TRANSPO LAW / URANZA / PUBLIC LAW ASPECT
4. any common carrier or public service entity
SEC. 11, ART. XII CONSTI

Limitations to grant of franchise, certificate or any other
form of authorization for the operation of a public utility
1. it shall be granted only 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
Philippine citizens
2. it shall not be exclusive in character nor for a
period longer than 50 years
3. it shall be under the condition that it shall be
subject to amendment, alteration or repeal by
Congress when the common good so requires.

Rule re: participation
1. The state shall encourage equity participation in
public utilities by the general public
2. The participation of foreign investors in the
governing body of an public utility shall be
limited to their proportionate share in its capital
3. All the executive and managing officers of such
corporation or association must be citizens of
the Philippines.
HISTORY OF SEC. 11, ART. XII CONSTI

1935 Constitution

1973 Constitution—added “equity participation” and
“rule on participation of foreign investors.”

1983 Constitution—added “rule on executive and
managing officers.”
PUBLIC UTILITY [North Negros Sugar v Hidalgo]

Property becomes clothed with public interest when used
in a manner to make it of public consequence, and affect
the community at large.

The public or private character of the enterprise does not
depend upon the number of persons by whom it is used,
but upon whether or not it is open to the use and service
of all members of the public who may require it, to the
extent of its capacity; and the fact that only a limited
number of persons may have occasion to use it does not
make it a private undertaking if the public generally has a
right to such use.

Whether or not a given business, industry or service is a
public utility does not depend upon legislative definition
but upon the nature of the business or service.
DEFINITION OF PUBLIC SERVICE

Sec. 13(b), Public Service Act: The term public service
shall include
1. every person, whether natural or juridical
2. that now or hereafter
3. may own, operate, manage or control in the
Philippines
page. 1
5. for hire or for compensation
6. with general or limited clientele
7. whether permanent, occasional or accidental
8. and done for general business purposes

It is not necessary under this definition that one holds
himself out as serving or willing to serve the public in
order to be considered a public service. [Luzon
Stevedoring Corp v PSC]

The idea of public use is implicit in the term “public
service.” A public service is a service for public use.
Hence, the mere omission from Sec.13 of the phrase
“public use” in the definition of public service does not
warrant the inference that the legislature meant to extend
the jurisdiction of the PSC to private enterprises not
devoted to use. [Luzon Brokerage v PSC]
REGULATORY AGENCIES

Land transportation—DOTC & LTFRB

Water transportation—Maritime Industry Authority
(MARINA)

Air Transportation—ATO & and the Civil Aeronautics
Board (CAB), which has been placed under the DOTC
as an attached agency

Telecommunications—National Telecommunications
Commission (NTC), which has been placed under the
DOTC as an attached agency

Energy—Board of Energy

Waterworks—National Water Resources Council
CPC/CPCN

A certificate of public convenience is an authorization by
the Commission (public service regulatory body) for the
operation of public services for which no franchise,
either municipal or legislative, is required by law.

A certificate of public convenience and necessity is an
authorization issued by the Commission (public services
regulatory body) for the operation of public services for
which a franchise is required by law.
NATURE OF CPC

Insofar as the State is concerned [Pangasinan Trans v
PSC]
1. it is a mere privilege that is always subject to
regulation
2. it constitutes neither a franchise nor a contract,
confers no property right, and is a mere license
or privilege.

It is included in the broad sense of the term property in
the broad sense of the term. Under the Public Service Law,
it can be sold by the holder thereof because it has
considerable material value and is considered a valuable
asset.
 TRANSPO LAW / URANZA / PUBLIC LAW ASPECT
WHEN CPC NOT REQUIRED
Sec. 14 Public Service Act [AB-WARP]
1. Vehicles drawn by Animals and Bancas moved
by oar or sail, and tugboats and lighters
2. Warehouses
3. Airships within the Philippines [except as regards
the fixing of their maximum rates on freight and
passengers]
4. Radio companies [except with respect to the fixing of
rates]
5. Public services owned or operated by any
instrumentality of the National Government or
by any government-owned or controlled
corporation [except with respect to the fixing of rates]
REQUISITES FOR GRANT OF CPC

Under the Constitution
1. it shall be granted only 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
Philippine citizens
2. it shall not be exclusive in character nor for a
period longer than 50 years
3. it shall be under the condition that it shall be
subject to amendment, alteration or repeal by
Congress when the common good so requires.

Under the Public Service Act [Sec. 16(a)]
1. notice and hearing
2. subject to the limitations and exceptions
mentioned and saving the provisions to the
contrary
3. operation of the public service proposed and the
authorization to do business will promote the
public interests in a proper and suitable manner
4. grantee is a citizen of the Philippines or entity
organized under the laws of the Philippines and
sixty percent of its stock or paid-up capital is
owned by Philippine citizens
5. it shall not be for a period of more than fifty
years

Under RA 9295 (for vessels)
1. Sec. 5. Authority to Operate—No franchise,
certificate or any other form authorization for
the carriage of cargo or passenger, or both in
the domestic trade, shall be granted except to
domestic ship owners or operators.
2. Sec. 6. Foreign Vessels Engaged in Trade and
Commerce in the Philippine Territorial Waters— No
foreign vessel shall be allowed to transport
passengers or cargo between ports or place
within the Philippine territorial waters, except
upon the grant Special Permit by the MARINA
when no domestic vessels is available or suitable
page. 2
to provide the needed shipping service and
public interest warrants the same.

Under RA 776 (for aircrafts)
1. Sec. 12. Citizenship requirement—Except as
otherwise provided in the Constitution and
existing treaty or treaties, permit authorizing a
person to engage in domestic air commerce
and/or transportation shall be used only to
citizens of the Philippines.
2. Sec. 34—Except as otherwise provided in the
Constitution and existing treaties, no aircraft
shall be eligible for registration unless
a. it is owned by a citizen or citizens [including
corporations organized under laws of the
Philippines, 60% of its capital is owned by
citizens of the Philippines]; and
b. it is not registered under the laws of a
foreign country.
KMU v GARCIA

Court holding:
1. undue delegation
2. Government must not relinquish the important
function of rate-fixing
3. Department Order conflicts with the law

Note:
1. power or LTFRB (to determine, prescribe and
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) [Sec. 5(c) EO 292]
2. Importance and complexity of rate-fixing (p.
409)
3. Requirement for grant of CPC (p. 411)
4. When public convenience and necessity exists
(p. 411)—when the proposed facility or service
meets a reasonable want of the public and
supply a need which the existing facilities do not
adequately supply.
JUST & REASONABLE RATE
A rate is just and reasonable if it conforms to the
following requirements:
1. one which yields to the carrier a fair return upon
the value of the property employed in
performing the service; and
2. one which is fair to the public for the services
rendered
RETURN ON RATE BASE
 TRANSPO LAW / URANZA / PUBLIC LAW ASPECT
DEREGULATION

Domestic Shipping
1. Sec. 8. Deregulation of the Domestic Shipping
Industry— In order to encourage investments in
the domestic shipping industry by existing
domestic ship operators and attract new
investment from new operators and investors,
domestic ship operators are hereby authorized
to establish their own domestic shipping rates:
Provided, That effective competition is fostered
and public interest is served.
The MARINA shall monitor all shipping
operations and exercise regulatory intervention
where it is established after due process that
public interest needs to be protected and
safeguarded.
2. Sec. 11—Every domestic ship operator shall
have the right to fix its own passenger or cargo
rates.

Air Transport
1. Par. 2.2 Executive Order No. 219—Tariffs and
Fares. To the extent allowed by law passage
freight and other charges shall be liberalized.
However, passage rates shall likewise be
deregulated for routes/links operated by more
than one (1) common carrier. For routes
serviced by a single operator, passage rates shall
continue to be regulated. However, all freight
rates, charges and passage rates shall be
monitored by the CAB.
2. Sec. 10 RA 776—CAB
a. power to regulate economic aspect
b. general supervision and regulation of and
jurisdiction and control
Sec. 10 (c) (2)
a. power to fix and determine the rates which
an air carrier may demand, collect or receive
for any service in connection with air
commerce
b. rate should not be unduly preferential or
unduly discriminatory or unreasonable
c. burden of proof on the carrier
d. considerations in imposition of rate
† movement of traffic
† adequate and efficient
transportation at the lowest cost
† character and quality as prescribed
by law
† inherent advantages of air
transportation
† need for revenues of carrier
page. 3
PRIOR APPLICANT RULE [Paez Vda. de Cruz v
Marcelo]
Priority in the filing of the application for a CPC is, other
conditions being equal, an important factor in
determining the rights of the public service companies,
and in the grant or refusal of a certificate
PRIOR OPERATOR LAW [Batangas Trans v Orlanes]

It is not the policy of the law to issue a CPC to a second
operator to cover the same field and in competition with
a 1st 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
Commission

RATIONALE: experience has demonstrated that
competition among natural monopolies is wasteful
economically and results finally in inefficient and
unsatisfactory service and extravagant fares.

Exceptions
1. Old operators were given a chance to improve or
complete their service but failed to do so [Paez
Vda. de Cruz v Marcelo]
2. Change in rule with respect to the domestic water
transport [Par. 1, Executive Order 185]—
The entry of new operators into the domestic water
transport industry shall be liberalized to enhance the
level of competition and bring about reasonable
rates and improved quality of services
REGULATION OF AUTHORIZED ROUTES
REGULATION OF EQUIPMENT USED

Sec. 16(d) Public Service Act—
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
exception mentioned and saving provisions to the
contrary, To fix just and reasonable standards,
classification, regulations, practices, measurements,
or service to be furnished, imposed, observed, and
followed thereafter by any public service.

LTFRB has power to promulgate [Sec. 19, Chapter 5, Title
XV, Executive Order 292]
(11) rules requiring operators of public land
transportation service to equip, install and provide in
their utilities and in their stations such devices and
operating procedures as may promote safety,
protection and convenience to persons and property
in their areas of operation.
 TRANSPO LAW / URANZA / PUBLIC LAW ASPECT

MARINA
1. Sec. 9 RA 9295. Safety standards; domestic ships—
shall at all times be in seaworthy condition,
properly equipped with adequate life-saving,
communication, safety and other
equipment, operated and maintained in
accordance with the standards set by
MARINA
2. Sec. 10 RA 9295. Jurisdiction; Power; and Duties of
MARINA—The MARINA shall have the
power and authority to:
♦ Set safety standards for vessels in
accordance with applicable conventions and
regulations;
♦ Require all domestic ship operators to
comply with operational and safety
standards for vessels set by applicable
conventions and regulations, maintain its
vessels in safe and serviceable conditions,
meet the standards of safety of life at sea
and safe manning requirements, and furnish
safe, adequate, efficient, reliable and proper
service at all times;
♦ Inspect all vessels to ensure and enforce
compliance with safety standards and other
regulations;
♦ Ensure that all domestic ship operators
shall have the financial capacity to provide
and sustain safe, reliable, efficient and
economic passenger or cargo service, or
both;
♦ Adopt and enforce such rules and
regulations which will ensure compliance by
every domestic ship operator with required
safety standards and other rules and
regulations on vessel safety;
♦ Impose such fines and penalties on,
including the revocations of licenses of any
domestic ship operator who shall fail to
maintain its vessels in safe and serviceable
condition, or who shall violate or fail to
comply with safety regulations;
REGULATION OF PERIOD

Constitution—shall not be more than 50 years

EO 292—none

Sec. 10 RA 9295—shall not be more than years

Sec. 11 RA 776—none
REQUISITION

Sec. 7, Art. XIV CONSTITUTION
In times of national emergency, when the public
interest so requires, the State may temporarily take
page. 4
over and direct the operation of any privately owned
utility or business affected with public interest.

Vessels
1. RA 7471
a. President may in times of war/other
national emergencies requisition
absolutely/temporarily vessels of Philippine
registry for any naval or military purpose
b. Pay owner
† FMV if absolutely
† Fair charter value if temporarily
c. Rule in case of disagreement—
Such fair value shall be determined by
an arbitration committee [1 appointed
by the MARINA, 1 appointed by the
owner/operator, 1 appointed by the 2]
2. RA 9292
a. National emergency/public interest requires
b. State may temporarily trade and commerce,
or prescribe rates or routes of operation
c. Upon cessation of national emergency,
immediately reinstate the domestic ship
operator the operation of its vessel under
the same terms and conditions existing
prior to the occurrence of the emergency
REVOCATION OF LICENSE

A CPC constitutes neither a franchise not a contract,
confers no property right, and is a mere license or
privilege; such privilege is forfeited when the grantee fails
to comply with his commitments. [Pangasinan Trans v
PSC]

Abandonment is sufficient cause for he cancellation of a
certificate of public convenience for public necessity
cannot be made to wait nor sacrifice for private
convenience [Paez Vda. de Cruz v Marcelo]
CABOTAGE

Nautical term denoting strictly navigation from cape to
cape along the coast without going into open sea.

Only vessels carrying a certificate of Philippine registry
have the right to engage in coastwise trade. [Tariff &
Customs Code]

No foreign vessels shall be allowed to transport
passengers or cargo between ports or places within the
Philippine Territorial Waters, except upon the grant of
special permit from by the MARINA when no domestic
vessels is available or suitable to provide the needed
shipping service and public interest warrants the same.
QUASIJUDICIAL FUNCTIONS