a. Public -touches its customers & employees b. Private- touches all other members of the community in which it operates •Public Use-it is not confined to privilege individuals but is open to the indefinite public. The true criterion to determine character of use is whether the public may enjoy it by right or only by permission. Transfer of CPC • The PSC has the authority to approve the sale of CPCs if (1) there are just & reasonable ground for making the transfer (2) sale is not detrimental to public interest • Approval of PSC is required to protect public interest but sale is valid & binding between the parties. Transferree cannot operate without the approval of the transfer. • Registered owner rule applies if transfer is not approved where registered owner continues to be liable to 3rd parties for vehicles registered under his name Public Service • A public utility is engaged in public service - providing basic commodities and services indispensable to the interest of the general public. • A public utility must submit to the regulation of government authorities & surrenders certain business prerogatives, including the amount of rates that may be charged by it. It is the duty of the State to use its protective power whenever too much profits become the priority of public utilities Public Service Regulations • 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 etc. The term implies public use & service. • Public utillities are privately owned & operated businesses whose services are essential to the general public. They are impressed with public interest & concern. General Business Purpose • Business as the means by which a party habitually or regularly earns a livelihood of some gain. • Activities or affairs where profit is the purpose or livelihood is the motive • Supply of electricity to the contestable market shall not be considered a public utility operation Basis of Regulation of Public Utilities • Regulation of PUs is founded on the State's police power. When private property is affected with public interest, it ceases to be private and becomes subject to regulation to promote the common good • Only Filipino citizens or domestic corporations 60% of capital is owned by Ph citizens can own a franchise for operation of PUs which will be determined at the time of franchise application Ownership of PUs • 60% Filipino ownership applies not only to voting control of corporation but also to beneficial ownership • 60% Filipino ownership must apply separately to each class of shares whether common, preferred non-voting, preferred voting etc • Limit imposed by Constitution on ownership applies only to operation of PU and not to ownership of facilities Elements of Public Service 1. The person must own, operate,manage or control in the Ph public services which may include distribution of goods or rendering of services to the public 2. The ownership, operation, management or control must be for hire; 3. The ownership, operation, management or control must be done for general business purposes Term & Exclusivity of Franchise • The term of PUs franchise is 50 years at any given time. However, the appropriate government body may extend the franchise • Constitution provides that franchise cannot be exclusive. • Franchise is subject to amendment, alteration or repeal by Congress when the common good so requires • Franchise is a mere privilege that may be reasonably burdened with some form of public service Take Over of PUs • Permanent -involves expropriation of PUs subject to payment of just compensation in the interest of national welfare or defense • Temporary -in times of national emergency when the public interest so requires such as typhoon, tsunami, national security Regulation of Rates • Regulation of PUs include the regulation of rates that they are charging the public • The power to regulate rate does not give State the right to prescribe rates that are so low as to deprive PU of reasonable return of investment • Fixing of just & reasonable rates involve a balancing of investor and consumer interests • Discrimination in charging of rates is not allowed Monopolies & Unfair Competition • The State shall regulate or prohibit monopolies when the public interest requires. Combinations in restraint of trade & unfair competition are not allowed • Interconnection of telephone companies was a valid form of intervention to promote the expansion of telecom services Reasonable & Just Rates • The only standard required to guide administrative agencies in rate fixing is that the rate must be reasonable & just. • What is just & reasonable is a question of fact calling for the exercise of disretion, good sense & a fair enlightened, judgment taking into account the fair return of property to PU & includes operating expenses • There is no fixed formula or method to determine reasonable & just rate • The burden is on person questoning rates fixed by administrative agency that the standards are not complied LTFRB • Rates are regulated by LTFRB to avoid cut throat competition & ensure that public safety & comfort are not sacrificed • In setting rates, factors like price of gasoline, spare parts, boundary & other operating expenses are considered • 2 Methods: Add-on adding the established minimum fare to fare per succeeding kilometer multiplied by distance in excess of 4 & 5 km; Straight actual distance travelled is multiplied by auhorized fare per succeeding kilometer of 0.25 centavos Provisional Increase • LTFRB may approve provisional increase wihout a hearing when demanded by public need • Provisional rates are merely temporary and subject to adjustment in conformity with definite rates approved after final hearing Certificate of Public Convenience Requirements 1. Applicant must be a citizen of Ph or domestic corporation, partnership or association 60% of stock or paid up capital belong to Ph citizens 2. Applicant must be financially capable of undertaking the proposed service and meeting responsibilities incident to operations 3. Applicant must prove that the operation of public service and authorization to do business will promote the public interest in a proper & suitable manner Public Convenience or Necessity • generally means something fitting or suited to public need. • Public convenience & necessity exists when the proposed facility or service meets a reasonable want of the public and supply a need that the existing facilities do not adequately supply. • Existence of PCN is a question of fact that must be established by evidence in a public hearing conducted for the purpose Other Rules & Policies to Determine Entitlement to PCN • Prior Operator Rule-CPC will not be issued to 2nd operator if 1st operator is rendering sufficient & satisfactory service • Third Operator-variation of prior operator, there are 2 prior operators rendering sufficient service • Protection of Investment-duty of State to protect operators from unfair & ruinous competition • Prior applicant rule-priority in filing applications is an important factor in determining rights of public service companies Free Competition • The aim to promote competition may work against the application of different policies like the prior operator rule and other related policies. • Monopoly is eschewed and the aim to deliver adequate service to the public takes precedence. Nature of CPC • CPC is a mere privilege that is always subject to regulation by the State • CC does not acquire property right to route covered by CPC • CPC may also be considered as property because it can be sold by the holder and is considered a valuable asset Provisional Authority • PA refers to an authority given to an entity qualified to operate a public utility for a limited period during the pendency of its application or before issuance of CPC • Public utility granted PA is allowed to operate, however the same may be revoked at any time and subject to final action on main application Revocation of CPC • Since CPC is a mere privilege, it may be revoked by the concerned agency anytime • Privilege is forfeited when the grantee fails to comply with his commitment for public necessity cannot be made to wait • If PU refused to comply with directives, rules & regulations of the concerned agency, CPC can be revoked Due Process • Regulatory agency cannot make ex parte revocation of CPC without giving operators previous notice & opportunity to explain • Due process does not mean that there should be prior notice & hearing in all actions undertaken by administrative agency