TRANSPORTATION LAWS

Assignment for May 14, 2020

5:30 PM
PUBLIC SERVICE ACT
Jurisdiction Powers and Duties of the Commission

1. Pilipino Tel. Corp. vs. NTC & ICV, G.R. No. 138295, August 28, 2003
FACTS:

 NTC issued Petitioner PILTEL a Provisional Authority (PA) to install and operate telephone
exchanges and public calling offices covering areas Mindanao.
 While PILTEL’s PA was still subsisting, NTC granted ICC a PA to establish local exchange services
in areas which is also covered by PILTEL’s PA.
 PILTEL filed a petition for certiorari with CA, but the CA dismissed the petition.
 PILTEL now contends that 1) NTC acted with GAD in granting ICC PA to operate in areas
previously assigned to PILTEL; 2) NTC Order is tantamount to taking of property without due
process of law.

ISSUES:

1) WON PILTEL properly availed of the remedy of certiorari.

2) WON PILTEL can claim exclusive operation in the areas covered by its PA.

3) WON NTC Order amounts to confiscation of property without due process of law.

HELD:

1) NEGATIVE. PILTEL should have filed a Motion for Reconsideration with the NTC. MR was the plain,
speedy and adequate remedy to the adverse NTC Order. Failure to file MR is failure to exhaust
administrative remedies.

2) NEGATIVE. The Constitution is emphatic that the operation of a public utility shall not be exclusive.
PHILTEL’s own franchise is also explicit that PHILTEL’s right to provide telecommunications services is
not exclusive.

There is a need for healthy competitive environment in telecommunications to provide improvement in

quality of services.

3) NEGATIVE. A franchise to operate a public utility is not an exclusive private property of the
franchisee. Under the Constitution, no franchisee can demand or acquire exclusivity in the operation of
a public utility. Thus, a franchisee of a public utility cannot complain of seizure or taking of property
because of the issuance of another franchise to a competitor.
2. KMU vs. Garcia, G.R. No. 115381 December 23, 1994
FACTS:

 The DOTC issued a Department Order, and the LTFRB a Memorandum Circular to implement the
DO, providing for 1) fare range system which allows provincial bus operators to adjust fares on
plus 20% or minus 25% of that imposed by the LTFRB without a need for petition; and 2)
presumption of public need for a service in favor of the applicant, and the burden of proving the
non-necessity of proposed service shall be on the oppositor;
 The KMU filed a petition before the LTFRB opposing the DO and Memo Circular, but its petition
was denied;
 Hence this petition for certiorari assailing the constitutionality and legality of the DO and Memo
Circular for being violative of the Public Service Act.
 Respondent contends that KMU has no legal standing, and LTFRB and DOTC had the power to
issue the assailed DO and Memo Circular.

ISSUES:

1) WON KMU has legal standing to sue.

2) WON the fare range scheme is illegal.

3) WON the presumption of public need is illegal.

HELD:

1) AFFIRMATIVE. KMU members, as commuters and part of riding public, would suffer irreparable injury
from the implementation of the assailed DO and Memo Circular. They are directly affected by the
burdensome cost of arbitrary increase in passenger fares. They have personal stake in the outcome of
the case.

Even if they do not have legal standing, the Court will brush aside the legal technicality on locus standi
because the issue is of transcendental importance.

2) AFFIRMATIVE. The rate-making power was delegated to LTFRB pursuant to E.O. 202. However, LTFRB
is not authorized to delegate such power to the common carrier, transport operator or other public
service. To do so is tantamount to undue delegation of legislative authority. What has been delegated
cannot be delegated. This doctrine is based on the ethical principle that such a delegated power
constitutes not only a right but a duty to be performed by the delegate through the instrumentality of
his own judgment and not through the intervening mind of another.

The policy of allowing the provincial bus operators to change and increase their fares at will would result
to an anarchic state of affairs. This would leave the riding public at the mercy of transport operators who
may increase fares whenever it pleases. It may also result to compounded fare.

The rate-making power is a delicate and sensitive function which requires that the fares must not be
confiscatory, placing the operator at a loss, nor should it be discriminatory and too high, which is
contrary to public interest. Notice and hearing is necessary to determine the reasonable and fair rate.
Opposition must be heard to any fare increase. Thus, the government cannot relinquish this important
function to the operators.

*Rate-making power = power to determine, prescribe, approve and periodically review and
adjust, reasonable fares, rates and other related charges, relative to the operation of public land
transportation services provided by motorized vehicles.

3) AFFIRMATIVE. Under t he Public Service Act, a Certificate of Public Convenience can be issued with
the concurrence of the following requisites:

(i) the applicant must be a Filipino Citizen or Domestic Corporation etc. at least 60% owned by
Filipino Citizen;

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

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

The presumption of public need is incompatible with the 3 rd requisite. The existence or nonexistence of
public convenience and necessity is therefore a question of fact that must be established by evidence.
Hence, full hearing and investigation is necessary.

Also, the LTFRB memorandum circular in question would in effect amend the Rules of Court by adding
another disputable presumption under Rule 131, Section 5 5of Rules of Court.

3. The MMDA and Fernando vs. Viron , G.R. No. 170656, August 15, 2007
FACTS:

 President Arroyo issued E.O. 179, among the purpose of which is to decongest traffic in Metro
Manila by eliminating the bus terminals located along major Metro Manila thoroughfares and
providing more convenient access to the mass transport system through the provision of mass
transport terminal facilities.
 The E.O. designated MMDA to implement the Project.
 Provincial bus operators filed Petitions for Declaratory Relief with RTC to declare that 1) the
MMDA does not have authority to implement the Project, 2) the Project contravenes the Public
Service Act; and 3) the E.O. is unconstitutional for transgressing the possessory rights of
operators over their terminals.
 The RTC ruled for the bus operators.

ISSUES:

1) WON there is a justiciable controversy.

2) WON the bus operators have legal interest in the controversy.

3) WON the MMDA has the authority to order the closure of bus terminals.

4) WON the closure of bus terminals is a valid exercise of police power.

5) WON the E.O. is confiscatory in character.

6) WON the closure of bus terminals contravenes the Public Service Act.

HELD:

1) AFFIRMATIVE. The E.O. thereafter lays down the immediate elimination of bus terminals and
establishment of common bus terminals for north- and south-bound commuters. The MMDA’s resolve
to immediately implement the Project is also evident from the passage by of Resolution No. 03-07,
Series of 2003 expressing its full support of the immediate implementation of the Project. A diagram of
the mass transport Terminal had been drawn up, and construction of the terminal is already in progress.

2) AFFIRMATIVE. The E.O. would have an adverse effect on respondents. The closure of their bus
terminals would mean, among other things, the loss of income from the operation and/or rentals of
stalls thereat. Respondents have thus amply demonstrated a “personal and substantial interest in the
case such that [they have] sustained, or will sustain, direct injury as a result of [the E.O.’s] enforcement.”

3) NEGATIVE. It is the DOTC which has the authority as the primary policy, planning, programming,
coordinating, implementing, regulating and administrative entity to promote, develop and regulate
networks of transportation and communications.

The designation of the MMDA as the implementing agency for the Project may not be sustained. It is
ultra vires, there being no legal basis therefor. There is no specific grant of authority to it under R.A. No.
7924. R.A. No. 7924 declared the Metropolitan Manila area39 as a “special development and
administrative region” and placed the administration of “metro-wide” basic services affecting the region
under the MMDA. All its functions are administrative in nature, i.e. planning, monitoring and co-
ordinative functions, and in the process exercise regulatory and supervisory authority over the delivery
of metro-wide services within Metro Manila. The MMDA is not vested with police power and cannot
validly order the elimination of respondents’ terminals.

4) NEGATIVE. Two tests of a valid police power measure, viz.:(1) the interest of the public generally, as
distinguished from that of a particular class, requires its exercise; and (2) the means employed are
reasonably necessary for the accomplishment of the purpose and not unduly oppressive upon
individuals.

The first requisite is present, but the second is lacking.

(i) lawful subject/public interest - Traffic congestion is a public concern that needs to be
addressed immediately. Congestion of traffic is a menace to public safety. Objective of
decongesting traffic in Metro Manila is valid subject of police power.

(ii) lawful means/reasonably necessary and not unduly oppressive – the Project is characterized
by overbreadth and are unduly oppressive. Bus terminals per se do not, however, impede or
help impede the flow of traffic. The outright proscription of the terminals was not shown to be
reasonably necessary to de-congest traffic in Manila. On the contrary, traffic congestion will
equally result in the common parking areas.

Less intrusive and more effective means in easing the traffic situation – to prescribe reasonable
specifications for the size of terminals; curbing the proliferation of “colorum” buses, vans and
taxis entering Metro Manila; prohibiting the use of the streets for parking and passenger pick-up
 points; strict enforcement of traffic rules and the removal of obstructions from major thorough-
fares.

5) NEGATIVE. Respondents’ certificates of public convenience confer no property right, and are mere
licenses or privileges.52 As such, these must yield to legislation safeguarding the interest of the people.

6) AFFIRMATIVE. Under the Public Service Act and E.O. 202, the LTFRB has the power to 1) compel any
public service to furnish safe, adequate, and proper service; 2) require any public service to establish,
construct, maintain, and operate any reasonable extension of its existing facilities.

The establishment and maintenance of vehicle parking areas or passenger terminals, is a necessary
service to be provided by provincial bus operators like respondents. Eliminating the terminals would
thus run counter to the provisions of the Public Service Act.

4. LTFRB vs. G.V. Florida Transport Inc., G.R. No. 213088, June 28, 2017
FACTS:

 A bus bearing “G.V. Florida” body mark figured in a vehicular accident at Mountain Province,
resulting to death and injuries of passenger.
 The investigation of the DOTC-CAR showed that the License Plate of the buss belongs to a
different bus owned by Cue, and the bus involved in the accident is not duly authorized for
public transportation and was owned by Dagupan Bus Co.;
 The LTFRB ordered Cue to show cause why his CPC should not be suspended. Dagupan Bus was
also ordered to submit an Answer.
 Dagupan Bus claimed that the owner of the bus is G.V. Florida. G.V. Florida and Dagupan Bus
entered into a MOA for the exchange of CPC for Cagayan and Bataan Route.
 According to Cue, he sold his buses and CPC to G.V. Florida.
 The LTFRB rendered a Decision suspending the operation of G.V. Florida’s 186 buses under 28 of
its CPC’s for 6 months.
 G.V. Florida filed petition for certiorari with CA which set aside the order of suspension of 28
CPCs.

ISSUES:

1) WON the LTFRB has the power to suspend the respondent’s CPC.

2) WON the LTFRB gravely abused its discretion in suspending respondent’s CPC.

3) WON the LTFRB violated the property rights of the respondent.

4) WON the LTFRB has the power to suspend all the 28 CPCs of respondent and not only the CPC
covering the ill-fated bus.

5) WON the penalty imposed by LTFRB is reasonable.

HELD:

1) AFFIRMATIVE. Section 16(n) of Public Service Act – PSC has the power 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

Section 5(b) of E.O. 202 – The LTFRB shall have the power to issue, amend, revise, suspend or cancel
Certificates of Public Convenience.

2) NEGATIVE. The LTFRB had basis to suspend respondent’s CPC. Respondent is guilty of several
violations of the law, to wit: lack of petitioner’s approval of the sale and transfer of the CPC which
respondent bought from Cue; operating the ill fated bus under its name when the same is registered
under the name of Dagupan Bus Co., Inc.; attaching a vehicle license plate to the ill fated bus when such
plate belongs to a different bus owned by Cue; and operating the subject bus under the authority of a
different CPC.

Such violations are tantamount to a willful and contumacious refusal to comply with the requirements
of law or of the orders, rules or regulations issued by petitioner and which is punishable, under the law,
by suspension or revocation of any of its CPCs.

The Court gives due deference to petitioner’s exercise of its sound administrative discretion. The law
gives to the LTFRB ample power and discretion to decree or refuse the cancellation of a certificate of
public convenience issued to an operator as long as there is evidence to support its action.

3) NEGATIVE. A grant of a certificate of public convenience confers no property rights but is a mere
license or privilege, and such privilege is forfeited when the grantee fails to comply with his
commitments behind which lies the paramount interest of the public, for public necessity cannot be
made to wait, nor sacrificed for private convenience.

4) AFFIRMATIVE. “Any” as used in the Public Service Act means “all,” “all or every,” “each,” “each one of
all,” “every” without limitation; indefinite number or quantity, an indeterminate unit or number of units
out of many or all, one or more as the case may be, several, some. LTFRB undoubtedly wields authority,
under the law, to suspend not only one but all of respondent’s CPCs if warranted, which is proven to be
the case here.

5) AFFIRMATIVE. This is not simply a case of one erring bus unit but a series or combination of
violations. Respondent’s violations are indicative of its design and intent to blatantly and maliciously
defy the law and disregard, with impunity, the regulations imposed. There is nothing irregular in
suspending for 6 months respondent’s 28 CPCs.

5. PAL vs. CAB & Grand Air International, G.R. No. 119528 March 26, 1997
FACTS:

 GrandAir applied for a Certificate of Public Convenience and Necessity and Temporary Operating
Permit with the Civil Aeronautics Board for Domestic Flight operations.
 PAL, a holder of legislative franchise, filed an Opposition, claiming that the Board has no
jurisdiction to hear GrandAir’s application until te latter has first obtained a franchise from
Congress;
 The Board denied PAL’s opposition and granted a Temporary permit in favor of GrandAir.
 PAL’s MR was denied, hence this petition.
ISSUES:

1) WON the Board may issue a Certificate of Public Convenience and Necessity without a legislative
franchise.

2) WON a Certificate of Public Convenience and Necessity requires actual physical necessity or an
indispensable thing.

HELD:

1) AFFIRMATIVE. The Civil Aeronautics Board is expressly authorized by Republic Act No. 776 to issue a
temporary operating permit or Certificate of Public Convenience and Necessity.

The power to authorize and control the operation of a public utility is admittedly a prerogative of the
legislature, since Congress is that branch of government vested with plenary powers of legislation.
However, it is generally recognized that a franchise may be derived indirectly from the state through a
duly designated agency, and to this extent, the power to grant franchises has frequently been delegated,
even to agencies other than those of a legislative nature.

The Civil Aeronautics Board has the authority to issue a Certificate of Public Convenience and Necessity,
or Temporary Operating Permit to a domestic air transport operator, who, though not possessing a
legislative franchise, meets all the other requirements prescribed by law.

There is nothing in the law nor in the Constitution, which indicates that a legislative franchise is an
indispensable requirement for an entity to operate as a domestic air transport operator.

2) NEGATIVE. The terms “convenience and necessity,” if used together in a statute, are usually held not
to be separable, but are construed together. The word ‘necessity’ is so connected, not as an additional
requirement but to modify and qualify what might otherwise be taken as the strict significance of the
word necessity.

Public convenience and necessity exists when the proposed facility will meet a reasonable want of the
public and supply a need which the existing facilities do not adequately afford. It does not mean or
require an actual physical necessity or an indispensable thing.

6. Batangas CATV, Inc. vs CA

FACTS:

 The Sangguniang Panlungsod of Batangas City enacted Resolution No. 210 granting a permit to
petitioner to operate a CATV system in Batangas City. The Resolution specified the maximum
rates that petitioner is authorized to charge, and provided that any increase of rates shall be
subject to the approval of the Sanggunian.
 When petitioner increased its subscriber rates, the Mayor of Batangas City wrote to it
threatening to cancel its permit unless petitioner secures the approval of the Sanggunian.
 Petitioner filed a petition for injunction with the RTC, alleging that it is the NTC, and not the
Sanggunian which has authority to regulate the rate it is charging.
  The RTC granted the injunction, but the CA reversed on the ground that the Sanggunian has
power to regulate under the general welfare clause.

ISSUES:

1) WON LGU’s can regulate the subscriber rates charged by CATV operators within its territorial
jurisdiction.

2) WON R.A. 7180/Local Government Code repealed E.O. 205 (Regulating The Operation Of Cable
Antenna Television (Catv) Systems In The Philippines).

3) WON Resolution No. 210 of the Sangguniang Panlungsod of Batangas City violates the State’s
deregulation policy.

4) WON E.O. 205 violates the constitutional prohibition against impairment of contracts, Resolution No.
210 of Batangas City Sangguniang Panlungsod being a grant of franchise to petitioner.

HELD:

1) NEGATIVE. The NTC exercises regulatory powers over CATV operators to the exclusion of other
bodies, pursuant to E.O.s 205 and 436.

Under the Local Government Code, provided under what is known as the general welfare clause, the
Sangguniang Panlungsod shall enact ordinances, approve resolutions and appropriate funds for the
general welfare of the city. Thus, the LGU to a certain degree may regulate CATV operators, to the
extent of the physical realities of constructing CATV system—the use of public streets, rights of ways,
the founding of structures, and the parceling of large regions.

However, the Sangguniang Panlungsod does not have the power to fix the subscriber rates charged by
CATV operators, a power that is exclusively vested in the NTC.

Since E.O. No. 205, a general law, mandates that the regulation of CATV operations shall be exercised by
the NTC, an LGU cannot enact an ordinance or approve a resolution in violation of the said law.
Municipal ordinances are inferior in status and subordinate to the laws of the state.

2. NEGATIVE. The repealing clause of R.A. 7160 does not include E.O. 205. Neither does it impliedly
repeal E.O. 205. E.O. 436 vests upon NTC the power to regulate the CATV operation in the country. This
shows that the NTC’s regulatory power over CATV operation is continuously recognized.

By harmonizing the two laws, he NTC, under E.O. No. 205, has exclusive jurisdiction over matters
affecting CATV operation, including specifically the fixing of subscriber rates, but nothing herein
precludes LGUs from exercising its general power, under R.A. No. 7160, to prescribe regulations to
promote the health, morals, peace, education, good order or safety and general welfare of their
constituents. In effect, both laws become equally effective and mutually complementary.

Moreover, the CATV system must be regulated by a specialized agency such as the NTC, especially in the
field of rate-fixing which involves technical operations.

3) AFFIRMATIVE. Deregulation is the reduction of government regulation of business to permit freer

markets and competition. There is a need for deregulation in telecommunication’s because many areas
in the Philippines are still unserved or underserved. To encourage the private sector and to stimulate the
growth of telecommunications, the State promoted the policy of deregulation under E.O. 436, which
provides that there must be minimal reasonable government regulations in the cable television industry.

When the State declared a policy of deregulation, the LGU’s are bound to follow. Being mere creatures
of the State, LGUs cannot defeat national policies through enactments of contrary measures.

4) NEGATIVE. There is no law specifically authorizing the LGUs to grant franchises to operate CATV
system. It is the NTC which may grant Provisional Authority or Certificate of Authority to maintain cable
television system.

Consequently, the protection of the constitutional provision as to impairment of the obligation of a

contract does not extend to privileges, franchises and grants given by a municipality in excess of its
powers, or ultra vires.