Module 7 Cases - Transpo_Lerios |EH306 | AY2021

PUBLIC SERVICE ACT

​Public Utility and Public Service – JG Summit Holdings, Inc. v. CA, et al., G.R. No. 124293, September 24, 2003

LEGAL PRINCIPLE: A "public utility” is "a business or service engaged in regularly supplying the public with some commodity or service of public
consequence such as electricity, gas, water, transportation, telephone or telegraph service." The principal determinative characteristic of a public utility is that of
service to, or readiness to serve, an indefinite public or portion of the public as such which has a legal right to demand and receive its services or commodities.

ISSUE: Whether a PHILSECO, a shipyard, is a public utility whose capitalization must be sixty percent (60%) owned by Filipinos

FACTS: National Investment and Development Corporation (NIDC), a government corporation, entered into a Joint Venture Agreement (JVA) with Kawasaki
Heavy Industries, Ltd. of Kobe, Japan (KAWASAKI) for the construction, operation and management of the Subic National Shipyard, Inc. (SNS), now Philippine
Shipyard and Engineering Corporation (PHILSECO).

Under the JVA, NIDC and KAWASAKI will contribute P330 million for the capitalization in 60%-40% proportion, respectively. The JVA grants the parties
the right of first refusal should either of them decide to sell, assign, or transfer its interest in the JVA.

So there is a series of transfers here. NIDC transferred all its rights to Philippine National Bank (PNB) which were subsequently transferred to the National
Government (NG) pursuant to Administrative Order No. 14.

President Cory Aquino's Proclamation No. 50 established Committee on Privatization (COP) and Asset Privatization Trust (APT) to take title, possess, conserve,
manage and dispose non-performing assets of the NG. Thus, APT became the trustee of the NG's share in PHILSECO.

In the interest of the national economy and the government, COP and APT deemed it best to sell the NG's share in PHILSECO to private entities. After several
negotiations between the APT and KAWASAKI, they agreed that KAWASAKI's right of first refusal under the JVA be "exchanged" for the right to top by five
percent (5%) the highest bid for the said shares. They also agreed that KAWASAKI is entitled to assign another entity to exercise its right. KAWASAKI informed
APT that Philyards Holdings, Inc. (PHI) would exercise its right to top.

Interested bidders were given copies of the JVA and of the Asset Specific Bidding Rules (ASBR) drafted for the National Government's 87.6% equity share in
PHILSECO.

During public bidding, petitioner J.G. Summit Holdings, Inc. (JGSMI) submitted a bid of P2,030,000,000.00. COP approved the sale subject to the right of
KAWASAKI/PHI to top JGSMI's bid by 5%.

Public Utility and Public Service – JG Despite protesting the offer of PHI to top its bid, petitioner was notified that PHI exercised its option to top that was approved by COP. APT and PHI then executed
Summit Holdings, Inc. v. CA, et al., a Stock Purchase Agreement.
G.R. No. 124293, September 24, 2003
Petitioner filed with SC a Petition for Mandamus which was referred to the CA. The CA denied the same for lack of merit ruling that it was not the proper remedy
to question the constitutionality or legality of the right of first refusal and the right to top and that it was prima facie legal. Furthermore, the petitioner, "by
participating in the public bidding, with full knowledge of the right to top granted to KAWASAKI/PHI is estopped from questioning the validity of the award given
to PHI.

Petitioner’s MR was likewise denied. Thus, this present petition alleging grave abuse of discretion on the part of the appellate court.

The SC rendered the now assailed Decision ruling that the CA erred when it dismissed the petition. It further ruled that a shipyard like PHILSECO is a public utility
whose capitalization must be sixty percent (60%) Filipino-owned. Consequently, the right to top granted to KAWASAKI under the ASBR drafted for the sale of the
87.67% equity of the National Government in PHILSECO is illegal — not only because it violates the rules on competitive bidding but more so, because it allows
foreign corporations to own more than 40% equity in the shipyard.

It also held that petitioner cannot be estopped from questioning the unconstitutional, illegal and inequitable provisions thereof." Thus, the SC voided the transfer of
the NG's 87.67% share in PHILSECO to PHI and upheld the right of Petitioner, as the highest bidder, to take title to the said shares.

PETITIONER’S CONTENTION:

Petitioner informed APT that it was protesting the offer of PHI to top its bid on the grounds that: (a) the KAWASAKI/PHI consortium composed of Kawasaki,
Philyards, Mitsui, Keppel, SM Group, ICTSI and Insular Life violated the ASBR because the last four (4) companies were the losing bidders thereby circumventing
the law and prejudicing the weak winning bidder; (b) only KAWASAKI could exercise the right to top; (c) giving the same option to top to PHI constituted
unwarranted benefit to a third party; (d) no right of first refusal can be exercised in a public bidding or auction sale; and (e) the JG Summit consortium was not
estopped from questioning the proceedings.

ISSUE: Whether a PHILSECO, a shipyard, is a public utility whose capitalization must be sixty percent (60%) owned by Filipinos

RULING: No. By nature, a shipyard is not a public utility and there is no law declaring a shipyard as a public utility.

A "public utility” is "a business or service engaged in regularly supplying the public with some commodity or service of public consequence such as electricity, gas,
water, transportation, telephone or telegraph service."

To constitute a public utility, the facility must be necessary for the maintenance of life and occupation of the residents. However, the fact that a business offers
services or goods that promote public good and serve the interest of the public does not automatically make it a public utility. Public use is not synonymous with
public interest. As its name indicates, the term "public utility" implies public use and service to the public. The principal determinative characteristic of a public
utility is that of service to, or readiness to serve, an indefinite public or portion of the public as such which has a legal right to demand and receive its services or
commodities. Unlike a private enterprise which independently determines whom it will serve, a "public utility holds out generally and may not refuse legitimate
demand for service."
 Thus, in Iloilo Ice and Cold Storage Co. vs. Public Utility Board, "Public use" means the same as "use by the public." The essential feature of the public use is that it
is not confined to privileged individuals, but is open to the indefinite public. It is this indefinite or unrestricted quality that gives it its public character. In
determining whether a use is public, we must look not only to the character of the business to be done, but also to the proposed mode of doing it. Applying the
criterion laid down in Iloilo to the case at bar, it is crystal clear that a shipyard cannot be considered a public utility.

A "shipyard" is "a place or enclosure where ships are built or repaired.” Its nature dictates that it serves but a limited clientele whom it may choose to serve at its
discretion. While it offers its facilities to whoever may wish to avail of its services, a shipyard is not legally obliged to

render its services indiscriminately to the public. It has no legal obligation to render the services sought by each and every client. The fact that it publicly offers its
services does not give the public a legal right to demand that such services be rendered.

Topic: Certificate of Public Convenience - AVILA, ROSE

Definition: What is a Certificate of Public Convenience (CPC)? An authorization issued for the operation of public services for which no franchise, either municipal
or legislative, is required by law, such as a common carrier.

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 a
valuable asset.

Nature: In Luque v. Villegas, Supreme Court held that to this day, the accepted view, at least insofar as the State is concerned, is that "a certificate of public
convenience constitutes neither a franchise nor a contract, confers no property right, and is a mere license or privilege." The holder of such certificate does not
acquire a property right in the route covered thereby. Nor does it confer upon the holder any proprietary right or interest or franchise in the public highways.
Revocation of this certificate deprives him of no vested right. Little reflection is necessary to show that the certificate of public convenience is granted with so many
strings attached. New and additional burdens, alteration of the certificate, and even revocation or annulment thereof is reserved to the State.

Basic Requirements:
The issuance of a certificate of public convenience requires concurrence of the following requisites:
(1) The applicant must be a citizen of the Philippines, or a corporation or co-partnership, association or joint stock company constituted and organized
under the laws of the Philippines, 60 per centum at least of the stock or paid-up capital of which belong entirely to citizens of the Philippines
(2) The applicant must be financially capable of undertaking the proposed service and meeting the responsibilities incident to its operations
(3) The applicant must prove that the operation of the public service proposed and the authorization to do business will promote the public interest in a
proper and suitable manner.

Requirements (in summary):

Certificate of Public Convenience –
definition, nature and basic 1. Applicant must be a citizen of the Philippines. If the applicant is a Corporation, 60% of its capital must be owned by Filipinos
requirements
 2. Applicant must prove public necessity

3. Applicant must prove the operation of proposed public service will promote public interest in a proper and suitable manner; and

4. Applicant must have sufficient financial capability to undertake proposed services and meeting responsibilities incidental to its operation. (Kilusang Mayo Uno v.
Garcia G.R. No. 108584, Dec. 22, 1994)

Cite instances where a certificate of public convenience is not necessary?

1. Warehouses

2. Animal-­‐drawn vehicles or banca powered by oar or by sail; tug boats and lighters

3. Airships except as to fixing rates

4. Radio companies, except as to fixing of rates

5. Ice plants

6. Public market

7. Public utilities operated by the national government or political subdivision except as to rates.

Topic: Vested rights to operate

Doctrine: 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. REVOCATION of this certificate deprives him of NO vested right. It’s just a license and privilege. Revocation and granting is reserved by the STATE.
Where to acquire COBC ?
1. Those engage in public service motorized vehicles - LTFRB
2. Domestic and overseas water carriers - Maritime IndustryAuthority (MARINA)
3. Air Commerce Foreign/Domestic - Civil Aeronautics Board (CAB)
4. Land Transportation by the use of tricycles - Local Sangguniang Bayan under LGU Code

Luque, et al. v. Villegas, et al., 30 Other entities, other than the transportation --this depends on the nature service
SCRA 408 a. Radio, TV, Telephone, other telecommunication entities - National Telecommunication Communication
 b. Electric and cooperatives - National Electrification Administration (NEA)
c. Local water utilities - Local Utilities Administration
d. Express Messenger Service - Philippine Postal

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

Facts:
Petitioners ( who are passengers from Cavite and Batangas who ride on buses to and from their province and Manila) and some public service operators of buses
and jeeps assail the validity of Ordinance 4986 and Administrative Order 1.

Ordinance 4986 states that PUB and PUJs shall be allowed to enter Manila only from 6:30am to 8:30pm every day except Sundays and holidays.

Argument (Petitioner): Petitioners contend that since they possess a valid CPC, they have already acquired a vested right to operate.

Administrative Order 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".

Argument (Respondent): Republic Act No. 409, as amended, otherwise known as the Revised Charter of the City of Manila, is a special law and of later enactment
than Commonwealth Act No. 548 and the Public Service Law (Commonwealth Act No. 146, as amended), so that even if conflict exists between the provisions of
the former act and the latter acts, Republic Act No. 409 should prevail over both Commonwealth Acts Nos. 548 and 146.

Ruling:
1. YES! Using the doctrine in Lagman vs. City of Manila, Petitioner's Certificate of Public Convenience 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 AO 1 fit into the concept of promotion and regulation of general welfare.

2. 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

Kilusang Mayo Uno v. Jesus B. Garcia,
et al., G.R. No. 115381, December 23,
1994
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.
CABANLIT
Topic:
Doctrine: The Legislature has delegated to the Public Service Commission the power of fixing the rates of public services; but it has not authorized the Public
Service Commission to delegate that power to a common carrier or other public service.
Issues:
1. W/N the Public Service Commission (PSC) and LTFRB are legally authorized to delegate the power to set a fare range over and above the authorized
existing fare to a common carrier, a transport operator or other public service (NO)
2. W/N the presumption of public need for service that is deemed in favor of the applicant, found in the said disputed memorandum, is violative of Section
16© (III) of the Public Service Act and the Rules of Court (YES)
Facts:
Then Sec. of DOTC Orbos, issued a Memorandum Circular No. 90-395 to then LTFRB Chairman Remedios allowing provincial bus operators to charge passengers
rates within a range of 15% above and 15% below the LTFRB official rate for a period of 1 year. Under the said memorandum, there is a statement there that:
“Transport Operators shall be allowed to charge passengers within a range of fifteen percent (15%) above and fifteen percent (15%) below the LTFRB
official rate for a period of one year.
Finding the said memo not feasible, Remedios submitted a memorandum which in essence said that:
- Sec 16(c)of Public Service Act prescribes that the rates should be proposed by public service operators; and there should be a publication and notice to
concerned or affected parties; and
- To allow bus operators in the country to charge fares fifteen (15%) above the present LTFRB fares in the wake of the devastation, death and suffering
caused by the July 16 earthquake will not be socially warranted and will be politically unsound;
- And it will greatly affect the people who suffered by the recent earthquake at that time.
Private respondent PBOAP filed an application for fare rate increase. An across-the-board increase of eight and a half centavos (P0.085) per kilometer for all types
of provincial buses with a minimum-maximum fare range of fifteen (15%) percent over and below the proposed basic per kilometer fare rate, with the said
minimum-maximum fare range applying only to ordinary, first class and premium class buses and a fifty-centavo (P0.50) minimum per kilometer fare for aircon
buses, was sought.
Private respondent PBOAP reduced its applied proposed fare to an across-the-board increase of six and a half (P0.065) centavos per kilometer for ordinary buses.
The application was opposed by the Philippine Consumers Foundation, Inc. and Perla C. Bautista alleging that the proposed rates were exorbitant and unreasonable
and that the application contained no allegation on the rate of return of the proposed increase in rates.

Public respondent LTFRB rendered a decision granting the fare rate increase. Thereafter, then Sec. of DOTC Prado issued DO No. 92-587 defining the policy
framework on the regulation of transport service. It provided, among others,:

In determining public need, the presumption of need for a service shall be deemed in favor of the applicant. The burden of proving that there is
no need for a proposed service shall be with the oppositor(s).

The LTFRB then issued Memo Circular No. 92-009 promulgating the guidelines for the implementation of DOTC DO 92-587:

The issuance of a Certificate of Public Convenience is determined by public need. The presumption of public need for a service shall be deemed in
favor of the applicant, while burden of proving that there is no need for the proposed service shall be the oppositor'(s).

The existing authorized fare range system of plus or minus 15 per cent for provincial buses and jeepneys shall be widened to 20% and -25% limit
in 1994 with the authorized fare to be replaced by an indicative or reference rate as the basis for the expanded fare range.

Private respondent PBOAP, availing itself of the deregulation policy of the DOTC allowing provincial bus operators to collect plus 20% and minus 25% of the
prescribed fare without first having filed a petition for the purpose and without the benefit of a public hearing, announced a fare increase of twenty (20%) percent of
the existing fares. Said increased fares were to be made effective on March 16, 1994.

Petitioner herein then filed a petition before the LTFRB opposing the upward adjustment of bus fares. But the same was denied for lack of merit. Hence, this petition
for certiorari with an urgent prayer for issuance of a TRO which this Court granted.

Argument (Petitioner)

1. First, the authority given by respondent LTFRB to provincial bus operators to set a fare range of plus or minus fifteen (15%) percent, later increased to
plus twenty (20%) and minus twenty-five (-25%) percent, over and above the existing authorized fare without having to file a petition for the purpose, is
unconstitutional, invalid and illegal.
2. Second, the establishment of a presumption of public need in favor of an applicant for a proposed transport service without having to prove public
necessity, is illegal for being violative of the Public Service Act and the Rules of Court.

Argument (Respondent)

Respondent, without touching the main issue contends that petitioner KMU has no legal standing to sue.

Ruling:

1st ISSUE: No. the SC ruled that while both admin bodies are authorized, under existing laws, such as EO No 202, to determine, prescribe, approve and
periodically review and adjust, reasonable fares, rates relative to the operation of public land transportation services provided by motorized vehicles, however,
nowhere in the provisions of law are the regulatory bodies, the PSC and LTFRB alike, authorized to delegate that power to a common carrier, a transport operator or
other public service.

In this case, the authority given by the LTFRB to the provincial bus operators to set a fare range over and above the authorized existing fare, is ILLEGAL and
INVALID as it is tantamount to an undue delegation of legislative authority. The SC said that what has been delegated cannot be delegated. Giving such authority to
provincial bus operators not only results to chaotic situation but to anarchic state of affairs. This would leave the riding public at the mercy of transport operators
who may increase fares every hour, every day, every month or every year, whenever it pleases.

If transport operators will be authorized to impose and collect an additional amount equivalent to 20% over and above the authorized fare over a period of time, this
will unduly prejudice a commuter who will be made to pay a fare that has been computed in a manner similar to those of compounded bank interest rates.

2nd ISSUE: YES. In said memo:

“The issuance of a Certificate of Public Convenience is determined by public need. The presumption of public need for a service shall be deemed
in favor of the applicant, while the burden of proving that there is no need for the proposed service shall be the oppositor”

The SC said that it is entirely incompatible and inconsistent with Section 16(c)(iii) of the Public Service Act which requires that before a CPC will be issued, the
applicant must prove by proper notice and hearing that the operation of the public service proposed will promote public interest in a proper and suitable manner. On
the contrary, the policy guideline states that the presumption of public need for a public service shall be deemed in favor of the applicant. In case of conflict between
a statute and an administrative order, the former must prevail.

Pursuant to Section 16(a) of the Public Service Act, as amended, the following requirements must be met before a CPC may be granted, to wit:

(i) the applicant must be a citizen of the Philippines, or a corporation or co-partnership, association or joint-stock company constituted and organized
under the laws of the Philippines, at least 60 per centum of its stock or paid-up capital must belong entirely to citizens of the Philippines;

(ii) the applicant must be financially capable of undertaking the proposed service and meeting the responsibilities incident to its operation; and

(iii) the applicant must prove that the operation of the public service proposed and the authorization to do business will promote the public interest in a
proper and suitable manner.

It is understood that there must be proper notice and hearing before the PSC can exercise its power to issue a CPC. By its terms, public convenience or necessity
generally means something fitting or suited to the public need.

The existence or non-existence of public convenience and necessity is therefore a question of fact that must be established by evidence, real and/or testimonial;
empirical data; statistics and such other means necessary, in a public hearing conducted for that purpose. The object and purpose of such procedure, among other
things, is to look out for, and protect, the interests of both the public and the existing transport operators.

Therefore, an applicant must, at all times, be required to prove his capacity and capability to furnish the service which he has undertaken to render. And all this will
 be possible only if a public hearing were conducted for that purpose.

Moreover, the offending provisions of the LTFRB memorandum circular in question would in effect amend the Rules of Court by adding another disputable
presumption in the enumeration of presumptions under Rule 131, Section 5 of the Rules of Court. Such usurpation of this Court's authority cannot be countenanced
as only this Court is mandated by law to promulgate rules concerning pleading, practice and procedure.

Hence, public respondents committed grave abuse of discretion in issuing DOTC DO No. 92-587 and LTFRB Memo Circular No. 92-009, being amendatory and
violative of Public Service Act and the Rules of Court. The twenty (20%) per centum fare increase imposed by respondent PBOAP on March 16, 1994 without the
benefit of a petition and a public hearing is null and void and of no force and effect.

Topic: Mod 7 - Concept and Regulations

DOCTRINE:
● Provisional Authority (PA) is a temporary certificate issued by NTC authorizing an entity to operate a public utility for a limited period during its pendency of its
application for, or before the issuance of its Certificate of Public Convenience (CPC)
● Temporary Permit (TP) is a document issued by the NTC which contains the details and specification under which a public utility should operate pursuant to
previously updated (PA).
● A TP does not substitute for a PA.
● Administrative Sanctions; Sec. 21 vis-a-vis Sec. 23 of Public Service Act; Fines under Sec. 21 pertains to administrative proceedings while fines imposed under
Sec. 23 pertain to criminal proceedings.
● Id; Id; Id; Prescription under Sec. 28; the 60-day prescriptive period fixed by section 28 of the Public Service Law is available as a defense only in criminal or
penal proceedings filed under Chapter IV of the Act. (Sambrano vs. Public Service Commission)

Issues:
I. WON GMA violated Sec. 21 of the Public Service Act. (Yes, it continued to operate under an expired PA)
II. WON the prescription under Sec. 28 applies to administrative proceedings for violation of Sec. 21. (No, Sec. 28 only applies to criminal proceedings i.e. Sec. 23)
III. WON the limit set under Sec. 23 shall apply to fines imposed under Sec. 21. (No, the limit is only for sanctions under a criminal proceeding. Sanctions under
GMA Network, Inc. v. NTC, G.R. No. Sec. 21 are administrative in nature.
192128 & 192135, September 13, 2017
(Provisional Authority; Prescription and Facts:
Imposition of Fine) ● GMA is a Filipino-owned domestic corporation engaged in the business of radio and television broadcasting as a grantee of a legislative franchise.
● NTC is a government agency that exercises jurisdiction over the supervision, adjudication and control of all telecommunications and broadcast services in the
country.
● GMA filed before three application for Certificate of Public Convenience to operate a TV Station in Dumaguete City and TV Stations and a Radio Station in
Zamboanga City.
● NTC granted the PAs to GMA.
● Upon the expiration of the PAs it took GMA 4-5 years before it was able to file a renewal of PA; and so GMA filed ex-parte motions for renewal.
● Before acting on the motions. NTC scheduled the cases for clarificatory hearing and directed GMA to explain why it should not be administratively sanctioned for
late filing and/or for operating with an expired PA.
● GMA explained that its failure to renew the PAs on time was not done with deliberate intent but due to pure inadvertence in the maintenance of its records and
confusion in the turn-over of documents from its previous handling lawyers.
● The delay was also allegedly caused by the economic crisis that hit the Philippines in 1998 and the consequent downturn in the broadcast industry which
adversely affected GMA's expansion plans and existing projects.
● GMA however adds that it can no longer be sanctioned for the late filing because its violation already prescribed pursuant to Sec. 28.
● The NTC thereafter issued a CPC for the radio station and respectively renewed the PA for the TV stations.
● The NTC also imposed sanction on GMA for operating with an expired PA at the rate 200/day for the radio station and 100.days for the tv station. The aggregate
amount imposed was 674,600.
● GMA moved for the partial reconsideration that the fines be lifted on the ground that the violations already prescribed and that any fines imposed against a public
service corporation must not exceed 25,000.
● NTC partly granted the motion by reducing the rate of the fine to 50/day (total amount 259,450).
● GMA went to CA with these arguments:
○ NTC erred in imposing fines since considering that they were operating under temporary permits duly issued by
NTC
○ Prescription (Sec. 28)
○ fines must not exceed 25,000 (Sec. 23)
● CA dismissed all of it. Hence this petition for review.

Petitioner’s Argument (LOST):

1. NTC erred in imposing fines since considering that they were operating under temporary permits duly issued by NTC
2. Prescription (Sec. 28)
3. fines must not exceed 25,000 (Sec. 23)

Ruling:
Petition is denied.
I. On Prescription
Assuming arguendo that its failure to apply for an extension of its PA is a violation of the terms and conditions of its previously issued Provisional Authority,
petitioner GMA posits that such failure is within the ambit of the phrase "violations of x x x the terms and conditions of any certificates issued by the Commission"
under Section 28 of the same law, and therefore subject to the prescriptive period set by the said provision. Petitioner GMA asserts that the 60-day prescriptive
period in Section 28 is available as their defense in administrative proceedings that may result into penal sanctions. GMA maintains that Section 21 of the Public
Service Act is expressly limited by Section 28 of the same chapter of the same law.

The court disagrees. It has been settle under Sambrano that the 60-day prescriptive period under Sec. 28 of PSA can be availed of as a defense only in criminal
proceedings and not in proceedings pertaining to the regulatory power of the NTC over a public service utility's observance of the terms and conditions of its
Provisional Authority.

II. On the 25,000 limit provided under Sec. 23 It does not apply.

Careful reading and comprehension of Sections 21 and 23 would clearly show that the monetary fine imposed under Sec. 21 is an administrative sanction imposed
by the NTC on a service for the latter's violation or failure to comply with the terms and conditions of its authorization, or any other order, decision or regulation of
respondent NTC.

NTC explained that the P25,000.00 monetary fine specified under Section 23 is a penal sanction imposed by the court of law in addition to imprisonment on the
responsible officer of a service provider when it fails to perform, commit, or do any act or thing forbidden or prohibited, or shall neglect, fail or omit to do or
perform any act or thing required by the Public Service Act to be done or performed. (In the same ruling the court cites GMA Network vs NTC in relation to a radio
station in Puerto Princesa, Palawan where GMA made the same arguments and the court made the same ruling)

III. Provisional Authority vs. Temporary Permit

GMA finally insists that the subject broadcasting stations were operated with the knowledge and direct authority of respondent NTC, as evidenced by the temporary
permits issued on their behalf. But this argument was likewise disregarded in GMA Network when the Court ruled that a temporary permit does not substitute for a
Provisional Authority.

Provisional Authority refers to an authority given to an entity qualified to operate a public utility for a limited period during the pendency of its application for, or
before the issuance of its Certificate of Public Convenience (CPC). It has a general scope because it is akin to a provisional CPC in that it gives a public utility
provider power to operate as such and be bound by the laws and rules governing public utilities, pending issuance of its actual CPC.
 Temporary Permit is a document containing the call sign, authorized power, frequency/channel, class station, hours of operation, points of communication and
equipment particulars granted to an authorized public utility. Its scope is more specific than a PA because it contains details and specifications under which a public
utility should operate [its tv/radio station] pursuant to a previously updated PA.

The Court has held that the respondent NTC, being the government agency entrusted with the regulation of activities coming under its special and technical forte,
and possessing the necessary rule-making power to implement its objectives, 22 is in the best position to interpret its own rules, regulations and guidelines.

Topic: Concept and Regulations

Doctrine:

A franchise is basically a legislative grant of special privilege to a person. Particularly, the term, franchise, includes not only authorizations issuing directly from
Congress in the form of statute, but also those granted by administrative agencies to which the power to grant franchise has been delegated by Congress.

Issue: Whether the respondent, Toll Regulatory Board (TRB), an administrative agency, is empowered to grant authority to operate the toll facility/system.

Facts:

1. President Marcos issued PD 1112 authorizing the establishment of toll facilities on public improvements. It acknowledged the huge financial requirements and
the need to tap the resources of the private sector to implement the government’s infrastructure programs. PD 1112 allowed the collection of toll fees for the use of
certain public improvements that would allow a reasonable rate of return on investments.

2. The same decree created the Toll Regulatory Board, vesting it with the power to enter into contracts for the construction, maintenance, and operation of tollways,
grant authority to operate a toll facility, issue the necessary Toll Operation Certificate (TOC) and fix initial toll rates, and adjust it from time to time after due notice
and hearing.

3. Thereafter, PD 1113 was issued granting the Philippine National Construction Corporation for a period of 30 years, a franchise to operate toll facilities in the
North Luzon and South Luzon Expressways. Subsequently, PD 1894 was issued further granting the PNCC a franchise over the Metro Manila Expressway and the
expanded delineated NLEX and SLEX.

4. Then came the 1987 Constitution with its franchise provision. In 1993, the Government Corporate Counsel held that the PNCC may enter into a joint venture
agreement with private entities without going into public bidding.

5. On February 1994, the DPWH together with other private entities executed a MOU to open the door for entry of private capital in the Subic and Clark extension
Francisco, Jr., et al. v. TRB, et al., G.R. projects. PNCC entered into a financial and technical JVAs with entities for the toll operation of its franchised areas. Several Supplemental Toll Operation
No. 166910, October 19, 2010, etc. Agreements (STOA) were entered for the South Metro Manila Skyway, NLEX Expansion, and South Luzon Expressway Projects.
(Franchising prerogative)
 Argument (Petitioner)

Seek to nullify the various STOAs and assail the constitutionality of Sections 3(a and d) of PD 1112 in relation to Section 8(b) of PD 1894. Insofar as they vested
the TRB the power to issue, modify, and promulgate toll rate changes while given the ability to collect tolls.
Argument (Respondent)

Uniformly seek the dismissal of the three special civil actions on the threshold issue of the absence of a justiciable case and lack of locus standi on the part of the
petitioners therein.

Ruling:

· The TRB was granted sufficient power to grant a qualified person or entity with authority to operate the toll facility/system. By explicit provisions of the PDs,
the TRB was given power to grant administrative franchise for toll facility projects. The limiting thrust of Article 11, Section 11 of the Constitution on the grant
of franchise or other forms of authorization to operate public utilities may, in context, be stated as follows: (a) the grant shall be made only in favor of qualified
Filipino citizens or corporations; (b) Congress can impair the obligation of franchises, as contracts; and (c) no such authorization shall be exclusive or exceed
fifty years.

· A franchise is basically a legislative grant of special privilege to a person. Particularly, the term, franchise, includes not only authorizations issuing directly
from Congress in the form of statute, but also those granted by administrative agencies to which the power to grant franchise has been delegated by Congress.

· In essence there is nothing in the Constitution remotely indicating the necessity of a congressional franchise before each and every public utility may operate.
Citing Albano vs Reyes: “The Constitution provides that the issuance of a franchise, certificate or other form of authorization for the operation of a public
utility shall be subject to amendment, alteration or repeal by Congress does not necessarily imply…that only Congress has the power to grant such
authorization. Our statute books are replete with laws granting specified agencies in the Executive Branch the power to issue such authorization for
certain classes of public utilities.

· Under the 1987 Constitution, Congress has an explicit authority to grant a public utility franchise. However, it may validly delegate its legislative authority,
under the power of subordinate legislation, to issue franchises of certain public utilities to some administrative agencies.

TOPIC: Module 7 - Concept and regulations

DOCTRINE:
A "public utility" is a business or service engaged in regularly supplying the public with
MCWD v. Adala, G.R. No. 168914, some commodity or service of public consequence such as electricity, gas, water,
July 4, 2007 ( 47, PD 198) transportation, telephone or telegraph service.

ISSUES:
1. Whether or not the petition may be dismissed outright for failure to comply with the procedural grounds - YES

2. WON the application for CPC should be denied on the ground of lack of consent of the Board of Directors – YES

FACTS:
Respondent filed an application with the National Water Resources Board (NWRB) for the issuance of a Certificate of Public Convenience (CPC) to operate and
maintain waterworks system in sitios San Vicente, Fatima, and Sambag in Baragay Bulacao, Cebu City.

At the initial hearing, respondent submitted proof of compliance with jurisdiction requirements of notice and publication. Petitioner which a GOCC pursuant to PD
198, opposed the application. It appeared through its lawyers. Petitioner filed a formal opposition by mail. NWRB had not yet received a copy. The counsel who
received a copy volunteered to give a copy to the hearing officer.

In its Opposition, Petitioner prayed for the denial of respondent’s application because: 1) petitioner’s Board of Directors did not consent to the issuance of the
franchise; 2) proposed waterworks would interfere with petitioner’s water supply; and 3) the water needs of the residents were already well served by petitioner.

The NWRB conducted a hearing and an ocular inspection. IT dismissed petitioner’s Opposition. Petitioner’s MR was likewise denied. It appealed to the RTC of
Cebu City which denied the same and upheld the decision of the NWRB. The RTC also denied petitioner’s MR.

ISSUES:

1. Whether or not the petition maybe dismissed outright for failure to comply with the procedural grounds - YES

2. WON the application for CPC should be denied on the ground of lack of consent of the Board of Directors – YES

RULING:
1. YES, Engr Paredes was not specifically authorized to sign the verification and certification against forum shopping in petitioner’s behalf.

Respondent claims that petitioner’s General Manager, Engr. Paredes, who filed the petition and signed the verification and certification of non-forum shopping, was
not specifically authorized for that purpose. Respondent cites Premium Marble Resources v CA and ABS-CBN Broadcasting Corporation v CA. Engr Paredes was
authorized by board resolution to file cases on petitioner’s behalf. The Board of Director’s Resolution No. 015-2004 was attached to the petition. It authorized Eng
Paredes to “file in behalf of the Metropolitan Cebu Water District expropriation and other cases”.

Respondent argues that the board resolution was invalid for being roving authority and not a specific resolution.

BA Savings Bank v. Sia – Board resolution was couched in words similar to the subject
resolution. The Court upheld its validity. The Resolution was sufficient to vest such persons with in the absence of a board resolution authorizing a person to act for
and in behalf of a corporation, the action led in its behalf must fail since "the power of the corporation to sue and be sued in any court is lodged with the board of
directors that exercises its corporate powers." "[f]or such officers to be deemed fully clothed by the corporation to exercise a power of the Board, the latter must
specially authorize them to do so." the authority to bind the corporation and was specific enough as to the acts they were empowered to do.

However, the Board Resolution does not authorize Engr Paredes for the specific act of signing verifications and certifications against forum shopping.

WON the application for CPC should be denied on the ground of lack of consent of the Board of Directors – YES

PD 198, Sec. 47. Exclusive Franchise. — No franchise shall be granted to any other person or agency for domestic, industrial or commercial water service within
the district or any portion thereof unless and except to the extent that the board of directors of said district consents thereto by resolution duly adopted, such
resolution, however, shall be subject to review by the Administration.

Petitioner contends that “franchise” should be broadly interpreted, such that the prohibition against its grant to other entities without the consent of the disctrict’s
board of director extends to the issuance of the CPCs.

Respondent proffers that the same prohibition only applies to franchises in the strict sense – those granted by Congress by means of statute – and does not extend to
CPCs granted by agencies. It quotes the NWRB Resolution dated May 17, 2004. It distinguished a franchise from a CPC.

A CPC is formal written authority issued by quasi-judicial bodies for the operation and maintenance of a public utility for which a franchise is not required by law
and a CPC issued by this Board is an authority to operate and maintain a waterworks system or water supply service. On the other hand, a franchise is privilege or
authority to operate appropriate private property for public use vested by Congress through legislation.

Clearly, therefore, a CPC is different from a franchise and Section 47 of Presidential Decree 198 refers only to franchise. Accordingly, the possession of franchise
by a water district does not bar the issuance of a CPC for an area covered by the water district.

Philippine Airlines, Inc v Civil Aeronautics Board - construed the term "franchise" broadly so as to include, not only authorizations issuing directly from Congress
in the form of statute, but also those granted by administrative agencies to which the power to grant franchises has been delegated by Congress.

That the legislative authority — in this instance, then President Marcos — intended to delegate its power to issue franchises in the case of water districts is clear
from the fact that, pursuant to the procedure outlined in P.D. 198, it no longer plays a direct role in authorizing the formation and maintenance of water districts, it
having vested the same to local legislative bodies and the Local Water Utilities Administration (LWUA).

Nonetheless, while the prohibition in Section 47 of P.D. 198 applies to the issuance of CPCs for the reasons discussed above, the same provision must be deemed
void ab initio for being irreconcilable with Article XIV Section 5 of the 1973 Constitution. It reads:

SECTION 5. 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 the capital of which is owned by such
citizens, nor shall such franchise, certificate, or authorization be exclusive in character or for a longer period than fifty years .
 This provision has been substantially reproduced in Article XII Section 11 of the 1987 Constitution, including the prohibition against exclusive franchises. In view
of the purposes for which they are established, water districts fall under the term "public utility" as defined in the case of National Power Corporation v. Court of
Appeals:

A "public utility" is a business or service engaged in regularly supplying the public with some commodity or service of public consequence such as electricity, gas,
water, transportation, telephone or telegraph service. . . .

It bears noting, moreover, that as early as 1933, the Court held that a particular water district — the Metropolitan Water District — is a public utility. The ruling in
National Waterworks and Sewerage Authority v. NWSA Consolidated Unions is also instructive: We agree with petitioner that the NAWASA is a public utility
because its primary function is to construct, maintain and operate water reservoirs and waterworks for the purpose of supplying water to the inhabitants, as well as
consolidate and centralize all water supplies and drainage systems in the Philippines.

Since Section 47 of P.D. 198, which vests an "exclusive franchise" upon public utilities, is clearly repugnant to Article XIV, Section 5 of the 1973 Constitution, it is
unconstitutional and may not, therefore, be relied upon by petitioner in support of its opposition against respondent's application for CPC and the subsequent grant
thereof by the NWRB. SECTION 47 of PD 198 is unconstitutional.

Topic: Module 7 - Concept and Regulations

Doctrine:

● What cannot be legally done directly cannot be done indirectly. This rule is basic and, to a reasonable mind, does not need explanation. Indeed, if acts that
cannot be legally done directly can be done indirectly, then all laws would be illusory.
● In case of conflict between the Constitution and a statute, the Constitution always prevails because the Constitution is the basic law to which all other laws must
conform to.
● Any act, however noble its intentions, is void if it violates the Constitution. This rule is basic. When the effect of a law is unconstitutional, it is void.

Issue:

Whether Section 47 of PD No. 198, as amended, is valid.

Facts:

Tawang Multi-Purpose Cooperative v.
La Trinidad Water District, G.R. No.
166471, March 22, 2011 ( 47, PD 198)
Tawang Multi-Purpose Cooperative (TMPC) is a cooperative, registered with the Cooperative Development Authority, and organized to provide domestic water
services in Barangay Tawang, La Trinidad, Benguet. La Trinidad Water District (LTWD) is a local water utility created under Presidential Decree (PD) No. 198,
as amended. It is authorized to supply water for domestic, industrial and commercial purposes within the municipality of La Trinidad, Benguet.
TMPC filed with the National Water Resources Board (NWRB) an application for a certificate of public convenience (CPC) to operate and maintain a waterworks
system in Barangay Tawang. LTWD opposed TMPC's application.
 Petitioner’s Arguments:

In approving TMPC's application for a CPC, the NWRB held that LTWD's franchise cannot be exclusive since exclusive franchises are unconstitutional and
found that TMPC is legally and financially qualified to operate and maintain a waterworks system.

Respondent’s Arguments:

LTWD claimed that under Section 47 of PD No. 198, as amended, its franchise is exclusive. It provides for exclusive franchise, stating that “no franchise shall be
granted to any other person or agency for domestic, industrial or commercial water service within the district or any portion thereof unless and except to the
extent that the board of directors of said district consents thereto by resolution duly adopted, such resolution, however, shall be subject to review by the
Administration.”

Ruling:

No, Section 47 of PD No. 198, as amended, is unconstitutional as it allows indirectly what cannot be legally done directly.

The President, Congress and the Court cannot create directly franchises for the operation of a public utility that are exclusive in character. The 1935 (Section 8,
Article XIII), 1973 (Section 5, Article XIV), and 1987 (Section 11, Article XII) Constitutions expressly and clearly prohibit the creation of franchises that are
exclusive in character. There is no exception.

What the President, Congress and the Court cannot legally do directly they cannot do indirectly. Thus, the President, Congress and the Court cannot create
indirectly franchises that are exclusive in character by allowing the Board of Directors (BOD) of a water district and the Local Water Utilities Administration
(LWUA) to create franchises that are exclusive in character.

In PD No. 198, as amended, former President Ferdinand E. Marcos (President Marcos) created indirectly franchises that are exclusive in character by allowing the
BOD of LTWD and the LWUA to create directly franchises that are exclusive in character.

In case of conflict between the Constitution and a statute, the Constitution always prevails because the Constitution is the basic law to which all other laws must
conform to. The duty of the Court is to uphold the Constitution and to declare void all laws that do not conform to it.

There is no "reasonable and legitimate" ground to violate the Constitution. The Constitution should never be violated by anyone. Right or wrong, the President,
Congress, the Court, the BOD and the LWUA have no choice but to follow the Constitution. Any act, however noble its intentions, is void if it violates the
Constitution. This rule is basic.

When the effect of a law is unconstitutional, it is void.

Gamboa v. Finance Secretary Cu

Maragarito Teves, et al., G.R. No.
176579, June 28, 2011 DOCTRINE
Any citizen or juridical entity desiring to operate a public utility must therefore meet the minimum nationality requirement prescribed in Section 11, Article XII of
the Constitution. Hence, for a corporation to be granted authority to operate a public utility, at least 60 percent of its "capital" must be owned by Filipino citizens

ISSUE
Whether or not foreigners exercise control over PLDT, thereby violating the Constitutional mandate to Filipinize public utilities. — YES

FACTS
The Philippine Legislature enacted Act No. 3436 which granted the Philippine Long Distance Telephone Company (PLDT) a franchise and the right to engage in
telecommunications business.

Petitioner Wilson Gamboa questioned the indirect sale of shares involving almost 12 million shares of PLDT owned by PTIC to First Pacific. Thus, First Pacific’s
common shareholdings in PLDT increased from 30.7 percent to 37 percent, thereby increasing the total common shareholdings of foreigners in PLDT to about
81.47%.

On 31 January 2007, the House of Representatives (HR) Committee on Good Government conducted a public hearing on the particulars of the then impending sale
of the 111,415 PTIC shares. Respondents Teves and Sevilla were among those who attended the public hearing. The HR Committee Report No. 2270 concluded
that: (a) the auction of the government's 111,415 PTIC shares bore due diligence, transparency and conformity with existing legal procedures; and (b) First Pacific's
intended acquisition of the government's 111,415 PTIC shares resulting in First Pacific's 100% ownership of PTIC will not violate the 40 percent constitutional limit
on foreign ownership of a public utility since PTIC holds only 13.847 percent of the total outstanding common shares of PLDT.

Petitioner’s Argument: The act of the respondents violates the Constitutional provision on filipinization of public utility, stated in Section 11, Article XII of the
1987 Philippine Constitution, which limits foreign ownership of the capital of a public utility to not more than 40%.

RULING
[Re: Locus Standi. MAY NOT BE RELEVANT TO THIS TOPIC]
Petitioner Gamboa is a stockholder of PLDT. As such, he has the right to question the subject sale, which he claims to violate the nationality requirement prescribed
in Section 11, Article XII of the Constitution. If the sale indeed violates the Constitution, then there is a possibility that PLDT's franchise could be revoked, a dire
consequence directly affecting petitioner's interest as a stockholder.

More importantly, there is no question that the instant petition raises matters of transcendental importance to the public. The fundamental and threshold legal issue
in this case, involving the national economy and the economic welfare of the Filipino people, far outweighs any perceived impediment in the legal personality of the
petitioner to bring this action.
[Re: Constitutional Provision]
The 1987 Constitution (Section 11, Article XII) provides for the Filipinization of public utilities by requiring that any form of authorization for the operation of
public utilities should be granted only 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.

(Relevant Provision) 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;

Section 11, Article XII of the Constitution, like other provisions of the Constitution expressly reserving to Filipinos specific areas of investment, such as the
development of natural resources and ownership of land, educational institutions and advertising business, is self-executing. There is no need for legislation to
implement these self-executing provisions of the Constitution. (Pursuant to the ruling in Manila Prince Hotel v. GSIS)

[Re: the term “capital”]

The provision in Sec. 11, Article XII of the 1987 Constitution is an express recognition of the sensitive and vital position of public utilities both in the national
economy and for national security." The evident purpose of the citizenship requirement is to prevent aliens from assuming control of public utilities, which may be
inimical to the national interest. This specific provision explicitly reserves to Filipino citizens control of public utilities, pursuant to an overriding economic goal of
the 1987 Constitution: to "conserve and develop our patrimony" and ensure "a self-reliant and independent national economy effectively controlled by Filipinos."

Any citizen or juridical entity desiring to operate a public utility must therefore meet the minimum nationality requirement prescribed in Section 11, Article XII of
the Constitution. Hence, for a corporation to be granted authority to operate a public utility, at least 60 percent of its "capital" must be owned by Filipino citizens.

The SC emphasized shares that have voting rights. As between common shares and preferred shares— it is the common shares that have voting rights which
translate to control, as opposed to preferred shares which usually have no voting rights. Thus, the term "capital" in Section 11, Article XII of the Constitution refers
only to common shares.

Only holders of common shares can vote in the election of directors, meaning only common shareholders exercise control over PLDT. Conversely, holders of
preferred shares, who have no voting rights in the election of directors, do not have any control over PLDT. In fact, under PLDT's Articles of Incorporation, holders
of common shares have voting rights for all purposes, while holders of preferred shares have no voting right for any purpose whatsoever. However, the SC
explained that if the preferred shares also have the right to vote in the election of directors, then the term "capital" shall include such preferred shares because the
right to participate in the control or management of the corporation is exercised through the right to vote in the election of directors.

As such, the term "capital" refers only to shares of stock that can vote in the election of directors. This interpretation is consistent with the intent of the framers of
the Constitution to place in the hands of Filipino citizens the control and management of public utilities. (But in this case, only those that hold common shares have
 voting rights, as per PLDT’s Articles of Incorporation)

The SC stressed that, in this case, it is the foreigners which hold a majority of the common shares of PLDT. According to PLDT's 2010 General Information Sheet
(GIS), foreigners hold 120,046,690 common shares of PLDT whereas Filipinos hold only 66,750,622 common shares. In other words, foreigners hold 64.27% of the
total number of PLDT's common shares, while Filipinos hold only 35.73%. Since holding a majority of the common shares equates to control, it is clear that
foreigners exercise control over PLDT. Such amount of control unmistakably exceeds the allowable 40 percent limit on foreign ownership of public utilities
expressly mandated in Section 11, Article XII of the Constitution.

The SC resolved this case by directing the Chairperson of the Securities and Exchange Commission to apply the definition of the term "capital”, as held in this case,
in order to determine the extent of allowable foreign ownership in PLDT, and if there is a violation of Section 11, Article XII of the Constitution, to impose the
appropriate sanctions under the law.

(Cuarteros, Lady Joyce)

Topic: Regulatory agencies; powers

Doctrine: Power to suspend the CPCs issued to public utility vehicles depends on its assessment of the gravity of the violation, the potential and actual harm to the
public, and the policy impact of its own actions. Indeed, the law gives to the LTFRB (previously known, among others, as Public Service Commission or Board of
Transportation) ample power and discretion to decree or refuse the cancellation of a certificate of public convenience issued to an operator as long as there is
evidence to support its action – in which case, the Court will not substitute its discretion for that of the LTFRB.

Issue: WON petitioner is justified in suspending respondent's 28 CPCs for a period of six (6) months. In other words, is the suspension within the powers of the
LTFRB to impose and is it reasonable? YES!

Facts:
This case involved a vehicular accident that involved a public utility bus bearing a "G.V. Florida" body mark. The mishap claimed the lives of 15 passengers and
injured 32 others. Based on initial investigation, the bus actually belonged to a certain Norberto Cue and that the bus involved in the accident is not duly authorized
to operate as a public transportation or was registered as “private”.

Petitioner, pursuant to its regulatory powers, immediately issued an Order preventively suspending, for a period not exceeding 30 days, the operations of 10 buses of
Cue under its CPC, as well as respondent's entire fleet of buses, consisting of 228 units, under its 28 CPCs.
LTFRB v. G.V. Florida Transport, G.R.
No. 213088, June 28, 2017 Based on the incident report, it was found that the registered owner was Dagupan Bus Co., Inc. (Dagupan Bus) while the previous owner was herein respondent bus
company – G.V. Florida Transport. Dagupan Bus denied ownership; Cue admitted that it completely ceded operation and maintenance of the subject buses in favor
of respondent G.V. Florida; and respondent likewise admitted that merely replaced Cue’s buses with new units using the License Plates attached to the old buses,
pending LTFRB’s approval of the sale and transfer of Cue's CPC in its favor or despite the absence of prior adequate compliance with the requirements that will
constitute its operation legal.
LTFRB’s decision: cancelled Cue's CPC and suspended the operation of respondent's 186 buses under 28 of its CPCs for a period of 6 months.

CA: granted respondent’s prayer for mandatory injunctive relief; lifted petitioner’s order of suspension and ordered the return of the confiscated license plates of
respondent's 186 authorized bus units under its 28 CPCs.

Argument (Petitioner):
· It is vested by law with jurisdiction to regulate the operation of public utilities;
· that under Section 5 (b) of E.O. 202, it is authorized "[t]o issue, amend, revise, suspend or cancel Certificates of Public Convenience or permits
authorizing the operation of public land transportation services provided by motorized vehicles, and to prescribe the appropriate terms and conditions
therefor;" and
· that its authority to impose the penalty of suspension of CPCs of bus companies found to have committed violations of the law is broad and is
consistent with its mandate and regulatory capability.

Argument (Respondent):
· the suspension of its 28 CPCs is tantamount to an outright confiscation of private property without due process of law; considering that only
one bus unit, covered by a single CPC, was involved in the subject accident; and
· that petitioner cannot simply ignore its property rights on the pretext of promoting public safety;
· insists that the penalty imposed by petitioner is not commensurate to the infraction it had committed; and
· that the authority given to petitioner, under Section 16 (n) of the Public Service Act does not mean that petitioner is given the power to suspend the
entire operations of a transport company.

Ruling: Yes, petitioner was justified in suspending respondent's 28 CPCs for a period of six (6) months.

The suspension of respondent's 28 CPCs is not only because of the findings of petitioner that the ill-fated bus was not roadworthy. Rather, and more
importantly, the suspension of the 28 CPCs was also brought about by respondent's wanton disregard and obstinate defiance of the regulations issued by
petitioner, which is tantamount to a willful and contumacious refusal to comply with the requirements of law or of the orders, rules or regulations issued by
petitioner and which is punishable, under the law, by suspension or revocation of any of its CPCs.
 Relevant citations:
Section 16 (n) of Commonwealth Act No. 146, otherwise known as the Public Service Act, provides: “The Commission shall have power, upon proper notice
and hearing in accordance with the rules and provisions of this Act, subject to the limitations and exceptions mentioned and saving provisions to the contrary:
xxx xxx xxx
(n) To suspend or revoke any certificate issued under the provisions of this Act whenever the holder thereof has violated or willfully and contumaciously
refused to comply with any order rule or regulation of the Commission or any provision of this Act: Provided, That the Commission, for good cause, may
prior to the hearing suspend for a period not to exceed thirty days any certificate or the exercise of any right or authority issued or granted under this Act by order
of the Commission, whenever such step shall in the judgment of the Commission be necessary to avoid serious and irreparable damage or inconvenience to the
public or to private interests.
xxx xxx xxx

Also, Section 5 (b) of E.O. 202 states: “The Board shall have the following powers and functions: xxx xxx xxx b. To issue, amend, revise, suspend or cancel
Certificates of Public Convenience or permits authorizing the operation of public land transportation services provided by motorized vehicles, and to prescribe
the appropriate terms and conditions therefor; xxx xxx xxx

In fact, respondent was guilty of several violations of the law, which it knowingly and blatantly committed, to wit:
· lack of petitioner's approval of the sale and transfer of the CPC which respondent bought from Cue;
· operating the ill-fated bus under its name when the same is registered under the name of Dagupan Bus Co., Inc.;
· attaching a vehicle license plate to the ill-fated bus when such plate belongs to a different bus owned by Cue; and
· operating the subject bus under the authority of a different CPC.

AS TO LTFRB’S POWER TO SUSPEND:

SC agrees that its power to suspend the CPCs issued to public utility vehicles depends on its assessment of the gravity of the violation, the potential and actual harm
to the public, and the policy impact of its own actions.

Here, the Court gives due deference to petitioner's exercise of its sound administrative discretion in applying its special knowledge, experience and expertise to
resolve respondent's case.

Indeed, the law gives to the LTFRB (previously known, among others, as Public Service Commission or Board of Transportation) ample power and discretion to
decree or refuse the cancellation of a certificate of public convenience issued to an operator as long as there is evidence to support its action – in which case,
the Court will not substitute its discretion for that of the LTFRB.

Citing the 1968 case of Rizal Light & Ice Co., Inc. v. The Municipality of Morong, Rizal and The Public Service Commission: To allow petitioner to continue its

Hontiveros-Baraquel v. TRB, et al.,
G.R. No. 181293, Feb. 23, 2015
operation would be to sacrifice public interest and convenience in favor of private interest. A grant of a certificate of public convenience confers no property
rights but is a mere license or privilege, and such privilege is forfeited when the grantee fails to comply with his commitments behind which lies the
paramount interest of the public, for public necessity cannot be made to wait, nor sacrificed for private convenience.
AS TO ALLEGED RECKLESS DISREGARD OF RESPONDENT’S PROPERTY RIGHTS AS A FRANCHISE HOLDER (considering that it has put in
substantial investments amounting to hundreds of millions in running its operations):
SC cited 1969 case of Luque v. Villegas: the accepted view, at least insofar as the State is concerned, is that "a certificate of public convenience constitutes neither a
franchise nor a contract, confers no property right, and is a mere license or privilege." The holder of such certificate does not acquire a property right in the
route covered thereby. Nor does it confer upon the holder any proprietary right or interest of franchise in the public highways. Revocation of this
certificate deprives him of no vested right. Little reflection is necessary to show that the certificate of public convenience is granted with so many strings
attached. New and additional burdens, alteration of the certificate, and even revocation or annulment thereof is reserved to the State.
AS TO PETITIONER’S POWER TO SUSPEND THE ENTIRE OPERATIONS OF A TRANSPORT COMPANY: [refer to abovecited of Sec. 16(n), Pub. Service
Act] When the context so indicates, the word "any" may be construed to mean as meaning "all”, or "used to indicate a maximum or whole". Hence, petitioner
undoubtedly wields authority, under the law, to suspend not only one but all of respondent's CPCs if warranted, which is proven to be the case here.
AS TO THE PENALTY IMPOSED BY PETITIONER:
SC said that this is not simply a case of one erring bus unit. Instead, the series or combination of violations it has committed with respect to the ill-fated bus is
indicative of its design and intent to blatantly and maliciously defy the law and disregard, with impunity, the regulations imposed by petitioner upon all holders of
CPCs. Thus, SC finds nothing irregular in petitioner's imposition of the penalty of six-month suspension of the operations of respondent's 28 CPCs. IOW, petitioner
did not commit grave abuse of discretion in imposing the questioned penalty.
Suspension of respondent's CPCs finds relevance in light of the series of accidents met by different bus units owned by different operators in recent events. This
serves as a reminder to all operators of public utility vehicles that their franchises and CPCs are mere privileges granted by the government. As such, they are
sternly warned that, as common carriers, they bear the responsibility of exercising extraordinary diligence in the transportation of their passengers; and that they
should conscientiously comply with the requirements of the law in the conduct of their operations, failing which they shall suffer the consequences of their own
actions or inaction.
Doctrine
R.A. 8975 prohibits lower courts from issuing any temporary restraining order, preliminary injunction, or preliminary mandatory injunction against the government to restrain,
prohibit or compel acts related to the implementation and completion of government infrastructure projects. The rationale for the law is easily discernible. Injunctions and
restraining orders tend to derail the expeditious and efficient implementation and completion of government infrastructure projects; increase construction, maintenance and
repair costs; and delay the enjoyment of the social and economic benefits therefrom. Thus, unless the matter is of extreme urgency involving a constitutional issue, judges of
lower courts who shall issue injunctive writs or restraining orders in violation of the law shall be administratively liable.
Issue

1. Whether the TRB has the power to grant authority to operate a toll facility
2. Whether the TOC issued to SOMCO was valid
3. Whether the approval of the ASTOA by the DOTC Secretary was valid
4. Whether the assumption of toll operations by SOMCO is disadvantageous to the government

Facts
The Toll Regulatory Board (TRB) was created by Presidential Decree No. (P.D.) 1112 1 in order to supervise and regulate, on behalf of the government, the collection of toll
fees and the operation of toll facilities by the private sector. On the same date, March 31, 1977, P.D. 1113 was issued granting to the Construction and Development
Corporation of the Philippines (now Philippine National Construction Corporation or PNCC) the right, privilege, and authority to construct, operate, and maintain toll facilities in
the North and South Luzon Toll Expressways for a period of 30 years. TRB and PNCC later entered into a Toll Operation Agreement, which prescribed the operating conditions
of the right granted to PNCC under P.D. 1113.

On 22 September 1993, PNCC entered into an agreement 5 with PT Citra Lamtoro Gung Persada (CITRA), a limited liability company organized and established under the
laws of the Republic of Indonesia, whereby the latter committed to provide PNCC with a pre-feasibility study on the proposed MME project. CITRA was to provide a preliminary
feasibility study on the Metro Manila Skyways (MMS) project, a system of elevated roadway networks passing through the heart of the Metropolitan Manila area.

In order to accelerate the actual implementation of both the MME and the MMS projects, PNCC and CITRA entered into a second agreement. As a result of the feasibility and
related studies, PNCC and CITRA submitted, through the TRB, a Joint Investment Proposal (JIP) to the Republic of the Philippines. TRB reviewed, evaluated and approved the
JIP. PNCC and CITRA entered into a Business and Joint Venture Agreement and created the Citra Metro Manila Tollways Corporation (CMMTC).

On 27 November 1995, the Republic of the Philippines — through the TRB — as Grantor, CMMTC as Investor, and PNCC as Operator executed a Supplemental Toll Operation
Agreement (STOA) covering Stage 1, Phases 1 and 2; and Stage 2, Phase 1 of the South Metro Manila Skyway.

On 18 July 2007, the Republic of the Philippines, through the TRB, CMMTC, and PNCC executed the assailed Amendment to the Supplemental Toll Operation Agreement
(ASTOA). Under the ASTOA, Skyway O & M Corporation (SOMCO) replaced PSC in performing the operations and maintenance of Stage 1 of the South Metro Manila Skyway.
Pursuant to EO No 497, Department of Transportation and Communications (DOTC) Secretary Leandro Mendoza approved the ASTOA.

On 21 December 2007, PNCC, PSC, and CMMTC entered into the assailed Memorandum of Agreement (MOA) 16 providing for the successful and seamless assumption by
SOMCO of the operations and maintenance of Stage 1 of the South Metro Manila Skyway.

The TRB issued the challenged Toll Operation Certificate (TOC) 17 to SOMCO on 28 December 2007, authorizing the latter to operate and maintain Stage 1 of the South Metro
Manila Skyway

PNCC Traffic Management and Security Department Workers Organization (PTMSDWO) filed a Notice of Strike against PSC on the ground of unfair labor practice, specifically
union busting. The Secretary of Labor and Employment assumed jurisdiction over the dispute in an Order dated 31 December 2007 and set the initial hearing of the case.
PTMSDWO and PNCC Skyway Corporation Employees Union (PSCEU) filed before the Regional Trial Court of Parañaque a complaint against respondents TRB, PNCC, PSC,
CMMTC, and SOMCO. The complaint was for injunction and prohibition with a prayer for a writ of preliminary injunction and/or a temporary restraining order, and sought to:
 1. prohibit the implementation of the ASTOA and the MOA, as well as the assumption of the toll operations by SOMCO
2. nullification of the ASTOA and the MOA for being contrary to law and for being grossly disadvantageous to the government.
3. praying that PSC be allowed to continue the toll operations

RTC: denied. Petitioners were seeking to enjoin a national government infrastructure project. Under Republic Act No. (R.A.) 8975, 25 lower courts are prohibited from issuing a
temporary restraining order or preliminary injunction against the government — or any person or entity acting under the government's direction — to restrain the execution,
implementation, or operation of any such contract or project. Also, the act sought to be restrained had already been consummated.

Petitioners filed a petition for certiorari under Rule 65 with SC.

Arguments
Petitioner - The replcament of SOMCO was a serious breach of the terms and conditions of PNCC’s undertaking under the franchise and effectively abdicated its rights and
privileges in favor of SOMCO. The TOC granted to SOMCO was highly irregular and contrary to law, DOTC Secretary of the ASTOA could not take the place of the presidential
approval required under P.D. 1113 44 and P.D. 1894 concerning the franchise granted to PNCC, and the assumption of the toll operations by SOMCO was grossly
disadvantageous to the government.

Respondent - Petitioners do not have legal standing, violated the hierarchy of courts, and guilty of forum shopping since SOLE has already took cognizance of the case.
Respondents argue that nothing in the ASTOA, the approval thereof by the DOTC Secretary, the MOA, or the TOC was violative of the Constitution, the authority to operate a
public utility can be granted by administrative agencies when authorized by law, there can be no valid objection to the approval of the ASTOA by the DOTC Secretary, because
he was authorized by the President to do so by virtue of E.O. 497, no merit in the claim that the TOC granted to SOMCO was highly irregular and contrary to law, and the
assumption of the toll operation and maintenance by SOMCO is not disadvantageous to the government.

Ruling

1. TRB has the power to grant authority to operate a toll facility. This matter has already been settled by the Court in Francisco, Jr. v. TRB , 102 which ruled thus:

It is abundantly clear that Section 3 (a) and (e) of P.D. 1112 in relation to Section 4 of P.D. 18 94 have invested the TRB with sufficient power to grant a qualified person or entity
with authority to construct, maintain, and operate a toll facility and to issue the corresponding toll operating permit or TOC. By explicit provision of law, the TRB was given the
power to grant administrative franchise for toll facility projects.

We cannot abide by the contention of petitioners that the franchise for toll operations was exclusively vested in PNCC, which effectively breached its franchise when it
transferred the toll operations to SOMCO.

1. there is nothing in P.D. 1113 or P.D. 1894 that states that the franchise granted to PNCC is to the exclusion of all others.
2. P.D. 1113 and P.D. 1894 granting PNCC the right, privilege and authority to construct, operate and maintain the North Luzon, South Luzon and Metro Manila
Expressways and their toll facilities.
 3. TRB is also empowered to modify, amend, and impose additional conditions on the franchise of PNCC in an appropriate contract, particularly when public interest
calls for it. This is provided under Section 3 of P.D. 1113 and Section 6 of P.D. 1894.

Section 6 of P.D. 1894 specifically mentions the Toll Operation Agreement. The STOA was one such modification or amendment of the franchise of PNCC. So was the ASTOA,
which further modified the franchise. PNCC cannot be said to have breached its franchise when it transferred the toll operations to SOMCO. PNCC remained the franchise
holder for the construction, operation, and maintenance of the project roads; it only opted to partner with investors in the exercise of its franchise leading to the organization of
companies such as PSC and SOMCO.

2. The TOC issued to SOMCO was not irregular.

Petitioners argue that the conditions provided under Section 3 (e) of P.D. 1112 were not imposed on SOMCO, because these do not appear on the face of the TOC. Petitioners
are mistaken. The TOC, as a grant of authority from the government, is subject to the latter's control insofar as the grant affects or concerns the public. Like all other franchises
or licenses issued by the government, the TOC is issued subject to terms, conditions, and limitations under existing laws and agreements.

As regards the allegation that none of the requirements for public bidding was observed before the TOC was issued to SOMCO, this matter was also squarely answered by the
Court in Francisco, Jr. v. TRB, Where, in the instant case, a franchisee undertakes the tollway projects of construction, rehabilitation and expansion of the tollways under its
franchise, there is no need for a public bidding. In pursuing the projects with the vast resource requirements, the franchisee can partner with other investors, which it may
choose in the exercise of its management prerogatives. In this case, clearly, no public bidding was necessary because PNCC, the franchisee, merely exercised its
management prerogative when it decided to undertake the construction, operation, and maintenance of the project roads through companies which are products of joint
ventures with chosen partners.

Petitioners also insist that SOMCO is not qualified to operate a toll facility, because it does not meet the nationality requirement for a corporation when scrutinized under the
"grandfather rule." However, petitioners have not shown how SOMCO fails to meet the nationality requirement for a public utility operator. Respondents attempt to show that all
these corporations are of Philippine nationality, with 60% of their capital stock owned by Filipino citizens. Petitioners did not refute the unanimous claim of respondents.

Finally, no public notices and hearings were necessary prior to the issuance of the TOC to SOMCO. For the same reason that a public bidding is not necessary, PNCC cannot
be required to call for public hearings concerning matters within its prerogative.

3. Approval of the ASTOA by the DOTC Secretary was approval by the President.

The doctrine of qualified political agency declares that, save in matters on which the Constitution or the circumstances require the President to act personally, executive and
administrative functions are exercised through executive departments headed by cabinet secretaries, whose acts are presumptively the acts of the President unless
disapproved by the latter.

There can be no question that the act of the secretary is the act of the President, unless repudiated by the latter. In this case, approval of the ASTOA by the DOTC Secretary
had the same effect as approval by the President. The same would be true even without the issuance of E.O. 497, in which the President, on 24 January 2006, specifically
delegated to the DOTC Secretary the authority to approve contracts entered into by the TRB.

When we say that the approval by the DOTC Secretary in this case was approval by the President, it was not in connection with the franchise of PNCC, as required under
Section 8 of P.D. 1113 and Section 13 of P.D. 1894. Rather, the approval was in connection with the powers of the TRB to enter into contracts on behalf of the government as
provided under Section 3 (a) of P.D. 1112.

4. Petitioners have not shown that the transfer of toll operations to SOMCO was grossly disadvantageous to the government. In this case, we find that the allegations
of petitioners are nothing more than speculations, apprehensions, and suppositions. The aim in the establishment of toll facilities is to draw from private resources the financing
of government infrastructure projects. Naturally, these private investors would want to receive reasonable return on their investments.

It is quite understandable that SOMCO does not yet have a proven track record in toll operations, considering that it was only the ASTOA and the MOA that gave birth to it. We
are not prepared to rule that this lack of track record would result in poor delivery of toll services, especially because most of the former employees of PSC have been rehired
by SOMCO, an allegation of respondents that was never refuted by petitioners. Neither are we prepared to take the amount of SOMCO's initial capital investment against it, as
it is considerably higher than P500,000, the authorized capital stock of PSC as of 2002.

Final Note
WHEREFORE, the petition is DISMISSED and prayers DENIED.