DEFINITION, COVERAGE, AND DISCUSSION OF TRANSPORTATION

CASE 1

G.R. No. 100727 March 18, 1992

COGEO-CUBAO OPERATORS AND DRIVERS ASSOCIATION, petitioner,

vs.
THE COURT OF APPEALS, LUNGSOD SILANGAN TRANSPORT SERVICES, CORP., INC., respondents.

MEDIALDEA, J.:

This is a petition for review on certiorari of the decision of the Court of Appeals which affirmed with modification
the decision of the Regional Trial Court awarding damages in favor of respondent Lungsod Silangan Transport
Services Corp., Inc. (Lungsod Corp. for brevity).

The antecedents facts of this case are as follows:

It appears that a certificate of public convenience to operate a jeepney service was ordered to be
issued in favor of Lungsod Silangan to ply the Cogeo-Cubao route sometime in 1983 on the
justification that public necessity and convenience will best be served, and in the absence of
existing authorized operators on the lined apply for . . . On the other hand, defendant-Association
was registered as a non-stock, non-profit organization with the Securities and Exchange
Commission on October 30, 1985 . . . with the main purpose of representing plaintiff-appellee for
whatever contract and/or agreement it will have regarding the ownership of units, and the like, of
the members of the Association . . .

Perturbed by plaintiffs' Board Resolution No. 9 . . . adopting a Bandera' System under which a
member of the cooperative is permitted to queue for passenger at the disputed pathway in
exchange for the ticket worth twenty pesos, the proceeds of which shall be utilized for Christmas
programs of the drivers and other benefits, and on the strength of defendants' registration as a
collective body with the Securities and Exchange Commission, defendants-appellants, led by
Romeo Oliva decided to form a human barricade on November 11, 1985 and assumed the
dispatching of passenger jeepneys . . . This development as initiated by defendants-appellants
gave rise to the suit for damages.

Defendant-Association's Answer contained vehement denials to the insinuation of take over and
at the same time raised as a defense the circumstance that the organization was formed not to
compete with plaintiff-cooperative. It, however, admitted that it is not authorized to transport
passengers . . . (pp. 15-16, Rollo)

On July 31, 1989, the trial court rendered a decision in favor of respondent Lungsod Corp., the dispositive
portion of which states:

WHEREFORE FROM THE FOREGOING CONSIDERATION, the Court hereby renders

judgment in favor of the plaintiff and against the defendants as follows:

1. Ordering defendants to pay plaintiff the amount of P50,000.00 as actual damages;

2. Ordering the defendants to pay the plaintiffs the amount of P10,000.00 as attorney's fees.

SO ORDERED. (P. 39, Rollo)

Not satisfied with the decision, petitioner Association appealed with the Court of Appeals. On May 27, 1991,
respondent appellate court rendered its decision affirming the findings of the trial court except with regard to the
award of actual damages in the amount of P50,000.00 and attorney's fees in the amount of P10,000.00. The
Court of Appeals however, awarded nominal damages to petitioner in the amount of P10,000.00.

Hence, this petition was filed with the petitioner assigning the following errors of the appellate court:
 I. THE RESPONDENT COURT ERRED IN MERELY MODIFYING THE JUDGMENT OF THE
TRIAL COURT.

II. THE RESPONDENT COURT ERRED IN HOLDING THAT THE PETITIONER USURPED THE
PROPERTY RIGHT OF THE PRIVATE RESPONDENT.

III. AND THE RESPONDENT COURT ERRED IN DENYING THE MOTION FOR
RECONSIDERATION.

Since the assigned errors are interrelated, this Court shall discuss them jointly. The main issue raised by the
petitioner is whether or not the petitioner usurped the property right of the respondent which shall entitle the
latter to the award of nominal damages.

Petitioner contends that the association was formed not to complete with the respondent corporation in the
latter's operation as a common carrier; that the same was organized for the common protection of drivers from
abusive traffic officers who extort money from them, and for the elimination of the practice of respondent
corporation of requiring jeepney owners to execute deed of sale in favor of the corporation to show that the latter
is the owner of the jeeps under its certificate of public convenience. Petitioner also argues that in organizing the
association, the members thereof are merely exercising their freedom or right to redress their grievances.

We find the petition devoid of merit.

Under the Public Service Law, a certificate of public convenience is an authorization issued by the Public
Service Commission for the operation of public services for which no franchise is required by law. In the instant
case, a certificate of public convenience was issued to respondent corporation on January 24, 1983 to operate a
public utility jeepney service on the Cogeo-Cubao route. As found by the trial court, the certificate was issued
pursuant to a decision passed by the Board of Transportation in BOT Case No. 82-565.

A certification of public convenience is included in the term "property" in the broad sense of the term. Under the
Public Service Law, a certificate of public convenience can be sold by the holder thereof because it has
considerable material value and is considered as valuable asset (Raymundo v. Luneta Motor Co., et al., 58 Phil.
889). Although there is no doubt that it is private property, it is affected with a public interest and must be
submitted to the control of the government for the common good (Pangasinan Transportation Co. v. PSC, 70
Phil 221). Hence, insofar as the interest of the State is involved, a certificate of public convenience does not
confer upon the holder any proprietary right or interest or franchise in the route covered thereby and in the public
highways (Lugue v. Villegas, L-22545, Nov . 28, 1969, 30 SCRA 409). However, with respect to other persons
and other public utilities, a certificate of public convenience as property, which represents the right and authority
to operate its facilities for public service, cannot be taken or interfered with without due process of law.
Appropriate actions may be maintained in courts by the holder of the certificate against those who have not been
authorized to operate in competition with the former and those who invade the rights which the former has
pursuant to the authority granted by the Public Service Commission (A.L. Ammen Transportation Co. v.
Golingco. 43 Phil. 280).

In the case at bar, the trial court found that petitioner association forcibly took over the operation of the jeepney
service in the Cogeo-Cubao route without any authorization from the Public Service Commission and in violation
of the right of respondent corporation to operate its services in the said route under its certificate of public
convenience. These were its findings which were affirmed by the appellate court:

The Court from the testimony of plaintiff's witnesses as well as the documentary evidences
presented is convinced that the actions taken by defendant herein though it admit that it did not
have the authority to transport passenger did in fact assume the role as a common carrier
engaged in the transport of passengers within that span of ten days beginning November 11,
1985 when it unilaterally took upon itself the operation and dispatching of jeepneys at St. Mary's
St. The president of the defendant corporation. Romeo Oliva himself in his testimony confirmed
that there was indeed a takeover of the operations at St. Mary's St. . . . (p. 36, Rollo)

The findings of the trial court especially if affirmed by the appellate court bear great weight and will not be
disturbed on appeal before this Court. Although there is no question that petitioner can exercise their
constitutional right to redress their grievances with respondent Lungsod Corp., the manner by which this
constitutional right is to be, exercised should not undermine public peace and order nor should it violate the legal
rights of other persons. Article 21 of the Civil Code provides that any person who wilfully causes loss or injury to
another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the
damage. The provision covers a situation where a person has a legal right which was violated by another in a
manner contrary to morals, good customs or public policy. It presupposes loss or injury, material or otherwise,
which one may suffer as a result of such violation. It is clear form the facts of this case that petitioner formed a
barricade and forcibly took over the motor units and personnel of the respondent corporation. This paralyzed the
usual activities and earnings of the latter during the period of ten days and violated the right of respondent
Lungsod Corp. To conduct its operations thru its authorized officers.

As to the propriety of damages in favor of respondent Lungsod Corp., the respondent appellate court stated:

. . . it does not necessarily follow that plaintiff-appellee is entitled to actual damages and
attorney's fees. While there may have been allegations from plaintiff-cooperative showing that it
did in fact suffer some from of injury . . . it is legally unprecise to order the payment of
P50,000.00 as actual damages for lack of concrete proof therefor. There is, however, no denying
of the act of usurpation by defendants-appellants which constituted an invasion of plaintiffs'-
appellees' property right. For this, nominal damages in the amount of P10,000.00 may be
granted. (Article 2221, Civil Code). (p. 18, Rollo)

No compelling reason exists to justify the reversal of the ruling of the respondent appellate court in the case at
bar. Article 2222 of the Civil Code states that the court may award nominal damages in every obligation arising
from any source enumerated in Article 1157, or in every case where any property right has been invaded.
Considering the circumstances of the case, the respondent corporation is entitled to the award of nominal
damages.

ACCORDINGLY, the petition is DENIED and the assailed decision of the respondent appellate court dated May
27, 1991 is AFFIRMED.

SO ORDERED.

CASE 2
G.R. No. 83542 August 20, 1990

ANTONIO S. COHON, petitioner,

vs.
COURT OF APPEALS, HON. REYNALDO MARQUEZ, IN HIS CAPACITY AS DEPUTY ADMINISTRATOR
AND HEARING OFFICER OF THE MARITIME INDUSTRY AUTHORITY (MARINA); ENRIQUE Y. TAN, JR.,
AND VICENTE ATILANO, respondents.

Joseph T. Cohon and Pedro N. Tanchuling for petitioner.

Pastor C. Bacani for private respondents.

PARAS, J.:

Before Us for review is the Decision * dated March 3, 1988 of respondent Court of appeals denying due course to the petition filed by petitioner Antonio S.
Cohon and dismissing the same for lack of merit. Petitioner also presents for review the Resolution of May 31, 1988 of said appellate court denying his motion
for reconsideration of the subject decision.

The prefatory facts, as found by respondent Court of appeals, are not disputed. Thus:

Respondent Enrique Tan, Jr. applied for and was granted a certificate of public convenience to
operate inter-island shipping service for transportation of passengers and freight on the line
Cebu-Cataingan-Placer-Kawayan-Masbate and vice versa with the use of one motor vessel
named "M/V Young Lady", in a decision of the Board of Transportation (BOT) dated August 26,
1981 in BOT Case No. 78-26975.

Tan's operation was stopped sometime in December 1983, due to engine breakdown of his
vessel "M/V Young Lady" and thereafter he completely abandoned the service of the route.

In April, 1985, to provide a much needed service caused by Tan's abandonment of operations,
petitioner herein, Antonio Cohon, doing business under the name and style of "Lapu-Lapu
Shipping Lines" applied with the BOT, and was granted a Certificate of Public Convenience CPC,
for the Cebu-Kataingan route.

Around May or June, 1985 petitioner discovered that FGR Shipping Lines, an alleged interloper,
was operating illegally on his route under Tan's CPC which he allegedly leased, for which reason
he filed a complaint with MARINA (MARINA Case No. 85-003C) charging FGR with illegal
operations.

Claiming to have purchased Tan's CPC, co-respondent Vicente Atilano, together with Tan, filed
with MARINA on May 29, 1985 an "Application for Approval of Sale and Transfer with
substitution of that respondent Atilano proposing to use the "M/V Yellow Rose" instead of the
"M/V Young Lady" which was then unfit for public service, docketed as MARINA Case No. 85-
079.

Petitioner opposed the joint petition on the following grounds:

1. He has been granted a CPC by the former BOT in a decision dated April 26, 1985 (BOT Case
No. 84-7228), one of the approved routes of which is Cebu-Katingan route;

2. His service on this route with the use of the motor vehicle "M/V Honey" has been regular and
uninterrupted, adequate and efficient;

3. Vendor Tan's franchise had already expired in May, 1985 and his vessel "M/V Young Lady"
which he sold to Atilano has been unseaworthy and has not been in operation since 1983;

4. Vendor Tan, having ceased to serve the Cebu-Cataingan route since late 1983, is guilty of
non-user of franchise that had since expired;

5. Approval of the joint petition will prove detrimental to petitioner and the interest of the riding
public and will result in destructive competition.

FGR filed an application for a CPC in its name, which was opposed by herein petitioner,
docketed as MARINA Case No. 85-226. This application was finally dismissed by MARINA on
January 19, 1987.

After MARINA Case No. 85-079 was reset for hearing on March 11, 1987, the same was
dismissed for failure to prosecute because of the non-appearance of both private respondents
and their counsel.

On a motion to set aside order of dismissal and to reset case for hearing, apparently with the
notice to petitioner, the case was reinstated and a hearing was conducted on an amended
application filed by respondents who then finished presenting their evidence.

On July 14, 1987 petitioner filed an urgent motion to set aside all proceedings after March 11,
1987, which was denied but petitioner was merely given the right to recall the sole witness of
respondents for cross-examination.

In the course of the hearing of September 16, 1987, petitioner sought to prove the invalidity of
Tan's CPC by showing that it was signed by only one BOT Member instead of at least two board
members as allegedly required by law. Respondent Marquez blocked petitioner's efforts saying
that the CPC is not subject to collateral attack and that petitioner should file a separate action
directly impugning the CPC's validity.

Accordingly, petitioner on October 7, 1987 filed MARINA Case No. 87-029-C entitled "Petition for
declaration of Nullity of Certificate of Public Convenience and/or Cancellation of CPC," praying
that Tan's CPC be declared void ab initio, or in the alternative that the same be cancelled by
reason of abandonment.

On the same date petitioner filed his "Motion to Suspend Proceedings" in Case No. 85-079 on
the ground that MARINA Case No. 87-029-C for declaration of nullity raises a prejudicial question
 the resolution of which is determinative of the merits of MARINA Case No. 85-079 for approval of
the sale and transfer of Tan's CPC to Atilano.

Respondent Marquez orally denied the motion for suspension in the hearing of October 7, 1987,
which was confirmed by written order dated October 27, 1987. Reconsideration was sought but
subsequently denied. (pp. 30-32, Rollo)

Petitioner submits these allegations:

1. Respondent Court of Appeals committed an error in declaring that private respondent's Certificate of Public
Convenience is valid on the basis of its argument that the original BOT case wherein said Certificate had been
granted was principally a case of rate fixing which should have required the approval of at least two members of
the defunct BOT board. The Certificate definitely spelled out the freight and passenger rates.

The law provides that all cases involving the fixing of rates must have concurrence and signatures of at least two
board members. The law referred to are the Rules of Practice and Procedure then enforced by the defunct BOT,
specifically Sec. 2 of Rule 14 of said Rules.

Considering that the CPC which involved the fixing of rates was issued against the mandatory requirements of
the aforecited law, it follows that the decision allowing the grant of the CPC and the CPC itself are void and
ineffective and, therefore, the Certificate did not confer any right or privilege to respondent-awardee. For being
invalid from the beginning, the same cannot be ratified nor validated. It further follows that the Maritime Industry
Authority (the agency which took over the powers and functions of the Board of Transportation) has no
jurisdiction to proceed with MARINA Case No. 85-079 which allegedly involved the approval and sale of the
invalid CPC.

2. Respondent Court of Appeals failed to perceive or appreciate the real nature of the main issue raised by
petitioner-the invalidity of private respondent's CPC which is a jurisdictional and threshold issue since it is only
proper and logical to determine first if the Certificate subject of purported sale is valid and actually exists before
resolving whether or not to approve the sale and transfer thereof.

The question of the CPC's invalidity is a jurisdictional issue since the very premise of MARINA Case No. 85-079
(for approval of the sale of the CPC) is the existence of a valid CPC. A finding as to the nullity and non-existence
of the subject CPC would render the aforecited case legally baseless and would thus deprive MARINA of its
jurisdiction to act on or proceed with the case.

The ruling of the Court of Appeals stating that the proceedings in MARINA Case No. 85-079 can continue
without first resolving the issue of the invalidity of the CPC would result in a major absurdity and would cause
serious damage to petitioner. For, the consequence of such a ruling is that respondent Atilano as transferee of
the void CPC and successor-in-interest of private respondent would automatically be allowed to operate the
route covered by the CPC and compete with petitioner to his prejudice. Private respondent, on the other hand,
contends:

1. The CPC under question was validly granted to him because his application was for the issuance of a
certificate of public convenience and not for the fixing of rates in which case, the grant thereof of one BOT
member was sufficient. The fact that rates were indicated did not make the application a case for the fixing of
rates. The rates are merely incidental to the grant of the certificate in order to make the grantee aware of what
rates to charge and which rates are the usual standard rates.

Under the BOT Rules and Procedure, the signature or approval of two board members is required only in cases
which are contested or specifically involving the fixing of rates.

2. If the application for a CPC were treated as one concerning the fixing of rates, such action would result in
absurdity because every application would then be an application for rate fixing, which should not be the case.

The resolution of this case hinges on the basic issue of whether or not a certificate of public convenience
embodying a schedule of rates for passengers, freight and cargo, which was granted on the basis of an
application for the issuance of said certificate to operate an interisland shipping service, should be considered as
a certificate primarily involving a fixing of rates.
The other questions of whether or not the award of the certificate of public convenience was legal and regular
with only one BOT member approving the same, and whether or not the determination of the validity of the
Certificate is a jurisdictional issue, would depend on the resolution of the aforestated pivotal issue.

We find merit in private respondent's submission. The application of private respondent was filed specifically for
the issuance of a certificate of public convenience and not for the fixing of rates.

The decision itself of the defunct Board of Transportation supports the above finding when it explicitly declares
that the applicant private respondent requests for the issuance of a CPC to operate an inter-island shipping
service for the transportation of passengers and freight.

Thus, the dispositive portion of the BOT decision, in squarely responding to the request, states as follows:

Wherefore, it is ordered that pursuant to the provisions of Section 16 (a) of Commonwealth Act
146, as amended, let a certificate of public convenience be issued to herein applicant, Enrique
Tan, Jr. (Grace Shipping Lines) authorizing him to operate an inter-island shipping service on the
line: Cebu-Cataingan-Placer-Kawayan-Masbate and vice versa with the use of one (1) motor
vessel, subject to the following, (Emphasis supplied) (p. 53, Rollo)

Notably, the fixing of the rates is an essential precondition to the approval of the application for the certificate of
public convenience and the award of the same. It is not merely incidental as private respondent claims; it is more
of a mandatory condition that comes with the grant of the certificate. The CPC embodies certain conditions
imposable upon its approval and certain conditions which should be complied with in order to sustain the validity
of the certificate.

As per verification with the Franchise Department of the Maritime Industry Authority, a CPC normally includes
the standard rates for passengers, cargo, and freight.

Thus, it appears that the CPC was granted on the basis of private respondent's application for the issuance
thereof and clearly, not for the fixing of rates. This finding is sufficiently supported by the dispositive portion of
the BOT decision as aforequoted.

Since the application was not contested at the time of its consideration and since the same was definitely not for
the fixing of rates, the requisite approval of two (2) Board members does not apply as contended by private
respondent. The approval of one member was enough to grant a valid certificate. In this regard, therefore,
private respondent's CPC was legally granted and valid.

But what started as a valid CPC assumed a different status by reason of a subsequent violation of two (2)
mandatory conditions embodied in the decision. We are speaking of No. 11 of the "Conditio ns" which provides:

11. That the authority herein granted shall be good only for the applicants motor vessel named
"M/V Young Lady" while the license issued to him by the Philippine Coast Guard is still subsisting
and in effect. (p. 56, Rollo)

The aforestated condition mandates that the CPC was granted exclusively for the operation of "M/V Young
Lady" and not for any other vessel. This simply means that the moment such particular vessel became
unseaworthy as when it was abandoned due to engine trouble, then it follows that the object covered by the
license and CPC became inexistent. Correspondingly, the CPC became ineffective.

It should be noted that the CPC covered the "M/V Young Lady" only. Said certificate was awarded exclusively for
the operation of the vessel. Hence, when the said ship became unseaworthy due to engine trouble in December,
1983, private respondent had to abandon completely the service of the route covered by the CPC. At that very
moment, private respondent already committed a violation of No. 2 of the "Conditions" imposed under the
Certificate.

Condition No. 2 reads thus:

Applicant shall not operate his motor vessels unless they are fit for public service and that before
operating his motor vessel, applicant shall renew his Coastwise License within thirty (30) days
from receipt of this decision and furnish copy thereof to the Board within thirty (30) days after
 renewal and every year thereafter. Failure of applicant to renew said license will be sufficient
cause for the cancellation of the authority herein granted. (Rollo, p. 55)

It becomes evident that private respondent could not have renewed his Coastwise License in 1983 because the
vessel "M/V Young Lady" was already grounded and hence, there was no more ship over which a license should
be secured. This was a sufficient cause for the cancellation of the CPC.

It appears clearly from the Conditions aforementioned that the original vessel covered by the License and
Certificate could not be substituted with another vessel, Such being the case, private respondent could not
legally sell and transfer his CPC in 1985 to Atilano when at that time, the "M/V Young Lady" subject of the
Certificate was no longer operational. Without the original and basic motor vessel, the CPC became
unenforceable and incapable of being the subject matter of a sale and transfer. This alone had the effect of
invalidating the CPC and private respondent therefore, had no valid CPC to sell and transfer to Atilano.
Consequently, MARINA Case No. 85-079 had no legal basis to proceed. Better still, it should not have been
instituted for lack of right of action.

Considering the foregoing, the appealed decision is hereby REVERSED and public respondent Reynaldo
Marquez, Deputy Administrator of MARINA is hereby directed to DISMISS MARINA Case No. 85-079.

SO ORDERED.

CASE 3

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

DOMINADOR RAYMUNDO, petitioner-appellant,

vs.
LUNETA MOTOR CO., ET AL., respondents-appellees.

A.M. Zarate for appellant.

Jose Agbulos for appellee Luneta Motor Co.
No appearance for the other appellee.

MALCOLM, J.:

The question squarely raised in these concerns the forced sales of certificates of public convinced held by public
service operators and the liability to execution of such certificates.

Breaking into the narration of the facts at the proper point, we find Nicanor de Guzman, signing as Guzco
Transit, purchasing trucks from the Luneta Motor Co. and to pay for them executing a series of promissory notes
guaranteed by a chattel mortgage on several trucks. On failure of De Guzman or Guzco Transit to pay the
promissory notes, suit was brought in the Court of First Instance of Manila for the collection of the amount
outstanding and unpaid. When the complaint was presented, a writ of attachment was obtained against the
properties of the Guzco Transit, and as a consequence garnishment was served on the Secretary of the Public
Service Commission attacking the right, title, and participation of the Guzco Transit in the certificates of public
convenience issued in cases Nos. 25635, 23914 and 24255 covering the bus transportation lines between
Manila and Cardona, Rizal, and between Manila and Pililla, Rizal. These certificates were ordered sold by the
Court of First Instance of Manila, and in fact the certificates of public convenience Nos. 25635 and 23914 were
sold to the Luneta Motor Co. as the highest bidder. The approval of the sheriff's sale was prayed for before the
Public Service Commission, and is one of the cases under review.

Going back a moment, it is necessary to insert in the statement of facts that on July 16, 1932, or nine days after
the certificates were attached by the Luneta Motor Co., the same certificates, together with certificate No. 25951
and several trucks, were sold by De Guzman for the Guzco Transit to Dominador Raymundo. The approval of
this sale was sought from the Public Service commission, and is the other case now under review. On the two
cases being heard together, the commission in its decision approved the sale at public auction in favor of the
Luneta Motor Co., and disapproved the sale made to Dominador Raymundo, reserving to Raymundo the right to
present another petition for the approval of the sale of certificate of public convenience No. 25951 which was not
included in the sale in favor of the Luneta Motor Co.

Sweeping incidental matters to one side, the prime question need not be complicated by determining if a sale of
a certificate of public convenience without any equipment may be the object of execution and garnishment sale,
for this is matter of policy to be determined by the Public Service Commission, and it appears that sale of
certificates of public convenience without equipment have been approved by the commission. Also it is evident
that the articles of incorporation of the Luneta Motor Co. are broad enough in scope to authorize the company, if
it so desires, to engage in the autotruck business, and if not, there would be nothing to preclude the company
from transferring the certificates to a third party with the approval of the Public Service Commission. Further, the
nature of the partnership which may have been entered into by Nicanor de Guzman and Agapito C. Correa
cannot now be discussed, considering that the promissory notes were signed Guzco Transit, by Nicanor de
Guzman, and considering that the judgment against Guzco Transit in the Court of First Instance of Manila has
become final. Finally, the dismissal in case No. 33033 pertaining to certificate No. 25951 was without prejudice,
and the appellees disclaim any interest in this certificate. Therefore, the question to be decided on this appeal is,
which of the two sales, the one at public auction by virtue of an attachment, or two voluntary sale made after the
property had been levied upon, should prevail, and a decision on this question is dependent on a decision
relative to the liability to execution of certificates of public convenience.

The Public Service Law, Act No. 3108, as amended, authorizes certificates of public convenience to be secured
by public service operators from the Public Service Commission. (Sec. 15 [i].) A certificate of public convenience
granted to the owner or operator of public service motor vehicles, it has been held, grants a right in the nature of
a limited franchise. (Public Utilities Commission vs. Garviloch [191], 54 Utah, 406.)

The Code of Civil Procedure establishes the general rule that "property, both real and personal, or any interest
therein of the judgment debtor, not exempt by law, and all property and rights of property seized and held under
attachment in the action, shall be liable to execution." (Sec. 450.) The statutory exemptions do not include
franchises or certificates of public convenience. (Sec. 452.) The word "property" as used in section 450 of the
Code of Civil Procedure comprehends every species of title, inchoate or complete, legal or equitable. The test by
which to determine whether or not property can be attached and sold upon execution is whether the judgment
debtor has such a beneficial interest therein that he can sell or otherwise dispose of it for value. (Reyes vs. Grey
[1911], 21 Phil., 73.)

It will be noted that the Public Service Law and the Code of Civil Procedure are silent on the question at issue,
that is, silent in the sense of not containing specific provisions on the right to attach certificates of public
convenience. The same attitude was not assumed in the enactment of Act No. 667, section 10, as amended,
which gave authority for the mortgage and sale under foreclosure proceedings of franchises granted by
Provincial and municipal governments. A similar tendency was evident in the Corporation Law, for in section 56
and following thereof express provisions were made for the sale on execution used in connection with them.
Should the legislative intention thus evidenced be taken as meaning that the generality of the language used by
the Code of Civil Procedure was too vague to permit of forced sales of franchises and certificates of public
convenience, or notwithstanding the provisions to be found in these special laws, is the language of the code of
Civil Procedure broad enough to include certificates of public convenience? We lean to the latter proposition,
and will now proceed to elucidate our viewpoint.

The test to be applied was announced by our Supreme Court in Reyes vs. Grey, supra, and there is nothing in
Tufexis vs. Olaguera and Municipal Council of Guinobatan ( [1915], 32 Phil., 654), cited by appellant, which
sanctions a contrary test. That rule it will be recalled tested the liability of property to execution by determining if
the interest of the judgment debtor in the case can be sold or conveyed to another in any way. Now the Public
Service Law permits the Public Service Commission to approved the sale, alienation, mortgaging, encumbering,
or leasing of property, franchises, privileges, or rights or any part thereof (sec. 16 [h]), and in practice the
purchase and sale of certificates of public convenience has been permitted by the Public Service Commission. If
the holder of a certificate of public convenience can sell it voluntarily, there is no valid reason why the same
certificate cannot be taken and sold involuntarily pursuant to process.

If this was all that there was to the case, we might hesitate to approve attachments of certificates of public
convenience. But there is more. Certificates of public convenience have come to have considerable material
value. They are valuable assets. In many cases the certificates are the cornerstones on which are builded the
business of bus transportation. The United States Supreme Court considers a franchise granted in consideration
of the performance of public service as constituting property within the protection of the Fourteenth Amendment
to the United States Constitution. (Frost vs. Corporation Commission of Oklahoma [1929], 278 U.S., 515.) If the
holder of the certificate of public convenience can thus be protected in his constitutional rights, we see no reason
why the certificate of public convenience should not assume corresponding responsibilities and be susceptible
as property or an interest therein of being liable to execution. In at least one State, the certificate of the railroad
commission permitting the operation of a bus line has been held to be included in the term "property" in the
broad sense of the term. If thus is true, the certificate under our law, considered as a species of property, would
be liable to execution. (Willis vs. Buck [1928], 81 Mont., 472.)

As has been intimated herein before, a practice has grown up in the Public Service Commission of permitting the
alienation of certificates of public convenience and in so doing approval has been given to the sale through
foreclosure proceedings of the certificates of public convenience to third parties. The very decision in the two
cases before us is an illustration of this practice. The same tendency is to be noted in the lower courts. As an
example in the instant record, there is a previous foreclosure of a mortgage apparently uncontested, Not only
this, but tacit approval to the attachment of certificates of public convenience either through chattel mortgages or
court writs has been given by this court. (Orlanes & Banaag Transportation Co. vs. Public Service Commission
[1932], 57 Phil., 634; Manila Electric Company vs. Orlanes & Banaag Transportation Co. [1933], 57 Phil., 805;
Nos. 39525 and 39531, Red Line Transportation Co. vs. Rural Transit Co. and Bachrach Motor Co., November
17, 1933. 1)

When the motion of the plaintiff praying that the certificates of public convenience granted by the Public Service
Commission which were attached be sold at public auction and the answer opposing the granting of the motion
on the ground that franchises can not be the subject of attachment and sale by garnishment came before the
Court of First Instance of Manila, the presiding Judge Anacleto Diaz, promulgated an order which sustained the
right of the plaintiff to attachment and garnishment. That order gains particular force because a later judgment by
consent was taken and no appeal was attempted to this court. It is true that the sale further required the
approval of the Public Service Commission, but the Public Service Commission respected the decision of the
court and so we have the concurrence of the court and the commission on this question. In the order in first
instance appears the following well considered language:

It remains to be determined whether, under the law, certificates of public convenience are liable to
attachment and seizure by legal process. The law is silent as to this matter. It can not be denied that
such franchises are valuable. They are subject to being sold for a consideration as much as any other
property. They are even more valuable than ordinary properties, taking into consideration than that they
are not granted to every one who applies for them but only to those who undertake to furnish satisfactory
and convenient service to the public. It may also be said that dealers in motor vehicles even extend
credit to owners of such certificates or franchises. The law permits the seizure by means of a writ of
attachment not only of chattels but also for shares and credits. While these franchises may be said to be
intangible character, they are however of value and are considered properties which can be seized
through legal process.

For all the foregoing, the court is of the opinion that the plaintiff is entitled to the remedy it prays for in its
motion which is hereby granted. lawphil.net

The ruling of the Supreme Court on the question raised by the record and the assignments of error is this:
Certificates of public convenience secured by public service operators are liable to execution, and the Public
Service Commission is authorized to approve the transfer of the certificates of public convenience to the
execution creditor. As a consequence, the decision brought on review will be affirmed, with costs against the
appellant.

Avanceña, C.J., Villa-Real, Hull, and Imperial, JJ., concur.

CASE 4

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

EPITACIO SAN PABLO, (Substituted by Heirs of E. San Pablo), petitioners,

vs.
PANTRANCO SOUTH EXPRESS, INC., respondent.

CARDINAL SHIPPING CORPORATION, petitioner,

vs.
HONORABLE BOARD OF TRANSPORTATION AND PANTRANCO SOUTH EXPRESS, INC., respondents.
GANCAYCO, J.:

The question that is posed in these petitions for review is whether the sea can be considered as a continuation
of the highway. The corollary issue is whether 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.

The Pantranco South Express, Inc., hereinafter referred to as PANTRANCO is a domestic corporation engaged
in the land transportation business with PUB service for passengers and freight and various certificates for public
conveniences CPC to operate passenger buses from Metro Manila to Bicol Region and Eastern Samar. On
March 27,1980 PANTRANCO through its counsel 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. 1 In a reply of April 29,1981 PANTRANCO was informed by MARINA that it cannot give due course to
the request on the basis of the following observations:

1. The Matnog-Allen run is adequately serviced by Cardinal Shipping Corp. and Epitacio San
Pablo; MARINA policies on interisland shipping restrict the entry of new operators to Liner trade
routes where these are adequately serviced by existing/authorized operators.

2. Market conditions in the proposed route cannot support the entry of additional tonnage; vessel
acquisitions intended for operations therein are necessarily limited to those intended for
replacement purposes only. 2

PANTRANCO nevertheless acquired the vessel MV "Black Double" on May 27, 1981 for P3 Million pesos. It
wrote the Chairman of the Board of Transportation (BOT) through its counsel, 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 invoking the case of Javellana vs. Public Service Commission. 3 PANTRANCO claims that it can
operate a ferry service in connection with its franchise for bus operation in the highway from Pasay City to
Tacloban City "for the purpose of continuing the highway, which is interrupted by a small body of water, the said
proposed ferry operation is merely a necessary and incidental service to its main service and obligation of
transporting its passengers from Pasay City to Tacloban City. Such being the case ... there is no need ... to
obtain a separate certificate for public convenience to operate a ferry service between Allen and Matnog to cater
exclusively to its passenger buses and freight trucks.4

Without awaiting action on its request PANTRANCO started to operate said ferry service. Acting Chairman Jose
C. Campos, Jr. of BOT ordered PANTRANCO not to operate its vessel until the application for hearing on Oct. 1,
1981 at 10:00 A.M. 5 In another order BOT enjoined PANTRANCO from operating the MV "Black Double"
otherwise it will be cited to show cause why its CPC should not be suspended or the pending application
denied. 6

Epitacio San Pablo (now represented by his heirs) and Cardinal Shipping Corporation who are franchise holders
of the ferry service in this area interposed their opposition. They claim they adequately service the PANTRANCO
by ferrying its buses, trucks and passengers. BOT then asked the legal opinion from the Minister of Justice
whether or not a bus company with an existing CPC between Pasay City and Tacloban City may still be required
to secure another certificate in order to operate a ferry service between two terminals of a small body of water.
On October 20, 1981 then Minister of Justice Ricardo Puno rendered an opinion to the effect that there is no
need for bus operators to secure a separate CPC to operate a ferryboat service holding as follows:

Further, a common carrier which has been granted a certificate of public convenience is
expected to provide efficient, convenient and adequate service to the riding public. (Hocking
Valley Railroad Co. vs. Public Utilities Commission, 1 10 NE 521; Louiseville and NR Co. vs.
Railroad Commissioners, 58 SO 543) It is the right of the public which has accepted the service
of a public utility operator to demand that the service should be conducted with reasonable
efficiency. (Almario, supra, citing 73 C.J.S. 990-991) Thus, when the bus company in the case at
bar proposes to add a ferry service to its Pasay Tacloban route, it merely does so in the
discharge of its duty under its current certificate of public convenience to provide adequate and
convenient service to its riders. Requiring said bus company to obtain another certificate to
operate such ferry service when it merely forms a part — and constitutes an improvement — of
its existing transportation service would simply be duplicitous and superfluous. 7
Thus on October 23, 1981 the BOT rendered its decision holding that the ferry boat service is part of its CPC to
operate from Pasay to Samar/Leyte by amending PANTRANCO's CPC so as to reflect the same in this wise:

Let the original Certificate of public convenience granted to Pantranco South Express Co., Inc.
be amended to embody the grant of authority to operate a private ferry boat service as one of the
conditions for the grant of the certificate subject to the condition that the ferryboat shall be for the
exclusive use of Pantranco buses, its passengers and freight trucks, and should it offer itself to
the public for hire other than its own passengers, it must apply for a separate certificate of public
convenience as a public ferry boat service, separate and distinct from its land transport
systems. 8

Cardinal Shipping Corporation and the heirs of San Pablo filed separate motions for reconsideration of said
decision and San Pablo filed a supplemental motion for reconsideration that were denied by the BOT on July 21,
1981. 9

Hence, San Pablo filed the herein petition for review on certiorari with prayer for preliminary injunction 10 seeking the
revocation of said decision, and pending consideration of the petition, the issuance of a restraining order or preliminary injunction against the operation by
PANTRANCO of said ferry service. San Pablo raised the following issues:

A. DID THE RESPONDENT BOARD VIOLATE PETITIONERS' RIGHT TO DUE PROCESS,

THE RULES OF PROCEDURE AND SECTION 16 (m) OF THE PUBLIC SERVICE ACT, WHEN
IT ISSUED IN A COMPLAINT CASE THE DECISION DATED OCTOBER 23, 1981
WHICH MOTU PROPIOAMENDED RESPONDENT PANTRANCO'S PUB CERTIFICATE TO
INCLUDE AND AUTHORIZE OPERATION OF A SHIPPING SERVICE ON THE ROUTE
MATNOG, SORSOGON — ALLEN, SAMAR — EVEN AS THERE MUST BE A FORMAL
APPLICATION FOR AMENDMENT AND SEPARATE PROCEEDINGS HELD THEREFORE,
ASSUMING AMENDMENT IS PROPER?

B. DID THE RESPONDENT BOARD ERR IN FINDING IN ITS DECISION OF OCTOBER 23,
1981, THAT THE SEA FROM THE PORT OF MATNOG, SORSOGON, LUZON ISLAND TO
THE PORT OF ALLEN, SAMAR ISLAND, OR FROM LUZON ISLAND TO SAMAR ISLAND IS A
MERE FERRY OR CONTINUATION OF THE HIGHWAY — IT BEING 23 KILOMETERS OF
ROUGH AND OPEN SEA AND ABOUT 2 HOURS TRAVEL TIME REQUIRING BIG INTER-
ISLAND VESSELS, NOT MERE BARGES, RAFTS OR SMALL BOATS UTILIZED IN FERRY
SERVICE?

C. DID THE RESPONDENT BOARD ERR WHEN IT RULED THAT RESPONDENT

PANTRANCO'S VESSEL M/V BLACK DOUBLE IS MERELY A PRIVATE CARRIER, NOT A
PUBLIC FERRY OPERATING FOR PUBLIC SERVICE (ASSUMING THAT THE MATNOG-
ALLEN SEA ROUTE IS A MERE FERRY OR CONTINUATION OF HIGHWAY) EVEN IF SAID
VESSEL IS FOR HIRE AND COLLECTS SEPARATE FARES AND CATERS TO THE PUBLIC
EVEN FOR A LIMITED CLIENTELE?

D. DID THE RESPONDENT BOARD ERR WHEN IT GRANTED RESPONDENT PANTRANCO

AUTHORITY TO OPERATE A SHIPPING SERVICE IN THE FACE OF THE LATTER'S
CONTENTION AS AN AFTER THOUGH THAT IT NEED NOT APPLY THEREFOR, AND IN
SPITE OF ITS FAILURE TO SECURE THE PRE-REQUISITE MARITIME INDUSTRY
AUTHORITY (MARINA) APPROVAL TO ACQUIRE A VESSEL UNDER ITS MEMORANDUM
CIRCULAR NO. 8-A AS WELL AS ITS PRIOR FAVORABLE ENDORSEMENT BEFORE ANY
SHIPPING AUTHORIZATION MAY BE GRANTED UNDER BOT — MARINA AGREEMENT OF
AUGUST 10, 1976 AND FEBRUARY 26, 1982?

E. DID RESPONDENT BOARD ERR WHEN IT GRANTED RESPONDENT PANTRANCO

AUTHORITY TO OPERATE A SHIPPING SERVICE ON A ROUTE ADEQUATELY SERVICED
IF NOT ALREADY "SATURATED" WITH THE SERVICES OF TWO 12) EXISTING
OPERATORS PETITIONERS AND CARDINAL SHIPPING CORP.) IN VIOLATION OF THE
PRINCIPLE OF PRIOR OPERATOR RULE'? 11

By the same token Cardinal Shipping Corporation filed a separate petition raising similar issues, namely:

a. the decision did not conform to the procedures laid down by law for an amendment of the
original certificate of public convenience, and the authority to operate a private ferry boat service
 to PANTRANCO was issued without ascertaining the established essential requisites for such
grant, hence, violative of due process requirements;

b. the grant to PANTRANCO of authority to operate a ferryboat service as a private carrier on

said route contravenes existing government policies relative to the rationalization of operations of
all water transport utilities;

c. it contravenes the memorandum of agreement between MARINA and the Board of

Transportation; d. the grant of authority to operate a ferry service as a private carrier is not
feasible; it lessens PANTRANCO's liability to passengers and cargo to a degree less than
extraordinary diligence?

e. PANTRANCO is not a private carrier when it operates its ferry service;

f. it runs counter to the "old operator" doctrine; and

g. the operation by PANTRANCO of the ferry service c•nstitutes undue competition.

The foregoing considerations constitutes the substantial errors committed by the respondent
Board which would more than amply justify review of the questioned decision by this Honorable
Court.12

Both cases were consolidated and are now admitted for decision.

The resolution of all said issues raised revolves on the validity of the questioned BOT decision.

The BOT resolved the issue of whether a ferry service is an extension of the highway and thus is a part of the
authority originally granted PANTRANCO in the following manner:

A ferry service, in law, is treated as a continuation of the highway from one side of the water over
which passes to the other side for transportation of passengers or of travellers with their teams
vehicles and such other property as, they may carry or have with them. (U.S. vs. Pudget Sound
Nev. Co. DC Washington, 24 F. Supp. 431). It maybe said to be a necessary service of a
specially constructed boat to carry passengers and property across rivers or bodies of water from
a place in one shore to a point conveniently opposite on the other shore and continuation of the
highway making a connection with the thoroughfare at each terminal (U.S. vs. Canadian Pac.
N.Y. Co. 4 P. Supp, 85). It comprises not merely the privilege of transportation but also the use
for that purpose of the respective landings with outlets therefrom. (Nole vs. Record, 74 OKL. 77;
176 Pac. 756). A ferry service maybe a public ferry or a private ferry. A public ferry service is one
which all the public have the right to resort to and for which a regular fare is established and the
ferryman is a common carrier be inbound to take an who apply and bound to keep his ferry in
operation and good repair. (Hudspeth v. Hall, 11 Oa. 510; 36 SB 770). A ferry (private) service is
mainly for the use of the owner and though he may take pay for ferriage, he does not follow it as
a business. His ferry is not open to the public at its demand and he may or may not keep it in
operation (Hudspeth vs. Hall, supra, St. Paul Fire and Marine Ins. 696), Harrison, 140 Ark 158;
215 S.W. 698).

The ferry boat service of Pantranco is a continuation of the highway traversed by its buses from
Pasay City to Samar, Leyte passing through Matnog (Sorsogon) through San Bernardino Strait to
Alien (Samar). It is a private carrier because it will be used exclusively to transport its own buses,
passengers and freight trucks traversing the said route. It will cater exclusively to the needs of its
own clientele (passengers on board- Pantranco buses) and will not offer itself indiscriminately for
hire or for compensation to the general public. Legally therefore, Pantranco has the right to
operate the ferry boat M/V BLACK DOUBLE, along the route from Matnog (Sorsogon) to Allen
(Samar) and vice versa for the exclusive use of its own buses, passengers and freight trucks
without the need of applying for a separate certificate of public convenience or provisional
authority. Since its operation is an integral part of its land transport system, its original certificate
of public convenience should be amended to include the operation of such ferryboat for its own
exclusive use

In Javellana 14 this Court recited the following definition of ferry :

 The term "ferry" implied the 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 .(Emphasis supplied)

The term "ferry" is often employed to denote the right or franchise granted by the state or its
authorized mandatories to continue by means of boats, an interrupted land highway over the
interrupting waters and to charge toll for the use thereof by the public. In this sense it has also
been defined as a privilege, a liberty, to take tolls for transporting passengers and goods across
a lake or stream or some other body of water, with no essential difference from a bridge
franchise except as to the mode of transportation, 22 Am. Jur. 553.

A "ferry" has been defined by many courts as "a public highway or thoroughfare across a stream
of water or river by boat instead of a bridge." (St. Clare Country v. Interstate Car and Sand
Transfer Co., 192 U.S. 454, 48 L. ed. 518; etc.)

The term ferry is often employed to denote the right or franchise granted by the state or its
authorized mandatories to continue by means of boats, an interrupted land highway over the
interrupting waters and to charge toll for the use thereof by the public. (Vallejo Ferry Co. vs.
Solano Aquatic Club, 165 Cal. 255, 131 P. 864, Ann. Cas. 1914C 1179; etc.) (Emphasis
supplied)

"Ferry" is service necessity for common good to reach point across a stream lagoon, lake, or
bay. (U.S. vs. Canadian Pac. Ry. Co. DC Was., 4 Supp. 851,853)'

"Ferry" properly means a place of transit across a river or arm of the sea, but in law it is treated
as a franchise, and defined as the exclusive right to carry passengers across a river, or arm of
the sea, from one vill to another, or to connect a continuous line of road leading from township or
vill to another. (Canadian Pac. Ry. Co. vs. C.C. A. Wash. 73 F. 2d. 831, 832)'

Includes various waters: (1) But an arm of the sea may include various subordinate descriptions
of waters, where the tide ebbs and flows. It may be a river, harbor, creek, basin, or bay; and it is
sometimes used to designate very extensive reaches of waters within the projecting capes or
points or a country. (See Rex vs. Bruce, Deach C.C. 1093). (2) In an early case the court said:
"The distinction between rivers navigable and not navigable, that is, where the sea does, or does
not, ebb and flow, is very ancient. Rex vs. Smith, 2 Dougl. 441, 99 Reprint 283. The former are
called arms of the sea, while the latter pass under the denomination of private or inland rivers"
Adams vs. Pease 2 Conn. 481, 484. (Emphasis supplied)

In the cases of Cababa vs. Public Service Commission, 16 Cababa vs. Remigio & Carillo and Municipality of Gattaran vs.
Elizaga 17 this Court considered as ferry service such water service that crosses rivers.

However, in Javellana We made clear distinction between a ferry service and coastwise or interisland service by
holding that:

We are not unmindful of the reasons adduced by the Commission in considering the motorboat
service between Calapan and Batangas as ferry; but from our consideration of the law as it
stands, particularly Commonwealth Act No. 146, known as the Public Service Act and the
provisions of the Revised Administrative Code regarding municipal ferries and those regarding
the jurisdiction of the Bureau of Customs over documentation, registration, licensing, inspection,
etc. of steamboats, motorboats or motor vessels, and the definition of ferry as above quoted we
have the impression and we are inclined to believe that the Legislature intended ferry to mean
the service either by barges or rafts, even by motor or steam vessels, between the banks of a
river or stream to continue the 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 But where the line or service
involves crossing the open sea like the body of water between the province of Batangas and the
island of Mindoro which the oppositors describe thus "the intervening waters between Calapan
and Batangas are wide and dangerous with big waves where small boat barge, or raft are not
adapted to the service," then it is more reasonable to regard said line or service as more properly
belonging to interisland or coastwise trade. According to the finding of the Commission itself the
distance between Calapan is about 24 nautical miles or about 44.5 kilometers. We do not believe
 that this is the short distance contemplated by the Legislature in referring to ferries whether
within the jurisdiction of a single municipality or ferries between two municipalities or provinces. If
we are to grant that water transportation between Calapan and Batangas is ferry service, then
there would be no reason for not considering the same service between the different islands of
the Philippines, such as Boac Marinduque and Batangas; Roxas City of Capiz and Romblon;
Cebu City, Cebu and Ormoc, Leyte; Guian, Samar and Surigao, Surigao; and Dumaguete,
Negros Oriental and Oroquieta or Cagayan de Oro.

The Commission makes the distinction between ferry service and motorship in the coastwise
trade, thus:

A ferry service is distinguished from a motorship or motorboat service engaged in the coastwise
trade in that the latter is intended for the transportation of passengers and/or freight for hire or
compensation between ports or places in the Philippines without definite routes or lines of
service.

We cannot agree. The definiteness of the route of a boat is not the deciding factor. A boat of say
the William Lines, Inc. goes from Manila to Davao City via Cebu, Tagbilaran, Dumaguete,
Zamboanga, every week. It has a definite route, and yet it may not for that reason be regarded
as engaged in ferry service. Again, a vessel of the Compania Maritima makes the trip from
Manila to Tacloban and back, twice a week. Certainly, it has a definite route. But that service is
not ferry service, but rather interisland or coastwise trade.

We believe that it will be more in consonance with the spirit of the law to consider steamboat or
motorboat 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. Anyway, whether said service between the different islands is regarded as ferry service
or coastwise trade service, as long as the water craft used are steamboats, motorboats or motor
vessels, the result will be the same as far as the Commission is concerned. " 18 (Emphasis supplied)

This Court takes judicial notice of the fact, and as shown by an examination of the map of the Philippines, that
Matnog which is on the southern tip of the island of Luzon and within the province of Sorsogon and Allen which
is on the northeastern tip of the island of Samar, is traversed by the San Bernardino Strait which leads towards
the Pacific Ocean. The parties admit that the distance between Matnog and Allen is about 23 kilometers which
maybe negotiated by motorboat or vessel in about 1-1/2 hours as claimed by respondent PANTRANCO to 2
hours according to petitioners. As the San Bernardino Strait which separates Matnog and Allen leads to the
ocean it must at times be choppy and rough so that it will not be safe to navigate the same by small boats or
barges but only by such steamboats or vessels as the MV "Black Double. 19

Considering the environmental circumstances of the case, the 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. Respondent PANTRANCO should secure a separate CPC for the operation of an interisland or coastwise shipping service in
accordance with the provisions of law. 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.

The contention of private respondent PANTRANCO that its ferry service operation is as a private carrier, not as
a common carrier for its exclusive use in the ferrying of its passenger buses and cargo trucks is absurd.
PANTRANCO does not deny that it charges its passengers separately from the charges for the bus trips and
issues separate tickets whenever they board the MV "Black Double" that crosses Matnog to
Allen, 20 PANTRANCO cannot pretend that in issuing tickets to its passengers it did so as a private carrier and
not as a common carrier. The Court does not see any reason why inspite of its amended franchise to operate a
private ferry boat service it cannot accept walk-in passengers just for the purpose of crossing the sea between
Matnog and Allen. Indeed evidence to this effect has been submitted. 21 What is even more difficult to
comprehend is that while in one breath respondent PANTRANCO claims that it is a private carrier insofar as the
ferryboat service is concerned, in another breath it states that it does not thereby abdicate from its obligation as
a common carrier to observe extraordinary diligence and vigilance in the transportation of its passengers and
goods. Nevertheless, considering that the authority granted to PANTRANCO is to operate a private ferry, it can
still assert that it cannot be held to account as a common carrier towards its passengers and cargo. Such an
anomalous situation that will jeopardize the safety and interests of its passengers and the cargo owners cannot
be allowed.
What appears clear from the record is that at the beginning PANTRANCO planned to operate such ferry boat
service between Matnog and Alien as a common carrier so it requested authority from MARINA to purchase the
vessel M/V "Black Double 22 in accordance with the procedure provided for by law for such application for a
certificate of public convenience. 23 However when its request was denied as the said routes "are adequately
serviced by existing/authorized operators, 24 it nevertheless purchased the vessel and started operating the
same. Obviously to go about this obstacle to its operation, it then contrived a novel theory that what it proposes
to operate is a private ferryboat service across a small body of water for the exclusive use of its buses, trucks
and passengers as an incident to its franchise to convey passengers and cargo on land from Pasay City to
Tacloban so that it believes it need not secure a separate certificate of public convenience. 25 Based on this
representation, no less than the Secretary of Justice was led to render an affirmative opinion on October 20,
1981, 26 followed a few days later by the questioned decision of public respondent of October 23,
1981. 27 Certainly the Court cannot give itsimprimatur to such a situation.

Thus the Court holds that the water transport service between Matnog and Allen is not a ferry boat service but a
coastwise or interisland shipping service. Before private respondent may be issued a franchise or CPC for the
operation of the said service as a common carrier, it must comply with the usual requirements of filing an
application, payment of the fees, publication, adducing evidence at a hearing and affording the oppositors the
opportunity to be heard, among others, as provided by law. 28

WHEREFORE, the petitions are hereby GRANTED and the Decision of the respondent Board of Transportation
(BOT) of October 23, 1981 in BOT Case No. 81-348-C and its Order of July 21, 1982 in the same case denying
the motions for reconsideration filed by petitioners are hereby Reversed and set aside and declared null and
void. Respondent PANTRANCO is hereby permanently enjoined from operating the ferryboat service and/or
coastwise/interisland services between Matnog and Allen until it shall have secured the appropriate Certificate of
Public Convenience (CPC) in accordance with the requirements of the law, with costs against respondent
PANTRANCO.

SO ORDERED.

CASE 5

CASE 6

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. 1awphi 1.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.

CASE 8

G.R. No. L-23688 April 30, 1970

MANDBUSCO, INC., MANDALUYONG BUS CO., INC., PRESCILO CAMAGANACAN, BLAS REYES and
ANASTACIO ESMAO, petitioners,
vs.
PABLO FRANSCISCO, respondent.

Clemente and Clemente for petitioners.

Baldomero S. Luque for respondent.

CASTRO, J.:

The respondent Pablo Francisco applied for a certificate of public convenience covering the operation of five (5)
PUJ jitneys from barrio Pinagbuhatan, Pasig, Rizal to the intersection of Highway 54 and Shaw Boulevard,
Mandaluyong, Rizal (otherwise known as the "Crossing") and vice-versa. Hearing was conducted, after due
notice and publication, enabling both the respondent applicant and the oppositors Mandbusco, Inc., et al., to
adduce their respective evidence. On June 15, 1964 a decision was rendered by the Public Service Commission
granting the respondent's application, it appearing to a division of three commissioners that:

After [a] careful study of the evidence presented by the parties, the Commission finds that the
proposed service will benefit the people of Bo. Pinagbuhatan considering that there is no direct
service from that place to the crossing of Highway 54 and Shaw Blvd. It can be noted also that
the provincial capitol, provincial hospital and other big establishments are located past the
Poblacion of Pasig and nearer to the other proposed terminal at Highway 54 and Shaw Blvd. and
that residents from Pinagbuhatan have to take 2 rides to reach these places.

The dispositive portion of the decision reads:

Finding further from the evidence adduced by the applicant that he is [a] Filipino citizen, legally
and financially capable [of operating and maintaining] the same, the oppositions filed in this case
are hereby overruled and the certificate of public convenience applied for, may be, as it is hereby
GRANTED to the applicant ....

It is mainly at the findings above-quoted that the petitioners, all bus operators, have aimed their present petition
for review, following the rejection of their motion for reconsideration by the Commission en banc.

The petitioners want to make capital of the declarations of their two witnesses, Federico Dantayana and Arturo
Clemente. Let us appraise these declarations.

Dantayana, an official inspector of the Commission, testified that he posted himself somewhere along the route
covered by the respondent's application, and conducted a survey of the number of passenger vehicles availing
themselves of the use of the Shaw Boulevard in going to and coming from Pasig, Rizal. The inspection sheets
offered in evidence show that buses with a usual loading capacity of from 65 to 75 passengers each were barely
half-filled on the whole, while "jitneys" with a usual loading capacity of 13 passengers each actually carried an
average of only 6 passengers each for every trip. These facts, the petitioners argue, illustrate an excess of
available passenger vehicles over the actual needs of the riding public. They negate the advisability of allowing
the applicant's "jitneys" to serve the route between barrio Pinagbuhatan and the crossing of Highway 54 and
Shaw Boulevard in Mandaluyong.

Closely scrutinizing Dantayana's testimony, we cannot acquiesce in the petitioners' conclusions. The length of
the route which the respondent applied for is divided into two parts. The first starts at barrio Pinagbuhatan and
ends at the poblacion of the town of Pasig. The second begins at the poblacion and winds up at the crossing of
Highway 54 and Shaw Boulevard in Mandaluyong. Dantayana's survey covered passenger vehicles passing
through the second part of the route applied for. It appears, however, that the second part is actually only a
converging point for passenger vehicles coming from towns east of Pasig, not to mention other passenger
vehicles, equally numerous, destined for Manila coming from their terminals located in the Pasig poblacion itself.
In short, Dantayana's survey does not at all indicate the volume of the traffic of passenger vehicles corning all
the way from barrio Pinagbuhatan. After all, the primary objective of the grant of the certificate of public
convenience in question was the welfare of the inhabitants of barrio Pinagbuhatan and other inhabitants along
the first part of the route applied for.

The petitioners' only other witness, Arturo Clemente, the president of both the Mandbusco, Inc. and of the Pasig-
Manila Bus Operators Association, testified that a total of 125 buses are operating between Pasig, Rizal and
Quiapo, Manila, all taking the Shaw Boulevard, which thoroughfare is part of the route applied for by the
respondent. Likewise, a total of 51 "jitneys" serve that same portion of Shaw Boulevard to and from the various
points in Pasig. In addition, a total of 171 buses coming from towns east of Pasig pass daily through the latter
town, proceed to Shaw Boulevard, and then to Manila. All these public conveyances, the witness pointed out,
are more than adequate to meet the transportation needs of the riding public in the areas served. The
petitioners, the witness added, have made substantial investments in their business and, therefore, the
allowance of additional public transportation vehicles, clearly unneeded, would result in ruinous competition and
threaten the stability of their financial positions.

This argument suffers, however, from the same basic oversight afflicting the testimony of Dantayana. All the
vehicles mentioned by Clemente, except possibly for two buses — a matter which we will shortly discuss — do
not run the full course of the route applied for by the respondent. The overlapping of service exists only with
regard to the second part of that route, and this is clearly unavoidable since the stretch of road from the
Pasig poblacion to the crossing serves as a common access to Highway 54 whence passengers embark for
separate destinations.

In the course of the hearing the petitioners presented a certificate of public convenience allowing the
Mandaluyong Bus Co., Inc. to utilize two of their buses, and a third as reserve, for the line from Pinagbuhatan
(Pasig, Rizal) to Plaza Miranda (Quiapo, Manila) via Mandaluyong, Rizal. This, according to petitioners, should
completely negate the finding of the Commission that there exists no direct service from barrio Pinagbuhatan to
the crossing of Highway 54 and Shaw Boulevard. We disagree. The certificate of public convenience adverted to
merely proves that authority has been given to the grantee to operate public utility vehicles in the designated
territory. It cannot serve as proof that the grantee has made actual use of such authority. Lacking any positive
proof that the petitioners (or any of them) adequately serve the transportation requirements of the inhabitants of
barrio Pinagbuhatan and the adjacent places, we are not inclined to overturn the finding of fact of the
Commission, realizing as we do, after the reading of the record, that the same is reasonably supported by
evidence.1

The petitioners invoke the "old operator rule," which is to the effect that a public utility operator should be
shielded from ruinous competition by affording him the opportunity to improve his equipment and service before
allowing a new operator to serve in the same territory he covers.2 This rule has no application in this case because
the certificate of public convenience granted to the respondent is a maiden franchise covering the particular line
connecting barrio Pinagbuhatan and the crossing of Highway 54 and Shaw Boulevard. The certificate of public
convenience authorizing the Mandaluyong Bus Co., Inc. to operate two buses, with one reserve, on the line extending
from barrio Pinagbuhatan to Plaza Miranda in Quiapo, Manila, while in a sense overlapping with the authority given to
the respondent, was essentially intended to cover the great distance run between barrio Pinagbuhatan and Quiapo,
Manila, via Pasig Boulevard, P. Sanchez, V. Mapa, Valenzuela, Old Sta. Mesa, Sta. Mesa Boulevard, Legarda,
Tanduay, P. Casal, Ayala Bridge, Concepcion, Arroceros, Quezon Bridge and Quezon Boulevard. Upon the other
hand, the grant in favor of the respondent covers only a brief shuttle run of 8 kilometers linking barrio Pinagbuhatan
directly with the Pasig poblacion and the crossing of Highway 54 and Shaw Boulevard. The Commission favored the
respondent with the certificate of public convenience in question; we are not prepared to substitute our discretion with
that of the Public Service Commission in the determination of what can best meet the requirements of public
convenience.

The ability of the respondent to finance the maintenance and operation of the service he applied for is likewise
questioned by the petitioners. This issue is now academic for the reason that the respondent has, since his
receipt of the franchise, actually registered the five units covered by the authority. He has, moreover, registered
one reserve unit for the same line, with the approval of the Commission. These units, plus the assets he proved
he owns, are sufficient guaranty that the respondent can sustain the service he applied for.3

The petitioners, in their brief, invoke the Public Service Commission Memorandum of May 15, 1963 and its
Supplemental Memorandum of July 22, 1963, with a view to establishing that the certificate of public
convenience in favor of respondent was issued in violation of these memoranda. The first memorandum comes
as a suggestion to all Commissioners that action on all pending applications, for certificates of public
convenience for the operation of passenger service in Manila, Quezon City, Pasay City, Caloocan,
Mandaluyong, Parañaque, San Juan and Makati, be suspended until further studies could be made. The
supplemental memorandum contains an order addressed to the Secretary of the Commission enjoining him from
calendaring for hearing or for continuation of hearing any application for passenger service in Manila and
suburbs; and any decision purporting to have been rendered prior to May 15, 1963 but had not been turned over
to the Secretary and recorded prior to the date of the order, should be withheld until further orders. It is not
difficult to see that the territory applied for is not among the one enumerated in the Memorandum of May 15,
1963. The respondent's service stretches mainly across the town of Pasig in Rizal, and if it abuts into a tiny
fraction of Mandaluyong, one of the areas covered by the enumeration, the incursion is incidental and does not
necessarily render Mandaluyong the mainstream of the respondent's service. Moreover, even if the
memorandum in question comprehend the present application, still public welfare and convenience, where
positively found by the Commission to be subserved, should prevail.4

ACCORDINGLY, the decision appealed from is hereby affirmed. No pronouncement as to costs.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Fernando, and Villamor, JJ., concur.

Teehankee, J., concurs in the result.

Barredo, J., took no part.

CASE 9

CASE 10

CASE 11

CASE 12

CASE 13