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G.R. No. 124293

September 24, 2003


Whether a shipyard is a public utility is at the heart of the present controversy.
Although I take a different route, I reach the same result as Mr. Justice Puno.
Since the enactment of Commonwealth Act No. 454 on June 8, 1939, shipyards have never
been considered public utilities, whether by legislative declaration or executive fiat, or even
in administrative practice.
True, "shipyard" is mentioned along with other business operations in the course of the
definition by enumeration of "public service" in the Public Service Act. 1 The terms "public
service" and "public utility," however, do not have the same legal meaning, at least since the
enactment of C.A. No. 454.2 The terms are related though.
The definition of "public service" in the Public Service Act, as last amended by Republic Act
No. 2677, includes every person who owns, operates, manages or controls, for hire or
compensation, 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 of any
class, express service, steamboat, or steamship line, pontines, ferries, and water craft,
engaged in the transportation of passengers or freight or both, shipyard, marine railway,
marine repair shop, wharf or dock, ice plant, icerefrigeration plant, canal, irrigation system,
gas, electric light, heat and power, water supply and power, petroleum, sewerage system,
wire or wireless communications systems, broadcasting stations and other similar public
services.3 A "public utility," on the other hand, 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. 4 Simply stated, a public
utility provides a service or facility needed for present day living which cannot be denied to
any one who is willing to pay for it.5

Formerly, there was a statutory definition of "public utility," but it was abandoned in C.A. No.
454.6 The definition was instead solely applied to "public service" apparently because it did
not exactly fit the concept of public utility. It is significant in this regard that while the 1935
Constitution which took effect on February 2, 1935 specifically mentioned "public
utility,"7 C.A. No. 454 shifted from "public utility" to "public service" as the sole reference term
in the Public Service Act.
Another dissimilarity is that a public utility requires a franchise, aside from a certificate of
public necessity and convenience, for its operation, while a public service which is not a
public utility requires only a certificate of public convenience. 8 The dichotomy in
requirements flows from the enforced indeterminacy of the market for the service provided
by a public utility. Thus, it may be pointed out that all public utilities are public services but
the converse is not true. This is so because the term "public utility" connotes public use and
service to the public.9
A legislative declaration such as the definition by enumeration in the Public Service
Act10 does not ipso facto render a business or service a public utility. For, as this Court held
in North Negros Sugar Co. v. Hidalgo,11 whether or not one is a public utility is a matter of
judicial, not legislative determination.
"* * * 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 rendered, and an
attempt to declare a company or enterprise to be a public utility, where it is inherently not
such, is, by virtue of the guaranties of the federal constitution, void whenever it interferes
with private rights of property or contract. So a legislature cannot by mere fiat or regulatory
order convert a private business or enterprise into a public utility, and the question whether
or not a particular company or service is a public utility is a judicial one, and must be
determined as such by a court of competent jurisdiction; * * *." (51 C.J., sec. 3, p.
5)12 [Emphasis supplied.]
Paraphrasing a decision13 of the United States Supreme Court, a private enterprise doing
business under private contracts with customers of its choice and therefore not devoted to
public use cannot by legislative enactment or administrative order be converted into a public
utility, for that would constitute taking of private property for public use without just
compensation in derogation of the Constitution.
Again, the categorization of a business or service as a public utility or other wise is a judicial
prerogative. Hence, this Court held in a significant number of cases that the business or
services involved were not public utilities despite contradicting legislative classifications.

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In one case,14 we declared that an oil company is not a public utility, notwithstanding the
law15 which categorizes petroleum operation, including refining, as a public utility:
A "public utility" under the Constitution and the Public Service Law is one organized "for hire
or compensation" to serve the public, which is given the right to demand its service.
PETRON is not engaged in oil refining to process the oil of other parties. 16
In another case,17 we intimated that a "wharf" or "dock" as contemplated under the Public
Service Act is not necessarily a public utility.18
An operator of trucks who furnished service under special agreements to carry particular
persons and property was held to be not a public utility as he did not hold himself out to
serve any and all persons.19 So is a mere owner and lessor of the equipment and facilities
needed to operate a rail system not a public utility since the right to operate a public utility
may exist independently of and separately from the ownership of the facilities thereof. 20

definition of "public service" in the Public Service Act, as amended, are clearly not public
utilities. Services which were once included in the definition of "public service" were later on
excluded from the statutory enumeration,25 indicating the impermanence of "public service"
as a concept in the law on utilities.
Still on the legislative side, to the best of my knowledge, 26 no person or firm has secured a
legislative franchise to operate a shipyard or even applied for one. On the administrative
side, as noted by Mr. Justice Puno,27 the Maritime Industry Authority (MARINA) has not been
empowered to issue franchise for shipyard operation. It is authorized under Executive
Orders No. 124 and NO. 125-A, effective as of January 10 and April 13, 1987, respectively,
to issue certificates of public convenience to domestic and water carriers. 28 But the
presidential issuances have no similar provision with respect to shipyard operation.

An ice plant, although included in the definition of a public service under Act No. 2307, 21 is
not a public utility if it is organized solely for particular persons under strictly private
contracts, and never was devoted by its owner to public use. However, it is treated as a
public utility if the ice it produces is sold to the public.22

To reiterate, shipyards have never been in legal contemplation considered as public utilities.
The promulgation of P.D. No. 666 in 1975 which required, in Section 1(d) 29 thereof, the
registration of shipyards merely as such, definitely not as public utilities, served simply to
remove any doubt as to their nonpublic utility status. Note in this regard that MARINA was
created by P.D. No. 47430 on June 1, 1974, or prior to the promulgation of P.D. No. 666. And
P.D. No. 474 did not authorize MARINA to issue franchise for shipyard operation, not unlike
E.O. Nos. 125 and 125-A which were promulgated after it.

The test, therefore, in determining if a service is a public utility, is whether the public may
enjoy it by right or only by permission.23 A shipyard fails this test. As Justice Puno points out,
a shipyard is not, by nature or tradition, a public utility in much the same way as automobile
or airplane manufacturers are not public utilities. 24

The repeal of Section 1 of P.D. No. 666 by Batas Pambansa Blg. 391, enacted in 1983, did
not convert shipyards into public utilities. Of course, the subsequent repeal of Batas
Pambansa Blg. 391 by E.O. No. 22631 in 1987 has effectively laid the issue to rest once and
for all.

Apart from shipyards, marine repair shops, wharves or docks, canals, irrigation systems,
petroleum supply and wire or wireless broadcasting stations, although included in the

Except for this divergence, I concur in Mr. Justice Punos well-reasoned opinion.
I vote to GRANT respondents motions for reconsideration.