CA 146 SECTION 13

b) The term "public service" includes every person that now or hereafter may own, operate,
manage, or control in the Philippines, for hire or compensation, with general or limited clientele,
whether permanent, occasional or accidental, and done for general business purposes, any
common carrier, railroad, street railway, traction railway, sub-way motor vehicle, either for freight
or passenger, or both with or without fixed route and whether may be its classification, freight or
carrier service of any class, express service, steamboat or steamship line, pontines, ferries, and
water craft, engaged in the transportation of passengers or freight or both, shipyard, marine
railways, marine repair shop, [warehouse] wharf or dock, ice plant, ice-refrigeration plant, canal,
irrigation system, gas, electric light, heat and power water supply and power, petroleum, sewerage
system, wire or wireless communications system, wire or wireless broadcasting stations and other
similar public services:

Provided, however, That a person engaged in agriculture, not otherwise a public service,
who owns a motor vehicle and uses it personally and/or enters into a special contract whereby
said motor vehicle is offered for hire or compensation to a third party or third parties engaged in
agriculture, not itself or themselves a public service, for operation by the latter for a limited time
and for a specific purpose directly connected with the cultivation of his or their farm, the
transportation, processing, and marketing of agricultural products of such third party or third
parties shall not be considered as operating a public service for the purposes of this Act.

(c) The word "person" includes every individual, co-partnership, joint-stock company or
corporation, whether domestic or foreign, their lessees, trustees, or receivers, as well as any
municipality, province, city, government-owned or controlled corporation, or agency of the
Government of the Philippines, and whatever other persons or entities that may own or possess or
operate public services. (As amended by Com. Act 454 and RA No. 2677)

A Certificate of Public Convenience, also known as “CPC” is a franchise that grants permission to operate in certain
public activities. It’s also considered an asset that can be transferred to another person or an entity in case you decide
to sell it and move on from the business.

There are different types of CPCs, and every class has its purpose and limitations. Some examples of it are for Truck-
for-hire, School Service, Shuttle Service, Cooperatives, and Corporation.
What are the trucking requirements you need to apply for a Certificate of Public Convenience for a Truck-For-Hire?

Document Preparation For Your CPC

To help you go through with the things you’ll be needing. You’ll first have to make sure that you’re qualified to apply for
a Certificate of Public Convenience, and you have the necessary trucking requirements before you proceed with the
application.
1Citizenship of Applicant

For individual applicants, the person applying for this certificate must be a Filipino citizen. In case you’re applying for a
corporation, then the ownership of the corporation’s capital should be at least 60% owned by Filipinos.

2Proof of Public Need

You will also need proof as one of your trucking requirements, choose one from the following accepted proofs of public
need:

 Notarized Hauling Contract

 Number of Units to be authorized including the Duration of Contract
 Area of Operation
 Notarized Authority to Operate in Ports
 3Barangay Clearance for Business

A Barangay Clearance is one of the documents needed for activities like renewal and application of new businesses.
The clearance proves the credibility of the business. That it has a good record, as well as proof that it exists in the area.

4Barangay Business Permit Clearance

For a new applicant, the trucking requirements you’ll be needing are the following:

 Latest Community Tax Certificate (Cedula)

 DTI Business Name Registration
 Barangay Business Permit Fee

5Business Permit

Once you’re able to secure your Barangay Business Clearance, you can now proceed to your Business Permit
application. This permit allows you to conduct business activities and serves as also as proof that the business follows
the laws and ordinances.

Take note of the requirements for Business Permit Application:

 Application form for New Business – Prepare two notarized copies

 Barangay Business Clearance – Original Copy
 DTI Registration for Sole Proprietor or SEC Registration for Corporation
 Tax Declaration of Property of the Owned Vehicle
 Public Liability Insurance SPA for Authorized Representatives along with and Identification Card (ID)

6Bureau of Internal Revenue (BIR)

Here are the requirements for BIR Application:

 Accomplished BIR Form 1903

 SEC Certificate of Registration
 Contract of Lease
 Mayor’s Permit
 Registration Fee of Php 500.00

7Local Government Unit Zoning Clearance

You will also need a Zoning Clearance as one of the trucking requirements for the location of the garage. Acquire it from
your local government, if you have at least three vehicle units with a gross weight of 4,500kg or below, or if you have at
least one truck that weighs above 4,500kg.

8Notarized Special Power of Attorney

If the applicant can’t be physically present throughout the application process, this permit will be necessary. You can
have an authorized representative like a lawyer or a relative along with the Notarized Special Power of Attorney, which
can be retrieved in areas where there’s a Notary Public.

9Certificate of Mortgage

These trucking requirements are only needed when your vehicle isn’t still under your name. You may get this certificate
from the financier of your vehicle.

10Proof of Financial Capacity

Completing your trucking requirements, you also need to present the following:
 Certified true copy of the most recent financial statement (CPA Certified)
 Certified True Copy of latest Income Tax Return/BIR’s Certificate of Registration (this is for new individual
applicants or corporations that are newly incorporated)
 Sole Proprietor

For five units or less, choose any of the following:

– Proof of Bank Deposit with P100,000 per unit

– Proof of Financial Capacity such as land title or ownership of the business

And for six units and above:

– Certified true copy of most recent Financial Statement (CPA Certified)

Fees For Your Application

To prepare you with the possible expenses that you will encounter during your application for your Certificate of Public
Convenience, here’s a breakdown of the amounts you’ll have to make before going to the LTFRB office:

Fee Amount

Php 510.00
For the first two units you're
Filing Fee
applying for and an additional Php
70.00 for every other unit

Unit Verification Fee Php 40.00 per unit

Php 50.00 per unit

For vehicles not exceeding to
4,500 kg of gross weight
Inspection Fee
Php 100.00 per unit
For trucks with a gross weight of
more than 4,500

Section 11. No franchise, certificate, or any other form of authorization for the operation of
a public utility shall be granted except to citizens of the Philippines or to corporations or
associations organized under the laws of the Philippines, at least sixty per centum of
whose capital is owned by such citizens; nor shall such franchise, certificate, or
authorization be exclusive in character or for a longer period than fifty years. Neither shall
any such franchise or right be granted except under the condition that it shall be subject to
amendment, alteration, or repeal by the Congress when the common good so requires.
The State shall encourage equity participation in public utilities by the general public. The
participation of foreign investors in the governing body of any public utility enterprise shall
be limited to their proportionate share in its capital, and all the executive and managing
officers of such corporation or association must be citizens of the Philippines.
Batangas Transportation Co. v. Orlanes
Johns, J (1928)

Nature: Review of an order of the Public Service Commission

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

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

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

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

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

Ruling/s:

NO. Decision of PSC is revoked.

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

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

The power of the PSC to issue a CPC is founded on the condition precedent that
after a full hearing and investigation, it shall find as a fact that the proposed
operation is for the convenience of the public. So long as the first operator keeps
and performs his terms and conditions of its license and complies with the
reasonable demands of the public, it has more or less of a vested and preferential
right over another who seeks to acquire a later license to operate over the same
route.
To carry out the purpose and intent for which the PSC was created, the law
contemplates that the first license will be protected in his investment and will not be
subjected to ruinous competition. The primary purpose of the PSC is to secure
adequate, sustained service for the public at the least possible cost and to protect
and conserve investments which have already been made for that purpose.

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

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

Meralco vs. Pasay Transportation Company Case Digest

Facts: 

Act No. 1446 was passed. Section 11 of the Act provides: "Whenever any franchise or
right of way is granted to any other person or corporation, now or hereafter in existence,
over portions of the lines and tracks of the grantee herein, the terms on which said other
person or corporation shall use such right of way, and the compensation to be paid to the
grantee herein by such other person or corporation for said use, shall be fixed by the
members of the Supreme Court, sitting as a board of arbitrators, the decision of a majority
of whom shall be final."

Pursuant to said Act, Meralco filed a petition requesting the members of the Supreme
Court, sitting as a board of arbitrators, to fix the terms upon which certain transportation
companies shall be permitted to use the Pasig bridge of the Manila Electric Company and
the compensation to be paid to the Manila Electric Company by such transportation
companies.

Copies of the petition were directed to be sent to transportation companies affected by the
petition. Opposition was entered to the petition by a number of public utility operators.

Issue:

Can the members of the Supreme Court sit as arbitrators and fix the terms and
compensation as is asked of them in this case?
Held:

No,
The Supreme Court of the Philippine Islands represents one of the three divisions of
power in our government. It is judicial power and judicial power only which is exercised by
the Supreme Court. Just as the Supreme Court, as the guardian of constitutional rights,
should not sanction usurpations by any other department of the government, so should it
as strictly confine its own sphere of influence to the powers expressly or by implication
erconferred on it. The Supreme Court and its members should not and cannot be required
to exercise any power or to perform any trust or to assume any duty not pertaining to or
connected with the administering of judicial functions.

Section 11 of Act No. 1446 contravenes the maxims which guide the operation of a
democratic government constitutionally established, and that it would be improper and
illegal for the members of the Supreme Court, sitting as a board of arbitrators, the decision
of a majority of whom shall be final, to act on the petition of the Manila Electric
Company. (Meralco vs. Pasay Transportation Company, G.R. No. L-37878, November
25, 1932

THE UNITED STATES, Plaintiff-Appellee,

v.
SEGUNDO BARIAS, Defendant-Appellant.
G.R. No. 7567. November 12, 1912.
Facts:

In 1904, Congress, through a law (Act No. 1136), authorized the Collector of Customs to regulate the
business of lighterage. Lighterage is a business involving the shipping of goods by use of lighters or cascos (small
ships/boats). The said law also provides that the Collector may promulgate such rules to implement Act No. 1136.
Further, Act No. 1136 provides that in case a fine is to be imposed, it should not exceed one hundred dollars. Pursuant
to this, the Collector promulgated Circular No. 397.

Meanwhile, Aniceto Barrias was caught navigating the Pasig River using a lighter which is manually powered by
bamboo poles (sagwan). Such is a violation of Circular No. 397 because under said Circular, only steam powered ships
should be allowed to navigate the Pasig River. However, in the information against Barrias, it was alleged that the
imposable penalty against him should be a fine not exceeding P500.00 at the discretion of the court – this was pursuant
to Circular No. 397 which provides:

For the violation of any part of the foregoing regulations, the persons offending shall be liable to a fine of not less than
P5 and not more than P500, in the discretion of the court.

Barrias now challenged the validity of such provision of the Circular as it is entirely different from the penal provision of
Act. No. 1136 which only provided a penalty of not exceeding $100.00 (Note at that time the peso-dollar exchange was
more or less equal).
ISSUE:
Whether or not the penal provision in the Circular is valid.

HELD:

No. The Commissioner cannot impose a different range of penalty different from that specified by Congress. If
the Collector is allowed to do so, then in effect, it is as if he is being delegated the power to legislate penalties. One of
the settled maxims in constitutional law is, that the power conferred upon the legislature to make laws cannot be
delegated by that department to anybody or authority. Where the sovereign power of the State has located the authority,
there it must remain; only by the constitutional agency alone the laws must be made until the constitution itself is
changed. The power to whose judgment, wisdom, and patriotism this high prerogative has been entrusted can not
relieve itself of the responsibility by choosing other agencies upon which the power shall be developed, nor can its
substitutes the judgment, wisdom, and patriotism and of any other body for those to which alone the people have seen
fit to confide this sovereign trust.

This doctrine is based on the ethical principle that such a delegated power constitutes not only a right but a
duty to be performed by the delegate by the instrumentality of his own judgment acting immediately upon the matter of
legislation and not through the intervening mind of another. The Collector cannot exercise a power exclusively lodged in
Congress. Hence, Barrias should be penalized in accordance to the penalty being imposed by Act No. 1136. In this
case, the Supreme Court determined that the proper fine is $25.00

Dominador Raymundo v. Luneta Motor G.R. Nos. L-39902, L-39903

November 29, 1933

FACTS:

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

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

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

ISSUE:

Whether a certificate of public convenience may be the object of execution and

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

HELD:

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

execution.

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

NOTA BENE:

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 (certificates of public convenience) 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 throug h
legal process
BALDOMERO S. LUQUE AND OTHER PASSENGERS FROM THE PROVINCE OF CAVITE AND
BATANGAS; AND PUBLIC SERVICE OPERATORS FILOMENA ABALOS, AND OTHERS vs. HON.
ANTONIO J. VILLEGAS, MAYOR OF MANILA; MUNICIPAL BOARD OF MANILA; MANILA POLICE
DEPARTMENT; HON. ENRIQUE MEDINA, PSC COMMISSIONER; PUBLIC SERVICE COMMISSION;
SAULOG TRANSIT, INC.; AND BATANGAS TRANSPORTATION CO., INC.
G.R. No. L-22545 November 28, 1969

FACTS:

Original petitioners are passengers from the provinces of Cavite and Batangas who ride on
buses plying along the routes between the said provinces and Manila. Other petitioners are public
service operators operating PUB and PUJ public service vehicles from the provinces with terminals
in Manila, while the rest are those allegedly operating PUB, PUJ or AC motor vehicles operating
within Manila and suburbs. They assailed the validity of Ordinance 4986 and A.O. No. 1 s. 1964.

Under Ordinance 4986, PUB and PUJs shall be allowed to enter Manila only from 6:30am to
8:30pm every day except Sundays and holidays. Meanwhile, A.O. No. 1 issued by Commissioner
of Public Service states that all jeeps authorized to operate from Manila to any point in Luzon,
beyond the perimeter of Greater Manila, shall carry the words "For Provincial Operation".

Commissioner issued A.O. No. 3 which resolved motions for reconsideration (of A.O. 1) filed by
several affected operators. This order (No. 3) states that only 10% of the provincial buses and
jeepneys shall be allowed to enter Manila; however, provincial buses and jeepneys "operating
within a radius of 50 kms. from Manila City Hall and whose business is more on the Manila end
than on the provincial end are given fifteen per cent to prevent a dislocation of their business;
provided that operators having less than five units are not permitted to cross the boundary and
shall operate exclusively on the provincial end." This order also allocated the number of units each
provincial bus operator is allowed to operate within the City of Manila.

Petitioners contend that since they possess a valid Certficiate of Piublic Convenience (CPC), they
have already acquired a vested right to operate. Moreover, Ordinance 4986 destroys vested rights
of petitioning public services to operate inside Manila and to proceed to their respective terminals
located in the City. They would want likewise to nullify said ordinance upon the averment that it
impairs the vested rights of petitioning bus passengers to be transported directly to downtown
Manila.

ISSUES:
Whether or not the said regulations are valid.
Whether or not Ordinance 4986 destroys vested rights to operate in Manila.

RULING:
YES. Using the doctrine in Lagman vs. City of Manila, petitioner's CPC was issued subject to the
condition that operators shall observe and comply with all the rules and regulations of the PSC
relative to PUB service.

The purpose of the ban is to minimize the problem in Manila and the traffic congestion, delays
and accidents resulting from the free entry into the streets of Manila and the operation around
said streets.

Both Ordinance 4986 and A.O. 1 fit into the concept of promotion and regulation of general
welfare.
NO. A vested right is some right or interest in the property which has become fixed and
established and is no longer open to doubt or controversy. As far as the State is concerned, a CPC
constitutes neither a franchise nor a contract, confers no property right, and is a mere license or
privilege.

The holder does not acquire a property right in the route covered, nor does it confer upon the
holder any proprietary right/interest/franchise in the public highways.

Neither do bus passengers have a vested right to be transported directly to Manila. The alleged
right is dependent upon the manner public services are allowed to operate within a given area. It
is no argument that the passengers enjoyed the privilege of having been continuously transported
even before outbreak of war. Times have changed and vehicles have increased. Traffic congestion
has moved from worse to critical. Hence, there is a need to regulate the operation of public
services. FOR THE REASONS GIVEN, the petition herein is denied. Costs against petitioners. So
ordered.

A. L. AMMEN TRANSPORTATION CO., INC., plaintiff-appellant,

vs.
VICENTE GOLINGCO, defendant-appellee.

Gibbs, Mcdonough and Johnson for appellant.

Ambrosio A. Calleja for appellee.

The fundamental question in this case is whether or not the amended complaint filed in the Court of First Instance of Albay, on
February 2, 1920, states a cause of action. Judge Mina, of the Court of first Instance, held that it did not, and, accordingly, sustained
the demurrer, and dismissed the action, with costs against the plaintiff. Said complaint reads as follows:

Now comes the plaintiff, by its undersigned attorneys, and to the court respectfully shows that on this same date, February 2,
1920, it was notified of the order of this court dated January 24, 1920, sustaining the demurrer and ordering the amendment
to the complaint, and in compliance therewith it now amends its complaint and alleges:

(1) That the plaintiff is a corporation duly organized and constituted and registered in accordance with the existing laws of the
Philippine Islands and is exploiting, conducting, and managing for itself a public utility business for the transportation of
passengers and freight by means of trucks between several towns of this Province of Albay, and the defendant is of legal
age, resident of the municipality of Tabco, Province of Albay, Philippine Islands, and both have the legal capacity to sue and
be sued.

(2) That the plaintiff corporation has been engaged in the said business of transporting passengers and freight in this
province of albay since the year 1012, having invested in said business the capital of one hundred fifty thousand pesos
(P150,000) and is now possessed of twenty-six (26) White trucks besides the required equipment and accessories necessary
to give service to the public; the plaintiff having complied fully with the requirements of Act No. 2307, as amended, which is
the law that creates the Board of Public Utility Commissioners and provides for its duties and rights and for other purposes,
having complied also with all the regulations and requisites prescribed by the said Board of Public Utility Commissioners
since the creation of said Board.

(3) That the defendant Vicente Golingco for several years now has been and still is the owner of a public utility business and
the said Vicente Golingco has possessed, exploited, managed and conducted the said public utility business, consisting of
twelve (12) White 1 1/2-ton trucks and has placed the said public utility business, from the date of its organization until
January 21, 1919, to the purpose of public transportation of passengers and freight by means of the said trucks, exclusively
between the districts of Legaspi, municipality of Albay, the municipality of Tiui of this Province of Albay, with the exception
stated in paragraph 7 of this amended complaint.

(4) That on the said 21st of January, 1919, the defendant Vicente Golingco transferred three of the trucks pertaining to his
public utility business to the route Legaspi, Albay, to Naga, Ambos Camarines, P.I., and began to operate one of said 3
trucks between Legaspi and Guinobatan; one truck to Legaspi-Ligao and the other to Legaspi-Polangui, all within the
Province of Albay and situated in the route between Legaspi, Albay, and Naga, Ambos Camarines; the said trucks, from the
aforesaid date until the preliminary injunction in this case was issued, were making regular and continuous trips between the
said towns and transporting passengers and freight in such a way that the defendant was illegally competing with the
plaintiff's business which has been legally in operation between the towns mentioned since the year 1912 and since that time
until now has been giving the public a regular, constant, adequate, and permanent service for the transportation of
passengers and freight.
 (5) That since January 29, 1920, the defendant again resume the operation illegally of more than three trucks of his public
utility business by placing them in the routes of different towns situated in the line between Legaspi, Albay, and Naga, Ambos
Camarines.

(6) That before operating the aforesaid trucks of his public utility business referred to in the two foregoing paragraphs,
between the municipalities already mentioned, the defendant had not obtained previously from the Public Utility Commission
a certificate to the effect that the operation of his trucks between the municipalities aforesaid or between any other
municipalities in the line from Legaspi, Albay, to Naga, Ambos Camarines, and the authority to operate some or all of the
trucks of his business will promote adequately and conveniently the public interests as required by Act No. 2694.

(7) That it is true that the defendant on or about the year 1914 before Act No. 2694 became a law on March 9, 1917, had
some of his trucks operating in the line from Legaspi, Albay, to Naga, Ambos Camarines, but later, about the beginning of the
year 1916, the defendant entirely abandoned said route and stopped operating his trucks on the same and since then he has
not operated any of his public utility trucks between the towns aforementioned by making regular and continuous trips so as
to establish again and maintain a permanent service of transporting passengers and freight in illegal competition with the
herein plaintiff, as said defendant is now trying to do in the manner and form above described and that on the said 9th day of
March, 1917, the defendant was not operating any public utility business for the transportation of passengers and freight in
the aforesaid route from Legaspi, Albay, to Naga, Ambos Camarines.

(8) That in view of the abandonment in the beginning of the year 1918 on the part of the defendant of the line from Legaspi,
Albay, to Naga, Ambos Camarines, the defendant since the month of February, 1916, has been increasing the number of
trucks of his public utility business for the purpose of meeting the requirements of traffic and in order to promote conveniently
and adequately the public interests and at the present time he has in operation fourteen trucks more than he had in
February, 1916.

(9) The defendant having abandoned any right that he had or might have had to operate his trucks in said line by virtue of the
existing laws prior to March 9, 1917, and not having obtained later the required certificate of public necessity from the Public
Utility Commission authorizing him to own, exploit, manage and conduct a business of public utility between the towns
situated in the line from Legaspi, Albay, to Naga, Ambos Camarines, the operation by the defendant of his trucks or any of
them is illegal and contrary to law.

(10) That the legal operation by the defendant of his aforesaid trucks of public utility, that is, the transportation of passengers
and freight between the different towns situated in the line from Legaspi, Albay, to Naga, Ambos Camarines, has caused and
is causing damages to the plaintiff corporation in the amount of not less than thirty pesos (P30) per day of operation per truck
and will continue causing damages to the plaintiff in the said sum each day that the defendant may be continuing the
operation of his aforesaid trucks of public utility.

For all the foregoing, the plaintiff prays that the court render judgment against the defendant and that a preliminary injunction
issue immediately against the said defendant, his attorneys, agents, or representatives prohibiting them from continuing the
operation of the defendant's trucks of public utility or any of them between the towns of the Province of Albay situated in the
line or main road from Legaspi, Albay, and Naga, Ambos Camarines, also prohibiting them during the pendency of this action
from transporting passengers and freight and that after due trial, the injunction be made permanent, enjoining the defendant,
his attorneys, agents, and representatives, from operating the said trucks or any truck of his public utility business between
the towns of the Province of Albay situated in the line or main road from Legaspi, Albay, to Naga, Ambos Camarines; and
prohibiting them further to engage their trucks or any of them for the transportation of passengers and freight in the aforesaid
route until the said defendant may obtain from the Public Utility Commission the certificate required by section 14 of Act No.
2694; and that the defendant be also sentenced to pay to the plaintiff as damages an amount of not less than thirty pesos
(P30) per day per truck in operation since January 21, 1919, until the day on which the defendant cease to operate the said
trucks of public utility; and that he be sentenced furthermore to pay the costs of this action and that the plaintiff be granted
any other relief that may seem to the court just and equitable.

In considering the appeal perfected by the plaintiff, we believe that the following propositions can be accepted without debate:

(1) Under Philippine organic law, in relation to Philippine statutory law, at least concurrent jurisdiction with the Public Utility
Commissioner remains in the courts to the end that special proceedings, such as injunctions, may be heard and tried in the
courts.

(2) If the rights which any public utility is exercising pursuant to lawful order of the Public Utility Commissioner, has been
invaded by another public utility, it is not essential that an action be maintained by the Government of the Philippine Islands
under section 197 of the Code of Civil Procedure, but, in appropriate cases, actions may be maintained by the complainant
public utility.

(3) Owners of public utilities operating under the supervision of the Public Utility Commissioner have the right to maintain
appropriate actions against other public utilities who have not been authorized to operate in competition with the
complainant.

(4) All public utilities which desire to operate in the Philippine Islands must first obtain from the Public Utility Commissioner a
certificate to the effect that the operation of said public utility, and the authorization to do business, will promote the public
interest in a proper and suitable way, unless the business was in operation by the public utility at the time the Public Utility
Law went into effect-which is not the case before us, because while the defendant public utility was in existence prior to the
 passage of Act No. 2694, it began to operate on new routes after the passage of said Act without first securing the certificate
provided by section 14 of the Act.

In conformity with the foregoing, we find reversible error in the judgment of the trial court dismissing the action. The amended complaint
states a cause of action and the demurrer to the same should not have been sustained.

Judgment is reversed, and the record shall be returned to the court of origin for further proceedings as provided by law. Without special
findings as to costs in this instance, it is so ordered.

Araullo, C.J., Villamor, Ostrand, Johns and Romualdez, JJ., concur.

ABELARDO LIM v. CA, GR No. 125817, 2002-01-16
Facts:
Sometime in 1982 private respondent Donato Gonzales purchased an Isuzu passenger jeepney from Gomercino Vallarta,  holder of a certificate
of public convenience for the operation of public utility vehicles plying the Monumento-Bulacan route.  While private respondent
Gonzales continued offering the jeepney for public transport services he did not have the registration of the vehicle transferred in his name nor
did he secure for himself a certificate of public convenience for its operation.   Thus Vallarta remained on record as its... registered owner and
operator.
the jeepney... collided with a ten-wheeler-truck owned by petitioner... and driven by his co-petitioner Esmadito Gunnaban.  Gunnaban owned
responsibility... for the accident
Petitioner Lim... negotiated with private respondent and offered to have the passenger jeepney repaired at... his shop.
respondent however did not accept the offer... instead, private respondent demanded a brand-new jeep or... the amount of P236,000.00.
the filing of the complaint for damages by private respondent against petitioners.
Issues:
When a passenger jeepney covered by a certificate of public convenience is sold to another who continues to operate it under the same
certificate of public convenience under the so-called kabit system, and in the course thereof the vehicle meets an... accident through the fault of
another vehicle, may the new owner sue for damages against the erring vehicle?
Ruling:
The kabit system is an arrangement whereby a person who has been granted a certificate of public convenience allows other persons who own
motor vehicles to operate them under his license, sometimes for a fee or percentage of the earnings.[9] Although... the parties to such an
agreement are not outrightly penalized by law, the kabit system is invariably recognized as being contrary to public policy and therefore void and
inexistent under Art. 1409 of the Civil Code.
In the early case of Dizon v. Octavio[10] the Court explained that one of the primary factors considered in the granting of a certificate of public
convenience for the business of public transportation is the financial capacity of the holder of the... license, so that liabilities arising from
accidents may be duly compensated.   The  kabit  system renders illusory such purpose and, worse, may  still be availed of by the grantee to
escape civil liability caused by a negligent use of a vehicle... owned by another and operated under his license.
for the safety of passengers and the public who may have been wronged and deceived through the baneful kabit system, the registered owner
of the vehicle is not allowed to prove that... another person has become the owner so that he may be thereby relieved of responsibility. 
Subsequent cases affirm such basic doctrine.
In the present case it is at once apparent that the evil sought to be prevented in enjoining the kabit  system does not exist.  First, neither of the
parties to the pernicious  kabit system is being held liable for damages. 
Second, the case arose from the negligence of another vehicle in using the public road to whom no representation, or misrepresentation, as
regards the ownership and operation of the passenger jeepney was made and to whom no such representation, or misrepresentation, was...
necessary.  Thus it cannot be said that private respondent Gonzales and the registered owner of the jeepney were in estoppel for leading the
public to believe that the jeepney belonged to the registered owner.  Third, the riding public was not bothered nor... inconvenienced at the very
least by the illegal arrangement.  On the contrary, it was private respondent himself who had been wronged and was seeking  compensation for
the damage done to him.  Certainly, it would be the height of inequity to deny him his... right.
private respondent has the right to proceed against petitioners for the damage caused on his passenger jeepney as well as on his business.
Principles:
Baliwag Transit, Inc. vs Court of Appeals, Spouses Antonio Garcia & Leticia Garcia, A & J Trading
and Julio Recontique
G.R. No. 116110, May 15, 1996
256 SCRA 746
FACTS:
Respondent Leticia Garcia, and her five-year old son, Allan Garcia, boarded Baliwag Transit Bus
bound for Cabanatuan City. At about 7:30 in the evening the bus passengers saw a cargo truck
parked at the shoulder of the national highway. A kerosene lamp appeared at the edge of the
road to serve as a warning device. The driver and the helper of the parked truck owned by
respondent A & J Trading were replacing a flat tire. However the bus driver was driving fast and
was conversing with his co-employees while driving. The passengers pleaded for its driver to slow
down, but their plea was ignored. The bus collided with the cargo truck causing the death of the
bus driver and the helper of the truck and injury to the passengers.
Respondents Leticia and Allan experienced physical suffering, mental anguish and serious anxiety
by reason of the accident. Leticia underwent an operation to replace her broken hip bone with a
metal plate. She was confined at the National Orthopedic Hospital for 45 days and her son was
also confined in the hospital for his foot injury.
ISSUES:
1. Whether or not petitioner carrier is liable for the injury of its passengers.
2. Whether or not respondent company and driver were also liable for failing to display an early
warning device.
3. Whether or not the injured passengers are entitled to moral damages.
RULING:
1. Yes. A common carrier is bound to carry its passengers safely as far as human care and
foresight can provide, using the utmost diligence of a very cautious person, with due regard for all
the circumstances. In a contract of carriage, it is presumed that the common carrier was at fault
or was negligent when a passenger dies or is injured. Unless the presumption is rebutted, the
court need not even make an express finding of fault or negligence on the part of the common
carrier. This statutory presumption may only be overcome by evidence that the carrier exercised
extraordinary diligence as prescribed in Articles 1733 and 1755 of the Civil Code. However, under
Article 1759, common carriers are liable for the death of or injuries to passengers through the
negligence or wilful acts of the former’s employees, although such employees may have acted
beyond the scope of their authority or in violation of the orders of the common carriers. This
liability of the common carriers do not cease upon proof that they exercised all the diligence of a
good father of a family in the selection or supervision of their employees.
In this case, Baliwag, as a common carrier, breached its contract of carriage when it failed to
deliver its passengers, Leticia and Allan Garcia to their destination safe and sound. Baliwag failed
to prove that it exercised extraordinary diligence. On the contrary, the evidence demonstrates its
driver’s recklessness.
2. No. The evidence shows that the truck driver and his helper placed a kerosene lamp or torch at
the edge of the road, near the rear portion of the truck to serve as an early warning device. This
substantially complies with Section 34 (g) of the Land Transportation and Traffic Code
3. Yes. In a breach of contract of carriage, moral damages are recoverable if the carrier, through
its agent, acted fraudulently or in bad faith. The evidence shows the gross negligence of the
driver of Baliwag bus which amounted to bad faith.
NOTES:
Evidence – To prove actual damages, the best evidence available to the injured party must be
presented. The court cannot rely on uncorroborated testimony whose truth is suspect but must
depend upon competent proof that damages have been actually suffered.
LITA ENTERPRISES, INC., vs.INTERMEDIATE APPELLATE COURT, NICASIO M. OCAMPO and FRANCISCA
P. GARCIA.
[G.R. No. L-64693 April 27, 1984]

FACTS:
Sometime in 1966, the spouses Nicasio M. Ocampo and Francisca Garcia, herein private respondents, purchased
in installment from the Delta Motor Sales Corporation five (5) Toyota Corona Standard cars to be used as
taxicabs. Since they had no franchise to operate taxicabs, they contracted with petitioner Lita Enterprises, Inc.,
through its representative, Manuel Concordia, for the use of the latter's certificate of public convenience in
consideration of an initial payment of P1,000.00 and a monthly rental of P200.00 per taxicab unit. To effectuate Id
agreement, the aforesaid cars were registered in the name of petitioner Lita Enterprises, Inc, Possession,
however, remained with tile spouses Ocampo who operated and maintained the same under the name Acme
Taxi, petitioner's trade name.

About a year later one of said taxicabs driven by their employee, Emeterio Martin, collided with a motorcycle
whose driver, one Florante Galvez, died from the head injuries sustained therefrom. A criminal case was
eventually filed against the driver Emeterio Martin, while a civil case for damages was instituted by Rosita
Sebastian Vda. de Galvez, heir of the victim, against Lita Enterprises, Inc., as registered owner of the taxicab in
the latter case. Petitioner Lita Enterprises, Inc. was adjudged liable for damages by the CFI.

This decision having become final, a writ of execution was issued. Two of the vehicles of respondent spouses
were levied upon and sold at public auction.

Thereafter, Nicasio Ocampo decided to register his taxicabs in his name. He requested the manager of petitioner
Lita Enterprises, Inc. to turn over the registration papers to him, but the latter allegedly refused. Hence, he and his
wife filed a complaint against Lita Enterprises, Inc., Mrs. de Galvez and the Sheriff of Manila for reconveyance of
motor vehicles with damages.

ISSUE: Whether or not petitioner has a cause of action against defendants.

HELD:
No.
Unquestionably, the parties herein operated under an arrangement, commonly known as the "kabit system",
whereby a person who has been granted a certificate of convenience allows another person who owns motors
vehicles to operate under such franchise for a fee. A certificate of public convenience is a special privilege
conferred by the government . Abuse of this privilege by the grantees thereof cannot be countenanced. The "kabit
system" has been Identified as one of the root causes of the prevalence of graft and corruption in the government
transportation offices. In the words of Chief Justice Makalintal, "this is a pernicious system that cannot be too
severely condemned. It constitutes an imposition upon the goo faith of the government.

Although not outrightly penalized as a criminal offense, the "kabit system" is invariably recognized as being
contrary to public policy and, therefore, void and inexistent under Article 1409 of the Civil Code, It is a
fundamental principle that the court will not aid either party to enforce an illegal contract, but will leave them both
where it finds them. Upon this premise, it was flagrant error on the part of both the trial and appellate courts to
have accorded the parties relief from their predicament. Article 1412 of the Civil Code denies them such aid. It
provides:

ART. 1412. if the act in which the unlawful or forbidden cause consists does not constitute a criminal offense, the
following rules shall be observed:

(1) when the fault, is on the part of both contracting parties, neither may recover what he has given by virtue of
the contract, or demand the performance of the other's undertaking.

Having entered into an illegal contract, neither can seek relief from the courts, and each must bear the
consequences of his acts.

The defect of inexistence of a contract is permanent and incurable, and cannot be cured by ratification or by
prescription. As this Court said in Eugenio v. Perdido, "the mere lapse of time cannot give efficacy to contracts
that are null void."

The principle of in pari delicto is well known not only in this jurisdiction but also in the United States where
common law prevails. Under American jurisdiction, the doctrine is stated thus: "The proposition is universal that
no action arises, in equity or at law, from an illegal contract; no suit can be maintained for its specific performance,
or to recover the property agreed to be sold or delivered, or damages for its property agreed to be sold or
delivered, or damages for its violation. The rule has sometimes been laid down as though it was equally universal,
that where the parties are in pari delicto, no affirmative relief of any kind will be given to one against the other."
Although certain exceptions to the rule are provided by law, We see no cogent reason why the full force of the
rule should not be applied in the instant case.