#196 PAL vs Civil Aeronautics Board G.R. No.

119525 March 26, 1997

[G.R. No. 119528. March 26, 1997.]

PHILIPPINE AIRLINES, INC., Petitioner, v. CIVIL AERONAUTICS BOARD and GRAND

INTERNATIONAL AIRWAYS, INC., Respondents.

Estelito P. Mendoza and Alberto E. Valenzuela, Jr. for Petitioner.

Belo Gozon Elma Parez Asuncion & Lucila for Grand Air.

FACTS:

Private respondent GrandAir applied for a Certificate of Public Convenience and Necessity with
the Civil Aeronautics Board (CAB). This application was opposed by petitioner PAL which is a
holder of a legislative franchise to operate air transport services alleging that that the CAB had
no jurisdiction to hear the petitioner’s application until GrandAir has first obtained a franchise to
operate from Congress.

ISSUE:

WON the CAB had the jurisdiction to hear the application because GrandAir did not possess a
legislative franchise.

WON Congress, in enacting Republic Act 776, has delegated the authority to authorize the
operation of domestic air transport services to the respondent Board, such that Congressional
mandate for the approval of such authority is no longer necessary.

RULING:

Yes. 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 the 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.
Although Section 11 of Article XII recognizes Congress’ control over any franchise, certificate or
authority to operate a public utility, it does not mean Congress has exclusive authority to issue
the same. Franchises issued by Congress are not required before each and every public utility
may operate. In many instances, Congress has seen it fit to delegate this function to
government agencies, specialized particularly in their respective areas of public service.

Congress, gave CAB the power to issue permits for the operation of domestic transport services.
It has delegated to the said body the authority to determine the capability and competence of a
prospective domestic air transport operator to engage in such venture.

The use of the word “necessity”, in conjunction with “public convenience” in a certificate of authorization
to a public service entity to operate –

Many and varied are the definitions of certificates of public convenience which courts and legal
writers have drafted. Some statutes use the terms “convenience and necessity” while others use
only the words “public convenience.” The terms “convenience and necessity”, if used together in
a statute, are usually held not to be separable, but are construed together. Both words modify
each other and must be 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. “The terms ‘convenience’ and ‘necessity’ are to be construed together,
although they are not synonymous, and effect must be given both. The convenience of the public
must not be circumscribed by according to the word ‘necessity’ its strict meaning or an essential
requisites.” The use of the word “necessity”, in conjunction with “public convenience” in a
certificate of authorization to a public service entity to operate, does not in any way modify the
nature of such certification, or the requirements for the issuance of the same. It is the law which
determines the requisites for the issuance of such certification, and not the title indicating the
certificate.

Kilusang Mayo Uno Labor Center vs.
Garcia Jr.
G.R. No. 115381; December 23, 1994
Facts:
Petition for certiorari assails the constitutionality and validity
of circulars released by the LandTransportation Franchising
and Regulatory Board (LTFRB). Such circulars authorized
provincial bus andjeepney operators to increase or decrease
the prescribed transportation fares without application with
the LTFRB for a period of one year. Likewise, it established a
presumption of public need for certificates ofpublic
convenience (CPC). Petitioner KMU claims however that the
authority given by LTFRB toprovincial bus operators to set a
fare range is unconstitutional, invalid and illegal. Also, the
establishmentof the presumption of public need for a
proposed transport service without having to prove
publicnecessity, is likewise illegal it being violative of Public
Service Act and the Rules of Court.
Issue:
Whether or not such circulars released by the LTFRB is valid.
Held:
The Supreme Court held that the authority given by the LTFRB
to the provincial bus operators to set a fare range over and
above the authorized existing fare is illegal and invalid. This
is tantamount to an undue delegation of legislative authority.
The policy of allowing the provincial bus operators to change
and increase their fares would result not only to a chaotic
situation but also to an anarchic state of affairs. This would
leave the riding public at the mercy of transport operators who
may change fares every hour, every day, every month as he
may wish to do so. The Supreme Court held that rate-fixing is
a delicate and sensitive government function that requires
dexterity of judgment with a settled goal of arriving at a just
and reasonable rate accepted by both the public and the
utility. With regard to the presumption of public need, CPC is
an authorization granted by the LTFRB for the operation of
land transportation services for public use as required by law.
Public convenience or necessity generally means something
fitting for public need. Thus in the case at bar, it was founded
that the LTFRB committed grave abuse of discretion is issuing
orders to regulate the transport sector. Such circulars
aredeemed null and void and of no force or effect.
---------------------------------------------------------------------
A certificate of public convenience (CPC) is an authorization
granted by the LTFRB for the operation of land transportation
services for public use as required by law.
Pursuant to Section 16(a) of the Public Service Act, as
amended, the following requirements must be met before a
CPC may be granted, to wit:
(i) the applicant must be a citizen of the Philippines, or a
corporation or co-partnership, association or joint-stock
company constituted and organized under the laws of
the Philippines, at least 60 per centum of its stock or
paid-up capital must belong entirely to citizens of the
Philippines;
(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. It is understood that there must be proper
notice and hearing before the PSC can exercise its power
to issue a CPC.
While adopting in toto the foregoing requisites for the
issuance of a CPC, LTFRB Memorandum Circular No. 92-009,
Part IV, provides for yet incongruous and contradictory policy
guideline on the issuance of a CPC. The guidelines states:
The issuance of a Certificate of Public Convenience is
determined by public need. The presumption of public need
for a service shall be deemed in favor of the applicant, while
the burden of proving that there is no need for the proposed
service shall be the oppositor's. (Emphasis ours).
The above-quoted provision is entirely incompatible and
inconsistent with Section 16(c)(iii) of the Public Service Act
which requires that before a CPC will be issued, the applicant
must prove by proper notice and hearing that the operation
of the public service proposed will promote public interest in
a proper and suitable manner. On the contrary, the policy
guideline states that the presumption of public need for a
public service shall be deemed in favor of the applicant. In
case of conflict between a statute and an administrative
order, the former must prevail.
By its terms, public convenience or necessity generally means
something fitting or suited to the public need.16 As one of the
basic requirements for the grant of a CPC, public convenience
and necessity exists 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. The
existence or non-existence of public convenience and
necessity is therefore a question of fact that must be
established by evidence, real and/or testimonial; empirical
data; statistics and such other means necessary, in a public
hearing conducted for that purpose. The object and purpose
of such procedure, among other things, is to look out for, and
protect, the interests of both the public and the existing
transport operators.
ERNESTO A. PAPA and CONRADO V. ATANACIO vs. SEVERO J. SANTIAGO,

G.R. No. L-12433; February 28, 1959

Facts:

Municipal Council of Pasig granted in its Resolution No. 217 respondent Severo J. Santiago, a municipal franchise to operate a
telephone service in Pasig. PB did not approve the resolution.

Municipal Council (MC) of Pasig approved Resolution No. 212 dated December 22, 1955, granting to petitioners Papa and Atanacio,
a municipal franchise to operate a telephone service in Pasig. Provincial Board (PB) of Rizal approved the said resolution.

Petitioners Papa and Atanacio filed an application in Case No. 24119 of the Public Service Commission for a certificate of public
convenience and necessity to operate a telephone service in Pasig, Rizal, and completed submission of their evidence in support
thereof.

MC of Pasig passed Resolution No. 245 revoked the franchise given to petitioners Papa and Atanacio on the ground that they had
failed to install a telephone service. The municipal resolution was approved by the PB.

MC in its Resolution No.186, granted respondent Santiago a franchise to operate a telephone service in Pasig. Petitioner called this
resolution a revival of its original Resolution No. 217. PB did not initially approved the said resolution, but later on approved it when
Santiago filed his application with the Public Service Commission for a certificate of public convenience and necessity to operate a
telephone service in Pasig.

Both parties sought for the dismissal of each application.

The Commission found: the action taken by the Provincial Board by its resolution forwarding the municipal resolution granting a
franchise to petitioners, to the Commission and to the President recommending approval, was not the express and explicit approval
required by the law- Section 2 of Act 667, which states:

"no franchise shall become operative until the same shall have been Provincial Board."

Issue:

Whether or not a recommendation for approval is equivalent to and may be regarded as an approval is equivalent to and may be
regarded as an approval is equivalent to and may be regarded as an approval

Ruling:

The fact is that the Provincial Board neither disapproved it, nor recommended its disapproval, and although it did not expressly
approved by the higher authorities. In our opinion, the favorable attitude of the Board to the measure, as clearly expressed
in its recommendation for approval may correctly and reasonably be regarded as an approval in the eyes of the law.
Consequently, the franchise granted by the Municipal Council to the petitioners was perfected and became operative, though still
subject to the action of the Commission and Chief Executive.

Intention of the Provincial Board was subsequently clarified and reiterated when upon the request of petitioners that it clarify and
define its intention in recommending to the Commission and the President the approval of the municipal resolution, the Board
passed a resolution authorizing the secretary to inform petitioners accordingly, which the secretary did, telling them that the Board
really approved the measure. Furthermore, the Commission had previously accepted and construed, though perhaps incidentally, a
recommendation for approval by a Provincial Board of a municipal resolution granting a franchise. In Case No. 76560 of the
Commission, the Caramoan Electric Power Cooperative Association secured a municipal franchise to install and operate an electric,
light, heat and power service in the municipality of Caramoan by virtue of a municipal resolution. When it reached the Provincial
Board, the latter instead of approving the resolution, merely referred the same to the Public Service Commission, recommendin g
approval, and said action of the Board was considered and interpreted by the Commission as an approval within the meaning of the
law, and the Commission, in its decision of March 2, 1956, granted the corresponding certificate of public convenience and
necessity.

The reason is that for a small community like Pasig, it is hard to imagine that more than one party or entity could operate a
telephone system with profit. The Commission would, in all probability, allow only one operator, and it is to be presumed that the
Municipal Council itself and the Provincial Board intended to grant a franchise to only one applicant, as shown by the fact that
although Santiago was first in applying for a franchise, the subsequent application of petitioners was approved only after Santiago’s
application was practically disapproved, because it had been submitted to public bidding; and that the application of Santiago was
subsequently revived by the Council and approved by the Provincial Board only after the Council and the Board had, presumably,
decided to revoke the franchise granted to the petitioners for their failure to install the telephone system. The case remanded to
Commission.
No. 199

G.R. No. L-27412 October 28, 1969

BUREAU OF TELECOMMUNICATIONS, petitioner-appellant,

vs.

THE PUBLIC SERVICE COMMISSION and THE PHILIPPINE LONG DISTANCE TELEPHONE COMPANY,
respondents-appellees.

FACTS:

Respondent Philippine Long Distance Telephone Company is a public utility corporation and the
grantee of a legislative franchise to install, maintain and operate telephone systems throughout the
Philippines.

On February 18, 1965, the Company filed, with the Public Service Commission, a complaint,
against the Bureau of Telecommunications, alleging that the same had "been operating its telephone
services within the City of Manila and other areas in the Philippines, without submitting" to the
Commission, "for its approval, the rates actually being charged by it" (the Bureau) for "said telephone
services" and that the Bureau had "inaugurated a long distance service between the Cities of Iloilo,
Bacolod, Cebu, Davao, and Manila," charging therefor rates "very much lower than those authorized" by
the Commission for the Company, and praying that the Bureau be required to show cause why no
disciplinary action should be taken against it for enforcing or charging rates unauthorized by the
Commission, and to submit for approval the schedule of rates of the Bureau in connection with its long
distance services, and that the Bureau be restrained from engaging in long distance service until such
time as the Commission shall have approved its schedule of rates, or, should the Bureau be allowed to
continue rendering said long distance service, that it be required "to adopt, charge and follow the rates
schedule authorized" for the Company.

In its answer, the Bureau contested the jurisdiction of the Commission, upon the ground that it
(the Bureau) is in operation, not for general business purposes, but only to serve governmental needs,
and alleged, inter alia, that any income derived by the Bureau from private sources is incidental to the
performance of its governmental functions, and that its aim is merely to fill the requirements of public
service which other public services cannot fully meet.

ISSUE:

Whether or not the Bureau is a "public service" as the term is used in the Public Service Act?

RULING:

The Bureau of Telecommunication is neither a "public service" nor engaged in the operation
of telephone services for "general business purposes," as the two (2) terms are used in the Public
Service Act, and, hence, is not subject to the jurisdiction of the Public Service Commission.

Section 13(b) of Public Service Act, as amended by Republic Act No. 2677 provides:
 (b) 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, ..., wire or wireless communications system, wire or wireless
broadcasting stations and other similar public services ...

Caro vs. Rilloraza, described a "business" as "the means by which a party habitually or regularly
earns a livelihood of some gain," whereas, in Collector of Internal Revenue vs. Manila Lodge, we
declared that "the plain, ordinary meaning of business is restricted to activities or affairs where profit is
the purpose, or livelihood is the motive." Substantially to the same effect is Collector of Internal
Revenue vs. St. Paul's Hospital, in which it was held that business is "that which occupies time, attention,
and labor of men for the purpose of livelihood or profit."

There is no allegation in the complaint of the Company that the Bureau is engaged in
telephone operation, either for the purpose of gain or profit, or as a means of livelihood. In fact, the
Bureau is not even authorized to use its income, or any part thereof, and its expenses are met through
annual appropriations made by Congress. Indeed, the Bureau has no corporate existence and it is
admittedly "discharging a governmental or State responsibility" or functions, which, as such, "is not
business."

Pursuant to Republic Act No. 51, otherwise known as the Reorganization Act of 1947, the
Bureau was created by Executive Order No. 94 of the President, series of 1947, Section 81 of which
transferred to the Bureau "(a)ll the personnel, powers, functions, activities, appropriations, properties,
equipment, supplies, records and documents pertaining to or intended for the electrical communication
service under the Bureau of Posts," the duties and functions of which, as well as those enumerated in
said Executive Order No. 94, as pertaining specifically to the Bureau of Telecommunications, do not
indicate or suggest that the latter has been created for "general business purposes." Indeed, its rates
are much lower than those of the Company and, although 20% to 30% of its telephone subscribers are
private subscribers, the services given thereto are merely incidental to its governmental function, to
meet the telecommunication needs of the Government and the people.
 Municipality of Echague v. Leopoldo Abellera & Avelino Ballad
GR No. L-48671, December 12, 1986

Facts:
The petitioner municipality through its council had been operating a municipal ferry
service within the municipality of Echague, Isabela. Ferry operation was either operated
by the municipality itself or through an annual lease to the highest bidder. The operation
of the ferry provided efficient transportation at a reasonable rates to the people and the
town and generated revenue to the municipality.
Respondent Avelino Ballad furnished the petitioner a photo copy of the decision
by the Board of Transportation granting him a Certificate of Public Convenience to operate
a two motor boat service for transportation of passenger and goods in Cagayan River.
Private respondent made known that he will start his operation on January and the
municipality should stop its operation.
The municipality expressed its surprise because it was not notified that there is an
application of Ballad to the board of transpo. The Board of Transportation issued an order
suspending the operation of Ballad.

Issue:
Is there still a need to obtain favorable resolution of the Sanguniang Bayan before
the Board of Transportation can issue a certificate of public convenience?

Ruling:
Yes. The issuance of the certificate of public convenience was unwarranted
considering the lack of notice thereof to the petitioner municipality.
The petitioner’s contention are 1. The lack of due process for not notifying the
municipality, 2. Absence of any SB resolution indorsing to the board Ballad’s application.
The SB resolution is a pre requisite before the board may issue a certificate of
public convenience, thus the board acted with grave abuse of discretion amounting to
lack or in excess of jurisdiction.
In Cababa v. Public Service Comm. It was held that “where a ferry lies entirely
within the territorial jurisdiction of a municipality, previous approval of the municipality is
necessary before a private operator may be granted a certificate of public convenience.”
#201 Metropolitan Manila Development Authority vs. Viron Transportation Authority Co.
Inc.

FACTS:

The present petition for review on certiorari, rooted in the traffic congestion problem, questions
the authority of the Metropolitan Manila Development Authority (MMDA) to order the closure of
provincial bus terminals along Epifanio de los Santos Avenue (EDSA) and major thoroughfares
of Metro Manila.

Executive Order (E.O.) No. 179, with the pertinent provisions contain:

WHEREAS, the MMDA has recommended a plan to decongest traffic by eliminating the bus
terminals now located along major Metro Manila thoroughfares and providing more convenient
access to the mass transport system to the commuting public through the provision of mass
transport terminal facilities that would integrate the existing transport modes, namely the buses,
the rail-based systems of the LRT, MRT and PNR and to facilitate and ensure efficient travel
through the improved connectivity of the different transport modes;
Section 2. PROJECT OBJECTIVES. – In accordance with the plan proposed by MMDA
Section 3. PROJECT IMPLEMENTING AGENCY. – The Metropolitan Manila Development
Authority (MMDA), is hereby designated as the implementing Agency for the project.

As the above-quoted portions of the E.O. noted, the primary cause of traffic congestion in Metro
Manila has been the numerous buses plying the streets and the inefficient connectivity of the
different transport modes; and the MMDA had “recommended a plan to decongest traffic by
eliminating the bus terminals now located along major Metro Manila thoroughfares and
providing more and convenient access to the mass transport system to the commuting public
through the provision of mass transport terminal facilities”which plan is referred to under the E.O.
as the Greater Manila Mass Transport System Project (the Project).
The E.O. thus designated the MMDA as the implementing agency for the Project.
Pursuant to the E.O., the Metro Manila Council (MMC), the governing board and policymaking
body of the MMDA, issued Resolution No. 03-07 series of 20037 expressing full support of the
Project. Recognizing the imperative to integrate the different transport modes via the
establishment of common bus parking terminal areas, the MMC cited the need to remove the
bus terminals located along major thoroughfares of Metro Manila.8
On February 24, 2003, Viron Transport Co., Inc. (Viron), a domestic corporation engaged in the
business of public transportation with a provincial bus operation, filed a petition for declaratory
relief before the RTC of Manila. Chairman Fernando, was “poised to issue a Circular,
Memorandum or Order closing, or tantamount to closing, all provincial bus terminals along
EDSA and in the whole of the Metropolis under the pretext of traffic regulation.” This impending
move, it stressed, would mean the closure of its bus terminal in Sampaloc, Manila and two
others in Quezon City.
The trial court sustained the constitutionality and legality of the E.O. pursuant to R.A. No. 7924,
which empowered the MMDA to administer Metro Manila’s basic services including those of
transport and traffic management.

ISSUE:

W/N EO is unconstitutional

HELD: YES.
The authority of the President to order the implementation of the Project notwithstanding, 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.

It bears stressing that under the provisions of E.O. No. 125, as amended, it is the DOTC, and
not the MMDA, which is authorized to establish and implement a project such as the one subject
of the cases at bar. Thus, the President, although authorized to establish or cause the
implementation of the Project, must exercise the authority through the instrumentality of the
DOTC which, by law, is the primary implementing and administrative entity in the promotion,
development and regulation of networks of transportation, and the one so authorized to
establish and implement a project such as the Project in question.

By designating the MMDA as the implementing agency of the Project, the President clearly
overstepped the limits of the authority conferred by law, rendering E.O. No. 179 ultra vires.

In another vein, the validity of the designation of MMDA flies in the absence of a specific grant
of authority to it under R.A. No. 7924.

SECTION 2. Creation of the Metropolitan Manila Development Authority. — . . .

The MMDA shall perform planning, monitoring and coordinative functions, and in the process
exercise regulatory and supervisory authority over the delivery of metro-wide services within
Metro Manila, without diminution of the autonomy of the local government units concerning
purely local matters.

In light of the administrative nature of its powers and functions, the MMDA is devoid of authority
to implement the Project as envisioned by the E.O; hence, it could not have been validly
designated by the President to undertake the Project. It follows that the MMDA cannot validly
order the elimination of respondents’ terminals.

This Court commiserates with the MMDA for the roadblocks thrown in the way of its efforts at
solving the pestering problem of traffic congestion in Metro Manila. These efforts are
commendable, to say the least, in the face of the abominable traffic situation of our roads day in
and day out. This Court can only interpret, not change, the law, however. It needs only to be
reiterated that it is the DOTC ─ as the primary policy, planning, programming, coordinating,
implementing, regulating and administrative entity to promote, develop and regulate networks of
transportation and communications ─ which has the power to establish and administer a
transportation project like the Project subject of the case at bar.
 SURIGAO ELECTRIC CO., INC. and ARTURO LUMANLAN, SR. vs. MUNICIPALITY OF SURIGAO
and PUBLIC SERVICE COMMISSION
No. L-22766 30 August 1968
Fernando, J.
FACTS:

On June 1960, Congress amended the Public Service Act, one of the changes introduced doing away with the requirement of a
certificate of public convenience and necessity from the Public Service Commission for public services owned and operated by
government entities or government-owned or controlled corporations, but at the same time affirming its power of regulation for the
fixing of rates. Surigao Electric Co., Inc., a legislative franchise holder, and petitioner Arturo Lumanlan, to whom, on February 16,
1962, the rights and privileges of the former as well as its plant and facilities were transferred, challenge the validity of the order of
respondent Public Service Commission.

ISSUE:

Whether or not a municipal government can directly maintain and operate an electric plant without obtaining a specific franchise for
the purpose and without a certificate of public convenience and necessity duly issued by the Public Service Commission.

HELD:

MUNICIPAL CORPORATIONS; EXTENSIONS OF THENATIONAL GOVERNMENT; EXEMPT FROM PSC JURISDICTION; EXCEPTION. — A
municipal government or a municipal corporation such as the municipality of Surigao is a government entity recognized, supported
and utilized by the National Government a sa part of its government machinery and functions; a municipal government actually
functions as an extension of the national government and, therefore, it is an instrumentality of the latter; and by express provisions
of Section 14(e) of Act 2677, an instrumentality of the national government is exempted from the jurisdiction of the PSC except with
respect to the fixing of the rates.

MUNICIPALITIES MAY ENGAGE IN SUPPLYING PUBLIC SERVICESWITHOUT NEED OF CERTIFICATE OF PUBLIC CONVENIENCE. — A
municipal corporation, by virtue of C.A. No. 2677, may further promote community welfare by itself engaging in supplying public
services, without the need of a certificate of public convenience. If at all then, the exercise of this governmental prerogative comes
within the broad, well-nigh, undefined scope of police power. It is not here, of course, the ordinary case of restraint on property or
liberty, by the imposition of a regulation. What the amendatory act in effect accomplishes is to lend encouragement and support for
the municipal corporation itself undertaking an activity as a result of which, profits of a competing private firm would be adversely
affected. Clearly, then, the relevancy of Act2677 providing for the taking or operation of the government of public utilities, appears,
to put it at its mildest, far from clear. Petitioners' contention as to this alleged error being committed, therefore, far from being
strengthened by such a reference, suffers from a fate less auspicious.

A LEGISLATIVE FRANCHISE CANNOT OVERRIDE SPECIFIC CONSTITUTIONAL RESTRICTION— Whatever privilege may be claimed by
petitioners cannot override the specific constitutional restriction that no franchise or right shall be granted to any individual or
corporation except under a condition that it shall be subject to amendment, alteration or repeal by Congress. Such amendment or
alteration need not be express; it may be implied from a latter act of applicability, such as the amendment now under consideration.

A legislative franchise cannot be availed of to defeat the proper exercise of police power; Reason therefor. —Under a well-settled
principle of American origin, one which upon the establishment of the Philippine Government under American tutelage was adopted
here and continued under our Constitution, no such franchise or right can be availed of to defeat the proper exercise of the police
power. An early expression of this view is found in the leading American case of Charles River Bridge v. Warren Bridge (11 Pet. 420,
548), an 1837 decision, the opinion being penned by Chief Justice Taney: "The continued existence of a government would be of no
great value, if by implications and presumptions it was disarmed of the powers necessary to accomplish the ends of its creation; and
the functions it was designed to perform, transferred to the hands of privileged corporations. x x x While the rights of private property
are sacredly guarded we must not forget that the community also have rights, and that the happiness and well-being of every citizen
depends on their faithful preservation (Ibid, p. 1300)." Surigao Electric Co.9 Inc. vs. Municipality of Surigao, 24 SCRA 898, No. L-22766
August 30, 1968
CHAMBER OF FILIPINO RETAILERS, INC., NATIONAL MARKET VENDORS ASSOCIATION,
INC., AMBROSIO ILAO, and CRISPIN DE GUZMAN vs. HON. ANTONIO J. VILLEGAS, as Mayor
of THE CITY OF MANILA

G.R. No. L-29819 April 14, 1972

Facts:

Antonio J. Villegas, et al. in the Court of First Instance of Manila to question the validity of Ordinance
No. 6696 increasing the rental fees of stalls in public markets in said city. A restraining order was
issued but the same was lifted. The court rendered judgement dismissing the case and declaring the
questioned ordinance valid.

The respondents immediately sought to enforce the provisions of Ordinance No. 6767 by making
demands for the payment of the back differentials in market rates together with the rentals at the new
rates, with the threat that petitioners would be ejected summarily from their respective stalls if they
refused or failed to pay the rentals and back charges demanded. After receiving such demand
petitioners filed the present action for prohibition to restrain collection of rentals and possible
ejectment.l

Issue:

Whether the lower court erred in holding that the City of Manila can charge fees for the use of its
public markets without the approval of the Public Service Commission

Ruling:

The appellants' argument is that a public market is a public service or public utility, and, pursuant to
Section 20 of the Public Service Act, it is —

unlawful for any public service or for the owner, lessee or operator thereof without the
approval of the Commission previously had — (a) To adopt, establish, impose,
maintain, collect or carry into effect any individual or joint rates, commutation,
mileage or other special rate, toll, fare, charge, classification or itinerary.

While a public market is a public service or utility, it is not one that falls under the jurisdiction of the
Public Service Commission, not being ejusdem generis with those public services enumerated in
Section 13(b) of the Public Service Act over which the Commission has jurisdiction. Hence the approval
by the Commission of the fees fixed by the City of Manila for the use of its markets is not covered by
Section 20 of the Public Service Act. And even if appellants had cited (which they did not) Republic Act
2677, amending the Public Service Act, by exempting any instrumentality of the National Government
from securing a certificate of public convenience and necessity, but affirming the Commission's power
of regulation over public service utilities operated by government entities, except with respect to fixing
of rates, the amendatory statute could not have helped the theory of the appellants (that Manila
cannot fix fees for the use of its public markets without the approval of the Commission), for the
reason that public markets are not among (or not similar to) those utilities over which the Commission
was vested with jurisdiction.
No. 204

G.R. No. L-29228 April 30, 1971

LEOPOLDO T. CALDERON, JR., petitioner,

vs.

PUBLIC SERVICE COMMISSION and CECILIO V. MILO, respondents.

FACTS:

Private respondent Milo was the grantee of a municipal franchise, and upon application, was
granted a certificate of public convenience for the operation of electric service in Pulilan, Bulacan.

On February 15, 1967, said respondent sold his franchise and corresponding certificate of public
convenience to petitioner. The parties to the sale filed on April 24, 1967 with respondent commission a
joint petition for approval of the sale, setting forth the inability of respondent-vendor to devote the
necessary time and attention to the operation of his franchise to the prejudice of the public and the
willingness and financial capacity of petitioner-vendee to operate the franchise with the resultant
promotion of public necessity and convenience.

After various hearings which were postponed by the parties' agreement, respondent executed
and submitted his affidavit that it has no objection and will not interpose any in the early approval of the
sale and transfer subject of the above case. His counsel later on manifested that there was no further
reason for postponements of the hearing as were obtained "several times in the past to enable the
parties to reach an agreement on certain collateral agreements between them" and "I will have no more
objection to the hearing of Case No. 67-2819 for approval of the sale and transfer and also to the
deputization of a hearing commissioner to receive the evidence in support of the application."

Due to the absence of Atty. Gueco, Commissioner Panganiban then delegated the reception of
evidence to the then chief of the industrial division, Engr. Pedro Talavera (not a lawyer), who was the
same commissioner who received the evidence in the original case granting respondent Milo the subject
certificate of public convenience.

Thereafter, Engr. Talavera conducted inspections of petitioner-vendee's electric service in the

municipality to verify his compliance with certain requirements for the improvement of his electric
service and installations, as required in the commission's provisional order of approval, and received the
evidence in support of the petition.

On December 19, 1967, on the basis of the evidence submitted, Commissioner Panganiban
rendered decision finding the petition in order and approving the transfer and sale of the franchise and
certificate of public convenience, including all machinery and equipment, in favor of petitioner, as
prompting the public interest in a proper and suitable manner.

On January 19, 1968, or 30 days after the decision, respondent Milo filed a petition for
reconsideration alleging that the decision was "incomplete and premature" since "collateral
agreements" only "partially" complied with, and "subsequent" commitments not complied with, by
petitioner-vendee, had not been submitted to the commission for approval; that petitioner was not
financially qualified to operate and maintain the electric service; and that "the transaction with
applicant-vendee belongs to the category of inexistent or void contracts" and that "no amount of
approval by the commission can cure the inherent nullity of the transaction." Petitioner duly filed his
opposition thereto of March 13, 1968.

Subsequently, however, at the hearing of the motion for reconsideration, respondent added a
new ground and filed a supplemental motion, assailing the validity of the proceedings before Engr.
Talavera, on the ground that not being a lawyer he could not be authorized to receive the evidence in
the case.

ISSUE:

Whether or not Commissioner Panganiban validly rendered judgment on the basis of the
evidence received by Engr. Talavera?

RULING:

Respondent Milo must be held to be now clearly estopped from assailing the delegation of the
reception of evidence to Engr. Talavera, then chief of the industrial division of the commission, and
questioning the validity of the decision thus rendered, after not having presented any timely
objection to such delegation but having consented thereto.

Such defect in the delegation of reception of evidence to the person designated by the
commission was invariably held to be a procedural defect which was deemed waived if no timely
objection were raised by a party in our jurisprudence prior to the enactment on June 6, 1952 of Republic
Act No. 723 — when the Public Service Act contained no provision authorizing the commission to
delegate the conduct of hearings and reception of evidence to hearing commissioners.

In Rizal Light & Ice Co. vs. Municipality of Morong, involving the very question of a similar
belated objection to the delegation of the very same Engr. Talavera as division chief to hear the case and
receive the evidence, although he is not a lawyer, and therefore excluded from those expressly
authorized in section 32 of the Public Service Act, as amended by Republic Act 723, to be designated
to receive evidence, the Court, per Mr. Justice Zaldivar, nevertheless adhered to the ruling of Enriquez,
and other precedents, supra, that such defect in delegation was a procedural, not a jurisdictional,
point that was waived by failure to interpose timely objection thereto.

Even if such defect in the delegation of reception of evidence were to be considered a

jurisdictional matter, it must be raised by timely objection as in the Eastern Tayabas case, for otherwise
the complaining party would fall under the principle enunciated by Mr. Justice Dizon for the Court in
Tijam vs. Sibonghanoy that "after voluntarily submitting a cause and encountering an adverse decision
on the merits, it is too late for the loser to question the jurisdiction or power of the court." As restated
in Crisostomo vs. Reyes and a number of subsequent cases, the principle decrees that "While the
jurisdiction of a tribunal may be challenged at any time, sound public policy bars the petitioners from
so doing after their having procured that jurisdiction themselves, speculating on the fortunes of
litigation."
 GMRC, Inc. et al v. Bell Telecoms, et al
G.R. No. 126526. April 30, 1997

Facts:

In 1993, private respondent Bell Telecommunication Philippines, Inc. (BellTel) filed with
the NTC an Application for a Certificate of Public Convenience and Necessity to Procure (CPNP)
to install, operate and maintain a Nationwide Integrated Telecommunications Services and to
Charge Rates, and with further request for the issuance of Provisional Authority (PA). BellTel was,
at that time, an unenfranchised applicant, it was excluded in the deliberations for service area
assignments for local exchange carrier service.

Only petitioners GMCR, Inc., Smart Communications, Inc., Isla Communications Co., Inc.
and International Communications Corporation, among others, were beneficiaries of formal
awards of service area assignments in April and May, 1994.

With the enactment of Republic Act No. 7692 on March 25, 1994, BellTel was granted a
congressional franchise to carry on the business of providing telecommunications services in and
around the country.

The following year of July 1994, said respondent filed with NTC a second application for
the issuance of CPCN for its local and international interconnection under an integrated system.

After presenting its pieces of evidence and cross-examined by the oppositors in the
proceedings, BellTel later filed its Formal Offer of Evidence together with all the technical, financial
and legal documents in support of its application. Pursuant to its rules, the application was
referred to the Common Carriers Authorization Department (CCAD) for study and
recommendation.

Agreeing with the findings and recommendations of the CCAD, NTC Deputy
Commissioners Fidelo Dumlao and Consuelo Perez adopted the same and expressly signified their
approval of the Memorandum of the CCAD dated February 6, 1995. The draft was initialed by
Deputy Commissioners Fidelo Q. Dumlao and Consuelo Perez but was not signed by Commissioner
Simeon Kintanar.

Issue:

Whether or not the NTC is a collegial body under Executive Order No. 546

Held:

In the interim, the Solicitor General filed with the respondent appellate court a
Manifestation In Lieu of Comment in which the Solicitor General took a legal position adverse to
that of the NTC. The Solicitor General, after a close examination of the laws creating the NTC and
its predecessors and a studious analysis of certain Department of Transportation and
Communications (DOTC) orders, NTC circulars, and Department of Justice (DOJ) legal opinions
pertinent to the issue of collegiality of the NTC, made the following recommendations:

a. declare respondent National Telecommunications Commission as a collegial body;

b. restrain respondent Commissioner Simeon Kintanar from arrogating unto himself alone
the powers of the said agency;
c. order NTC, acting as a collegial body, to resolve petitioner Bell Telecoms application under
NTC-94-229;
d. declare NTC Memorandum Circulars 1-1-93 and 3-1-93 as void; [and]
e. uphold the legality of DOTC Department Order 92-614.

The more critical point that matters most, however, is that Court cannot be diverted from
the principal issue in this case concerning the collegiality of the NTC.
#196 PAL vs Civil Aeronautics Board G.R. No. 119525 March 26, 1997

[G.R. No. 119528. March 26, 1997.]

PHILIPPINE AIRLINES, INC., Petitioner, v. CIVIL AERONAUTICS BOARD and GRAND

INTERNATIONAL AIRWAYS, INC., Respondents.

Estelito P. Mendoza and Alberto E. Valenzuela, Jr. for Petitioner.

Belo Gozon Elma Parez Asuncion & Lucila for Grand Air.

FACTS:

Private respondent GrandAir applied for a Certificate of Public Convenience and Necessity with
the Civil Aeronautics Board (CAB). This application was opposed by petitioner PAL which is a
holder of a legislative franchise to operate air transport services alleging that that the CAB had
no jurisdiction to hear the petitioner’s application until GrandAir has first obtained a franchise to
operate from Congress.

ISSUE:

WON the CAB had the jurisdiction to hear the application because GrandAir did not possess a
legislative franchise.

WON Congress, in enacting Republic Act 776, has delegated the authority to authorize the
operation of domestic air transport services to the respondent Board, such that Congressional
mandate for the approval of such authority is no longer necessary.

RULING:

Yes. 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 the 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.
Although Section 11 of Article XII recognizes Congress’ control over any franchise, certificate or
authority to operate a public utility, it does not mean Congress has exclusive authority to issue
the same. Franchises issued by Congress are not required before each and every public utility
may operate. In many instances, Congress has seen it fit to delegate this function to
government agencies, specialized particularly in their respective areas of public service.

Congress, gave CAB the power to issue permits for the operation of domestic transport services.
It has delegated to the said body the authority to determine the capability and competence of a
prospective domestic air transport operator to engage in such venture.

The use of the word “necessity”, in conjunction with “public convenience” in a certificate of authorization
to a public service entity to operate –

Many and varied are the definitions of certificates of public convenience which courts and legal
writers have drafted. Some statutes use the terms “convenience and necessity” while others use
only the words “public convenience.” The terms “convenience and necessity”, if used together in
a statute, are usually held not to be separable, but are construed together. Both words modify
each other and must be 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. “The terms ‘convenience’ and ‘necessity’ are to be construed together,
although they are not synonymous, and effect must be given both. The convenience of the public
must not be circumscribed by according to the word ‘necessity’ its strict meaning or an essential
requisites.” The use of the word “necessity”, in conjunction with “public convenience” in a
certificate of authorization to a public service entity to operate, does not in any way modify the
nature of such certification, or the requirements for the issuance of the same. It is the law which
determines the requisites for the issuance of such certification, and not the title indicating the
certificate.
 Manila Electric company vs. Public Service Commission, G.R. No. L-24762,
Nov. 14, 1966

Facts:

These are four (4) different appeals from a decision and an order of the Public Service Commission (PSC),
dated March 15, and July 16, 1965, respectively.

On October 22, 1964, the Manila Electric Company (MERALCO) filed a petition seeking approval of a
revised (increased) rate schedule, and of the "Terms and Conditions of Service" and the "Standard Rules
and Regulations" appended to the application, for the purpose of providing a fair return on the present
value of its property now devoted to public service and of attracting foreign capital with which to expand
its facilities in order to meet the requirements of its present and future customers. The Republic of the
Philippines, the City of Manila, Ricardo Rosal and a number of other entities and individuals opposed said
petition.

On March 15, 1965, the PSC disapproved the proposed rates of MERALCO and in lieu thereof authorized
and approved a modified rate increase as follows: for Residential Service, 23o/o instead of 32.5% (increase
as proposed); for General Services, 24.99yo instead of 30.99% (increase as proposed); for General Power,
24.90u. , instead of 25.90% (increase as proposed), all subject to the condition, that a substantial portion
of the increased revenues resulting from the revision of rates shall be devoted exclusively to the
acquisition of equipment to meet the demands of public service, to avoid a deterioration of the service.
This decision was opposed.

On June 29, 1965, the Supreme Court directed the PSC to immediately hear and promptly resolve the
motions for reconsideration of its decision of March 15, 1965.

Lower Court's Ruling: On July 16,1965, two (2) orders were registered in the Office of the Secretary of the
PSC. One, filed at about 2:52 p.m., was signed by five (5) members of the PSC amending its March 15,
1965 decision. It exempted from any increase: (A) All hospitals, public and private; (B) All residential flat
rate customers; and (C) All metered residential customers who consume from I to 30 kwh. In addition, the
PSC subjected certain residential customers with a gradual rate of increase based on their consumption,
as follows: (1) 31 to 40 kwh - up to 5%; (2) 41 to 50 kwh - up to 8.33o/o; (3) 51 to 60 kwh - up to 10.71%;
(4) 61to 70 kwh - up to 12.67%; (5) 7l to 80 kwh - up to 14.38%; (6) 8l to 90 kwh -upto 15.88%; and(7) 91
to 100kwh-luptoL7.22o/o.

The other order filed on July 16, 1965, at about 4:01 p.m., although dated June 14, 1965, was
signed by PSC Commissioner Medina and concurred in by Associate Commissioner Panganiban, and
favored the granting of the motions for reconsideration of the March 15, 1965 decision. Appeals were
taken from said order of July 16, 1965, and the aforementioned decision of March 15, 1965, by the
Meralco (G.R. No. L-24762\, Ricardo Rosal (G.R. No. L-24841), the Republic of the Philippines (G.R. No. L-
24854), and the City of Manila (G.R. No. L-24872).

Issues:

1. Whether the rate increases were proper considering the circumstances obtaining in these
cases;
2. What rate of earnings are allowable;
3. What shall be the basis for the computation of said eamings;
4. Whether the reduction of rates directed in the order of July 16, 1965, is legally justifiable.

Ruling:

The Supreme Court ruled in favor of and affirmed the decision of the Public Service Commission dated
March 15, 1965, as amended by the appealed order of July 16, 1965.

On the first issue The exigencies of the present and the future require, not only that measures be taken
to oflset the effects of the wear and tear upon MERALCO's lines, equipment and other facilities and to
avoid a deterioration ofthe adequate and satisfactory services it has rendered, but also, that additional
and improved equipment and facilities be acquired, installed and used to meet the ever growing demands
for electricity in all field of endeavor.

The Supreme Court in arriving at this ruling relied on the March 15,1965 decision of the PSC, and
said that it wanted to avoid a repetition of the state of affairs of PLDT and the unpleasant deterioration
of the PLDT's public service. Thus it is better to approve now a modest increase (23%;o for residential
service and approximately 25o/o for General Service and General Powers) than to have to approve later
on a 50o/o increase plus another 40o/o and 47%o increase, as with the PLDT, with the added advantage
that the satisfactory and adequate service rendered by Meralco today will not be intemrpted.

On the second issue In the Philippines, our decisions have consistently adopted the l2Yo rate for public
utilities and the PSC has done no more than adhere to the established jurisprudence thereon. In view of
this circumstance, nobody would lend the necessary funds to the MERALCO, if its returns were fixed at a
lower rate. The reason is obvious: capitalists would prefer to lend their resolrces to other public utilities,
because the latter would, generally, be in a better position to pay a higher rate of interest and offer a
greater assurance of stability and capacity to meet its obligations, all other things being equal.

On the third issue The Supreme Court found no reason to disturb either the facts upon which the
conclusions of the PSC are premised or the conclusions drawn from said facts, both being, by and large,
supported by the records. The PSC adopted the present or market value theory, as the basis for the
computation of the earnings allowable to and the rate schedule chargeable by the MERALCO, as well as
the method of valuation used and the appraisal made by the same, after making therefrom some
deductions recommended by GAO.

On the fourth issue The Supreme Court quoted from part of the PSC's decision appealed from which
stated that "[I]n a democracy the instrumentality of the State favors not only one segment of society, like
favoring only the poor, or favoring only the rich; it must favor the public good or well-being, the reason
for its existence. And so it is that in determining a reasonable compensation for the services of a public
utility, it should be just to the public and just to the Company; but the more enlightened reason is that if
it cannot be just to both . . . it must in any event be just to the public." MDG-F 1919: Enhancing Access to
and Provision of Water Services with the Active Participation of the Poor for the Compilation and Analysis
of Jurisprudence on Water Supply Case Digests with Analysis of Development lmplications

The order appealed from does not give any specific figures that would permit the Supreme Court
to estimate the amount of the reduction that would thus be effected in the revenues and returns of the
MERALCO, as determined in the original decision, dated March 15, 1965. Neither has the MERALCO
supplied the figures necessary to show that the modifications provided in the order of July 16, 1965, are
materially inconsistent with the basic principles or premises established and adopted in said decision and
confirmed in the order appealed from. And, since the findings of and determinations by administrative
organs, in matters which are within their peculiar competence, should be respected by courts of justice,
unless clearly devoid of factual or legal foundation, and no such flaw has been shown in the cases at bar,
we deem it improper, at this time, to review the modifications thus effected by said order. At any rate, it
should always be understood that if, after having been in operation long enough to reasonably ascertain
the effects of the contested modifications, the same should prove to be unjust and unfair, the PSC may,
after due notice and hearing, grant such relief as may be proper to remove the resulting evils, if any, and
promote public interest.
RADIO COMMUNICATIONS OF THE PHILIPPINES, INC. vs. NATIONAL
TELECOMMUNICATIONS COMMISSION and KAYUMANGGI RADIO NETWORK INCORPORATED

G.R. No. L-68729; May 29, 1987

Facts:

Petition seeks the reversal of the decision of the National Telecommunications Commission (NTC)
which ordered petitioner Radio Communications of the Philippines, Incorporated (RCPI) to desist from
operating its radio telephone services in Catarman, Northern Samar; San Jose, Occidental Mindoro;
and Sorsogon, Sorsogon.

Petitioner has been operating a radio communications system since 1957 under its legislative
franchise granted by Republic Act No. 2036 which was enacted on June 23, 1957. In NTC Case No. 80-
08, private respondent Kayumanggi Radio Network Incorporated was authorized by the public
respondent to operate radio communications systems in Catarman, Samar and in San Jose, Mindoro.

The private respondent filed a complaint with the NTC alleging that the petitioner was operating in
Catarman, Samar and in San Jose, Mindoro without a certificate of public covenience and necessity.
The petitioner, on the other hand, counter-alleged that its telephone services in the places subject of
the complaint are covered by the legislative franchise recognized by both the public respondent and its
predecessor, the Public Service Commission.

NTC ordered petitioner RCPI to immediately cease or desist from the operation of its radio telephone
services in Catarman Northern Samar; San Jose, Occidental Mindoro; and Sorsogon, Sorsogon
stating that a certificate of public convenience and necessity is mandatory for the operation of
communication utilities and services including radio communications.

Issue:

Whether or not petitioner RCPI, a grantee of a legislative franchise to operate a radio company, is
required to secure a certificate of public convenience and necessity before it can validly operate

Ruling:

We find no merit in the petitioner's contention. The position of the petitioner that by the mere grant of
its franchise under RA No. 2036 it can operate a radio communications system anywhere within the
Philippines is erroneous.

Pursuant to Presidential Decree No. 1 dated September 23,1972, reorganizing the executive branch of
the National Government, the Public Service Commission was abolished and its functions were
transferred to three specialized regulatory boards, as follows: the Board of Transportation, the Board
of Communications and the Board of Power and Waterworks. The functions so transferred were
still subject to the limitations provided in sections 14 and 15 of the Public Service Law, as
amended. With the enactment of Executive Order No. 546 on July 23, 1979 implementing P.D. No.1,
the Board of Communications and the Telecommunications Control Bureau were abolished and their
functions were transferred to the National Telecommunications Commission (Sec. 19(d),
Executive Order No. 546). Section 15 of said Executive Order spells out the functions of the National
Telecommunications Commission as follows:

Sec. 15. Functions of the Commission.-The Commission shall exercise the following
functions:

a. Issue Certificate of Public Convenience for the operation of communications utilities

and services, radio communications petitions systems, wire or wireless telephone or
telegraph system, radio and television broadcasting system and other similar public
utilities;
 b. Establish, prescribe and regulate areas of operation of particular operators of public
service communications; and determine and prescribe charges or rates pertinent to
the operation of such public utility facilities and services except in cases where charges
or rates are established by international bodies or associations of which the Philippines
is a participating member or by bodies recognized by the Philippine Government as the
proper arbiter of such charges or rates;

c. Grant permits for the use of radio frequencies for wireless telephone and telegraph
systems and radio communication systems including amateur radio stations and radio
and television broadcasting systems;

d. Sub-allocate series of frequencies of bands allocated by the International

Telecommunications Union to the specific services;

e. Establish and prescribe rules, regulations, standards, specifications in all cases

related to the issued Certificate of Public Convenience and administer and enforce the
same;

f. Coordinate and cooperate with government agencies and other entities concerned
with any aspect involving communications with a view to continuously improve the
communications service in the country;

g. Promulgate such rules and regulations, as public safety and interest may require, to
encourage a larger and more effective use of communications, radio and television
broadcasting facilities, and to maintain effective competition among private entities in
these activities whenever the Commission finds it reasonably feasible;

h. Supervise and inspect the operation of radio stations and telecommunications

facilities;

i. Undertake the examination and licensing of radio operators;

j. Undertake, whenever necessary, the registration of radio transmitters and

transceivers; and

k. Perform such other functions as may be prescribed by law.

It is clear from the aforequoted provision that the exemption enjoyed by radio companies from
the jurisdiction of the Public Service Commission and the Board of Communications no
longer exists because of the changes effected by the Reorganization Law and implementing
executive orders.

A franchise started out as a "royal privilege or (a) branch of the King's prerogative, subsisting in the
hands of a subject." This definition was given by Finch, adopted by Blackstone, and accepted by every
authority since (State v. Twin Village Water Co., 98 Me 214, 56 A 763 (1903)). Today, a franchise,
being merely a privilege emanating from the sovereign power of the state and owing its existence to a
grant, is subject to regulation by the state itself by virtue of its police power through its administrative
agencies.

In Pangasinan transportation Co., Inc. v. Public Service Commission (70 Phil. 221) that:

... statutes enacted for the regulation of public utilities, being a proper exercise by the
State of its police power, are applicable not only to those public utilities coming into
existence after its passage, but likewise to those already established and in operation .
R.A. No. 2036, itself, requires the approval of the then Secretary of Public Works and Communications
was a precondition before the petitioner could put up radio stations in areas where it desires to
operate. It has been repeated time and again that where the statutory norm speaks unequivocally,
there is nothing for the courts to do except to apply it.

It is within the powers of the public respondent to authorize the installation by the private respondent
network of radio communications systems in Catarman, Samar and San Jose, Mindoro.
209.

G.R. No. 112702 September 26, 1997

NATIONAL POWER CORPORATION, petitioner,

vs.

COURT OF APPEALS and CAGAYAN ELECTRIC POWER AND LIGHT CO., INC. (CEPALCO), respondents.

G.R. No. 113613 September 26, 1997

PHIVIDEC INDUSTRIAL AUTHORITY, petitioner,

vs.

COURT OF APPEALS and CAGAYAN ELECTRIC POWER AND LIGHT CO., INC. (CEPALCO), respondents.

FACTS:

On June 17, 1961, Cagayan Electric and Power Light Company (CEPALCO) was enfranchised by
RA 3247, for 50 years, to construct, maintain and operate an electric light, heat and power system for
the purpose of generating and/or distributing electric light, heat and/or power for sale within Cagayan
de Oro City and its suburbs. RA 3570 approved in 1963, expanded the coverage of the franchise to
include the municipalities of Tagoloan and Opol, Misamis Oriental. In 1969, RA 6020 further amended
the same franchise to include the areas of Villanueva and Jasaan, Misamis Oriental.

PD 243 issued in 1973 created Philippine Veterans Investment Development Corporation

(PHIVIDEC)authorized to engage in commercial, industrial, mining, agricultural and other enterprises to
allow the full and continued employment of the productive capabilities of and investment of veterans
and retirees of the Armed Forces of the Philippines. In 1974, PD 538 created PHIVIDEC Industrial
Authority (PIA) which shall promote the professional management of well-planned industrial areas.
Under Sec 3 of PD 538, the first area for development shall be located in the municipalities of Tagoloan
and Villanueva. This area forms part of the PHIVIDEC Industrial Estate Misamis Oriental (PIE-MO).

PIA, as manager of PIE-MO, granted the Ferrochrome Philippines, INC (FPI) and Metal Alloys
Corporation(MAC) authority to operate in its area of development. In 1979, PIA granted CEPALCO a
temporary authority to retail electric power to the industries operating within PIE-MO which authorized
CEPALCO to operate, administer, construct and distribute electric power within the PIE-MO for a period
of 5 years, renewable for another 5 years, at the end of which, PIA has the option to take over the
operation of the electric service and acquire by purchase CEPALCO’s assets within PIE-MO. However,
CEPALCO was notable to meet the demands of the industries in PIE-MO which led most of the
companies to close. Thus, PIA applied with the NPC for direct power connection which in due course was
approved.

One of the companies that entered into an agreement with NPC for a direct sale and supply of
power was FPI. CEPALCO contended this agreement saying that it violated its right as the authorized
operator of an electric light and power system in the area and the national electrification policy hence
they filed a petition for prohibition, mandamus and injunction before RTC of QC. The RTC granted such
petition which restrained NPC from supplying power directly to FPI on the ground that such direct sale,
supply and delivery of electric power was violative of the rights of CEPALCO under its legislative
franchise. NPC however violated such directive of the Court and its directors were held in contempt.

CEPALCO thereby filed with the ERB a petition praying that the ERB order the discontinuance of
all existing direct supply of power by the NPC within petitioner’s franchise area. The ERB granted such
petition. However, PIA contracted the NPC for the construction of a transmission line from Namutulan
substation to the substation of PIA thus, CEPALCO filed in RTC of Pasig a petition for certiorari,
prohibition and mandamus and injunction against NPC and PIA, however it was dismissed on the ground
of res judicata. Thus, CEPALCO elevated the case to the SC but was later referred to the CA. The CA
denied the issuance of a TRO ruling that since the NPC is a public utility it cannot be issued a TRO,
however upon MR, the CA reversed its decision and granted the TRO. The CA however said that a proper
administrative body should hear the dispute between NPC and CEPALCO to supply the power to PIE-MO
with NPC asserting that they have such power to resolve such dispute. Hence, this petition.

ISSUE:

Whether or not the NPC has jurisdiction to determine whether it may supply electric power
directly to the facilities of an industrial corporation in areas where there is an existing and operating
electric power franchisee.

RULING:

No. It is the ERB (Energy Regulation Board) which has authority to determine which of the two
public utilities has the right to supply electric power to an area within the coverage of both.

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. The term implies public use and service.

Petitioner PIA is a subsidiary of the PHIVIDEC with "governmental and proprietary functions
Clearly then, the PIA is authorized to render indirect service to the public by its administration of the
PHIVIDEC industrial areas like the PIE-MO and may, therefore, be considered a public utility. As it is
expressly authorized by law to perform the functions of a public utility, a certificate of public
convenience, as suggested by the Court of Appeals, is not necessary for it to avail of a direct power
connection from the NPC. However, such authority to be a public utility may not be exercised in such a
manner as to prejudice the rights of existing franchisees.

The determination of which of two public utilities has the right to supply electric power to an
area which is within the coverage of both is certainly not a rate-fixing function which should remain
with the ERB. It deals with the regulation of the distribution of energy resources which, under Executive
Order No. 172, was expressly a function of ERB. However, with the enactment of Republic Act No. 7638,
the Department of Energy took over such function. Hence, it is this Department which shall then
determine whether CEPALCO or PIA should supply power to PIE-MO.
 Clearly, petitioner NPC's assertion that its "authority to entertain and hear direct connection
applications is a necessary incident of its express authority to sell electric power in bulk" is now baseless.

WHEREFORE, both petitions in G.R. No. 112702 and 113613 are hereby DENIED. The
Department of Energy is directed to conduct a hearing with utmost dispatch to determine whether it is
the Cagayan Electric Power and Light Co., Inc. or the National Power Corporation, through the PHIVIDEC
Industrial Authority, which should supply electric power to the industries in the PHIVIDEC Industrial
Estate-Misamis Oriental.