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page. 1
TRANSPO LAW / URANZA / PUBLIC LAW ASPECT
SEC. 11, ART. XII CONSTI
 
Limitations to grant of franchise, certificate or any otherform of authorization for the operation of a public utility 
 
1.
 
it shall be granted only to citizens of thePhilippines or to corporations or associationsorganized under the laws of the Philippines, atleast 60% of whose capital is owned by Philippine citizens
 
2.
 
it shall not be exclusive in character nor for aperiod longer than 50 years
 
3.
 
it shall be under the condition that it shall besubject to amendment, alteration or repeal by Congress when the common good so requires.
 
 
Rule re: participation
 
1.
 
 The state shall encourage equity participation inpublic utilities by the general public
 
2.
 
 The participation of foreign investors in thegoverning body of an public utility shall belimited to their proportionate share in its capital
 
3.
 
 All the executive and managing officers of suchcorporation or association must be citizens of the Philippines.
 HISTORY OF SEC. 11, ART. XII CONSTI
 
1935 Constitution
 
 
1973 Constitution—added “equity participation” and“rule on participation of foreign investors.”
 
 
1983 Constitution—added “rule on executive andmanaging officers.”
 PUBLIC UTILITY 
[ 
North Negros Sugar v Hidalgo
 ]
 
Property becomes clothed with public interest when usedin a manner to make it of public consequence, and affectthe community at large.
 
 
 The public or private character of the enterprise does notdepend upon the number of persons by whom it is used,but upon whether or not it is open to the use and serviceof all members of the public who may require it, to theextent of its capacity; and the fact that only a limitednumber of persons may have occasion to use it does notmake it a private undertaking if the public generally has aright to such use.
 
 
 Whether or not a given business, industry or service is apublic utility does not depend upon legislative definitionbut upon the nature of the business or service.
 DEFINITION OF PUBLIC SERVICE
 
Sec. 13(b), Public Service Act
: The term public serviceshall include
 
1.
 
every person, whether natural or juridical
 
2.
 
that now or hereafter
 
3.
 
may own, operate, manage or control in thePhilippines
 
4.
 
any common carrier or public service entity 
 
5.
 
for hire or for compensation
 
6.
 
 with general or limited clientele
 
7.
 
 whether permanent, occasional or accidental
 
8.
 
and done for general business purposes
 
 
It is not necessary under this definition that one holdshimself out as serving or willing to serve the public inorder to be considered a public service. [ 
LuzonStevedoring Corp v PSC
 ]
 
 
 The idea of public use is implicit in the term “publicservice.” A public service is a service for public use.Hence, the mere omission from Sec.13 of the phrase“public use” in the definition of public service does not warrant the inference that the legislature meant to extendthe jurisdiction of the PSC to private enterprises notdevoted to use. [ 
Luzon Brokerage v PSC
 ]
 REGULATORY AGENCIES
 
Land transportation—DOTC
& 
LTFRB
 
 
 Water transportation—Maritime Industry Authority (MARINA)
 
 
 Air Transportation—ATO
& 
and the Civil AeronauticsBoard (CAB), which has been placed under the DOTCas an attached agency 
 
 
 Telecommunications—National TelecommunicationsCommission (NTC), which has been placed under theDOTC as an attached agency 
 
 
Energy—Board of Energy 
 
 
 Waterworks—National Water Resources Council
 CPC/CPCN
 
 A certificate of public convenience is an authorization by the Commission (public service regulatory body) for theoperation of public services for which no franchise,either municipal or legislative, is required by law.
 
 
 A certificate of public convenience and necessity is anauthorization issued by the Commission (public servicesregulatory body) for the operation of public services for which a franchise is required by law.
 NATURE OF CPC
 
Insofar as the State is concerned [ 
Pangasinan Trans v PSC
 ]1.
 
it is a mere privilege that is always subject toregulation2.
 
it constitutes neither a franchise nor a contract,confers no property right, and is a mere licenseor privilege.
 
It is included in the broad sense of the term
 property 
inthe broad sense of the term. Under the
Public Service Law 
,it can be sold by the holder thereof because it hasconsiderable material value and is considered a valuableasset.
 
 
page. 2
TRANSPO LAW / URANZA / PUBLIC LAW ASPECT
 WHEN CPC NOT REQUIREDSec. 14 Public Service Act [AB-WARP]
1.
 
 Vehicles drawn by 
 A 
nimals and
B
ancas movedby oar or sail, and tugboats and lighters2.
 
 W
arehouses3.
 
 A 
irships within the Philippines [ 
except as regards the fixing of their maximum rates on freight and  passengers 
 ]4.
 
R 
adio companies [ 
except with respect to the fixing of rates 
 ]5.
 
P
ublic services owned or operated by any instrumentality of the National Government orby any government-owned or controlledcorporation [ 
except with respect to the fixing of rates 
 ]
REQUISITES FOR GRANT OF CPC
 
Under the Constitution1.
 
it shall be granted only to citizens of thePhilippines or to corporations or associationsorganized under the laws of the Philippines, atleast 60% of whose capital is owned by Philippine citizens2.
 
it shall not be exclusive in character nor for aperiod longer than 50 years3.
 
it shall be under the condition that it shall besubject to amendment, alteration or repeal by Congress when the common good so requires.
 
Under the Public Service Act [Sec. 16(a)]1.
 
notice and hearing 
 
2.
 
subject to the limitations and exceptionsmentioned and saving the provisions to thecontrary 
 
3.
 
operation of the public service proposed and theauthorization to do business will promote thepublic interests in a proper and suitable manner
 
4.
 
grantee is a citizen of the Philippines or entity organized under the laws of the Philippines andsixty percent of its stock or paid-up capital isowned by Philippine citizens
 
5.
 
it shall not be for a period of more than fifty years
 
 
Under RA 9295 (for vessels)
 
1.
 
Sec. 5. Authority to Operate 
 —No franchise,certificate or any other form authorization forthe carriage of cargo or passenger, or both inthe domestic trade, shall be granted except todomestic ship owners or operators.
 
2.
 
Sec. 6. Foreign Vessels Engaged in Trade and Commerce in the Philippine Territorial Waters— 
Noforeign vessel shall be allowed to transportpassengers or cargo between ports or place within the Philippine territorial waters, exceptupon the grant Special Permit by the MARINA when no domestic vessels is available or suitableto provide the needed shipping service andpublic interest warrants the same.
 
 
Under RA 776 (for aircrafts)
 
1.
 
Sec. 12. Citizenship requirement— 
Except asotherwise provided in the Constitution andexisting treaty or treaties, permit authorizing aperson to engage in domestic air commerceand/or transportation shall be used only tocitizens of the Philippines.
 
2.
 
Sec. 34— 
Except as otherwise provided in theConstitution and existing treaties, no aircraftshall be eligible for registration unlessa.
 
it is owned by a citizen or citizens [including corporations organized under laws of thePhilippines, 60% of its capital is owned by citizens of the Philippines]; andb.
 
it is not registered under the laws of aforeign country.
 KMU v GARCIA 
 
Court holding:1.
 
undue delegation2.
 
Government must not relinquish the importantfunction of rate-fixing 3.
 
Department Order conflicts with the law 
 
Note:1.
 
power or LTFRB (to determine, prescribe andapprove and periodically review and adjustreasonable fares, rates and other related chargesrelative to the operation of public landtransportation services provided by motorized vehicles) [Sec. 5(c) EO 292]2.
 
Importance and complexity of rate-fixing (p.409)3.
 
Requirement for grant of CPC (p. 411)4.
 
 When public convenience and necessity exists(p. 411)—when the proposed facility or servicemeets a reasonable want of the public andsupply a need which the existing facilities do notadequately supply.
 JUST
& 
REASONABLE RATE
 A rate is just and reasonable if it conforms to thefollowing requirements:1.
 
one which yields to the carrier a fair return uponthe value of the property employed inperforming the service; and2.
 
one which is fair to the public for the servicesrendered
RETURN ON RATE BASE
 
 
page. 3
TRANSPO LAW / URANZA / PUBLIC LAW ASPECT
DEREGULATION
 
Domestic Shipping 1.
 
Sec. 8 
.
Deregulation of the Domestic Shipping Industry— 
In order to encourage investments inthe domestic shipping industry by existing domestic ship operators and attract new investment from new operators and investors,domestic ship operators are hereby authorizedto establish their own domestic shipping rates:Provided, That effective competition is fosteredand public interest is served. The MARINA shall monitor all shipping operations and exercise regulatory intervention where it is established after due process thatpublic interest needs to be protected andsafeguarded.2.
 
Sec. 11— 
Every domestic ship operator shallhave the right to fix its own passenger or cargorates.
 
 
 Air Transport
 
1.
 
Par. 2.2 Executive Order No. 219— 
 Tariffs andFares. To the extent allowed by law passagefreight and other charges shall be liberalized.However, passage rates shall likewise bederegulated for routes/links operated by morethan one (1) common carrier. For routesserviced by a single operator, passage rates shallcontinue to be regulated. However, all freightrates, charges and passage rates shall bemonitored by the CAB.
 
2.
 
Sec. 10
RA 776— 
CAB
 
a.
 
power to regulate economic aspect
 
b.
 
general supervision and regulation of andjurisdiction and control
 
Sec. 10 (c) (2)a.
 
power to fix and determine the rates whichan air carrier may demand, collect or receivefor any service in connection with aircommerce
 
b.
 
rate should not be unduly preferential orunduly discriminatory or unreasonable
 
c.
 
burden of proof on the carrier
 
d.
 
considerations in imposition of rate
 
†
 
movement of traffic
 
†
 
adequate and efficienttransportation at the lowest cost
 
†
 
character and quality as prescribedby law 
 
†
 
inherent advantages of airtransportation
 
†
 
need for revenues of carrier
 PRIOR APPLICANT RULE
[ 
Pae
z
Vda. de Cruz v Marcelo
 ]
 
Priority in the filing of the application for a CPC is, otherconditions being equal, an important factor indetermining the rights of the public service companies,and in the grant or refusal of a certificate
PRIOR OPERATOR LAW [Batangas Trans v Orlanes]
 
It is not the policy of the law to issue a CPC to a secondoperator to cover the same field and in competition witha 1
st
operator who is rendering sufficient, adequate andsatisfactory service, and who in all things and respects iscomplying with the rules and regulations of theCommission
 
 
RATIONALE: experience has demonstrated thatcompetition among natural monopolies is wastefuleconomically and results finally in inefficient andunsatisfactory service and extravagant fares.
 
 
Exceptions
 
1.
 
Old operators were given a chance to improve orcomplete their service but failed to do so [ 
Paez Vda. de Cruz v Marcelo
 ]
 
2.
 
Change in rule with respect to the domestic watertransport [ 
Par. 1, Executive Order 185 
 ]—  The entry of new operators into the domestic watertransport industry shall be liberalized to enhance thelevel of competition and bring about reasonablerates and improved quality of services
REGULATION OF AUTHORIZED ROUTESREGULATION OF EQUIPMENT USED
 
Sec. 16(d) Public Service Act— 
 
 The Commission shall have power, upon propernotice and hearing in accordance with the rules andprovisions of this Act, subject to the limitations andexception mentioned and saving provisions to thecontrary, To fix just and reasonable standards,classification, regulations, practices, measurements,or service to be furnished, imposed, observed, andfollowed thereafter by any public service.
 
 
LTFRB has power to promulgate [ 
Sec. 19, Chapter 5, Title  XV, Executive Order 292 
 ]
 
(11) rules requiring operators of public landtransportation service to equip, install and provide intheir utilities and in their stations such devices andoperating procedures as may promote safety,protection and convenience to persons and property in their areas of operation.
 
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