Freedom from Debt Coalition (FDC) v.

Energy
Regulatory Commission (ERC)
G.R. No. 161113, June 15, 2004
FACTS:

• MERALCO filed with the ERC an application for an increase

in rates and prayed for the grant of provisional authority to
implement the increase.
• FDC filed its motion for production of documents to enable
the evaluation of MERALCO’s application
• ERC subsequently issued an order provisionally approving
MERALCO’s application despite the motion
• MERALCO refused to produce the documents requested by
the opposition on the ground that such documents are
immaterial are irrelevant to its application
• On the schedule date of hearing for the case, ERC did not
revoke the provisional authority it granted to MERALCO
• FDC filed a petition alleging that ERC’s order is void on the
following ground:
a. It was issued without legal authority because EPIRA
repealed prior laws conferring to precursors of ERC the
power to grant provisional orders
b. Affected sectors were not afforded the opportunity to be
heard
c. ERC based the provisional increase without proof of
MERALCO’s actual financial condition
ISSUE

Whether or not ERC has legal authority to grant provisional

rate adjustment under EPIRA.
RULING:

• YES. The conferment upon the ERC of the power to grant

provisional rate adjustment is not inconsistent with any
provision of the EPIRA.
RULING:

Overview of EPIRA

• “Electric Power Industry Reform Act of 2001.”

• It established a new policy, legal structure and regulatory
framework for the electric power industry
• It’s thrust is to tap private capital for the expansion of the
industry due to its highly-capital intensive character
RULING:

Overview of EPIRA

• In restructuring the industry, it aims to establish a strong

and purely independent regulatory body.
• Thus, the law created the ERC in place of the Energy
Regulatory Board (ERB)
RULING:

• The powers of ERB transferred to the ERC under Sec. 44 of

EPIRA are in addition to the new powers conferred upon
the ERC under Sec. 43 of said law.

Section 44. Transfer of Powers and Functions. - The powers and functions of

the Energy Regulatory Board not inconsistent with the provisions of this Act are
hereby transferred to the ERC. The foregoing transfer of powers and functions
shall include all applicable funds and appropriations, records, equipment,
property and personnel as may be necessary.
RULING:

• Sec. 80 of the EPIRA complements Sec. 44, as it mandates

the continued efficacy of the applicable provisions of prior
laws, as long as these are not inconsistent with EPIRA.
• This includes Commonwealth Act No. 146, otherwise
known as the Public Services Act, as well as Executive
Order 172 which created the ERB.
• Sec 16 (c) Public Service Act: “…Commission may, in its
discretion, approve rates proposed by public services
provisionally and without necessity of hearing; but it shall
call a hearing thereon within 30 days thereafter, upon
publication and notice to the concerned parties operating
in the territory affected.”
• Sec 8 EO 172 (ERB Charter): “The Board may, upon the filing of an
application, petition or complaint or at any stage thereafter and
without prior hearing, on the basis of supporting papers duly
verified or authenticated, grant provisional relief on motion of a
party in the case or on its own initiative, without prejudice to a
final decision after hearing, should the Board find that the
pleadings, together with such affidavits, documents and other
evidence which may be submitted in support of the motion,
substantially support the provisional order.
• The principal powers of the ERB relative to electric public utilities
transferred to the ERC are the following:
a. To regulate and fix the power rates to be charged by electric companies
b. To issue certificates of public convenience for the operation of electric
power utilities
c. To grant or approve provisional electric rates

Thus, ERC may validly grant provisional remedy under EPIRA.

THANK YOU
BF Homes and the Philippine Waterworks and
Construction Corp. v. Manila Electric Company
G.R. No. 171624, December 6, 2010
FACTS:
• MERALCO is a corporation duly organized under Philippine laws
engaged in the distribution and sale of electric power in Metro
Manila. On the other hand, BF Homes and PWCC are owners
and operators of waterworks systems delivering water to
households and commercial buildings in BF Homes subdivisions
in Metro Manila cities.
• The water distributed in the waterworks systems owned and
operated by BF Homes and PWCC is drawn from deep wells
using pumps run by electricity supplied by MERALCO.
• BF Homes and PWCC filed a petition against Meralco before the
RTC, invoking their right to refund based on the Meralco Refund
Cases earlier decided
• BF Homes and PWCC alleged that Meralco kept cutting off
power connections to their water pumps and disrupted water
connections in the area, demanded that they pay their bill
amounting to over Php 4 Million, and denied their request for
refunds since it has not yet come up with the schedule for such.
• BF Homes and PWCC additionally prayed that the RTC issue
a writ of preliminary injunction and restraining order
considering that Meralco was going to cut off their electric
power again should they still refuse to pay.
• Meanwhile Meralco alleged that the Company reserves the
right to discontinue service in case the customer is in
arrears in the payment of bills
• MERALCO further alleged that instead of paying their
unpaid electric bills, [BF Homes and PWCC] filed the
instant petition to avoid payment of [MERALCOs] valid and
legal claim for regular monthly electric bills.
• RTC ruled in favor of BF Homes and PWCC; CA reversed the
decision
ISSUE

Whether or not the ERC has legal authority to exercise its

power over all cases involving rate refunds?
RULING: YES

• A careful review of the material allegations of BF Homes

and PWCC in their Petition before the RTC reveals that the
very subject matter thereof is the off-setting of the amount
of refund they are supposed to receive from MERALCO
against the electric bills they are to pay to the same
company.
• It bears to stress that in the MERALCO Refund cases, the
Supreme Court affirmed the earlier decision of the ERB
fixing the just and reasonable rate for the electric services
of MERALCO and granting refund to MERALCO consumers
of the amount they overpaid. Said Decision was rendered
by the ERB in the exercise of its jurisdiction to determine
and fix the just and reasonable rate of power utilities.
• Presently, the ERC has original and exclusive jurisdiction
under Rule 43(u) of the EPIRA over all cases contesting
rates, fees, fines, and penalties imposed by the ERC in the
exercise of its powers, functions and responsibilities.
• The ERC is the regulatory agency of the government having the
authority and supervision over MERALCO. Thus, the task to approve
the guidelines, schedules, and details of the refund by MERALCO to
its consumers, to implement the judgment of the Supreme Court in
the MERALCO Refund cases, also falls upon the ERC.
• By filing their Petition before the RTC, BF Homes and PWCC intend
to collect their refund without submitting to the approved schedule
of the ERC, and in effect, enjoy preferential right over the other
equally situated MERALCO consumers.
• In relation thereto is the doctrine of primary jurisdiction involving
matters that demand the special competence of administrative
agencies even if the question involved is also judicial in nature.
Courts cannot and will not resolve a controversy involving a
question within the jurisdiction of an administrative tribunal,
especially when the question demands the sound exercise of
administrative discretion requiring special knowledge, experience
and services of the administrative tribunal to determine technical
and intricate matters of fact.
• Since the RTC had no jurisdiction over the Petition of BF
Homes and PWCC in this case, then it was also devoid of
any authority to act on the application of BF Homes and
PWCC for the issuance of a writ of preliminary injunction
contained in the same Petition.
• Lastly, the Court reiterated that it is the ERC that has legal
authority over cases involving rate refunds.
• Thus, the Supreme Court dismissed the petition for
issuance of writ of preliminary injunction by BF Homes and
PWCC against MERALCO.
THANK YOU
Francisco v. Toll Regulatory Board,
GR 166910, Oct. 19, 2010
MANDIGMA, Teodoro A.
FACTS

• Presidential Decree No. ("P.D.") 1112 created the Toll

Regulatory Board ("TRB") with the power to enter, for the
Republic, into contracts for the construction, maintenance
and operation of tollways, grant authority to operate a toll
facility, issue therefor the necessary Toll Operation
Certificate ("TOC") and fix initial toll rates, and, from time
to time, adjust the same after due notice and hearing.
• Petitioners assail the validity of Section
3 (d) of PD 1112 granting TRB the
power to issue and promulgate toll
rates and Section 8 (b) of PD 1894
granting TRB adjudicatory jurisdiction
over matters involving toll rate
movements.
P.D. 1112 and P.D. 1894 which read:
P.D. 1112

Section 3. Powers and Duties of the Board. — The Board shall have in
addition to its general powers of administration the following powers
and duties:

xxx….
 
(d) Issue, modify and promulgate from time to time the rates of toll that
will be charged the direct users of toll facilities and upon notice and
hearing, to approve or disapprove petitions for the increase thereof.
 P.D. 1894

SECTION 8.. . .

b) “….the GRANTEE shall collect toll at such rates as

shall initially be approved by the Toll Regulatory
Board. The Toll Regulatory Board shall have the
authority to approve such initial toll rates without
the necessity of any notice and hearing, except as
provided in the immediately succeeding paragraph
of this Section. xxx……”
 ISSUE
Whether the TRB has the power to
modify and promulgate toll rates and to
rule on petitions relative to toll rates level
and increase valid.
RULING:
Yes. Administrative bodies have expertise in
specific matters within the purview of their
respective jurisdictions. Accordingly, the law
concedes to them the power to promulgate
implementing rules and regulations ("IRR")
to carry out declared statutory policies
provided that the IRR conforms to the terms
and standards prescribed by that statute.
Petitioners have not shown that the TRB lacks the
expertise, competence and capacity to implement
its mandate of balancing the interests of the toll-
paying motoring public and the imperative of
allowing the concessionaires to recoup their
investment with reasonable profits. As it were,
Section 9 of P.D. 1894 provides a parametric
formula for adjustment of toll rates that takes into
account the Peso-US Dollar exchange rate, interest
rate and construction materials price index, among
other verifiable and quantifiable variables.
The fact that an administrative agency is
exercising its administrative or executive
functions (such as the granting of franchises
or awarding of contracts) and at the same
time exercising its quasi-legislative (e.g., rule-
making) and/or quasi-judicial functions (e.g.,
rate-fixing), does not support a finding of a
violation of due process or the Constitution
Napocor v. Court of Appeals,
279 SCRA 506
MANDIGMA, Teodoro A.
FACTS:

• On June 17, 1961, Cagayan Electric and Power Light Company

(CEPALCO) was enfranchised by RA 3247, for 50 years, to
construct, maintain and operate an electric light, heat and
power system for the purpose of generating and/or distributing
electric light, heat and/or power for sale within Cagayan de Oro
City and its suburbs. Further special laws expanded the
coverage of the franchise to include the municipalities of
Tagoloan, Opol, Villanueva and Jasaan, Misamis Oriental.
FACTS:
• In 1974, PD 538 created Philippine Veterans
Investment Development Corporation
(PHIVIDEC) Industrial Authority (PIA) which shall
promote the professional management of well-
planned industrial areas. Under Sec 3 of PD 538,
the first area for development shall be located in
the municipalities of Tagoloan and Villanueva.
This area forms part of the PHIVIDEC Industrial
Estate Misamis Oriental (PIE-MO).
FACTS:
• PIA granted CEPALCO a temporary authority to retail
electric power to the industries operating within PIE-MO
which authorized CEPALCO to operate, administer,
construct and distribute electric power within the PIE-MO
for a period of 5 years
 
• However, CEPALCO was not able to meet the demands of
the industries in PIE-MO which led most of the companies
to close. Thus, PIA applied with the NPC for direct power
connection which in due course was approved.
FACTS:
• One of the companies that entered into
an agreement with NPC for a direct sale
and supply of power was Ferrochrome
Phils., Inc (FPI). CEPALCO contended this
agreement saying that it violated its right
as the authorized operator of an electric
light and power system in the area and
the national electrification policy.
ISSUE:
Whether or not the NPC may supply
power directly to PIA in the PIE-MO area
where CEPALCO has a franchise.
RULING:
No. The NPC is not the proper authority
not only because the subject of the
hearing is a matter involving the NPC
itself, but also because the law has
created the proper administrative body
vested with authority to conduct a
hearing.
It may be gleaned from the provisions of SEC. 3 of
Executive Order No. 172, the Energy Regulatory
Board (ERB) is basically a price or rate-fixing
agency. Apparently recognizing this basic
function, Republic Act No. 7638 (An Act Creating
the Department of Energy, Rationalizing the
Organization and Functions of Government
Agencies Related to Energy, and for Other
Purposes), specifically provides:
"SEC. 18. Rationalization or Transfer of
Functions of Attached or Related Agencies .
— The non-price regulatory jurisdiction,
powers, and functions of the Energy
Regulatory Board as provided for in Section 3
of Executive Order No. 172 are hereby
transferred to the Department. (DOE)
The determination of which of two public utilities has the
right to supply electric power to an area which is within
the coverage of both is certainly not a rate-fixing function
which should remain with the ERB. It deals with the
regulation of the distribution of energy resources which,
under Executive Order No. 172, was expressly a function
of ERB. However, with the enactment of Republic Act No.
7638, the Department of Energy took over such function.
Hence, it is this Department which shall then determine
whether CEPALCO or PIA should supply power to PIE-MO.
TRANSPORTATION LAW

Montoya V. Ignacio
G.R. L-5868
December 29, 1953
Reported by: Ms. Erika D Tanguilan
Approval of Sale and Mortgages of Public Utility Assets or Equity
DISCUSSION
The law requires that, before the approval is granted, there should be a public
hearing, with notice to all interested parties, in order that the Commission may
determine if there are good and reasonable grounds justifying the transfer or
lease of the property covered by the franchise, or if the sale or lease is
detrimental to public interest. Such being the reason and philosophy behind this
requirement, it follows that if the property covered by the franchise is
transferred, or leased to another without obtaining the requisite approval, the
transfer is not binding against the Public Service Commission and in
contemplation of law the grantee continues to be responsible under the
franchise in relation to the Commission and to the public.
Public Service Act, Section 20 (g), (h) and (i)

Section 20. Acts requiring the approval of the

Commission. - Subject to established limitations
and exceptions and saving provisions to the
contrary, it shall be unlawful for any public service
or for the owner, lessee or operator thereof, without
the approval and authorization of the Commission
previously had -
Public Service Act, Section 20 (g)
(g) To sell, alienate, mortgage, encumber or lease its property, franchises, certificates,
privileges, or rights or any part thereof; or merge or consolidate its property, franchises
privileges or rights, or any part thereof, with those of any other public service. The
approval herein required shall be given, after notice to the public and hearing the persons
interested at a public hearing, if it be shown that there are just and reasonable grounds
for making the mortgaged or encumbrance, for liabilities of more than one year maturity,
or the sale, alienation, lease, merger, or consolidation to be approved, and that the same
are not detrimental to the public interest, and in case of a sale, the date on which the
same is to be consummated shall be fixed in the order of approval: Provided, however,
that nothing herein contained shall be construed to prevent the transaction from being
negotiated or completed before its approval or to prevent the sale, alienation, or lease by
any public service of any of its property in the ordinary course of its business.
Public Service Act, Section 20 (h)
(h) To sell or register in its books the transfer or sale of shares of its
capital stock, if the result of that sale in itself or in connection with
another previous sale, shall be to vest in the transferee more than forty
per centum of the subscribed capital of said public service. Any transfer
made in violation of this provision shall be void and of no effect and shall
not be registered in the books of the public service corporation. Nothing
herein contained shall be construed to prevent the holding of shares
lawfully acquired.
(As amended by Com. Act No. 454.)
Public Service Act, Section 20 (i)

(i) To sell, alienate or in any manner transfer shares of its

capital stock to any alien if the result of that sale, alienation,
or transfer in itself or in connection with another previous
sale shall be the reduction to less than sixty per centum of
the capital stock belonging to Philippine citizens. Such sale,
alienation or transfer shall be void and of no effect and shall
be sufficient cause for ordering the cancellation of the
certificate.
FACTS :
Montoya V. Ignacio, G.R. L-5868

In January 5, 1949, Tomasita Arca boarded the jeepney driven by Leonardo de Guzman at Tanza, Cavite in
order to go to Cavite City. She paid the usual fare for the trip. While the jeepney was on its way to its
destination, and at a point between Tanza and Cavite City,  it collided with a bus of the Luzon Bus Line
causing as a result the death of Tomasita. Tomasita was then a school teacher of Tanza Elementary School
with an annual compensation of P1,320. Because of the jeepney's failure to transport Tomasita safely to her
destination and her resultant death, her widower and children instituted the present action praying that
the defendants, owners of the jeepney, be ordered to pay them an indemnity in the amount of P31,000.

Ignacio, set up as a special defense that the collision between the jeepney and the bus was investigated by
the Office of the Provincial Fiscal of Cavite and the result of the investigation was that the one at fault was
the driver of the bus and, as a consequence, said driver was charged with triple homicide thru reckless
imprudence. Cayetano Tahimik further claims that he is not and has never been the owner of the jeepney
and cannot therefore be held responsible for the damages cause by it.
FACTS

Court of First Instance of Cavite: Case Dismissed, defendants are not

liable for damages because it was not proven that the collision was
due to the negligence of the driver of the jeepney whose ownership
is attributed to defendants.

CA affirmed on the ground that Ignacio was not the one operating
the jeepney, but Defendant Cayetano Tahimik who had leased the
jeepney by virtue of a document duly executed by the parties.
ISSUE
1. WON it is necessary to maintain an action for
damages caused by the breach of a carrier’s
obligation to carry a passenger safely to his
destination, to prove that the damages were caused
by the negligence of the driver of the said carrier in
order that liability may attach?
RULING
1. No. The Court of Appeals affirmed the decision appealed
from. Marcelino Ignacio was not the one operating the
jeepney but one Leoncio Tahimik who had leased the
jeepney by virtue of a document duly executed by the
parties. Thus having been overruled, there is no reason
why the same issue should be reiterated in this instance.
ISSUE
2. WON the person who was actually operating the
jeepney at the time of collision was liable?
RULING:
2. NO. It is claimed that while Marcelino Ignacio, owner of the jeepney, has leased the same to
one Leoncio Tahimik on June 8, 1948, and that at the time of collision it was the latter who was
actually operating it, the contract of lease was null and void because it was not approved by the
Public Service Commission as required by section 16, paragraph h, of the Public Service Law.  The
law requires the approval of the Public Service Commission in order that a franchise, or any
privilege pertaining thereto, may be sold or leased without infringing the certificate issued to the
grantee. Since a franchise is personal in nature any transfer or lease thereof should be notified to
the Public Service Commission so that the latter may take proper safeguards to protect the
interest of the public. Since the lease of the jeepney in question was made without such approval,
the only conclusion that can be drawn is that Marcelino Ignacio still continues to be its operator in
contemplation of law, and as such is responsible for the consequences incident to its operation,
one of them being the collision under consideration.
Y Transit Co, Inc v, NLRC, 229 SCRA 508

Jose Miguel A. Manez

Facts

• In March 1960 and sometime thereafter, Yujuico Transit Co., Inc.,

mortgaged ten (10) of its buses to the Development Bank of the
Philippines (DBP) to secure a loan in the amount of P2,795,129.36.
Thereafter, the Board of Directors of Yujuico Transit Co., Inc. passed a
resolution authorizing its President, Jesus Yujuico to enter into a dacion
en pago arrangement with the DBP, whereby Jesus Yujuico would
transfer to the DBP the Saint Martin Technical Institute in consideration
of the full settlement of the obligations of three companies, one of
which was Yujuico Transit Co, Inc.
Facts

• Accordingly, on or about October 24, 1978, the transfer of the

property was made and DBP released the mortgages constituted on
the buses of Yujuico Transit Co., Inc. Consequently, the company
transferred the ownership of its mortgaged properties, including the
buses, to Jesus Yujuico.
Facts

• Meanwhile, sometime in June and July 1979, the

Yujuico Transit Employees Union (Associated labor
Union) filed two (2) consolidated complaints against
Yujuico Transit Co., Inc. for Unfair Labor Practice.
• On May 21, 1980, Jesus Yujuico sold the subject buses
to herein petitioner "Y" Transit Co., Inc. for
P3,485,400.00
Facts

• On July 23, 1981, the Labor Arbiter rendered a decision dismissing the
complaint for unfair labor practice but holding Yujuico Transit Co., Inc.
liable under the aforementioned Presidential Decrees in the amount of
P142,790.49. 
• On February 9, 1982, a writ of execution for the said amount was issued
by the Labor Arbiter.
• On June 14, 1982, an alias writ of execution was issued and levy was
made upon the ten (10) buses. Thereafter, "Y" Transit Co., Inc. filed
Affidavits of Third Party Claim.
Facts

• Yujuico Transit Employees Union herein opposed the Third party

claim on the ground that the transactions leading to the transfer of
the buses to "Y" Transit Co., Inc. were void because they lacked the
approval of the BOT as required by the Public Service Act. 
• They also argued that the buses were still registered in the name of
Yujuico Transit Co. which was, therefore, still the lawful owner
thereof.
Labor Arbiter

• The Labor Arbiter found that "Y" Transit Co., Inc. had valid title to
the buses and that the BOT, by its subsequent acts had approved
the transfer. 
• Accordingly, the Third-Party Claim was granted and the release of all
the buses levied for execution was ordered.
NLRC

• On appeal, the NLRC reversed the labor arbiter's decision on the

ground that the transfer of the buses lacked the BOT approval. It
ordered the reinstatement of the levy and the auction of properties.
• "Y" Transit Co., Inc. thereafter filed this special civil action
for certiorari under Rule 65 of the Rules of Court praying for the
issuance of a Restraining Order and/or a Writ of Preliminary
Injunction and for the annulment of the NLRC decision as it was
issued with grave abuse of discretion amounting to lack of
jurisdiction.
Issue
• Whether NLRC committed palpable legal error and
grave abuse of discretion amounting to lack of
jurisdiction when it held that there was no valid
transfer of ownership in favor of the petitioner
Ruling
• There being no prior BOT approval in the transfer
of property from Yujuico Transit Co., Inc. to Jesus
Yujuico, it only follows that as far as the BOT and
third parties are concerned, Yujuico Transit Co.,
Inc. still owned the properties. and Yujuico, and
later, "Y" Transit Co., Inc. only held the same as
agents of the former. 
In Montoya v. Ignacio we held
• ”The law really requires the approval of the Public
Service Commission in order that a franchise, or
any privilege pertaining thereto, may be sold or
leased without infringing the certificate issued to
the grantee. The reason is obvious. Since a
franchise is personal in nature any transfer or
lease thereof should be notified to the Public
Service Commission so that the latter may take
proper safeguards to protect the interest of the
public.
In Montoya v. ignacio
• that even if the approval has not been obtained
the transfer or lease is valid and binding between
the parties although not effective against the
public and the Public Service Commission. The
approval is only necessary to protect public
interest. (Emphasis ours)
In Tamayo v. Aquino
• . . . In operating the truck without transfer thereof
having been approved by the Public Service
Commission, the transferee acted merely as agent
of the registered owner and should be responsible
to him”
Ruling
• Conversely, where the registered owner is liable
for obligations to third parties and vehicles
registered under his name are levied upon to
satisfy his obligations, the transferee of such
vehicles cannot prevent the levy by asserting his
ownership because as far as the law is concerned,
the one in whose name the vehicle is registered
remains to be the owner and the transferee
merely holds the vehicles for the registered owner.
Ruling
• Thus, "Y" Transit Co., Inc. cannot now argue that
the buses could not be levied upon to satisfy the
money judgment in favor of herein respondents.
However, this does not deprive the transferee of
the right to recover from the registered owner any
damages which may have been incurred by the
former since the transfer or lease is valid and
binding between the parties
PLDT VS NTC,
GR 88404,
October 18, 1990
Topic: Approval of Sale and Mortgages of
Public Utility Assets or Equity
Facts:
In 1958, Felix Alberto & Co., Inc (FACI) was granted by Congress a franchise to build radio
stations. FACI later changed its name to Express Telecommunications Co., Inc. (ETCI).

In 1987, ETCI was granted by the National Telecommunications Commission a provisional

authority to build a telephone system in some parts of Manila.

Philippine Long Distance Telephone Co. (PLDT) opposed the said grant as it avers, among others,
that ETCI is not qualified because its franchise has already been invalidated when it failed to
exercise it within 10 years from 1958; that in 1987, the Albertos, owners of more than 40% of
ETCI’s shares of stocks, transferred said stocks to the new stockholders; that  such transfer
involving more than 40% shares of stocks amounted to a transfer of franchise which is void
because the authorization of Congress was not obtained. The NTC denied PLDT. PLDT then filed
a petition for certiorari and prohibition against the NTC.
 Issue:
Whether or not the transfer of
more than 40% shares of stock
of Albertos required the
congressional authorization.
Ruling:
No. Under Section 20 (h) of the Public Service Act, the act requiring the approval of the
Commission.
xxx
(h) To sell or register in its books the transfer or sale of shares of its capital stock, if the
result of that sale in itself or in connection with another previous sale, shall be to vest in
the transferee more than forty per centum of the subscribed capital of said public
service. Any transfer made in violation of this provision shall be void and of no effect
and shall not be registered in the books of the public service corporation. Nothing
herein contained shall be construed to prevent the holding of shares lawfully acquired.
Ruling:
The transfer of more than 40% of the shares of stocks is not tantamount to a transfer of
franchise. There is a distinction here. There is no need to obtain authorization of
Congress for the mere transfer of shares of stocks. Shareholders can transfer their
shares to anyone. The only limitation is that if the transfer involves more than 40% of
the corporation’s stocks, it should be approved by the NTC. The transfer in this case
was shown to have been approved by the NTC. What requires authorization from
Congress is the transfer of franchise; and the person who shall obtain the authorization
is the grantee (ETCI). A distinction should be made between shares of stock, which are
owned by stockholders, the sale of which requires only NTC approval, and the
franchise itself which is owned by the corporation as the grantee thereof, the sale or
transfer of which requires Congressional sanction.
Republic v. International
Communications
Corporation, GR No.
141667, July 17, 2006
Topic: Power to set fess and other charges
Facts:
International Communications Corporation (ICC), holder of a legislative franchise under
Republic Act (RA) No. 7633 to operate domestic telecommunications, filed with the NTC an
application for a Certificate of Public Convenience and Necessity to install, operate, and
maintain an international telecommunication leased circuit service between the Philippines
and other countries, and to charge rates therefore, with provisional authority for the purpose.

The NTC approved the application for a provisional authority subject to the payment of a
permit fee in the amount of P1,190,750.00, in accordance with section 40(g) of the Public
Service Act, as amended;

ICC filed a motion for partial reconsideration of the Order insofar as the same required the
payment of a permit fee. In a subsequent Order, the NTC denied the motion.
Facts:
Therefrom, ICC went to the CA on a petition for certiorari with prayer for a temporary
restraining order and/or writ of preliminary injunction, questioning the NTC's imposition
against it of a permit fee of P1,190,750.50 as a condition for the grant of the provisional
authority applied for.

CA ruled in favor of the NTC whose challenged orders were sustained. ICC moved for a
reconsideration. This time, the CA, reversed itself.

In its Amended Decision, The CA ruled that petitioner NTC had arrogated upon itself the
power to tax an entity, which it is not authorized to do.

NTC argued that it is not a tax measure but a simple regulatory provision for the collection
of fees imposed pursuant to the exercise of the State’s police power.
 Issue:
Whether or not the permit fee
imposed to ICC is in the nature
of tax or collection of fees.
Ruling:

Under Section 40(g) of the Public Service Act, the Commission is

authorized and ordered to charge and collect from any public service or
applicant, as the case may be, the following fees as reimbursement of its
expenses in the authorization, supervision and/or regulation of the
public services:

g) For each permit, authorizing the increase in equipment, the installation

of new units or authorizing the increase of capacity, or the extension of
means or general extensions in the services, twenty centavos for each one
hundred pesos or fraction of the additional capital necessary to carry out
the permit
Ruling:
The court ruled that Section 40(g) of the Public Service Act is not a tax measure but a
simple regulatory provision for the collection of fees imposed pursuant to the exercise
of the States police power. A tax is imposed under the taxing power of government
principally for the purpose of raising revenues.

The law in question, however, merely authorizes and requires the collection of fees for
the reimbursement of the Commission's expenses in the authorization, supervision
and/or regulation of public services. There can be no doubt then that petitioner NTC is
authorized to collect such fees. However, the amount thereof must be reasonably
related to the cost of such supervision and/or regulation.The court ruled that the amount
imposed of P1,190,750.50 as permit fee is exorbitant. That is hardly taking into
consideration the actual costs of fulfilling its regulatory and supervisory functions.
 PLDT vs. NTC
G.R. No. 88404
October 18, 1990

Topic: Other means of regulation

 FACTS:
ETCI filed an application with NTC for the issuance of a
Certificate of Public Convenience and Necessity (CPCN) to
construct, install, establish, operate and maintain a Cellular
Mobile Telephone System and an Alpha Numeric Paging
System in Metro Manila and in the Southern Luzon regions,
with a prayer for provisional authority to operate Phase A of
its proposal within Metro Manila. PLDT filed an Opposition
with a Motion to Dismiss.
 FACTS:
The provisional authority was issued after due hearing, reception of evidence and
evaluation thereof, with the hearings attended by various oppositors, including PLDT.
It was granted only after a prima facie showing that ETCI has the necessary legal,
financial and technical capabilities and that public interest, convenience and necessity
so demanded. PLDT argues, however, that a provisional authority is nothing short of a
CPCN and that it is merely a "distinction without a difference." Provisional authority
would be meaningless if the grantee were not allowed to operate. It is clear that its
scope is limited only to the first phase, out of four, of the proposed nationwide
telephone system. The installation and operation of an alpha numeric paging system
was not authorized. The provisional authority is not exclusive. Its lifetime is limited
and may be revoked by the NTC at any time in accordance with law.
 FACTS:
The decisive considerations to the granting are
public need, public interest, and the common good.
It was granted only after a prima facie showing that
ETCI has the necessary legal, financial and technical
capabilities and that public interest, convenience
and necessity so demanded.
ISSUE:
Whether or not ETCI’s franchise has
been cancelled
 RULING:
NO, neither RA 2090 or P.D. No. 36 should be construed as self-
executing in working a forfeiture. Franchise holders should be given
an opportunity to be heard, particularly so, where, as in this case,
ETCI does not admit any breach, in consonance with the rudiments
of fair play. If the public utility has offended against a provision of
its legislative franchise, or has subjected it to misuse or abuse, the
violation may more properly be inquired into in quo warranto
proceedings instituted by the State and not in a collateral attack
thereto.
 RULING:
The decisive considerations are public need, public
interest, and the common good. A modern and
dependable communications network rendering
efficient and reasonably priced services is also
indispensable for accelerated economic recovery and
development. To these public and national interests,
public utility companies must bow and yield.
 RULING:
In relation to Public Services Act, Section 16 (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.
 BF Homes vs Meralco
G.R. No. 171624
December 6, 2010

Topic: Other means of regulation

FACTS:

MERALCO supplies the electricity used to pump and distribute

water in the waterworks systems owned and operated by BF
Homes and Philippine Waterworks and Construction
Corporation (PWCC), who own and operate waterworks
systems delivering water to over 12,000 households and
commercial buildings in BF Homes subdivisions in Parañaque,
Las Piñas, Caloocan, and Quezon City.
FACTS:

MERALCO disconnected electric supply to BF Homes and

PWCC’s 16 water pumps (additional 5 pumps later),
disrupting the water supply and demanded the payment of
electric bills. BF Homes and PWCC requested to apply the
₱4,717,768.15 electric bill against the ₱11,834,570.91 that
MERALCO was ordered to refund in Republic v. MERALCO.
FACTS:
MERALCO claimed that the service contracts as well as the
terms and conditions of its service as approved by Board of
Energy, now Energy Regulatory Commission (ERC), provide
that BF Homes and PWCC agree that it “reserves the right to
discontinue service in case the customer is in arrears in the
payment of bills. Meralco is a utility company whose business
activity is wholly regulated by the ERC, which, being the
regulatory agency having the authority over Meralco.
ISSUE:
Whether or not ERC is the regulatory
agency of the government having
authority and supervision over
MERALCO
RULING:

YES, the ERC is the regulatory agency of the

government having the authority and supervision over
MERALCO. Thus, the task to approve the guidelines,
schedules, and details of the refund by MERALCO to its
consumers, to implement the judgment of this Court in
the MERALCO Refund cases, also falls upon the ERC.
RULING:
E.O. No. 172 reconstituting the BOE into the Energy Regulatory
Board, transferring the former’s functions and powers under
P.D. No. 1206 to the latter and consolidating in and entrusting
on the ERB "all the regulatory and adjudicatory functions
covering the energy sector., which states that "The applicable
provisions of the ‘Public Service Act’ and P.D. No. 1206, as
amended, creating the Department of Energy, shall continue
to have full force and effect, except insofar as inconsistent
with this Order."
RULING:

Thereafter, the Electric Power Industry Reform Act

of 2001 (EPIRA), was enacted, providing a
framework for restructuring the electric power
industry. One of the avowed purposes of the EPIRA
is to establish a strong and purely independent
regulatory body.
RULING:

In relation to Public Services Act, Section 16 (d): To fix

just and reasonable standards, classifications,
regulations, practices, measurement, or service to be
furnished, imposed, observed, and followed thereafter
by any public service.
 Taxicab Operators of Metro Manila, Inc.
(TOMMI) et al. v. The Board of Transporation
(BOT) and The Director of the Bureau of Land
Transportation (BLT) (G.R. No. L-59234,
September 30, 1982)
Topic: Other means of Regulation

Reporter: Evan A. Triol

Facts:

Taxicab Operators of Metro Manila Inc. (TOMMI) et al. assail the

constitutionality of Memorandum Circular No. 77-42 issued by the Board of
Transportation (BOT) providing for the phasing out and replacement of old
and dilapidated taxicabs; as well as Implementing Circular No. 52 issued
pursuant thereto by the Bureau of Land Transportation (BLT) instructing
personnel of the BLT within the National Capital Region to implement the said
BOT Circular, and formulating a schedule of phase-out of vehicles to be
allowed and accepted for registration as public conveyances.
Facts:

TOMMI et al. allege that the questioned Circulars did not afford them
procedural and substantive due process, equal protection of the law, and
protection against arbitrary and unreasonable classification and standard.
Among others, they question the issuance of the Circulars without first calling
them to a conference or requiring them to submit position papers or other
documents enforceability thereof only in Metro Manila; and their being
applicable only to taxicabs and not to other transportation services.
 Issue:
Whether or not the implementation and
enforcement of the assailed memorandum
circulars violate the TOMMI’s constitutional
rights to:
(1) Equal protection of the law;
(2) Substantive due process; and
(3) Protection against arbitrary and
unreasonable classification and
standard.
 Ruling:
The law being enforced in Metro Manila only and was
directed solely towards the taxi industry does not violate
their right to equal protection of the law for the traffic
conditions are not the same in every city, a substantial
distinction exists so that infringement of the equal
protection clause can hardly be successfully claimed.

The State, in the exercise, of its police power, can

prescribe regulations to promote the health, morals,
peace, good order, safety and general welfare of the
people. It can prohibit all things hurtful to comfort, safety
and welfare of society. It may also regulate property
rights.
 Ruling:
In the language of Chief Justice Enrique M. Fernando:

“The necessities imposed by public welfare may justify the exercise of governmental
authority to regulate even if thereby certain groups may plausibly assert that their
interests are disregarded".

In so far as the non-application of the assailed Circulars to other transportation

services is concerned, it need only be recalled that the equal protection clause does
not imply that the same treatment be accorded all and sundry. It applies to things or
persons identically or similarly situated. It permits of classification of the object or
subject of the law provided classification is reasonable or based on substantial
distinction, which make for real differences, and that it must apply equally to each
member of the class.
 Ruling:
What is required under the equal protection clause is the
uniform operation by legal means so that all persons under
identical or similar circumstance would be accorded the
same treatment both in privilege conferred and the
liabilities imposed. The challenged Circulars satisfy the
foregoing criteria.

Evident then is the conclusion that the questioned Circulars

do not suffer from any constitutional infirmity. To declare a
law unconstitutional, the infringement of constitutional
right must be clear, categorical and undeniable. Hence, the
Writs prayed for are denied and was dismissed.
Pantranco vs Public Service Commission
(PSC)
Topic: Regulation of Public Utilities
- Due Process Requirements
Discussions

• Constitutionality of Sec 1.
of CA No. 454
• Due process clause
 FACTS
• Pantranco applied with the Public Service Commission (PSC)
certificates of public convenience and authorization to operate ten
(10) new Broadway trucks on the ground that they were needed to
comply with the terms & conditions of its existing certificates and
as a result of the Eight Hour Labor Law.
• PSC granted the application, but ordered that said certificates will
only be valid for 25 years and that Pantranco may be acquired by
the Commonwealth of the Philippines at any time it so desires
upon payment of the cost price of its useful equipment, less
reasonable depreciation as determined by the Commission at the
time of acquisition.
 FACTS
• Pantranco filed a motion for reconsideration which was
denied by the PSC. Thus Pantranco was constrained to
appeal to the Supreme Court, alleging that the Section
1 of CA No. 454 is unconstitutional. Pantranco furthers
that should Section 1 be declared constitutional, the
same only applies to future certificates and not to valid
and subsisting certificates issued prior to June 8, 1939,
when said Act took effect.
ISSUES

1.Whether Section 1 of CA No.

454 is unconstitutional?
2.If the Section 1 is
constitutional, does it deprive
Pantranco of due process?
 RULING
1. No. Section 1 of CA No. 454, which amends Section 15 of CA No. 146
is constitutional.
The two provisions of Section 15 when read and interpreted
together in issuing a certificate, the Commission must necessarily be
satisfied that the operation of the service under said certificate during
a definite period fixed therein "will promote the public interests in a
proper and suitable manner." As the period to be fixed by the
Commission under Section 15 is inseparable from the certificate itself,
said period cannot be disregarded by the Commission in determining
the question whether the issuance of the certificate will promote the
public interests in a proper and suitable manner.
 RULING
2. No, Pantranco is not deprived of due process.
The Constitution, in Section 8 of Article XIII provides that "no
franchise or right shall be granted to any individual, firm, or
corporation, except under the condition that it shall be subject to
amendment, alteration, or repeal by the National Assembly when
the public interest so requires." Statutes enacted for the
regulation of public utilities, being a proper exercise by the state
of its police power, are applicable not only to those public
utilities coming into existence after its passage, but likewise to
those already established and in operation.
 NOTE
The Supreme Court reversed the decision of the
PSC as there was no valid notice and hearing.
Pantranco was not provided any opportunity to
adduce evidence in support of its application,
nor did the PSC had any regard in reviewing said
evidence to support its decision. Hence, the
application was remanded to PSC for further
proceedings.
Thank you!