this opinion. Neither party to recover costs on this appeal. So ordered.

Carmelo v. Monserrat, 55 Phil TOPIC: The Certificate of Convenience (CPC), the Cert. of Public Convenience and Necessity (CPCN) and the “Prior
644 Operator Rule”

PETITIONERS: ALFREDO CARMELO and RAMON ORIOL

SULLIVAN
RESPONDENTS: ENRIQUE MONSERRAT
FACTS:
Enrique Moserrat twice applied to the Legislature for an exclusive franchise for that purpose and twice it passed a bill
giving him such exclusive franchise for the period of ten years, and wisely, for many reasons, the Governor-General twice
vetoed the bill. Monserrat then made application to the Public Service Commission for a certificate of public convenience
to operate a taxicab service in the City of Manila and surrounding municipalities which, after due notice and hearing, was
granted December, 1929.

Thereafter, on December 27, 1929, the petitioners, Alfredo Carmelo and Ramon Oriol, applied to the Public Service
Commission for a certificate of public convenience to operate a taxicab service within the City of Manila and surrounding
municipalities, notice of which was duly published. To this application an opposition was filed by Enrique Monserrat, and
the case heard and tried by the commission on January 16, 1930, which on May 30, 1930, rendered a decision denying the
application of the petitioners

ISSUE:W/N petitioners’ certificate of public convenience should be granted.

RULING: YES. In the granting or refusal of a certificate of public convenience, all things considered, the question is what
is for the best interests of the public. Tested by that rule, it is hard to conceive how it would be for the best interests of the
public to have one taxicab service only, and how the public would be injured by the granting of the certificate in question,
for it must be conceded that two companies in the field would stimulate the business, and that the public would much
sooner and much easier become educated in the use of the taxi.

Monserrat has no exclusive rights of a prior operator of a taxicab company. There is also no reason for the exclusive right
to benefit the public. The simple reason is that the use of any taxi is in the sole discretion of the customer.

The Court held that the same rule of law does not apply to the granting of a certificate of public convenience for the
operation of a taxicab service and the granting of such a certificate for the operation of an autobus on a fixed schedule in a
given direction between certain points on a provincial road. In the very nature of things, the granting of a license to the
petitioners would not be "the granting of a subsequent license to another for the same thing over the same route of travel,"
for as to whether or not the taxi travels at all or where it goes or when it goes or how far it goes is a matter exclusively at
the call and in the discretion of the customer; otherwise, the taxi would remain idle -- not so with an autobus operating on a
fixed schedule between certain points on a provincial road.

There is no valid, legal reason why Monserrat should have the exclusive right of operating a taxicab service within the
limits of the City of Manila, and it is very apparent that such an exclusive right would be against the best interest of the
public. Neither is there any valid reason why the petitioners should not have a like certificate of public convenience,
subject only to the reasonable rules and regulations of the commission.
 DISPOSITIVE PORTION: The decision of the commission denying the petitioners a certificate of public convenience is
reversed and the case is remanded to the commission, with instructions to grant the petition and for such other and further
proceedings as are not inconsistent with this opinion, with costs against Monserrat. So ordered.

San Pablo v. Pantranco, 153 TOPIC: The Certificate of Convenience (CPC), the Cert. of Public Convenience and Necessity (CPCN) and the “Prior
SCRA 199 Operator Rule”

PETITIONERS: Epitatcio San Pablo and Cardinal Shipping Corporation

TAGUIBA
RESPONDENTS: PANTRANCO South Express, Inc. and Honorable Board of Transportation and Pantranco South
Express, Inc.

FACTS:

● PANTRANCO is a domestic corporation engaged in the land transportation business with PUB service for
passengers and freight and various certificates for public conveniences CPC to operate passenger buses from
Metro Manila to Bicol Region and Eastern Samar.
● PANTRANCO wrote to Maritime Industry Authority (MARINA) requesting authority to lease/purchase a vessel
(M/V Black Double) for its project to operate a ferryboat service from Matnog, Sorsogon and Allen, Samar to
service the company buses and freight trucks crossing San Bernardo Strait
● MARINA could not give due course to the request because:
○ The Matnog-Allen run is adequately serviced by Petitioners Cardinal Shipping Corp. and Epitacio San
Pablo;
○ MARINA policies on interisland shipping restrict the entry of new operators to Liner trade routes where
these are adequately serviced by existing/authorized operators.
● Market conditions in the proposed route cannot support the entry of additional tonnage.
● PANTRANCO nevertheless acquired the vessel and wrote to the Chairman of the Board of Transportation (BOT)
proposing a ferry service to carry its passenger buses and freight trucks between Allen and Matnog.
● PANTRANCO: "for the purpose of continuing the highway, which is interrupted by a small body of water, the
said proposed ferry operation is merely a necessary and incidental service to its main service and obligation of
transporting its passengers from Pasay City to Tacloban City.”
● Since it is merely incidental PANTRANCO claims that there is no need to obtain a separate CPC to operate a
ferry service between Allen and Matnog
● Without awaiting action on its request PANTRANCO started to operate the ferry service.
● Petitioners Epitacio San Pablo (now represented by his heirs) and Cardinal Shipping Corporation claim they
adequately service the PANTRANCO by ferrying its buses, trucks and passengers.
● Board of Transportation: sought the legal opinion of the Minister of Justice whether or not a bus company with
an existing CPC between Pasay City and Tacloban City may still be required to secure another certificate in order
 to operate a ferry service between two terminals of a small body of water.
● Minister of Justice: there is no need for bus operators to secure a separate CPC TO A common carrier which has
been granted a certificate of public convenience is expected to provide efficient, convenient and adequate service
to the riding public.
○ It is the right of the public which has accepted the service of a public utility operator to demand that the
service should be conducted with reasonable efficiency.
○ When the PANTRANCO proposes to add a ferry service to its Pasay-Tacloban route, it merely does so in
the discharge of its duty under its current certificate of public convenience
○ Requiring PANTRANCO to obtain another certificate to operate such ferry service when it merely forms
a part - and constitutes an improvement - of its existing transportation service would simply be
duplicitous and superfluous.”
● BOT: the ferryboat service is part of its CPC to operate from Pasay to Samar/Leyte. A ferry service, in law, is
treated as a continuation of the highway from one side of the water over which passes to the other side for
transportation of passengers or of travellers with their teams vehicles and such other property as, they may carry
or have with them.
○ The ferryboat service of Pantranco is a continuation of the highway traversed by its buses from Pasay
City to Samar, Leyte passing through Matnog (Sorsogon) through San Bernardino Strait to Allen,
(Samar).
○ It is a private carrier because it will be used exclusively to transport its own buses, passengers and freight
trucks and will not offer itself for hire or for compensation to the general public

ISSUE:

Whether or not a land transportation company can be authorized to operate a ferry service as an incident to its franchise
without the need of filing a separate application. NO.

RULING:
● Under no circumstance can the sea between Matnog and Allen be considered a continuation of the highway.
● Legislature intended ferry to mean the service either by barges or rafts, even by motor or steam vessels, between
the banks of a river or stream to continue the highway which is interrupted by the body of water, or in some cases,
to connect two points on opposite shores of an arm of the sea such as bay or lake which does not involve too great
a distance or too long a time to navigate.
● Where the waters are wide and dangerous with big waves where small boat, barge or raft are not adapted to the
service, then it is more reasonable to regard said line or service as more properly belonging to interisland or
coastwise trade.
● By simply looking at the Philippine Map, it can be seen that Matnog which is on the southern tip of Luzon and
within the province of Sorsogon and Allen which is on the northeastern tip of the island of Samar, is separated by
the San Bernardino Strait which leads towards the Pacific Ocean
 ○ The distance between Matnog and Allen is about 23 kilometers.
● Conveyance of passengers, trucks and cargo from Matnog to Allen is certainly not a ferryboat service but a
coastwise or interisland shipping service.
● In this case, the two terminals (Matnog and Allen) are separated by an open sea so it cannot be considered as a
continuation of the highway.
● PANTRANCO even admits that it charges its passengers separately from the charges for the bus trips and issues
separate tickets whenever they board the M/V "Black Double so they cannot pretend that in issuing tickets to its
passengers it did so as a private carrier and not as a common carrier.
● Court holds that the water transport service between Matnog and Allen is not a ferryboat service but a coastwise
or interisland shipping service. Hence, before PANTRANCO may be issued a franchise or CPC for the operation
of the said service as a common carrier, it must comply with the usual requirements of filing an application,
payment of the fees, publication, adducing evidence at a hearing and affording the oppositors the opportunity to
be heard, among others, as provided by law.

DISPOSITIVE PORTION: WHEREFORE, the petitions are hereby GRANTED and the Decision of the respondent
Board of Transportation (BOT) of October 23, 1981 in BOT Case No. 81-348-C and its Order of July 21, 1982 in the same
case denying the motions for reconsideration filed by petitioners are hereby Reversed and set aside and declared null and
void. Respondent PANTRANCO is hereby permanently enjoined from operating the ferryboat service and/or
coastwise/interisland services between Matnog and Allen until it shall have secured the appropriate Certificate of Public
Convenience (CPC) in accordance with the requirements of the law, with costs against respondent PANTRANCO. SO
ORDERED

Pangasinan Transportation TOPIC: Transportation; Public Nature; Certificate of Convenience (CPC), the Cert. of Public Convenience and
Company, Inc. v. Simplicio de Necessity (CPCN) and the “Prior Operator Rule”
la Cruz, , 95 Phil 278
PETITIONERS: PANGASINAN TRANSPORTATION COMPANY (PANTRANCO)

RIVERA RESPONDENTS: SIMPLICIO DE LA CRUZ

FACTS: Simplicio de la Cruz is an operator of a TPU auto-truck service under a certificate of public convenience (CPC)
granted by the Public Service Commission. Desiring to expand his operations, he has applied for authority to operate the
same kind of service between Urdaneta and Dagupan via Manaoag, between Urdaneta and San Fernando (La Union), and
between Urdaneta and San Jose (Nueva Ecija) using a total of 14 units for that purpose. Notwithstanding the opposition of
the PANTRANCO and two other operators in that region, the Commission granted the application, but reducing the units
to be used to five auto-trucks for the three lines. PANTRANCO filed this petition for review.

ISSUE: W/n there is still a need for such additional service

 RULING: YES. At the hearing of this application, applicant presented evidence to the effect that he is already the grantee
of a certificate of public convenience valid for 25 years. On the lines applied for in this case, traffic is heavy. The needs of
the traveling public cannot be adequately served by the present TPU truck operators on the said lines. The services at
present being rendered by the present TPU operators on the lines in question are entirely insufficient.
This Court would not be justified in substituting its own judgment for that of the Commission, just because the witnesses
for PANTRANCO have testified that the service being rendered by this oppositor and the other operators in that region is
already adequate. Where the Commission has reached a conclusion of fact after weighing the conflicting evidence, that
conclusion must be respected, and this Court will not interfere unless it clearly appears that there is no evidence to support
the decision of the Commission.

DISPOSITIVE PORTION: In view of the foregoing, the decision of the Public Service Commission is affirmed, with
costs.

Teja v. IAC, 148 SCRA 347 TOPIC: Transportation; Public Nature; Certificate of Convenience (CPC), the Cert. of Public Convenience and
Necessity (CPCN) and the “Prior Operator Rule”
BANAYBANAY
PETITIONERS: Teja Marketing

RESPONDENTS: Intermediate Appellate Court

FACTS:

Pedro Nale bought from Teja Marketing a motorcycle with complete accessories and a sidecar. A chattel mortgage was
constituted as a security for the payment of the balance of the purchase price. The records of the Land Transportation
Commission show that the motorcycle sold to the defendant was first mortgaged to the Teja Marketing by Angel Jaucian
though the Teja Marketing and Angel Jaucian are one and the same, because it was made to appear that way only as the
defendant had no franchise of his own and he attached the unit to the plaintiff’s MCH Line. The agreement also of the
parties here was for the plaintiff to undertake the yearly registration of the motorcycle with the Land Transportation
Commission. The plaintiff, however failed to register the motorcycle on that year on the ground that the defendant failed to
comply with some requirements such as the payment of the insurance premiums and the bringing of the motorcycle to the
LTC for stenciling, the plaintiff said that the defendant was hiding the motorcycle from him. Lastly, the plaintiff also
explained that though the ownership of the motorcycle was already transferred to the defendant, the vehicle was still
mortgaged with the consent of the defendant to the Rural Bank of Camaligan for the reason that all motorcycle purchased
from the plaintiff on credit was rediscounted with the bank.

Teja Marketing made demands for the payment of the motorcycle but just the same Nale failed to comply, thus forcing Teja
Marketing to consult a lawyer and file an action for damage before the City Court of Naga in the amount of P546.21 for
attorney’s fees and P100.00 for expenses of litigation. Teja Marketing also claimed that as of 20 February 1978, the total
account of Nale was already P2, 731, 05 as shown in a statement of account; includes not only the balance of P1, 700.00
 but an additional 12% interest per annum on the said balance from 26 January 1976 to 27 February 1978; a 2% service
charge; and P546.21 representing attorney’s fees. On his part, Nale did not dispute the sale and the outstanding balance of
P1,700.00 still payable to Teja Marketing; but contends that because of this failure of Teja Marketing to comply with his
obligation to register the motorcycle, Nale suffered damages when he failed to claim any insurance indemnity which would
amount to no less than P15,000.00 for the more than 2 times that the motorcycle figured in accidents aside from the loss of
the daily income of P15.00 as boundary fee beginning October 1976 when the motorcycle was impounded by the LTC for
not being registered. The City Court rendered judgment in favor of Teja Marketing, dismissing the counterclaim, and
ordered Nale to pay Teja Marketing On appeal to the Court of First Instance of Camarines Sur, the decision was affirmed
in toto. Nale filed a petition for review with the Intermediate Appellate Court. On 18 July 1983, the appellate court set
aside the decision under review on the basis of doctrine of “pari delicto,” and accordingly, dismissed the complaint of Teja
Marketing, as well as the counterclaim of Nale; without pronouncements as to costs. Hence, the petition for review was
filed by Teja Marketing and/or Angel Jaucian.

ISSUE:

Whether the defendant can recover damages against the plaintiff

RULING:

Unquestionably, the parties herein operated under an arrangement, commonly known as the “kabit system” whereby a
person who has been granted a certificate of public convenience allows another person who owns motor vehicles to
operate under such franchise for a fee. A certificate of public convenience is a special privilege conferred by the
government. Abuse of this privilege by the grantees thereof cannot be countenanced.

The “kabit system” has been identified as one of the root causes of the prevalence of graft and corruption in the
government transportation offices. Although not out rightly penalized as a criminal offense, the kabit system is invariably
recognized as being contrary to public policy and, therefore, void and in existent under Article 1409 of the Civil Code. It is
a fundamental principle that the court will not aid either party to enforce an illegal contract, but will leave both where it
finds then. Upon this premise it would be error to accord the parties relief from their predicament.

DISPOSITIVE PORTION:

Qualitrans Limousine Service, TOPIC: Issuance of Certificate of Public Convenience

Inc. v. Royal Class Limousine
PETITIONERS: QUALITRANS LIMOUSINE SERVICE, INC.
Service, 179 SCRA 569
RESPONDENTS: ROYAL CLASS LIMOUSINE SERVICE, LAND TRANSPORTATION COMMISSION, COURT OF
MAGARZO APPEALS

FACTS:
● 1982, Board of Transportation granted Qualitrans a certificate of public convenience to operate a garage (tourist)
air-conditioned service within the City of Manila and from said place to any point in Luzon, and vice-versa.
● The Board amended the certificate, allowing Qualitrans to pick-up passengers in Manila International Airport and
to any point of Luzon as drop-off..
● Royal Class bought Transcare, Royal Class applied for a certificate of public convenience.
● The Board of Transportation issued a certificate to Royal Class that allows Royal Class to pick-up passengers in
the Airport to be dropped at any point in Luzon.
● Qualitrans filed a motion for reconsideration before the Board of Transportation that sought to correct the route.
Qualitrans argued that in Royal Class’ application, the route was Airport to Hotels. But in the certificate issued to
Royal Class it was Airport to any point of Luzon.
● The Board of Transportation denied the motion of Qualitrans. RTC/CA, affirmed the Board.

ISSUE: W/N Royal Class can continue to operate in the route as described in their certificate of public convenience. YES

RULING:
● In the granting or refusal of a certificate of public convenience, all things considered, the question is what is for
the best interests of the public.
● It is simply bellyaching to say that Royal Class had transcended the bounds of the certificate of public
convenience granted to it. What Qualitrans is plainly carping about is the threat the Royal Class’ certificate of
public convenience poses on its foothold in the "limo" service business. This is monopolism, plainly and simply,
and we can not tolerate it. The constitutional mandate is for "a more equitable distribution of opportunities,
income, and wealth" and for the State to regulate or prohibit monopolies."
● Under the Constitution, the national economy stands for, "competi[tion] in both domestic and foreign markets."
Obviously, not every kind of competition is "ruinous competition." All things considered and all things equal,
competition is a healthy thing. Besides, there is no showing that Qualitrans stood to lose its capital investment
with the approval of Royal Class’ franchise. Our considered opinion is that Qualitrans should improve its services
as a counterbalance to Royal Class’ own toehold in the market. And let that be its challenge.
DISPOSITIVE PORTION:

Lara v. Valencia, 104 Phil 65 TOPIC:* This also falls in Private nature

PETITIONERS: LOURDES J. LARA, ET AL.

JOSON
RESPONDENTS: BRIGIDO R. VALENCIA
 FACTS: The case involves the death of Demetrio Lara, Sr. It appears that in a rush to go back home to Davao from his
place of work in Cotabato, he got a seat on the trunk of the respondent’s pick-up truck. Unfortunately, during transit, Lara
fell from the trunk. Despite Valencia’s earnest efforts to deal with the situation, Lara ultimately died. This prompted his
heir, Lourdes Lara to file an action for damages against Valencia.

The CFI ruled in favor of Lourdes, and held Brigido Valencia liable for the death of Demetrio. Valencia was found to be
negligent for driving at 40kph.

ISSUE: WON Valencia was negligent

RULING: Valencia was not negligent

DISPOSITIVE PORTION: On appeal to the SC, the decision was reversed. The Court found that Lara, and the other
passengers were mere “accommodation passengers who paid nothing for the service and so they can be considered as
invited guests within the meaning of the law. As accommodation passengers or invited guests, defendant as owner and
driver of the pickup owes to them merely the duty to exercise reasonable care so that they may be transported safely to
their destination.” It was held that Valencia was not negligent in applying ordinary, reasonable diligence. Furthermore, the
Court held that the law provides that a passenger must likewise employ reasonable diligence to avoid harm on himself.
This, Demetrio failed to do when he refused to take an available seat inside the pick-up, and consequently fell asleep
during transit.

Loadstar v. CA, 315 SCRA 339 TOPIC: Certificate of Public Convenience

PETITIONERS: Loadstar
ALMONTE
RESPONDENTS: CA and Manila Insurance Co

FACTS:

LOADSTAR received on board its M/V “Cherokee” (hereafter, the vessel) the goods valued at P6M and insured for
the same amount by Manila Insurance Co (MIC). While in transit, the vessel, along with its cargo, sank off. MIC
paid P6M to the insured and subrogated the latter’s right against Loadstar.

MIC then filed a complaint against Loadstar alleging that sinking of the vessel was due to negligence on the part of
Loadstar RTC and CA ordered Loadstar to pay MIC, hence this petition.

Loadstar advanced the defense that the vessel is a private carrier because:

- No Certificate of Public Convenience was issued to them

 - It did not have a regular trip or schedule nor a fixed route, and there was only “one shipper, one consignee
for a special cargo

Loadstar's argument is based on the rulings in Home Insurance Co v. American Steamship Agencies Inc. where the
Court held that a common carrier transporting special cargo or chartering the vessel to a special person becomes a
private carrier that is not subject to the provisions of the Civil Code. Any stipulation in the charter party absolving
the owner from liability for loss due to the negligence of its agent is void only if the strict policy governing common
carriers is upheld. Such policy has no force where the public at large is not involved, as in the case of a ship totally
chartered for the use of a single party.

ISSUE: Is the M/V “Cherokee” a private or a common carrier? (NO)

RULING:

LOADSTAR fits the definition of a common carrier under Article 1732 of the Civil Code. A certificate of public
convenience is not a requisite for the incurring of liability under the Civil Code provisions governing common
carriers. That liability arises the moment a person or firm acts as a common carrier, without regard to whether or not
such carrier has also complied with the requirements of the applicable regulatory statute and implementing
regulations and has been granted a certificate of public convenience or other franchise. To exempt private respondent
from the liabilities of a common carrier because he has not secured the necessary certificate of public convenience,
would be offensive to sound public policy; that would be to reward private respondent precisely for failing to comply
with applicable statutory requirements.

The public character of the vessel is not altered by the fact that the carriage of the goods in question was periodic,
occasional, episodic or unscheduled and the cases invoked by LOADSTAR are not applicable in the case at bar for
simple reason that:

- The records do not disclose that the M/V “Chero-kee,” undertook to carry a special cargo or was
chartered to a special person only.
- There was no charter party.
- The bills of lading failed to show any special arrangement, but only a general provision to the effect
that the M/V “Cherokee” was a “general cargo carrier.”

Further, the bare fact that the vessel was carrying a particular type of cargo for one shipper, which appears to be
purely coincidental, is not reason enough to convert the vessel from a common to a private carrier, especially where,
as in this case, it was shown that the vessel was also carrying passengers.
DISPOSITIVE PORTION:
WHEREFORE, the instant petition is DENIED and the challenged decision of 30 January 1997 of the Court of Appeals in
CA-G.R. CV No. 36401 is AFFIRMED.