transportation notes 031009
TRANSPORTATION NOTES 1 A PUBLIC UTILITY IS A PARTLY NATIONALIZED
BUSINESS GENERAL CONSIDERATIONS ENDEAVOR Public utilities may only
be operated by Filipino citizens or PUBLIC UTILITIES corporations,
associations, partnerships organized and constituted under the laws
of the Philippines, and wherein at least 60% of the capital stock
or paid-up capital is owned by Filipinos 1987 PHILIPPINE
CONSTITUTION Another aspect of this idea is that the participation
of foreign investors shall be limited to their proportionate share,
and all the Section 11. No franchise, certificate, or any other
form of authorization for executive and managing officers of such
corporation or association the operation of a public utility shall
be granted except to citizens of the must be citizens of the
Philippines Philippines or to corporations or associations
organized under the laws of The constitution reserves part of
ownership of public utilities to the Philippines, at least sixty
per centum of whose capital is owned by such Filipinos citizens;
nor shall such franchise, certificate, or authorization be
exclusive in Fully-nationalized, as given by the Constitution: mass
media, character or for a longer period than fifty years. Neither
shall any such exercise of profession franchise or right be granted
except under the condition that it shall be subject to amendment,
alteration, or repeal by the Congress when the A PUBLIC UTILITY IS
A BUSINESS ENDEAVOR VIEWED WITH PUBLIC common good so requires. The
State shall encourage equity participation in INTEREST public
utilities by the general public. The participation of foreign
investors in The issuance of a franchise, certificate or any other
form of the governing body of any public utility enterprise shall
be limited to their authorization is needed for the operation of a
public utility proportionate share in its capital, and all the
executive and managing officers Franchise granted is subject to the
condition that can be amended, of such corporation or association
must be citizens of the Philippines. altered, or repealed by the
Congress when common good so requires Section 17. In times of
national emergency, when the public interest so The State may
temporarily take over requires, the State may, during the emergency
and under reasonable terms The State may permanently acquire vital
industries and private prescribed by it, temporarily take over or
direct the operation of any privately- enterprises owned public
utility or business affected with public interest. The State shall
regulate or prohibit monopolies Section 18. The State may, in the
interest of national welfare or defense, WHAT IS A PUBLIC UTILITY?
establish and operate vital industries and, upon payment of just
May fall under those enumerated in Section 13 (b) in CA 146
compensation, transfer to public ownership utilities and other
private enterprises to be operated by the Government. 1 REPUBLIC V.
MANILA ELECTRIC COMPANY 391 SCRA 700 Section 19. The State shall
regulate or prohibit monopolies when the public interest so
requires. No combinations in restraint of trade or unfair FACTS:
competition shall be allowed. MERALCO filed an application with the
ERB for the increase of its rate schedules, which included
application for provisional increase pending TWO IDEAS CONVEYED BY
THE PROVISIONS ON PUBLIC UTILITY decision of the same agency. ERB
allowed the provisional increase and 1. It is a partly nationalized
business endeavor
referred the matter to the COA. The COA consequently made a 2.
It is viewed with public interest
recommendation that income taxes should not be included by
MERALCO in MA. ANGELA AGUINALDO ATENEO LAW 2010 TRANSPORTATION
NOTES 2 its operating expenses. Likewise, the COA recommended that
net average Clearly, by its nature, income tax payments of a public
utility are not investment method should be used by the company in
the valuation of its expenses which contribute to or are incurred
in connection with the properties. The ERB adopted this
recommendation, ordered MERALCO to a production of profit of a
public utility. Income tax should be borne by the lower increase
than applied for, and ordered as well for the company to taxpayer
alone as they are payments made in exchange for benefits adopt the
net average investment method. This was however overturned by
received by the taxpayer from the State. No benefit is derived by
the the CA. customers of a public utility for the taxes paid by
such entity and no direct contribution is made by the payment of
income tax to the operation of a HELD: public utility for purposes
of generating revenue or profit. Accordingly, the The regulation of
rates to be charged by public utilities is founded upon the burden
of paying income tax should be Meralco's alone and should not be
police powers of the State and statutes prescribing rules for the
control and shifted to the consumers by including the same in the
computation of its regulation of public utilities are a valid
exercise thereof. When private operating expenses. property is used
for a public purpose and is affected with public interest, it
ceases to be juris privati only and becomes subject to regulation.
The The usage of net average investment method is not unreasonable
regulation is to promote the common good. Submission to regulation
may be withdrawn by the owner by discontinuing use; but as long as
use of the The ERB did not abuse its discretion when it applied the
net average property is continued, the same is subject to public
regulation. investment method. The reasonableness of net average
investment method is borne by the records of the case. In its
report, the COA explained that the In regulating rates charged by
public utilities, the State protects the public computation of the
proportionate value of the property and equipment in against
arbitrary and excessive rates while maintaining the efficiency and
accordance with the actual number of months such property or
equipment is quality of services rendered. However, the power to
regulate rates does not in service for purposes of determining the
rate base is favored, as against give the State the right to
prescribe rates which are so low as to deprive the the trending
method employed by MERALCO, "to reflect the real status of public
utility of a reasonable return on investment. Thus, the rates
prescribed the property."36 By using the net average investment
method, the ERB and by the State must be one that yields a fair
return on the public utility upon the the COA considered for
determination of the rate base the value of value of the property
performing the service and one that is reasonable to properties and
equipment used by MERALCO in proportion to the period that the
public for the services rendered. the same were actually used
during the period in question. This treatment is consistent with
the settled rule in rate regulation that the determination of the
Income tax as operating expense cannot be allowed in
rate-determination rate base of a public utility entitled to a
return must be based on properties process and equipment actually
being used or are useful to the operations of the public utility.
The ERB correctly ruled that income tax should not be included in
the computation of operating expenses of a public utility. Income
tax paid by a 2 DAVID, ET. AL. V. GLORIA ARROYO, ET. AL. public
utility is inconsistent with the nature of operating expenses. In
general, GR 171396, 3 MAY 2006 operating expenses are those which
are reasonably incurred in connection with business operations to
yield revenue or income. They are items of FACTS: expenses which
contribute or are attributable to the production of income or The
president issued PP1017, on the advent of the 20th EDSA People
Power revenue. As correctly put by the ERB, operating expenses
"should be a Anniversary. This was allegedly due to the incessant
activities staged by the requisite of or necessary in the operation
of a utility, recurring, and that it activists and opposition, who
sought the downfall of the present redounds to the service or
benefit of customers." administration. The president ordered in
said proclamation the cancellation of all activities related to the
celebration of the EDSA anniversary, as well as MA. ANGELA
AGUINALDO ATENEO LAW 2010 TRANSPORTATION NOTES 3 rally permits.
This notwithstanding, rallies were still staged. This led to the
warrantless arrests of many as well as the take-over of two
pro-opposition SECTION 13. newspaper companiesDaily Tribune and
Malaya. Together with other petitions assailing the
constitutionality of PP 1017 and GO5, it was averred xxx that the
take-over the newspaper companies constituted censorship and prior
restraint. (b) The term "public service" includes every person that
now or hereafter may own, operate, manage, or control in the
Philippines, for hire or HELD: compensation, with general or
limited clientele, whether permanent, Generally, Congress is the
repository of emergency powers, such as the occasional or
accidental, and done for general business purposes, any taking over
of public utilities. This is evident in the tenor of Section 23
(2), common carrier, railroad, street railway, traction railway,
sub-way motor Article VI authorizing it to delegate such powers to
the President. Certainly, a vehicle, either for freight or
passenger, or both with or without fixed route and body cannot
delegate a power not reposed upon it. However, knowing that whether
may be its classification, freight or carrier service of any class,
during grave emergencies, it may not be possible or practicable for
express service, steamboat or steamship line, pontines, ferries,
and water Congress to meet and exercise its powers, the Framers of
our Constitution craft, engaged in the transportation of passengers
or freight or both, deemed it wise to allow Congress to grant
emergency powers to the shipyard, marine railways, marine repair
shop, [warehouse] wharf or dock, President, subject to certain
conditions, thus: ice plant, ice-refrigeration plant, canal,
irrigation system, gas, electric light, heat and power water supply
and power, petroleum, sewerage system, wire (1) There must be a war
or other emergency. or wireless communications system, wire or
wireless broadcasting stations and other similar public services:
Provided, however, That a person engaged (2) The delegation must be
for a limited period only. in agriculture, not otherwise a public
service, who owns a motor vehicle and uses it personally and/or
enters into a special contract whereby said motor (3) The
delegation must be subject to such restrictions as the Congress may
vehicle is offered for hire or compensation to a third party or
third parties prescribe. engaged in agriculture, not itself or
themselves a public service, for operation by the latter for a
limited time and for a specific purpose directly connected (4) The
emergency powers must be exercised to carry out a national policy
with the cultivation of his or their farm, the transportation,
processing, and declared by Congress. marketing of agricultural
products of such third party or third parties shall not be
considered as operating a public service for the purposes of this
Act. Section 17, Article XII must be understood as an aspect of the
emergency powers clause. The taking over of private business
affected with public 3 ALBANO V. REYES interest is just another
facet of the emergency powers generally reposed 175 SCRA 224 upon
Congress. Thus, when Section 17 states that the "the State may,
during the emergency and under reasonable terms prescribed by it,
FACTS: temporarily take over or direct the operation of any
privately owned public A public bidding was conducted for the
management and operation of the utility or business affected with
public interest," it refers to Congress, not the Manila
International Container Terminal. Seven consortia of companies
President. Now, whether or not the President may exercise such
power is submitted their respective bids and consequently, the
bidding committee dependent on whether Congress may delegate it to
him pursuant to a law recommended the award to be given to ICTSI.
Subsequently, two petitions prescribing the reasonable terms
thereof. were filed questioning the regularity of the bidding
conducted. One of the allegations forwarded was that since MICT is
a public utility, prior franchise PUBLIC SERVICE LAW (CA 146) from
the legislature is needed. MA. ANGELA AGUINALDO ATENEO LAW 2010
TRANSPORTATION NOTES 4 In the instant case, the PPA, in the
exercise of the option granted it by P.D. HELD: No. 857, chose to
contract out the operation and management of the MICP A review of
the applicable provisions of law indicates that a franchise to a
private corporation. This is clearly within its power to do. Thus,
PPA's specially granted by Congress is not necessary for the
operation of the acts of privatizing the MICT and awarding the MICT
contract to ICTSI are Manila International Container Port (MICP) by
a private entity, a contract wholly within the jurisdiction of the
PPA under its Charter which empowers entered into by the PPA and
such entity constituting substantial compliance the PPA to
"supervise, control, regulate, construct, maintain, operate and
with the law. provide such facilities or services as are necessary
in the ports vested in, or belonging to the PPA." (Section 6(a) ii,
P.D. 857) Thus, while the PPA has been tasked, under E.O. No. 30,
with the management and operation of the Manila International Port
Complex and to The contract between the PPA and ICTSI, coupled with
the President's undertake the providing of cargo handling and port
related services thereat, written approval, constitute the
necessary authorization for ICTSI's operation the law provides that
such shall be "in accordance with P.D. 857 and other and management
of the MICP. The award of the MICT contract approved by applicable
laws and regulations." On the other hand, P.D. No. 857 expressly no
less than the President of the Philippines herself enjoys the legal
empowers the PPA to provide services within Port Districts "whether
on its presumption of validity and regularity of official action.
In the case at bar, own, by contract, or otherwise" [See. 6(a)
(v)]. Therefore, under the terms of there is no evidence which
clearly shows the constitutional infirmity of the E.O. No. 30 and
P.D. No. 857, the PPA may contract with the International
questioned act of government. Container Terminal Services, Inc.
(ICTSI) for the management, operation and development of the MICP.
4 TATAD V. GARCIA 243 SCRA 436 Even if the MICP be considered a
public utility, or a public service on the theory that it is a
"wharf' or a "dock" as contemplated under the Public FACTS: Service
Act, its operation would not necessarily call for a franchise from
the The DOTC planned to construct LRT 3. Special technical teams
were Legislative Branch. Franchises issued by Congress are not
required before formed to evaluate the project. Coincidentally, the
BOT law was signed into each and every public utility may operate.
Thus, the law has granted certain law, which provided for two
arrangements, BOT and BT. Upon the passage administrative agencies
the power to grant licenses for or to authorize the of the law,
modifications were made to the prequalification proceedings.
operation of certain public utilities. (See E.O. Nos. 172 and 202)
Five groups forwarded their interests to undertake the project but
it was only EDSA LRT consortium which was said to have complied
with the As stated earlier, E.O. No. 30 has tasked the PPA with the
operation and requirements. DOTC recommended the award to be made
to the consortium management of the MICP, in accordance with P.D.
857 and other applicable but was informed that the prequalification
procedure wasn't the bidding laws and regulations. However, P.D.
857 itself authorizes the PPA to process contemplated by the BOT
law. in light of this, amendments were perform the service by
itself, by contracting it out, or through other means. made to the
agreement with the consortium, which proposed a BLT Reading E.O.
No. 30 and P.D. No. 857 together, the inescapable conclusion
arrangement. Later on, amendments were made to the BOT law. 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 The petition mainly rests on the question of whether a foreign
corporation management by another by contract or other means, at
its option. The latter can own a public utility. 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 HELD:
becomes unnecessary. What private respondent owns are the rail
tracks, rolling stocks like the coaches, rail stations, terminals
and the power plant, not a public utility. MA. ANGELA AGUINALDO
ATENEO LAW 2010 TRANSPORTATION NOTES 5 While a franchise is needed
to operate these facilities to serve the public, vehicles under
simulated operating conditions, control of operations, dealing they
do not by themselves constitute a public utility. What constitutes
a with emergencies, collection, counting and securing cash from the
fare public utility is not their ownership but their use to serve
the public. collection system. Personnel of DOTC will work under
the direction and control of private respondent only during
training. The training objectives, The Constitution, in no
uncertain terms, requires a franchise for the however, shall be
such that upon completion of the EDSA LRT III and upon operation of
a public utility. However, it does not require a franchise before
opening of normal revenue operation, DOTC shall have in their
employ one can own the facilities needed to operate a public
utility so long as it does personnel capable of undertaking
training of all new and replacement not operate them to serve the
public. personnel. In other words, by the end of the three-year
construction period and upon commencement of normal revenue
operation, DOTC shall be able The right to operate a public utility
may exist independently and separately to operate the EDSA LRT III
on its own and train all new personnel by itself. from the
ownership of the facilities thereof. One can own said facilities
without operating them as a public utility, or conversely, one may
operate a Fees for private respondent' s services shall be included
in the rent, which public utility without owning the facilities
used to serve the public. The likewise includes the project cost,
cost of replacement of plant equipment devotion of property to
serve the public may be done by the owner or by the and spare
parts, investment and financing cost, plus a reasonable rate of
person in control thereof who may not necessarily be the owner
thereof. return thereon. This dichotomy between the operation of a
public utility and the ownership of Since DOTC shall operate the
EDSA LRT III, it shall assume all the the facilities used to serve
the public can be very well appreciated when we obligations and
liabilities of a common carrier. For this purpose, DOTC shall
consider the transportation industry. Enfranchised airline and
shipping indemnify and hold harmless private respondent from any
losses, damages, companies may lease their aircraft and vessels
instead of owning them injuries or death which may be claimed in
the operation or implementation of themselves. the system, except
losses, damages, injury or death due to defects in the EDSA LRT III
on account of the defective condition of equipment or facilities
While private respondent is the owner of the facilities necessary
to operate or the defective maintenance of such equipment
facilities. the EDSA. LRT III, it admits that it is not
enfranchised to operate a public utility. In view of this
incapacity, private respondent and DOTC agreed that In sum, private
respondent will not run the light rail vehicles and collect fees on
completion date, private respondent will immediately deliver
possession from the riding public. It will have no dealings with
the public and the public of the LRT system by way of lease for 25
years, during which period DOTC will have no right to demand any
services from it. shall operate the same as a common carrier and
private respondent shall provide technical maintenance and repair
services to DOTC. Technical 5 PAL V. CAB maintenance consists of
providing (1) repair and maintenance facilities for 270 SCRA 538
the depot and rail lines, services for routine clearing and
security; and (2) producing and distributing maintenance manuals
and drawings for the entire FACTS: system. Grand Air applied with
the CAB for the issuance of a Certificate of Public Convenience and
Necessity. Notice for hearing was issued by the agency. Private
respondent shall also train DOTC personnel for familiarization with
Here comes PAL, which alleges the lack of jurisdiction of CAB to
entertain the operation, use, maintenance and repair of the rolling
stock, power plant, the application or rule upon it. PAL further
alleges that a legislative franchise substations, electrical,
signaling, communications and all other equipment as is prior
needed for the issuance of the CPCN. Private respondent on the
supplied in the agreement. Training consists of theoretical and
live training other hand, following pronouncements of earlier
cases, allege that no of DOTC operational personnel which includes
actual driving of light rail MA. ANGELA AGUINALDO ATENEO LAW 2010
TRANSPORTATION NOTES 6 legislative franchise is anymore needed with
respect to air transportation before a CPCN be issued. Section 13.
(a) The Commission shall have jurisdiction, supervision, and
control over all public services and their franchises, equipment,
and other HELD: properties, and in the exercise of its authority,
it shall have the necessary Many and varied are the definitions of
certificates of public convenience powers and the aid of the public
force: Provided, That public services owned which courts and legal
writers have drafted. Some statutes use the terms or operated by
government entities or government-owned or controlled "convenience
and necessity" while others use only the words "public corporations
shall be regulated by the Commission in the same way as
convenience." The terms "convenience and necessity", if used
together in a privately-owned public services, but certificates of
public convenience or statute, are usually held not to be
separable, but are construed together. certificates of public
convenience and necessity shall not be required of such Both words
modify each other and must be construed together. The word entities
or corporations: And provided, further, That it shall have no
authority 'necessity' is so connected, not as an additional
requirement but to modify to require steamboats, motor ships and
steamship lines, whether privately- and qualify what might
otherwise be taken as the strict significance of the owned, or
owned or operated by any Government controlled corporation or word
necessity. Public convenience and necessity exists when the
proposed instrumentality to obtain certificate of public
convenience or to prescribe their facility will meet a reasonable
want of the public and supply a need which the definite routes or
lines of service. existing facilities do not adequately afford. It
does not mean or require an actual physical necessity or an
indispensable thing. (b) The term "public service" includes every
person that now or hereafter may own, operate, manage, or control
in the Philippines, for hire or The use of the word "necessity", in
conjunction with "public convenience" in compensation, with general
or limited clientele, whether permanent, a certificate of
authorization to a public service entity to operate, does not in
occasional or accidental, and done for general business purposes,
any any way modify the nature of such certification, or the
requirements for the common carrier, railroad, street railway,
traction railway, sub-way motor issuance of the same. It is the law
which determines the requisites for the vehicle, either for freight
or passenger, or both with or without fixed route and issuance of
such certification, and not the title indicating the certificate.
whether may be its classification, freight or carrier service of
any class, express service, steamboat or steamship line, pontines,
ferries, and water Congress, by giving the respondent Board the
power to issue permits for the craft, engaged in the transportation
of passengers or freight or both, operation of domestic transport
services, has delegated to the said body the shipyard, marine
railways, marine repair shop, [warehouse] wharf or dock, authority
to determine the capability and competence of a prospective ice
plant, ice-refrigeration plant, canal, irrigation system, gas,
electric light, domestic air transport operator to engage in such
venture. This is not an heat and power water supply and power,
petroleum, sewerage system, wire instance of transforming the
respondent Board into a mini-legislative body, or wireless
communications system, wire or wireless broadcasting stations with
unbridled authority to choose who should be given authority to
operate and other similar public services: Provided, however, That
a person engaged domestic air transport services. in agriculture,
not otherwise a public service, who owns a motor vehicle and uses
it personally and/or enters into a special contract whereby said
motor vehicle is offered for hire or compensation to a third party
or third parties TRANSPORTATION engaged in agriculture, not itself
or themselves a public service, for operation by the latter for a
limited time and for a specific purpose directly connected
TRANSPORTATION, DEFINED. with the cultivation of his or their farm,
the transportation, processing, and One whereby a certain person or
association of persons obligate marketing of agricultural products
of such third party or third parties shall not themselves to
transport persons, things, or news from one place to be considered
as operating a public service for the purposes of this Act. another
for a fixed price PUBLIC NATURE MA. ANGELA AGUINALDO ATENEO LAW
2010 TRANSPORTATION NOTES 7 (c) The word "person" includes every
individual, co-partnership, joint-stock the immediate cancellation
of the certificate without the necessity of any company or
corporation, whether domestic or foreign, their lessees, trustees,
express action on the part of the Commission. or receivers, as well
as any municipality, province, city, government-owned or controlled
corporation, or agency of the Government of the Philippines, In
estimating the depreciation, the effect of the use of the
equipment, its and whatever other persons or entities that may own
or possess or operate actual condition, the age of the model, or
other circumstances affecting its public services. (As amended by
Com. Act 454 and RA No. 2677) value in the market shall be taken
into consideration. Section 14. The following are exempted from the
provisions of the preceding The foregoing is likewise applicable to
any extension or amendment of section: certificates actually in
force and to those which may hereafter be issued, to permit to
modify itineraries and time schedules of public services, and to
(a) Warehouses; authorizations to renew and increase equipment and
properties. (b) Vehicles drawn by animals and bancas moved by oar
or sail, and Section 16. Proceedings of the Commission, upon notice
and hearing. - The tugboats and lighters; Commission shall have
power, upon proper notice and hearing in accordance with the rules
and provisions of this Act, subject to the limitations (c) Airships
within the Philippines except as regards the fixing of their and
exceptions mentioned and saving provisions to the contrary :
maximum rates on freight and passengers; (a) To issue certificates
which shall be known as certificates of public (d) Radio companies
except with respect to the fixing of rates; convenience,
authorizing the operation of public service within the Philippines
whenever the Commission finds that the operation of the public (e)
Public services owned or operated by any instrumentality of the
National service proposed and the authorization to do business will
promote the Government or by any government-owned or controlled
corporation, except public interest in a proper and suitable
manner. Provided, That thereafter, with respect to the fixing of
rates. (As amended by Com. Act 454, RA No. certificates of public
convenience and certificates of public convenience and 2031, and RA
No. 2677 ) necessity will be granted only to citizens of the
Philippines or of the United States or to corporations,
co-partnerships, associations or joint-stock Section 15. With the
exception of those enumerated in the preceding companies
constituted and organized under the laws of the Philippines;
section, no public service shall operate in the Philippines without
possessing Provided, That sixty per centum of the stock or paid-up
capital of any such a valid and subsisting certificate from the
Public Service Commission known corporations, co-partnership,
association or joint-stock company must belong as "certificate of
public convenience," or "certificate of public convenience entirely
to citizens of the Philippines or of the United States: Provided,
and necessity," as the case may be, to the effect that the
operation of said further, That no such certificates shall be
issued for a period of more than service and the authorization to
do business will promote the public interests fifty years. in a
proper and suitable manner. (b) To approve, subject to
constitutional limitations any franchise or privilege The
Commission may prescribe as a condition for the issuance of the
granted under the provisions of Act No. Six Hundred and
Sixty-seven, as certificate provided in the preceding paragraph
that the service can be amended by Act No. One Thousand and
twenty-two, by any political acquired by the Republic of the
Philippines or any instrumentality thereof subdivision of the
Philippines when, in the judgment of the Commission, upon payment
of the cost price of its useful equipment, less reasonable such
franchise or privilege will properly conserve the public interests,
and the depreciation; and likewise, that the certificate shall be
valid only for a definite Commission shall in so approving impose
such conditions as to construction, period of time; and that the
violation of any of these conditions shall produce equipment,
maintenance, service, or operation as the public interests and MA.
ANGELA AGUINALDO ATENEO LAW 2010 TRANSPORTATION NOTES 8 convenience
may reasonably require, and to issue certificates of public
maintenance of the same and when the financial condition of the
said public convenience and necessity when such is required or
provided by any law or service reasonably warrants the original
expenditure required in making and franchise. operating such
extension. (c) To fix and determine individual or joint rates,
tolls, charges, (i) To direct any railroad, street railway or
traction company to establish and classifications, or schedules
thereof, as well as commutation, mileage, maintain at any junction
or point of connection or intersection with any other kilometrage,
and other special rates which shall be imposed observed and line of
said road or track, or with any other line of any other railroad,
street followed thereafter by any public service: Provided, That
the Commission railway or traction to promote, such just and
reasonable connection as shall may, in its discretion, approve
rates proposed by public services be necessary to promote the
convenience of shippers of property, or of provisionally and
without necessity of any hearing; but it shall call a hearing
passengers, and in like manner direct any railroad, street railway,
or traction thereon within thirty days, thereafter, upon
publication and notice to the company engaged in carrying
merchandise, to construct, maintain and concerns operating in the
territory affected: Provided, further, That in case operate, upon
reasonable terms, a switch connection with any private the public
service equipment of an operator is used principally or secondarily
sidetrack which may be constructed by any shipper to connect with
the for the promotion of a private business, the net profits of
said private railroad, street railway or traction company line
where, in the judgment of the business shall be considered in
relation with the public service of such Commission, such
connection is reasonable and practicable and can be out operator
for the purpose of fixing the rates. in with safety and will
furnish sufficient business to justify the construction and
maintenance of the same. (d) To fix just and reasonable standards,
classifications, regulations, practices, measurement, or service to
be furnished, imposed, observed, and (j) To authorize, in its
discretion, any railroad, street railway or traction followed
thereafter by any public service. company to lay its tracks across
the tracks of any other railroad, street railway or traction
company or across any public highway. (e) To ascertain and fix
adequate and serviceable standards for the measurement of quantity,
quality, pressure, initial voltage, or other condition (k) To
direct any railroad or street railway company to install such
safety pertaining to the supply of the product or service rendered
by any public devices or about such other reasonable measures as
may in the judgment of service, and to prescribe reasonable
regulations for the examination and test the Commission be
necessary for the protection of the public are passing of such
product or service and for the measurement thereof. grade crossing
of (1) public highways and railroads, (2) public highways and
streets railway, or (3) railways and street railways. (f) To
establish reasonable rules, regulations, instructions,
specifications, and standards, to secure the accuracy of all meters
and appliances for (l) To fix and determine proper and adequate
rates of depreciation of the measurements. property of any public
service which will be observed in a proper and adequate
depreciation account to be carried for the protection of (g) To
compel any public service to furnish safe, adequate, and proper
stockholders, bondholders or creditors in accordance with such
rules, service as regards the manner of furnishing the same as well
as the regulations, and form of account as the Commission may
prescribe. Said maintenance of the necessary material and
equipment. rates shall be sufficient to provide the amounts
required over and above the expense of maintenance to keep such
property in a state of efficiency (h) To require any public service
to establish, construct, maintain, and corresponding to the
progress of the industry. Each public service shall operate any
reasonable extension of its existing facilities, where in the
conform its depreciation accounts to the rates so determined and
fixed, and judgment of said Commission, such extension is
reasonable and practicable shall set aside the moneys so provided
for out of its earnings and carry the and will furnish sufficient
business to justify the construction and same in a depreciation
fund. The income from investments of money in such MA. ANGELA
AGUINALDO ATENEO LAW 2010 TRANSPORTATION NOTES 9 fund shall
likewise be carried in such fund. This fund shall not be expended
expressly exempted from the jurisdiction of the Commission, either
totally or otherwise than for depreciation, improvements, new
construction, extensions in part, by the provisions of section
thirteen of this Act. or conditions to the properly of such public
service. Section 19. Unlawful Acts. - It shall be unlawful for any
public service: (m) To amend, modify or revoke at any time
certificate issued under the provisions of this Act, whenever the
facts and circumstances on the strength (a) To provide or maintain
any service that is unsafe, improper, or of which said certificate
was issued have been misrepresented or materially inadequate or
withhold or refuse any service which can reasonably be changed.
demanded and furnished, as found and determined by the Commission
in a final order which shall be conclusive and shall take effect in
accordance with (n) To suspend or revoke any certificate issued
under the provisions of this this Act, upon appeal of otherwise.
Act whenever the holder thereof has violated or willfully and
contumaciously refused to comply with any order rule or regulation
of the Commission or any (b) To make or give, directly or
indirectly, by itself or through its agents, provision of this Act:
Provided, That the Commission, for good cause, may attorneys or
brokers, or any of them, discounts or rebates on authorized prior
to the hearing suspend for a period not to exceed thirty days any
rates, or grant credit for the payment of freight charges, or any
undue or certificate or the exercise of any right or authority
issued or granted under unreasonable preference or advantage to any
person of corporation or to this Act by order of the Commission,
whenever such step shall in the any locality or to any particular
description of traffic or service, or subject any judgment of the
Commission be necessary to avoid serious and irreparable particular
person or corporation or locality or any particular description of
damage or inconvenience to the public or to private interests.
traffic to any prejudice or disadvantage in any respect whatsoever;
to adopt, maintain, or enforce any regulation, practice or
measurement which shall be (o) To fix, determine, and regulate, as
the convenience of the state may found or determined by the
Commission to be unjust, unreasonable, unduly require, a special
type for auto-busses, trucks, and motor trucks to be preferential
or unjustly discriminatory in a final order which shall be
hereafter constructed, purchased, and operated by operators after
the conclusive and shall take effect in accordance with the
provisions of this Act, approval of this Act; to fix and determine
a special registration fee for auto- upon repeal or otherwise.
buses, trucks, and motor trucks so constructed, purchased and
operated: Provided, That said fees shall be smaller than more those
charged for auto- (c) To refuse or neglect, when requested by the
Director of Posts or his busses, trucks, and motor trucks of types
not made regulation under the authorized representative, to carry
public mail on the regular trips of any subsection. public land
transportation service maintained or operated by any such public
service; upon such terms and conditions and for a consideration in
such xxx amount as may be agreed upon between the Director of Posts
and the public service carrier of fixed by the Commission in the
absence of an agreement Section 18. It shall be unlawful for any
individual, co-partnership, between the Director of Posts and the
carrier. In case the Director of Posts association, corporation or
joint-stock company, their lessees, trustees or and public service
carrier are unable to agree on the amount of the receivers
appointed by any court whatsoever, or any municipality, province,
compensation to be paid for the carriage of the mail, the Director
of Posts or other department of the Government of the Philippines
to engage in any shall forthwith request the Commission to fix a
just and reasonable public service business without having first
secured from the Commission a compensation for such carriage and
the same shall be promptly fixed by the certificate of public
convenience or certificate of public convenience and Commission in
accordance with Section sixteen of this Act. necessity as provided
for in this Act, except grantees of legislative franchises
expressly exempting such grantees from the requirement of securing
a Section 20. Acts requiring the approval of the Commission. -
Subject to certificate from this Commission as well as concerns at
present existing established limitations and exceptions and saving
provisions to the contrary, MA. ANGELA AGUINALDO ATENEO LAW 2010
TRANSPORTATION NOTES 10 it shall be unlawful for any public service
or for the owner, lessee or operator any other public service. The
approval herein required shall be given, after thereof, without the
approval and authorization of the Commission previously notice to
the public and hearing the persons interested at a public hearing,
if had - it be shown that there are just and reasonable grounds for
making the mortgaged or encumbrance, for liabilities of more than
one year maturity, or (a) To adopt, establish, fix, impose,
maintain, collect or carry into effect any the sale, alienation,
lease, merger, or consolidation to be approved, and that individual
or joint rates, commutation, mileage or other special rate, toll,
fare, the same are not detrimental to the public interest, and in
case of a sale, the charge, classification or itinerary. The
Commission shall approve only those date on which the same is to be
consummated shall be fixed in the order of that are just and
reasonable and not any that are unjustly discriminatory or
approval: Provided, however, that nothing herein contained shall be
unduly preferential, only upon reasonable notice to the public
services and construed to prevent the transaction from being
negotiated or completed other parties concerned, giving them a
reasonable opportunity to be heard before its approval or to
prevent the sale, alienation, or lease by any public and the burden
of the proof to show that the proposed rates or regulations service
of any of its property in the ordinary course of its business. are
just and reasonable shall be upon the public service proposing the
same. (h) To sell or register in its books the transfer or sale of
shares of its capital (b) To establish, construct, maintain, or
operate new units or extend existing stock, if the result of that
sale in itself or in connection with another previous facilities or
make any other addition to or general extension of the service.
sale, shall be to vest in the transferee more than forty per centum
of the subscribed capital of said public service. Any transfer made
in violation of xxx this provision shall be void and of no effect
and shall not be registered in the books of the public service
corporation. Nothing herein contained shall be (e) Hereafter to
issue any stock or stock certificates representing an increase
construed to prevent the holding of shares lawfully acquired. (As
amended of capital; or issue any share of stock without par value;
or issue any bonds by Com. Act No. 454.) or other evidence of
indebtedness payable in more than one year from the issuance
thereof, provided that it shall be the duty of the Commission,
after (i) To sell, alienate or in any manner transfer shares of its
capital stock to hearing, to approve any such issue maturing in
more than one year from the any alien if the result of that sale,
alienation, or transfer in itself or in date thereof, when
satisfied that the same is to be made in accordance with connection
with another previous sale shall be the reduction to less than law,
and the purpose of such issue be approved by the Commission. (f) To
sixty per centum of the capital stock belonging to Philippine
citizens. Such capitalize any franchise in excess of the amount,
inclusive of any tax or sale, alienation or transfer shall be void
and of no effect and shall be annual charge, actually paid to the
Government of the Philippines or any sufficient cause for ordering
the cancellation of the certificate. political subdivision thereof
as the consideration of said franchise; capitalize any contract for
consolidation, merger or lease, or issue any bonds or other 6 Y
TRANSIT V. NLRC evidence of indebtedness against or as a lien upon
any contract for 226 SCRA 508 consolidation, merger, or lease:
Provided, however, that the provisions of this section shall not
prevent the issuance of stock, bonds, or other evidence FACTS: of
indebtedness subject to the approval of the Commission by any
lawfully Yujuico Transit mortgaged its 10 buses to DBP to be able
to secure a loan merged or consolidated public services not in
contravention of the provisions from the latter. With the
authorization of the board, the company president of this section.
entered into a dacion en pago to settle its obligations. After the
buses were relieved of the mortgage, the same were sold to Y
Transit. In the meantime, (g) To sell, alienate, mortgage, encumber
or lease its property, franchises, Yujuico Transit was held liable
in a labor case and levy was made to the certificates, privileges,
or rights or any part thereof; or merge or consolidate buses. Y
Transit opposed the same averring that it owned the buses its
property, franchises privileges or rights, or any part thereof,
with those of already. However, private respondents argue that the
transfer was void as MA. ANGELA AGUINALDO ATENEO LAW 2010
TRANSPORTATION NOTES 11 BOT approval was not sought. The private
respondents were sustained. In Authorization to operate a public
service for which a franchise is the end, levy was reinstated over
the buses. required by law HELD: REQUISITES FOR GRANT OF
CERTIFICATE The law really requires the approval of the Public
Service Commission in 1. Applicant must be a citizen of the
Philippines, or a corporation, order that a franchise, or any
privilege pertaining thereto, may be sold or association or
partnership constituted and organized under the laws leased without
infringing the certificate issued to the grantee. The reason is of
the Philippines, 60% at least of the stock or paid-up capital is
obvious. Since a franchise is personal in nature any transfer or
lease thereof owned by Filipinos should be notified to the Public
Service Commission so that the latter may 2. The applicant must
prove that the operation of the public service take proper
safeguards to protect the interest of the public. In fact, the law
proposed and the authorization to do business will promote the
requires that, before approval is granted, there should be a public
hearing public interests in a proper and suitable manner with
notice to all interested parties in order that the commission may
3. The applicant is financially capable of undertaking the proposed
determine if there are good and reasonable grounds justifying the
transfer or service and meeting the responsibilities incident to
its operations lease of the property covered by the franchise, or
if the sale or lease is ( otherwise he will not be allowed to
operate since it is something he detrimental to public interest.
Such being the reason and philosophy behind wouldnt be able to
sustain) this requirement, it follows that if the property covered
by the franchise is transferred, or leased to another without
obtaining the requisite approval, the PRIOR OPERATOR RULE transfer
is not binding against Public Service Commission and in The first
licensee will be protected in his investment and will not be
contemplation of law, the grantee continues to be responsible under
the subjected to a ruinous competition franchise in relation to the
Commission and to the public. It is not the laws policy for the PSC
to issue a CPC to a second operator to cover the same field and in
competition with a first There being no prior BOT approval in the
transfer of property from Yujuico operator who is rendering
sufficient, adequate, and satisfactory Transit Co., Inc. to Jesus
Yujuico, it only follows that as far as the BOT and service, and
who in all things and respects is complying with the third parties
are concerned, Yujuico Transit Co., Inc. still owned the rules and
regulations of the Commission properties. and Yujuico, and later,
"Y" Transit Co., Inc. only held the same as Criticized because it
allegedly fosters monopolies: no, since this is agents of the
former. made in pursuant to the power of the State to regulate
CERTIFICATE OF PUBLIC CONVENIENCE 7 RAYMUNDO V. LUNETA MOTOR
Authorization to operate a public service issued by the Public 58
PHIL 389 Service Commission, for which no franchise is required by
law This is merely a license or privilege and this can be forfeited
when FACTS: the grantee fails to comply with his commitments Guzco
Transit purchased from Luneta Motors buses for its operations, for
May represent property rights to the extent that if the rights
which which it promised to pay through promissory notes with
chattel mortgage. any public utility is exercising pursuant to
lawful orders of the Public Upon failure to pay, action was filed
Guzco and attaching therein the buses Utility Commissioner has been
invaded by another public utility, in in question. The notice of
garnishment was served as well to the PSC. In appropriate cases
actions may be maintained by the complainant the meantime, the
certificates of public convenience and necessity were sold public
utility by Guzco to Raymundo but still, the same were subject to
attachment. CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY HELD:
MA. ANGELA AGUINALDO ATENEO LAW 2010 TRANSPORTATION NOTES 12 The
Public Service Law, Act No. 3108, as amended, authorizes
certificates In the instant case, the evidence is conclusive that
the Batangas of public convenience to be secured by public service
operators from the Transportation Company operated its line five
years before Orlanes ever Public Service Commission. (Sec. 15 [i].)
A certificate of public convenience turned a wheel, yet the legal
effect of the decision of the Public Service granted to the owner
or operator of public service motor vehicles, it has been
Commission is to give an irregular operator, who was the last in
the field, a held, grants a right in the nature of a limited
franchise. 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. The rule 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 So
long as the first licensee keeps and performs the terms and
conditions of another in any way. Now the Public Service Law
permits the Public Service its license and complies with the
reasonable rules and regulations of the Commission to approved the
sale, alienation, mortgaging, encumbering, or Commission and meets
the reasonable demands of the public, it should leasing of
property, franchises, privileges, or rights or any part thereof
(sec. have more or less of a vested and preferential right over a
person who seeks 16 [h]), and in practice the purchase and sale of
certificates of public to acquire another and a later license over
the same route. Otherwise, the convenience has been permitted by
the Public Service Commission. If the first license would not have
protection on his investment, and would be holder of a certificate
of public convenience can sell it voluntarily, there is no subject
to ruinous competition and thus defeat the very purpose and intent
valid reason why the same certificate cannot be taken and sold
involuntarily for which the Public Service Commission was created.
pursuant to process. It does not appear that the public has ever
made any complaint the Certificates of public convenience secured
by public service operators are Batangas Transportation Company,
yet on its own volition and to meet the liable to execution, and
the Public Service Commission is authorized to increase of its
business, it has applied to the Public Service Commission for
approve the transfer of the certificates of public convenience to
the execution authority to increase the number of daily trips to
nineteen, thus showing a creditor. As a consequence, the decision
brought on review will be affirmed, spirit that ought to be
commended. with costs against the appellant. 9 SAN PABLO V.
PANTRANCO 8 BATANGAS TRANSPORTATION V. ORLANES 153 SCRA 199 52 PHIL
455 FACTS: FACTS: PANTRANCO is a domestic corporation engaged in
the land transportation Batangas Transportation has been for five
years operating its bus line in the business with PUB service for
passengers and freight and various province of Batangas as well as
in the province of Tayabas, prior to Orlanes. certificates for
public conveniences CPC to operate passenger buses from Orlanes
filed an application for the issuance of the certificate of public
Metro Manila to Bicol Region and Eastern Samar. On March 27,1980
convenience, and requested for the operation in a fixed schedule.
The PANTRANCO through its counsel wrote to Maritime Industry
Authority company filed an application to this petition by Orlanes,
averring therein that (MARINA) requesting authority to
lease/purchase a vessel named M/V it had been operating for five
years in the Province of Batangas, and likewise "Black Double" "to
be used for its project to operate a ferryboat service from alleged
that its operations is sufficient to cater to public convenience.
Matnog, Sorsogon and Allen, Samar that will provide service to
company Nevertheless, the Commission issued the permit and
certificate to Orlanes buses and freight trucks that have to cross
San Bernardo Strait. In a reply of notwithstanding the existence of
a prior operator. April 29,1981 PANTRANCO was informed by MARINA
that it cannot give due course to the request on the basis that the
run was already adequately HELD: serviced and that additional
tonnage cannot be accomodated. This notwithstanding, the company
still pushed through with the purchase of the MA. ANGELA AGUINALDO
ATENEO LAW 2010 TRANSPORTATION NOTES 13 vessel and wrote a letter
to the BOT applying to approve its operations. Not Bernardino
Strait which separates Matnog and Allen leads to the ocean it being
able to wait however for BOT to reply, it started operations and
was must at times be choppy and rough so that it will not be safe
to navigate the reprimanded to stop until the scheduled hearing.
San Pablo and Cardinal same by small boats or barges but only by
such steamboats or vessels as Transportation entered their
respective opposition, alleging that they have the MV "Black
Double. adequately serviced PANTRANCO with the ferry off their
buses. However, in the end, the Commission ruled that the operation
o the ferry boat was part Considering the environmental
circumstances of the case, the conveyance of the CPC of PANTRANCO.
of passengers, trucks and cargo from Matnog to Allen is certainly
not a ferry boat service but a coastwise or interisland shipping
service. Under no HELD: circumstance can the sea between Matnog and
Allen be considered a We are not unmindful of the reasons adduced
by the Commission in continuation of the highway. While a ferry
boat service has been considered considering the motorboat service
between Calapan and Batangas as ferry; as a continuation of the
highway when crossing rivers or even lakes, which but from our
consideration of the law as it stands, particularly are small body
of waters - separating the land, however, when as in this
Commonwealth Act No. 146, known as the Public Service Act and the
case the two terminals, Matnog and Allen are separated by an open
sea it provisions of the Revised Administrative Code regarding
municipal ferries can not be considered as a continuation of the
highway. Respondent and those regarding the jurisdiction of the
Bureau of Customs over PANTRANCO should secure a separate CPC for
the operation of an documentation, registration, licensing,
inspection, etc. of steamboats, interisland or coastwise shipping
service in accordance with the provisions of motorboats or motor
vessels, and the definition of ferry as above quoted we law. Its
CPC as a bus transportation cannot be merely amended to include
have the impression and we are inclined to believe that the
Legislature this water service under the guise that it is a mere
private ferry service. 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 The contention of private
respondent PANTRANCO that its ferry service highway which is
interrupted by the body of water, or in some cases to operation is
as a private carrier, not as a common carrier for its exclusive
connect two points on opposite shores of an arm of the sea such as
bay or use in the ferrying of its passenger buses and cargo trucks
is absurd. lake which does not involve too great a distance or too
long a time to PANTRANCO does not deny that it charges its
passengers separately from navigate But where the line or service
involves crossing the open sea like the charges for the bus trips
and issues separate tickets whenever they the body of water between
the province of Batangas and the island of board the MV "Black
Double" that crosses Matnog to Allen, PANTRANCO Mindoro which the
oppositors describe thus "the intervening waters between cannot
pretend that in issuing tickets to its passengers it did so as a
private Calapan and Batangas are wide and dangerous with big waves
where small carrier and not as a common carrier. The Court does not
see any reason boat barge, or raft are not adapted to the service,"
then it is more reasonable why inspite of its amended franchise to
operate a private ferry boat service it to regard said line or
service as more properly belonging to interisland or cannot accept
walk-in passengers just for the purpose of crossing the sea
coastwise trade. between Matnog and Allen. Indeed evidence to this
effect has been submitted. What is even more difficult to
comprehend is that while in one This Court takes judicial notice of
the fact, and as shown by an examination breath respondent
PANTRANCO claims that it is a private carrier insofar as of the map
of the Philippines, that Matnog which is on the southern tip of the
the ferryboat service is concerned, in another breath it states
that it does not island of Luzon and within the province of
Sorsogon and Allen which is on thereby abdicate from its obligation
as a common carrier to observe the northeastern tip of the island
of Samar, is traversed by the San extraordinary diligence and
vigilance in the transportation of its passengers Bernardino Strait
which leads towards the Pacific Ocean. The parties admit and goods.
Nevertheless, considering that the authority granted to that the
distance between Matnog and Allen is about 23 kilometers which
PANTRANCO is to operate a private ferry, it can still assert that
it cannot be maybe negotiated by motorboat or vessel in about 1-1/2
hours as claimed by held to account as a common carrier towards its
passengers and cargo. respondent PANTRANCO to 2 hours according to
petitioners. As the San MA. ANGELA AGUINALDO ATENEO LAW 2010
TRANSPORTATION NOTES 14 Such an anomalous situation that will
jeopardize the safety and interests of and in existent under
Article 1409 of the Civil Code. It is a fundamental its passengers
and the cargo owners cannot be allowed. 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 10 PAL V. CAB accord the parties relief from their predicament
Supra PRIVATE NATURE; RIGHTS AND OBLIGATIONS OF PARTIES INTER SE
Caveat of the decision this decision brings to a blur the question
on when it ARISING FROM TRANSACTIONS RELATING TO TRANSPORTATION is
needed to secure a franchise from Congress. Before, when it is a
CPCN, a legislative franchise is a mandatory requirement. However,
with this case, ABSENT A TRANSPORTATION CONTRACT it imports that no
franchise is anymore needed. 12 LARA V. VALENCIA 11 TEJA V. IAC 104
PHIL 65 148 SCRA 347 FACTS: FACTS: Lara was an inspector of the
Bureau of Forestry. The defendant is engaged Nale purchased from
Teja Marketing a motorbike with a side car. He in the business of
exporting logs from his lumber concession in Cotabato. accordingly
gave a downpayment and promised to pay the balance in 60 Lara went
to said concession upon instructions of his chief to classify the
days. However, he failed to pay the balance and asked for an
extension of logs of defendant which were about to be loaded on a
ship anchored in the one year. Still, he was not able to pay. An
action for sum of money and port of Parang. The work Lara of lasted
for six days during which he damages was filed and though Nale
didn't deny that he owed Teja Marketing contracted malaria fever.
On a later date, Lara who then in a hurry to return money, he
alleged that the latter failed to register the chattel mortgage and
to Davao asked defendant if he could take him in his pick-up as
there was motor vehicle yearly with the LTC. The trial courts
sustained Teja Marketing then no other means of transportation, to
which defendant agreed, and in and dismissed the counterclaim,
ordering Nale top pay the balance of the that same morning the
pick-up left Parang bound for Davao taking along six purchase
price. However, this was reversed by the Court of Appeals on the
passengers, including Lara. ground that there was a illegal
transaction involved. The transaction that transpired was that of a
kabit system, prohibited by law. The pick-up has a front seat where
the driver and two passengers can be accommodated and the back has
a steel flooring enclosed with a steel HELD: walling of 16 to 17
inches tall on the sides and with a 19 inches tall walling at
Unquestionably, the parties herein operated under an arrangement,
the back. In the middle Lara sat on a bag. Before leaving Parang,
defendant commonly known as the "kabit system" whereby a person who
has been invited Lara to sit with him on the front seat but Lara
declined. It was their granted a certificate of public convenience
allows another person who owns understanding that upon reaching
barrio Samoay, Cotabato, the passengers motor vehicles to operate
under such franchise for a fee. A certificate of were to alight and
take a bus bound for Davao, but when they arrived at that public
convenience is a special privilege conferred by the government.
place, only one alighted and the other passengers requested
defendant to Abuse of this privilege by the grantees thereof cannot
be countenanced. The allow them to ride with him up to Davao
because there was then no available "kabit system" has been
Identified as one of the root causes of the bus that they could
take in going to that place. Defendant again prevalence of graft
and corruption in the government transportation offices.
accommodated the passengers. Although not outrightly penalized as a
criminal offense, the kabit system is When they continued their
trip, the sitting arrangement of the passengers invariably
recognized as being contrary to public policy and, therefore, void
remained the same, Lara being seated on a bag in the middle with
his arms MA. ANGELA AGUINALDO ATENEO LAW 2010 TRANSPORTATION NOTES
15 on a suitcase and his head cove red by a jacket. Upon reaching
Km. 96, administrative entity of the Executive Branch of the
government in the barrio Catidtuan, Lara accidentally fell from the
pick-up and as a result he promotion, development and regulation of
dependable and coordinated suffered serious injuries. Valencia
stopped the pick-up to see what networks of transportation and
communication system, as well as in the fast, happened to Lara. He
sought the help of the residents of that place and sale, efficient
and reliable postal, transportation and communication applied water
to Lara but to no avail. They brought Lara to the nearest place
services. where they could find a doctor and not having found any
they took him to St. Joseph's Clinic of Kidapawan. But when Lara
arrived he was already dead. To accomplish such mandate, the
Ministry shall have the following From there they proceeded to
Davao City and immediately notified the local objectives:
authorities. 1. Promote the development of dependable and
coordinated networks of transportation and communication systems;
HELD: 2. Guide government and private investment in the development
of the It therefore appears that the deceased, as well his
companions who rode in country's inter- model transportation and
communication systems in a the pick-up of defendant, were merely
accommodation passengers who paid most practical, expeditious, and
orderly fashion for maximum safety, nothing for the service and so
they can be considered as invited guests service, and cost
effectiveness; within the meaning of the law. As accommodation
passengers or invited 3. Impose appropriate measure so that
technical, economic and other guests, defendant as owner and driver
of the pick-up owes to them merely condition for the continuing
economic viability of the transportation and the duty to exercise
reasonable care so that they may be transported safely
communication entities are not jeopardized and do not encourage to
their destination. Thus, "The rule is established by the weight of
authority inefficiency and distortion of traffic patronage; that
the owner or operator of an automobile owes the duty to an invited
guest 4. Develop an integrated plan for a nationwide transmission
system in to exercise reasonable care in its operation, and not
unreasonably to expose accordance with the national and
international telecommunication him to danger and injury by
increasing the hazard of travel. This rule, as service requirement
including, among others,radio and television frequently stated by
the courts, is that an owner of an automobile owes a broadcast
relaying, leased channel services and data transmission; guest the
duty to exercise ordinary or reasonable care to avoid injuring him.
5. Guide government and private investment in the establishment,
Since one riding in an automobile is no less a guest because he
asked for operation and maintenance of an international switching
system for the privilege of doing so, the same obligation of care
is imposed upon the incoming and outgoing telecommunication
services; driver as in the case of one expressly invited to ride"
(5 Am. Jur., 626-627). 6. Encourage the development of a domestic
telecommunication industry Defendant, therefore, is only required
to observe ordinary care, and is not in in coordination with the
concern entities particularly, the manufacture of duty bound to
exercise extraordinary diligence as required of a common
communications/ electronics equipment and components to complement
carrier by our law (Articles 1755 and 1756, new Civil Code). and
support as much as possible, the expansion, development, operation
and maintenance of the nationwide telecommunications ARISING FROM A
TRANSPORTATION CONTRACT network; 7. Provide for a safe, reliable
and efficient postal system for the country. AIR REGULATION OF THE
TRANSPORTATION INDUSTRY AIR TRANSPORTATION OFFICE DEPARTMENT OF
TRANSPORTATION AND COMMUNICATIONS EO 125. SECTION 12. Bureau of Air
Transportation. The Bureau of Air EO 125. SECTION 4. Mandate. The
Ministry shall be the primary policy, Transportation, as
reorganized herein, shall have the function of developing,
planning, programming, coordinating, implementing, regulating, and
MA. ANGELA AGUINALDO ATENEO LAW 2010 TRANSPORTATION NOTES 16
formulating and recommending plans, policies, program, projects,
standards, SECTION 10. Powers and duties of the Board.
specification and guidelines related to Air Transportation
including air space (A) Except as otherwise provided herein, the
Board shall have the power to utilization, air traffic control and
aeronautics communication and information regulate the economic
aspect of air transportation, and shall have the services, aircraft
and air navigational facilities, services, maintenance and general
supervision and regulation of, the jurisdiction and control over,
air operations. For such purposes, it shall, with the approval of
the Minister: carriers, general sales agents, cargo sales agents,
and airfreight forwarders 1. Establish and prescribe rules and
regulations for the inspection and as well as their property,
property rights, equipment, facilities, and franchise, registration
of aircraft's; in so far as may be necessary for the purpose of
carrying out the provisions 2. Establish and prescribe rules and
regulations for the issuance of of this Act. licenses to qualified
airmen; 3. Establish and prescribe rules and regulations for the
enforcement of xxx laws governing air transportation, including the
penalties for violations thereof, and for the deputization of
appropriate law enforcement (C) The Board shall have the following
specific powers and duties: agencies in pursuant thereof; (1) In
accordance with the provisions of Chapter 4 of this Act, to issue,
deny, 4. Determine, fix and/or prescribe charges and/or rates
pertinent to the amend, revise, alter, modify, cancel, suspend, or
revoke, in whole or in part, operation of public air utility
facilities and services except in cases where upon petition or
complaint, or upon its own initiative, any temporary charges or
rates are established by international bodies or associations
operating permit or Certificate of Public Convenience and
Necessity; of which the Philippines is a participating member or by
bodies or Provided, however, That in the case of foreign air
carriers, the permit shall associations reorganized by the
Philippine Government as the proper be issued with the approval of
the President of the Republic of the arbiter of such charges or
rates; Philippines. 5. Administer and operate the Civil Aeronautics
Training Center; 6. Perform such other function as may be provided
by law. (2) To fix and determine reasonable individual, joint or
special rates, charges or fares, which an air carrier may demand,
collect or receive for any service RA 776, Section 25. Organization
of the Civil Aeronautics Administration. in connection with air
commerce. The Board may adopt any original, The Civil Aeronautics
Administration shall be under the Administrative amended, or new
individual, joint or special rates, charges or fares proposed
supervision and control of the Department of Commerce and Industry.
The by an air carrier if the proposed individual, joint, or special
rates, charges for Civil Aeronautics Administration shall have one
Chief and one Deputy Chief fares are not unduly preferential or
unduly discriminatory or unreasonable. who shall be known as
"Administrator" and "Deputy Administrator", The burden of proof to
show that the proposed individual, joint or special respectively.
rates, charges or fares are just and reasonable shall be upon the
air carrier proposing the same. CIVIL AERONAUTICS BOARD In fixing
rates, charges, fares under the provisions of this Act, the Board
SECTION 5. Composition of the Board. - The Civil Aeronautics Board
shall shall take into consideration, among other factors: be
composed of the Secretary of Transportation and Communications or
his (a) The effect of such rates upon the movement of traffic;
designated representative as Chairman, the Assistant Secretary for
Air (b) The need in the public interest of adequate and efficient
Transportation of the Department of Transportation and
Communications as transportation of persons and property by air
carriers at the lowest Vice-Chairman, the Commanding General of the
Philippine Air Force* and cost consistent with the furnishing of
such service. two (2) members to be appointed by the President of
the Philippines. They (c) Such standards respecting the character
and quality of service shall hold office at the pleasure of the
President. to be rendered by air carriers as may be prescribed by
or pursuant to law; MA. ANGELA AGUINALDO ATENEO LAW 2010
TRANSPORTATION NOTES 17 (d) The inherent advantages of
transportation by aircraft; and money, and the length of times such
accounts, records and memoranda (e) The need of each air carrier
for revenues sufficient to enable shall be preserved: Provided,
that any air carrier may keep additional such air carrier, under
honest, economical, and efficient accounts, records, or memoranda
if they do not impair the integrity of the management, to provide
adequate and efficient air carrier service. accounts, records, or
memoranda prescribed or approved by the Board and do not constitute
an undue financial burden on such air carrier. (3) To authorize any
type of charters whether domestic or international and special air
services or flight under such terms and conditions as in its (8) To
require each officer and director of any air carrier to transmit a
report judgment public interest requires. Notwithstanding the
existence of bilateral describing the shares of stock with any
persons engaged in any phase or air agreement, the CAB is
authorized to grant any foreign airline increase in other interest
held by such air carrier of aeronautics, and the holding of the
frequencies and/or capacities on international routes when in its
judgment stock in and control of, other persons engaged in any
phase of aeronautics. the national interest requires it, provided
that the utilization of the increase frequencies and capacities is
not more than thirty days. All grants of SECTION 11. Nature, terms
and conditions. - Certificate of Public frequencies and/or
capacities shall be subject to the approval of the Convenience and
Necessity is a permit issued by the Board authorizing a President.
person to engage in air commerce and/or transportation, foreign
and/or domestic. No person shall engage in air commerce unless
there is in force a (4) To approve or disapprove increase and/or
decrease of capital, lease, permit issued by the Board. purchase,
sales of aircraft of air carrier engaged in air commerce;
consolidation, merger, purchase, lease and acquisition and control
of No general sales agent, cargo sales agent or airfreight
forwarder shall operating contracts between domestic foreign air
carriers, or between engage in any of the activities mentioned in
Section 3 paragraphs (jj), (kk) domestic air carriers or any person
engaged in any phase of aeronautics. and (ll) respectively, unless
there is in force a permit or any other form of authorization
issued by the Board. (5) To inquire into the management of the
business of any air carrier and, to the extent reasonably necessary
for such inquiry, to obtain from such carrier, Any permit may be
altered, amended, modified, suspended, canceled or and from any
person controlling, or controlled by, or under common control
revoked by the Board in whole or in part, upon complaints or
petition or upon with, such air carrier, full and complete reports
and othe informations. Such the Boards initiative as hereinafter
provided, whenever the Board finds such reports shall be under oath
whenever the Board so requires. action to be in the public
interest. (6) To require annual, monthly, periodical, and special
reports from any air There shall be attached to the exercise of the
privileges granted by the carrier, to prescribe the manner and form
in which such reports shall be permit, or amendment thereto, such
reasonable terms, conditions, or made, and to require from any air
carrier specific answers to all questions limitations as, in the
judgment of the Board, the public interest may require. upon which
the Board may deem information to be necessary. Such reports No
permit shall confer any proprietary, property, or exclusive right
in the use shall be under oath whenever the Board so requires. The
Board may also of any air space, civil airway, landing area of
government air navigation require any air carrier to file with it
any contract, agreement, understanding facility. or arrangement, or
a true copy thereof, between such air carrier and any other carrier
or person, in relation to any traffic affected by the provisions of
The permit shall, among others specify the terminal and
intermediate points, this Act. if any, between which the air
carrier is authorized to operate the service to be rendered, the
time of arrival and departure at each point, and the (7) To
prescribe the forms of any and all accounts, records, and memoranda
frequency of flights. Provided, that no change in routes, rates,
schedules or of the movement of traffic, as well as of the receipts
and expenditures of frequency nor supplemental or additional
flights to those covered by an air MA. ANGELA AGUINALDO ATENEO LAW
2010 TRANSPORTATION NOTES 18 commerce permit or franchise shall be
affected without prior approval of the explicitly authorizes CAB to
issue a "temporary operating permit," and Civil Aeronautics Board.
In so far as the operation is to take place within the nothing
contained, either in said section, or in Chapter IV of Republic Act
No. Philippines, the permit shall designate the terminal and
intermediate points 776, negates the power to issue said "permit",
before the completion of the only insofar as the Board shall deem
practicable, and otherwise shall applicant's evidence and that of
the oppositor thereto on the main petition. designate only the
general route or routes to be followed. Indeed, the CAB's authority
to grant a temporary permit "upon its own initiative," strongly
suggests the power to exercise said authority, even No carrier
shall abandon any route, or part thereof for which a permit has
before the presentation of said evidence has begun. been issued,
unless upon findings by the Civil Aeronautics Board that such
Moreover, we perceive no cogent reason to depart, in connection
with the an abandonment is uneconomical and is in the public
interest. commercial air transport service, from the policy of our
public service law, which sanctions the issuance of temporary or
provisional permits or SECTION 12. Citizenship requirement. -
Except as otherwise provided, in certificates of public convenience
and necessity, before the submission of a the Constitution and
existing treaty or treaties, permit authorizing a person to case
for decision on the merits. The overriding considerations in both
engage in domestic air commerce and/or transportation shall be
issued only instances are the same, namely, that the service be
required by public to citizens of the Philippines. convenience and
necessity, and, that the applicant is fit, as well as willing and
able to render such service properly, in conformity with law and
the CIVIL AERONAUTICS AUTHORITY (RA9497) pertinent rules,
regulations and requirements. 12 PAL V. CAB 13 PAL V. CAB 23 SCRA
992 270 SCRA 538 FACTS: FACTS: Fairways petitioned the CAB for
authority to operate its scheduled and non- PAL sought the
annulment of the issuance of a temporary operating permit scheduled
domestic flights. Upon hearing, it was granted provisional to Grand
Air by the CAB. Grand Air has filed a petition for the issuance of
a authority to which PAL opposed. Fairways was sustained.
Certificate of Public Convenience and Necessity and upon compliance
prayed for the issuance of the temporary permit. Mainly it alleges
that Grand HELD: Air shouldnt be granted any temporary operating
permit absent any The first ground is devoid of merit. Section
10-C(1) of Republic Act No. 776, legislative franchise to operate.
PAL also alleged that the CBA had illegally reading: exercised
jurisdiction over the matter due to the same reason. (C) The Board
shall have the following specific powers and duties: HELD: (1) In
accordance with the provisions of Chapter IV of this Act, to issue,
There The Civil Aeronautics Board has jurisdiction over GrandAir's
deny, amend, revise, alter, modify, cancel suspend or revoke, in
whole or in Application for a Temporary Operating Permit. This rule
has been part, upon petitioner complaint, or upon its own
initiative, any temporary established in the case of Philippine Air
Lines Inc., vs. Civil Aeronautics operating permit or Certificate
of Public Convenience and Necessity; Board, promulgated on June 13,
1968.[12] The Board is expressly Provided, however, That in the
case of foreign air carriers, the permit shall authorized by
Republic Act 776 to issue a temporary operating permit or be issued
with the approval of the President of the Republic of the
Certificate of Public Convenience and Necessity, and nothing
contained in Philippines.... 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 MA. ANGELA
AGUINALDO ATENEO LAW 2010 TRANSPORTATION NOTES 19 own initiative"
strongly suggests the power to exercise said authority, even Given
the foregoing postulates, we find that the Civil Aeronautics Board
has before the presentation of said evidence has begun. Assuming
arguendo the authority to issue a Certificate of Public Convenience
and Necessity, or that a legislative franchise is prerequisite to
the issuance of a permit, the Temporary Operating Permit to a
domestic air transport operator, who, absence of the same does not
affect the jurisdiction of the Board to hear the though not
possessing a legislative franchise, meets all the other
application, but tolls only upon the ultimate issuance of the
requested permit. requirements prescribed by the law. Such
requirements were enumerated in Section 21 of R.A. 776. The power
to authorize and control the operation of a public utility is
admittedly a prerogative of the legislature, since Congress is that
branch of There is nothing in the law nor in the Constitution,
which indicates that a government vested with plenary powers of
legislation. legislative franchise is an indispensable requirement
for an entity to operate as a domestic air transport operator.
Although Section 11 of Article XII Congress has granted certain
administrative agencies the power to grant recognizes Congress'
control over any franchise, certificate or authority to licenses
for, or to authorize the operation of certain public utilities.
With the operate a public utility, it does not mean Congress has
exclusive authority to growing complexity of modern life, the
multiplication of the subjects of issue the same. Franchises issued
by Congress are not required before governmental regulation, and
the increased difficulty of administering the each and every public
utility may operate. In many instances, Congress has laws, there is
a constantly growing tendency towards the delegation of seen it fit
to delegate this function to government agencies, specialized
greater powers by the legislature, and towards the approval of the
practice particularly in their respective areas of public service.
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 LAND 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 LAND
TRANSPORTATION OFFICE 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 SECTION 13. Bureau of
Land Transportation. The Bureau of Land been made by an act of the
Legislature. Transportation is hereby created and shall have the
functions of developing, formulating and recommending plans,
programs, policies, standards, The trend of modern legislation is
to vest the Public Service Commissioner specifications and
guidelines pertaining to land transportation. For such with the
power to regulate and control the operation of public services
under purposes, it shall, with the approval of the Minister:
reasonable rules and regulations, and as a general rule, courts
will not 1. Establish a prescribe rules and regulations for routes,
zones and/or interfere with the exercise of that discretion when it
is just and reasonable areas of particular operators of public land
services; and founded upon a legal right. 2. Establish and
prescribe rules and regulations for the issuance of certificates of
public convenience for the operation of public and land It is this
policy which was pursued by the Court in Albano vs. Reyes. Thus, a
transportation utilities and services such as motor vehicles,
trimobiles, reading of the pertinent issuances governing the
Philippine Ports Authority, and railroad lines; proves that the PPA
is empowered to undertake by itself the operation and 3. Establish
and prescribe rules and regulation for the inspection and
management of the Manila International Container Terminal, or to
authorize registration of public and land transportation facilities
such as motor its operation and management by another by contract
or other means, at its vehicles, trimobiles, and railroad lines;
option. The latter power having been delegated to the PPA, a
franchise from 4. Establish and prescribe rules and regulations for
the issuance of Congress to authorize an entity other than the PPA
to operate and manage licenses to qualified motor vehicle drivers,
trimobile drivers, motor the MICP becomes unnecessary. vehicle
conductors, train engineers and train conductors; MA. ANGELA
AGUINALDO ATENEO LAW 2010 TRANSPORTATION NOTES 20 5. Establish and
prescribe the corresponding rules and regulation for the The Board
shall be supported by the Technical Evaluation Division, Legal
enforcement of laws governing land transportation, including the
Division, Management Information Division, Administrative Division
and penalties for violation thereof, and for the deputation of
appropriate law Finance Division. enforcement agencies in pursuance
thereof; 6. Determine, fix and/or prescribe charges and/or rates
pertinent to the Sec. 5. Powers and Functions of the Land
Transportation Franchising and operation of public and land utility
facilities and services except in cases Regulatory Board. The Board
shall have the following powers and functions: where charges or
rates are established by international bodies or a. To prescribe
and regulate routes of service, economically viable association of
which the Philippines is a participating member or by capacities
and zones or areas of operation of public land transportation
bodies or association recognized by the Philippine Government as
the services provided by motorized vehicles in accordance with the
public land proper arbiter of such charges or rates; transportation
development plans and programs approved by the 7. Establish and
prescribe the rules, regulations, procedures and Department of
Transportation and Communications; standards for the accreditation
of driving schools; b. To issue, amend, revise, suspend or cancel
Certificates of Public 8. Performs such other functions as may be
provided by law. Convenience or permits authorizing the operation
of public land transportation services provided by motorized
vehicles, and to prescribe the LAND TRANSPORTATION FRANCHISING AND
REGULATORY BOARD appropriate terms and conditions therefor; (LTFRB)
c. To determine, prescribe and approve and periodically review and
adjust, reasonable fares, rates and other related charges, relative
to the operation of EO 202. Sec. 1. Creation of the Land
Transportation Franchising and public land transportation services
provided by motorized vehicles; Regulatory Board. There is hereby
created in the Department of d. To issue preliminary or permanent
injunction, whether prohibitory or Transportation and
Communications, the Land Transportation Franchising mandatory, in
all cases in which it has jurisdiction, and in which cases the and
Regulatory Board hereinafter referred