Transportation Law CADC

TRANSPORTATION, DEFINED.

whatever other persons or entities that may own or

possess or operate public services. (As amended by
Com. Act 454 and RA No. 2677)

One whereby a certain person or association of persons

obligate themselves to transport persons, things, or
news from one place to another for a fixed price

Section 14. The following are exempted from the

provisions of the preceding section:

PUBLIC NATURE

(a) Warehouses;

Section 13. (a) The Commission shall have jurisdiction,

supervision, and control over all public services and
their franchises, equipment, and other properties, and
in the exercise of its authority, it shall have the
necessary powers and the aid of the public force:
Provided, That public services owned or operated by
government
entities
or
government-owned
or
controlled corporations shall be regulated by the
Commission in the same way as privately-owned public
services, but certificates of public convenience or
certificates of public convenience and necessity shall
not be required of such entities or corporations: And
provided, further, That it shall have no authority to
require steamboats, motor ships and steamship lines,
whether privately- owned, or owned or operated by any
Government controlled corporation or instrumentality
to obtain certificate of public convenience or to
prescribe their definite routes or lines of service.

(b) Vehicles drawn by animals and bancas moved by

oar or sail, and tugboats and lighters;

(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, street railway,
traction railway, sub-way motor vehicle, either for
freight or passenger, or both with or without fixed route
and whether 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 railways, marine repair shop,
[warehouse] wharf or dock, ice plant, ice-refrigeration
plant, canal, irrigation system, gas, electric light, heat
and power water supply and power, petroleum,
sewerage system, wire or wireless communications
system, wire or wireless broadcasting stations and
other similar public services: Provided, however, That a
person engaged in agriculture, not otherwise a public
service, who owns a motor vehicle and uses it
personally and/or enters into a special contract
whereby said motor vehicle is offered for hire or
compensation to a third party or third parties engaged
in agriculture, not itself or themselves a public service,
for operation by the latter for a limited time and for a
specific purpose directly connected with the cultivation
of his or their farm, the transportation, processing, and
marketing of agricultural products of such third party or
third parties shall not be considered as operating a
public service for the purposes of this Act.
(c) The word "person" includes every individual, copartnership, joint-stock company or corporation,
whether domestic or foreign, their lessees, trustees, or
receivers, as well as any municipality, province, city,
government-owned or controlled corporation, or
agency of the Government of the Philippines, and

(c) Airships within the Philippines except as regards the

fixing of their maximum rates on freight and
passengers;
(d) Radio companies except with respect to the fixing
of rates;
(e) Public services owned or operated by any
instrumentality of the National Government or by any
government-owned or controlled corporation, except
with respect to the fixing of rates. (As amended by
Com. Act 454, RA No. 2031, and RA No. 2677 )
Section 15. With the exception of those enumerated in
the preceding section, no public service shall operate
in the Philippines without possessing a valid and
subsisting certificate from the Public Service
Commission
known
as
"certificate
of
public
convenience," or "certificate of public convenience and
necessity," as the case may be, to the effect that the
operation of said service and the authorization to do
business will promote the public interests in a proper
and suitable manner.
The Commission may prescribe as a condition for the
issuance of the certificate provided in the preceding
paragraph that the service can be acquired by the
Republic of the Philippines or any instrumentality
thereof upon payment of the cost price of its useful
equipment, less reasonable depreciation; and likewise,
that the certificate shall be valid only for a definite
period of time; and that the violation of any of these
conditions shall produce the immediate cancellation of
the certificate without the necessity of any express
action on the part of the Commission. In estimating the
depreciation, the effect of the use of the equipment, its
actual condition, the age of the model, or other
circumstances affecting its value in the market shall be
taken into consideration. The foregoing is likewise
applicable to any extension or amendment of
certificates actually in force and to those which may
hereafter be issued, to permit to modify itineraries and
time schedules of public services, and to authorizations
to renew and increase equipment and properties.
Section 16. Proceedings of the Commission, upon
notice and hearing. - The Commission shall have
power, upon proper notice and hearing in accordance
with the rules and provisions of this Act, subject to the
limitations and exceptions mentioned and saving
provisions to the contrary :
(a) To issue certificates which shall be known as

[TYPE THE DOCUMENT TITLE]

certificates of public convenience, authorizing the

operation of public service within the Philippines
whenever the Commission finds that the operation of
the public service proposed and the authorization to do
business will promote the public interest in a proper
and suitable manner. Provided, That thereafter,
certificates of public convenience and certificates of
public convenience and necessity will be granted only
to citizens of the Philippines or of the United States or
to corporations, co-partnerships, associations or jointstock companies constituted and organized under the
laws of the Philippines; Provided, That sixty per centum
of the stock or paid-up capital of any such corporations,
co-partnership, association or joint-stock company
must belong entirely to citizens of the Philippines or of
the United States: Provided, further, That no such
certificates shall be issued for a period of more than
fifty years.

instructions, specifications, and standards, to secure

the accuracy of all meters and appliances for
measurements.

(b) To approve, subject to constitutional limitations any

franchise or privilege granted under the provisions of
Act No. Six Hundred and Sixty-seven, as amended by
Act No. One Thousand and twenty-two, by any political
subdivision of the Philippines when, in the judgment of
the Commission, such franchise or privilege will
properly conserve the public interests, and the
Commission shall in so approving impose such
conditions as to construction, equipment, maintenance,
service, or operation as the public interests and
convenience may reasonably require, and to issue
certificates of public convenience and necessity when
such is required or provided by any law or franchise.

(i) To direct any railroad, street railway or traction

company to establish and maintain at any junction or
point of connection or intersection with any other line
of said road or track, or with any other line of any other
railroad, street railway or traction to promote, such just
and reasonable connection as shall be necessary to
promote the convenience of shippers of property, or of
passengers, and in like manner direct any railroad,
street railway, or traction company engaged in carrying
merchandise, to construct, maintain and operate, upon
reasonable terms, a switch connection with any private
sidetrack which may be constructed by any shipper to
connect with the railroad, street railway or traction
company line where, in the judgment of the
Commission, such connection is reasonable and
practicable and can be out in with safety and will
furnish sufficient business to justify the construction
and maintenance of the same.

(c) To fix and determine individual or joint rates, tolls,

charges, classifications, or schedules thereof, as well as
commutation, mileage, kilometrage, and other special
rates which shall be imposed observed and followed
thereafter by any public service: Provided, That the
Commission may, in its discretion, approve rates
proposed by public services provisionally and without
necessity of any hearing; but it shall call a hearing
thereon within thirty days, thereafter, upon publication
and notice to the concerns operating in the territory
affected: Provided, further, That in case the public
service equipment of an operator is used principally or
secondarily for the promotion of a private business, the
net profits of said private business shall be considered
in relation with the public service of such operator for
the purpose of fixing the rates.
(d) To fix just and reasonable standards, classifications,
regulations, practices, measurement, or service to be
furnished, imposed, observed, and followed thereafter
by any public service.
(e) To ascertain and fix adequate and serviceable
standards for the measurement of quantity, quality,
pressure, initial voltage, or other condition pertaining
to the supply of the product or service rendered by any
public service, and to prescribe reasonable regulations
for the examination and test of such product or service
and for the measurement thereof.
(f)

To

establish

reasonable

rules,

regulations,

(g) To compel any public service to furnish safe,

adequate, and proper service as regards the manner of
furnishing the same as well as the maintenance of the
necessary material and equipment.
(h) To require any public service to establish, construct,
maintain, and operate any reasonable extension of its
existing facilities, where in the judgment of said
Commission, such extension is reasonable and
practicable and will furnish sufficient business to justify
the construction and maintenance of the same and
when the financial condition of the said public service
reasonably warrants the original expenditure required
in making and operating such extension.

(j) To authorize, in its discretion, any railroad, street

railway or traction company to lay its tracks across the
tracks of any other railroad, street railway or traction
company or across any public highway.
(k) To direct any railroad or street railway company to
install such safety devices or about such other
reasonable measures as may in the judgment of the
Commission be necessary for the protection of the
public are passing grade crossing of (1) public
highways and railroads, (2) public highways and streets
railway, or (3) railways and street railways.
(l) To fix and determine proper and adequate rates of
depreciation of the property of any public service which
will be observed in a proper and adequate depreciation
account to be carried for the protection of
stockholders, bondholders or creditors in accordance
with such rules, regulations, and form of account as the
Commission may prescribe. Said rates shall be
sufficient to provide the amounts required over and
above the expense of maintenance to keep such
property in a state of efficiency corresponding to the
progress of the industry. Each public service shall
conform its depreciation accounts to the rates so
determined and fixed, and shall set aside the moneys

Transportation Law CADC

so provided for out of its earnings and carry the same
in a depreciation fund. The income from investments of
money in such fund shall likewise be carried in such
fund. This fund shall not be expended otherwise than
for depreciation, improvements, new construction,
extensions or conditions to the properly of such public
service.
(m) To amend, modify or revoke at any time certificate
issued under the provisions of this Act, whenever the
facts and circumstances on the strength of which said
certificate was issued have been misrepresented or
materially changed.
(n) To suspend or revoke any certificate issued under
the provisions of this Act whenever the holder thereof
has violated or willfully and contumaciously refused to
comply with any order rule or regulation of the
Commission or any provision of this Act: Provided, That
the Commission, for good cause, may prior to the
hearing suspend for a period not to exceed thirty days
any certificate or the exercise of any right or authority
issued or granted under this Act by order of the
Commission, whenever such step shall in the judgment
of the Commission be necessary to avoid serious and
irreparable damage or inconvenience to the public or
to private interests.
(o) To fix, determine, and regulate, as the convenience
of the state may require, a special type for autobusses, trucks, and motor trucks to be hereafter
constructed, purchased, and operated by operators
after the approval of this Act; to fix and determine a
special registration fee for auto- buses, trucks, and
motor trucks so constructed, purchased and operated:
Provided, That said fees shall be smaller than more
those charged for auto- busses, trucks, and motor
trucks of types not made regulation under the
subsection.
xxx
Section 18. It shall be unlawful for any individual, copartnership, association, corporation or joint-stock
company, their lessees, trustees or receivers appointed
by any court whatsoever, or any municipality, province,
or other department of the Government of the
Philippines to engage in any public service business
without having first secured from the Commission a
certificate of public convenience or certificate of public
convenience and necessity as provided for in this Act,
except grantees of legislative franchises expressly
exempting such grantees from the requirement of
securing a certificate from this Commission as well as
concerns at present existing expressly exempted from
the jurisdiction of the Commission, either totally or in
part, by the provisions of section thirteen of this Act.
Section 19. Unlawful Acts. - It shall be unlawful for any
public service:
(a) To provide or maintain any service that is unsafe,
improper, or inadequate or withhold or refuse any
service which can reasonably be demanded and
furnished, as found and determined by the Commission
in a final order which shall be conclusive and shall take

effect in accordance with this Act, upon appeal of

otherwise.
(b) To make or give, directly or indirectly, by itself or
through its agents, attorneys or brokers, or any of
them, discounts or rebates on authorized rates, or
grant credit for the payment of freight charges, or any
undue or unreasonable preference or advantage to any
person of corporation or to any locality or to any
particular description of traffic or service, or subject
any particular person or corporation or locality or any
particular description of traffic to any prejudice or
disadvantage in any respect whatsoever; to adopt,
maintain, or enforce any regulation, practice or
measurement which shall be found or determined by
the Commission to be unjust, unreasonable, unduly
preferential or unjustly discriminatory in a final order
which shall be conclusive and shall take effect in
accordance with the provisions of this Act, upon repeal
or otherwise.
(c) To refuse or neglect, when requested by the
Director of Posts or his authorized representative, to
carry public mail on the regular trips of any public land
transportation service maintained or operated by any
such public service; upon such terms and conditions
and for a consideration in such amount as may be
agreed upon between the Director of Posts and the
public service carrier of fixed by the Commission in the
absence of an agreement between the Director of Posts
and the carrier. In case the Director of Posts and public
service carrier are unable to agree on the amount of
the compensation to be paid for the carriage of the
mail, the Director of Posts shall forthwith request the
Commission to fix a just and reasonable compensation
for such carriage and the same shall be promptly fixed
by the Commission in accordance with Section sixteen
of this Act.
Section 20. Acts requiring the approval of the
Commission. - Subject to established limitations and
exceptions and saving provisions to the contrary, it
shall be unlawful for any public service or for the
owner, lessee or operator thereof, without the approval
and authorization of the Commission previously had (a) To adopt, establish, fix, impose, maintain, collect or
carry into effect any individual or joint rates,
commutation, mileage or other special rate, toll, fare,
charge, classification or itinerary. The Commission shall
approve only those that are just and reasonable and
not any that are unjustly discriminatory or unduly
preferential, only upon reasonable notice to the public
services and other parties concerned, giving them a
reasonable opportunity to be heard and the burden of
the proof to show that the proposed rates or
regulations are just and reasonable shall be upon the
public service proposing the same.
(b) To establish, construct, maintain, or operate new
units or extend existing facilities or make any other
addition to or general extension of the service.
xxx
(e) Hereafter to issue any stock or stock certificates

[TYPE THE DOCUMENT TITLE]

representing an increase of capital; or issue any share

of stock without par value; or issue any bonds or other
evidence of indebtedness payable in more than one
year from the issuance thereof, provided that it shall be
the duty of the Commission, after hearing, to approve
any such issue maturing in more than one year from
the date thereof, when satisfied that the same is to be
made in accordance with law, and the purpose of such
issue be approved by the Commission. (f) To capitalize
any franchise in excess of the amount, inclusive of any
tax or annual charge, actually paid to the Government
of the Philippines or any political subdivision thereof as
the consideration of said franchise; capitalize any
contract for consolidation, merger or lease, or issue
any bonds or other evidence of indebtedness against
or as a lien upon any contract for consolidation,
merger, or lease: Provided, however, that the
provisions of this section shall not prevent the issuance
of stock, bonds, or other evidence of indebtedness
subject to the approval of the Commission by any
lawfully merged or consolidated public services not in
contravention of the provisions of this section.
(g) To sell, alienate, mortgage, encumber or lease its
property, franchises, certificates, privileges, or rights or
any part thereof; or merge or consolidate its property,
franchises privileges or rights, or any part thereof, with
those of any other public service. The approval herein
required shall be given, after notice to the public and
hearing the persons interested at a public hearing, if it
be shown that there are just and reasonable grounds
for making the mortgaged or encumbrance, for
liabilities of more than one year maturity, or the sale,
alienation, lease, merger, or consolidation to be
approved, and that the same are not detrimental to the
public interest, and in case of a sale, the date on which
the same is to be consummated shall be fixed in the
order of approval: Provided, however, that nothing
herein contained shall be construed to prevent the
transaction from being negotiated or completed before
its approval or to prevent the sale, alienation, or lease
by any public service of any of its property in the
ordinary course of its business.
(h) To sell or register in its books the transfer or sale of
shares of its capital stock, if the result of that sale in
itself or in connection with another previous sale, shall
be to vest in the transferee more than forty per centum
of the subscribed capital of said public service. Any
transfer made in violation of this provision shall be void
and of no effect and shall not be registered in the
books of the public service corporation. Nothing herein
contained shall be construed to prevent the holding of
shares lawfully acquired. (As amended by Com. Act No.
454.)
(i) To sell, alienate or in any manner transfer shares of
its capital stock to any alien if the result of that sale,
alienation, or transfer in itself or in connection with
another previous sale shall be the reduction to less
than sixty per centum of the capital stock belonging to
Philippine citizens. Such sale, alienation or transfer
shall be void and of no effect and shall be sufficient
cause for ordering the cancellation of the certificate.

CERTIFICATE OF PUBLIC CONVENIENCE

Authorization to operate a public service issued by the
Public Service Commission, for which no franchise is
required by law
This is merely a license or privilege and this can be
forfeited when the grantee fails to comply with his
commitments
May represent property rights to the extent that if the
rights which any public utility is exercising pursuant to
lawful orders of the Public Utility Commissioner has
been invaded by another public utility, in appropriate
cases actions may be maintained by the complainant
public utility.
CERTIFICATE OF PUBLIC CONVENIENCE AND
NECESSITY
Authorization to operate a public service for which a
franchise is required by law
REQUISITES FOR GRANT OF CERTIFICATE
1. Applicant must be a citizen of the Philippines, or a
corporation, association or partnership constituted and
organized under the laws of the Philippines, 60% at
least of the stock or paid-up capital is owned by
Filipinos
2. The applicant must prove that the operation of the
public service proposed and the authorization to do
business will promote the public interests in a proper
and suitable manner
3. The applicant is financially capable of undertaking
the proposed service and meeting the responsibilities
incident to its operations (otherwise he will not be
allowed to operate since it is something he wouldnt be
able to sustain)
PRIOR OPERATOR RULE
The first licensee will be protected in his investment
and will not be subjected to a ruinous competitionIt is
not the laws policy for the PSC to issue a CPC to a
second operator to cover the same field and in
competition with a first operator who is rendering
sufficient, adequate, and satisfactory service, and who
in all things and respects is complying with the rules
and regulations of the Commission
Criticized because it allegedly fosters monopolies: no,
since this is made in pursuant to the power of the State
to regulate
RAYMUNDO V. LUNETA MOTOR 58 PHIL 389
FACTS:Guzco Transit purchased from Luneta Motors
buses for its operations, for which it promised to pay
through promissory notes with chattel mortgage. Upon
failure to pay, action was filed Guzco and attaching

Transportation Law CADC

therein the buses in question. The notice of
garnishment was served as well to the PSC. In the
meantime, the certificates of public convenience and
necessity were sold by Guzco to Raymundo but still,
the same were subject to attachment.
HELD:
The Public Service Law, Act No. 3108, as amended,
authorizes certificates of public convenience to be
secured by public service operators from the Public
Service Commission. (Sec. 15 [i].) A certificate of public
convenience granted to the owner or operator of public
service motor vehicles, it has been held, grants a right
in the nature of a limited franchise.
The rule tested the liability of property to execution by
determining if the interest of the judgment debtor in
the case can be sold or conveyed to another in any
way. Now the Public Service Law permits the Public
Service Commission to approved the sale, alienation,
mortgaging, encumbering, or leasing of property,
franchises, privileges, or rights or any part thereof (sec.
16 [h]), and in practice the purchase and sale of
certificates of public convenience has been permitted
by the Public Service Commission. If the holder of a
certificate of public convenience can sell it voluntarily,
there is no valid reason why the same certificate
cannot be taken and sold involuntarily pursuant to
process.
Certificates of public convenience secured by public
service operators are liable to execution, and the Public
Service Commission is authorized to approve the
transfer of the certificates of public convenience to the
execution creditor. As a consequence, the decision
brought on review will be affirmed, with costs against
the appellant.

BATANGAS
PHIL 455

TRANSPORTATION

V.

ORLANES

52

FACTS:Batangas Transportation has been for five years

operating its bus line in the province of Batangas as
well as in the province of Tayabas, prior to Orlanes.
Orlanes filed an application for the issuance of the
certificate of public convenience, and requested for the
operation in a fixed schedule. The company filed an
application to this petition by Orlanes, averring therein
that it had been operating for five years in the Province
of Batangas, and likewise alleged that its operations is
sufficient to cater to public convenience. Nevertheless,
the Commission issued the permit and certificate to
Orlanes notwithstanding the existence of a prior
operator.
HELD:
In the instant case, the evidence is conclusive that the
Batangas Transportation Company operated its line five
years before Orlanes ever turned a wheel, yet the legal
effect of the decision of the Public Service Commission
is to give an irregular operator, who was the last in the

field, a preferential right over a regular operator, who

was the first in the field. That is not the law, and there
is no legal principle upon which it can be sustained.
So long as the first licensee keeps and performs the
terms and conditions of its license and complies with
the reasonable rules and regulations of the
Commission and meets the reasonable demands of the
public, it should have more or less of a vested and
preferential right over a person who seeks to acquire
another and a later license over the same route.
Otherwise, the first license would not have protection
on his investment, and would be subject to ruinous
competition and thus defeat the very purpose and
intent for which the Public Service Commission was
created.
It does not appear that the public has ever made any
complaint the Batangas Transportation Company, yet
on its own volition and to meet the increase of its
business, it has applied to the Public Service
Commission for authority to increase the number of
daily trips to nineteen, thus showing a spirit that ought
to be commended.

9 SAN PABLO V. PANTRANCO 153 SCRA 199

FACTS:PANTRANCO is a domestic corporation engaged
in the land transportation business with PUB service for
passengers and freight and various certificates for
public conveniences CPC to operate passenger buses
from Metro Manila to Bicol Region and Eastern Samar.
On March 27,1980 PANTRANCO through its counsel
wrote to Maritime Industry Authority (MARINA)
requesting authority to lease/purchase a vessel named
M/V "Black Double" "to be used for its project to
operate a ferryboat service from Matnog, Sorsogon and
Allen, Samar that will provide service to company
buses and freight trucks that have to cross San
Bernardo Strait. In a reply of April 29,1981 PANTRANCO
was informed by MARINA that it cannot give due course
to the request on the basis that the run was already
adequately serviced and that additional tonnage
cannot be accomodated. This notwithstanding, the
company still pushed through with the purchase of the
vessel and wrote a letter to the BOT applying to
approve its operations. Not being able to wait however
for BOT to reply, it started operations and was
reprimanded to stop until the scheduled hearing. San
Pablo and Cardinal Transportation entered their
respective opposition, alleging that they have
adequately serviced PANTRANCO with the ferry off their
buses. However, in the end, the Commission ruled that
the operation o the ferry boat was part of the CPC of
PANTRANCO.
HELD:We are not unmindful of the reasons adduced by
the Commission in considering the motorboat service
between Calapan and Batangas as ferry; but from our
consideration of the law as it stands, particularly
Commonwealth Act No. 146, known as the Public
Service Act and the provisions of the Revised
Administrative Code regarding municipal ferries and
those regarding the jurisdiction of the Bureau of

[TYPE THE DOCUMENT TITLE]

Customs over documentation, registration, licensing,

inspection, etc. of steamboats, motorboats or motor
vessels, and the definition of ferry as above quoted we
have the impression and we are inclined to believe that
the Legislature intended ferry to mean the service
either by barges or rafts, even by motor or steam
vessels, between the banks of a river or stream to
continue the highway which is interrupted by the body
of water, or in some cases to connect two points on
opposite shores of an arm of the sea such as bay or
lake which does not involve too great a distance or too
long a time to navigate But where the line or service
involves crossing the open sea like the body of water
between the province of Batangas and the island of
Mindoro which the oppositors describe thus "the
intervening waters between Calapan and Batangas are
wide and dangerous with big waves where small boat
barge, or raft are not adapted to the service," then it is
more reasonable to regard said line or service as more
properly belonging to interisland or coastwise trade.
This Court takes judicial notice of the fact, and as
shown by an examination of the map of the Philippines,
that Matnog which is on the southern tip of the island
of Luzon and within the province of Sorsogon and Allen
which is on the northeastern tip of the island of Samar,
is traversed by the San Bernardino Strait which leads
towards the Pacific Ocean. The parties admit that the
distance between Matnog and Allen is about 23
kilometers which maybe negotiated by motorboat or
vessel in about 1-1/2 hours as claimed by respondent
PANTRANCO to 2 hours according to petitioners. As the
San
Bernardino Strait which separates Matnog and Allen
leads to the ocean it must at times be choppy and
rough so that it will not be safe to navigate the same
by small boats or barges but only by such steamboats
or vessels as the MV "Black Double.
Considering the environmental circumstances of the
case, the conveyance of passengers, trucks and cargo
from Matnog to Allen is certainly not a ferry boat
service but a coastwise or interisland shipping service.
Under no circumstance can the sea between Matnog
and Allen be considered a continuation of the highway.
While a ferry boat service has been considered as a
continuation of the highway when crossing rivers or
even lakes, which are small body of waters - separating
the land, however, when as in this case the two
terminals, Matnog and Allen are separated by an open
sea it can not be considered as a continuation of the
highway. Respondent PANTRANCO should secure a
separate CPC for the operation of an interisland or
coastwise shipping service in accordance with the
provisions of law. Its CPC as a bus transportation
cannot be merely amended to include this water
service under the guise that it is a mere private ferry
service.
The contention of private respondent PANTRANCO that
its ferry service operation is as a private carrier, not as
a common carrier for its exclusive use in the ferrying of
its passenger buses and cargo trucks is absurd.

PANTRANCO does not deny that it charges its

passengers separately from the charges for the bus
trips and issues separate tickets whenever they board
the MV "Black Double" that crosses Matnog to Allen,
PANTRANCO cannot pretend that in issuing tickets to its
passengers it did so as a private carrier and not as a
common carrier. The Court does not see any reason
why inspite of its amended franchise to operate a
private ferry boat service it cannot accept walk-in
passengers just for the purpose of crossing the sea
between Matnog and Allen. Indeed evidence to this
effect has been submitted. What is even more difficult
to comprehend is that while in one breath respondent
PANTRANCO claims that it is a private carrier insofar as
the ferryboat service is concerned, in another breath it
states that it does not thereby abdicate from its
obligation as a common carrier to observe
extraordinary
diligence
and
vigilance
in
the
transportation
of
its
passengers
and
goods.
Nevertheless, considering that the authority granted to
PANTRANCO is to operate a private ferry, it can still
assert that it cannot be held to account as a common
carrier towards its passengers and cargo.
Such an anomalous situation that will jeopardize the
safety and interests of its passengers and the cargo
owners cannot be allowed.

PAL V. CAB
Supra
Caveat of the decisionthis decision brings to a blur
the question on when it is needed to secure a franchise
from Congress. Before, when it is a CPCN, a legislative
franchise is a mandatory requirement. However, with
this case, it imports that no franchise is anymore
needed

TEJA V. IAC 148 SCRA 347

FACTS:Nale purchased from Teja Marketing a motorbike
with a side car. He accordingly gave a downpayment
and promised to pay the balance in 60 days. However,
he failed to pay the balance and asked for an extension
of one year. Still, he was not able to pay. An action for
sum of money and damages was filed and though Nale
didn't deny that he owed Teja Marketing money, he
alleged that the latter failed to register the chattel
mortgage and motor vehicle yearly with the LTC. The
trial courts sustained Teja Marketing and dismissed the
counterclaim, ordering Nale top pay the balance of the
purchase price. However, this was reversed by the
Court of Appeals on the ground that there was a illegal
transaction involved. The transaction that transpired
was that of a kabit system, prohibited by law.
HELD:Unquestionably, the parties herein operated
under an arrangement, commonly known as the "kabit

Transportation Law CADC

system" whereby a person who has been granted a
certificate of public convenience allows another person
who owns motor vehicles to operate under such
franchise for a fee. A certificate of public convenience
is a special privilege conferred by the government.
Abuse of this privilege by the grantees thereof cannot
be countenanced. The "kabit system" has been
Identified as one of the root causes of the prevalence
of
graft and corruption in the government
transportation offices.
Although not outrightly penalized as a criminal offense,
the kabit system is invariably recognized as being
contrary to public policy and, therefore, void
and in existent under Article 1409 of the Civil Code. It
is a fundamental principle that the court will not aid
either party to enforce an illegal contract, but will leave
both where it finds then. Upon this premise it would be
error to accord the parties relief from their predicament

PRIVATE NATURE; RIGHTS AND OBLIGATIONS OF

PARTIES INTER SE ARISING FROM TRANSACTIONS
RELATING TO TRANSPORTATION
ABSENT A TRANSPORTATION CONTRACT
LARA V. VALENCIA 104 PHIL 65
FACTS:Lara was an inspector of the Bureau of Forestry.
The defendant is engaged in the business of exporting
logs from his lumber concession in Cotabato. Lara went
to said concession upon instructions of his chief to
classify the logs of defendant which were about to be
loaded on a ship anchored in the port of Parang. The
work Lara of lasted for six days during which he
contracted malaria fever. On a later date, Lara who
then in a hurry to return to Davao asked defendant if
he could take him in his pick-up as there was then no
other means of transportation, to which defendant
agreed, and in that same morning the pick-up left
Parang bound for Davao taking along six passengers,
including Lara.
The pick-up has a front seat where the driver and two
passengers can be accommodated and the back has a
steel flooring enclosed with a steel walling of 16 to 17
inches tall on the sides and with a 19 inches tall walling
at the back. In the middle Lara sat on a bag. Before
leaving Parang, defendant invited Lara to sit with him
on the front seat but Lara declined. It was their
understanding that upon reaching barrio Samoay,
Cotabato, the passengers were to alight and take a bus
bound for Davao, but when they arrived at that place,
only one alighted and the other passengers requested
defendant to allow them to ride with him up to Davao
because there was then no available bus that they
could take in going to that place. Defendant again
accommodated the passengers.
When they continued their trip, the sitting arrangement
of the passengers remained the same, Lara being
seated on a bag in the middle with his arms on a

suitcase and his head cove red by a jacket. Upon

reaching Km. 96, barrio Catidtuan, Lara accidentally fell
from the pick-up and as a result he suffered serious
injuries. Valencia stopped the pick-up to see what
happened to Lara. He sought the help of the residents
of that place and applied water to Lara but to no avail.
They brought Lara to the nearest place where they
could find a doctor and not having found any they took
him to St. Joseph's Clinic of Kidapawan. But when Lara
arrived he was already dead. From there authorities.
they proceeded to Davao City and immediately notified
the local
HELD:
It therefore appears that the deceased, as well his
companions who rode in the pick-up of defendant, were
merely accommodation passengers who paid nothing
for the service and so they can be considered as
invited guests within the meaning of the law As
accommodation
passengers
or
invited
guests,
defendant as owner and driver of the pick-up owes to
them merely the duty to exercise reasonable care so
that they may be transported safely to their
destination. Thus, "The rule is established by the
weight of authority that the owner or operator of an
automobile owes the duty to an invited guest to
exercise reasonable care in its operation, and not
unreasonably to expose him to danger and injury by
increasing the hazard of travel. This rule, as frequently
stated by the courts, is that an owner of an automobile
owes a guest the duty to exercise ordinary or
reasonable care to avoid injuring him. Since one riding
in an automobile is no less a guest because he asked
for the privilege of doing so, the same obligation of
care is imposed upon the driver as in the case of one
expressly invited to ride" (5 Am. Jur., 626-627).
Defendant, therefore, is only required to observe
ordinary care, and is not in duty bound to exercise
extraordinary diligence as required of a common
carrier by our law (Articles 1755 and 1756, new Civil
Code).
DEPARTMENT
OF
COMMUNICATIONS

TRANSPORTATION

AND

EO 125. SECTION 4. Mandate. The Ministry shall be the

primary policy, planning, programming, coordinating,
implementing, regulating, and administrative entity of
the Executive Branch of the government in the
promotion, development and regulation of dependable
and coordinated networks of transportation and
communication system, as well as in the fast, sale,
efficient and reliable postal, transportation and
communication services.
To accomplish such mandate, the Ministry shall have
the following objectives:1. Promote the development of
dependable
and
coordinated
networks
of
transportation and communication systems;2. Guide
government
and
private
investment
in
the
development
of
the
country's
intermodel
transportation and communication systems in a most
practical, expeditious, and orderly fashion for
maximum safety, service, and cost effectiveness;

[TYPE THE DOCUMENT TITLE]

3. Impose appropriate measure so that technical,

economic and other condition for the continuing
economic
viability
of
the
transportation
and
communication entities are not jeopardized and do not
encourage inefficiency and distortion of traffic
patronage;
4. Develop an integrated plan for a nationwide
transmission system in accordance with the national
and
international
telecommunication
service
requirement including, among others,radio and
television broadcast relaying, leased channel services
and data transmission;
5. Guide government and private investment in the
establishment, operation and maintenance of an
international switching system for incoming and
outgoing telecommunication services;
6. Encourage the development of a domestic
telecommunication industry in coordination with the
concern entities particularly, the manufacture of
communications/
electronics
equipment
and
components to complement and support as much as
possible, the expansion, development, operation and
maintenance of the nationwide telecommunications
network;
7. Provide for a safe, reliable and efficient postal
system for the country.
AIR
AIR TRANSPORTATION OFFICE

of which the Philippines is a participating member or by

bodies or associations reorganized by the Philippine
Government as the proper arbiter of such charges or
rates;
Administer and operate the Civil Aeronautics Training
Center;
Perform such other function as may be provided by law.

RA 776, Section 25. Organization

Aeronautics Administration.

of

the

Civil

The Civil Aeronautics Administration shall be under the

Administrative supervision and control of the
Department of Commerce and Industry. The Civil
Aeronautics Administration shall have one Chief and
one Deputy Chief who shall be known as
"Administrator"
and
"Deputy
Administrator",
respectively.
CIVIL AERONAUTICS BOARD
SECTION 5. Composition of the Board. - The Civil
Aeronautics Board shall be composed of the Secretary
of Transportation and Communications or his
designated representative as Chairman, the Assistant
Secretary for Air Transportation of the Department of
Transportation and Communications as Vice-Chairman,
the Commanding General of the Philippine Air Force*
and two (2) members to be appointed by the President
of the Philippines. They shall hold office at the pleasure
of the President.

EO 125. SECTION 12. Bureau of Air Transportation. The

Bureau of Air Transportation, as reorganized herein,
shall have the function of developing, formulating and
recommending plans, policies, program, projects,
standards, specification and guidelines related to Air
Transportation including air space utilization, air traffic
control
and
aeronautics
communication
and
information services, aircraft and air navigational
facilities, services, maintenance and operations. For
such purposes, it shall, with the approval of the
Minister:

SECTION 10. Powers and duties of the Board.

Establish and prescribe rules and regulations for the

inspection and registration of aircraft's;

xxx

Establish and prescribe rules and regulations for the

issuance of licenses to qualified airmen;

Establish and prescribe rules and regulations for the

enforcement of laws governing air transportation,
including the penalties for violations thereof, and for
the deputization of appropriate law enforcement
agencies in pursuant thereof;

Determine, fix and/or prescribe charges and/or rates

pertinent to the operation of public air utility facilities
and services except in cases where charges or rates
are established by international bodies or associations

(A) Except as otherwise provided herein, the Board

shall have the power to regulate the economic aspect
of air transportation, and shall have the general
supervision and regulation of, the jurisdiction and
control over, air carriers, general sales agents, cargo
sales agents, and airfreight forwarders as well as their
property, property rights, equipment, facilities, and
franchise, in so far as may be necessary for the
purpose of carrying out the provisions of this Act.

(C) The Board shall have the following specific powers

and duties:(1) In accordance with the provisions of
Chapter 4 of this Act, to issue, deny, amend, revise,
alter, modify, cancel, suspend, or revoke, in whole or in
part, upon petition or complaint, or upon its own
initiative, any temporary operating permit or Certificate
of Public Convenience and Necessity; Provided,
however, That in the case of foreign air carriers, the
permit shall be issued with the approval of the
President of the Republic of the Philippines.
(2) To fix and determine reasonable individual, joint or
special rates, charges or fares, which an air carrier may
demand, collect or receive for any service in

Transportation Law CADC

connection with air commerce. The Board may adopt
any original, amended, or new individual, joint or
special rates, charges or fares proposed by an air
carrier if the proposed individual, joint, or special rates,
charges for fares are not unduly preferential or unduly
discriminatory or unreasonable. The burden of proof to
show that the proposed individual, joint or special
rates, charges or fares are just and reasonable shall be
upon the air carrier proposing the same.
In fixing rates, charges, fares under the provisions of
this Act, the Board shall take into consideration, among
other factors:
(a) The effect of such rates upon the movement of
traffic;(b) The need in the public interest of adequate
and efficient transportation of persons and property by
air carriers at the lowest cost consistent with the
furnishing of such service.(c) Such standards
respecting the character and quality of service to be
rendered by air carriers as may be prescribed by or
pursuant
to
law;
d) The inherent advantages of transportation by
aircraft; and(e) The need of each air carrier for
revenues sufficient to enable such air carrier, under
honest, economical, and efficient management, to
provide adequate and efficient air carrier service.
(3) To authorize any type of charters whether domestic
or international and special air services or flight under
such terms and conditions as in its judgment public
interest requires. Notwithstanding the existence of
bilateral air agreement, the CAB is authorized to grant
any foreign airline increase in frequencies and/or
capacities on international routes when in its judgment
the national interest requires it, provided that the
utilization of the increase frequencies and capacities is
not more than thirty days. All grants of frequencies
and/or capacities shall be subject to the approval of the
President.

copy thereof, between such air carrier and any other

carrier or person, in relation to any traffic affected by
the provisions of this Act.
(7) To prescribe the forms of any and all accounts,
records, and memoranda of the movement of traffic, as
well as of the receipts and expenditures of money, and
the length of times such accounts, records and
memoranda shall be preserved: Provided, that any air
carrier may keep additional accounts, records, or
memoranda if they do not impair the integrity of the
accounts, records, or memoranda prescribed or
approved by the Board and do not constitute an undue
financial burden on such air carrier.
(8) To require each officer and director of any air carrier
to transmit a report describing the shares of stock with
any persons engaged in any phase or other interest
held by such air carrier of aeronautics, and the holding
of the stock in and control of, other persons engaged in
any phase of aeronautics.
SECTION 11. Nature, terms and conditions. - Certificate
of Public Convenience and Necessity is a permit issued
by the Board authorizing a person to engage in air
commerce and/or transportation, foreign and/or
domestic. No person shall engage in air commerce
unless there is in force a permit issued by the Board.
No general sales agent, cargo sales agent or airfreight
forwarder shall engage in any of the activities
mentioned in Section 3 paragraphs (jj), (kk) and (ll)
respectively, unless there is in force a permit or any
other form of authorization issued by the Board.
Any permit may be altered, amended, modified,
suspended, canceled or revoked by the Board in whole
or in part, upon complaints or petition or upon the
Boards initiative as hereinafter provided, whenever the
Board finds such action to be in the public interest.

(4) To approve or disapprove increase and/or decrease

of capital, lease, purchase, sales of aircraft of air carrier
engaged in air commerce; consolidation, merger,
purchase, lease and acquisition and control of
operating contracts between domestic foreign air
carriers, or between domestic air carriers or any person
engaged in any phase of aeronautics.

There shall be attached to the exercise of the privileges

granted by the permit, or amendment thereto, such
reasonable terms, conditions, or limitations as, in the
judgment of the Board, the public interest may require.
No permit shall confer any proprietary, property, or
exclusive right in the use of any air space, civil airway,
landing area of government air navigation facility.

(5) To inquire into the management of the business of

any air carrier and, to the extent reasonably necessary
for such inquiry, to obtain from such carrier, and from
any person controlling, or controlled by, or under
common control with, such air carrier, full and
complete reports and othe informations. Such reports
shall be under oath whenever the Board so requires.

The permit shall, among others specify the terminal

and intermediate points, if any, between which the air
carrier is authorized to operate the service to be
rendered, the time of arrival and departure at each
point, and the frequency of flights. Provided, that no
change in routes, rates, schedules or frequency nor
supplemental or additional flights to those covered by
an air commerce permit or franchise shall be affected
without prior approval of the Civil Aeronautics Board. In
so far as the operation is to take place within the
Philippines, the permit shall designate the terminal and
intermediate points only insofar as the Board shall
deem practicable, and otherwise shall designate only
the general route or routes to be followed.

(6) To require annual, monthly, periodical, and special

reports from any air carrier, to prescribe the manner
and form in which such reports shall be made, and to
require from any air carrier specific answers to all
questions upon which the Board may deem information
to be necessary. Such reports shall be under oath
whenever the Board so requires. The Board may also
require any air carrier to file with it any contract,
agreement, understanding or arrangement, or a true

No carrier shall abandon any route, or part thereof for

which a permit has been issued, unless upon findings

1
0

[TYPE THE DOCUMENT TITLE]

by the Civil Aeronautics Board that such an

abandonment is uneconomical and is in the public
interest.
SECTION 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 issued only to citizens of the
Philippines.
CIVIL AERONAUTICS AUTHORITY (RA9497)
PAL V. CAB 23 SCRA 992
FACTS:Fairways petitioned the CAB for authority to
operate its scheduled and non- scheduled domestic
flights. Upon hearing, it was granted provisional
authority to which PAL opposed. Fairways was
sustained.
HELD:The first ground is devoid of merit. Section 10C(1) of Republic Act No. 776, reading:
(C) The Board shall have the following specific powers
and duties:(1) In accordance with the provisions of
Chapter IV of this Act, to issue, deny, amend, revise,
alter, modify, cancel suspend or revoke, in whole or in
part, upon petitioner complaint, or upon its own
initiative, any temporary operating permit or Certificate
of Public Convenience and Necessity; Provided,
however, That in the case of foreign air carriers, the
permit shall be issued with the approval of the
President of the Republic of the Philippines.... explicitly
authorizes CAB to issue a "temporary operating
permit," and nothing contained, either in said section,
or in Chapter IV of Republic Act No. 776, negates the
power to issue said "permit", before the completion of
the applicant's evidence and that of the oppositor
thereto on the main petition. Indeed, the CAB's
authority to grant a temporary permit "upon its own
initiative," strongly suggests the power to exercise said
authority, even before the presentation of said
evidence has begun.
Moreover, we perceive no cogent reason to depart, in
connection with the commercial air transport service,
from the policy of our public service law, which
sanctions the issuance of temporary or provisional
permits or certificates of public convenience and
necessity, before the submission of a case for decision
on the merits. The overriding considerations in both
instances are the same, namely, that the service be
required by public convenience and necessity, and,
that the applicant is fit, as well as willing and able to
render such service properly, in conformity with law
and the pertinent rules, regulations and requirements

PAL V. CAB 270 SCRA 538

FACTS:PAL sought the annulment of the issuance of a

temporary operating permit to Grand Air by the CAB.
Grand Air has filed a petition for the issuance of a
Certificate of Public Convenience and Necessity and
upon compliance prayed for the issuance of the
temporary permit. Mainly it alleges that Grand Air
shouldnt be granted any temporary operating permit
absent any legislative franchise to operate. PAL also
alleged that the CBA had illegally exercised jurisdiction
over the matter due to the same reason.
HELD:There The Civil Aeronautics Board has jurisdiction
over GrandAir's Application for a Temporary Operating
Permit. This rule has been established in the case of
Philippine Air Lines Inc., vs. Civil Aeronautics Board,
promulgated on June 13, 1968.[12] The Board is
expressly authorized by Republic Act 776 to issue a
temporary operating permit or Certificate of Public
Convenience and Necessity, and nothing contained in
the said law negates the power to issue said permit
before the completion of the applicant's evidence and
that of the oppositor thereto on the main petition.
Indeed, the CAB's authority to grant a temporary
permit "upon its own initiative" strongly suggests the
power to exercise said authority, even before the
presentation of said evidence has begun. Assuming
arguendo that a legislative franchise is prerequisite to
the issuance of a permit, the absence of the same does
not affect the jurisdiction of the Board to hear the
application, but tolls only upon the ultimate issuance of
the requested permit.
The power to authorize and control the operation of a
public utility is admittedly a prerogative of the
legislature, since Congress is that branch of
government vested with plenary powers of legislation.
Congress has granted certain administrative agencies
the power to grant licenses for, or to authorize the
operation of certain public utilities. With the growing
complexity of modern life, the multiplication of the
subjects of governmental regulation, and the increased
difficulty of administering the laws, there is a
constantly growing tendency towards the delegation of
greater powers by the legislature, and towards the
approval of the practice by the courts. It is generally
recognized that a franchise may be derived indirectly
from the state through a duly designated agency, and
to this extent, the power to grant franchises has
frequently been delegated, even to agencies other
than those of a legislative nature. In pursuance of this,
it has been held that privileges conferred by grant by
local authorities as agents for the state constitute as
much a legislative franchise as though the grant had
been made by an act of the Legislature.
The trend of modern legislation is to vest the Public
Service Commissioner with the power to regulate and
control the operation of public services under
reasonable rules and regulations, and as a general
rule, courts will not interfere with the exercise of that
discretion when it is just and reasonable and founded

Transportation Law CADC

upon a legal right.
It is this policy which was pursued by the Court in
Albano vs. Reyes. Thus, a reading of the pertinent
issuances governing the Philippine Ports Authority,
proves that the PPA is empowered to undertake by
itself the operation and management of the Manila
International Container Terminal, or to authorize its
operation and management by another by contract or
other means, at its option. The latter power having
been delegated to the PPA, a franchise from Congress
to authorize an entity other than the PPA to operate
and manage the MICP becomes unnecessary.
Given the foregoing postulates, we find that 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. Such requirements were enumerated in
Section 21 of R.A. 776.
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.
LAND
LAND TRANSPORTATION OFFICE
SECTION 13. Bureau of Land Transportation. The
Bureau of Land Transportation is hereby created and
shall have the functions of developing, formulating and
recommending plans, programs, policies, standards,
specifications and guidelines pertaining to land
transportation. For such purposes, it shall, with the
approval of the Minister:
1. Establish a prescribe rules and regulations for
routes, zones and/or areas of particular operators of
public land services;

issuance of licenses to qualified motor vehicle drivers,

trimobile drivers, motor vehicle conductors, train
engineers and train conductors;
Establish and prescribe the corresponding rules and
regulation for the enforcement of laws governing land
transportation, including the penalties for violation
thereof, and for the deputation of appropriate law
enforcement agencies in pursuance thereof;
Determine, fix and/or prescribe charges and/or rates
pertinent to the operation of public and land utility
facilities and services except in cases where charges or
rates are established by international bodies or
association of which the Philippines is a participating
member or by bodies or association recognized by the
Philippine Government as the proper arbiter of such
charges or rates;
Establish and prescribe the rules, regulations,
procedures and standards for the accreditation of
driving schools;
Performs such other functions as may be provided by
law.
LAND
TRANSPORTATION
REGULATORY BOARD (L TFRB)

FRANCHISING

AND

EO 202. Sec. 1. Creation of the Land Transportation

Franchising and Regulatory Board. There is hereby
created in the Department of Transportation and
Communications, the Land Transportation Franchising
and Regulatory Board hereinafter referred to as the
"Board".
Sec. 2. Composition of the Board. The Board shall be
composed of a Chairman and two (2) members with
the same rank, salary and privileges of an Assistant
Secretary, all of whom shall be appointed by the
President of the Philippines upon recommendation of
the Secretary of Transportation and Communications.
One (1) member of the Board shall be a member of the
Bar and shall have engaged in the practice of law in
the Philippines for at least five (5) years, another a
holder of a degree in civil engineering, and the other a
holder of a degree in economics, finance or
management both with the same number of years of
experience and practice.

2. Establish and prescribe rules and regulations for the

issuance of certificates of public convenience for the
operation of public and land transportation utilities and
services such as motor vehicles, trimobiles, and
railroad lines;

Sec. 3. Executive Director and Support Staff of the

Board. The Board shall have an Executive Director who
shall also appointed by the President of the Philippines
upon the recommendation of the Secretary of
Transportation and Communications. He shall have the
rank, salary and privileges of a Department Service
Chief. He shall assist the Board in the performance of
its powers and functions.

3. Establish and prescribe rules and regulation for the

inspection and registration of public and land
transportation facilities such as motor vehicles,
trimobiles, and railroad lines;

The Board shall be supported by the Technical

Evaluation Division, Legal Division, Management
Information Division, Administrative Division and
Finance Division.

4. Establish and prescribe rules and regulations for the

Sec.

5.

Powers

and

Functions

of

the

Land

1
2

[TYPE THE DOCUMENT TITLE]

Transportation Franchising and Regulatory Board. The

Board shall have the following powers and functions: a.
To prescribe and regulate routes of service,
economically viable capacities and zones or areas of
operation of public land transportation services
provided by motorized vehicles in accordance with the
public land transportation development plans and
programs
approved
by
the
Department
of
Transportation and Communications;
b. To issue, amend, revise, suspend or cancel
Certificates of Public Convenience or permits
authorizing the operation of public land transportation
services provided by motorized vehicles, and to
prescribe the appropriate terms and conditions
therefor;
c. 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;
d. To issue preliminary or permanent injunction,
whether prohibitory or mandatory, in all cases in which
it has jurisdiction, and in which cases the pertinent
provisions of the Rules of Court shall apply;
e. To punish for contempt of the Board, both direct and
indirect, in accordance with the pertinent provisions of,
and the penalties prescribed by, the Rules of Court;f. To
issue subpoena and subpoena duces tecum and
summon witnesses to appear in any proceedings of the
Board, to administer oaths and affirmations;
g. To conduct investigations and hearings of complaints
for violation of the public service laws on land
transportation and of the Board's rules and regulations,
orders, decisions and/or rulings and to impose fines
and/or penalties for such violations;
h. To review motu proprio the decisions/actions of the
Regional Franchising and Regulatory Office herein
created;i. To promulgate rules and regulations
governing proceedings before the Board and the
Regional Franchising and Regulatory Office: Provided,
That except with respect to paragraphs d, e, f and g
hereof, the rules of procedure and evidence prevailing
in the courts of laws should not be controlling and it is
the spirit and intention of said rules that the Board and
the Regional Franchising and Regulatory Offices shall
use every and all reasonable means to ascertain facts
in its case speedily and objectively and without regard
to technicalities of law and procedures, all in the
interest of due process;j. To fix, impose and collect, and
periodically review and adjust, reasonable fees and
other related charges for services rendered;
k. To formulate, promulgate, administer, implement
and
enforce
rules
and
regulations
on
land
transportation
public
utilities,
standards
of
measurements and/or design, and rules and
regulations requiring operators of any public land
transportation service to equip, install and provide in
their utilities and in their stations such devices,

equipment facilities and operating procedures and

techniques as may promote safety, protection, comfort
and convenience to persons and property in their
charges as well as the safety of persons and property
within their areas of operations;
l. To coordinate and cooperate with other government
agencies and entities concerned with any aspect
involving public land transportation services with the
end in view of effecting continuing improvement of
such services; andm. To perform such other functions
and duties as may be provided by law, or as may be
necessary, or proper or incidental to the purposes and
objectives of this Executive Order.
Sec. 6. Decision of the Board; Appeals therefrom
and/or Review thereof. The Board, in the exercise of its
powers and functions, shall sit and render its decisions
en banc. Every such decision, order, or resolution of
the Board must bear the concurrence and signature of
at least two (2) members thereof.
The decision, order or resolution of the Board shall be
appealable to the Secretary within thirty (30) days from
receipt of the decision: Provided, That the Secretary
may motu proprio review any decision or action of the
Board before the same becomes final.
Sec. 7. Creation of Regional Franchising and
Regulatory Offices. There shall be a Regional
Franchising and Regulatory Office in each of the
administrative regions of the country which shall be
headed by a Board Regional Manager having the rank,
salary and privileges of a Department Assistant
Regional Director. The Regional Franchising and
Regulatory Offices shall hear and decide uncontested
applications/petitions for routes, within their respective
administrative
regions:
Provided,
That
applications/petitions for routes extending their
respective territorial jurisdictions shall be heard and
decided by the Board.
KMU LABOR CENTER V. GARCIA 239 SCRA 386
FACTS:Certain orders and circulars of the DOTC and
LFTRB are being assailed for its unconstitutionality and
illegality. These pertain to, but not limited to the
following-- (a) authorize provincial bus and jeepney
operators to increase or decrease the prescribed
transportation fares without application therefor with
the LTFRB and without hearing and approval thereof by
said agency in violation of Sec. 16(c) of Commonwealth
Act No. 146, as amended, otherwise known as the
Public Service Act, and in derogation of LTFRB's duty to
fix and determine just and reasonable fares by
delegating that function to bus operators, and (b)
establish a presumption of public need in favor of
applicants for certificates of public convenience (CPC)
and place on the oppositor the burden of proving that
there is no need for the proposed service, in patent
violation not only of Sec. 16(c) of CA 146, as amended,
but also of Sec. 20(a) of the same Act mandating that

Transportation Law CADC

fares should be "just and reasonable." It is, likewise,
violative of the Rules of Court which places upon each
party the burden to prove his own affirmative
3
allegations. The offending provisions contained in the
questioned issuances pointed out by petitioner, have
resulted in the introduction into our highways and
thoroughfares thousands of old and smoke-belching
buses, many of which are right-hand driven, and have
exposed our consumers to the burden of spiraling costs
of public transportation without hearing and due
process.
HELD:
On the fare-ranging scheme...
Legislature delegated to the defunct Public Service
Commission the power of fixing the rates of public
services. Respondent LTFRB, the existing regulatory
body today, is likewise vested with the same under
Executive Order No. 202 dated June 19, 1987. Section
5(c) of the said executive order authorizes LTFRB "to
determine, prescribe, approve and periodically review
and adjust, reasonable fares, rates and other related
charges, relative to the operation of public land
transportation
services
provided
by
motorized
vehicles."
In the case at bench, 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 as it is tantamount to an undue delegation of
legislative authority. Potestas delegata non delegari
potest. What has been delegated cannot be delegated.
This doctrine is based on the ethical principle that such
a delegated power constitutes not only a right but a
duty to be performed by the delegate through the
instrumentality of his own judgment and not through
the intervening mind of another. A further delegation of
such power would indeed constitute a negation of the
duty in violation of the trust reposed in the delegate
mandated to discharge it directly. The policy of
allowing the provincial bus operators to change and
increase their fares at will would result not only to a
chaotic situation but to an anarchic state of affairs. This
would leave the riding public at the mercy of transport
operators who may increase fares every hour, every
day, every month or every year, whenever it pleases
them or whenever they deem it "necessary" to do so.
On the presumption of public need...
While adopting in toto the foregoing requisites for the
issuance of a CPC, LTFRB Memorandum Circular No. 92009, 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.
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.
Verily, the power of a regulatory body to issue a CPC is
founded on the condition that after full-dress hearing
and investigation, it shall find, as a fact, that the
proposed operation is for the convenience of the
public.
WATER
SECTION 14. Maritime Industry Authority. The Maritime
Industry Authority is hereby retained and shall have
the following functions:1. Develop and formulate,
plans,
policies,
programs,
project,
standards,
specifications and guidelines geared towards the
promotion and development of the Maritime Industry,
the growth and effective regulation of shipping
enterprises, for the national security objectives of the
country;
2. Establish, prescribe and regulate routes, zones
and /or areas of operation of particular operators of
public water services;
3. Issue certificates of public convenience for the
operation of domestic and overseas water carriers;
4. Register vessels as well as issue certificates, licenses
or documents necessary or incident thereto;
5. Undertake the safety regulatory functions pertaining
to vessels construction and operations including the
determination of manning levels and issuance of
certificates competency to seamen;
6. Enforce laws, prescribe and enforce rules and
regulation, including penalties for violation thereof,
governing water transportation and the Philippine
merchant marine with the aid of other law enforcement
agencies;

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4

[TYPE THE DOCUMENT TITLE]

Undertake the issuance of licenses to qualified seamen

and harbor, bay and river pilots;

Determine, fix and/or prescribe charges and/or rates

pertinent to the operation of public water transport
utilities, facilitate all services except in cases where
charges or rates are established by international bodies
or association of which the Philippine is a participating
member or by bodies or association recognized by the
Philippine Government as the proper arbiter of such
charges or rates;

Accredit marine surveyors and maritime enterprises

engaged in shipbuilding, ship repair, ship breaking,
domestic and overseas shipping, ship management
and agency;

Supervise the Philippine Merchant Marine Academy as

recognized herein in accordance with its charter, the
provision hereof and applicable laws, rules and
regulation under the chairmanship of the maritime
administrator;

Issue and register the Continuous Discharge Book of

Filipino Seamen;

Establish and prescribe rules and regulation, standards

and procedures for the efficient and effective discharge
of the above functions;
Perform such other function as may now or hereafter
be provided by the law.