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promise; the new promise upon this sufficient consideration

Obligations Development Bank of


the Philippines v. Adil, G.R.
constitutes, in fact, a new cause of action.” “x x x x x It is
this new promise, either made in express terms or deduced
from an acknowledgment as a legal implication, which is to
No. L-48889 (May 11, 198) be regarded as reanimating the old promise, or as imparting
vitality to the remedy (which by lapse of time had become
A. Concept extinct) and thus enabling the creditor to recover upon his
original contract.”
Civil Law; Prescription; Waiver of right to prescription;
Case at bar.—The right to prescription may be waived or Same; Same; Same; Conjugal Partnership; Husband as
1. Obligations under the law renounced. Article 1112 of Civil Code provides: “Art. administrator of the conjugal partnership under Art. 165 of
1112. Persons with capacity to alienate property may the Civil Code.—WE disagree. Under Article 165 of the
renounce prescription already obtained, but not the right to Civil Code, the husband is the administrator of the conjugal
Republic Act (RA) No. 386, Arts. 1156, 1423-1430 prescribe in the future. Prescription is deemed to have been partnership. As such administrator, all debts and obligations
tacitly renounced when the renunciation results from acts contracted by the husband for the benefit of the conjugal
which imply the abandonment of the right acquired.” There partnership, are chargeable to the conjugal partnership. No
is no doubt that prescription has set in as to the first doubt, in this case, respondent Confesor signed the second
Ansay, et. al. v The Board of promissory note of February 10, 1940. However, when promissory note for the benefit of the conjugal partnership.
Directors of National respondent Confesor executed the second promissory note Hence the conjugal partnership is liable for this obligation.
on April 11,1961 whereby he promised to pay the amount
Development Company, et.
covered by the previous promissory note on or before June
al., G.R. No. L-13667 (April 15, 1961, and upon failure to do so, agreed to the
29, 1960) foreclosure of the mortgage, said respondent thereby
effectively and expressly renounced and waived his right to B. Essential Requisites
the prescription of the action covering the first promissory
note. This Court had ruled in a similar case that—"x x x
VOLUNTARY FULFILLMENT; WHEN RETENTION when a debt is already barred by prescription, it cannot be RA No. 386, Art. 1156
CAN BE ORDERED.—An element of natural obligation enforced by the creditor. But a new contract recognizing
before it can he cognizable by the court is voluntary and assuming the prescribed debt would be valid and
fulfillment by the obligor. Retention can be ordered only enforceable x x x.” Thus, it has been held—“Where,
after there has been voluntary performance. therefore, a party acknowledges the correctness of a debt
C. Sources
and promises to pay it after the same has prescribed and
ID.; BONUS NOT DEMANDABLE AND
ENFORCEABLE; EXCEPTION.—A bonus is not a
with full knowledge of the prescription he thereby waives 1. Law
the benefit of prescription.”
demandable and enforceable obligation, except when it is
made a part of the wage or salary compensation. Same; Same; Same; Effects of a new express promise to RA No. 386, Arts. 1157-1158
(Philippine Education Co. vs. CIR and the Union of pay a debt.—This is not a mere case of acknowledgment of
Philippine Education Co. Employees (NLU), 92 Phil., 381; a debt that has prescribed but a new promise to pay the
48 Off. Gaz. 5278.) Hence, the grant thereof does not debt. Theconsideration of the new promissory note is the
generally constitute a natural obligation on the part of the pre-existing obligation under the first promissory note. The Leung Ben v. O’Brien, et. al.,
company. statutory limitation bars the remedy but does not discharge
G.R. No. L-13602 (April 6,
the debt. “A new express promise to pay a debt barred xxx
will take the case from the operation of the statute of 1918)
limitations as this proceeds upon the ground that as a
statutory limitation merely bars the remedy and does not
discharge the debt, there is something more than a mere CERTIORARI; ISSUANCE OF ATTACHMENT
moral obligation to support a promise, to wit—a preexisting WITHOUT STATUTORY AUTHORITY.—Where a
debt which is a sufficient consideration for the new Court of First Instance issues an attachment for which there
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is no statutory authority, it is acting irregularly and in
.excess of its jurisdiction in the sense necessary to justify Pelayo v. Lauron, et. al., G.R. Bautista v. Borromeo, et. al.,
the Supreme Court in entertaining an application for a writ
No. L-4089 (January 12, G.R. No. L-26002 (October
of certiorari and quashing the attachment.
1909) 31, 1969)
ID.; ID.; INADEQUATE REMEDY.—In such case the
remedy on the attachment bond or by appeal would not be
sufficiently speedy to meet the exigencies of the case.
Attachment is an exceedingly violent measure and its Obligations arising from law are not presumed. Those Civil law; Obligation; Obligations derived from law;
unauthorized issuance may result in the infliction of expressly determined in the code or in special laws, etc., are Section 2of Workmen's Compensation Act which requires
damage which could never be repaired by any pecuniary the only demandable ones. Obligations arising from the employer to pay death benefits and funeral expenses for
award at the final hearing. contracts have legal force between the contracting parties the employee's death while in the course of employment is
and must be fulfilled in accordance with their stipulations. an obligation arising from law.—The obligation of the
ID.; ID.; DISTINCTION BETWEEN JURISDICTION (Arts. 1090 and 1091.) employer to pay death benefits and funeral expenses for his
OVER PRINCIPAL CAUSE AND OVER ANCILLARY employee's death while in the course of employment as
REMEDY.—There is a clear distinction to be noted The rendering of medical assistance in case of illness is sanctioned by Sections 2 and 6 of the Workmen's
between the jurisdiction of a Court of First Instance with comprised among the mutual obligations to which the Compensation Act is one that arises from law.
respect to the principal cause of action and its jurisdiction spouses are bound by way of mutual support. (Arts. 142
to grant an auxiliary remedy, like attachment. A court, and 143.) Same; Same; Same; Subrogation of employer for worker's
although it may have unquestioned jurisdiction over the rights against the tortfeasor-—If compensation is claimed
If every obligation consists in giving, doing or not doing and awarded, and the employer pays it, the employer
principal cause of action, may nevertheless act irregularly
something (art. 1088), and spouses are mutually bound to becomes subrogated to and acquires, by operation of law,
or in excess of its jurisdiction in granting the auxiliary
support each other, there can be no question but that, when the worker's rights against the tartfeasor. There is no need
remedy. In such case the party aggrieved may prosecute a
either of them by reason of illness should be in need of to establish any contractual relationship between the
proceeding by writ of certiorari in the Supreme Court.
medical assistance, the other is under the unavoidable employee and the tortfeasor in order that the employer may
(Herrera vs. Barretto and Joaquin, 25 Phil. Rep., 245,
obligation to furnish the necessary services of a physician recover what he paid the employee because the cause of
distinguished.)
in order that health may be restored, and he or she may be action of employer does not spring from a creditor-debtor
CONTRACT; IMPLIED CONTRACT.—The obligation freed from the sickness by which life is jeopardized; the relationship but from the fact that the employer is
imposed by Act No. 1757 upon the winner in a prohibited party bound to furnish such support is therefore liable for subrogated to the right of the employee to sue the guilty
game to return to the loser the money or other thing of all expenses, including the fees of the medical expert for his party. Such subrogation is sanctioned by the Workmen's
value won at play is an "implied contract," as this term is professional services. This liability originates from the Compensation Law.
used in subsection (1) of section 412 of the Code of Civil above-cited mutual obligation which the law has expressly
Procedure. established between the married couple. Juan F. Nakpil & Sons v. Court of Appeals, G.R. No. L-
47851 (October 3, 1986)
ATTACHMENT; CAUSE OF ACTION ARISING UPON Within the meaning of the law, the father and
CONTRACT, EXPRESS OR IMPLIED.—In an action mother-in-law are strangers with respect to the obligation Obligations and Contracts; Damages; Requisites for
brought pursuant to the provisions of Act No. 1757 to that devolves upon the husband to provide support, among exemption from liability due to an “act of God.”—To
recover a sum of money lost at play, an attachment was which is the furnishing of medical assistance to his wife at exempt the obligor from liability under Article 1174 of the
obtained in the Court of First Instance under section 424 in the time of her confinement; and, on the other hand, it does Civil Code, for a breach of an obligation due to an “act of
connection with subsection 1 of section 412 of the Code of not appear that a contract existed between the defendants God,’ the following must concur: (a) the cause of the
Civil Procedure. These provisions authorize the issuance of and the plaintiff physician, for which reason it is obvious breach of the obligation must be independent of the will of
an attachment in an action for the recovery of money on a that the former can not be compelled to pay fees which they the debtor; (b) the event must be either unforseeable or
cause of action arising upon contract, express or implied, are under no liability to pay because it does not appear that unavoidable; (c) the event must be such as to render it
when the defendant is about to depart from the Philippine they consented to bind themselves. impossible for the debtor to fulfill his obligation in a
Islands. Held: That the cause of action arose upon an normal manner; and (d) the debtor must be free from any
implied contract and that the action of the court in issuing participation in, or aggravation of the injury to the creditor.
the attachment would not be annulled by the Supreme
Same; Same; Having made substantial deviations from
Court in a proceeding by writ of certiorari
plans and specifications, having failed to observe requisite

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workmanship in construction, and the architect made plans reinforcements which were already in place as in the case exception of attorney’s fees) occasioned by the loss of the
that contain defects and inadequacies, both contractor and of column A4 second floor. If the reinforcement for the building (including interest charges and lost rentals) and an
architect cannot escape liability for damages sustained by girder and column is to subsequently wrap around the additional ONE HUNDRED THOUSAND (P100,000.00)
the building that collapsed in the wake of an earthquake on spirals, this would not do for the elasticity of steel would Pesos as and for attorney’s fees, the total sum being
Aug. 2, 1968.— prevent the making of tight column spirals and loose or payable upon the finality of this decision. Upon failure to
improper spirals would result. The proper way is to produce pay on such finality, twelve (12%) per cent interest per
The negligence of the defendant and the third-party correct spirals down from the top of the main column bars, annum shall be imposed upon aforementioned amounts
defendants petitioners was established beyond dispute both a procedure which can not be done if either the beam or from finality until paid. Solidary costs against the defendant
in the lower court and in the Intermediate Appellate Court. girder reinforcement is already in place. The engineering and third-party defendants (except Roman Ozaeta).
Defendant United Construction Co., Inc. was found to have experts for the defendants strongly assert and apparently
made substantial deviations from the plans and believe that the cutting of the spirals did not materially
specifications, and to have failed to observe the requisite diminish the strength of the column. This belief together
workmanship in the construction as well as to exercise the with the difficulty of slipping the spirals on the top of the 2. Contracts
requisite degree of supervision; while the third-party column once the beam reinforcement is in place may be a
defendants were found to have inadequacies or defects in sufficient motivation for the cutting of the spirals
the plans and specifications prepared by them. As correctly themselves. The defendants, therefore, should be held
assessed by both courts, the defects in the construction and responsible for the consequences arising from the loss of RA No. 386, Arts. 1157, 1159, 1305-1422
in the plans and specifications were the proximate causes strength or ductility in column A5 which may have
that rendered the PBA building unable to withstand the contributed to the damages sustained by the building.
earthquake of August 2, 1968. For this reason the defendant
and third-party defendants cannot claim exemption from Same; Same; One who creates a dangerous condition
liability. Same; Same; Fact that all other buildings cannot escape liability although an act of God may have Cangco v. Manila Railroad
withstood the earthquake, except the one at bar, cannot be intervened.— Relative thereto, the ruling of the Supreme Co., G.R. No. L-12191
ignored.—In any event, the relevant and logical Court in Tucker v. Milan (49 O.G. 4379, 4380) which may (October 14, 1918)
observations of the trial court as affirmed by the Court of be in point in this case, reads: “One who negligently creates
Appeals that “while it is not possible to state with certainty a dangerous condition cannot escape liability for the natural
that the building would not have collapsed were those and probable consequences thereof, although the act of a
defects not present, the fact remains that several buildings third person, or an act of God for which he is not MASTER AND SERVANT; CONTRACT;
in the same area withstood the earthquake to which the responsible, intervenes to precipitate the loss.” As already NEGLIGENCE.. —Failure to perform a contract cannot be
building of the plaintiff was similarly subjected,” cannot be discussed, the destruction was not purely an act of God. excused upon the ground that the breach was due to the
ignored. Same; Same; The lower courts found, among Truth to tell hundreds of ancient buildings in the vicinity negligence of a servant of the obligor, and that the latter
others, that spirals in column A5, ground floor were cut.— were hardly affected by the earthquake. Only one thing exercised due diligence in the selection and control of the
The cutting of the spirals in column A5, ground floor is the spells out the fatal difference; gross negligence and evident servant.
subject of great contention between the parties and deserves bad faith, without which the damage would not have
special consideration. The proper placing of the main occurred. CONTRACTS; NEGLIGENCE; CULPA AQUILIANA;
reinforcements and spirals in column A5, ground floor, is CULPA CONTRACTUAL.—The distinction between
the responsibility of the general contractor which is the Same: Same; Liability of architect and contractor for negligence as the source of an obligation (culpa aquiliana)
UCCI. The burden of proof, therefore, that this cutting was collapse and negligence in the performance of a contract (culpa
done by others is upon the defendants. Other than a strong contractual) pointed out.
of building is solidary.—WHEREFORE, the decision
allegation and assertion that it is the plumber or his men
appealed from is hereby MODIFIED and considering the 3. CARRIERS; PASSENGERS; ALIGHTING FROM
who may have done the cutting (and this was flatly denied
special and environmental circumstances of this case, We MOVING TRAIN.—It is not negligence per se for a
by the plumber) no conclusive proof was presented. The
deem it reasonable to render a decision imposing, as We do traveler to alight from a slowly moving train.
engineering experts for the defendants asserted that they
hereby impose, upon the defendant and the third-party
could have no motivation for cutting the bar because they
defendants (with the exception of Roman Ozaeta) a
can simply replace the spirals by wrapping around a new
solidary (Art. 1723, Civil Code, Supra, p. 10) indemnity in
set of spirals. This is not quite correct. There is evidence to
favor of the Philippine Bar Association of FIVE MILLION
show that the pouring of concrete for columns was
(P5,000,000.00) Pesos to cover all damages (with the
sometimes done through the beam and girder
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policy with respondent Sio Choy for indemnity against Civil Code gives to a solidary debtor who has paid the
Malayan Insurance Co. v. third party liability is only P20,000.00? Moreover, the entire obligation the right to be reimbursed by his
qualification made in the decision of the trial court to the co-debtors for the share which corresponds to each. In
Court of Appeals, G.R. No. L-
effect that petitioner is sentenced to pay up to P20,000.00 accordance with Article 1217, petitioner, upon payment to
36413 (September 26, 1988) only when the obligation to pay P29,103.00 is made respondent Vallejos and thereby becoming the subrogee of
solidary, is an evident breach of the concept of a solidary solidary debtor Sio Choy, is entitled to reimbursement from
obligation. Thus, We hold that the trial court, as upheld by respondent San Leon Rice Mill, Inc.
the Court of Appeals, erred in holding petitioner, solidarily
Insurance; Third-Party Liability; Solidary Obligation; The
liable with respondents Sio Choy and San Leon Rice Mill,
direct liability of the insurer under indemnity contracts
Inc. to respondent Vallejos. Civil Law; Subrogation;
against third-party liability does not mean that the insurer
Principle of Subrogation.—”x x x
can be held solidarily liable with the insured and/or the
other parties found at fault.—While it is true that where the Sub-rogation is a normal incident of indemnity insurance Telefast
insurance contract provide for indemnity against liability to (Aetna L. Ins. Co. vs. Moses, 287 U.S. 530, 77 L. ed. 477). Communications/Philippine
third persons, such third persons can directly sue the Upon payment of the loss, the insurer is entitled to be
insurer, however, the direct liability of the insurer under Wireless, Inc. v. Castro, G.R.
subrogated pro tanto to any right of action which the
indemnity contracts against third party liability does not insured may have against the third person whose No. 73867 (February 29,
mean that the insurer can be held solidarily liable with the negligence or wrongful act caused the loss (44 Am. Jr. 2nd 1988)
insured and/or the other parties found at fault. The liability 745, citing Standard Marine Ins. Co. vs. Scottish
of the insurer is based on contract; that of the insured is Metropolitan Assurance Co., 283 U.S. 284, 75 L. ed. 1037).
based on tort. The right of subrogation is of the highest equity. The loss in
the first instance is that of the insured but after Civil Law; Damages; Obligations; Telegrams; Failure of
Same; Same; Same; Same; Petitioner as insurer of Sio telegram company to send the sender's telegram overseas
reimbursement or compensation, it becomes the loss of the
Choy is liable to respondent Vallejos but it cannot be made despite payment of the required charges, makes it guilty of
insurer. Same; Same; Same; The equitable right of
solidarily liable with the two principal tortfeasors.—In the contravening its obligation and is liable for damages.—In
subrogation as the legal effect of payment inures to the
case at bar, petitioner as insurer of Sio Choy, is liable to the case at bar, petitioner and private respondent Sofia C.
insurer without any formal assignment or any express
respondent Vallejos, but it cannot, as incorrectly held by Crouch entered into a contract whereby, for a fee, petitioner
stipulation to that effect in the policy. —Although many
the trial court, be made “solidarily” liable with the two undertook to send said private respondent's message
policies including policies in the standard form, now
principal tortfeasors, namely respondents Sio Choy and San overseas by telegram. This, petitioner did not do, despite
provide for subrogation, and thus determine the rights of
Leon Rice Mill, Inc. For if petitioner-insurer were performance by said private respondent of her obligation by
the insurer in this respect, the equitable right of subrogation
solidarily liable with said two (2) respondents by reason of paying the required charges. Petitioner was therefore guilty
as the legal effect of payment inures to the insurer without
the indemnity contract against third party liability—under of contravening its obligation to said private respondent
any formal assignment or any express stipulation to that
which an insurer can be directly sued by a third party—this and is thus liable for damages. Same; Same; Same; Same;
effect in the policy” (44 Am. Jur. 2nd 746). Stated
will result in a violation of the principles underlying Liability of telegram company is not limited to actual or
otherwise, when the insurance company pays for the loss,
solidary obligation and insurance contracts. Same; Same; quantified damages.—This liability is not limited to actual
such payment operates as an equitable assignment to the
Same; Same; Same; The trial court as upheld by the Court or quantified damages. To sustain petitioner's contrary
insurer of the property and all remedies which the insured
of Appeals erred in holding petitioner solidarily liable with position in this regard would result in an inequitous
may have for the recovery thereof. That right is not
respondents Sio Choy and San Leon Rice Mill, Inc. to situation where petitioner will only be held liable for the
dependent upon, nor does it grow out of, any privity of
respondent Vallejos.—In the case at bar, the trial court held actual cost of a telegram fixed thirty (30) years ago. Same;
contract, (italics supplied) or upon written assignment of
petitioner together with respondents Sio Choy and San Same; Same; Same; Moral damages, concept of, under Art.
claim, and payment to the insured makes the insurer an
Leon Rice Mills Inc. solidarily liable to respondent Vallejos 2217 of the Civil Code; Moral damages, recoverable in
assignee in equity. Same; Same; Same; Same; Petitioner is
for a total amount of P29,103.00, with the qualification that case at bar.—We find Art. 2217 of the Civil Code
subrogated to whatever rights Sio Choy has against
petitioner’s liability is only up to P20,000.00 In the context applicable to the case at bar. It states: "Moral damages
respondent San Leon Rice Mill, Inc.—It follows, therefore,
of a solidary obligation, petitioner may be compelled by include physical suffering, mental anguish, fright, serious
that petitioner, upon paying respondent Vallejos the amount
respondent Vallejos to pay the entire obligation of anxiety, besmirched reputation, wounded feelings, moral
of not exceeding P20,000.00, shall become the subrogee of
P29,103.00, notwithstanding the qualification made by the shock, social humiliation, and similar injury. Though
the insured, the respondent Sio Choy; as such, it is
trial court. But, how can petitioner be obliged to pay the incapable of pecuniary computation, moral damages may
subrogated to whatever rights the latter has against
entire obligation when the amount stated in its insurance be recovered if they are the proximate results of the
respondent San Leon Rice Mill, Inc. Article 1217 of the
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defendant's wrongful act or omission." Same; Same; Same; dealings involving interest in real property come under the
Same; Petitioners act or omission amounted to gross Statute. Moreover, appellant’s complaint clearly alleges Dometila M. Andres - Irene’s
negligence.—Here, petitioner's act or omission, which that he has already fulfilled his part of the bargain to induce
Wearing Apparel v.
amounted to gross negligence, was precisely the cause of the Deudors to amicably settle their differences with
the suffering private respondents had to undergo. defendants as, in fact, on March 16, 1963, through his Manufacturers Hanover &
efforts, a compromise agreement between these parties was Trust Corporation, G.R. No.
Same; Same; Same; Same; Compensatory damages, award approved by the court. In other words, the agreement in
of, proper, as petitioner was remiss in performing its 82670 (September 15, 1989)
question has already been partially consummated, and is no
obligations.—We also sustain the trial court's award of P1 longer merely executory. And it is likewise a fundamental
6,000.00 as compensatory damages to Sofia C. Crouch principle governing the application of the Statute that the
representing the expenses she incurred when she came to contract in dispute should be purely executory on the part Civil Law; Obligations and Contracts; Solutio Indebiti; For
the Philippines from the United States to testify before the of both parties thereto. the rule on solutio indebiti to apply, it is required that he
trial court. Had petitioner not been remiss in performing its who paid was under no obligation to do so and that
obligation, there would have been no need for this suit or Same; Quasi-contract; A presumed quasi-contract cannot payment was made by reason of an essential mistake of
for Mrs. Crouch's testimony. Same; Same; Same; Same; emerge as against one party when the subject matter thereof fact.—The sole issue in this case is whether or not the
Exemplary damages, award of, justified to serve as a is already covered by a contract with another party.—From private respondent has the right to recover the second
warning to all telegram companies to observe due diligence the very language of this provision, it is obvious that a $10,000.00 remittance it had delivered to petitioner. The
in transmitting their customers' messages.—The award of presumed quasicontract cannot emerge as against one party resolution of this issue would hinge on the applicability of
exemplary damages by the trial court is likewise justified when the subject matter thereof is already covered by an Art. 2154 of the New Civil Code. x x x For this article to
and, therefore, sustained in the amount of P1,000.00 for existing contract with another party. Predicated on the apply the following requisites must concur: “(1) that he
each of the private respondents, as a warning to all telegram principle that no one should be allowed to unjustly enrich who paid was not under obligation to do so; and, (2) that
companies to observe due diligence in transmitting the himself at the expense of another, Article 2142 creates the payment was made by reason of an essential mistake of
messages of their customers. legal fiction of a quasi-contract precisely because of the fact” [City of Cebu v. Piccio, 110 Phil. 558, 563, (1960)].
absence of any actual agreement between the parties
concerned. Corollarily, if the one who claims having Courts; Certiorari; Questions of Fact; The jurisdiction of
enriched somebody has done so pursuant to a contract with the Supreme Court in cases brought to it from the Court of
3. Quasi-Contracts a third party, his cause of action should be against the latter, Appeals is limited to reviewing and revising errors of law
who in turn may, if there is any ground therefor, seek relief imputed to the latter, its findings of fact being
against the party benefited. It is essential that the act by conclusive.—The rule regarding questions of fact being
RA No. 386, Arts. 22, 1157, 1160, 2142-2175 which the defendant is benefited must have voluntary and raised with this Court in a petition for certiorari under Rule
unilateral on the part of the plaintiff. As one distinguished 45 of the Revised Rules of Court has been stated in
civilian puts it, “The act is voluntary, because the actor in Remalante v. Tibe, G.R. No. 59514, February 25, 1988,
Cruz v. J.M. Tuason & Company, Inc., G.R. No. L-23749 quasi-contracts is not bound by any pre-existing obligation 158 SCRA 138, thus: The rule in this jurisdiction is that
(April 29, 1977) to act. It is unilateral, because it arises from the sole will of only questions of law may be raised in a petition for
the actor who is not previously bound by any reciprocal or certiorari under Rule 45 of the Revised Rules of Court.
Civil law; Statute of Frauds; The statute of frauds does not
bilateral agreement. The reason why the law creates a “The jurisdiction of the Supreme Court in cases brought to
apply to an alleged contract whereby one party agreed to juridical relation and imposes certain obligations is to it from the Court of Appeals is limited to reviewing and
deliver a parcel of land to another in consideration of the prevent a situation where a person is able to benefit or take revising the errors of law imputed to it, its findings of fact
latter’s acting as intermediary to effect a compromise in a advantage of such lawful, voluntary and unilateral acts at being conclusive” [Chan v. Court of Appeals, G.R. No.
civil action.—In the instant case, what appellant is trying to the expense of said actor.” (Ambrosio Padilla, Civil Law, L-27488, June 30, 1970, 33 SCRA 737, reiterating a long
enforce is the delivery to him of 3,000 square meters of Vol. VI, p. 748, 1969 ed.) In the case at bar, since appellant line of decisions.] This Court has emphatically declared
land which he claims defendants promised to do in has a clearer and more direct recourse against the Deudors that “it is not the function of the Supreme Court to analyze
consideration of his services as mediator or intermediary in with whom he had entered into an agreement regarding the or weigh such evidence all over again, its jurisdiction being
effecting a compromise of the civil action, Civil Case No. improvements and expenditures made by him on the land of limited to reviewing errors of law that might have been
135, between the defendants and the Deudors. In no sense appellees, it cannot be said, in the sense contemplated in committed by the lower court” [Tiongco v. De la Merced,
may such alleged contract be considered as being a “sale of Article 2142, that appellees have been enriched at the G.R. No. L-24426, July 25, 1974, 58 SCRA 89; Corona v.
real property or of any interest therein.” Indeed, not all expense of appellant. Court of Appeals, G.R. No. L-62482, April 28, 1983, 121
SCRA 865; Baniqued v. Court of Appeals, G. R. No.
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L47531, February 20, 1984, 127 SCRA 596]. “Barring, code shall be applicable even though by the former laws a the accused has not been satisfactorily established, he is not
therefore, a showing that the findings complained of are longer period might be required”. The action has therefore exempt from civil liability which may be proved by
totally devoid of support in the record, or that they are so prescribed only with respect to the payments made before preponderance of evidence only. This is the, situation
glaringly erroneous as to constitute serious abuse of October 30, 1950, when a written demand was made, contemplated in Article 29 of the Civil Code, where the
discretion, such findings must stand, for this Court is not considering that the prescription of action is interrupted civil action for damages is “for the same act or omission.”
expected or required to examine or contrast the oral and when there is a written extra-judicial demand (Art. 1155, Althrough the two actions have different purposes, the
documentary evidence submitted by the parties” [Santa NCC). matters discussed in the civil case are similar to those
Ana, Jr. v. Hernandez, G.R. No. L-16394, December 17, discussed in the criminal case. However, the judgment in
1966, 18 SCRA 973.] [at pp. 144-145.] the criminal proceeding cannot be read in evidence in the
civil action to establish any fact there determined, even
4. Delicts though both actions involve the same act or omission. The
reason for this rule is that the parties are not the same and
Gonzalo Puyat & Sons, Inc v. secondarily, different rules of evidence are applicable.
City Of Manila and Marcelo Hence, notwithstanding herein petitioner’s acquittal, the
RA No. 386, Arts. 20, 29, 33, 35-36, 1157, Court of Appeals in determining whether Article 29
Sarmiento, as City Treasurer
1161, 2177, 2206 applied, was not precluded from looking into the question
of Manila, G.R. No. L-17447 of petitioner’s negligence or reckless imprudence.
(April 30, 1963) Act No. 3815, Arts. 11-15, 100-111
Same; Same; Same; Judgments; A finding in the trial
court’s judgment that “a hypothesis inconsistent with the
Manantan v. Court of Appeals, G.R. No. 107125 (January negligence of the accused presented itself before the Court”
Taxation; Retail dealers taxes; Recovery of taxes paid by 29, 2001) and since said “hypothesis is consistent with the record . . .
mistake; Protest not necessary.—Where taxes which are not the Court’s mind cannot rest on a verdict of conviction”
Same; Civil Liability; Damages; Our law recognizes two
legally due are paid thru error or mistake, they may, under clearly shows that the acquittal of the accused was
kinds
the principle of solutio indebiti, be recovered, even if no predicated on the conclusion that his guilt had not been
protest was made upon their payment, particularly where of acquittal, with different effects on the civil liability of established with moral certainty, an acquittal based on
such payment was due to a mistake in the construction of a the accused—(a) first is an acquittal on the ground that the reasonable doubt.—Our scrutiny of the lower court’s
doubtful or difficult question of law (Article 2155 new accused is not the author of the act or omission complained decision in Criminal Case No. 066 supports the conclusion
Civil Code). Same; Same; Same; Same; Section 76 of of and this instance closes the door to civil liability, and, (b) of the appellate court that the acquittal was based on
charter of Manila and applicable in case at bar.—Section 76 second is an acquittal based on reasonable doubt on the reasonable doubt; hence, petitioner’s civil liability was not
of the Charter of Manila, which provides that “No court guilt of the accused, in which case even if the guilt of the extinguished by his discharge. We note the trial court’s
shall entertain any suit assailing the validity of tax under accused has not been satisfactorily established, he is not declaration that did not discount the possibility that “the
this article until the taxpayer shall have paid, under protest exempt from civil liability which may be proved by accused was really negligent.” However, it found that “a
the taxes assessed against him, x x x,” relates to the preponderance of evidence only.—Our law recognizes two hypothesis inconsistent with the negligence of the accused
assessment, collection and recovery of real estate taxes kinds of acquittal, with different effects on the civil liability presented itself before the Court” and since said
only, and not to the recovery of retail dealers taxes. Same; of the accused. First is an acquittal on the ground that the “hypothesis is consistent with the record . . . the Court’s
accused is not the author of the act or omission complained mind cannot rest on a verdict of conviction.” The foregoing
Same; Same; Prescription interrupted by written clearly shows that petitioner’s acquittal was predicated on
of. This instance closes the door to civil liability, for a
extrajudicial demand.—Even applying the provisions of the conclusion that his guilt had not been established with
person who has been found to be not the perpetrator of any
Act No. 190 to payments by appellee of the retail dealers moral certainty. Stated differently, it is an acquittal based
act or omission cannot and can never be held liable for such
taxes made before the effectivity of the new Civil Code, on reasonable doubt and a suit to enforce civil liability for
act or omission. There being no delict, civil liability ex
because “prescription already running before the effectivity the same act or omission lies.
delicto is out of the question, and the civil action, if any,
of this Code shall be governed by laws previously in force
which may be instituted must be based on grounds other
x x x” (Art. 1116, NCC), still payments made before Same; Same; Same; Same; Where the civil action is
than the delict complained of. This is the situation
August 30, 1950, are no longer recoverable in view if the impliedly instituted together with the criminal action, the
contemplated in Rule 111 of the Rules of Court. The
second paragraph of the said article, which provides that actual damages claimed by the offended parties are not
second instance is an acquittal based on reasonable doubt
“but if since the time this Code took effect the entire period included in the computation of the filing fees—filing fees
on the guilt of the accused. In this case, even if the guilt of
herein required for prescription should elapse. The present are to be paid only if other items of damages such as moral,
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nominal, temperate, or exemplary damages are alleged in No. 409 establishes a general rule regulating the liability of 1173 of the Civil Code). There is no argument that it is the
the complaint or information, or if they are not so alleged, the City of Manila for "damages or injury to persons or duty of the City of Manila to exercise reasonable care to
shall constitute a first lien on the judgment.—Thus, where property arising from the failure of city officers" to enforce keep the public market reasonably safe for people
the civil action is impliedly instituted together with the the provisions of said Act, "or any other law or ordinance frequenting the place for their marketing needs. While it
criminal action, the actual damages claimed by the or from negligence" of the City "Mayor, Municipal Board, may be conceded that the fulfillment of such duties is
offended parties, as in this case, are not included in the or other officers while enforcing or attempting to enforce extremely difficult during storms and floods, it must
computation of the filing fees. Filing fees are to be paid said provisions." Upon the other hand, Article 2189 of the however, be admitted that ordinary precautions could have
only if other items of damages such as moral, nominal, Civil Code of the Philippines constitutes a particular been taken during good weather to minimize the dangers to
temperate, or exemplary damages are alleged in the prescription making "provinces, cities and municipalities x life and limb under those difficult circumstances. For
complaint or information, or if they are not so alleged, shall x x liable for damages for the death of, or injury suffered by instance,. the drainage hole could have been placed under
constitute a first lien on the judgment. Recall that the any person by reason"—specifically—"of the defective the stalls instead of on the passage ways. Even more
information in Criminal Case No. 066 contained no specific condition of roads, streets, bridges, public buildings, and important is the fact, that the City should have seen to it
allegations of damages. Considering that the Rules of other public works under their control or supervision." In that the openings were covered. Sadly, the evidence
Criminal Procedure effectively guarantee that the filing fees other words, Art. 1, sec. 4, R.A. No. 409 refers to liability indicates that long before petitioner fell into the opening, it
for the award of damages are a first lien on the judgment, arising from negligence, in general, regardless of the object, was already uncovered, and five (5) months after the
the effect of the enforcement of said lien must retroact to thereof, while Article 2189 of the Civil Code governs incident happened, the opening was still uncovered. (Rollo,
the institution of the criminal action. The filing fees are liability due to "defective streets, public buildings and other pp. 57; 69). Moreover, while there are findings that during
deemed paid from the Sling of the criminal complaint or public works" in particular and is therefore decisive on this floods the vendors remove the iron grills to hasten the flow
information. We therefore find no basis for petitioner’s specific case. Same; Same; Same; For liability under of water (Decision, ACG.R. CV No. 01387, Rollo, p. 17),
allegations that the filing fees were not paid or improperly Article 2189 of the there is no showing that such practice has ever been
paid and that the appellate court acquired no jurisdiction. prohibited, much less penalized by the City of Manila.
Civil Code to attach, control or supervision by the province, Neither was it shown that any sign had been placed
city or municipality over the public building in question is thereabouts to warn passers-by of the impending danger.
enough; Case at bar.—In the same suit, the Supreme Court
clarified further that under Article 2189 of the Civil Code,
5. Quasi-Delicts it is not necessary for the liability therein established to
attach, that the defective public works belong to the Gutierrez v. Gutierrez, et. al.,
province, city or municipality from which responsibility is G.R. No. 34840 (September
RA No. 386, Arts. 21, 1157, 1162, 2176-2194 exacted. What said article requires is that the province, city
or municipality has either "control or supervision" over the 23, 1931)
public building in question. In the case at bar, there is no
question that the Sta. Ana Public Market, despite the
Management and Operating Contract between respondent DAMAGES; MASTER AND SERVANT; MOTOR
Jimenez v. City of Manila, City and Asiatic Integrated Corporation remained under the VEHICLES; LIABILITY OF HEAD OF HOUSE FOR
G.R. No. 71049 (May 29, control of the former. The fact of supervision and control of ACTS OF DRIVER WHO is HIS MINOR CHILD.—The
1987) the City over subject public market was admitted by Mayor head of a house, the owner of an automobile, who
Ramon Bagatsing in his letter to Secretary of Finance Cesar maintains it for the general use of his family, is liable for its
Virata. In fact, the City of Manila employed a market negligent operation by one of his children, whom he
master for the Sta. Ana Public Market whose primary duty designates or permits to run it, where the car is occupied
Civil Law; Civil liability of Provinces, Cities and is-to take direct supervision and control of that particular and being used at the time of the injury for the pleasure of
Municipalities for quasi-delict; Article 1, Sec. 4, RA No. market, more specifically, to check the safety of the place other members of the owner's family than the child driving
409 (Revised Charter of Manila) refers to liability arising for the public. it.
from negligence, in general, regardless of the object, while
Article 2189 of the Civil Code governs liability due to Same; Same; Same; Same; Respondent City of Manila ID.; ID.; ID.; ID.; CASE AT BAR.—One G, a passenger in
"defective streets, public buildings and other public works" failed to exercise the diligence of a good father of a family a truck, recovers damages in the amount of P5,000 from the
in particular.—This issue has been laid to rest in the case of which is a defense in quasi-delict.—As a defense against owner of a private automobile not in the car, the machine
City of Manila v. Teotico (22 SCRA 269-272 [1968]) liability on the basis of a quasidelict, one must have being operated by a son 18 years of age, with other
where the Supreme Court squarely ruled that Republic Act exercised the diligence of a good father of a family. (Art. members of the family accommodated therein, and from the
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chauffeur and owner of the truck which collided with the
private automobile on a bridge, causing physical injuries to
G as a result of the automobile accident.

D. Breach

RA No. 386, Arts. 1163-1178, 1788, 1388,


1344, 1680, 2201

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phrases "public services" and "public service" substitute 3.ID.; ID.; ID.; ID.—The essential feature of a public use is

Public Utilities Law and supersede the phrases' "public utilities" and "public
utility." While the old law in defining the term "public
that it is not. confined to privileged individuals, but is open
to the indefinite public.
utility" included the phrase "for public use," these words
are not to be found in the new law. The phrase "for hire or 4.ID.; ID.; ID.; ID.—The use is public if all persons have
compensation" appearing in the new law does not appear in the right to the use under the same circumstances.
A. The Concept of Public the old law.
5.ID.; ID.; ID.; ID.—If an individual, copartnership,
Service 2.ID.; ID.—Under the old law, the concurrence of two association, corporation, or joint stock company does, in
things were necessary: (1) The individual, copartnership, truth, sell ice to all persons seeking its services, it is a
etc. must be a "public utility;" and (2) the business in which public utility. But if, on the other hand, the individual,
such individual, copartnership, etc. is engaged must be for copartnership, association, corporation, or joint stock
Act No. 2307, Sec. 14 company was organized solely for particular persons under
public use. Under the new law the concurrence of two
Act No. 2694, Sec. 9 things are necessary: (1) The individual, copartnership, etc. strictly private contracts and never was devoted by its
must be a "public service;" and (2) the business in which owners to public use, it could not be held to be a public
Commonwealth Act (CA) No. 146, Sec. 13-14 utility without violating the due process of law clause of the
such individual, copartnership, etc. is engaged must be for
CA No. 454, Sec. 1 hire or compensation. Constitution.

1987 Constitution, Art. XII, Secs. 1-2, 11, 18 3.ID. ; ID.—It is here held that within the meaning either of 6.ID.; ID.; ID.; ID.—Held: That upon the facts shown in
the old law or the new law "El Tren de Aguadas" is the record, the Iloilo Ice and Cold Storage Company is not
1987 Constitution, Art. II, Sec. 1 dedicated to the operation of a water system, and that this a public utility within the meaning of the law.
E. S. de Dios, What is a Public Utility: service is for public use or -for hire or compensation. As a
7.ID.; ID.; ID.; ID.—Sympathetic consideration should
consequence, it is further held that "El Tren de Aguadas"
Defense and Opulence (Business World comes under the jurisdiction of the Public Service
always be given by the court to the facts laid before the
Public Utility Commissioner and the Public Utility Board,
Online). Retrieved in Commission.
with reference to the law under which the Commissioner
http://www.bworldonline.com/content.php?section=Opinio and the Board are acting. Iloilo Ice and Cold Storage Co.
n&title=What-is-a-publicutility?-Defense-and- vs. Public Utility Board, 44 Phil. 551, No. 19857 March 2,
opulence&id=73697 1923
Iloilo Ice and Cold Storage
House Bills No. 4501 and 5828 (17th Co. v. Public Utility Board,
Congress) G.R. No. 19857 (March 2,
1923) La Paz Ice Plant & Cold
Storage Co., Inc. v. Bordman
Santos v. Public Service et. al., G.R. No. L-43668
Commission, G.R. No. 26771 PUBLIC UTILITIES; ACT No. 2694, SECTION 9, (March 31, 1938)
(September 23, 1927) CONSTRUED; "PUBLIC USE/' DEFINED; THE ILOILO
ICE AND COLD STORAGE COMPANY, WHETHER A
PUBLIC UTILITY.—The term "public utility," in this
PUBLIC SERVICES; STATUTORY CONSTRUCTION;
jurisdiction, includes every individual, copartnership,
RETROACTIVITY OF COMMONWEALTH ACT No.
PUBLIC SERVICE LAW; COMPARISON OF THE association, corporation, or joint stock company that now
146.—While section 46 of Commonwealth Act No. 146
FORMER PUBLIC UTILITY LAW, ACT No. 2307, or hereafter may own, operate, manage, or control, within
expressly repeals Act No. 3108 and its amendments,
DEFINING THE TERM "PUBLIC UTILITY" WITH THE the Philippine Islands, any ice, refrigeration, cold storage
nowhere does it provide that it has retroactive effect. In the
PRESENT PUBLIC SERVICE LAW, ACT No. 3108, system, plant, or equipment, for public use.
absence of any express provision to this effect, the general
DEFINING THE TERM "PUBLIC SERVICE."—A
2.ID.; ID.; ID.; ID.—The criterion by which to judge of the rule should prevail that laws do not have retroactive effect,
comparison of the present Public Service Law, Act No.
character of the use is whether the public may enjoy it by unless otherwise expressly provided. And this rule is the
3108, as amended by Act No. 3316, with the former Public
right or only by permission. more applicable to the present case because the defendants
Utility Law, Act No. 2307, as amended, discloses that the
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have acquired rights under the former law which should be sold to the general public for a price by way of proper charges. Unlike a private enterprise which
protected. Held: That Commonwealth Act No. 146 is not compensation. independently determines whom it will serve, a “public
applicable to the present case, and that the defendants' utility holds out generally and may refuse legitimate
rights, in connection with the certificate of public 5.ID. ; WRIT OF INJUNCTION; INDEMNITY.—The demand for service.”
convenience for the ice factory operated by them, should be injunction was issued for a just cause because it is
governed by Act No. 3108, as amended. established and admitted by the defendants themselves that Same; Same; “Public Use”; Definition; The true criterion
they operated their ice plant without paying the fees by which to judge the character of the use is whether the
2.ID. ; ID. ; PUBLIC SERVICES EXISTING BEFORE required by law, payment which should have been made public may enjoy it by right or only by permission.—
ITS APPROVAL.—Subsection (i) of section 15 of Act No. within sixty days following the approval of the law. “Public use” means the same as “use by the public.” The
3108, as amended by section 2 of Act No. 4033, contains Indemnity for damages founded upon the illegal issuance of essential feature of the public use is that it is not confined
an exception providing that public services existing before writ of injunction does not lie. La Paz Ice Plant & Cold to privileged individuals, but is open to the indefinite
its approval, instead of providing themselves with a Storage Co., vs. Bordman., 65 Phil. 401, No. 43668 March public. It is this indefinite or unrestricted quality that gives
certificate of public convenience or with a certificate of 31, 1938 it its public character. In determining whether a use is
public necessity and convenience, as the case may be, shall public, we must look not only to the character of the
only pay the fees fixed by law for the issuance of said business to be done, but also to the proposed mode of doing
certificates. The factory operated by the defendants is it. If the use is merely optional with the owners, or the
within the purview of the proviso, and under the law, it is JG Summit Holdings, Inc. v. public benefit is merely incidental, it is not a public use,
not under a duty to provide itself with a certificate of public Court of Appeals, G.R. No. authorizing the exercise of jurisdiction of the public utility
convenience, but only to pay the required fees for the 124293 (September 24, commission. There must be, in general, a right which the
issuance of said certificate. law compels the owner to give to the general public. It is
2003) not enough that the general prosperity of the public is
3.ID. ; JURISDICTION AND AUTHORITY OF THE promoted. Public use is not synonymous with public
PUBLIC SERVICE COMMISSION OVER PUBLIC interest. The true criterion by which to judge the character
SERVICES.—The ruling should not be interpreted to mean of the use is whether the public may enjoy it by right or
that the defendants are not subject to the jurisdiction and Administrative Law; Public Utilities; Definition; To
constitute a public utility, the facility must be necessary for only by permission. (emphasis supplied)
authority of the Public Service Commission. After paying
the aforesaid fees the commission shall issue to them the the maintenance of life and occupation of the residents.—A Same; Same; “Bidding”; Definition; Principles.—The word
corresponding certificate of public convenience, which may “public utility” is “a business or service engaged in “bidding” in its comprehensive sense means making an
be regulated, modified or cancelled for just cause, and in its regularly supplying the public with some commodity or offer or an invitation to prospective contractors whereby
operation and exploitation the defendants' factory shall be service of public consequence such as electricity, gas, the government manifests its intention to make proposals
subject to the jurisdiction and authority of the commission, water, transportation, telephone or telegraph service.” To for the purpose of supplies, materials and equipment for
like any new enterprise, in accordance with the provisions constitute a public utility, the facility must be necessary for official business or public use, or for public works or
of Commonwealth Act No. 146. the maintenance of life and occupation of the residents. repair. The three principles of public bidding are: (1) the
However, the fact that a business offers services or goods offer to the public; (2) an opportunity for competition; and
4.ID.; ID. ; CONSTITUTIONALITY.—The defendants that promote public good and serve the interest of the (3) a basis for comparison of bids. As long as these three
invoke in support of their contention that Act No. 3108 and public does not automatically make it a public utility. principles are complied with, the public bidding can be
its amendments are unconstitutional and void the doctrine Public use is not synonymous with public interest. As its considered valid and legal. It is not necessary that the
enunciated by the Supreme Court of the United States in name indicates, the term “public utility” implies public use highest bid be automatically accepted. The bidding rules
the case of New State Ice Company vs. Liebman (285 U. and service to the public. The principal determinative may specify other conditions or the bidding process be
S., 262 et seq.), wherein it was held that the manufacture of characteristic of a public utility is that of service to, or subjected to certain reservation or qualification such as
ice is a private business in the State of' Oklahoma, for readiness to serve, an indefinite public or portion of the when the owner reserves to himself openly at the time of
which reason it is not subject to the jurisdiction and public as such which has a legal right to demand and the sale the right to bid upon the property, or openly
authority of the Public Utility Commission. Held: That the receive its services or commodities. Stated otherwise, the announces a price below which the property will not be
facts supporting the legal conclusions laid down therein are owner or person in control of a public utility must have sold. Hence, where the seller reserves the right to refuse to
entirely distinct from those found established in the present devoted it to such use that the public generally or that part accept any bid made, a binding sale is not consummated
case. Under our law and the facts admitted by the of the public which has been served and has accepted the between the seller and the bidder until the seller accepts the
defendants in this case, the ice factory which the defendants service, has the right to demand that use or service so long bid. Furthermore, where a right is reserved in the seller to
operate is a public service because the ice it produces is as it is continued, with reasonable efficiency and under reject any and all bids received, the owner may exercise the
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right even after the auctioneer has accepted a bid, and this Republic Act No. 2677, includes every person who owns, whether or not a particular company or service is a public
applies to the auction of public as well as private property. operates, manages or controls, for hire or compensation, utility is a judicial one, and must be determined as such by
and done for general business purposes, any common a court of competent jurisdiction, * * *.” (51 C.J., sec. 3, p.
Same; Same; Same; Where the invitation to bid contains a carrier, railroad, street railway, traction railway, sub-way 5) [Emphasis supplied]
reservation for the Government to reject any or all bids, the motor vehicle, either for freight or passenger, or both with
lowest or the highest bidder, as the case may be, is not or without fixed route and whatever may be its Same; Same; A private enterprise doing business not
entitled to an award as a matter of right for it does not classification, freight or carrier service of any class, express devoted to public use cannot by legislative enactment or
become a ministerial duty of the Government to make such service, steamboat, or steamship line, pontines, ferries, and administrative order be converted into a public utility.—
an award.—It is a settled rule that where the invitation to water craft, engaged in the transportation of passengers or Paraphrasing a decision of the United States Supreme
bid contains a reservation for the Government to reject any freight or both, shipyard, marine railway, marine repair Court, a private enterprise doing business under private
or all bids, the lowest or the highest bidder, as the case may shop, wharf or dock, ice plant, ice refrigeration plant, canal, contracts with customers of its choice and therefore not
be, is not entitled to an award as a matter of right for it does irrigation system, gas, electric light, heat and power, water devoted to public use cannot by legislative enactment or
not become a ministerial duty of the Government to make supply and power, petroleum, sewerage system, wire or administrative order be converted into a public utility, for
such an award. Thus, it has been held that where the right wireless communications systems, broadcasting stations that would constitute taking of private property for public
to eject is so reserved, the lowest bid or any bid for that and other similar public services. A “public utility,” on the use without just compensation in derogation of the
matter may be rejected on a mere technicality, that all bids other hand, is a business or service engaged in regularly Constitution. JG Summit Holdings, Inc. vs. Court of
may be rejected, even if arbitrarily and unwisely, or under a supplying the public with some commodity or service of Appeals, 412 SCRA 10, G.R. No. 124293 September 24,
mistake, and that in the exercise of a sound discretion, the public consequence such as electricity, gas, water, 2003
award may be made to another than the lowest bidder. And transportation, telephone or telegraph service. Simply
so, where the Government—as advertiser, availing itself of stated, a public utility provides a service or facility needed
that right, makes its choice in rejecting any or all bids, the for present day living which cannot be denied to anyone
losing bidder has no cause to complain nor right to dispute who is willing to pay for it.
Bagatsing v. Committee on
that choice, unless an unfairness or injustice is shown. Privatization, G.R. No.
Accordingly, he has no ground of action to compel the Same; Same; Same; All public utilities are public services 112399 (July 14, 1995)
Government to award the contract in his favor, nor compel but the converse is not true.—Another dissimilarity is that a
it to accept his bid. public utility requires a franchise, aside from a certificate of
public necessity and convenience, for its operation, while a
Same; Same; Same; Public Bidding; The requirement of public service which is not a public utility requires only a Parties; Constitutional Law; Separation of Powers;
public bidding does not negate the exercise of the right of certificate of public convenience. The dichotomy in Contracts; In the absence of a claim that a contract entered
first refusal.—It is true that properties of the National requirements flows from the enforced indeterminacy of the into by the government violated the rights of members of
Government, as a rule, may be sold only after a public market for the service provided by a public utility. Thus, it Congress or impermissibly intruded into the domain of the
bidding is held. Public bidding is the accepted method in may be pointed out that all public utilities are public Legislature, legislators have no legal standing to institute an
arriving at a fair and reasonable price and ensures that services but the converse is not true. This is so because the action in their capacity as members of Congress.—In
overpricing, favoritism and other anomalous practices are term “public utility” connotes public use and service to the Philip-pine Constitution Association v. Hon. Salvador
eliminated or minimized. But the requirement for public public. Enriquez, G.R. No. 113105, August 19, 1994, we held that
bidding does not negate the exercise of the right of first members of Congress have the legal standing to question
refusal. In fact, public bidding is an essential first step in Same; Public Utilities; Whether or not a given business or the validity of acts of the Executive which injures them in
the exercise of the right of first refusal because it is only industry is a public utility depends upon the nature of the their person or the institution of Congress to which they
after the public bidding that the terms upon which the business or service rendered.—“* * * Whether or not a belong. In the latter case, the acts cause derivative but
Government may be said to be willing to sell its shares to given business, industry, or service is a public utility does nonetheless substantial injury which can be questioned by
third parties may be known. not depend upon legislative definition, but upon the nature members of Congress (Kennedy v. James, 412 F. Supp. 353
of the business or service rendered, and an attempt to [1976]). In the absence of a claim that the contract in
TINGA, J., Separate Opinion: declare a company or enterprise to be a public utility, where question violated the rights of petitioners or impermissibly
it is inherently not such, is, by virtue of the guaranties of
Administrative Law; “Public Service”; Definition; intruded into the domain of the Legislature, petitioners have
the federal constitution, void whenever it interferes with
Distinguished from “Public Utility”; Public service is no legal standing to institute the instant action in their
private rights of property or contract. So a legislature
different from public utility.—The definition of “public capacity as members of Congress.
cannot by mere fiat or regulatory order convert a private
service” in the Public Service Act, as last amended by
business or enterprise into a public utility, and the question
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Same; Same; Taxpayer’s Suits; Taxpayers may question said provision classifies two types of assets: (1) Non- Energy Program under R.A. No. 7638.—PETRON’s
contracts entered into by the national government or performing assets of government financial institutions; and privatization is also in line with and is part of the Philippine
government-owned or controlled corporations alleged to be (2) Government-owned or controlled corporations which Energy Program under R.A. No. 7638. Section 5(b) of the
in contravention of the law.—However, petitioners can have been found unnecessary or inappropriate for the law provides that the Philippine Energy Program shall
bring the action in their capacity as taxpayers under the government sector to maintain. include a policy direction towards the privatization of
doctrine laid down in Kilosbayan, Inc. v. Guingona, 232 government agencies related to energy.
SCRA 110 (1994). Under said ruling, taxpayers may Same; Same; Same; Constitutional Law; Separation of
question contracts entered into by the national government Powers; The decision of PNOC to privatize PETRON and Same; Same; Same; Same; P.D. No. 334; PNOC under P.D.
or government-owned or controlled corporations alleged to the approval of the COP of such privatization, being made No. 334 is authorized to establish and maintain offices,
be in contravention of the law. As long as the ruling in in accordance with Proclamation No. 50, cannot be subsidiaries or other units and to reorganize or abolish the
Kilosbayan on locus standi is not reversed, we have no reviewed by the Supreme Court.—The decision of PNOC same.—Under P.D. No. 334, the law creating PNOC, said
choice but to follow it and uphold the legal standing of to privatize PETRON and the approval of the COP of such corporation is granted the authority “[t]o establish and
petitioners as taxpayers to institute the present action. privatization, being made in accordance with Proclamation maintain offices, branches, agencies, subsidiaries,
No. 50, cannot be reviewed by this Court. Such acts are correspondents or other units anywhere as may be needed
Government-Owned and Controlled Corporations exercises of the executive function as to which the Court by the Company and reorganize or abolish the same as it
(GOCCs); Privatization; The proposition that only non- will not pass judgment upon or inquire into their wisdom may deem proper.”
performing assets should be the subject of privatization (Llamas v. Orbos, 202 SCRA 844 [1991]).
does not conform with the realities of economic life.—To Same; Same; Same; Bids and Bidding; Commission on
say that only non-performing assets should be the subject of Same; Same; Same; In privatizing PETRON, PNOC was Audit; Instances where there is failure of bidding.—Under
privatization does not conform with the realities of simply exercising its corporate powers to dispose of all or a said COA Circular, there is a failure of bidding when: 1)
economic life. In the world of business and finance, it is portion of its shares in a subsidiary.—PNOC, in privatizing there is only one offeror; or (2) when all the offers are non-
difficult to sell a business in dire, financial distress. As PETRON, was simply exercising its corporate power to complying or unacceptable. In the case at bench, there were
entrepreneur Don Eugenio Lopez used to advert to his dispose of all or a portion of its shares in a subsidiary. three offerors: SAUDI ARAMCO, PETRONAS and
younger executives: “Don’t buy headaches. Don’t even PNOC was created under P.D. No. 334, as amended by WESTMONT.
accept them if they are offered to you on a silver platter.” It P.D. No. 927, which empowers it to acquire shares of the
capital stock of any other corporation and to dispose of the Same; Same; Same; Same; Same; To constitute a failed
is only in a fire sale that the government can expect to get
same shares. bidding under COA Circular No. 89-296, all the offerors
rid of its non-performing assets, more so if the sequencing
must be disqualified.—While two offerors were
pattern insisted by petitioners (initial public offering of
Same; Same; Same; Statutes; R.A. No. 7181; The disqualified, PETRONAS for submitting a bid below the
10% block to small investors) is followed.
privatization of PETRON could well be undertaken under floor price and WESTMONT for technical reasons, not all
Same; Same; Proclamation No. 50; Proclamation No. 50 laws other than Proclamation No. 50.—The privatization of the offerors were disqualified. To constitute a failed
does not prohibit the disposal of the other kinds of assets, PETRON could well be undertaken under laws other than bidding under the COA Circular, all the offerors must be
whether performing, necessary or appropriate.—While Proclamation No. 50. Of significance is Section 2(c) of disqualified.
Proclamation No. 50 mandates that non-performing assets R.A. No. 7181, which provides that: “Privatization of
government assets classified as a strategic industry by the Same; Same; Same; Same; Same; COA Circular No. 89-
should promptly be sold, it does not prohibit the disposal of
National Economic and Development Authority shall first 296 does not speak of accepted bids but of offerors, without
the other kinds of assets, whether performing, necessary or
be approved by the President of the Philip-pines” (Italics distinction as to whether they were disqualified.—
appropriate.
supplied). Section 6, the repealing clause of R.A. No. 7181, Petitioners urge that in effect there was only one bidder and
Same; Same; Same; Section 1 of Proclamation No. 50 expressly repealed Sections 3 and 10 of Proclamation No. that it can not be said that there was a competition on “an
classifies two types of assets that may be privatized.— 50 and all other laws, orders and rules and regulations equal footing” (G.R. No. 112399, Rollo, p. 122). But the
Section 1 of the Proclamation reads: “Statement of which are inconsistent therewith. The only requirement COA Circular does not speak of accepted bids but of
Policy.—It shall be the policy of the State to promote under R.A. No. 7181 in order to privatize a strategic offerors, without distinction as to whether they were
privatization through an orderly, coordinated and efficient industry like PETRON is the approval of the President. In disqualified.
program for the prompt disposition of the large number of the case of PETRON’s privatization, the President gave his
Same; Same; Same; Same; Same; Statutory Construction;
non-performing assets of the government financial approval not only once but twice.
Administrative Law; The interpretation of an agency of its
institutions, and certain government-owned or controlled
Same; Same; Same; Same; R.A. No. 7638; PETRON’s own rules should be given more weight than the
corporations which have been found unnecessary or
privatization is also in line with and is part of the Philippine interpretation by that agency of the law it is merely tasked
inappropriate for the government sector to maintain.” The
to administer.—The COA itself, the agency that adopted
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the rules on bidding procedure to be followed by have the first crack to buy the same. These Rules have been Same; Same; Same; Same; Same; Same; Same; Statutes;
government offices and corporations, had upheld the consistently applied in previous privatizations, and they R.A. 387; The activities considered as “public utility”
validity and legality of the questioned bidding. The constitute a contemporaneous construction and under Section 7 of R.A. No. 387 refer only to petroleum
interpretation of an agency of its own rules should be given interpretation of a law by the implementing, administrative which is indigenous to the Philippines and that refining of
more weight than the interpretation by that agency of the agency. Such construction is accorded great respect by the petroleum products sourced from abroad as is done by
law it is merely tasked to administer. Court (Nestlé Philippines, Inc. v. Court of Appeals, 203 Petron is not within the contemplation of the law.—
SCRA 504 [1991]). Likewise, the activities considered as “public utility” under
Same; Same; Same; R.A. No. 7181 does not mandate any Section 7 of R.A. No. 387 refer only to petroleum which is
sequencing for the disposition of shares in government- Same; Same; Same; Same; Initial Public Offerings (IPOs); indigenous to the Philippines. Hence, the refining of
owned corporations being privatized.—We agree with It is more reasonable to read R.A. 7181 as leaving to the petroleum products sourced from abroad as is done by
PETRON that the language of Section 2(d) of R.A. No. COP and the government corporations concerned to Petron, is not within the contemplation of the law. We
7181 does not mandate any sequencing for the disposition determine the sequencing of the sale to strategic investors agree with the opinion of the Secretary of Justice that the
of shares in a government-owned corporation being and the general public.—The sensitive market forces refining of imported crude oil is not regulated by, nor is it
privatized. involved in initial public offerings render unrealistic any within the scope and purview of the Petroleum Act of 1949.
legislative mandate to follow a sequencing in the sale of He said: “Examination of our statute books fails to reveal
Same; Same; Same; Statutory Construction; A reasonable government-owned shares in the market. The legislators, any law or legal provision which, in explicit terms, either
reading of Section 2(d) of R.A. 7181 is that it merely gives practical men of affairs as they are, were aware of the permits or prohibits the establishment and operation of oil
a right of first refusal by the small investors vis-a-vis the vagaries, variables and vicissitudes of the stock market refineries that would refine only imported crude oil”
10% block of shares in a corporation to be privatized—and when they enacted R.A. No. 7181. It is more reasonable to (Opinion, No. 267, S. 1955). Bagatsing vs. Committee on
the offer may be made before, after or simultaneous with read the said law as leaving to the COP and the government Privatization, 246 SCRA 334, G.R. No. 115994 July 14,
the offer of the shares to strategic partners or major corporations concerned to determine the sequencing of the 1995
investors depending on the prevailing conditions of the sale to strategic investors and the general public. To require
market.—It is the unfortunate use of the word “first” in the offer of 10% to the general public before the sale of a
Section 2(d) of R.A. No. 7181 that threw petitioners off block to a strategic partner may delay or even impede the
track and caused them to misread the provision as one entire privatization program. Luzon Stevedoring Co. Inc.
requiring a mandatory sequencing of the sale. As a wit once
said, if a centipede would be compelled to follow a Same; Same; Same; The pricing of shares of stock is a et. al. v. Public Service
prescribed sequencing of its steps, it could never move an highly specialized field that is better left to the experts.— Commission, G.R. No. L-5458
inch. A reasonable reading of the provision is that it merely The pricing of shares of stock is a highly specialized field (September 16, 1953)
gives a right of first refusal by the small investors vis-a-vis that is better left to the experts. It involves an inquiry into
the 10% block of shares. As far as the 10% block is the earning potential, dividend history, business risks,
concerned, the small investors shall have a first chance to capital structure, management, asset values of the company;
subscribe thereto whenever it is offered. The offer may be the prevailing business climate; the political and economic 1.Contracts and Obligations ; Admiralty Law; Hire of
made before, after or simultaneous with the offer of the conditions; and a myriad of other factors that bear on the Vessel Distinguished from Lease Thereof.—Where the
shares to strategic partners or major investors depending on valuation of shares (Van Horne, Financial Management and lighters and tugboats in question were not leased, but used
the prevailing condition of the market. Certainly, in an Policy 652-653 [8th ed.]); Leffler and Farwell, The Stock to carry goods for compensation at a fixed rate for a fixed
initial public offering, it is good judgment and business Market 573-575 [3rd ed.]). weight, they must be deemed to have been hired, hired in
sense that should prevail, rather than the rigid and the sense that the shippers did not have direction, control,
inflexible rules of step one, step two, etc. Same; Same; Same; Constitutional Law; Natural and maintenance thereof, which is a characteristic feature
Resources; Public Utilities; Words and Phrases; A “public of lease.
Same; Same; Same; Same; Administrative Law; A utility” under the Constitution and the Public Service Law
contemporaneous construction and interpretation of a law is one organized “for hire or compensation” to serve the 2.Public Utility; Determination Whether a Firm or
by the implementing and administrative agency is accorded public, which is given the right to demand its service.—A Company is a Pubilc Utility.—Public Utility, even where
great respect by the Court.—The Rules and Regulations “public utility” under the Constitution and the Public the term is not defined by statute, is not determined by the
issued by the COP to implement R.A. No. 7181 set aside Service Law is one organized “for hire or compensation” to number of people actually served. Nor does the mere fact
10% of the shares subject of the privatization to be offered serve the public, which is given the right to demand its that service is rendered only under contract prevent a
first to the small local investors, and made clear that as far service. PETRON is not engaged in oil refining for hire and company from being a public utility. [43 Am. Jur., 573;
as said 10% block is concerned, the small investors shall compensation to process the oil of other parties. Luzon Brokerage Co. vs. Public Service Commission, 40

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Off. Gaz., Supp. 7, p. 271.] On the other hand, causal or the evidence, after decision was rendered. The point is rendered by the stenographers and has not raised any
incidental service devoid of public character and interest is procedural, not jurisdic-tional, and may be waived by objection to the amount paid until its propriety was
not brought within the category of public utility. The express consent or acquiescence [Everett Steamship Corpn. disputed by the Auditor General, the payment of the fees
demarkation line is not susceptible of exact description or vs. Chua Hiong, 90 Phil., 64; La Paz Ice Plant vs. became contractual and as such is valid even if it goes
definition, each being governed by its circumstance. ConaisiOn de Utilidades Publicas, 89 Phil., 109]. Where in beyond the limit prescribed by the Rules of Court. Bacani
a prolonged hearing before a com-missioner, a party and Matoto vs. Natl. Coconut Corp., et al., 100 Phil. 468,
3.Id.; Id ; Case at Bar.—The transportation service which crossexamined his adversary's witnesses and presented his No. L-9657 November 29, 1956
was the subject of complaint was not casual or incidental. It own evidence, he has waived objection to such designation.
had been carried on regularly for years at almost uniform
rates of charges. Although the number of the company's 1. Basis of Regulation
customers was limited, the value of goods, transported was Agricultural Credit and
not incon-siderable. It did not have the same customers all Cooperative Financing
the time embraced in the complaint, and there was no
reason to believe that it would not accept, and there was Administration v. ACCFA
nothing to prevent it from accepting, new customers that Bacani v. National Coconut Supervisors’ Association et.
might be willing to avail of its services to the extent of its al., G.R. No. L-21484
capacity. Held: Applying the plain letter of Commonwealth Corporation, G.R. No. L-9657
Act No. 146, it is a public utility, and to restrain it from (November 29, 1956) (November 29, 1969)
further operating its watercraft to transport goods for hire or
compensation between points in the Philippines until the
rates it proposes to charge are approved by the Public Labor law; Land Reform Code; ACA is a government
POLITICAL LAW; TERM “GOVERNMENT OF THE
Service Commission, does not invade private rights of office engaged in governmental, not propriatary function.—
REPUBLIC OF THE PHILIPPINES" CONSTRUED.—
property or contract. The constitutionality of The ACA is a government office engaged in governmental,
Commonwealth Act No. 146 was upheld, implicity in The term “Government of the Republic of the Philippines”
used in section 2 of the Revised Administrative Code refers not proprietary functions. There can be no dispute as to the
Luzon Brokerage Co. vs. Public Service Com-mission [40 fact that the land reform program contemplated in the Land
Off. Gaz., Supp. 7, p. 271] and explicitly in Pangasinan to that government entity through which the functions of
the government are exercised as an attribute of sovereignty, Reform Code is beyond the capabilities of any private
Transportation Co. vs. Public Service Commission [70 enterprise to translate into reality. It is a purely
Phil., 221]. and in this are included those arms through which political
authority is made effective whether they be provincial, governmental function, no less than, say, the establishment
municipal or other ex orm of local government. These are and maintenance of public schools and public hospitals.
4.Id. ; Ruinous; Competition; Its Prevention, One of the
what we call municipal corporations. They do not include And when, aside from the governmental objectives, of the
Purposes of the Public Service Law.—The Public Service
government entitles which are given a corporate personality ACA, geared as they are to the implementation of the land
Law was enacted not only to protect the public against
separate and distinct from the government and which are reform program of the State, the law itself declares that the
unreasonable charges and poor, inefficient service, but also
governed by the Corporation Law, such as the National ACA is a government office, with the formulation of
to prevent ruinous competiton. That is the main purpose in
Coconut Corporation. Their powers, duties and liabilities policies, plans and programs vested no longer in a Board of
bringing under the jurisdiction of the Public Service
have to be determined in the light of that law and of their Governors, as in the case of the ACCFA, but in the
Commission Motor Vehicles, other means of
corporate charters. They do not therefore come within the National Land Reform Council, itself a government
transportation, ice plants, etc., which cater to a limited
exemption clause prescribed in section 16, Rule 130 of our instrumentality; and that its personnel are subject to Civil
portion of the public under private agreements. To the
Rules of Court. Service Laws and to rules of standardization with respect to
extent that such agreements may tend to wreek or im-pair
positions and salaries, any vestige 01 doubt as to the
the financial stability and efficiency of public utilities who
2.STENOGRAPHERS; TRANSCRIPT FEES; PAYMENT governmental character of its functions disappears.
do offer service to the public in general, they are affected
OF FEES BEYOND THE LIMIT PRESCRIBED BY THE
with public interest and come within the police power of Same; Same; Same; Functions of ACA may not be strictly
RULES OF COURT, VALID.—It is true that in section 8,
the state to regulate. described "constituent," as distinguished from "ministrant,"
Rule 130, stenographers may only charge as fees P0.30 for
each page of transcript of not less than 200 words before functions.—The governmental functions of ACA may not
5.Public Service Commission; Hearing Therein;
the appeal is taken and P0.15 for each page after the filing be strictly what President Wilson described as "constituent"
Designation of Commission to Take Evidence; Waiver of
of the appeal, but where, as in the case at bar, the party has (as distinguished from "ministrant"), such as those relating
Objection to such Designation—It was tardy to object, for
agreed and in fact has paid P1 per page for the services to the maintenance of peace and the prevention of crime,
the first time to the designation of a commissioner to take
those regulating property and property rights, those relating
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to the administration of justice and the determination of Political law; Governmental functions; Classification into
political duties of citizens, and those relating to national constituent and ministrant functions.—In Bacani v. People’s Homesite and
defense and foreign relations. Under this traditional NACOCO, governmental functions are classified into
Housing Corporation v. Court
classification, such constituent functions are exercised by constituent and ministrant. The former are those which
the State as attributes of sovereignty, and not merely to constitute the very bonds of society and are compulsory in of Industrial Relations, G.R.
promote the welfare, progress and prosperity of the nature; the latter are those that are undertaken only by way No. L-31890 (May 29, 1987)
people—these latter functions being ministrant, the exercise of advancing the general interests of society, and are
of which is optional on the part of the government The merely optional. President Wilson enunierates the
growing complexities of modern society, however, have constituent functions as follows: (1) The keeping of order
rendered this traditional classification of the functions of and providing for the protection of persons and property Court; Jurisdiction; Court of Industrial Relation has no
government quite unrealistic, not to say obsolete, The areas from violence and robbery; (2) The fixing of the legal jurisdic-tion over labor disputes involving government-
which used to be left to private enterprise and initiative and relations between man and wife and between parents and owned or controlled corporations performing government
which the government was called upon to enter optionally children; (3) The regulation of the holding, transmission, functions.—The jurisdiction of the then Court of Industrial
continue to lose their well-defined boundaries and to be and interchange of property, and the determination of its Relations is set forth in Section 1 of Commonwealth Act
absorbed within activities that the government must liabilities for debt or for crime; (4) The determination of No. 103, as amended. Construing this provision of law, We
undertake in its sovereign capacity if it is to meet the contractual rights between individuals; (5) The definition have ruled that the CIR has jurisdiction over labor disputes
increasing social challenges of the times. In the Philippines and punishment of crime; (6) The administration of justice involving government-owned or controlled corporations
as abmost everywhere else the tendency is undoubtedly in civil cases; (7) The determination of the political duties, performing basically proprietary functions, (GSIS v.
towards a greater socialization of economic forces. Here of privileges, and relations of citizens; (8) Dealings of the Castillo, 98 Phil. 876 [1956]; GSIS v. GSIS Employees
course this development was envisioned, indeed adopted as state with foreign powers: the preservation of the state from Assn., 119 Phil. 524 [1964]; SSS Employees Assn. v.
a national policy, by the Constitution itself in its declaration external danger or encroachment and the advancement of Soriano, 117 Phil. 1038 [1963] but not those performing
of principle concerning the promotion of social justice. It its international interests. The most important of the governmental functions (University of the Philippines and
was in furtherance of such policy that the Land Reform ministrant functions are: public works, public education, Anonas v. CIR, 107 Phil. 848 [1960]).
Code was enacted and the various agencies, the ACA public charity, health and safety regulations, and
Public Corporation; PHHC (now NHA) is a governmental
among them, established to carry out its purposes. regulations of trade and industry. The principles
institution performing governmental and not proprietary
determining whether or not a government shall exercise
Same; Same; Collective bargaining emetered into by functions.—This -is not the first time We are ruling on the
certain of these optional functions are (1) that a government
ACCFA with labor unions must be enforced; Case at bar.— proper characterization of housing as an activity of
should do for the public welfare those things which private
ACCFA sought to avoid compliance with the collective government. In the 1985 case of National Housing
capital would not naturally undertake and (2)that a
bargaining contract it entered into with its labor unions on Corporation v. Juco and the NLRC (No. L64313, January
government should do these things which by its very nature
the ground that the condition imposed by the Office of the 17, 1985, 134 SCRA 172), We ruled that housing is a
is better equipped to administer for the public welfare than
President that the payment of the benefits therein fixed governmental function. In the Juco case, We ruled that the
is any private individual or group of individuals.
must be "within the financial ability of the particular NHC, as it was established as an "instrumentality of
corporation to bear," was not complied with. Some fringe Same; Same; Laissez-faire principle never found film government to accomplish governmental policies and
benefits thereunder had already been paid however. HELD: acceptance in this jurisdiction.—The influence exerted by objectives and extend essential services to the people,"
The payment of the fringe benefits agreed upon, to our American constitutional doctrines unvoidable when the performs governmental and not proprietary functions. It
mind, throws that the same were within the financial Philippines was still under American rule notwithstanding, thus comes under the jurisdiction of the Civil Service
capability of the ACCFA then, and hence justifies the an influence that has not altogether vanished even after Commission and not the Ministry of Labor and
conclusion that this particular condition imposed by the independence, the laissez-faire principle never found full Employment (supra, 134 SCRA 172,180, 181). We see no
Office of the President in its approval of the bargaining acceptance in this jurisdiction, even during the period of its reason for departing from that ruling now. The Court of
contract was satisfied. We hold, therefore, that insofar as full flowering in the United States. Moreover, to erase any Industrial Relations had no jurisdiction over the dispute
the fringe benefits already paid are concerned. there is no doubts, the Constitutional Convention saw to it that our involving the PHHC and the private respondents. People's
reason to set aside the decision of the respondent Court, but fundamental law embodies a policy of the responsibility Homesite and Housing Corporation vs. Court of Industrial
that since the respondent Unions have no right to the thrust on government to cope with social and economic Relations, 150 SCRA 296, No. L-31890 May 29, 1987
certification election sought by them nor. consequently. to problems and an earnest and sincere commitment to the
bargain collectively with the petitioner ACA (formerly promotion of the general welfare through state action.
ACCFA), no further benefits may be demanded on the
basis of any collective bargaining agreement.
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local government. While it may be true that the NIA was 2666 of 1916; Act No. 4007 of 1931; Executive Order (EO)
Spouses Fontanilla v. essentially a service agency of the government aimed at No. 392 (s.
promoting public interest and public welfare, such fact does
Maliaman, G.R. No. 55963 1951); EO No. 546 (s. 1979); EO No. 292 (s. 1987), Book
not make the NIA essentially and purely a “government-
(February 27, 1991) function” corporation. NIA was created for the purpose of IV, Title XV; EO
“constructing, improving, rehabilitating, and administering
No. 125 (s. 1987) and EO No. 125-A (s. 1987); EO No. 269
all national irrigation systems in the Philippines, including
(s. 2004); EO
all communal and pump irrigation projects.” Certainly, the
Political Law; Functions of government has been classified
state and the community as a whole are largely benefited by No. 454 (s. 2005); EO No. 603 (s. 2007); EO No. 648 (s.
into governmental or constituent and proprietary or
the services the agency renders, but these functions are only 2007); EO No. 780
ministrant.—It may not be amiss to state at this point that
incidental to the principal aim of the agency, which is the
the functions of government have been classified into
irrigation of lands. (s. 2009); EO No. 47 (s. 2011); RA No. 10844
governmental or constituent and proprietary or ministrant.
The former involves the exercise of sovereignty and Same; Same; Same; The NIA is a government agency with RA No. 4136; EO No. 546, Sec. 10; EO No. 1011 (s.
considered as compulsory; the latter connotes merely the a juridical personality separate and distinct from the 1985); EO No. 125, Sec. 12; EO No. 125-A, Secs. 2 and 4;
exercise of proprietary functions and thus considered as government.—On the basis of the foregoing considerations, EO No. 202 (s. 1987); EO No.292,
optional. We conclude that the National Irrigation Administration is
a government agency with a juridical personality separate Book IV, Title XV; Chapter 2, Sec. 9; EO No. 292, Book
Same; Same; The NAWASA is not an agency performing IV, Title XV, Chapters 5-6
and distinct from the government. It is not a mere agency of
governmental functions, rather it performs proprietary
the government but a corporate body performing Presidential Decree (PD) No. 1112 (s. 1977); PD No. 1649
functions.—Of equal importance is the case of National
proprietary functions. Therefore, it may be held liable for (s. 1979); RA No. 6957; EO No. 133 (s. 2002); EO No. 644
Waterworks and Sewerage Authority (NAWASA) vs.
the damages caused by the negligent act of its driver who (s. 2007); EO No. 686 (s. 2007)
NWSA Consolidated Unions, 11 SCRA 766, which
was not its special agent.
propounds the thesis that “the NAWASA is not an agency
performing governmental functions; rather it performs Act No. 554 of 1902; Act No. 1510; Act No. 2574; RA No.
FELICIANO, J., Concurring Opinion: 4156; RA No.
proprietary functions x x x.” The functions of providing
water supply and sewerage service are regarded as mere NIA is not part of the “state” or of the “Government of the 6366; PD No. 110 (s. 1973); PD No. 741 (s. 1975); EO No.
optional functions of government even though the service Republic of the Philippines.” Since the NIA has been 546; RA No. 10638
rendered caters to the community as a whole and the goal is vested with all the powers of a corporate person, it seems
for the general interest of society. The business of only reasonable to believe that it is at the same time PD No. 474 (s. 1974); EO No. 546, Sec. 20; EO No. 1011,
furnishing water supply and sewerage service, as held in subjected to all the ordinary liabilities of a corporate Sec. 13; EO No. 125, Sec. 14; EO No. 125-A, Sec. 3, RA
the case of Metropolitan Water District vs. Court of person. Fontanilla vs. Maliaman, 194 SCRA 486, G.R. Nos. No. 9295; RA No. 10635; EO No. 197 (s. 2016)
Industrial Relations, et al., 91 Phil. 840, “may for all 55963 & 61045 February 27, 1991
practical purposes be likened to an industry engaged in by Act No. 3909; Act No. 3996, Act No. 4033; CA No. 168;
coal companies, gas companies, power plants, ice plants, EO No. 94 (s.
and the like.” Withal, it has been enunciated that “although
the State may regulate the service and rates of water plants 2. Historical and Legal 1947), Sec. 136-150; RA No. 224; RA No. 776; EO No.
546; EO NO. 125; RA No. 9497
owned and operated by municipalities, such property is not Antecedents
employed for governmental purposes and in the ownership Act No. 3396; Act No. 3846; EO No. 546, Sec. 13; EO No.
and operation thereof the municipality acts in its 205 (s. 1987), EO No. 125, Sec. 15; RA No. 7925
proprietary capacity, free from legislative interference.” R. Regala, The Development of Public Utility Regulation
in the Philippines, 12 Phil LJ 463 (1993) Act No. 484; Act No. 667; Act No. 1112; PD No. 269 (s.
Same; Same; While it may be true that the NIA was 1973); PD No. 1206
essentially a service agency of the government aimed at Act No. 2307; Act No. 2694; CA No. 146; CA No. 454
promoting public interest and public welfare, such fact does (s. 1977); PD No. 1645 (s. 1979); EO No. 172 (s. 1987);
not make the NIA essentially and purely a “government- Organic Decree of June 23, 1898; Malolos Constitution, RA No. 9136; RA No. 9209, RA No. 9511; RA No. 9513;
function” corporation.—Like the NAWASA, the National Art. 73; Act No. RA No. 9729; RA No. 10531
Irrigation Administration was not created for purposes of

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Act No. 2152; RA No. 3601; RA No. v. PCGG, 299 SCRA 744 (1998), the Court upheld the right However, if the preferred shares also have the right to vote
6234; PD No. 198 (s. 1973); PD No. of a citizen to bring a suit on matters of transcendental in the election of directors, then the term “capital” shall
importance to the public. include such preferred shares because the right to
424 (s. 1974); PD No. 552 (s. 1974); PD No. 1067 (s. participate in the control or management of the corporation
1976); PD No. 1206; PD No. 1702 (s. 1980); MO No. 38 (s. Corporation Law; Words and Phrases; “Capital”; The term is exercised through the right to vote in the election of
1986); EO No. 124 (s. 1987); EO No. “capital” in Section 11, Article XII of the Constitution directors. In short, the term “capital” in Section 11, Article
refers only to shares of stock entitled to vote in the election XII of the Constitution refers only to shares of stock that
124-A (s. 1987); EO No. 123 (s. 2002); EO No. 860 (s. of directors, and thus in the present case only to common can vote in the election of directors.
2010); EO No. 165 (s. 2014); MO No. 70 (s. 2014) shares, and not to the total outstanding capital stock
comprising both common and non-voting preferred Same; Same; The term “capital” in Section 11, Article XII
PD No. 286 (s. 1973); PD No. 346 (s. 1973); PD shares.—We agree with petitioner and petitioners-in- of the Constitution to include both voting and non-voting
No. 696 (s. 1975); PD No. 841 (s. 1975); EO No. 904 (s. intervention. The term “capital” in Section 11, Article XII shares will result in the abject surrender of our
1983); EO N0. 125 of the Constitution refers only to shares of stock entitled to telecommunications industry to foreigners, amounting to a
vote in the election of directors, and thus in the present case clear abdication of the State’s constitutional duty to limit
only to common shares, and not to the total outstanding control of public utilities to Filipino citizens; The Court
capital stock comprising both common and non-voting should never open to foreign control what the Constitution
3. Ownership preferred shares. has expressly reserved to Filipinos for that would be a
betrayal of the Constitution and of the national interest.—
Same; Capital; Common shares cannot be deprived of the Indisputably, construing the term “capital” in Section 11,
1987 Constitution, Art. XII, Secs. 10-11, 16-19 right to vote in any corporate meeting, and any provision in Article XII of the Constitution to include both voting and
the articles of incorporation restricting the right of common non-voting shares will result in the abject surrender of our
shareholders to vote is invalid.—Indisputably, one of the telecommunications industry to foreigners, amounting to a
rights of a stockholder is the right to participate in the clear abdication of the State’s constitutional duty to limit
Gamboa v. Teves, G.R. No. control or management of the corporation. This is exercised control of public utilities to Filipino citizens. Such an
176579 (October 9, 2012) through his vote in the election of directors because it is the interpretation certainly runs counter to the constitutional
board of directors that controls or manages the corporation. provision reserving certain areas of investment to Filipino
In the absence of provisions in the articles of incorporation citizens, such as the exploitation of natural resources as
denying voting rights to preferred shares, preferred shares well as the ownership of land, educational institutions and
Actions; Locus Standi; Petitioner being a stockholder of have the same voting rights as common shares. However,
Philippine Long Distance Telephone (PLDT) has the right advertising businesses. The Court should never open to
preferred shareholders are often excluded from any control, foreign control what the Constitution has expressly
to question the subject sale which he claims to violate the that is, deprived of the right to vote in the election of
nationality requirement prescribed in Section 11, Article reserved to Filipinos for that would be a betrayal of the
directors and on other matters, on the theory that the Constitution and of the national interest. The Court must
XII of the Constitution; Court upheld the right of a citizen preferred shareholders are merely investors in the
to bring a suit on matters of transcendental importance to perform its solemn duty to defend and uphold the intent and
corporation for income in the same manner as bondholders. letter of the Constitution to ensure, in the words of the
the public.—There is no dispute that petitioner is a In fact, under the Corporation Code only preferred or
stockholder of PLDT. As such, he has the right to question Constitution, “a self-reliant and independent national
redeemable shares can be deprived of the right to vote. economy effectively controlled by Filipinos.”
the subject sale, which he claims to violate the nationality Common shares cannot be deprived of the right to vote in
requirement prescribed in Section 11, Article XII of the any corporate meeting, and any provision in the articles of Same; Securities and Exchange Commission; The
Constitution. If the sale indeed violates the Constitution, incorporation restricting the right of common shareholders Securities and Exchange Commission (SEC) is vested with
then there is a possibility that PLDT’s franchise could be to vote is invalid. the power and function to suspend or revoke, after proper
revoked, a dire consequence directly affecting petitioner’s notice and hearing, the franchise or certificate of
interest as a stockholder. More importantly, there is no Same; Same; The term “capital” in Section 11, Article XII registration of corporations, partnerships or associations,
question that the instant petition raises matters of of the Constitution refers only to shares of stock that can upon any of the grounds provided by law.—Under Section
transcendental importance to the public. The fundamental vote in the election of directors.—Considering that 5(m) of the Securities Regulation Code, the SEC is vested
and threshold legal issue in this case, involving the national common shares have voting rights which translate to with the “power and function” to “suspend or revoke, after
economy and the economic welfare of the Filipino people, control, as opposed to preferred shares which usually have proper notice and hearing, the franchise or certificate of
far outweighs any perceived impediment in the legal no voting rights, the term “capital” in Section 11, Article registration of corporations, partnerships or associations,
personality of the petitioner to bring this action. In Chavez XII of the Constitution refers only to common shares. upon any of the grounds provided by law.” The SEC is
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mandated under Section 5(d) of the same Code with the facilities used to serve the public.—In law, there is a clear 903, 188 Wis. 246 [1925]; Ellis v. Interstate Commerce
“power and function” to “investigate x x x the activities of distinction between the “operation” of a public utility and Commission, Ill. 35 S. Ct. 645, 646, 237 U.S. 434, 59 L.
persons to ensure compliance” with the laws and the ownership of the facilities and equipment used to serve Ed. 1036 [1914]). Neither are owners of tank, refrigerator,
regulations that SEC administers or enforces. The GIS that the public. wine, poultry and beer cars who supply cars under contract
all corporations are required to submit to SEC annually to railroad companies considered as public utilities (Crystal
should put the SEC on guard against violations of the Same; Same; Same; Ownership Defined.—Ownership is Car Line v. State Tax Commission, 174 P. 2d 984, 987
nationality requirement prescribed in the Constitution and defined as a relation in law by virtue of which a thing [1946]).
existing laws. This Court can compel the SEC, in a petition pertaining to one person is completely subjected to his will
for declaratory relief that is treated as a petition for in everything not prohibited by law or the concurrence with Same; Same; Same; Mere formation of public utility
mandamus as in the present case, to hear and decide a the rights of another (Tolentino, II Commentaries and corporation does not ipso facto characterize the corporation
possible violation of Section 11, Article XII of the Jurisprudence on the Civil Code of the Philippines 45 as one operating a public utility. It becomes so when it
Constitution in view of the ownership structure of PLDT’s [1992]). applies for a franchise, certificate or any other form of
voting shares, as admitted by respondents and as stated in authorization for that purpose.—Even the mere formation
Same; Same; Same; The operation of a rail system as a of a public utility corporation does not ipso facto
PLDT’s 2010 GIS that PLDT submitted to SEC.
public utility includes the transportation of passengers from characterize the corporation as one operating a public
one point to another point, their loading and unloading at utility. The moment for determining the requisite Filipino
designated places and the movement of the trains at nationality is when the entity applies for a franchise,
prescheduled times.—The exercise of the rights certificate or any other form of authorization for that
encompassed in ownership is limited by law so that a purpose (People v. Quasha, 93 Phil. 333 [1953]). Tatad vs.
Tatad v. Garcia, Jr., G.R. No. property cannot be operated and used to serve the public as Garcia, Jr., 243 SCRA 436, G.R. No. 114222 April 6, 1995
114222 (April 6, 1995) a public utility unless the operator has a franchise. The
operation of a rail system as a public utility includes the Public Officials; Regularity of Performance of Function;
transportation of passengers from one point to another Government officials are presumed to perform their
point, their loading and unloading at designated places and functions with regularity and strong evidence is necessary
Public Utilities; Administrative Law; What constitutes a the movement of the trains at prescheduled times (cf. to rebut this presumption.—Government officials are
public utility is not their ownership but their use to serve Arizona Eastern R.R. Co. v. J.A. Matthews, 20 Ariz 282, presumed to perform their functions with regularity and
the public.—The phrasing of the question is erroneous; it is 180 P. 159, 7 A.L.R. 1149 [1919]; United States Fire Ins. strong evidence is necessary to rebut this presumption.
loaded. What private respondent owns are the rail tracks, Co. v. Northern P.R. Co., 30 Wash 2d. 722, 193 P. 2d 868, Petitioners have not presented evidence on the reasonable
rolling stocks like the coaches, rail stations, terminals and 2 A.L.R. 2d 1065 [1948]). rentals to be paid by the parties to each other. The matter of
the power plant, not a public utility. While a franchise is valuation is an esoteric field which is better left to the
needed to operate these facilities to serve the public, they Same; Same; Same; Right to operate a public utility may experts and which this Court is not eager to undertake.
do not by themselves constitute a public utility. What exist independently and separately from the ownership of
constitutes a public utility is not their ownership but their the facilities thereof.—The right to operate a public utility Administrative Law; Public Utilities; DOTC has the power,
use to serve the public (Iloilo Ice & Cold Storage Co. v. may exist independently and separately from the ownership authority and technical expertise to determine whether or
Public Service Board, 44 Phil. 551, 557-558 [1923]). of the facilities thereof. One can own said facilities without not a specific transportation or communications project is
operating them as a public utility, or conversely, one may necessary, viable and beneficial to the people.—Definitely,
Constitutional Law; Franchise; Public Utilities; operate a public utility without owning the facilities used to the agreements in question have been entered into by
Constitution does not require a franchise before one can serve the public. The devotion of property to serve the DOTC in the exercise of its governmental function. DOTC
own the facilities needed to operate a public utility so long public may be done by the owner or by the person in is the primary policy, planning, programming, regulating
as it does not operate them to serve the public.—The control thereof who may not necessarily be the owner and administrative entity of the Executive branch of
Constitution, in no uncertain terms, requires a franchise for thereof. government in the promotion, development and regulation
the operation of a public utility. However, it does not of dependable and coordinated networks of transportation
require a franchise before one can own the facilities needed Same; Same; Same; Mere owner and lessor of the facilities and communications systems as well as in the fast, safe,
to operate a public utility so long as it does not operate used by a public utility is not a public utility.—Indeed, a efficient and reliable postal, transportation and
them to serve the public. mere owner and lessor of the facilities used by a public communications services (Administrative Code of 1987,
utility is not a public utility (Providence and W.R. Co. v. Book IV, Title XV, Sec. 2). It is the Executive department,
Same; Same; Same; There is distinction between United States, 46 F. 2d 149, 152 [1930]; Chippewa Power DOTC in particular, that has the power, authority and
“operation” of a public utility and ownership of the Co. v. Railroad Commission of Wisconsin, 205 N.W. 900, technical expertise to determine whether or not a specific

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transportation or communications project is necessary, explanatory note of House Bill No. 1027 distinguish which is owned by Filipino citizens or corporations or
viable and beneficial to the people. The discretion to award between wholly and partly nationalized business. It is associations wholly owned by Filipino citizens—must be
a contract is vested in the government agencies entrusted axiomatic that where the law does not distinguish, there subject to and conditioned by the Anti-Dummy Law, which
with that function (Bureau Veritas v. Office of the should not be made any distinction Once the policy or was enacted subsequent to the Corporation Law, otherwise
President, 205 SCRA 705 [1992]). Tatad vs. Garcia, Jr., purpose of the law is ascertained, the Judiciary has the known as Act No. 1459 which took effect April 1, 1906.
243 SCRA 436, G.R. No. 114222 April 6, 1995 imperative duty to give it effect, even if the policy goes
beyond the letter or words of the statute. Same; Exemption of tugboats and lighters from coverage of
section 16 of the Public Service Law, as amended, does not
Same; Construction of three clauses of section 2-A; mean their cessation as public utilities.—Congress
4. Management Dependence on and subordination lo the principal and only amended section 14 of the Public Service Law by
opening clause.—All the three clauses including clause 3 of exempting from the provision of section 13 of said law
Section 2-A of the Anti-Dummy Law are dependent on and tugboats and lighters to make it consistent with sections
1987 Constitution, Art. XII, Secs. 11 are subordinate to its principal and only opening clause. 1139 (a) and (b) and sections 1167 and 1169 of the Revised
Tested by the rules of grammar, the three dependent clauses Administrative Code which confer on the Bureau of
are merely the three different predicates of the same Customs general supervision, control and regulation of the
subject, the sole opening clause; because the questioned coastwise trade and in the carrying or towing of passengers
Luzon Stevedoring Co. v. clause 3, like the first two preceding clauses, cannot stand and freight on the bays and rivers in the Philippines as well
by itself and is meaningless without, and unless read as the registration and licensing of vessels, particularly of
Anti-Dummy Board, G.R. No.
together with, said opening clause. more than three tons gross used in Philippine waters. The
L-26094 (August 18, 1972) amendatory law. Republic Act No. 2031, does not authorize
Same; Same; Three dependent clauses contemplate three the non-American aliens to operate tugboats and lighters
separate criminal acts.—The three dependent clauses or within the territorial waters of the Philippines; for such
predicates are three separate criminal acts for which a tugboats and lighters do not cease to be public utilities as
Anti-Dummy law as amended; Insertion of clause 3 in person, corporation or association mentioned in the opening long as they are for hire. Luzon Stevedoring Corporation
section 2-A of Commonwealth Act No. 810; Purpose clause, whether completely or partially nationalized, is vs. Anti-Dummy Board, 46 SCRA 474, No. L-26094
thereof.—The policy or purpose of the amendatory law, liable; because the opening clause includes corporations or August 18, 1972
Republic Act No. 134, in inserting Clause 3 in Section 2-A associations at least 60 per centum of the capital stock of
of Commonwealth Act No. 108, as amended by which is owned by Filipino citizens or of any other specific
Commonwealth Act No. 421, was to plug all loopholes that country.
may be utilized by designing foreigners to circumvent the
nationalization laws of the country, regardless of whether Same; Clause 3 of section 2-A; Term “citizens of the Phil-
such laws provide for complete or only partial ippines” includes both natural and juridical persons.—The King v. Hernaez, G.R. No. L-
nationalization of the right, franchise, privilege, property or term “citizens of the Philippines” as employed in the 14859 (March 31, 1962)
business covered thereby. questioned clause of Section 2-A of the Anti-Dummy Law
includes both natural and juridical persons in much the
Same; Same; Same; Prohibition against employment of same manner that the term “person” in the due process
non-American aliens in public utility corporations refers to clause of the Bill of Rights comprehends both human Anti-Dummy Law; Retail trade; Employment of aliens in
business, right, franchise or privilege wholly or partially beings and artificial persons. control and non-control positions, prohibited.—The
nationalized.—It is contended that because, unlike in the employment of aliens in control and non-control positions
first two dependent clauses, of the absence of the phrase “or Same; Corporation law subject 1o and conditioned by Anti- in a retail establishment or trade is prohibited by the Anti-
to qualified corporations or associations” immediately after Dummy law.—Generally, under the Corporation Law, Dummy Law, except for technical positions with previous
the phrase “citizens of the Philippines or of any other aliens may be employed in domestic corporations and alien authority of the President.
specific country” in Clause 3 of Section 2-A of the Anti- stockholders therein can vote to elect alien directors, for the
Dummy Law, Congress by such omission intended to limit simple reason that the Corporation Law does not prohibit Same; Same; Same; Prohibition not contrary to any
the prohibition against the employment of non-American the same. But the Corporation Law with respect to the provision of the constitution.—The nationalization of
aliens in the operation of public utilities as are owned operation of public utilities—which under the Constitution employment in retail trade does not run counter to any
wholly by citizens of the Philippines or of any other can be operated only by Filipino citizens or corporations or provision of the Constitution considering that its aim is not
specific country. Held, that neither the law nor the associations at least 60 per centum of the -capital stock of exactly to deprive a citizen of a right that he may exercise

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under it but rather to promote, enhance, and protect those Held: Petitioner's claim is devoid of merit,
that are expressly accorded to a citizen such as the right to Lagman v. Medina et. al., inasmuch as:
life, liberty and pursuit of happiness.
G.R. No. L-22615 (December 1. The terms and conditions of the bus
Declaratory relief; Declaration of rights under the 24, 1968) ban establisbed by the Commissioner
AntiDummy Law before breach of the statute; Case at are substantially identical to those
bar.—It is contended that petitioner employer had in his contained in Ordinance No. 4986 of the
employ his Chinese co-petitioners for a period of more than City of Manila "rerouting traffic on
two years in violation of the Anti-Dummy Law. Hence, due Public Service Commission; Bus ban; Where certificate of roads and streets" therein. The validity
to their breach of the law, petitioners have forfeited their public convenience was subject to the rules and regulations of said Ordinance was earlier upheld in
right to file the present action for declaratory relief for of the Public Service Commission; Bus ban held valid; Lagman v. City of Manila, L-23305,
under Section 1 , of R ul e 66 Rules of Court, the action Case at bar.—On February 13, 1963, the Commissioner June 30, 1966.
must be brought bef ore there has been a breach of the issued an order providing that only PU buses operating
contract or statute the construction of which is sought. exclusively within the City of Manila shall be permitted to 2. Petitioner's certif icate of public
Held: The contention is untenable. The alien petitioners enter and continue operating within the limits thereof, and convenience, like all other similar
were already in the employ of the establishment when requiring provincial PU buses, or those operating f rom the certificates, was issued subject to the
petitioner employer acquired the ownership of said City of Manila to any point in Luzon and vice-versa, to condition that operators "shall observe
establishment and, because of the doubt he entertained as establish terminals outside the City, as well as prohibiting and comply x x x all the rules and
regards the scope of the prohibition of the law, petitioner them from entering the same or operating within its regulations of the Commission relative
employer requested from the President of the Philippines perimeter. This order was amended by a supplemental to PUB service," and the contested
permission to continue said alien petitioners in his order, dated March 12, 1963, pursuant to which the orders—issued pursuant to Sections 13
employment, and immediately after the request was denied, authority to enter and continue operating within the City of (a) and 17 (a) of Commonwealth Act
he instituted the present action for declaratory relief. It Manila was extended to PU buses operating exclusively No. 146, as amended—partake of the
cannot, therefore, be said that petitioner employer has within the limits of Greater Manila. On July 22, 1963, the nature of such rules and regulations.
already breached the law when he filed the present action. Commissioner issued another order stating that, before the
promulgation of the order of February 13, 1963, notices had 3. The purpose of the ban—to minimize
King vs. Hernaez, 4 SCRA 792, No. L-14859 March 31,
been sent to all PUB operators—which notices were the "traffic problem in the City of
1962
"publicized" in the newspapers—"inviting them to appear Manila" and the "traffic congestion,
for conference on January 17, 1963". delays and even accidents" resulting
from the free entry into the streets of
On February 27, 1964, the effectivity of the bus said City and the operation "around
B. License/Authority to ban was deferred to March 2, 1964. Prior thereto, said streets, loading and unloading or
or on March 20, 1963, the PSC had granted picking up passengers and cargoes" of
Operate petitioner Lagman a certificate of public PU buses in great "number and size—
convenience to operate 15 autotrucks for the and the letter and spirit of the contested
transportation of passengers and freight on the orders are inconsistent with the
CA No. 146, Sec. 15-16 line Bocaue (Bulacan)-Parañaque (Rizal), via exclusion of Lagman or of those
Rizal Avenue, etc., Manila. On March 5, 1964, granted .certificates of public
Lagman filed with the PSC an urgent petition for convenience subsequently to the
exemption from the bus ban. Before any action issuance of said orders from the
1. Certificate of Public had been taken on said petitions, Lagman operation thereof.
Convenience/Necessity commenced the present action, alleging, among
others, that the bus ban is inapplicable to him; 4. Lagman had more than ample time
that he had not been notified of the hearings; that within which to submit his objections,
the provisions of the bus ban had not been if any, to the proposed bus ban, yet he
incorporated into his certificate of public did not do so until after the ban had
convenience: and that, the bus ban is unfair, become effective.
unreasonable, and oppressive.

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5. The theory to the effect that, to be incorporated into the certificate of public convenience. Same; Same; Ordinance 4986 of City of Manila, is not a,
valid, the aforementioned orders must Certificate of public convenience, like all other similar class legislation.—While the ordinance in question allows
be issued by the PSC, not merely by its certificates, are issued subject to the condition that interurban buses to enter the City of Manila which privilege
Commissioner, and only after due operators shall observe and comply with all the rules and is not given to provincial buses, although they are allowed
notice and hearing, is predicated upon regulations of the Commission relative to PUB service. shuttle service into the City of Manila, there is no
the premise that the bus ban operates as unjustified discrimination under the law. The obvious
an amendment of petitioners certificate Civil law; Property; Vested rights; Defined.—It has been inequality in treatment is but the result flowing from the
of public convenience, which is false, said that a vested right is one which is fixed, unalterable, or classification made by the ordinance between inter-urban
and was not sustained by this Court in irrevocable: absolute, complete, and unconditional, to the buses and provincial buses. Inter-urban buses are used for
its decision in G.R. No. L-23305, exercise of which no obstacle exists. When the right to transporting passengers only. Provincial buses are used for
which is binding upon Lagman, he enjoyment, present or prospective, has become the property passengers and freight. Provincial buses, because of the
being the petitioner in said case. of some particular person or persons as a present interest, freight of baggage which the passengers usually bring
that right is a vested right. along with them, take longer time to load or unload than
inter-urban buses. Provincial buses generally travel along
Commercial law; Public Service Law: Certificate of Public
national highways and provincial roads, cover long
Luque et. al. v. Villegas et. Convenience confers no vested right to operate public
distances, have fixed trip schedules. Provincial buses are
utility vehicles in the route covered thereby—A certificate
al., G.R. No. L-22545 of public convenience constitutes neither a franchise nor a
greater in size and weight than inter-urban buses. The
routes of inter-urban buses are short, covering contiguous
(November 28, 1969) contract, confest no property right, and is a mere license or
municipalities and cities only. These distinctions generally
privilege. The holder of such certificate does not acquire a
hold true between provincial passenger jeepneys and inter-
property right in the route covered thereby. Nor does it
urban passenger jeepneys.
confer upon the holrer any proprietary right or interest or
franchise in the public highways. Revocation of this Same; Same; Same; Does not violate equal protection
Commercial law; Public Service Law; Power of Public certificate deprives him of no vested right. New and clause.—The ordinance in question does not violate the
Service Commission and City of Manila over motor traffic; additional burdens, alteration of the certificate, and even equal protection clause. Persons engaged in the same
Ordinance 4986 of the City of Manila approved on July 13, revocation or annulment thereof is reserved to the State. business are subjected to different restrictions or are held
1964 rerouting traffic on roads and streets in the City of entitled to different privileges under the same conditions.
Manila is valid-—Ordinance 4986 of the City of Manila Same; Same; Same; Bus passengers have no vested right to
Neither does the ordinance unjustifiably favor private
approved on July 13, 1964 rerouting traffic on roads and be tramported directly to City of Manila.—Bus passengers
vehicles over public vehicles. Private vehicles are not
streets in the City of Manila is valid. First, Republic Act have no vested right to be transported directly ints the City
geared for profit; usually, they have but one destination.
No. 409, as amended, otherwise known as the Revised of Manila. The alleged right of bus passengers, to a great
Public vehicles are operated primarily for profit and for this
Charter of the City of Manila, is a special law and of later extent, is dependent upon the manner public services are
reason are continually operated to make the most of time.
enactment than Commonwealth Act No. 548 and the Public allowed to operate within a given area.
Public and private vehicles belong to different classes.
Service Law (Commonwealth Act No. 146, as amended) so Political law; Constitutional law; Police power; Regulation Luque vs. Villegas, 30 SCRA 408, No. L-22545 November
that even if conflict exists between the two, Republic Act of vehicular traffic; Ordinance 4986 of City of Manila and 28, 1969
No. 409 should prevail as a later act than Commonwealth Commissioner Medina's Administrative Orders Nos. 1 and
Acts Nos. 548 and 146. Second, the powers conferred by 3, series of 1964, ore valid exercise of police power.—Both
law upon the Public Service Commission were not Ordinance 4986 and the Commissioner's administrative
designed to deny or supersede the regulatory power of local orders fit into the concept of promotion of the general Radio Communications of
governments over motor traffic, in streets subject to their welfare. Public welfare lies at the bottom of any regulatory the Philippines, Inc. v.
control. measure designed to relieve congestion of traffic, which is, National
Same; Same; Administrative Order No. 3, series of 1964, to say the least, a menace to public safety. As a corollary,
measures calculated to promote the safety and convenience
Telecommunications
dated April 21, 1964 and Administrative Order No. 1,
series of 1964 dated February 7, 1964, issued by of the people using the thoroughfares by the regulation of Commission, G.R. No. L-
Commissioner Medina are valid—Administrative Orders vehicular traffic present a proper subject for the exercise of 68729 (May 29, 1987)
Nos. 1 and 3, series of 1964 of Commissioner Medina are police power.
valid even if the provisions of the bus ban had not been

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Administrative Law; Specialized Regulatory Boards; Public Same; Same; Same; Same; Petitioner cannot install and was well within the powers of the public respondent to
Service Commission; Transfer of certain functions of the operate radio telephone services on the basis of its authorize the installation by the private respondent network
Public Service Commission to the specialized regulatory legislative franchise alone.—Executive Order No. 546, of radio communications systems in Catarman, Samar and
board under PD No. 1 and under Executive Order No. being an implementing measure of P.D. No. 1 insofar as it San Jose, Mindoro. Under the circumstances of this case,
546.—Pursuant to Presidential Decree No. 1 dated amends the Public Service Law (CA No. 146, as amended) the mere fact that the petitioner possesses a franchise to put
September 23, 1972, reorganizing the executive branch of is applicable to the petitioner who must be bound by its up and operate a radio communications system in certain
the National Government, the Public Service Commission provisions. The petitioner cannot install and operate radio areas is not an insuperable obstacle to the public
was abolished and its functions were transferred to three telephone services on the basis of its legislative franchise respondent's issuing the proper certificate to an applicant
specialized regulatory boards, as follows: the Board of alone. desiring to extend the same services to those areas. The
Transportation, the Board of Communications and the Constitution mandates that a franchise cannot be exclusive
Board of Power and Waterworks. The functions so Same; Same; Same; Same; Statutory Construction; Where in nature nor can a franchise be granted except that it must
transferred were still subject to the limitations provided in the statutory norm speaks unequivocally, there is nothing be subject to amendment, alteration, or even repeal by the
sections 14 and 15 of the Public Service Law, as amended. for the courts to do except to apply it.—Thus, in the words legislature when the common good so requires. (Art. XII,
With the enactment of Executive Order No. 546 on July 23, of R.A. No. 2036 itself, approval of the then Secretary of sec. 11 of the 1986 Constitution). There is an express
1979 implementing P.D. No. 1, the Board of Public Works and Communications was a precondition provision in the petitioner's franchise which provides
Communications and the Telecommunications Control before the petitioner could put up radio stations in areas compliance with the above mandate (RA 2036, sec. 15).
Bureau were abolished and their functions were transferred where it desires to operate. It has been repeated time and
to the National Telecommunications Commission (Sec. again that where the statutory norm speaks unequivocally, Same; Same; Same; Same; General rule that the findings of
19(d), Executive Order No. 546). there is nothing for the courts to do except to apply it. The fact of the public respondent will not be disturbed when
law, leaving no doubt as to the scope of its operation, must reasonably supported by evidence; Exception; Petitioner
Same; Same; Same; Jurisdiction; Exemption enjoyed by be obeyed. (Gonzaga v. Court of Appeals, 51 SCRA 381). has not overcome the presumption that when public
radio companies from the jurisdiction of the Public Service respondent disturbed petitioner's monopoly in certain areas,
Commission and the Board of Communications no longer Same; Same; Same; Same; Absence of required authority it was for the public interest and the common good; Case at
exists.—lt is clear from the aforequoted provision that the from the then Secretary of Public Works and bar.—ln view of the foregoing, we find no reason to disturb
exemption enjoyed by radio companies from the Communications and a certificate of public convenience the public respondent's findings of fact, and conclusions of
jurisdiction of the Public Service Commission and the and necessity from the National Telecommunications law insofar as the private respondent was authorized to
Board of Communications no longer exists because of the Commission before petitioner installed its radio telephone operate in Catarman, Samar and San Jose, Mindoro. As a
changes effected by the Reorganization Law and services.—The records of the case do not show any grant of rule, the Commission's findings of fact, if supported by
implementing executive orders. The petitioner's claim that authority from the then Secretary of Public Works and substantial evidence, are conclusive upon this Court. We
its franchise cannot be affected by Executive Order No. 546 Communications before the petitioner installed the may modify or ignore them only when it clearly appears
on the ground that it has long been in operation since 1957 questioned radio telephone services in San Jose, Mindoro in that there is no evidence to support reasonably such a
cannot be sustained. 1971. The same is true as regards the radio telephone conclusion. (Halili v. Daplas, 14 SCRA 14). The petitioner
services opened in Sorsogon, Sorsogon and Catarman, has not shown why the private respondent should be denied
Same; Same; Constitutional Law; Franchise; Definition of Samar in 1983. No certificate of public convenience and the authority to operate its services in Samar and Mindoro.
franchise; Franchise, being merely a privilege emanating necessity appears to have been secured by the petitioner It has not overcome the presumption that when the public
from the state's sovereign power is subject to the regulation from the public respondent when such certificate was respondent disturbed the petitioner's monopoly in certain
by the State itself by virtue of its police power.—A required by the applicable public utility regulations. (See areas, it was doing so pursuant to public interest and the
franchise started out as a "royal privilege or (a) branch of Executive Order No. 546, sec. 15, supra.; Philippine Long common good. Radio Communications of the Philippines,
the King's prerogative, subsisting in the hands of a subject." Distance Telephone Co. v. City of Davao, 15 SCRA 75; Inc. vs. National Telecommunications Commission, 150
This definition was given by Finch, adopted by Blackstone, Olongapo Electric Light and Power Corp. v. National SCRA 450, No. L-68729 May 29, 1987
and accepted by every authority since (State v. Twin Power Corporation, et al., G.R. No. L-24912, promulgated
Village Water Co., 98 Me 214, 56 A 763 (1903)). Today, a April 9, 1987.)
franchise, being merely a privilege emanating from the
sovereign power of the state and owing its existence to a Same; Same; Same; Same; National Telecommunications Philippine Airlines v. Civil
grant, is subject to regulation by the state itself by virtue of Commission, empowered to authorize the installation by
private network of radio communications in the same areas Aeronautics Board, G.R. No.
its police power through its administrative agencies.
as petitioner despite petitioner's possession of a franchise to 119528 (March 26, 1997)
operate in said areas; Franchise, not exclusive in nature.—It

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Public Utilities; Transportation; Air Transportation; grant licenses for, or to authorize the operation of, certain transport operator. Although Section 11 of Article XII
Franchises; Civil Aeronautics Board; The Civil Aeronautics public utilities. With the growing complexity of modern recognizes Congress’ control over any franchise, certificate
Board is expressly authorized by Republic Act No. 776 to life, the multiplication of the subjects of governmental or authority to operate a public utility, it does not mean
issue a temporary operating permit or Certificate of Public regulation, and the increased difficulty of administering the Congress has exclusive authority to issue the same.
Convenience and Necessity, and nothing contained in the laws, there is a constantly growing tendency towards the Franchises issued by Congress are not required before each
said law negates the power to issue said permit before the delegation of greater powers by the legislature, and towards and every public utility may operate. In many instances,
completion of the applicant’s evidence and that of the the approval of the practice by the courts. It is generally Congress has seen it fit to delegate this function to
oppositor thereto on the main petition.—The Civil recognized that a franchise may be derived indirectly from government agencies, specialized particularly in their
Aeronautics Board has jurisdiction over GrandAir’s the state through a duly designated agency, and to this respective areas of public service.
Application for a Temporary Operating Permit. This rule extent, the power to grant franchises has frequently been
has been established in the case of Philippine Air Lines delegated, even to agencies other than those of a legislative Same; Same; Same; Same; Same; Words and Phrases;
Inc., vs. Civil Aeronautics Board, promulgated on June 13, nature. In pursuance of this, it has been held that privileges “Convenience and Necessity,” Explained; The terms
1968. The Board is expressly authorized by Republic Act conferred by grant by local authorities as agents for the “convenience and necessity,” if used together in a statute,
No. 776 to issue a temporary operating permit or Certificate state constitute as much a legislative franchise as though are usually held not to be separable, but are construed
of Public Convenience and Necessity, and nothing the grant had been made by an act of the Legislature. together—both words modify each other.—Many and
contained in the said law negates the power to issue said varied are the definitions of certificates of public
permit before the completion of the applicant’s evidence Same; Same; Same; Same; Same; The trend of modern convenience which courts and legal writers have drafted.
and that of the oppositor thereto on the main petition. legislation is to vest the Public Service Commissioner with Some statutes use the terms “convenience and necessity”
Indeed, the CAB’s authority to grant a temporary permit the power to regulate and control the operation of public while others use only the words “public convenience.” The
“upon its own initiative” strongly suggests the power to services under reasonable rules and regulations.—The trend terms “convenience and necessity,” if used together in a
exercise said authority, even before the presentation of said of modern legislation is to vest the Public Service statute, are usually held not to be separable, but are
evidence has begun. Assuming arguendo that a legislative Commissioner with the power to regulate and control the construed together. Both words modify each other and must
franchise is prerequisite to the issuance of a permit, the operation of public services under reasonable rules and be construed together. The word ‘necessity’ is so
absence of the same does not affect the jurisdiction of the regulations, and as a general rule, courts will not interfere connected, not as an additional requirement but to modify
Board to hear the application, but tolls only upon the with the exercise of that discretion when it is just and and qualify what might otherwise be taken as the strict
ultimate issuance of the requested permit. reasonable and founded upon a legal right. significance of the word necessity. Public convenience and
necessity exists when the proposed facility will meet a
Same; Same; Same; Same; Words and Phrases; Same; Same; Same; Same; Same; The Civil Aeronautics reasonable want of the public and supply a need which the
“Franchise,” Explained; The power to authorize and control Board has the authority to issue a Certificate of Public existing facilities do not adequately afford. It does not
the operation of a public utility is admittedly a prerogative Convenience and Necessity, or Temporary Operating mean or require an actual physical necessity or an
of the legislature, since Congress is that branch of Permit to a domestic air transport operator, who, though not indispensable thing. “The terms ‘convenience’ and
government vested with plenary powers of legislation.— possessing a legislative franchise, meets all the other ‘necessity’ are to be construed together, although they are
The power to authorize and control the operation of a requirements prescribed by law.—Given the foregoing not synonymous, and effect must be given both. The
public utility is admittedly a prerogative of the legislature, postulates, we find that the Civil Aeronautics Board has the convenience of the public must not be circumscribed by
since Congress is that branch of government vested with authority to issue a Certificate of Public Convenience and according to the word ‘necessity’ its strict meaning or an
plenary powers of legislation. “The franchise is a legislative Necessity, or Temporary Operating Permit to a domestic air essential requisites.”
grant, whether made directly by the legislature itself, or by transport operator, who, though not possessing a legislative
any one of its properly constituted instrumentalities. The franchise, meets all the other requirements prescribed by Same; Same; Same; Same; Same; Congress, by giving the
grant, when made, binds the public, and is, directly or the law. Such requirements were enumerated in Section 21 CAB the power to issue permits for the operation of
indirectly, the act of the state.” of R.A. No. 776. domestic transport services, has delegated to the said body
the authority to determine the capability and competence of
Same; Same; Same; Same; Delegation of Powers; Same; Same; Same; Same; Same; There is nothing in the a prospective domestic air transport operator to engage in
Administrative Law; It is generally recognized that a law nor in the Constitution, which indicates that a such venture.—Congress, by giving the respondent Board
franchise may be derived indirectly from the state through a legislative franchise is an indispensable requirement for an the power to issue permits for the operation of domestic
duly designated agency, and to this extent, the power to entity to operate as a domestic air transport operator.— transport services, has delegated to the said body the
grant franchises has frequently been delegated, even to There is nothing in the law nor in the Constitution, which authority to determine the capability and competence of a
agencies other than those of a legislative nature.—Congress indicates that a legislative franchise is an indispensable prospective domestic air transport operator to engage in
has granted certain administrative agencies the power to requirement for an entity to operate as a domestic air such venture. This is not an instance of transforming the
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respondent Board into a minilegislative body, with operate without the authority of the Board of Communications are required as well. This interpretation
unbridled authority to choose who should be given Communications and the Secretary of Public Works and adheres to the rule in statutory construction that words in a
authority to operate domestic air transport services. Communications or their successors who have the right and statute should not be construed as surplusage if a
Philippine Airlines, Inc. vs. Civil Aeronautics Board, 270 authority to assign to qualified parties frequencies, channels reasonable construction which will give them some force
SCRA 538, G.R. No. 119528 March 26, 1997 or other means of identifying broadcasting system . . .” and meaning is possible.
(emphasis supplied)
Same; Same; E.O. No. 546 which came after P.D. No. 576-
Same; Same; Statutory Construction; Words and Phrases; A did not dispense with the requirement of a congressional
Associated Communications Were it the intention of the law to do away with the franchise.—Contrary to the opinion of the Secretary of
& Wireless Services United requirement of a franchise after December 31, 1981, then Justice in DOJ Opinion No. 98, Series of 1991, the
the phrase “(t)hereafter, irrespective of any franchise, grant, appellate court was correct in ruling that E.O. No. 546
Broadcasting Networks v. license, permit, certificate or other forms of authority to which came after P.D. No. 576-A did not dispense with the
National operate granted by any office, agency or person” would not requirement of a congressional franchise. It merely
Telecommunications have been necessary because the first sentence of Section 6 abolished the Board of Communications and the
already states that “(a)ll franchises, grants, licenses, Telecommunications Control Bureau under the
Commission, G.R. No. permits, certificates or other forms of authority to operate Reorganization Plan and transferred their functions to the
144109 (February 17, 2003) radio or television broadcasting systems shall terminate on NTC, including the power to issue Certificates of Public
December 31, 1981”; Words in a statute should not be Convenience (CPC) and grant permits for the use of
construed as surplusage if a reasonable construction which frequencies.
will give them some force and meaning is possible.—A
Public Utilities; Radio and Television Franchises; There is Same; Same; E.O. No. 546 defines the regulatory and
textual interpretation of Section 6 of P.D. No. 576-A yields
nothing in P.D. No. 576-A that reveals any intention to do technical aspect of the legal process preparatory to the full
the same interpretation that after December 31, 1981, a
away with the requirement of a franchise for the operation exercise of the privilege to operate radio and television
franchise is still necessary to operate radio and television
of radio and television stations.—The appellate court stations, which is different from the grant of a franchise
stations. Were it the intention of the law to do away with
correctly ruled that a congressional franchise is necessary from Congress.—E.O. No. 546 defines the regulatory and
the requirement of a franchise after said date, then the
for petitioner to operate television Channel 25. Even technical aspect of the legal process preparatory to the full
phrase “(t)hereafter, irrespective of any franchise, grant,
assuming that Act No. 3846 applies only to radio stations exercise of the privilege to operate radio and television
license, permit, certificate or other forms of authority to
and not to television stations as petitioner adamantly insists, stations, which is different from the grant of a franchise
operate granted by any office, agency or person (emphasis
the subsequent P.D. No. 576-A clearly shows in Section 1 from Congress, viz.: “The statutory functions of NTC may
supplied)” would not have been necessary because the first
that a franchise is required to operate radio as well as then be given effect as Congress’ prerogative to grant
sentence of Section 6 already states that “(a)ll franchises,
television stations, viz.: “Sec. 1. No radio station or franchises under Act No. 3846 is upheld for they are
grants, licenses, permits, certificates or other forms of
television channel may obtain a franchise unless it has distinct forms of authority. The former covers matters
authority to operate radio or television broadcasting
sufficient capital on the basis of equity for its operation for dealing mostly with the technical side of radio or television
systems shall terminate on December 31, 1981.” It is
at least one year, including purchase of equipment.” broadcasting, while the latter involves the exercise by the
therefore already understood that these forms of authority
(emphasis supplied) As pointed out in DOJ Opinion No. 98, legislature of an exclusive power resulting in a franchise or
have no more force and effect after December 31, 1981. If
there is nothing in P.D. No. 576-A that reveals any a grant under authority of government, conferring a special
the intention were to do away with the franchise
intention to do away with the requirement of a franchise for right to do an act or series of acts of public concern (37
requirement, Section 6 would have simply laid down after
the operation of radio and television stations. Section 6 of C.J.S., secs. 1, 14, pp. 144, 157). In fine, there being no
the first sentence the requirements to operate radio and
P.D. No. 576-A merely identifies the regulatory agencies clear showing that the laws here involved cannot stand
television stations after December 31, 1981, i.e., “no radio
from whom authorizations, in addition to the required together, the presumption is against inconsistency or
or television station shall be authorized to operate without
congressional franchise, must be secured after December repugnance, hence, against implied repeal of the earlier law
the authority of the Board of Communications and the
31, 1981, viz.: “Sec. 6. All franchises, grants, licenses, by the later statute (Agujetas v. Court of Appeals, 261
Secretary of Public Works and Communications.” Instead,
permits, certificates or other forms of authority to operate SCRA 17 [1996]).”
however, the phrase “irrespective of any franchise, . . .”
radio or television broadcasting systems shall terminate on
was inserted to emphasize that a franchise or any other
December 31, 1981. Thereafter, irrespective of any Same; Same; Words and Phrases; “Franchise” and
form of authorization from any office, agency or person
franchise, grant, license, permit, certificate or other forms “Certificate of Public Convenience,” Distinguished; A
does not suffice to operate radio and television stations
of authority to operate granted by any office, agency or franchise is distinguished from a CPC in that the former is a
because the authorizations of both the Board of
person, no radio or television station shall be authorized to grant or privilege from the sovereign power, while the latter
Communication, and the Secretary of Public Works and
QUEBAL
is a form of regulation through the administrative the NTC and at the same time recognized the requirement franchise for its operation, P.D. No. 576-A was
agencies.—As we held in Radio Communication of the of a congressional franchise for the operation of a radio subsequently issued in 1974, which clearly requires a
Philippines, Inc. v. National Telecommunications station under Act No. 3846. We did not interpret E.O. No. franchise for both radio and television stations. Thus, the
Commission, a franchise is distinguished from a CPC in 546 to have repealed the congressional franchise 1994 MOU did not amend any law, but merely clarified the
that the former is a grant or privilege from the sovereign requirement under Act No. 3846 as these two laws are not existing law that requires a franchise.
power, while the latter is a form of regulation through the inconsistent and can both be given effect.
administrative agencies, viz.: “A franchise started out as a Same; Same; Estoppel; The NTC’s erroneous approval of
‘royal privilege or (a) branch of the King’s prerogative, Same; Same; While it is correct to say that specified petitioner’s application in January 1998 did not estop the
subsisting in the hands of a subject.’ This definition was agencies in the Executive Branch have the power to issue NTC from ordering petitioner on February 26, 1998 to
given by Finch, adopted by Blackstone, and accepted by authorization for certain classes of public utilities, this does cease and desist from operating Channel 25 for failure to
every authority since (State v. Twin Village Water Co., 98 not mean that the authorization or CPC issued by the comply with the franchise requirements as estoppel does
Me 214, 56 A 763 [1903]). Today, a franchise, being National Telecommunications Commission dispenses with not work against the government.—Be that as it may, the
merely a privilege emanating from the sovereign power of the requirement of a franchise as this is clearly required NTC’s February 26, 1998 order for petitioner to cease and
the state and owing its existence to a grant, is subject to under P.D. No. 576-A.—Our ruling in Albano that a desist from operating Channel 25 was not unreasonable,
regulation by the state itself by virtue of its police power congressional franchise is not required before “each and unfair, oppressive, whimsical and confiscatory. The 1994
through its administrative agencies.” every public utility may operate” should be viewed in its MOU states in unmistakable terms that petitioner’s
proper light. Where there is a law such as P.D. No. 576-A temporary permit to operate Channel 25 would be valid for
Same; Same; Statutory Construction; There is no conflict which requires a franchise for the operation of radio and only two years, i.e., from June 29, 1995 to June 28, 1997.
between E.O. No. 546 and P.D. No. 576-A—Section 15 of television stations, that law must be followed until During these two years, petitioner was supposed to have
the former does not dispense with the franchise requirement subsequently repealed. As we have earlier shown, however, secured a congressional franchise, otherwise “the NTC
in the latter; The Court adheres to the cardinal rule in there is nothing in the subsequent E.O. No. 546 which shall not extend or renew its permit or authorization to
statutory construction that statutes in pare materia, although evinces an intent to dispense with the franchise operate any further.” Apparently, petitioner did not submit
in apparent conflict, or containing apparent inconsistencies, requirement. In contradistinction with the case at bar, the a congressional franchise to the NTC in applying for
should, as far as reasonably possible, be construed in law applicable in Albano, i.e., E.O. No. 30, did not require renewal of this temporary permit on May 14, 1997. The
harmony with each other, so as to give force and effect to a franchise for the Philippine Ports Authority to take over, NTC’s approval of petitioner’s application to renew its
each.—Even prior to E.O. No. 546, the NTC’s precursor, manage and operate the Manila International Port Complex temporary permit in January 1998 was thus erroneous
i.e., the Board of Communications, already had the function and undertake the providing of cargo handling and port because under the 1994 MOU, the NTC could not renew
of issuing CPC under the Integrated Reorganization Plan. related services thereat. Similarly, in Philippine Airlines, petitioner’s temporary permit to operate Channel 25
The CPC was required by the Board at the same time that Inc. v. Civil Aeronautics Board, et al., we ruled that a without a congressional franchise. In the absence of a
P.D. No. 576-A required a franchise to operate radio and legislative franchise is not necessary for the operation of renewed temporary permit, the NTC was correct in
television stations. The function of the NTC to issue CPC domestic air transport because “there is nothing in the law ordering petitioner to cease and desist from operating
under E.O. No. 546 is thus nothing new and exists nor in the Constitution which indicates that a legislative Channel 25, regardless of whether or not petitioner received
alongside the requirement of a congressional franchise franchise is an indispensable requirement for an entity to the November 17, 1997 letter. The NTC’s erroneous
under P.D. No. 576-A. There is no conflict between E.O. operate as a domestic air transport operator.” Thus, while it approval of petitioner’s application in January 1998 did not
No. 546 and P.D. No 576-A; Section 15 of the former does is correct to say that specified agencies in the Executive estop the NTC from ordering petitioner on February 26,
not dispense with the franchise requirement in the latter. Branch have the power to issue authorization for certain 1998 to cease and desist from operating Channel 25 for
We adhere to the cardinal rule in statutory construction that classes of public utilities, this does not mean that the failure to comply with the franchise requirement as
statutes in pare materia, although in apparent conflict, or authorization or CPC issued by the NTC dispenses with the estoppel does not work against the government.
containing apparent inconsistencies, should, as far as requirement of a franchise as this is clearly required under
reasonably possible, be construed in harmony with each P.D. No. 576-A. Same; Same; Due Process; Although a particular ground
other, so as to give force and effect to each. The ruling of for suspending operations of the broadcasting company was
this Court in Crusaders Broadcasting System, Inc. v. Same; Same; Even assuming that Act No. 3846 requires not reflected in the show cause order, the NTC could
National Telecommunications Commission, buttresses the only radio stations to secure a congressional franchise for nevertheless raise said ground if any basis therefore was
interpretation that the requirement of a congressional its operation, P.D. No. 576-A was subsequently issued in gleaned during the administrative proceedings.—Likewise,
franchise for the operation of radio and television stations 1974, which clearly requires a franchise for both radio and the NTC’s denial of petitioner’s application for renewal of
exists alongside the requirement of a CPC. In that case, we television stations.—We find no merit in petitioner’s its temporary permit to operate Channel 25 and recall of its
held that under E.O. No. 546, the regulation of radio contention. As we have shown, even assuming that Act No. Channel 25 frequency in its January 13, 1999 decision were
communications is a function assigned to and performed by 3846 requires only radio stations to secure a congressional not unreasonable, unfair, oppressive, whimsical and
QUEBAL
confiscatory so as to offend petitioner’s right to due and the increased difficulty of administering the laws, there Batangas Transportation Co., has not the effect of
process. In Crusaders Broadcasting System, Inc. v. National is a constantly growing tendency towards the delegation of establishing in favor of an old carrier a sort of Torrens title
Telecommunications Commission, the Court ruled that greater powers by the legislature, and towards the approval on all lines constructed or to be constructed for public
although a particular ground for suspending operations of of the practice by the courts. (Pangasinan Transportation traffic within the jurisdiction of the province where it
the broadcasting company was not reflected in the show Co., Inc. vs. The Public Service Commission, G.R. No. operates.
cause order, the NTC could nevertheless raise said ground 47065, June 26, 1940, 70 Phil. 221)
if any basis therefore was gleaned during the administrative 2.ID. ; FACTOR DETERMINING THEIR RIGHTS.—
proceedings. In the instant case, the lack of congressional It is generally recognized that a franchise may be derived Priority in the filing of the application for a certificate of
franchise as ground for denial of petitioner’s application for indirectly from the state through a duly designated agency, public convenience is, other conditions being equal, an
renewal of temporary permit and recall of its Channel 25 and to this extent, the power to grant franchises has important factor in determining the rights of the public
frequency was raised not only during the administrative frequently been delegated, even to agencies other than service companies. Batangas Trans. Co. vs. Orlanes &
proceedings against it, but was even stated in the February those of a legislative nature. Banaag Trans. Co., 55 Phil. 745, No. 33827, No. 33839
26, 1998 show cause order. March 4, 1931
In pursuance of this, it has been held that privileges
Same; Same; The process of securing a congressional conferred by grant by local authorities as agents for the
franchise is separate and distinct from the process of state constitute as much a legislative franchise as though
applying for renewal of a temporary permit with the the grant had been made by an act of the Legislature. Mindanao Bus Co. v.
NTC—the latter is not a prerequisite to the former.— (Superior Water, Light and Power Co. vs. City of Superior, Cagayan-Misamis Land
Petitioner’s argument is flawed when it states that the 181 N.W. 113, 174 Wis. 257, affirmed 183 N.W. 254, 37
C.J.S. 158.) The call to dispense with the requisite Transportation Co., G.R. No.
January 13, 1999 decision of the NTC “slammed the door”
on its application for a congressional franchise as the legislative franchise must, however, be addressed to L-33689 (March 13, 1931)
process of securing a congressional franchise is separate Congress as the lawmaker of the land for the Court’s
and distinct from the process of applying for renewal of a function is to interpret and not to rewrite the law. As long
temporary permit with the NTC. The latter is not a as the law remains unchanged, the requirement of a
franchise to operate a television station must be upheld. PUBLIC SERVICE COMMISSION; CERTIFICATE OF
prerequisite to the former. In fact, in the normal course of CONVENIENCE; PRIORITY OF APPLICATION NOT
securing authorizations to operate a television and radio Associated Communications & Wireless Services-United
Broadcasting Networs vs. National Telecommunications CONTROLLING.—While priority of application is a factor
station, the application for a CPC with the NTC comes after to be considered in the granting of a certificate of
securing a franchise from Congress. The CPC is not a Commission, 397 SCRA 574, G.R. No. 144109 February
17, 2003 convenience, it does not necessarily control; and where
condition for the grant of a congressional franchise. more than one applicant are seeking certificates, the
Same; Same; Administrative Law; Delegation of Powers; commission will consider whether the public convenience
The Court is not unmindful that there is a trend towards will be best served by granting a certificate of convenience
delegating the legislative power to authorize the operation 2. Issuance to one particular applicant or to more than one.
of certain public utilities to administrative agencies and 2.ID. ; ID. ; APPLICATION FILED DURING PERIOD
dispensing with the requirement of a congressional WHEN APPLICATION OF RIVAL APPLICANT HAD
franchise, but this matter should be addressed to Congress BEEN DISMISSED AND BEFORE
for the Court’s function is to interpret and not to rewrite the REINSTATEMENT.—Where an application for a
law.—The Court is not unmindful that there is a trend
towards delegating the legislative power to authorize the
Batangas Transportation Co. certificate of convenience to operate a motor-bus service
was dismissed, owing to the failure of the applicant to
operation of certain public utilities to administrative et. al. v. Orlanes Banaag,
appear at the hearing, but the application was subsequently
agencies and dispensing with the requirement of a Trans. Co., Inc. G.R. No. reinstated, a competitor filing his application during the
congressional franchise as in the Albano case which 33827 (March 4, 1931) period subsequent to dismissal and prior to reinstatement,
involved the provision of cargo handling and port related to operate a similar service over the same route, cannot
services at the Manila International Port Complex and the assert a superior right based on the supposed priority of his
PAL case involving the operation of domestic air transport. application. Mindanao Bus Co. vs. Cagayan-Misamis Land
The rationale for this trend was explained in the PAL case, PUBLIC SERVICE; CARRIER'S RIGHT TO LINES Trans. Co., 55 Phil. 826, No. 33689 March 13, 1931 Sima
viz.: “. . . With the growing complexity of modern life, the SUBSEQUENTLY CONSTRUCTED.—The case of Javier v.Hacbang, G.R. No. L-37321 (March 3, 1933)
multiplication of the subjects of governmental regulation, vs. Orlanes (53 Phil., 468), cited in support of the appellant
QUEBAL
development of the MICP.—Thus, while the PPA has been Same; Same; Same; Constitutional Law; he award of the
Benitez v. Santos, G.R. Nos. tasked, under E.O. No. 30, with the management and MICP contract approved by the Chief Executive of the
operation of the Manila International Port Complex and to Philippines is constitutional; Legal presumption of validity
L-12911-12 and L-13073-74
undertake the providing of cargo handling and port related and regularity of official function.—The contract between
(February 29, 1960) services thereat, the law provides that such shall be “in the PPA and ICTSI, coupled with the President’s written
accordance with P.D. 857 and other applicable laws and approval, constitute the necessary authorization for ICTSI’s
regulations.” On the other hand, P.D. No. 857 expressly operation and management of the MICP. The award of the
empowers the PPA to provide services within Port Districts MICT contract approved by no less than the President of
PUBLIC UTILITIES; FILING OF APPLICATION FOR
“whether on its own, by contract, or otherwise” [Sec. 6(a) the Philippines herself enjoys the legal presumption of
CERTIFICATE OF PUBLIC CONVENIENCE; WHEN
(v)]. Therefore, under the terms of E.O. No. 30 and P.D. validity and regularity of official action. In the case at bar,
PRIORITY IN FILING CONSIDERED AN IMPORTANT
No. 857, the PPA may contract with the International there is no evidence which clearly shows the constitutional
FACTOR.—Priority in the filing of the application for a
Container Terminal Services, Inc. (ICTSI) for the infirmity of the questioned act of government.
certificate of public convenience is, other conditions being
management, operation and development of the MICP.
equal, an important factor in determining the rights of the Same; Same; Same; Same; Petitioner has sufficient
public service companies (Batangas Transportation Co. and Same; Same; Same; The law granted certain administrative standing to institute an action where public right is sought
Eliseo Silva vs. Orlanes and Banaag Transportation Co., 55 agencies the power to grant licenses for the operation of to be enforced.—That petitioner herein is suing as a citizen
Phil.. 745). public utilities; Theory that MICP is a “wharf” or a “dock”, and taxpayer and as a Member of the House of
not necessarily calls for a franchise from Legislative Representatives, sufficiently clothes him with the standing
2.ID.; ID.; PREVENTION OF MONOPOLY.—The fact
Branch.—Even if the MICP be considered a public utility, to institute the instant suit questioning the validity of the
that a present operator already owns and operates a
or a public service on the theory that it is a “wharf” or a assailed contract. While the expenditure of public funds
considerable number of units, militates against his
“dock” as contemplated under the Public Service Act, its may not be involved under the contract, public interest is
application for a certificate of public convenience to
operation would not necessarily call for a franchise from definitely involved considering the important role of the
operate additional units, because giving the award to him
the Legislative Branch. Franchises issued by Congress are MICP in the economic development of the country and the
would likely create a monopoly in his particular line of
not required before each and every public utility may magnitude of the financial consideration involved.
business. Prior experience, while itself useful, cannot create
operate. Thus, the law has granted certain administrative Consequently, the disclosure provision in the Constitution
a vested right which would endanger the national economy.
agencies the power to grant licenses for or to authorize the would constitute sufficient authority for upholding
Marquez Benitez vs. Santos, 107 Phil. 167, Nos. L-12911-
operation of certain public utilities. (See E.O. Nos. 172 and petitioner’s standing. [Cf. Tañada v. Tuvera, G.R. No.
12 and L-13073-74 February 29, 1960
202) 63915, April 24, 1985, 136 SCRA 27, citing Severino v.
Governor General, 16 Phil. 366 (1910), where the Court
Same; Same; Same; The lawmaker has empowered the considered the petitioners with sufficient standing to
PPA to undertake by itself the operation of MICP or to institute an action where a public right is sought to be
Albano v. Reyes, G.R. No. authorize its operation by another by contract or other enforced.]
83551 (July 11, 1989) means.—As stated earlier, E.O. No. 30 has tasked the PPA
with the operation and management of the MICP, in Same; Same; Same; Same; Public Bidding; The PPA is the
accordance with P.D. 857 and other applicable laws and agency in the best position to evaluate the feasibility of the
regulations. However, P.D. 857 itself authorizes the PPA to projections of the bidders; The Court nor Congress has the
Public Service Act; Public Utilities; Franchise; A
perform the service by itself, by contracting it out, or technical expertise to look into this matter.—The
legislative franchise is not necessary for the operation of
through other means. Reading E.O. No. 30 and P.D. No. determination of whether or not the winning bidder is
the Manila International Container Port (MICP); Reasons;
857 together, the inescapable conclusion is that the qualified to undertake the contracted service should be left
Case at bar.—A review of the applicable provisions of law
lawmaker has empowered the PPA to undertake by itself to the sound judgment of the PPA. The PPA, having been
indicates that a franchise specially granted by Congress is
the operation and management of the MICP or to authorize tasked with the formulation of a plan for the development
not necessary for the operation of the Manila International
its operation and management by another by contract or of port facilities and its implementation [Sec. 6(a) (i)], is
Container Port (MICP) by private entity, a contract entered
other means, at its option. The latter power having been the agency in the best position to evaluate the feasibility of
into by the PPA and such entity constituting substantial
delegated to the PPA, a franchise from Congress to the projections of the bidders and to decide which bid is
compliance with the law.
authorize an entity other than the PPA to operate and compatible with the development plan. Neither the Court,
Same; Same; Same; Under E.O. No. 30 and P.D. No. 857, manage the MICP becomes unnecessary. nor Congress, has the time and the technical expertise to
the PPA may contract with the International Container look into this matter.
Terminal Services Inc. for the management, operation and
QUEBAL
GUTIERREZ, JR., J., Concurring Opinion: PUBLIC SERVICE COMMISSION; CERTIFICATES OF for breach of contract only when the defendant acted
PUBLIC CONVENIENCE; OWNER OF, IN EYES OF fraudulently or in bad faith. What the law would consider
Public Utilities; Franchise; Public Biddings; The THE LAW AND THE COMMISSION.—In the eyes of the as bad faith which may furnish a ground for the award of
determination of whether or not the winning bidder is law and of the Public Service Commission, the owner of a moral damages would be bad faith in the securing and in
qualified to undertake the contracted service should be left certificate of public convenience is the person to whom it the execution of the contract and in the enforcement of its
to PPA.—I concur in the Court’s decision that the was granted. One has a right to rely on the records of the terms, or any kind of deceit which may have been used by
determination of whether or not the winning bidder is Commission and should not suffer through any secret both defendants. Tamayo vs. Aquino, et al., 105 Phil. 949,
qualified to undertake the contracted service should be left arrangements between said grantee and others. Nos. L-12634 and L-12720 May 29, 1959Cogeo-Cubao
to the sound judgment of the Philippine Ports Authority Operators and Drivers Association v. Court of Appeals,
(PPA). I agree that the PPA is the agency which can best 2.ID.; ID.; CANCELLATION OF DUMMY'S G.R. No. 100727 (March 18, 1992)
evaluate the comparative qualifications of the various CERTIFICATE.—The Public Service Commission may
bidding contractors and that in making such evaluation it cancel a certificate of public convenience where the grantee “Y” Transit Co., Inc. v. National Labor Relations
has the technical expertise which neither this Court nor is a mere dummy, on the ground of misrepresentation. Commission, G.R. No. 88195-96 (January 27, 1994)
Congress possesses. Pecson vs. Pecson, 78 Phil. 522, No. 48003 June 19, 1947

Same; Same; Same; Same; Pleadings; PPA should show


greater consistency in its submissions to the Supreme 4. Temporary Take-over
Court.—I was surprised during the oral arguments of the Tamayo v. Aquino et. al.,
present petition to hear the counsel for PPA submit G.R. No. L-12634 & L-12720
diametrically different statements regarding the capabilities 1987 Constitution, Art. XII, Sec. 17
and worth of E. Razon, Inc., as an arrastre operator. It now (May 29, 1959)
turns out that the Manila International Container Terminal 1987 Constitution, Art. VI, Sec. 23(2)
will depend a great deal on the expertise, reliability and
competence of E. Razon, Inc., for its successful operations.
DAMAGES; REGISTERED OWNER OF PUBLIC
The time difference between the two petitions is
UTILITIES LIABLE FOR DAMAGES DESPITE
insubstantial. After going over the pleadings of the present
TRANSFER OF VEHICLE.—The registered owner of a
David v. Ermita, G.R.
petition, I am now convinced that it is the submissions of No.171396 (May 3, 2006)
public service vehicle is responsible for damages that may
PPA in this case and not its contentions in G.R. No. 75197
be caused to any of the passengers therein, even if the said
which are accurate and meritorious. There is the distinct
vehicle had already been sold, leased or transferred to
possibility that we may have been unfair in the earlier
another person who was, at the time of the accident,
petition because of assertions made therein which are Following our interpretation of Section 17, Article XII,
actually operating the vehicle.
contradictory to the submissions in the instant petition. No invoked by President Arroyo in issuing PP 1017, this Court
such doubts would exist if the Government is more 2.ID.; LIABILITY OF REGISTERED OWNER DIRECT; rules that such Proclamation does not authorize her during
consistent in its pleadings on such important factual matters REMEDY OF THE LATTER AGAINST the emergency to temporarily take over or direct the
as those raised in these two petitions. Albano vs. Reyes, TRANSFEREE.—The responsibility of a registered owner operation of any privately owned public utility or business
175 SCRA 264, G.R. No. 83551 July 11, 1989 of a public vehicle to the public or to any passenger riding affected with public interest without authority from
in the vehicle is direct. However, the transferee, who Congress.
operated the vehicle when the accident took place, and who
Let it be emphasized that while the President alone can
is directly responsible therefor, should in turn be made
3. Transfer respon-sible to the registered owner for what the latter may
declare a state of national emergency, however, without
legislation, he has no power to take over privately-owned
have been adjudged to pay. The remedy of the registered
public utility or business affected with public interest.
owner is by third-party complaint.
The President cannot decide whether exceptional
Pecson et. al. v. Pecson et. 3.ID.; MORAL DAMAGES; No MORAL DAMAGES IN circumstances exist warranting the take over of privately-
owned public utility or business affected with public
al., G.R. No. 48003 (June 19, BREACH OF CONTRACT IN THE ABSENCE OF
FRAUD OR BAD FAITH; MEANING OF TERM "BAD interest. Nor can he determine when such exceptional
1947) circumstances have ceased. Likewise, without legislation,
FAITH".—Article 2220 of the Civil Code expressly
provides that award of moral damages can be made in a suit the President has no power to point out the types of

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businesses affected with public interest that should be taken Radio Control Act, currently finds its basis in E.O. No. 546, power to the administrative agency, then the action of such
over. In short, the President has no absolute authority to the law establishing the NTC. administrative agency cannot be sustained. The life and
exercise all the powers of the State under Section 17, authority of an administrative agency emanates solely from
Article VII in the absence of an emergency powers act Same; Same; The legal obligation of the National an Act of Congress, and its facuties confined within the
passed by Congress. Telecommunications Commission (NTC) once Congress parameters set by the legislative branch of government.
has established a legislative franchise for a broadcast media
station is to facilitate the operation by the franchisee of its Same; Same; Even as the National Telecommunications
broadcast stations.—The complexities of our dual Commission (NTC) is vested with the power to issue
5. Revocation franchise/license regime for broadcast media should be Certificates of Public Convenience (CPCs) to broadcast
understood within the context of separation of powers. The stations, it is not expressly vested with the power to cancel
right of a particular entity to broadcast over the airwaves is such CPCs.—We earlier replicated the various functions of
established by law—i.e., the legislative franchise—and the NTC, as established by E.O. No. 546. One can readily
Divinagracia v. Consolidate determined by Congress, the branch of government tasked notice that even as the NTC is vested with the power to
Broadcasting System, Inc., with the creation of rights and obligations. As with all other issue CPCs to broadcast stations, it is not expressly vested
laws passed by Congress, the function of the executive with the power to cancel such CPCs, or otherwise
G.R. No.162272 (April 7, branch of government, to which the NTC belongs, is the empowered to prevent broadcast stations with duly issued
2009) implementation of the law. In broad theory, the legal franchises and CPCs from operating radio or television
obligation of the NTC once Congress has established a stations.
legislative franchise for a broadcast media station is to
facilitate the operation by the franchisee of its broadcast Same; Same; Allowing the National Telecommunications
Administrative Law; National Telecommunications stations. However, since the public administration of the Commission (NTC) to countermand State policy by
Commission; Broadcast stations are still required to obtain airwaves is a requisite for the operation of a franchise and revoking respondent’s vested legal right to operate
a legislative franchise.—Associated Communications is moreover a highly technical function, Congress has broadcast stations unduly gives to a mere administrative
makes clear that presently broadcast stations are still delegated to the NTC the task of administration over the agency veto power over the implementation of the law and
required to obtain a legislative franchise, as they have been broadcast spectrum, including the determination of the enforcement of especially vested legal rights.—
so since the passage of the Radio Control Act in 1931. By available bandwidths and the allocation of such available Allowing the NTC to countermand State policy by
virtue of this requirement, the broadcast industry falls bandwidths among the various legislative franchisees. The revoking respondent’s vested legal right to operate
within the ambit of Section 11, Article XII of the 1987 licensing power of the NTC thus arises from the necessary broadcast stations unduly gives to a mere administrative
Constitution, the one constitutional provision concerned delegation by Congress of legislative power geared towards agency veto power over the implementation of the law and
with the grant of franchises in the Philippines. The the orderly exercise by franchisees of the rights granted the enforcement of especially vested legal rights. That
requirement of a legislative franchise likewise differentiates them by Congress. concern would not arise if Congress had similarly
the Philippine broadcast industry from that in America, empowered the NTC with the power to revoke a
where there is no need to secure a franchise from the U.S. Same; Same; The restrictions imposed by an administrative franchisee’s right to operate broadcast stations. But as
Congress. agency such as the National Telecommunications earlier stated, there is no such expression in the law, and by
Commission (NTC) on broadcast media franchisees will presuming such right the Court will be acting contrary to
Same; Same; After securing their legislative franchises, have to pass not only the test of constitutionality, but also the stated State interest as expressed in respondents’
stations are required to obtain Certificates of Public the test of authority and legitimacy.—The restrictions legislative franchises.
Convenience (CPCs) from the National enacted by Congress on broadcast media franchisees have
Telecommunications Commission (NTC) before they can to pass the mettle of constitutionality. On the other hand,
operate their radio or television broadcasting systems.— the restrictions imposed by an administrative agency such
Broadcast and television stations are required to obtain a
legislative franchise, a requirement imposed by the Radio
as the NTC on broadcast media franchisees will have to
pass not only the test of constitutionality, but also the test
C. Rates
Control Act and affirmed by our ruling in Associated of authority and legitimacy, i.e., whether such restrictions
Broadcasting. After securing their legislative franchises, have been imposed in the exercise of duly delegated
stations are required to obtain CPCs from the NTC before legislative powers from Congress. If the restriction or
they can operate their radio or television broadcasting sanction imposed by the administrative agency cannot trace
systems. Such requirement while traceable also to the its origin from legislative delegation, whether it is by virtue
of a specific grant or from valid delegation of rule-making
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law prohibits. If the services are alike and specialized administrative boards or commissions with the
United States v. Quinajon et. contemporaneous, discrimination in the price charged is special knowledge, experience and capability to hear and
prohibited. THE UNITED STATES vs. QUINAJON and determine promptly disputes on technical matters or
al., G.R. No. L-8686 (July 30,
QUITORIANO, 31 Phil. 189, No. 8686 July 30, 1915 intricate questions of facts, subject to judicial review in
1915) case of grave abuse of discretion, is indispensable.
“Between the power lodged in an administrative body and a
court, the unmistakable trend is to refer it to the former.” In
Padua v. Ranada et. al., G.R. Industrial Enterprises, Inc. vs. Court of Appeals, we ruled:
COMMON CARRIERS; WHO ARE COMMON
No. 141949 (October 14, “x x x, if the case is such that its determination requires the
CARRIERS; ACT No. 98 CONSTRUED.—A common
2002) expertise, specialized skills and knowledge of the proper
carrier is a person or corporation whose regular business is
administrative bodies because technical matters or intricate
to carry passengers or property for all persons who may
questions of facts are involved, then relief must first be
choose to employ and remunerate him. A common carrier
obtained in an administrative proceeding before a remedy
is a person or corporation who undertakes to carry goods or
Administrative Law; Toll Regulatory Board; Expressways; will be supplied by the courts even though the matter is
persons for hire. Act No. 98 of the United States Philippine
Doctrine of Primary Jurisdiction; Exhaustion of within the proper jurisdiction of a court.”
Commission is an Act to regulate commerce in the
Philippine Islands. Administrative Remedies; The laws and the TRB Rules of
Procedure have provided the remedies of an interested Same; Same; Same; Actions; Prohibition; The office of the
expressway user—there must be a prior resort to the Toll remedy of prohibition is not to correct errors of judgments
2.ID.; PREFERENCES AND DISCRIMINATIONS.—Act
Regulatory Board since it is the agency assigned to but to prevent or restrain usurpation of jurisdiction or
No. 98 provides that no common carrier shall, directly or
supervise the collection of toll fees and the operation of toll authority by inferior tribunals and to compel them to
indirectly, by any special rate, rebate, drawback, or other
facilities.—Obviously, the laws and the TRB Rules of observe the limitation of their jurisdictions.—Petitioner
device, charge, demand, collect, or receive from any person
Procedure have provided the remedies of an interested Zialcita’s resort to prohibition is intrinsically inappropriate.
or persons a greater or less compensation for any services
Expressways user. The initial proper recourse is to file a It bears stressing that the office of this remedy is not to
rendered in the transportation of passengers or property,
petition for review of the adjusted toll rates with the TRB. correct errors of judgment but to prevent or restrain
between points in the Philippine Islands, than he charges,
The need for a prior resort to this body is with reason. The usurpation of jurisdiction or authority by inferior tribunals
demands, collects, or receives from any other person or
TRB, as the agency assigned to supervise the collection of and to compel them to observe the limitation of their
persons, for doing a like or contemporaneous service, under
toll fees and the operation of toll facilities, has the jurisdictions. G.R. No. 151108, while designated as a
substantially similar conditions or circumstances. A
necessary expertise, training and skills to judiciously decide petition for prohibition, has for its object the setting aside
common carrier cannot, under the law, give any
matters of this kind. As may be gleaned from the petition, of Resolution No. 2001-89 on the ground that it was issued
unnecessary or unreasonable preference or advantage to
the main thrust of petitioner Zialcita’s argument is that the without prior notice, hearing and publication and that the
any particular person, company, firm, corporation or
provisional toll rate adjustments are exorbitant, oppressive, provisional toll rate adjustments are exorbitant. This is not
locality, or any particular kind of traffic, or subject any
onerous and unconscionable. This is obviously a question the proper subject of prohibition because as long as the
particular person, company, firm, or corporation or locality,
of fact requiring knowledge of the formula used and the inferior court, tribunal or board has jurisdiction over the
or any particular kind of traffic, to any undue or
factors considered in determining the assailed rates. person and subject matter of the controversy, the writ will
unreasonable prejudice or discrimination whatsoever.
Definitely, this task is within the province of the TRB. not lie to correct errors and irregularities in procedure, or to
3.ID. ; ID.—Said Act No. 98 does not require that the same prevent an erroneous decision or an enforcement of an
charge shall be made for carrying passengers or property, Same; Same; Same; Same; Same; In this era of clogged erroneous judgment. And even in cases of encroachment,
unless all the conditions are alike and contemporaneous. It court dockets, the need for specialized administrative usurpation, and improper assumption of jurisdiction, the
does not prohibit the charging of a different rate for the boards or commissions with the special knowledge, writ will not issue where an adequate and applicable
carrying of passengers or property when the actual cost of experience and capability to hear and determine promptly remedy by appeal, writ or error, certiorari, or other
handling and transporting the same is different. Common disputes on technical matters or intricate questions of facts, prescribed methods of review are available. In this case,
carriers can not make a different rate to different persons subject to judicial review in case of grave abuse of petitioner Zialcita should have sought a review of the
for carrying persons or merchandise, unless the actual cost discretion, is indispensable—between the power lodged in assailed Resolution before the TRB.
of handling and shipping is different. It is when the price an administrative body and a court, the unmistakable trend
is to refer it to the former.—We take cognizance of the Same; Same; Same; Statutes; The TRB may grant and issue
charged is for the purpose of favoring persons or localities
wealth of jurisprudence on the doctrine of primary ex-parte to any petitioner, without need of notice,
or particular kinds of merchandise, that the law intervenes
administrative jurisdiction and exhaustion of administrative publication or hearing, provisional authority to collect,
and prohibits. It is favoritism and discrimination which the
remedies. In this era of clogged court dockets, the need for pending hearing and decision on the merits of the petition,
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the increase in rates prayed for or such lesser amount as the Reinoso, Jr. and Mario K. Espinosa. Petitioner Padua Philippine National Construction Corporation, provides that
TRB may in its discretion provisionally grant; That LOI would argue that while these Directors signed the the investor, CITRA, and/or Operator, shall be entitled to
No. 1334-A has the force and effect of law finds support in Resolution, none of them personally attended the hearing. apply for and if warranted, to be granted an interim
a catena of cases decreeing that “all proclamations, orders, This argument is misplaced. Under our jurisprudence, an adjustment of toll rates in case of force majeure and a
decrees, instructions, and acts promulgated, issued, or done administrative agency may employ other persons, such as a significant currency valuation.—Anent petitioner Padua’s
by the former President (Ferdinand E. Marcos) are part of hearing officer, examiner or investigator, to receive contention that CITRA has no standing to apply for a toll
the law of the land, and shall remain valid, legal, binding, evidence, conduct hearing and make reports, on the basis of fee increase, suffice it to say that CITRA’s right stems from
and effective, unless modified, revoked or superseded by which the agency shall render its decision. Such a the STOA which was entered into by no less than the
subsequent proclamations, orders, decrees, instructions, or procedure is a practical necessity. Thus, in Mollaneda vs. Republic of the Philippines and by the PNCC. Section 7.04
other acts of the President.”—For one, it is not true that the Umacob, we ruled: “x x x At any rate, it cannot be gainsaid of the STOA provides that the Investor, CITRA, and/or the
provisional toll rate adjustments were not published prior to that the term ‘administrative body or agency’ includes the Operator, PNCC, shall be entitled to apply for and if
its implementation on January 1, 2002. Records show that subordinate officials upon whose hand the body or agency warranted, to be granted an interim adjustment of toll rates
they were published on December 17, 24 and 31, 2001 in delegates a portion of its authority. Included therein are the in case of force majeure and a significant currency
three newspapers of general circulation, particularly the hearing officers through whose eyes and ears the valuation. Now, unless set aside through proper action, the
Philippine Star, Philippine Daily Inquirer and The Manila administrative body or agency observes the demeanor, STOA has the force and effect of law between the
Bulletin. Surely, such publications sufficiently complied conduct and attitude of the witnesses and listens to their contracting parties, and is entitled to recognition by this
with Section 5 of P.D. No. 1112 which mandates that “no testimonies. Court.
new rates shall be collected unless published in a
newspaper of general publication at least once a week for Same; Same; Same; The TRB’s authority to grant Same; Same; Same; The Court cannot sustain the
three consecutive weeks.” At any rate, it must be pointed provisional toll rate adjustments does not require the contention that the term “Metro Manila Skyway” Project
out that under Letter of Instruction No. 1334-A, the TRB conduct of a hearing.—Be that as it may, we must stress excludes the at-grade portions of the South Luzon
may grant and issue ex-parte to any petitioner, without need that the TRB’s authority to grant provisional toll rate Expressway.—On the same breath, we cannot sustain
of notice, publication or hearing, provisional authority to adjustments does not require the conduct of a hearing. Padua’s contention that the term “Metro Manila Skyway”
collect, pending hearing and decision on the merits of the Pertinent laws and jurisprudence support this conclusion. Project excludes the at-grade portions of the South Luzon
petition, the increase in rates prayed for or such lesser Expressway considering that under the same STOA the
Same; Same; Same; An administrative agency may be “Metro Manila Skyway” includes: “(a) the South Metro
amount as the TRB may in its discretion provisionally
empowered to approve provisionally, when demanded by Manila Skyway, coupled with the rehabilitated at-grade
grant. That LOI No. 1334-A has the force and effect of law
urgent public need, rates of public utilities without a portion of the South Luzon Expressway, from Alabang to
finds support in a catena of cases decreeing that “all
hearing, the reason being that provisional rates are by their Quirino Avenue; (b) the Central Metro Manila Skyway,
proclamations, orders, decrees, instructions, and acts
nature temporary and subject to adjustment in conformity from Quirino Avenue to A. Bonifacio Avenue; x x x.”
promulgated, issued, or done by the former President
with the definitive rates approved after final hearing.—The
(Ferdinand E. Marcos) are part of the law of the land, and
practice is not something peculiar. We have ruled in a Same; Same; Courts; Judgments; The rule set out in Section
shall remain valid, legal, binding, and effective, unless
number of cases that an administrative agency may be 14, Article VIII of the 1987 Constitution applies only to a
modified, revoked or superseded by subsequent
empowered to approve provisionally, when demanded by decision of a court of justice, not TRB.—Petitioner Zialcita
proclamations, orders, decrees, instructions, or other acts of
urgent public need, rates of public utilities without a faults the TRB for not stating the facts and the law on
the President.”
hearing. The reason is easily discerned from the fact that which Resolution No. 2001-89 is based. Petitioner is
Same; Same; Same; Words and Phrases; An administrative provisional rates are by their nature temporary and subject wrong. Suffice it to state that while Section 14, Article VIII
agency may employ other persons, such as a hearing to adjustment in conformity with the definitive rates of the 1987 Constitution provides that “no decision shall be
officer, examiner or investigator, to receive evidence, approved after final hearing. In Maceda vs. Energy rendered by any court without expressing therein clearly
conduct hearing and make reports, on the basis of which the Regulatory Board, we ruled that while the ERB is not and distinctly the facts and the law on which it is based”
agency shall render its decision; It cannot be gainsaid that precluded from conducting a hearing on the grant of this rule applies only to a decision of a court of justice, not
the term “administrative body or agency” includes the provisional authority—which is of course, the better TRB. Padua vs. Ranada, 390 SCRA 663, G.R. No. 141949,
subordinate officials upon whose hand the body or agency procedure—however, it can not be stigmatized if it failed to G.R. No. 151108 October 14, 2002
delegates a portion of its authority.—For another, it is not conduct one.
true that it was TRB Executive Director Dumlao, Jr. alone
Same; Same; Same; Section 7.04 of the Supplemental Toll
who issued Resolution No. 2001-89. The Resolution itself
Operation Agreement (STOA), which was entered into by
contains the signature of the four TRB Directors, namely,
no less that the Republic of the Philippines and by the
Simeon A. Datumanong, Emmanuel P. Bonoan, Ruben S.
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consumers how to save on electricity and avoid accidents; powers of the State and statutes prescribing rules for the
Republic v. Medina et. al., (b) group insurance premiums for its employees; (c) control and regulation of public utilities are a valid exercise
recreational and athletic facilities for employees; and (d) thereof. When private property is used for a public purpose
G.R. No. L-32068 (October 4,
dispute franchise taxes, are properly includible in the and is affected with public interest, it ceases to be juris
1971) computation of the utility’s operational expenses. privati only and becomes subject to regulation. The
regulation is to promote the common good. Submission to
Same; Purpose of depreciation reserve.—A utility company regulation may be withdrawn by the owner by
may not set up a depreciation reserve to cushion the effects discontinuing use; but as long as use of the property is
Same; Controlling standard for rate of return and rate base of the floating rate. Section 16(1) of the Public Service Act continued, the same is subject to public regulation.
determination.—In authorizing an increase of rates, the provides that the depreciation “shall not be expended
Public Service Commission proceeded on the basis that the otherwise than for depreciation, improvements, new Same; Same; Same; The rates prescribed by the State must
MERALCO as public utility should receive a reasonable construction, extensions or conditions to the property of be one that yields a fair return on the public utility upon the
return on its investment, equivalent to 12% on the rate base, such public service.” Thus, ME-RALCO could not lawfully value of the property performing the service and one that is
the present market or replacement value of the properties use the depreciation fund to meet the deficit in its reasonable to the public for the services rendered.—In
devoted to the service less depreciation, plus operating operational expenses. regulating rates charged by public utilities, the State
capital equivalent to 2 months operating income. In so protects the public against arbitrary and excessive rates
doing, the Public Service Commission only followed the Same; Rate-fixing primarily a duty of the Commission.—It while maintaining the efficiency and quality of services
constant doctrine of the cases heretofore adjudicated by this must be borne in mind that rate-fixing involves a series of rendered. However, the power to regulate rates does not
Court. technical operations into the details of which we are ill- give the State the right to prescribe rates which are so low
equipped to enter, and which is primarily entrusted to the as to deprive the public utility of a reasonable return on
Same; Same.—Withal, the decided weight of authority is to Commission. investment. Thus, the rates prescribed by the State must be
the effect that property valuation is not to be solved by
one that yields a fair return on the public utility upon the
formula, but depends upon circumstances and relevant facts Same; Mere monopoly not justification for reduced rates.—
value of the property performing the service and one that is
affecting each utility as to what constitutes a just rate base While a public utility like MERALCO may in effect be
reasonable to the public for the services rendered. The
and what would be the fair return, just to both the utility deemed a monopoly, its favored position as such is more
fixing of just and reasonable rates involves a balancing of
and the public. than counterbalanced by the regulatory limitation on the
the investor and the consumer interests.
rate of a return on its capital and its unavoidable obligation
Same; Same; Measurement of stockholder’s equity at par to maintain and expand its services as demand therefor Same; Same; Same; The power to fix rates is a legislative
value.—The present Filipino stockholders acquired the increases. Of course, its rates must always be just to the function; Determination of whether the rates so fixed are
stocks owned by the previous American owners of public, but protection of the latter does not necessarily reasonable and just is a purely judicial question and is
MERALCO at several times their par value. To compute mean that only reduced rates, regardless of economic subject to the review of the courts.—While the power to fix
the equity of such stockholders at the par value of the conditions, can be just. Republic vs. Medina, 41 SCRA rates is a legislative function, whether exercised by the
shares is evidently unjust and would result in fixing the 643, No. L-32068, No. L-32083, No. L-32155, No. L- legislature itself or delegated through an administrative
returns of a utility at confiscatory levels, particularly for 32374, No. L-32402, No. L-32464 October 4, 1971 agency, a determination of whether the rates so fixed are
recent stockholders that acquired shares at a premium.
reasonable and just is a purely judicial question and is
Measured against actual cost, the dividend percentage does
subject to the review of the courts.
not appear abnormal.
Republic v. Manila Electric Same; Same; Same; What is a just and reasonable rate is a
Same; Trending method in property valuation.—The
purpose of the trending method is to give recognition to Company, G.R. No. 141314 question of fact calling for the exercise of discretion, good
(November 15, 2002) sense, and a fair, enlightened and independent judgment.—
changing economic conditions and variations in the
In the fixing of rates, the only standard which the
purchasing power of the currency between the time of
legislature is required to prescribe for the guidance of the
investment and the time of the rate base computation. In the
administrative authority is that the rate be reasonable and
case at bar, the trend factor used by the public utility in re-
Constitutional Law; Taxation; Public Utilities; When just. It has been held that even in the absence of an express
valuating its properties cannot be said to have resulted in
private property is used for a public purpose and is affected requirement as to reasonableness, this standard may be
the overvaluation of its utility plant in service.
with public interest, it ceases to be juris privati only and implied. What is a just and reasonable rate is a question of
Same; Includible expense items.—The amount expended becomes subject to regulation.—The regulation of rates to fact calling for the exercise of discretion, good sense, and a
by MERALCO (a) for institutional advertising instructing be charged by public utilities is founded upon the police fair, enlightened and independent judgment. The

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requirement of reasonableness comprehends such rates Public Service Commission on questions of fact and will public utility. Income tax should be borne by the taxpayer
which must not be so low as to be confiscatory, or too high only reverse or modify such orders of the Public Service alone as they are payments made in exchange for benefits
as to be oppressive. In determining whether a rate is Commission when it really appears that the evidence is received by the taxpayer from the State. Republic vs.
confiscatory, it is essential also to consider the given insufficient to support their conclusions.” Manila Electric Company, 391 SCRA 700, G.R. No.
situation, requirements and opportunities of the utility. 141314, G.R. No. 141369 November 15, 2002
Same; Same; Same; The function of the court, in exercising
Same; Same; Same; Major factors in determining the just its power of judicial review, is to determine whether under
and reasonable rates to be charged by a public utility.—In the facts and circumstances, the final order entered by the
determining the just and reasonable rates to be charged by a administrative agency is unlawful or unreasonable.—In the
public utility, three major factors are considered by the cases at bar, findings and conclusions of the ERB on the
regulating agency: a) rate of return; b) rate base and c) the rate that can be charged by MERALCO to the public Kilusang Mayo Uno Labor
return itself or the computed revenue to be earned by the should be respected. The function of the court, in exercising Center v. Garcia, et. al. G.R.
public utility based on the rate of return and rate base. The its power of judicial review, is to determine whether under No. 115381 (December 23,
rate of return is a judgment percentage which, if multiplied the facts and circumstances, the final order entered by the
with the rate base, provides a fair return on the public administrative agency is unlawful or unreasonable. Thus, to 1994)
utility for the use of its property for service to the public. the extent that the administrative agency has not been
The rate of return of a public utility is not prescribed by arbitrary or capricious in the exercise of its power, the time-
statute but by administrative and judicial pronouncements. honored principle is that courts should not interfere. The Public Utilities; Common Carriers; Words and Phrases;
This Court has consistently adopted a 12% rate of return for principle of separation of powers dictates that courts should When one devotes his property to a use in which the public
public utilities. The rate base, on the other hand, is an hesitate to review the acts of administrative officers except has an interest, he, in effect grants to the public an interest
evaluation of the property devoted by the utility to the in clear cases of grave abuse of discretion. in that use, and must submit to the control by the public for
public service or the value of invested capital or property the common good, to the extent of the interest he has thus
which the utility is entitled to a return. Same; Same; Same; ERB correctly ruled that income tax
should not be included in the computation of operating created.—Public utilities are privately owned and operated
Same; Same; Same; Other factors to consider for purposes expenses of a public utility.—The ERB correctly ruled that businesses whose services are essential to the general
of rate regulation.—Aside from the financial condition of income tax should not be included in the computation of public. They are enterprises which specially cater to the
the public utility, there are other critical factors to consider operating expenses of a public utility. Income tax paid by a needs of the public and conduce to their comfort and
for purposes of rate regulation. Among others, they are: public utility is inconsistent with the nature of operating convenience. As such, public utility services are impressed
particular reasons involved for the request of the rate expenses. In general, operating expenses are those which with public interest and concern. The same is true with
increase, the quality of services rendered by the public are reasonably incurred in connection with business respect to the business of common carrier which holds such
utility, the existence of competition, the element of risk or operations to yield revenue or income. They are items of a peculiar relation to the public interest that there is
hazard involved in the investment, the capacity of expenses which contribute or are attributable to the superinduced upon it the right of public regulation when
consumers, etc. Rate regulation is the art of reaching a production of income or revenue. As correctly put by the private properties are affected with public interest, hence,
result that is good for the public utility and is best for the ERB, operating expenses “should be a requisite of or they cease to be juris privati only. When, therefore, one
public. necessary in the operation of a utility, recurring, and that it devotes his property to a use in which the public has an
redounds to the service or benefit of customers.” interest, he, in effect grants to the public an interest in that
Same; Same; Same; Factual findings of administrative use, and must submit to the control by the public for the
bodies on technical matters within their area of expertise Same; Same; Same; By its nature, income tax payments of common good, to the extent of the interest he has thus
should be accorded not only respect but even finality if they a public utility are not expenses which contribute to or are created.
are supported by substantial evidence even if not incurred in connection with the production of profit of a
overwhelming or preponderant.—Settled jurisprudence public utility.—Income tax, it should be stressed, is Same; Same; Political Law; Administrative Law;
holds that factual findings of administrative bodies on imposed on an individual or entity as a form of excise tax Delegation of Powers; Power of Subordinate Legislation;
technical matters within their area of expertise should be or a tax on the privilege of earning income. In exchange for The Legislature has delegated to the defunct Public Service
accorded not only respect but even finality if they are the protection extended by the State to the taxpayer, the Commission, and presently the LTFRB, the power of fixing
supported by substantial evidence even if not government collects taxes as a source of revenue to finance the rates of public services.—Under the foregoing
overwhelming or preponderant. In one case, we cautioned its activities. Clearly, by its nature, income tax payments of provision, the Legislature delegated to the defunct Public
that courts should “refrain from substituting their discretion a public utility are not expenses which contribute to or are Service Commission the power of fixing the rates of public
on the weight of the evidence for the discretion of the incurred in connection with the production of profit of a services. Respondent LTFRB, the existing regulatory body
today, is likewise vested with the same under Executive
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Order No. 202 dated June 19, 1987. Section 5(c) of the said a negation of the duty in violation of the trust reposed in the Philippines, at least 60 per centum of its stock or paid-up
executive order authorizes LTFRB “to determine, delegate mandated to discharge it directly. capital must belong entirely to citizens of the Philippines;
prescribe, approve and periodically review and adjust, (ii) the applicant must be financially capable of undertaking
reasonable fares, rates and other related charges, relative to Same; Same; Same; Same; Same; Rate Fixing; Rate the proposed service and meeting the responsibilities
the operation of public land transportation services making or rate fixing is a delicate and sensitive government incident to its operation; and (iii) the applicant must prove
provided by motorized vehicles.” function that requires dexterity of judgment and sound that the operation of the public service proposed and the
discretion with the settled goal of arriving at a just and authorization to do business will promote the public interest
Same; Same; Same; Same; Same; Same; Given the task of reasonable rate acceptable to both the public utility and the in a proper and suitable manner. It is understood that there
determining sensitive and delicate matters as route-fixing public.—Moreover, rate making or rate fixing is not an must be proper notice and hearing before the PSC can
and rate-making for the transport sector, the responsible easy task. It is a delicate and sensitive government function exercise its power to issue a CPC.
regulatory body is entrusted with the power of subordinate that requires dexterity of judgment and sound discretion
legislation, under which such administrative body may with the settled goal of arriving at a just and reasonable rate Same; Same; Same; Administrative Law; Statutory
implement broad policies laid down in a statute by “filling acceptable to both the public utility and the public. Several Construction; In case of conflict between a statute and an
in” the details which the Legislature may neither have time factors, in fact, have to be taken into consideration before a administrative order, the former must prevail.—The above-
nor competence to provide.—Such delegation of legislative balance could be achieved. A rate should not be quoted provision is entirely incompatible and inconsistent
power to an administrative agency is permitted in order to confiscatory as would place an operator in a situation where with Section 16(c)(iii) of the Public Service Act which
adapt to the increasing complexity of modern life. As he will continue to operate at a loss. Hence, the rate should requires that before a CPC will be issued, the applicant
subjects for governmental regulation multiply, so does the enable public utilities to generate revenues sufficient to must prove by proper notice and hearing that the operation
difficulty of administering the laws. Hence, specialization cover operational costs and provide reasonable return on of the public service proposed will promote public interest
even in legislation has become necessary. Given the task of the investments. On the other hand, a rate which is too high in a proper and suitable manner. On the contrary, the policy
determining sensitive and delicate matters as route-fixing becomes discriminatory. It is contrary to public interest. A guideline states that the presumption of public need for a
and rate-making for the transport sector, the responsible rate, therefore, must be reasonable and fair and must be public service shall be deemed in favor of the applicant. In
regulatory body is entrusted with the power of subordinate affordable to the end user who will utilize the services. case of conflict between a statute and an administrative
legislation. With this authority, an administrative body and order, the former must prevail.
in this case, the LTFRB, may implement broad policies laid Same; Same; Same; Same; Same; Same; Due Process; The
down in a statute by “filling in” the details which the government must not relinquish the important function of Same; Same; Same; Same; Evidence; Presumptions; The
Legislature may neither have time nor competence to rate-fixing; The people deserve to be given full opportunity existence or non-existence of public convenience and
provide. However, nowhere under the aforesaid provisions to be heard in their opposition to any fare increase.—Given necessity is a question of fact that must be established by
of law are the regulatory bodies, the PSC and LTFRB alike, the complexity of the nature of the function of rate-fixing evidence in a public hearing conducted for that purpose.—
authorized to delegate that power to a common carrier, a and its far-reaching effects on millions of commuters, By its terms, public convenience or necessity generally
transport operator, or other public service. government must not relinquish this important function in means something fitting or suited to the public need. As
favor of those who would benefit and profit from the one of the basic requirements for the grant of a CPC, public
Same; Same; Same; Same; Same; The authority given by industry. Neither should the requisite notice and hearing be convenience and necessity exists when the proposed facility
the LTFRB to the provincial bus operators to set a fare done away with. The people, represented by reputable or service meets a reasonable want of the public and supply
range over and above the authorized existing fare, is illegal oppositors, deserve to be given full opportunity to be heard a need which the existing facilities do not adequately
and invalid as it is tantamount to an undue delegation of in their opposition to any fare increase. supply. The existence or non-existence of public
legislative authority; Potestas delegata non delegari convenience and necessity is therefore a question of fact
potest.—In the case at bench, the authority given by the Same; Same; Certificates of Public Convenience (CPC); that must be established by evidence, real and/or
LTFRB to the provincial bus operators to set a fare range Words and Phrases; CPC, Explained; Requisites before a testimonial; empirical data; statistics and such other means
over and above the authorized existing fare, is illegal and CPC may be granted.—A certificate of public convenience necessary, in a public hearing conducted for that purpose.
invalid as it is tanta-mount to an undue delegation of (CPC) is an authorization granted by the LTFRB for the The object and purpose of such procedure, among other
legislative authority. Potestas delegata non delegari potest. operation of land transportation services for public use as things, is to look out for, and protect, the interests of both
What has been delegated cannot be delegated. This doctrine required by law. Pursuant to Section 16(a) of the Public the public and the existing transport operators. Verily, the
is based on the ethical principle that such a delegated power Service Act, as amended, the following requirements must power of a regulatory body to issue a CPC is founded on
constitutes not only a right but a duty to be performed by be met before a CPC may be granted, to wit: (i) the the condition that after full-dress hearing and investigation,
the delegate through the instrumentality of his own applicant must be a citizen of the Philippines, or a it shall find, as a fact, that the proposed operation is for the
judgment and not through the intervening mind of another. corporation or co-partnership, association or joint-stock convenience of the public.
A further delegation of such power would indeed constitute company constituted and organized under the laws of the

QUEBAL
Same; Same; Same; Same; Same; Same; Separation of
Powers; Supreme Court; The establishment of a
presumption of public need in favor of an applicant for
CPC reverses well-settled and institutionalized judicial,
quasi-judicial and administrative procedures, and would in
effect amend the Rules of Court by adding another
disputable presumption under Rule 131; Only the Supreme
Court is mandated by law to promulgate rules concerning
pleading, practice and procedure.—Other-wise 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.

Same; Same; Police Power; Deregulation; Advocacy of


liberalized franchising and regulatory process is tantamount
to an abdication by the government of its inherent right to
exercise police power, of the right to regulate public
utilities for protection of the public and the utilities
themselves.—Deregulation, while it may be ideal in certain
situations, may not be ideal at all in our country given the
present circumstances. Advocacy of liberalized franchising
and regulatory process is tantamount to an abdication by
the government of its inherent right to exercise police
power, that is, the right of government to regulate public
utilities for protection of the public and the utilities
themselves. Kilusang Mayo Uno Labor Center vs. Garcia,
Jr., 239 SCRA 386, G.R. No. 115381 December 23, 1994

QUEBAL

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