G.R. No.

115381 December 23, 1994

KILUSANG MAYO UNO LABOR CENTER, petitioner,

vs.

HON. JESUS B. GARCIA, JR., the LAND TRANSPORTATION FRANCHISING AND REGULATORY
BOARD, and the PROVINCIAL BUS OPERATORS ASSOCIATION OF THE
PHILIPPINES, respondents.

The instant petition for certiorari assails the constitutionality and validity of certain memoranda,
circulars and/or orders of the Department of Transportation and Communications (DOTC) and the
Land Transportation Franchising and Regulatory Board LTFRB)2 which, among others, (a)
authorize provincial bus and jeepney operators to increase or decrease the prescribed
transportation fares without application therefor with the LTFRB and without hearing and
approval thereof by said agency in violation of Sec. 16(c) of Commonwealth Act No. 146, as
amended, otherwise known as the Public Service Act, and in derogation of LTFRB's duty to fix and
determine just and reasonable fares by delegating that function to bus operators, and (b)
establish a presumption of public need in favor of applicants for certificates of public convenience
(CPC) and place on the oppositor the burden of proving that there is no need for the proposed
service, in patent violation not only of Sec. 16(c) of CA 146, as amended, but also of Sec. 20(a) of
the same Act mandating that fares should be "just and reasonable." It is, likewise, violative of the
Rules of Court which places upon each party the burden to prove his own affirmative
allegations.3 The offending provisions contained in the questioned issuances pointed out by
petitioner, have resulted in the introduction into our highways and thoroughfares thousands of
old and smoke-belching buses, many of which are right-hand driven, and have exposed our
consumers to the burden of spiraling costs of public transportation without hearing and due
process.

FACTS:
In 1990, DOTC Sec. Oscar Orbos issued Memo Circular to LTFRB Chair Remedios Fernando to
allow provincial bus to change passenger rates w/in a fare range of 15% above or below the
LTFRB official rate for a 1yr. period. This is in line with the liberalization of regulation in the
transport sector which the government intends to implement and to make progress towards
greater reliance on free market forces.

Fernando respectfully called attention of DOTC Sec. that the Public Service Act requires
publication and notice to concerned parties and public hearing. In Dec. 1990, Provincial Bus
Operators Assoc. of the Phils. (PBOAP) filed an application for across the board fare rate
increase, which was granted by LTFRB. In 1992, then DOTC Sec. Garcia issued a memo to LTFRB
suggesting a swift action on adoption of procedures to implement the Department Order & to
lay down deregulation policies. Pursuant to LTFRB Guideline, PBOAP, w/o benefit of public
hearing announced a 20% fare rate increase.

Petitioner Kilusang Mayo Uno (KMU) opposed the move and filed a petition before LTFRB w/c
was denied. Hence the instant petition for certiorari w/ urgent prayer for a TRO, w/c was readily
granted by the Supreme Court.

ISSUE:
Whether the authority granted by LTFB to provincial buses to set a fare range above existing
authorized fare range is unconstitutional and invalid.

HELD:
The grant of power by LTFRB of its delegated authority is unconstitutional. The doctrine of
Potestas delegate non delegari (what has been delegated cannot be delegated) is applicable
because a delegated power constitutes not only a right but a duty to be performed by the
delegate thru instrumentality of his own judgment. To delegate this power is a negation of the
duty in violation of the trust reposed in the delegate mandated to discharge such duty. Also, to
give provincial buses the power to charge their fare rates will result to a chaotic state of affairs
ad this would leave the riding public at the mercy of transport operators who can increase their
rates arbitrarily whenever it pleases or when they deem it necessary.

[ GR No. 83551, Jul 11, 1989 ]

RODOLFO B. ALBANO v. RAINERIO O. REYES +

DECISION

This is a Petition for Prohibition with prayer for Preliminary Injunction or Restraining Order
seeking to restrain the respondents Philippine Ports Authority (PPA) and the Secretary of the
Department of Transportation and Communications Rainerio O. Reyes from awarding to the
International Container Terminal Services, Inc. (ICTSI) the contract for the development,
management and operation of the Manila International Container Terminal (MICT).

Albano vs. Reyes

175 SCRA 264 | Paras, J.

Facts:

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

On May 18, 1988, the President of the Philippines approved the same with directives that PPA
shall still have the responsibility for planning, detailed engineering, construction, expansion,
rehabilitation and capital dredging of the port, as well as the determination of how the revenues
of the port system shall be allocated for future works; and the contractor shall not collect taxes
and duties except that in the case of wharfage or tonnage dues.

Petitioner Albano, as taxpayer and Congressman, assailed the legality of the award and claimed
that since the MICT is a public utility, it needs a legislative franchise before it can legally operate
as a public utility.

ISSUE: Whether a franchise is needed for the operation of the MICT?

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

Even if the MICT is considered a public utility, its operation would not necessarily need a franchise
from the legislature because the law has granted certain administrative agencies the power to
grant licenses for or to authorize the operation of public utilities. Reading E.O. 30 and P.D. 857
together, it is clear that the lawmaker has empowered the PPA to undertake by itself the
operation and management of the MICP or to authorize its operation and management by
another by contract or other means, at its option.
Doctrine: The law granted certain administrative agencies the power to grant licenses for the
operation of public utilities. Theory that MICT is a “wharf” or a “dock”, as contemplated under
the Public Service Act, would not necessarily call for a franchise from the Legislative Branch.

Tatad vs. Garcia

241 SCRA 334, GR. No. 114222. April 6, 1995

This is a petition under Rule 65 of the Revised Rules of Court to prohibit respondents from
further implementing and enforcing the "Revised and Restated Agreement to Build, Lease and
Transfer a Light Rail Transit System for EDSA" dated April 22, 1992, and the "Supplemental
Agreement to the 22 April 1992 Revised and Restated Agreement To Build, Lease and
Transfer a Light Rail Transit System for EDSA" dated May 6, 1993.

Facts: DOTC planned to construct a light railway transit line along Edsa. EDSA LRT Corporation,
Ltd., a foreign corporation was awarded the contract to build, lease and transfer the said light
railway.

The said award was questioned by the petitioners on the basis that a foreign corporation cannot
own the EDSA LRT III, a public utility as it violates the Constitution.

Issue: Whether or not an owner and lessor of the facilities used by a public utility constitute a
public utility?

Held: EDSA LRT Corporation, Ltd. Is admittedly a foreign corporation “duly incorporated and
existing under the laws of Hong Kong”. However, there is no dispute that once the EDSA LRT III is
constructed, the private respondent, as lessor, will turn it over to DOTC as lessee, for the latter to
operate the system and pay rentals for the said use.

What private respondent owns are the rail tracks, rolling stocks, rail stations, terminals and the
power plant, not a public utility. While a franchise is needed to operate these facilities to serve
the public, they do not themselves constitute a public utility. What constitutes a public utility in
not their ownership but their use to serve the public.

The Constitution, in no uncertain terms, requires a franchise for the operation of a public utility.
However, it does not require a franchise before one can own the facilities needed to operate a
public utility so long as it does not operate them to serve the public. In law, there is a clear
distinction between the “operation” of a public utility and the ownership of the facilities and the
equipment used to serve the public.

Philippine Airlines, Inc. vs. Civil Aeronautics Board

(270 SCRA 538)

Philippine Airlines, Inc. vs. Civil Aeronautics Board, 270 SCRA 538, G.R. No. 119528 March 26, 1997

Facts: Philippine Airlines seeks to prohibit Civil Aeronautics Board from exercising jurisdiction over
private respondents Application for the issuance of a Certificate of Public Convenience and
Necessity, and to annul and set aside a temporary operating permit issued by the Civil Aeronautics
Board in favor of GrandAir, allowing the same to engage in scheduled domestic air transportation
services, particularly the Manila-Cebu, Manila-Davao, and converse routes.PAL contested the
grant issued by CAB to GrandAir as the latter does not possess a legislative franchise authorizing it
toengage in air transportation service within the Philippines or elsewhere. Such franchise is,
allegedly, a requisite for the issuance of a Certificate of Public Convenience or Necessity by the
respondent Board, as mandated under Section 11, Article XII of the Constitution. GrandAir, on the
other hand, posits that a legislative franchise is no longer a requirement for the issuance of a
Certificate of Public Convenience and Necessity or a Temporary Operating Permit, following the
Courts pronouncements in the case of Albano vs. ReyesGrandAir applied for a Certificate of Public
Convenience and Necessity with CAB, which the Chief Hearing Officer of the CAB issued a Notice
of Hearing setting the application for initial hearing. Petitioner, itself the holder of a legislative
franchise to operate air transport services, filed an Oppositionto the application for a Certificate
of Public Convenience and Necessity because, accordingly, CAB has no jurisdiction to hear the
petitioners application until GrandAir has first obtained a franchise to operate from Congress.
Chief Hearing Officer of CAB issued an Order denying petitioners Opposition.The Board
promulgated Resolution No. 119b92h approving the issuance of a Temporary Operating Permit in
favor of Grand Airfor a period of three months, which was later, extended to six months.Issue:
Whether the respondent has the power to issue a temporary operating permit The Civil
Aeronautics Board has jurisdiction over GrandAirts Application for a Temporary Operating Permit.
The Board is expressly authorized by Republic Act No. 776 to issue a temporary operating permit or
Certificate of Public Convenience and Necessity, and nothing contained in the said law negates the
power to issue said permit before the completion of the applicants evidence and that of the
oppositor thereto on the main petition. The CABts authority togrant a temporary permit Lupon its
own initiativeL strongly suggests the power to exercise said authority, even before the presentation
of said evidence has begun. Even if a legislative franchise is prerequisite to the issuance of a
permit, the absence of the same does not affect the jurisdiction of the Board to hear the
application, but tolls only upon the ultimate issuance of the requested permit.

Facts: Grand Air applied for a Certificate of Public Convenience and Necessity with the Civil
Aeronautics Board (CAB). The Chief Hearing Officer issued a notice of hearing directing Grand Air
to serve a copy of the application and notice to all scheduled Philippine Domestic operators.
Grand Air filed its compliance and requested for a Temporary Operating Permit (TOP). PAL filed
an opposition to the application on the ground that the CAB had no jurisdiction to hear the
application until Grand Air first obtains a franchise to operate from Congress. The Chief Hearing
Officer denied the opposition and the CAB approved the issuance of the TOP for a period of 3
months. The opposition for the TOP was likewise denied. The CAB justified its assumption of
jurisdiction over Grand Air’s application on the basis of Republic Act 776 which gives it the specific
power to issue any TOP or Certificate of Public Convenience and Necessity.

Issue: Whether or not the CAB can issue a Certificate of Public Convenience and Necessity or TOP
even though the prospective operator does not have a legislative franchise?

Held: Yes, as mentioned by the CAB, it is duly authorized to do so under Republic Act 776 and a
legislative franchise is not necessary before it may do so, since Congress has delegated the
authority to authorize the operation of domestic air transport services to the CAB, an
administrative agency. The delegation of such authority is not without limits since Congress had
set specific standard and limitations on how such authority should be exercised.

Public convenience and necessity exists when the proposed facility will meet a reasonable want
of the public and supply a need which the existing facilities do not adequately afford.

Thus, the Board should be allowed to continue hearing the application, since it has jurisdiction
over it provided that the applicant meets all the requirements of the law.

G.R. Nos. 88195-96

Teja Marketing v. Intermediate Appellate Court

(148 SCRA 347)

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

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

Issue: Whether the defendant can recover damages against the plaintiff?

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

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

Dominador Raymundo v. Luneta Motor

G.R. Nos. L-39902, L-39903
November 29, 1933

FACTS:

Nicanor De Guzman signed as “Guzco Transit”, purchased trucks from the Luneta Motor Co. He
then executed promissory notes guaranteed by a chattel mortgage on several trucks. However, he
failed to comply with his obligation.

Because of failure to perform obligation, a suit was filed against Guzco Transit for the collection of
the unpaid and outstanding amount. A writ of attachment was obtained against the properties of
Guzco Transit, so garnishment was made by the Sec. of Public Service Commission attacking the
right, title, and participation of the Guzco Transit in the certificates of public convenience covering
bus transportation lines (route: Manila-Cardona, Rizal; Manila-Pilila, Rizal).

The CFI ordered the selling of the certificates of public convenience. The highest bidder was Luneta
Motor Co. After several days, or after a writ of attachment was issued, these certificates were sold
by Luneta Motor to Dominador Raymundo. The Public Service Commission approved the sale at
public auction in favor of Luneta Motor but denied the sale of the certificates of public convenience
to Raymundo.

ISSUE:

Whether a certificate of public convenience may be the object of execution and garnishment sale
What will prevail, a sale of these certificates of public convenience at public auction by virtue of an
attachment, or voluntary sale made after the property had been levied upon

HELD:

Certificate of Public Convenience secured by public service operators are liable to execution.

The Public Service Law Act 3108 as amended permits the Public Service Commission to approve
sale, alienation, mortgaging, encumbering or leasing of property, franchises, priviliges, or rights or
any part thereof, and in practice the purchase and sale of certificates of public convenience has
been permitted by the Pubic Service Commission. If the holder of a certificate of public convenience
can sell it voluntarily, there is no valid reason why these certificates cannot be taken and sold
involuntarily pursuant to process.

Epitacio San Pablo v. Pantranco South Express, Inc.

G.R. No. L-61461 August 21, 1987
Gancayco, J.

FACTS:
 Pantranco – engaged in the land transportation business with PUB service for
passengers and freight and various certificates for public conveniences to operate
passenger buses from Metro Manila to Bicol Region and Eastern Samar; through its
counsel, it wrote to Maritime Industry Authority (MARINA) requesting authority to
lease/purchase a vessel named M/V “Black Double” “to be used for its project to
operate a ferryboat service from Matnog, Sorsogon and Allen, Samar that will
provide service to company buses and freight trucks that have to cross San Bernardo
Strait; request was denied by MARINA
 It nevertheless acquired the vessel MV “Black Double”; it wrote the Chairman of the
Board of Transportation that it proposes to operate a ferry service to carry its
passenger buses and freight trucks between Allen and Matnog in connection with
its trips to Tacloban City for the purpose of continuing the highway, which is
interrupted by a small body of water, the said proposed ferry operation being
merely a necessary and incidental service to its main service and obligation of
transporting its passengers; that being so, it believed that there was no need for it
to obtain a separate certificate for public convenience to operate a ferry service
Matnog to cater exclusively to its passenger buses and freight trucks. BOT granted
the request. Cardinal Shipping Corporation and the heirs of San Pablo filed separate
motions for reconsideration.

ISSUES: 1. WON a ferry service is an extension of the highway and thus is a part of the
authority originally granted PANTRANCO; 2. WON a land transportation company can
be authorized to operate a ferry service or coastwise or interisland shipping service
along its authorized route as an incident to its franchise without the need of filing a
separate application for the same

HELD: 1. No.
 ferry - continuation by means of boats, barges, or rafts, of a highway or the
connection of highways located on the opposite banks of a stream or other body of
water. The term necessarily implies transportation for a short distance, almost
invariably between two points, which is unrelated to other transportation
 ferry service - service either by barges or rafts, even by motor or steam vessels,
between the banks of a river or stream to continue the highway which is interrupted
by the body of water, or in some cases to connect two points on opposite shores of
an arm of the sea such as bay or lake which does not involve too great a distance or
too long a time to navigate
 coastwise or interisland service - service which involves crossing the open sea
 motorship, steamboat or motorboat service (engaged in the coastwise trade) –
service between the different islands, involving more or less great distance and over
 more or less turbulent and dangerous waters of the open sea, to be coastwise or
inter-island service; considered coastwise or inter-island service
 conveyance of passengers, trucks and cargo from Matnog to Allen is certainly not a
ferry boat service but a coastwise or interisland shipping service. Under no
circumstance can the sea between Matnog and Allen be considered a continuation
of the highway. While a ferry boat service has been considered as a continuation of
the highway when crossing rivers or even lakes, which are small body of waters -
separating the land, however, when as in this case the two terminals, Matnog and
Allen are separated by an open sea it can not be considered as a continuation of the
highway. PANTRANCO should secure a separate CPC for the operation of an
interisland or coastwise shipping. Its CPC as a bus transportation cannot be merely
amended to include this water service under the guise that it is a mere private ferry
service.

III. Transportation of Passengers

1. Extra Ordinary Diligence – b) Accommodation Passenger

Lourdes Lara, et al vs. Brigido Valencia

GR No. L-9907 June 30, 1958
www.lawphil.net/judjuris/juri1958/jun1958/gr_l-9907_1958.html

FACTS:
 The deceased. Demetrio Lara, Sr., was an inspector of the Bureau of Forestry stationed
in Davao.
 Defendant, Brigido Valencia is engaged in the business of exporting logs from his lumber
concession in Cotabato.
 Lara went to said concession upon instructions of his chief to classify the logs of Valencia
which were about to be loaded on a ship anchored in the port of Parang. His work lasted
for six days during which he contracted malaria fever.
 One morning, Lara asked Valencia if he could take him in his pick up to Davao as there
was then no other means of transportation, to which Valencia agreed.
 The pick-up left Parang bound to Davao taking along six passengers including Lara. Lara
was invited by the defendant to come sit with him on the front seat, but he declined.
During the trip, Lara sat at the back of the pick-up, on a bag in the middle with his arms
on a suitcase and his head cove red by a jacket.
 Upon reaching barrio Catidtuan, Lara accidentally fell from the pick-up and then
suffered serious injuries. They brought Lara to the nearest place where they could find a
doctor and not having to found any, they took him to St. Joseph’s Clinic of Kidapawan.
But when Lara arrived, he was already dead.
 It therefore appears that the deceased as well as his companions who rode in the pick-
up of defendant, were merely accommodation passengers who paid nothing for the
service, and so they can be considered as invited guests.
 As accommodation passengers or invited guests, defendant as owner and driver of the
pick-up owes to them merely the duty to exercise reasonable care so that they may be
transported safely to their destination.
 Defendant is only required to observe ordinary care, and is not duty bound to exercise
extraordinary diligence as required of a common carrier by the law.

ISSUE:
o Whether or not the defendant failed to observe ordinary care or diligence in
transporting the deceased from Parang to Davao

HELD:

The Supreme Court ruled in favor of the respondents, reversing the decision appealed
from. The Supreme Court held that all things considered, the accident occurred not due to the
negligence of the defendant but to circumstances beyond his control and that he should be
exempt from liability.
The Supreme Court stated that there is nothing to indicate that defendant has acted
with negligence or without taking the precaution that an ordinary prudent man would have
taken under similar circumstances. There is every reason to believe that the unfortunate
happening was only due to an unforeseen accident by the fact that at the time the deceased
was half-asleep and must have fallen from the pick-up when it ran into some stones causing it to
jerk considering that the road was then bumpy, rough and full of stones. The Supreme Court
also states that they may rather attribute the incident to lack of care on the part of the
deceased considering that the pick-up was open and he was then in crouching position. Indeed,
the law provides that “A passenger must observe the diligence of a good father of a family to
avoid injury to himself” (Article 1761, NCC), which means that if the injury to the passenger has
been proximately caused by his own negligence, the carrier cannot be held liable.

Batangas Transportation Co. v. Orlanes

Johns, J (1928)

Nature: Review of an order of the Public Service Commission

Parties: Batangas Transportation Co., petitioner
Cayetano Orlanes, respondent

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

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

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

Issue/s:
WON a CPC should be issued to a second operator in a field where, and in competition with,
a first operator who is already operating a sufficient, adequate and satisfactory service?

Ruling/s:
NO. Decision of PSC is revoked.

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

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

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

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

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

The policy of regulation upon which the present public utility commission plan is based and
which tends to do away with competition among public utilities as they are natural
monopolies, is at once the reason that the regulation of an existing system of transportation,
which is properly serving a given field, or may be required to do so, is to be preferred to
competition among several independent systems. While requiring a proper service from a
single system for a territory in consideration for protecting it as a monopoly for all the service
required and in conserving its resources, no economic waste results and service may be
furnished at a minimum cost.

Y Transit Co., Inc. vs. NLRC | Romero (1994)

ROMERO, J.:
This is a special civil action for certiorari filed by "Y" Transit Co., Inc. for the annulment of the
decision of the National Labor Relations Commission, the dispositive portion of which reads as
follows:

"WHEREFORE, the appealed Order should be as it is hereby REVERSED reinstating the levy made
by the Sheriff on July 13 and 16, 1982. Accordingly, the sale of the levied properties may
proceed pursuant to existing laws.

SO ORDERED."[1]

FACTS

1. On 24 October 1978, Yujuico Transit Co., Inc. (Yujuico) transferred ownership of ten
buses to Jesus Yujuico (Jesus) as a consequence of the latter’s transfer of property to DBP to
satisfy the former’s obligations.

2. Sometime in June and July 1979, respondent Yujuico Transit Employees Union (Union)
filed two consolidated complaints against Yujuico for unfair labor practice and for non-payment
of living allowances.

3. Meanwhile, on 21 May 1980, Jesus sold the buses to petitioner Y Transit Co., Inc. .

4. On 21 July 1981, the LA dismissed the complaint for unfair labor practice but held
Yujuico liable for non-payment of living allowances and the buses were levied upon to satisfy
the writ of execution.

5. Y filed Affidavits of Third Party Claim, which Union opposed on the grounds that: (1) the
transactions leading to the transfer of the buses to Y were void because they lacked the
approval of the BOT as required by the Public Service Act; and (2) the buses were still registered
in the name of Yujuico which means it is still the lawful owner.

6. The LA found that Y had valid title to the buses and that the BOT, by its subsequent acts,
had approved the transfer; he further ruled that registration is not the operative act that
transfers ownership and that, in addition, Y had already constructively registered the vehicles.

7. On appeal the NLRC reversed the decision on the ground that the transfer of the buses
lacked the BOT approval.

ISSUES/HELD

Were the transfer of the buses, without BOT approval, valid insofar as the respondents are
concerned? – NO.

RATIONALE

• The law really requires the approval of the Public Service Commission in order that a
franchise, or any privilege pertaining thereto, may be sold or leased without infringing the
certificate issued to the grantee.

o Since a franchise is personal in nature, any transfer or lease thereof should be notified
to the PSC so that the latter may take proper safeguards to protect the interest of the public.

o In fact, the law requires that, before the approval is granted, there should be a public
hearing with notice to all interested parties in order that the commission may determine if there
are good and reasonable ground justifying the transfer or lease of the property covered by the
franchise, or is the sale or lease is detrimental to public interest.

• If the property covered by the franchise is transferred, or leased to another without

obtaining the requisite approval, the transfer is not binding against the PSC and, in
contemplation of law, the grantee continues to be responsible under the franchise.

• The last part of Section 16 (h) (which states that “nothing herein contained shall be
construed to prevent the sale, alienation, or lease by any public utility of any of its property in
the ordinary course of business”) does not mean that the approval of the PSC is a mere formality
and that the transfer or lease is still binding; said provision only means that, even if the approval
has not been obtained, the transfer or lease is valid and binding between the parties although
not effective against the public and the PSC as the approval is only necessary to protect public
interest.

• There being no prior BOT approval in the transfer of the property from Yujuico to Jesus,
it only follows that, as far as the BOT and third parties are concerned, Yujuico still owned the
properties and Jesus, and later Y, only held the same as agents of the former.

• Conversely, where the registered owner is liable for obligations to third parties and
vehicles registered under his name are levied upon to satisfy his obligations, the transferee of
such vehicles cannot prevent the levy by asserting his ownership because, as far as the law is
concerned, the one in whose name the vehicle is registered remains to be the owner and the
transferee merely holds the vehicles for the registered owner.
o However, this does not deprive the transferee of the right to recover from the
registered owner any damages which may have been incurred by the former since the transfer
or lease is valid and binding between the parties.