G.R. No. L-28865
December 19, 1928
BATANGAS TRANSPORTATION CO., petitioner-appellant,
vs.
CAYETANO ORLANES, respondent-appellee.
L. D. Lockwood and C. de G. Alvear for appellant.
Paredes, Buencamino and Yulo and Menandro Quiogue for appellee.
STATEMENT
In his application for a permit, the appellee Orlanes alleges that he is the holder of a certificate of public
convenience issued by the Public Service Commission in case No. 7306, to operate an autobus line from
Taal to Lucena, passing through Batangas, Bolbok and Bantilan, in the Province of Batangas, and Candelaria
and Sariaya, in the Province of Tayabas, without any fixed schedule; that by reason of the requirements of
public convenience, he has applied for a fixed schedule from Bantilan to Lucena and return; that in case
No. 7306, he cannot accept passengers or cargo from Taal to any point before Balbok, and vice versa; that
the public convenience requires that he be converted into what is known as a regular operator on a fixed
schedule between Taal and Bantilan and intermediate points, and for that purpose, he has submitted to
the Commission proposed schedule for a license to make trips between those and intermediate points. He
then alleges that by reason of increase of traffic, the public convenience also requires that he be permitted
to accept passengers and cargo at points between Taal and Bantilan, and he asked for authority to establish
that schedule, and to accept passengers at all points between Taal and Bantilan.
To this petition the Batangas Transportation Company appeared and filed an application for a permit, in
which it alleged that it is operating a regular service of auto trucks between the principal municipalities of
the Province of Batangas and some of those of the Province of Tayabas; that since 1918, it has been
operating a regular service between Taal and Rosario, and that in 1920, its service was extended to the
municipality of San Juan de Bolbok, with a certificate of public convenience issued by the Public Servise
Commission; that in the year 1925 Orlanes obtained from the Commission a certificate of public
convenience to operate an irregular service of auto trucks between Taal, Province of Batangas, and Lucena,
Province of Tayabas, passing through the municipalities of Bauan, Batangas, Ibaan, Rosario, and San Juan
de Bolbok, with the express limitation that he could not accept passengers from intermediate points
between Taal and Bolbok, except those which were going to points beyond San Juan de Bolbok or to the
Province of Tayabas; that he inaugurated this irregular in March, 1926, but maintained it on that part of
the line between Taal and Bantilan only for about three months, when he abandoned that portion of it in
the month of June and did not renew it until five days before the hearing of case No. 10301, which was set
for November 24, 1926, in which hearing the Batangas Transportation Company asked for additional hours
for its line between Batangas and Bantilan; that in June, 1926, Orlanes sought to obtain a license as a regular
operator on that portion of the line between Bantilan and Lucena without having asked for a permit for tat
portion of the line between Bantilan and Taal; that from June, 1926, Orlanes and the Batangas
Transportation Company were jointly operating a regular service between Bantilan and Lucena, with trips
every half an hour, and Orlanes not having asked for a regular service between Bantilan and Taal, the
Batangas Transportation Company remedied this lack of service under the authority of the Commission,
and increased its trips between Bantilan and Tayabas to make due and timely connections in Bantilan on a
half-hour service between Bantilan and Batangas with connections there for Taal and all other points in the
Province of Batangas. It is then alleged that the service maintained by the company is sufficient to satisafy
the convenience of the public, and that the public convenience does not require the granting of the permit
for the service which Orlanes petitions, and that to do so would result in ruinous competition and to the
grave prejudice of the company and without any benefit to the public, and it prayed that the petition of
Orlanes to operate a regular service be denied.
After the evidence was taken upon such issues, the Public Service Commission granted the petition of
Orlanes, as prayed for, and the company then filed a motion for a rehearing, which was denied, and the
case is now before this court, in which the appellant assigns the following errors:
The Commission erred in ordering that a certificate of public convenience be issued in favor of Cayetano
Orlanes to operate the proposed service without finding and declaring that the public interest will be
prompted in a proper and suitable by the operation of such service, or when the evidence does not show
that the public interests will be so prompted.
That the Commission erred in denying the motion for a rehearing.
JOHNS, J.:
The questions presented involve a legal construction of the powers and duties of the Public Service
Commission, and the purpose and intent for which it was created, and the legal rights and privileges of a
public utility operating under a prior license.
It must be conceded that an autobus line is a public utility, and that in all things and respects, it is what is
legally known as a common carrier, and that it is an important factor in the business conditions of the
Islands, which is daily branching out and growing very fast.
Before such a business can be operated, it must apply for, and obtain, a license or permit from the Public
Service Commission, and comply with certain defined terms and conditions, and when license is once,
granted, the operator must conform to, and comply with all, reasonable rules and regulations of the Public
Service Commission. The object and purpose of such a commission, among other things, is to look out for,
and protect, the interests of the public, and, in the instant case, to provide it with safe and suitable means
of travel over the highways in question, in like manner that a railroad would be operated under like terms
and conditions. To all intents and purposes, the operation of an autobus line is very similar to that of a
railroad, and a license for its operation should be granted or refused on like terms and conditions. For many
and different reasons, it has never been the policy of a public service commission to grant a license for the
operation of a new line of railroad which parallels and covers the same field and territory of another old
established line, for the simple reason that it would result in ruinous competition between the two lines,
and would not be of any benefit or convenience to the public.
The Public Service Commission has ample power and authority to make any and all reasonable rules and
regulations for the operation of any public utility and to enforce complience with them, and for failure of
such utility to comply with, or conform to, such reasonable rules and regulations, the Commission has
power to revoke the license for its operation. It also has ample power to specify and define what is a
reasonable compensation for the services rendered to the traveling public.
That is to say, the Public Service Commission, as such has the power to specify and define the terms and
conditions upon which the public utility shall be operated, and to make reasonable rules and regulations
for its operation and the compensation which the utility shall receive for its services to the public, and for
any failure to comply with such rules and regulations or the violation of any of the terms and conditions for
which the license was granted the Commission has ample power to enforce the provisions of the license or
even to revoke it, for any failure or neglect to comply with any of its terms and provisions.
Hence, and for such reasons, the fact that the Commission has previously granted a license to any person
to operate a bus line over a given highway and refuses to grant a similar license to another person over the
same highway, does not in the least create a monopoly in the person of the licensee, for the reason that at
all times the Public Service Commission has the power to say what is a reasonable compensation to the
utility, and to make reasonable rules and regulations for the convenience of the traveling public and to
enforce them.
In the instant case, Orlanes seek to have a certificate of public convenience to operate a line of auto trucks
with fixed times of departure between Taal and Bantilan, in the municipality of Bolbok, Province of
Batangas, with the right to receive passengers and freight from intermediate points. The evidence is
conclusive that at the time of his application, Orlanes was what is known as an irregular operator between
Bantilan and Taal, and that the Batangas operator between Batangas and Rosario. Orlanes now seeks to
have his irregular changed into a regular one, fixed hours of departure and arrival between Bantilan and
Taal, and to set aside and nullify the prohibition against him in his certificate of public convenience, in
substance and to the effect that he shall not have or receive any passengers or freight at any of the points
served by the Batangas Transportation Company for which that company holds a prior license from the
Commission. His petition to become such a regular operator over such conflicting routes is largely based
upon the fact that, to comply with the growing demands of the public, the Batangas Transportation
Company, in case No. 10301, applied to the Commission for a permit to increase the number of trip hours
at and between the same places from Batangas to Rosario, and or for an order that all irregular operators
be prohibited from operating their respective licenses, unless they should observe the interval of two hours
before, or one hour after, the regular hours of the Batangas Transportation Company.
In his petition Orlanes sought to be releived from his prohibition to become a regular operator, and for a
license to become a regular operator with a permission to make three trips daily between Bantilan and
Taal, the granting of which make him a regular operator between those points and bring him in direct
conflict and competition over the same points with the Batangas Transportation Company under its prior
license, and in legal effect that was the order which the Commission made, of which the Batangas
Transportation Company now complains.
The appellant squarely plants its case on the proposition:
Is a certificate of public convenience going to be issued to a second operator to operate a public utility in a
field where, and in competition with, a first operator who is already operating, adequate and satisfactory
service?
There is no claim or pretense that the Batangas Transportation Company has violated any of the terms and
conditions of its license. Neiher does the Public Service Commission find as a fact that the grantring of a
license to Orlanes as a regular operator between the points in question is required or necessary for the
convenience of the traveling public, or that there is any complaint or criticism by the public of the services
rendered by the Batangas Transportation Company over the route in question.
The law creating the Public service Commission of the Philippine Islands is known as Act No. 3108, as
amended by Act No. 3316, and under it the supervision and control of public utilities is very broad and
comprehensive.
Section 15 of Act No. 3108 provides that the Commission shall have power, after hearing, upon notice, by
order in writing to require every public utility:
(a) To comply with the laws of the Philippine Islands;
(b) To furnish safe, adequate, and proper service as regards the manner of furnishing the same as well as
the maintenance of the necessary material equipment, etc;
(c) To establish, construct, maintain, and operate any reasonable extention of its existing facilities, where
such extension is reasonable and practicable and will furnish sufficient business to justify the construction
and maintenance of the same;
(d) To keep a uniform system of books, records and accounts;
(e) To make specific answer with regard to any point on which the Commission requires information, and
to furnish annual reports of finance and operations;
(f) To carry, whenever the Commission may require, a proper and adequate depreciation account;
(g) To notify the Commission of all accidents;
(h) That when any public utility purposes to increase or reduce any existing individual rates, it shall give the
Commission written notice thirty days prior to the proposed change; and
(i) "No public utility as herein defind shall operate in the Philippine Islands without having first secured from
the Commission a certificate, which shall be known as Certificate of Public Convenience, to the effect that
the operation of said public utility and the authorization to do busibness wikll promote the public interest
in a proper and suitable maner."
Section 16 specially prohibits any discrimination in the handling of freight charges.
In construing a similar law of the State of Kansas, the United States Supreme Court, in an opinion written
by Chief Justice Taft, in Wichita Railroad and Light Co. vs. Public Utilities Commission of Kansas (260 U. S.
48; 67 Law. ed., 124), said:
The proceeding we are considering is governed by section 13. That is the general section of the act
comprehensively describing the duty of the Commission, vesting it with power to fix and order substituted
new rates for existing rates. The power is expressly made to depend on the condition that, after full hearing
and investigation, the Commission shall find existing rates to be unjust, unreasonable, unjustly
discriminatory, or unduly preferential. We conclude that a valid order of the Commission under the act
must contain a finding of fact after hearing and investigation, upon which the order is founded, and that,
for lack of such a finding, the order in this case was void.
This conclusion accords with the construction put upon similar statutes in other states. (State Public Utilities
Commission ex rel. Springfield vs. Springfield Gas and E. Co., 291 Ill., 209; P. U. R., 1920C, 640; 125 N. E.
891; State Public Utilities Co. vs. Baltimore and O. S. W. R. Co., 281 Ill; 405; P. U. R., 1918B, 655; 118 N. E.,
81.) Moreover, it accords with general principles of constitutional government. The maxim that a legislature
may not delegate legislative power has some qualifications, as in the creation of municipalities, and also in
the creation of administrative boards to apply to the myriad details of rate schedule the regulatory police
power of the state. The latter qualification is made necessary in order that the legislative power may be
effectively exercised. In creating such an administrative agency, the legislature, to prevent its being a pure
delegation of legislative power, must enjoin upon a certain course of procedure and certain rules of
decision in the perfomance of its function. It is a wholesome and necessary principle that such an agency
must pursue the procedure and rules enjoined, and show a substantial compliance therewith, to give
validity to its action. When, therefore, such an administrative agency is required, as a condition precedent
to an order, to make a finding of facts, the validity of the order rest upon the needed finding. It is lacking,
the order is ineffective.
It is pressed on us that the lack of an express finding may be supplied by implication and by reference to
the averments of the petition invoking the action of the Commission. We cannot agree to this point. It is
doubtful whether the facts averred in the petition were sufficient to justify a finding that the contract rates
were unreasonably low; but we do not find it necessay to answer this question. We rest our decision on
the principle that an express finding of unreasonableness by the Commission was indispensable under the
statutes of the state.
That is to say, in legal effect, that the power of the Commission to issue a certificate of public convenience
depends on the condition precedent that, after a full hearing and investigation, the Commission shall have
found as a fact that the operation of the proposed public service and its authority to do business must be
based upon the finding that it is for the convenience of the public.
In the Philippine Islands the cetificate of public convenience is as folows:
CERTIFICATE OF PUBLIC CONVENIENCE
To whom it may concern:
THIS IS TO CERTIFY, That in pursuance of the power and authority conferred upon it by subsection (i) of
section 15 of Act No. 3108 of the Philippine Legislature,
THE PUBLIC SERVICE COMMISSION OF THE PHILIPPINE ISLANDS, after having duly considered the
application of ................. for a certificate of public convenience the operation of ........................ in
connection with the evidence submitted in support thereof, has rendered its decision on................, 192....,
in case No. ............, declaring that the operation by the applicant ...................... of the business above
described will promote the public interests in a proper and suitable manner, and granting................. to this
effect the corresponding authority, subject to the conditions prescribed in said decision.
Given at Manila Philippine Islands, this ......... day of ....................., 192 .....
PUBLIC SERVICE COMMISSION OF THE PHILIPPINE ISLANDS
By..................................
Commissioner
Attested:
.....................................
Secretary
That is to say, that the certificate of public convenince granted to Orlanes in the instant case expressly
recites that it "will promote the public interests in a proper and suitable manner." Yet no such finding of
fact was made by the Commission.
In the instant case, the evidence is conclusive that the Batangas Transportation Company operated its line
five years before Orlanes ever turned a wheel, yet the legal effect of the decision of the Public Service
Commission is to give an irregular operator, who was the last in the field, a preferential right over a regular
operator, who was the first in the field. That is not the law, and there is no legal principle upon which it can
be sustained.
So long as the first licensee keeps and performs the terms and conditions of its license and complies with
the reasonable rules and regulations of the Commission and meets the reasonable demands of the public,
it should have more or less of a vested and preferential right over a person who seeks to acquire another
and a later license over the same route. Otherwise, the first license would not have protection on his
investment, and would be subject to ruinous competition and thus defeat the very purpose and intent for
which the Public Service Commission was created.
It does not appear that the public has ever made any complaint the Batangas Transportation Company, yet
on its own volition and to meet the increase of its business, it has applied to the Public Service Commission
for authority to increase the number of daily trips to nineteen, thus showing a spirit that ought to be
commended.
Such is the rule laid down in the case of Re B. F. Davis Motor Lines, cited by the Public Service Commission
of Indiana (P. U. R., 1927-B, page 729), in which it was held:
A motor vehicle operator having received a certificate with a voluntary stipulation not to make stops (that
is not to carry passengers) on a part of a route served by other carriers, and having contracted with such
carries not to make the stops, will not subsequently are able to carry all passengers who present theselves
for transportation within the restricted district.
And in Re Mount Baker Development Co., the Public Service Commission of Washington (P. U. R., 1925D,
705), held:
A cerificate authorizing through motor carrier service should not authorize local service between points
served by the holders of a certificate, without first giving the certificate holders an opportunity to render
additional service desired.
In the National Coal Company case (47 Phil., 356), this court said:
When there is no monopoly. — There is no such thing as a monopoly where a property is operated as a
public utility under the rules and regulations of the Public Utility Commission and the terms and provision
of the Public Utility Act.
Section 775 of Pond on Public Utilities, which is recognized as a standard authority, states the rule thus:
The policy of regulation, upon which our present public utility commission plan is based and which tends
to do away with competition among public utilities as they are natural monopolies, is at once reason and
the justification for the holding of our courts that the regulation of an existing system of transportation,
which is properly serving a given field, or may be required to do so, is to be preferred to competition among
several independent systems. While requiring a proper service from, a single system for a city or territory
in consideration for protecting it as a monopoly for all service required and in conserving its resources, no
economic waste results and service may be furnished at the minimum cost. The prime object and real
purpose of commission control is to secure adequate sustained service for the public at the least possible
cost, and to protect and conserve investments already made for this purpose. Experience has
demonstrated beyond any question that competition among natural monopolies is wasteful economically
and results finally in insufficient and unsatisfactory service and extravagant rates.
The rule has been laid down, without dissent in numerous decisions, that where an operator is rendering
good, sufficient and adequate service to the public, that the convenince does not require and the public
interests will not be promoted in a proper and suitable manner by giving another operator a certificate of
public convenience to operate a competing line over the same ruote.
In Re Haydis (Cal.), P. U. R., 1920A, 923:
A certificate of convenience and necessity for the operation of an auto truck line in occupied territory will
not be granted, where there is no complaint as to existing rates and the present company is rendering
adequate service.
In Re Chester Auto Bus Line (Pa.), P. U. R., 1923E, 384:
A Commission should not approve an additional charter and grant an additional certificate to a second bus
company to operate in territory covered by a certificate granted to another bus company as a subsidiary of
a railway company for operation in conjunction with the trolley system where one bus service would be
ample for all requirements.
In Re Branham (Ariz.), P. U. R., 1924C, 500:
A showing must be clear and affirmative that an existing is unable or has refused to maintain adequate and
satisfactory service, before a certificate of convenience and necessity will be granted for the operation of
an additional service.
In Re Lambert (N. H.), P. U. R., 1923D, 572:
Authority to operate a jitney bus should be refused when permision has been given to other parties to
operate and, from the evidence, they are equipped adequately to accommodate the public in this respect,
no complaints having been received in regard to service rendered.
In Re White (Md.), P. U. R., 1924E, 316:
A motor vehicle operator who has built up a business between specified points after years of effort should
not be deprived of the fruits of his labor and of the capital he has invested in his operation by a larger
concern desiring to operate between the same points.
In Re Kocin (Mont.), P. U. R., 1924C, 214:
A certificate authorizing the operation of passenger motor service should be denied where the record
shows that the admission of another operator into the territory served by present licensees is not necessary
and would render their licensee oppressive and confiscatory because of further division and depletion of
revenues and would defeat the purpose of the statue and disorganize the public service.
In Re Nevada California Stage Co., P. U. R., 1924A, 460:
The Nevada Commission denied an application for a certificate of convenience and necessity for the
operation of an automobile passenger service in view of the fact that the service within the territory
proposed to be served appeared to be adequate and it was the policy of the Commission to protect the
established line in the enjoyment of business which it had built, and in view of the further fact that it was
very uncertain whether the applicant could secure sufficient business to enable him to operate profitably.
In Re Idaho Light & P. Co. (Idaho), P. U. R., 1915A, 2:
Unless it is shown that the utility desiring to enter a competitive field can give such service as will be a
positive advantage to the public, a certificate of convenience will be denied by the Idaho Commission,
provided that the existing utility furnishing adequate service at reasonable rates at the time of the
threatened competition.
In Scott, vs. Latham (N. Y. 2d Dist), P. U. R., 1921C, 714:
Competition between bus lines should be prohibited the same as competition between common carriers.
In Re Portland Taxicab Co. (Me.), P. U. R., 1923E, 772:
Certificates permitting the operation of motor vehicles for carrying passengers for hire over regular routes
between points served by steam and electric railways should not be granted when the existing service is
reasonable, safe, and adequate as required by statue.
In Re Murphy (Minnesota), P.U.R., 1927C, 807:
Authority to operate an auto transportation service over a route which is served by another auto
transportation company should be denied if no necessity is shown for additional service.
In Re Hall, editorial notes, P. U. R., 1927E:
A certificate of convenience and necessity for the operation of a motor carrier service has been denied by
the Colorado Commission where the only ground adduced for the certificate was that competition thereby
afforded to an existing utility would benefit the public by lowering rates. The Commission said: "Up to the
present time the Commission has never issued a certificate authorizing a duplication of motor vehicle
operation over a given route unless it appeared that the service already rendered was not adequate, that
there was no ruinous competition or that the second applicant could, while operating on a sound
businesslike basis, afford transportation at cheaper rates than those already in effect. There has been no
complaint to date as to the rates now being charged on the routes over which the applicant desires to
serve. Moreover, the Commission stand ready, at any time the unreasonable of the rates of any carrier are
questioned, to determine their reasonableness and to order them reduced if they are shown to be
unreasonable." In this case the Commission also expressed its disappoval of the practice of an applicant
securing a certificate for the sole purpose of transferring it to another.
In Re Sumner (Utah), P. U. R., 1927D, 734:
The operation of an automobile stage line will not be authorized over a route adequately served by a
railroad and other bus line, although the proposed service would be an added convenience to the territory.
In Bartonville Bus Line vs. Eagle Motor Coach Line (Ill. Sup. Court), 157 N. E., 175; P. U. R., 1927E, 333:
The policy of the state is to compel an established public utility occupying a given filed to provide adequate
service and at the same time protect it from ruinous competition, and to allow it an apportunity to provide
additional service when required instead of permitting such service by a newly established competitor.
Upon the question of "Reason and Rule for Regulation," in section 775, Pond says:
The policy of regulation, upon which our present public utility commission plan is based and which tends
to do away with competition among public utilities as they are natural monopolies, is at once the reason
and the justification for the holding of our courts that the regulation of an existing system of transportation,
which is properly serving a given field or may be required to do so, is to be preferred to competition among
several independent systems. While requiring a proper service from a single system for a city or territory
in consideration for protecting it as a monopoly for all the service required and in conserving its resources,
no economic waste results and service may be furnished at the minimum cost. The prime object and real
purpose of commission control is to secure adequate sustained service for the public at the least possible
cost, and to protect and conserve investments already made for this purpose. Experience has demostrated
beyond any question that competition among natural monopolies is wasteful economically and results
finally in insufficient and unsatisfactory service and extravagant rates. Neither the number of the individuals
demanding other service nor the question of the fares constitutes the entire question, but rather what the
proper agency should be to furnish the best service to the public generally and continuously at the least
cost. Anything which tends to cripple seriously or destroy an established system of transportation that is
necessary to a community is not a convenience and necessity for the public and its introduction would be
a handicap rather than a help ultimately in such a field.
That is the legal construction which should be placed on paragraph (e) of section 14, and paragraph (b) and
(c) of section 15 of the Public Service Law.
We are clearly of the opinion that the order of the Commission granting the petition of Orlanes in question,
for the reason therein stated, is null and void, and that it is in direct conflict with the underlying and
fundamental priciples for which the Commission was created.1awphi1.net
The question presented is very important and far-reaching and one of first impression in this court, and for
such reasons we have given this case the careful consideration which its importance deserves. The
Government having taken over the control and supervision of all public utilities, so long as an operator
under a prior license complies with the terms and conditions of his license and reasonable rules and
regulation for its operation and meets the reasonable demands of the public, it is the duty of the
Commission to protect rather than to destroy his investment by the granting of a subsequent license to
another for the same thing over the same route of travel. The granting of such a license does not serve its
convenience or promote the interests of the public.
The decision of the Public Service Commission, granting to Orlanes the license in question, is revoked and
set aside, and the case is remanded to the Commission for such other and further proceedings as are not
inconsistent with this opinion. Neither party to recover costs on this appeal. So ordered.
Johnson, Street, Malcolm and Ostrand, JJ., concur.
Separate Opinions
ROMUALDEZ, J., dissenting:
I believe the Public Service Commission had jurisdiction to try this case and that there is sufficient evidence
of record to sustain the appealed judgment. However, I think there sould be no conflict between trip hours,
and that the Commission could do away with it by making the necessary arrangements.
Villa-Real, J., concur.
[G.R. No. L-5458. September 16, 1953.]
LUZON STEVEDORING CO., INC., and VISAYAN STEVEDORE TRANSPORTATION CO., Petitioners, v. THE
PUBLIC SERVICE COMMISSION and THE PHILIPPINE SHIPOWNERS ASSOCIATION, Respondents.
Perkins, Ponce Enrile, Contreras and Enrique Belo, for Petitioners.
Ozaeta, Roxas, Lichauco, Picazo, Juan H. Paulino and Gerardo M. Alfonso for respondent Philippine
Shipowners Association.
SYLLABUS
1. CONTRACTS AND OBLIGATIONS; ADMIRALTY LAW; HIRE OF VESSEL, DISTINGUISHED FROM LEASE
THEREOF. — Where the lighters and tugboats in question were not leased, but used to carry goods for
compensation at a fixed rate for a fixed weight, they must be deemed to have been hired, hired in the sense
that the shippers did not have direction, control, and maintenance thereof, which is a characteristic feature
of lease.
2. PUBLIC UTILITY; DETERMINATION WHETHER A FIRM OR COMPANY IS A PUBLIC UTILITY. — Public Utility,
even where the term is not defined by statute, is not determined by the number of people actually served.
Nor does the mere fact that service is rendered only under contract prevent a company from being a public
utility. [43 Am. Jur., 573; Luzon Brokerage Co. v. Public Service Commission, 40 Off. Gaz., Supp. 7, p. 271. ]
On the other hand, causal or incidental service devoid of public character and interest is not brought within
the category of public utility. The demarkation line is not susceptible of exact description or definition, each
being governed by its circumstance.
3. ID.; ID.; CASE AT BAR. — The transportation service which was the subject of complaint was not casual
or incidental. It had been carried on regularly for years at almost uniform rates of charges. Although the
number of the company’s customers was limited, the value of goods, transported was not inconsiderable.
It did not have the same customers all the time embraced in the complaint, and there was no reason to
believe that it would not accept, and there was nothing to prevent it from accepting, new customers that
might be willing to avail of its services to the extent of its capacity. Held: Applying the plain letter of
Commonwealth Act No. 146, it is a public utility, and to restrain it from 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 Service Commission, does not invade private rights of property or
contract. The constitutionality of Commonwealth Act No. 146 was upheld, implicity in Luzon Brokerage Co.
v. Public Service Commission [40 Off. Gaz., Supp. 7, p. 271] and explicitly in Pangasinan Transportation Co.
v. Public Service Commission [70 Phil., 221].
4. ID.; RUINOUS; COMPETITION; ITS PREVENTION, ONE OF THE PURPOSES OF THE PUBLIC SERVICE LAW. —
The Public Service Law was enacted not only to protect the public against unreasonable charges and poor,
inefficient service, but also to prevent ruinous competition. That is the main purpose in bringing under the
jurisdiction of the Public Service Commission Motor Vehicles, other means of transportation, ice plants,
etc., which cater to a limited portion of the public under private agreements. To the extent that such
agreements may tend to wreek or impair the financial stability and efficiency of public utilities who do offer
service to the public in general, they are affected with public interest and come within the police power of
the state to regulate.
5. PUBLIC SERVICE COMMISSION; HEARINGS THEREIN; DESIGNATION OF COMMISSION TO TAKE EVIDENCE;
WAIVER OF OBJECTION TO SUCH DESIGNATION. — It was tardy to object, for the first time to the
designation of a commissioner to take the evidence, after decision was rendered. The point is procedural,
not jurisdictional, and may be waived by express consent or acquiescence [Everett Steamship Corpn. v.
Chua Hiong, 90 Phil., 64; La Paz Ice Plant v. Comision de Utilidades Publicas, 89 Phil., 109]. Where in a
prolonged hearing before a commissioner, a party crossexamined his adversary’s witnesses and presented
his own evidence, he has waived objection to such designation.
DECISION
TUASON, J.:
Petitioners apply for review of a decision of the Public Service Commission restraining them "from further
operating their watercraft to transport goods for hire or compensation between points in the Philippines
until the rates they propose to charge are approved by this Commission."cralaw virtua1aw library
The facts are summarized by the Commission as follows:jgc:chanrobles.com.ph
". . . respondents are corporations duly organized and existing under the laws of the Philippines, mainly
engaged in the stevedoring or lighterage and harbor towage business. At the same time, they are engaged
in interisland service which consists of hauling cargoes such as sugar, oil, fertilizer and other commercial
commodities which are loaded in their barges and towed by their tugboats from Manila to various points
in the Visayan Islands, particularly in the Provinces of Negros Occidental and Capiz, and from said places to
Manila. For this service respondents charge freightage on a unit price with rates ranging from P0.50 to
P0.62 1/2 per bag or picul of sugar loaded or on a unit price per ton in the case of fertilizer or sand. There
is no fixed route in the transportation of these cargoes, the same being left at the indication of the owner
or shipper of the goods. The barge and the tugboats are manned by the crew of respondents and, in case
of damage to the goods in transit caused by the negligence of said crews, respondents are liable therefor.
The service for which respondents charge freightage covers the hauling or carriage of the goods from the
point of embarkation to the point of disembarkation either in Manila or in any point in the Visayan Islands,
as the case may be.
"The evidence also sufficiently establishes that respondents are regularly engaged in this hauling business
serving a limited portion of the public. Respondent Luzon Stevedoring Company, Inc., has among its regular
customers the San Miguel Glass Factory, PRATRA, Shell Co., of P.I., Ltd., Standard Oil Co., of New York and
Philippine-Hawaiian; while respondent Visayan Stevedore Transportation Co., has among its regular
customers the Insular Lumber, Shell Company, Ltd., Kim Kee Chua Yu & Co., PRATRA and Luzon
Merchandising Corporation. During the period from January, 1949 and up to the present, respondent Luzon
Stevedoring Co. Inc., has been rendering to PRATRA regularly and on many occasions such service by
carrying fertilizer from Manila to various points in the Provinces of Negros Occidental and Capiz, such as
Hinigatan, Silay, Fabrica, Marayo, Mambaquid, Victorias and Pilar, and on the return trip sugar was loaded
from said provinces to Manila. For these services, as evidenced by Exhibits A, A-1, A-2, A-3 and A-4,
respondent Luzon Stevedoring Company, Inc., charged PRATRA at the rate of P0.60 per picul or bag of sugar
and, according to Mr. Mauricio Rodriguez, chief of the division in charge of sugar and fertilizer of the
PRATRA, for the transportation of fertilizer, this respondent charged P12 per metric ton. During practically
the same period, respondent Visayan Stevedore Transportation Company transported in its barges and
towed by its tugboats sugar for Kim Kee Chua Yu & Company coming from Victorias, Marayo and Pilar to
Manila, and for Luzon Merchandising Corporation, from Hinigaran, Bacolod, Marayo and Victorias to
Manila. For such service respondent Visayan Stevedore Transportation Company charge Kim Kee Chua Yu
Company for freightage P0.60 per picul or bag as shown in Exhibits C, C-1, C-2, C-3, C-4, C- 5, C-6, C-7 and
C-8, and Luzon Merchandising Corporation was also charged for the same service and at the same rate as
shown in Exhibits B, B-1 and B-2."cralaw virtua1aw library
It was upon these findings that the Commission made the order now sought to be reviewed, upon
complaint of the Philippine Shipowners’ Association charging that the then respondents were engaged in
the transportation of cargo in the Philippines for hire or compensation without authority or approval of the
Commission, having adopted, filed and collected freight charges at the rate of P0.60 per bag or picul,
particularly sugar, loaded and transported in their lighters and towed by their tugboats between different
points in the Province of Negros Occidental and Manila, which said rates resulted in ruinous competition
with complainant.
Section 13 (b) of the Public Service Law (Commonwealth Act No. 146) defines public service
thus:jgc:chanrobles.com.ph
"The term ’public service’ includes every person that now or hereafter may own, operate, manage, or
control in the Philippines, for hire or compensation, with general or limited clientele, whether permanent,
occasional or accidental, and done for general business purposes any common carrier, railroad, street
railway, traction railway, subway, motor vehicle, either for freight or passenger, or both, with or without
fixed route and whatever may be its classification, freight or carrier service of any class, express service,
steamboat, or steamship line, pontines, ferries, and small water craft, engaged in the transportation of
passengers and freight, shipyard, marine railway, marine repair shop, warehouse, wharf or dock, ice plant,
ice-refrigeretion plant, canal, irrigation system, sewerage, gas, electric light, heat and power, water supply
and power, petroleum, sewerage system, telephone, wire or wireless telegraph system and broadcasting
radio stations."cralaw virtua1aw library
It is not necessary, under this definition, that one holds himself out as serving or willing to serve the public
in order to be considered public service.
In Luzon Brokerage Company v. Public Service Commission (40 Off. Gaz., 7th Supplement, p. 271), this court
declared that "Act 454 is clear in including in the definition of a public service that which is rendered for
compensation, although limited exclusively to the customers of the petitioner."cralaw virtua1aw library
In that case, the Luzon Brokerage Company, a customs broker, had been receiving, depositing and
delivering goods discharged from ships at the pier to its customers. As here, the Luzon Brokerage was then
rendering transportation service for compensation to a limited clientele, not to the public at large.
In the United States where, it is said, there is no fixed definition of what constitutes public service or public
utility, it is also held that it is not always necessary, in order to be a public service, that an organization be
dedicated to public use, i.e., ready and willing to serve the public as a class. It is only necessary that it must
in some way be impressed with a public interest; and whether the operation of a given business is a public
utility depends upon whether or not the service rendered by it is of a public character and of public
consequence and concern. (51 C. J. 5.) Thus, a business may be affected with public interest and regulated
for public good although not under any duty to serve the public. (43 Am. Jur., 572.)
It can scarcely be denied that the contracts between the owners of the barges and the owners of the cargo
at bar were ordinary contracts of transportation and not of lease. Petitioners’ watercraft was manned
entirely by crews in their employ and payroll, and the operation of the said craft was under their direction
and control, the customers assuming no responsibility for the goods handled on the barges. The great
preponderance of the evidence contradicts the assertion that there was any physical or symbolic
conveyance of the possession of the tugboats and barges to the shippers. Whether the agreements were
written or verbal, the manner of payment of freight charges, the question who loaded and unloaded the
cargo, the propriety of the admission of certain receipts in evidence, etc., to all of which the parties have
given much attention — these are matters of form which do not alter the essential nature of the
relationship of the parties to the transactions as revealed by the fundamental facts of record.
It is contended that "if the Public Service Act were to be construed in such manner as to include private
lease contracts, said law would be unconstitutional," seemingly implying that, to prevent the law from being
in contravention of the Constitution, it should be so read as to embrace only those persons and companies
that are in fact engaged in public service" with its corresponding qualification of an offer to serve
indiscriminately the public."cralaw virtua1aw library
It has been already shown that the petitioners’ lighters and tugboats were not leased, but used to carry
goods for compensation at a fixed rate for a fixed weight. At the very least, they were hired, hired in the
sense that the shippers did not have direction, control, and maintenance thereof, which is a characteristic
feature of lease.
On the second proposition, the Public Service Commission has, in our judgment, interpreted the law in
accordance with legislative intent. Commonwealth Act No. 146 declares in unequivocal language that an
enterprise of any of the kinds therein enumerated is a public service if conducted for hire or compensation
even if the operator deals only with a portion of the public or limited clientele.
It has been seen that public utility, even where the term is not defined by statute, is not determined by the
number of people actually served. Nor does the mere fact that service is rendered only under contract
prevent a company from being a public utility. (43 Am. Jur., 573.) On the other hand, casual or incidental
service devoid of public character and interest, it must be admitted, is not brought within the category of
public utility. The demarkation line is not susceptible of exact description or definitions, each case being
governed by its peculiar circumstances.
"It is impossible to lay down any general rule on the subject whether the rendering of incidental service to
members of the public by an individual or corporation whose principal business is of a different nature
constitute such person a public utility. In the result reached, the cases are in conflict, as the question
involved depends on such factors as the extent of service, whether such person or company has held
himself or itself out as ready to serve the public or a portion of the public generally, or in other ways
conducted himself or itself as a public utility. Tn several cases, it has been held that the incidental service
rendered to others constituted such person or corporation a public utility, but in other cases, a contrary
decision has been reached." (43 Am. Jur., 573.)
The transportation service which was the subject of complaint was not casual or incidental. It had been
carried on regularly for years at almost uniform rates of charges. Although the number of the petitioners’
customers was limited, the value of goods transported was not inconsiderable. Petitioners did not have the
same customers all the time embraced in the complaint, and there was no reason to believe that they
would not accept, and there was nothing to prevent them from accepting, new customers that might be
willing to avail of their service to the extent of their capacity. Upon the well-established facts as applied to
the plain letter of Commonwealth Act No. 146, we are of the opinion that the Public Service Commission’s
order does not invade private rights of property or contract.
In at least one respect, the business complained of was a matter of public concern. The Public Service Law
was enacted not only to protect the public against unreasonable charges and poor, inefficient service, but
also to prevent ruinous competition. That, we venture to say, is the main purpose in bringing under the
jurisdiction of the Public Service Commission motor vehicles, other means of transportation, ice plants,
etc., which cater to a limited portion of the public under private agreements. To the extent that such
agreements may tend to wreck or impair the financial stability and efficiency of public utilities who do offer
service to the public in general, they are affected with public interest and come within the police power of
the state to regulate.
Just as the legislature may not "declare a company or enterprise to be a public utility when it is not
inherently such," a public utility may not evade control and supervision of its operation by the government
by selecting its customers under the guise of private transactions.
For the rest, the constitutionality of Commonwealth Act No. 146 was upheld, implicitly in Luzon Brokerage
Company v. Public Service Commission, supra, and explicitly in Pangasinan Transportation Company v.
Public Service Commission (70 Phil., 221).
Were there serious doubts, the courts should still be reluctant to invalidate the Public Service Law or any
provision thereof. Although the legislature can not, by its mere declaration, make something a public utility
which is not in fact such, "the public policy of the state as announced by the legislature will be given due
weight, and the determination of the legislature that a particular business is subject to the regulatory
power, because the public welfare is dependent upon its proper conduct and regulation, will not lightly be
disregarded by the courts." (51 C. J. 5.)
The objection to the designation of Attorney Aspillera as commissioner to take the evidence was tardy. It
was made for the first time after decision was rendered, following a prolonged hearing in which the
petitioners crossexamined the complainant’s witnesses and presented their own evidence.
The point is procedural, not jurisdictional, and may be waived by express consent or acquiescence. So it
was held in Everett Steamship Corporation v. Chua Hiong, 90 Phil. 64 and La Paz Ice Plant and Cold Storage
Company v. Comision de Utilidades Públicas Et. Al., 89 Phil., 109.
Upon the foregoing considerations, the appealed order of the Public Service Commission is affirmed, with
costs against the petitioners.
G.R. No. 213088, June 28, 2017
LAND TRANSPORTATION FRANCHISING AND REGULATORY BOARD (LTFRB), Petitioner, v. G.V. FLORIDA
TRANSPORT, INC., Respondent.
DECISION
PERALTA,**J.:
Before the Court is a petition for review on certiorari seeking the reversal and setting aside of the Decision1
of the Court of Appeals (CA), dated June 26, 2014 in CA-G.R. SP No. 134772.
The pertinent factual and procedural antecedents of the case are as follows:
Around 7:20 in the morning of February 7, 2014, a vehicular accident occurred at Sitio Paggang, Barangay
Talubin, Bontoc, Mountain Province involving a public utility bus coming from Sampaloc, Manila, bound for
Poblacion Bontoc and bearing a "G.V. Florida" body mark with License Plate No. TXT-872. The mishap
claimed the lives of fifteen (15) passengers and injured thirty-two (32) others.
An initial investigation report, which came from the Department of Transportation and Communications of
the Cordillera Administrative Region (DOTC-CAR), showed that based on the records of the Land
Transportation Office (LTO) and herein petitioner, License Plate No. TXT-872 actually belongs to a different
bus owned by and registered under the name of a certain Norberto Cue, Sr. (Cue) under Certificate of Public
Convenience (CPC) Case No. 2007-0407 and bears engine and chassis numbers LX004564 and
KN2EAM12PK004452, respectively; and that the bus involved in the accident is not duly authorized to
operate as a public transportation.
Thus, on the same day of the accident, herein petitioner, pursuant to its regulatory powers, immediately
issued an Order2 preventively suspending, for a period not exceeding thirty (30) days, the operations often
(10) buses of Cue under its CPC Case No. 2007-0407, as well as respondent's entire fleet of buses, consisting
of two hundred and twenty-eight (228) units, under its twenty-eight (28) CPCs. In the same Order,
respondent and Cue were likewise directed to comply with the following:
1. Inspection and determination of road worthiness of the authorized PUB unit of respondents-operators
bringing the said buses to the Motor Vehicle Inspection Service (MVIS) of the Land Transportation Office,
together with the authorized representatives of the Board;
2. Undergo Road Safety Seminar of respondents-operators' drivers and conductors to be conducted or
scheduled by the Board and/or its authorized seminar provider;
3. Compulsory Drug Testing of the respondents-operators' drivers and conductors to be conducted by
authorized/accredited agency of the Department of Health and the Land Transportation Office;
4. Submit the Certificates of Registration and latest LTO Official Receipts of the units, including the names
of the respective drivers and conductors; and
5. Submit the video clippings of roadworthiness inspection, Road Safety Seminar and Drug Testing.3
Furthermore, respondent and Cue were ordered to show cause why their respective CPCs should not be
suspended, canceled or revoked due to the said accident.
Thereafter, in its Incident Report dated February 12, 2014, the DOTC-CAR stated, among others: that the
License Plate Number attached to the ill-fated bus was indeed TXT-872, which belongs to a different unit
owned by Cue; that the wrecked bus had actual engine and chassis numbers DE12T-601104BD and
KTP1011611C,4 respectively; that, per registration records, the subject bus was registered as "private" on
April 4, 2013 with issued License Plate No. UDO 762; and that the registered owner is Dagupan Bus Co., Inc.
(Dagupan Bus) while the previous owner is herein respondent bus company.
As a result, Dagupan Bus was also ordered to submit an Answer on the DOTC-CAR Incident Report,
particularly, to explain why the bus involved in the above accident, which is registered in its name, was
sporting the name "G.V. Florida" at the time of the accident.
Subsequently, Dagupan Bus filed its Answer claiming that: it is not the owner of the bus which was involved
in the accident; the owner is G.V. Florida; Dagupan Bus entered into a Memorandum of Agreement with
G.V. Florida, which, among others, facilitated the exchange of its CPC covering the Cagayan route for the
CPC of Florida covering the Bataan route; and the subsequent registration of the subject bus in the name
of Dagupan Bus is a mere preparatory act on the part of G.V. Florida to substitute the old authorized units
of Dagupan Bus plying the Cagayan route which are being operated under the abovementioned CPC which
has been exchanged with G.V. Florida.
On the other hand, Cue filed his Position Paper contending that: License Plate No. TXT-872 was issued by
the LTO to one among ten public utility buses under CPC No. 2007-04075 issued to him as operator of the
Mountain Province Cable Tours; the application for the extension of the validity of the said CPC is pending
with petitioner; the subject CPC, together with all authorized units, had been sold to G.V. Florida in
September 2013; and thereafter, Cue completely ceded the operation and maintenance of the subject
buses in favor of G.R. Florida.
In its Position Paper, herein respondent alleged that: it, indeed, bought Cue's CPC and the ten public utility
buses operating under the said CPC, including the one which bears License Plate No. TXT-872; since Cue's
buses were already old and dilapidated, and not wanting to stop its operations to the detriment of the
riding public, it replaced these buses with new units using the License Plates attached to the old buses,
pending approval by petitioner of the sale and transfer of Cue's CPC in its favor; and it exercised utmost
good faith in deciding to dispatch the ill-fated bus notwithstanding the absence of prior adequate
compliance with the requirements that will constitute its operation legal.
On March 14, 2014, herein petitioner rendered its Decision canceling Cue's CPC No. 2007-0407 and
suspending the operation of respondent's 186 buses under 28 of its CPCs for a period of six (6) months.
Pertinent portions of the dispositive portion of the said Decision read as
follows:chanRoblesvirtualLawlibrary
WHEREFORE, premises considered and by virtue of Commonwealth Act 146 (otherwise known as "The
Public Service Law"), as amended, and Executive Order No. 202, the Board hereby ORDERS
that:chanRoblesvirtualLawlibrary
a. The Certificate of Public Convenience of respondent-operator NORBERTO M. CUE, SR. under Case No.
2007-0407, now under the beneficial ownership of respondent-operator G.V. FLORIDA TRANSPORT, INC.,
be CANCELLED and REVERTED to the State. Therefore, upon receipt of this Decision, respondent-operator
G.V. FLORIDA TRANSPORT, INC. is hereby directed to CEASE and DESIST from operating the Certificate of
Public Convenience under Case No. 2007-0407 involving ten (10) authorized units, to wit:
xxxx
b. Upon finality of this Decision, the above-mentioned for hire plates of respondent-operator NORBERTO
M. CUE, SR. are hereby ordered DESTRUCTED (sic) and DESTROYED prior to their turn over to the Land
Transportation Office (LTO).
xxxx
c. All existing Certificates of Public Convenience of respondent-operator G.V. FLORIDA TRANSPORT, INC.
under case numbers listed under case numbers listed below are hereby SUSPENDED for a period of SIX (6)
MONTHS commencing from March 11, 2014, which is the lapse of the 30-day preventive suspension order
issued by this Board, to wit:
xxxx
[d.] During the period of suspension of its CPCs and as a condition for the lifting thereof, respondentoperator G.V. FLORIDA TRANSPORT, INC. must comply with the following:chanRoblesvirtualLawlibrary
1. All its authorized drivers must secure the National Competency III issued by the Technical Education and
Skills Development Authority (TESDA)
2. All its conductors must secure Conductor's License from the Land Transportation Office (LTO);
3. Submit all its authorized units that have not undergone inspection and determination of roadworthiness
to the Motor Vehicle Inspection Service of the LTO, together with the authorized representatives of the
Board; and
4. Compulsory Drug Testing of all its authorized drivers and conductors to be conducted by the authorized
accredited agency of the Department of Health and the Land Transportation Office at least thirty (30) days
before the expiration of its suspension.
[e.] The Show Cause Order issued against respondent-operator DAGUPAN BUS CO., INC. is hereby SET
ASIDE.
The Information Systems Management Division (ISMD) is also directed to make proper recording of this
Decision for future reference against subject vehicles and respondents-operators. During the period of
suspension of its CPCs, respondent-operator G.V. FLORIDA TRANSPORT, INC. is allowed to confirm its
authorized units subject to submission of all requirements for confirmation.
The Law Enforcement Unit of this Board, the Land Transportation Office (LTO), the Metro Manila
Development Authority (MMDA), the Philippine National Police-Highway Patrol Group (PNP-HPG), and
other authorized traffic enforcement agencies are hereby ordered to APPREHEND and IMPOUND the said
vehicles, if found operating.
SO ORDERED.6
Respondent then filed with the CA a petition for certiorari under Rule 65 of the Rules of Court, with prayer
for the issuance of a preliminary mandatory injunction, assailing petitioner's above Decision.
On June 26, 2014, the CA promulgated its questioned Decision, disposing as
follows:chanRoblesvirtualLawlibrary
WHEREFORE, the instant petition is PARTIALLY GRANTED. The Decision dated March 14, 2014 of the Land
Transportation Franchising and Regulatory Board is MODIFIED as follows:chanRoblesvirtualLawlibrary
1. The Order canceling and reverting to the State of the Certificate of Public Convenience of operator Cue
under Case No. 2007-0407, under the beneficial ownership of petitioner G.V. Florida Transport, Inc. is
AFFIRMED;
2. The penalty of suspension for a period of six (6) months against all existing 28 Certificates of Public
Convenience of petitioner G.V. Florida, Transport, Inc., is REVERSED and SET ASIDE;
3. The condition set forth in the Decision for the lifting of the penalty of suspension is DELETED; and
4. The order to apprehend and impound petitioner G.V. Florida Transport, Inc.'s 186 authorized bus units
under the 28 CPCs if found operating is RECALLED
Accordingly, petitioner G.V. Florida Transport, Inc. prayer for mandatory injunctive relief is hereby
GRANTED. The Land Transportation and Franchising Regulatory Board is hereby ordered to immediately
LIFT the order of suspension and RETURN or CAUSE the RETURN of the confiscated license plates of
petitioner G.V. Florida Transport, Inc.'s 186 authorized bus units under its 28 Certificates of Public
Convenience without need of further order from this Court. Said Office is further DIRECTED to submit its
Compliance within five (5) days from receipt thereof.
SO ORDERED.7
Hence, the present petition grounded on a lone issue, to wit:chanRoblesvirtualLawlibrary
DOES THE LTFRB HAVE THE POWER TO SUSPEND THE FLEET OF A PUBLIC UTILITY THAT VIOLATES THE LAW,
TO THE DAMAGE OF THE PUBLIC?8
The main issue brought before this Court is whether or not petitioner is justified in suspending respondent's
28 CPCs for a period of six (6) months. In other words, is the suspension within the powers of the LTFRB to
impose and is it reasonable?
Petitioner contends that it is vested by law with jurisdiction to regulate the operation of public utilities; that
under Section 5(b) of Executive Order No. 202 (E.O. 202),9 it is authorized "[t]o issue, amend, revise,
suspend or cancel Certificates of Public Convenience or permits authorizing the operation of public land
transportation services provided by motorized vehicles, and to prescribe the appropriate terms and
conditions therefor;" and that petitioner's authority to impose the penalty of suspension of CPCs of bus
companies found to have committed violations of the law is broad and is consistent with its mandate and
regulatory capability.
On the other hand, respondent, in its Comment to the present Petition, contends that the suspension of
its 28 CPCs is tantamount to an outright confiscation of private property without due process of law; and
that petitioner cannot simply ignore respondent's property rights on the pretext of promoting public safety.
Respondent insists that the penalty imposed by petitioner is not commensurate to the infraction it had
committed.
The Court rules in favor of petitioner.
Section 16(n) of Commonwealth Act. No. 146, otherwise known as the Public Service Act,
provides:chanRoblesvirtualLawlibrary
Section 16. Proceedings of the Commission, upon notice and hearing. - The Commission shall have power,
upon proper notice and hearing in accordance with the rules and provisions of this Act, subject to the
limitations and exceptions mentioned and saving provisions to the contrary:chanRoblesvirtualLawlibrary
xxxx
(n) To suspend or revoke any certificate issued under the provisions of this Act whenever the holder thereof
has violated or willfully and contumaciously refused to comply with any order rule or regulation of the
Commission or any provision of this Act: Provided, That the Commission, for good cause, may prior to the
hearing suspend for a period not to exceed thirty days any certificate or the exercise of any right or
authority issued or granted under this Act by order of the Commission, whenever such step shall in the
judgment of the Commission be necessary to avoid serious and irreparable damage or inconvenience to
the public or to private interests.
xxxx
Also, Section 5(b) of E.O. 202 states:chanRoblesvirtualLawlibrary
Sec. 5. Powers and Functions of the Land Transportation Franchising and Regulatory Board. The Board shall
have the following powers and functions:chanRoblesvirtualLawlibrary
xxxx
b. To issue, amend, revise, suspend or cancel Certificates of Public Convenience or permits authorizing the
operation of public land transportation services provided by motorized vehicles, and to prescribe the
appropriate terms and conditions therefor;
xxxx
In the present case, respondent is guilty of several violations of the law, to wit: lack of petitioner's approval
of the sale and transfer of the CPC which respondent bought from Cue; operating the ill-fated bus under
its name when the same is registered under the name of Dagupan Bus Co., Inc.; attaching a vehicle license
plate to the ill-fated bus when such plate belongs to a different bus owned by Cue; and operating the
subject bus under the authority of a different CPC. What makes matters worse is that respondent knowingly
and blatantly committed these violations. How then can respondent claim good faith under these
circumstances?
Respondent, nonetheless, insists that it is unreasonable for petitioner to suspend the operation of 186
buses covered by its 28 CPCs, considering that only one bus unit, covered by a single CPC, was involved in
the subject accident.
The Court is not persuaded. It bears to note that the suspension of respondent's 28 CPCs is not only because
of the findings of petitioner that the ill-fated bus was not roadworthy.10 Rather, and more importantly, the
suspension of the 28 CPCs was also brought about by respondent's wanton disregard and obstinate
defiance of the regulations issued by petitioner, which is tantamount to a willful and contumacious refusal
to comply with the requirements of law or of the orders, rules or regulations issued by petitioner and which
is punishable, under the law, by suspension or revocation of any of its CPCs.
The Court agrees with petitioner that its power to suspend the CPCs issued to public utility vehicles depends
on its assessment of the gravity of the violation, the potential and actual harm to the public, and the policy
impact of its own actions. In this regard, the Court gives due deference to petitioner's exercise of its sound
administrative discretion in applying its special knowledge, experience and expertise to resolve
respondent's case.
Indeed, the law gives to the LTFRB (previously known, among others, as Public Service Commission or Board
of Transportation) ample power and discretion to decree or refuse the cancellation of a certificate of public
convenience issued to an operator as long as there is evidence to support its action.11 As held by this Court
in a long line of cases,12 it was even intimated that, in matters of this nature so long as the action is justified,
this Court will not substitute its discretion for that of the regulatory agency which, in this case, is the LTFRB.
Moreover, the Court finds the ruling in Rizal Light & Ice Co., Inc. v. The Municipality of Morong, Rizal and
The Public Service Commission,13 instructive, to wit:chanRoblesvirtualLawlibrary
xxxx
It should be observed that Section 16(n) of Commonwealth Act No. 146, as amended, confers upon the
Commission ample power and discretion to order the cancellation and revocation of any certificate of
public convenience issued to an operator who has violated, or has willfully and contumaciously refused to
comply with, any order, rule or regulation of the Commission or any provision of law. What matters is that
there is evidence to support the action of the Commission. In the instant case, as shown by the evidence,
the contumacious refusal of the petitioner since 1954 to comply with the directives, rules and regulations
of the Commission, its violation of the conditions of its certificate and its incapability to comply with its
commitment as shown by its inadequate service, were the circumstances that warranted the action of the
Commission in not merely imposing a fine but in revoking altogether petitioner's certificate. To allow
petitioner to continue its operation would be to sacrifice public interest and convenience in favor of private
interest.
A grant of a certificate of public convenience confers no property rights but is a mere license or privilege,
and such privilege is forfeited when the grantee fails to comply with his commitments behind which lies
the paramount interest of the public, for public necessity cannot be made to wait, nor sacrificed for private
convenience. (Collector of Internal Revenue v. Estate of F. P. Buan, et al., L-11438 and Santiago Sambrano,
et al. v. PSC, et al., L-11439 & L-11542-46, July 31, 1958)
(T)he Public Service Commission, ... has the power to specify and define the terms and conditions upon
which the public utility shall be operated, and to make reasonable rules and regulations for its operation
and the compensation which the utility shall receive for its services to the public, and for any failure to
comply with such rules and regulations or the violation of any of the terms and conditions for which the
license was granted, the Commission has ample power to enforce the provisions of the license or even to
revoke it, for any failure or neglect to comply with any of its terms and provisions. x x x
x x x14
Respondent likewise contends that, in suspending its 28 CPCs, the LTFRB acted in reckless disregard of the
property rights of respondent as a franchise holder, considering that it has put in substantial investments
amounting to hundreds of millions in running its operations. In this regard, the Court's ruling in the case of
Luque v. Villegas15 is apropos:chanRoblesvirtualLawlibrary
xxxx
Contending that they possess valid and subsisting certificates of public convenience, the petitioning public
services aver that they acquired a vested right to operate their public utility vehicles to and from Manila as
appearing in their said respective certificates of public convenience.
Petitioner's argument pales on the face of the fact that the very nature of a certificate of public convenience
is at cross purposes with the concept of vested rights. To this day, the accepted view, at least insofar as the
State is concerned, is that "a certificate of public convenience constitutes neither a franchise nor a contract,
confers no property right, and is a mere license or privilege." The holder of such certificate does not acquire
a property right in the route covered thereby. Nor does it confer upon the holder any proprietary right or
interest of franchise in the public highways. Revocation of this certificate deprives him of no vested right.
Little reflection is necessary to show that the certificate of public convenience is granted with so many
strings attached. New and additional burdens, alteration of the certificate, and even revocation or
annulment thereof is reserved to the State.
We need but add that the Public Service Commission, a government agency vested by law with "jurisdiction,
supervision, and control over all public services and their franchises, equipment, and other properties" is
empowered, upon proper notice and hearing, amongst others: (1) "[t]o amend, modify or revoke at any
time a certificate issued under the provisions of this Act [Commonwealth Act 146, as amended], whenever
the facts and circumstances on the strength of which said certificate was issued have been misrepresented
or materially changed"; and (2) "[t]o suspend or revoke any certificate issued under the provisions of this
Act whenever the holder thereof has violated or wilfully and contumaciously refused to comply with any
order, rule or regulation of the Commission or any provision of this Act: Provided, That the Commission,
for good cause, may prior to the hearing suspend for a period not to exceed thirty days any certificate or
the exercise of any right or authority issued or granted under this Act by order of the Commission,
whenever such step shall in the judgment of the Commission be necessary to avoid serious and irreparable
damage or inconvenience to the public or to private interests."
Jurisprudence echoes the rule that the Commission is authorized to make reasonable rules and regulations
for the operation of public services and to enforce them. In reality, all certificates of public convenience
issued are subject to the condition that all public services "shall observe and comply [with] ... all the rules
and regulations of the Commission relative to" the service. To further emphasize the control imposed on
public services, before any public service can "adopt, maintain, or apply practices or measures, rules, or
regulations to which the public shall be subject in its relation with the public service," the Commission's
approval must first be had.
And more. Public services must also reckon with provincial resolutions and municipal ordinances relating
to the operation of public utilities within the province or municipality concerned. The Commission can
require compliance with these provincial resolutions or municipal ordinances.
Illustrative of the lack of "absolute, complete, and unconditional" right on the part of public services to
operate because of the delimitations and restrictions which circumscribe the privilege afforded a certificate
of public convenience is the following from the early (March 31, 1915) decision of this Court in Fisher vs.
Yangco Steamship Company, 31 Phil. 1, 18-19:chanRoblesvirtualLawlibrary
Common carriers exercise a sort of public office, and have duties to perform in which the public is
interested. Their business is, therefore, affected with a public interest, and is subject of public regulation.
(New Jersey Steam Nav. Co. vs. Merchants Banks, 6 How. 344, 382; Munn vs. Illinois, 94 U.S. 113, 130.)
Indeed, this right of regulation is so far beyond question that it is well settled that the power of the state
to exercise legislative control over railroad companies and other carriers 'in all respects necessary to
protect the public against danger, injustice and oppression' may be exercised through boards of
commissioners. (New York, etc. R. Co. vs. Bristol, 151 U.S. 556, 571; Connecticut, etc. R. Co. vs. Woodruff,
153 U.S. 689.).
xxxx
.... The right to enter the public employment as a common carrier and to offer one's services to the public
for hire does not carry with it the right to conduct that business as one pleases, without regard to the
interests of the public and free from such reasonable and just regulations as may be prescribed for the
protection of the public from the reckless or careless indifference of the carrier as to the public welfare and
for the prevention of unjust and unreasonable discrimination of any kind whatsoever in the performance
of the carrier's duties as a servant of the public.
Business of certain kinds, including the business of a common carrier, holds such a peculiar relation to the
public interest that there is superinduced upon it the right of public regulation. (Budd vs. New York, 143
U.S. 517, 533.) When private property is "affected with a public interest it ceases to be juris privati only."
Property becomes clothed with a public interest when used in a manner to make it of public consequence
and affect the community at large. "When, therefore, one devotes his property to a use in which the public
has an interest, he, in effect, grants to the public an interest in that use, and must submit to be controlled
by the public for the common good, to the extent of the interest he has thus created. He may withdraw his
grant by discontinuing the use, but so long as he maintains the use he must submit to control." (Munn vs.
Illinois, 94 U.S. 113; Georgia R. & Bkg. Co. vs. Smith, 128 U.S. 174; Budd vs. New York, 143 U.S. 517;
Louisville, etc. Ry. Co. vs. Kentucky, 161 U.S. 677, 695.).
The foregoing, without more, rejects the vested rights theory espoused by petitioning bus operators.
x x x16
Neither is the Court convinced by respondent's contention that the authority given to petitioner, under the
abovequoted Section 16(n) of the Public Service Act does not mean that petitioner is given the power to
suspend the entire operations of a transport company. Respondent must be reminded that, as quoted
above, the law clearly states that petitioner has the power "[t]o suspend or revoke any certificate issued
under the provisions of [the Public Service Act] whenever the holder thereof has violated or willfully and
contumaciously refused to comply with any order rule or regulation of the Commission or any provision of
this Act x x x" This Court has held that when the context so indicates, the word "any" may be construed to
mean, and indeed it has been frequently used in its enlarged and plural sense, as meaning "all," "all or
every," "each," "each one of all," "every" without limitation; indefinite number or quantity, an
indeterminate unit or number of units out of many or all, one or more as the case may be, several, some.17
Thus, in the same vein, the Merriam-Webster Dictionary defines the word "any" as "one, some, or all
indiscriminately of whatever quantity"; "used to indicate a maximum or whole"; "unmeasured or unlimited
in amount, number, or extent."18 Hence, under the above definitions, petitioner undoubtedly wields
authority, under the law, to suspend not only one but all of respondent's CPCs if warranted, which is proven
to be the case here.
As to whether or not the penalty imposed by petitioner is reasonable, respondent appears to trivialize the
effects of its deliberate and shameless violations of the law. Contrary to its contention, this is not simply a
case of one erring bus unit. Instead, the series or combination of violations it has committed with respect
to the ill-fated bus is indicative of its design and intent to blatantly and maliciously defy the law and
disregard, with impunity, the regulations imposed by petitioner upon all holders of CPCs. Thus, the Court
finds nothing irregular in petitioner's imposition of the penalty of six-months suspension of the operations
of respondent's 28 CPCs. In other words, petitioner did not commit grave abuse of discretion in imposing
the questioned penalty.
Lastly, the suspension of respondent's CPCs finds relevance in light of the series of accidents met by
different bus units owned by different operators in recent events. This serves as a reminder to all operators
of public utility vehicles that their franchises and CPCs are mere privileges granted by the government. As
such, they are sternly warned that they should always keep in mind that, as common carriers, they bear
the responsibility of exercising extraordinary diligence in the transportation of their passengers. Moreover,
they should conscientiously comply with the requirements of the law in the conduct of their operations,
failing which they shall suffer the consequences of their own actions or inaction.
WHEREFORE, the instant petition is GRANTED. The Decision of the Court of Appeals, dated June 26, 2014
in CA-G.R. SP No. 134772, is REVERSED and SET ASIDE. The March 14, 2014 Decision of the Land
Transportation Franchising and Regulatory Board is REINSTATED.
SO ORDERED.