Transportation and maritime law

TRANSPORTATION AND MARITIME LAW
Based on the outline of Prof. Rodrigo Quimbo
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I. General Considerations

A. Public Utilities
1. Article XII, 1987 Constitution

Art. XII, 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 60% of whose capital is owned by such citizens, nor shall such franchise, certificate or authorization be exclusive in character or for a longer period than fifty years. Neither shall any franchise or right be granted except under the condition that it shall be subject to amendment, alteration or repeal by the Congress when the common good so requires. The State shall encourage equity participation in public utilities by the general public. The participation of foreign investors in the governing body of any public utility enterprise shall be limited to their proportionate share in its capital, and all the executive and managing officers of such corporation or association must be citizens of the Philippines.
Section 17. In times of national emergency, when the public interest so requires, the State may, during the emergency and under reasonable terms prescribed by it, temporarily take over or direct the operation of any privately owned public utility or business affected with public interest.
Section 18. The State may, in the interest of national welfare or defense, establish and operate vital industries and, upon payment of just compensation, transfer to public ownership utilities and other private enterprises to be operated by the Government.
Section 19. The State shall regulate or prohibit monopolies when the public interest so requires. No combinations in restraint of trade or unfair competition shall be allowed.

(a) What is 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. Apart from statutes which define the public utilities that are within the purview of such statutes, it would be difficult to construct a definition of a public utility which would fit every conceivable case. As its name indicates, however, the term public utility implies a public use and service to the public. (Am. Jur. 2d V. 64, p.549.) (Albano vs Reyes)
(b) What is a public service?
The Public Service Act (CA No. 146 as amended) provides that the term public service "includes every person that now or hereafter may own, operate, manage, or control in the Philippines, for hire or compensation, with general or limited clientele, whether permanent, occasional or accidental, and done for general business purposes, any common carrier, railroad, street railway, traction railway, sub-way motor vehicle, either for freight or passenger, or both with or without fixed route and whatever may be its classification, freight or carrier service or any class, express service, steamboat, or steamship line, pontines, ferries, and water craft, engaged in the transportation of passengers and freight or both, shipyard, marine repairshop, [warehouse], wharf or dock, ice plant, ice refrigeration plant, canal, irrigation system, gas, electric light, heat and power, water supply and power, petroleum, sewerage system, wire or wireless communications system, wire or wireless broadcasting stations and other similar public services..." [Sec. 13(b)] (Albano vs Reyes)

Albano vs Reyes 175 SCRA 264
F: On 20 April 1987, the Phil. Ports Authority (PPA) adopted a resolution directing mgmt. to prepare the Invitation to Bid and all relevant bidding documents necessary for the public bidding of the development, mgmt., and operation of the Manila Intl. Container Terminal (MICT) and authorized the Board Chairman Secretary Reyes to oversee and implement the project.
Secretary Reyes created a 7-man MICT Bidding Committee to evaluate all bids and recommend to the Board the best bid. The PPA published the Invitation to Bid with the reservation that it had the right to reject any bid and to accept such bid it may deem advantageous to the govt.

Seven companies submitted bids. The Committee recommended that the contract be awarded to Intl. Container Terminal Services (ICTSI) on the ground that it offered the best technical and financial proposal. Secretary Reyes awarded the contract to ICTSI. Before the contract could be signed, two cases were filed questioning the legality or regularity of the bidding. The first was a special action for prohibition with prelim injunction filed by Alo, a concerned taxpayer. The second was a civil case for prohibition with prayer for TRO filed by Sharp Co. which actively participated in the bidding.

The President approved the proposed MICT contract. The PPA and ICTFSI perfected the contract. Rodolfo Albano, a member of the House of Representatives filed the present case assailing the award of the contract on the ground that since the MICT is a public utility, it needs a legislative franchise before it can legally operate as a public utility.
Issue : WON a legislative franchise is necessary.
Held : NO. Petition dismissed.

A franchise specially granted by Congress is not necessary for the operation of the MICT by a private entity. A contract entered into by the PPA and such entity is substantial compliance with the law. 1. Executive Order No. 30 authorized the PPA to take over, manage and operate the MICT in accordance with PD 857 (Revised Charter of the PPA). PD 857 expressly empowers the PPA to provide services within Port Districts "whether on its own, by contract or otherwise." Therefore, under EO 30 and PD 857, the PPA may contract with ICTSI for the mgmt., operation and devt. of the MICT.

2. Even if the MICT be considered a public utility or a public service on the theory that it is a wharf or a dock as contemplated by the Public Service Act, its operation would not necessarily call for a legislative franchise. Legislative franchises are not required before each and every public utility may operate. The law has granted certain administrative agencies the power to grant licenses for or to authorize the operation of certain public utilities.

That the Consti provides that the issuance of a franchise 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. There are several laws granting specified agencies in the Executive Dept. the power to issue such authorization for certain classes of public utilities. [ 1. LTFRB wrt Certificates of Public Convenience authorizing the operation of public land transportation services provided by motorized vehicles; 2. ERB wrt operation of electric power utilities and services except electric coops]

Reading EO 30 and PD 857 together, the PPA has been empowered to undertake by itself or to authorize the operation and mgmt. of the MICT by another by contract. The latter power having been delegated to the PPA, a legislative franchise is no longer necessary. In this case, the PPA's contracting with ICTSI is wholly within its jurisdiction and powers.

3. The award of the contract to ICTSI is all the authorization that is necessary. The award made by the PPA and the President enjoys the presumption of validity and regularity of official action. There is no evidence to the contrary.

4. Albano has standing to assail the contract. While the expenditure of public funds may not be involved under the contract, public interest is definitely involved considering the important role of the MICP in the economic devt. of the country and the magnitude of the amount involved. He has sufficient standing since a public right (disclosure provision) is sought to be enforced.

5. There in no conflict among the 3 branches of govt. The Executive Dept. has not contravened an act of Congress. There is no usurpation of powers of another branch.

6. The determination of the winning bid should be left to the sound judgment of the PPA. It is in the best position to evaluate the bids. It has the technical expertise which neither the Court nor Congress has. No abuse of discretion has been shown.

2. CA 146, as amended, Sec 13 (b)

The term public service includes every person that now or hereafter may operate, manage, or control in the Philippines, for hire or compensation, with general or limited clientele, whether permanent, occasional or accidental, and done for general business purposes, any common carrier, railroad, street railway, traction railway, sub-way motor vehicle, either for freight or passenger, or both with or without fixed route and whatever may be its classification, freight or carrier service or any class, express service, steamboat, or steamship line, pontines, ferries, and water craft, engaged in the transportation of passengers and freight or both, shipyard, marine repairshop, [warehouse], wharf or dock, ice plant, ice refrigeration plant, canal, irrigation system, gas, electric light, heat and power, water supply and power, petroleum, sewerage system, wire or wireless communications system, wire or wireless broadcasting stations and other similar public services: Provided, however, that a person engaged in agriculture, not otherwise a public service, who owns a motor vehicle and uses it personally and/or enters into a special contract whereby said motor vehicle is offered for hire or compensation to a third party or third parties engaged in agriculture, not itself or themselves a public service, for operation by the latter for a limited time and for a specific purpose directly connected with the cultivation of his or their farm, the transportation, processing, and marketing of agricultural products of such third party or third parties shall not be considered as operating a public service for the purposes of this Act.

B. Transportation

1. Definition - A contract of transportation is one whereby a certain person or association of persons obligate themselves to transport persons, things, news from one place to another for a fixed price. It is the removal of goods or persons from one place to another.
2. Public Nature
(a) Public Service Act
Section 13 (a) The Commission (PSC) shall have jurisdiction, supervision, and control over all public services and their franchises, eqpt., and other properties, and in the exercise of its authority, it shall have the necessary powers and the aid of the public force: Provided, That public services owned or operated by govt. entities or GOOCs shall be regulated by the Commission in the same way as privately owned public services, but certificates of public convenience or certificates of public convenience and necessity shall not be required of such entities or corporations: And provided, further, That it shall have no authority to require steamboats, motorships and steamship lines, whether privately owned or owned or operated by any govt. controlled corporation or instrumentality to obtain certificates of public convenience or to prescribe their definite routes or lines of service.
(b) The term public service includes every person that now or hereafter may operate, manage, or control in the Philippines, for hire or compensation, with general or limited clientele, whether permanent, occasional or accidental, and done for general business purposes, any common carrier, railroad, street railway, traction railway, sub-way motor vehicle, either for freight or passenger, or both with or without fixed route and whatever may be its classification, freight or carrier service or any class, express service, steamboat, or steamship line, pontines, ferries, and water craft, engaged in the transportation of passengers and freight or both, shipyard, marine repairshop, warehouse, wharf or dock, ice plant, ice refrigeration plant, canal, irrigation system, gas, electric light, heat and power, water supply and power, petroleum, sewerage system, wire or wireless communications system, wire or wireless broadcasting stations and other similar public services: Provided, however, that a person engaged in agriculture, not otherwise a public service, who owns a motor vehicle and uses it personally and/or enters into a special contract whereby said motor vehicle is offered for hire or compensation to a third party or third parties engaged in agriculture, not itself or themselves a public service, for operation by the latter for a limited time and for a specific purpose directly connected with the cultivation of his or their farm, the transportation, processing, and marketing of agricultural products of such third party or third parties shall not be considered as operating a public service for the purposes of this Act.
(c) The word "person" includes every individual, co- partnership, joint stock co. or corporation, whether domestic or foreign, their lessees, trustees, or receivers, as well as any municipality, province, city, GOOC, or agency of the govt. of the Philippines, and whatever other person or entities that may own or possess or operate public services.
Section 14. The ff. are exempted from the provisions of the preceding section :

(a) Warehouses;

(b) Vehicles drawn by animals and bancas moved by oar or sail, and tugboats and lighters;

(c) Airships within the Philippines except as regards the fixing of their maximum rates on freight and passengers;

(d) Radio companies except with respect to the fixing of rates;

(e) Public services owned or operated by any instrumentality of the Natl. Govt. or by any GOOC, except with respect to the fixing of rates.
Section 15. With the exception of those enumerated in the preceding section, no public service shall operate in the Philippines without possessing a valid and subsisting certificate from the PSC known as the certificate of public convenience, or certificate of public convenience and necessity as the case may be, to the effect that the operation of said service and the authorization to do business will promote the public interests in a proper and suitable manner.

The Commission may prescribe as a condition for the issuance of the certificate provided in the preceding paragraph that the service can be acquired by the Republic of the Philippines or any instrumentality thereof upon payment of the cost price of its useful eqpt., less reasonable depn.; and likewise, that the certificate shall be valid only for a definite period of time; and that the violation of any of these conditions shall produce the immediate cancellation of the certificate without the necessity of any express action on the part of the Commission.

In estimating the depn., the effect of the use of the eqpt., its actual condition, the age of the model, or other circumstances affecting its value in the market shall be taken into consideration.

The foregoing is likewise applicable to any extension or amendment of certificates actually in force and to those which may hereafter be issued, to permit to modify itineraries and time schedules of public services, and to authorizations to renew and increase eqpt. and properties.
Section 16. Proceedings of the Commission, upon notice and hearing. 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.
(a) To issue certificates ... authorizing the operation of public services within the Philippines, whenever the Commission finds 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. Provided, that certificates will be granted only to citizens of the Philippines or of the US or to corps., co-partnerships, associations or joint stock companies constituted and organized under the laws of the Philippines; Provided, that 60% of the stock or paid-up capital ... must belong entirely to citizens of the Philippines or of the US; Provided, further, that no such certificate shall be issued for a period of more than 50 years.
(b) To approve, subject to constitutional limitations any franchise, privilege granted under the provisions of Act No. 667, as amended by Act. No. 1022, by any political subdivision of the Philippines when, in the judgment of the Commission, such franchise or privilege will properly conserve the public interests xxx
(c) To fix and determine individual or joint rates, tolls, charges, classifications, or schedules thereof, as well as commutation, mileage, kilometrage, and other special rates which shall be imposed, observed and followed thereafter by any public service ; Provided, further that in case the public service equipment of an operator is used principally or secondarily for the promotion of a private business, the net profits of said business shall be considered in relation with the public service of such operator for the purpose of fixing the rates.
(d) To fix just and reasonable standards, classifications, regulations, practices, measurements, or service to be furnished, imposed, observed, and followed thereafter by any public service.
(e) To ascertain and fix adequate and serviceable standards for the measurement of quantity, quality, pressure, initial voltage, or other condition pertaining to the supply of the product or service rendered by any public service, and to prescribe reasonable regulations for the examination and test of such product or service and for the measurement thereof.
(f) To establish reasonable rules, regulations, instructions, specifications, and standards, to secure the accuracy of all meters and appliances for measurements.
(g) To compel any public service to furnish safe, adequate, and proper service as regards the manner of furnishing the same as well as the maintenance of the necessary material and eqpt.
(h) To require any public service to establish, construct, maintain and operate any reasonable extension of its existing facilities, where, in the judgment of said commission, such extension is reasonable and practicable, and will furnish sufficient business to justify the construction and maintenance of the same, and when the financial condition of the said public service reasonably warrants the original expenditure required in making and operating such extension.
(i) To direct any railroad, street, railway or traction co. to establish and maintain at any junction or point of connection or intersection with any other line of said road or track, or with any other line of any other railroad, street, railway or traction co., such just and reasonable connection as shall be necessary to promote the convenience of shippers of property, or of passengers, and in like manner to direct any railroad, street railway or traction co. engaged in carrying merchandise, to construct, maintain and operate, upon reasonable terms, a switch connection with any private sidetrack which may be constructed by any shipper to connect with the railroad, street railway or traction company line where, in the judgment of the commission, such connection is reasonable and practicable, and can be put in with safety, and will furnish sufficient business to justify the construction and maintenance of the same.
(j) To authorize, in its discretion, any railroad, street railway of traction company to lay its tracks across tracks of any other railroad, street railway or traction company, or across any public highway.

(k) To direct any railroad or street railway co. to install such safety devices or to adopt such other reasonable measures as may in the judgment of the commission be necessary for the protection of the public at passing grade crossings of (1) public highways and railroads, (2) public highways and street railways, or (3) railroads and street railways.
(l) To fix and determine the proper and adequate rates of depn. of the property of any public service which will be observed in proper and adequate depn. account to be carried for the protection of stockholders, or bondholders or creditors, in accordance with such rules, regulations, and forms of account as the commission may prescribe. Said rates shall be sufficient to provide the amounts required over and above the expenses of maintenance to keep such property in a state of efficiency corresponding to the progress of the industry. Each public service shall conform its depreciation accounts to the rates so determined and fixed, and shall set aside the money so provided for out of its earnings and carry the same in a depreciation fund. The income from such investments of money in such fund shall likewise be carried in such fund. This fund shall not be expended otherwise than for depreciation, improvements, extensions, new constructions or additions to the property of such public service.
(m) To amend, modify or revoke at any time any certificate under the provisions of this act, whenever the facts and circumstances on the strength of which said certificate was issued have been misrepresented or materially changed.
(n) To suspend or revoke any certificate issued under the provisions of this act whenever the holder thereof has violated or willfully and consumatedly refused to comply with any order, rule or regulation of the commission or any provisions of this act: Provided, that the commission for good cause, may prior to the hearing suspend for a period not exceeding 30 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.
(o) To fix, determine, and regulate, as the convenience of the state may require, a special type for auto buses, trucks and motor trucks, to be hereafter constructed, purchased, and operated by operators after the approval of this act; to fix and determine a special registration fee for auto-buses, trucks and motor trucks so constructed, purchased, and operated: Provided, that said fees shall be smaller than those charged for auto- buses, trucks, and motor trucks of types not made regulation under this subsection.
Section 17. Proceedings of commission without previous hearing:

(a) To investigate, upon its own initiative, or upon complaint in writing, any matter concerning any public service as regards matters under its jurisdiction; to require any public service to furnish safe, adequate and proper service as the public interest may require and warrant; to enforce compliance with any standard xxx and to prohibit or prevent any public service from operating without first securing a certificate of public convenience or public necessity and convenience xxx and require existing public services to pay the fees provided for in this act for the issuance of the proper certificate xxx under the penalty, in the discretion of the commission, of the revocation and cancellation of any acquired right.
(b) To require payment of actual expenses incurred in any investigation if a violation shall be found; to assess costs not to exceed 25% with reference to such investigation
(c) To appraise and value the property of any public service; in relation thereto, to have access to and use any books, documents or records in the possession of any govt. dept., bureau, office, or political subdivision
(d) To provide, on motion by or at the request of any consumer, for the examination and test of any appliance used for the measuring of any product or service of a public service, to enter any premises where said appliances may be, and other premises of the public service, for the purpose of setting up and using on said premises any apparatus necessary therefor, and to fix fees to be paid by the consumer who may apply for such examination, and in case of defect, to refund the fees paid
(e) To permit any street railway or traction company to change its existing gauge to standard steam railroad gauge
(f) To grant any public service special permits to make extra or special trips within the territory covered by its certificate and to make special excursions outside if the public interest or special circumstances so require; Provided where the public service cannot render such extra service on its own line or in its own territory, a special permit for such extra service may be granted to any other public service
(g) To require any public service to keep its books, records, and accounts; to adopt a uniform system of accounting as approved by the auditor general
(h) To require any public service to furnish annual reports of finances and operations, covering the 12 month period ending December 31
(i) To require every public service to file with the commission a written, verified statement made by the owner, president or secretary setting forth the officers, authority, power and duties of every officer, as to disclose the source and origin of each administrative act or rule

(j) To require any public service to comply with the laws of the Philippines and with any local resolution or ordinance or its charter
(k) To investigate accidents directly or indirectly arising from or connected with the maintenance or operation of the public service
(l) To require every public service to file a complete schedule of every classification, individual or joint rate, toll, fare or charge, and in case of public carriers, a complete statement of itineraries or routes
o Section 18 - It shall be unlawful for any individual, co- partnership, association, corporation or joint-stock company, their lessees, trustees or receivers xxx to engage in any public service business without having first secured from the commission a certificate, except grantees of legislative franchises expressly exempting such grantee from the reqts of securing a certificate from the commission, as well as those expressly exempted from the jurisdiction of the commission
Section 19. Unlawful acts - It shall be unlawful for any public service :
(a) To provide or maintain any service that is unsafe, improper or inadequate ,or withhold or refuse any service which can reasonably be demanded and furnished, as found and determined by the commission in a final order which shall be conclusive and shall take effect in accordance with this act, upon appeal or otherwise.
(b) To make or give, directly or indirectly, by itself or through its agents, attorneys or brokers, or any of them, discounts or rebates on authorized rates, or grant credit for the payment of freight charges, or any undue or unreasonable preference or advantage to any person or corporation or to any locality or to any particular person or corporation or locality or any particular description of traffic or service, or subject any particular person or corporation or locality or any particular description of traffic to any prejudice or disadvantage in any respect whatsoever; to adopt, maintain, or enforce any regulation, practice or measurement which shall be found or determined by the commission to be unjust, unreasonable, unduly preferential, or unjustly discriminatory, in a final order which shall be conclusive and shall take effect in accordance with the provisions of this act, upon appeal or otherwise.
(c) To refuse or neglect, when requested by the director of posts or his authorized representative to carry public mail on the regular trips of any public land transportation service maintained or operated by any such public service, upon such terms and conditions and for a consideration in such amount as may be agreed upon between the Director of Posts and the public service carrier or fixed by the commission in the absence of an agreement between the Director of Posts and the carrier. In case the Director of Posts and the public service carrier are unable to agree on the amount of the compensation to be paid for the carriage of the mail, the Director of Posts shall forthwith request the commission to fix a just and reasonable compensation for such carriage and the same shall be promptly fixed by the commission in accordance with section 16 of this act.
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 -
(a) To adopt, establish, fix, impose, maintain, collect or carry into effect any individual or joint rates, commutation, mileage or other special rate, toll, fare, charge, classification or itinerary. The Commission shall approve only those that are just and reasonable and not nay that are unjustly discriminatory or unduly preferential, only upon reasonable notice to the public services and other parties concerned, giving them a reasonable opportunity to be heard and the burden of the proof to show that the proposed rates or regulations are just an reasonable shall be upon the public service proposing the same.
(b) To establish, construct, maintain or operate new units or extend existing facilities or make any other addition to or general extension of the service.
(e) Hereafter to issue any stock or stock certificates representing an increase of capital; or issue any share of stock without par value; or issue any bonds or other evidence of indebtedness payable in more than one year from the issuance thereof, provided that it shall be the duty of the Commission, after hearing, to approve any such issue maturing in more than one year from the date thereof, when satisfied that the same is to be made in accordance with law, and the purpose of such issue be approved by the Commission.
(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 public service. The approval herein required shall be given, after notice to the public and after hearing, if it be shown that there are just and reasonable grounds for making the mortgage 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.
(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 40% 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.
(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 60% 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.

(b) The Certificate of Public Convenience (CPC), the Certificate of Public Convenience and Necessity (CPCN), and the Prior Operator Rule

Difference between CPC and CPCN : A CPCN is issued by the PSC to a public service to which any political subdivision has granted a franchise under Act 667 after the PSC has approved the same under Section 16(b). A CPC is any authorization to operate a public service issued by the PSC. A CPC is an authorization issued by the Commission for the operation of public services for which no franchise, either municipal or legislative, is required by law (e.g. auto-trucks and motor vehicles). A CPCN is an authorization issued by the PSC for the operation of public services for which a franchise is required by law (e.g. electric, telephone services).
Nature of certificate : It constitutes neither a franchise nor a contract, confers no property rights and 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.

However, certificates represent property rights to the extent that if the rights which any public utility is exercising pursuant to lawful orders of the PSC has been invaded by another public utility, in appropriate cases actions may be maintained by the complainant public utility. Owners of public utilities have the right to maintain appropriate actions against other public utilities not authorized to operate in competition with the complainant.

Certificates are considered as property as used in Civil Procedure as they have material value and are material assets. They are subject to attachment and seizure by legal process, and may be acquired by purchase.
Determination of WON an issuance of a certificate is for public convenience - (1) financial responsibility of the applicant, (2) reliability of the applicant, (3) priority of filing the application for a certificate, and (4) priority of operation
Prior operator rule - to carry out the purpose and intent for which the PSC was created the law contemplates that the first licensee will be protected in his investment and will not be subjected to a ruinous competition. It is not therefore the policy of the law for the PSC to issue a CPC to a second operator to cover the same field and in competition with a first operator who is rendering sufficient, adequate and satisfactory service, and who in all things and respects is complying with the rules and regulations of the PSC. Accordingly, a CPC or CPCN ought not to be granted where there is no complaint as to existing rates and the co. in the field is rendering adequate services.

- regular operators are preferred over irregular operators

- prior operator is given opportunity to improve service

- prior operator given opportunity to extend lines

- basis of rule : to prevent ruinous and wasteful competition in order that the interests of the public would be conserved and preserved; so long as the operator complied with the terms and conditions of the license and the reasonable demands of the public, it is the duty of the PSC to protect rather than to destroy its investment
Raymundo vs Luneta Motor 58 Phil 889
F: Nicanor de Guzman signing as Guzco Transit purchased trucks from Luneta Motor and executed PNs guaranteed by a chattel mortgage on several trucks. Failing to pay the PNs, a suit for collection was filed. A writ of attachment was issued and garnishment was served on the PSC attaching the right, title, and participation of Guzco Transit in the CPC covering the bus transportation lines between Manila and Rizal. The CFI ordered the selling of these certificates in a public bidding in which Luneta Motor was the highest bidder.

Nine days after the certificates were attached, these were sold to Raymundo (including certificate No. 25951 which was not included in the sale to Luneta Motor Co.). The approval of the sale was sought from the PSC. The PSC approved the sale in the public bidding and disapproved the sale to Raymundo except with respect to Certificate No. 25951 which Raymundo could apply for its approval.

Issue : Which of the two sales should prevail? public auction by virtue of an attachment vs voluntary sale

Held : Sale to Luneta Motor Co. in a public auction

The Public Service Law authorizes certificates of public convenience to be secured by public service operators from the PSC. A CPC grants a right in the nature of a limited franchise. The Code of Civil Procedure does not exclude franchises or certificates from the word "property." The test by which to determine WON a property can be attached and sold upon execution is whether the judgment debtor has such a beneficial interest therein that he can sell or otherwise dispose of it for value. The Public Service Law permits the PSC to approve the sale, alienation, mortgaging, encumbering or leasing of property, franchises, privileges, or rights or any part thereof. If the holder of a certificate can voluntary sell it, there is no reason why the same cannot be sold involuntarily pursuant to court process.

CPCs have considerable material value. They are valuable assets. They are subject to being sold for consideration as much as any other property. They are even more valuable than ordinary properties, taking into consideration that they are not granted to every one who applies for them but only to those who undertake to furnish satisfactory and convenient service to the public. Though intangible, they are of value and are considered properties which can be seized through legal process.

Batangas Transportation Co. vs Orlanes 52 Phil 455
F: Orlanes sought to have a CPC to operate a line of auto trucks with fixed times of departure between Taal and Bantilan, with the right to receive passengers and freight from intermediate points. The evidence is conclusive that at the time of his application, Orlanes was an irregular operator between Bantilan and Taal, and that BTC was a regular operator between Batangas and Rosario. Orlanes sought to have his irregular operation changed into a regular operation, and to set aside and nullify the prohibition against him in his CPC that he shall not have or receive any passengers or freight at any of the points served by the BTC which holds a prior license from the PSC. His petition is based on the fact that to comply with the growing demands of the public, the BTC applied for a permit to increase the no. of trip hours at and between the same places and for an order that all irregular operators be prohibited from operating unless they should observe an interval of 2 hours before or one hour after the regular hours of the BTC. The PSC granted the petition of Orlanes.
Issue : WON a CPC should be issued to a second operator in a field where, and in competition with, a first operator who is already operating a sufficient, adequate and satisfactory service.
Held : NO. Decision of PSC is revoked.

An autobus line is a public utility, and as such, is a common carrier and an impt. factor in the business affairs of the community.

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

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

The power of the PSC to issue a CPC is founded on the condition precedent that after a full hearing and investigation, it shall find as a fact that the proposed operation is for the convenience of the public.

So long as the first operator keeps and performs his terms and conditions of its license and complies with the reasonable demands of the public, it has more or less of a vested and preferential right over another who seeks to acquire a later license to operate over the same route.

To carry out the purpose and intent for which the PSC was created, the law contemplates that the first license will be protected in his investment and will not be subjected to ruinous competition.

The primary purpose of the PSC is to secure adequate, sustained service for the public at the least possible cost and to protect and conserve investments which have already been made for that purpose. A CPCN for the operation of an auto truck line in occupied territory should not be granted where there is no complaint as to existing rates and the co. in the field is rendering adequate service. It is the duty of the PSC to protect rather than to destroy the investment of a public utility.

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

Carmelo vs Monserrat 55 Phil 644
F: Monserrat twice applied to Congress for an exclusive franchise to operate a taxicab service in Manila. The Governor General twice vetoed the bill. Monserrat then applied to the PSC for a CPC. It was granted.

Carmelo and Oriol then applied to the PSC for a CPC to operate a taxicab service within Manila. Monserrat opposed. The PSC denied the application.

Held : There is no valid, legal reason why Monserrat should have the exclusive right of operating a taxicab service. In the granting and refusal of a CPC, the question is what is for the best interest of the public. Tested by that rule, it is hard to conceive how it would be for the best interests of the public to have one taxicab service only, and how the public would be injured by the granting of the certificate in question, for it must be conceded that two companies in the field would stimulate the business, and the public would much sooner and much easier become educated in the use of taxi.

Monserrat does not have a vested right in the business of any person that might want the use of a taxi, for the simple reason that the use of any taxi is the sole discretion of the customer. This is unlike the BTC case which dealt with an autobus service with fixed schedules and routes.

San Pablo vs Pantranco South Express, Inc. 153 SCRA 199
F: Pantranco operates passenger buses from Metro Manila to Bicol and Eastern Samar. It wrote to the Maritime Industry Authority (MARINA) requesting authority to lease/purchase MV Black Double to be used in operating a ferryboat service from Matnog, Sorsogon and Allen, Samar that will provide service to co. buses and freight trucks that have to cross the Bernardo Strait. MARINA denied the petition on the ground that the Matnog- Allen run is adequately serviced by the Cardinal Shipping Corp. and Epitacio San Pablo and that market conditions cannot support the entry of additional tonnage.

Pantranco acquired the vessel. It then applied to BOT claiming that it can operate a ferry service in connection with its franchise for bus operation in the highway from Pasay City to Tacloban City for the purpose of continuing the highway, which is interrupted by a small body of water, and that the proposed ferry operation is merely a necessary and incidental service to its main service and obligation of transferring passengers from Pasay City to Tacloban City. Accdg. to it, there is no need to obtain a separate CPC to operate a ferry service to cater exclusively to its passenger buses and ferry trucks. Pantranco began operating its ferry service. The BOT held that the ferryboat service is part of Pantranco's CPC and amended Pantranco's CPC to provide so. The two other ferry boat services filed motions for reconsideration.

Issue : WON the sea can be considered as a continuation of the highway. WON a land transpo co. can be authorized to operate a ferry service or coastwise or interisland shipping service along its authorized route as an incident to its franchise without the need of filing a separate application for the same.

Held : The water transport service between Matnog and Allen is not a ferryboat service but a coastwise or interisland shipping service. Before private respondent may be issued a franchise or CPC for the operation of the said service as a common carrier, it must comply with the usual reqts. of filing an application, payment of the fees, publication, adducing evidence at a hearing and affording the oppositors the opportunity to be heard.

Considering the environmental circumstances of the case, the conveyance of passengers from Matnog to Allen is not a ferryboat service but a coastwise or interisland shipping service. Under no circumstances can the sea between Matnog and Allen be considered a continuation of the highway. While a ferryboat service has been considered as a continuation of the highway when crossing rivers or even lakes, which are small body of waters separating the land, however, when as in this case the two terminals are separated by an open sea, it cannot be considered a continuation of the highway. Pantranco must secure a separate CPC for the operation of an interisland or coastwise shipping service. Its CPC cannot be merely amended to include this water service under the guise that it is a mere private ferry service.

Pantranco does not deny that it charges its passengers separately from the charges for the bus trips and issues separate tickets whenever they board the MV Black Double. It cannot pretend that it issued tickets as a private carrier and not as a common carrier. It in fact accepts walk in passengers during the trips. It cannot claim that it is both a private carrier and a common carrier at the same time.

In the case of Javellana vs PSC, the Court differentiated between ferry service and interisland or coastwide service. Ferry means service either by barges or rafts, even by motor or steam vessels, between the banks of a river or stream to continue the highway which is interrupted by a body of water, or in some cases, to connect two points on opposite shores of an arm of the sea such as a bay or lake which does not involve too great a distance or too long a time to navigate. But where the line or service involves crossing a body of water which is wide and dangerous with big waves, then such line or service belongs properly to interisland or coastwide trade.

3. Private nature: rights and obligations of parties inter se arising from transactions relating to transportation

(a) absent a transportation contract
(b) arising from a transportation contract

(i) contract of transportation, defined - one whereby a certain person or association of persons obligate themselves to transport persons, things or news from one place to another for a fixed price

(ii) contract of transportation, elements