Case Digest: General Santos Coca-Cola Plant Free Workers Union – TUPAS vs Coca-Cola Bottlers Philippines., Inc., CA and NLRC, G.R. No. 178647

 

General Santos Coca-Cola Plant Free Workers Union – TUPAS vs Coca-Cola Bottlers Philippines., Inc., CA and NLRC, G.R. No. 178647, February 13, 2009

Subject: Labor Law 

FACTS

In the late 1990s, CCBPI experienced a significant decline in profitability due to the Asian economic crisis, hence, it implemented three (3) waves of an Early Retirement Program. An inter-office memorandum was sent to all of CCBPI’s Plant Human Resources Managers/Personnel Officers, including those of the CCBPI General Santos Plant (CCBPI Gen San) mandating them to put on hold "all requests for hiring to fill in vacancies in both regular and temporary positions in [the] Head Office and in the Plants." Because several employees availed of the early retirement program, vacancies were created in some departments, including the production department of CCBPI Gen San, where members of petitioner Union worked. This prompted petitioner to negotiate with the Labor Management Committee for filling up the vacancies with permanent employees. 

Faced with the "freeze hiring" directive, CCBPI Gen San engaged the services of JLBP Services Corporation (JLBP), a company in the business of providing labor and manpower services, including janitorial services, messengers, and office workers to various private and government offices.

In 2002, petitioner filed with the NCMB, a Notice of Strike on the ground of alleged unfair labor practice committed by CCBPI Gen San for contracting-out services regularly performed by union members ("union busting"). After conciliation and mediation proceedings before the NCMB, the parties failed to come to an amicable settlement. Hence, CCBPI filed a Petition for Assumption of Jurisdiction with the Office of the Secretary of Labor and Employment. The Secretary of Labor issued an Order enjoining the threatened strike and certifying the dispute to the NLRC for compulsory arbitration.

In 2003, the NLRC ruled that CCBPI was not guilty of unfair labor practice for contracting out jobs to JLBP. The NLRC anchored its ruling on the validity of the "Going-to-the-Market" (GTM) system implemented by the company, which called for restructuring its selling and distribution system, leading to the closure of certain sales offices and the elimination of conventional sales routes. CA affirmed NLRC’s decision that CCBPI did not commit unfair labor practice. Hence, this petition for review.

ISSUE

Whether or not JLBP is an independent contractor, whether or not CCBPI’s contracting-out of jobs to JLBP amounted to unfair labor practice, and whether or not such action was a valid exercise of management prerogative, call for a re-examination of evidence, which is not within the ambit of this Court’s jurisdiction.

RULING

Yes, JLBP is an independent Contractor. No, CCBPI’s contracting out of jobs to JLBP does not amount to unfair labor practice. Yes, it is a valid exercise of management prerogative.

Under the law, it shall be unlawful for an employer to commit any of the following unfair labor practices: (c) To contract out services or functions being performed by union members when such will interfere with, restrain or coerce employees in the exercise of their right to self-organization.

In this case, SC held that unfair labor practice refers to "acts that violate the workers’ right to organize." The prohibited acts are related to the workers’ right to self-organization and to the observance of a CBA. Without that element, the acts, even if unfair, are not unfair labor practices. It is true that the NLRC erroneously concluded that the contracting- out of jobs in CCBPI Gen San was due to the GTM system, which actually affected CCBPI’s sales and marketing departments, and had nothing to do with petitioner’s complaint. However, this does not diminish the NLRC’s finding that JLBP was a legitimate, independent contractor and that CCBPI Gen San engaged the services of JLBP to meet business exigencies created by the freeze-hiring directive of the CCBPI Head Office. CCBPI did not engage in labor-only contracting and, therefore, was not guilty of unfair labor practice. SC held that the company’s action to contract-out the services and functions performed by Union members did not constitute unfair labor practice as this was not directed at the members’ right to self-organization. Both the NLRC and the CA found that petitioner was unable to prove its charge of unfair labor practice. It was the Union that had the burden of adducing substantial evidence to support its allegations of unfair labor practice, which burden it failed to discharge.

Case Digest: PCI Leasing and Finance, Inc. vs. UCPB General Insurance Co., Inc., G.R. No. 162267

 

PCI Leasing and Finance, Inc. vs. UCPB General Insurance Co., Inc., G.R. No. 162267, July 4, 2008

Subject: Transportation Law

FACTS

A Mitsubishi Lancer was hit and bumped by an 18-wheeler Tanker Truck o Lancer, owned by UCPB and insured by respondent, driven by Flaviano Isaac with Conrado Geronimo, the Asst. Manager of UCPB. While the truck was owned by petitioner and allegedly leased to and operated by SUGECO and driven by its employee, Renato Gonzaga.

The rear part of the Lancer exploded due to the impact. The driver and passenger suffered physical injuries. However, the Truck driver Gonzaga continued on his way to its destination and did not bother to bring his victims to the hospital Respondent paid insurance proceeds to the assured UCPB Demands were made by respondent to the registered owner of the truck, PCI, for payment of the amount of the insurance proceeds.

No payment was made Respondent filed the present case. Petitioner admits that it is the owner, but it could not be held liable for the collision, since the driver of the truck, Gonzaga, was not its employee, but that of SUGECO. It was SUGECO that was the actual operator of the truck, pursuant to a Contract of Lease.

After trial, RTC favored the respondent and held petitioner and driver are solidarily liable to respondent. On appeal, CA affirmed RTC’s decision with modifications.

Under the Public Service Act, if the property covered by a franchise is transferred or leased to another without obtaining the requisite approval, the transfer is not binding on the Public Service Commission and, in contemplation of law, the grantee continues to be responsible under the franchise in relation to the operation of the vehicle, such as damage or injury to third parties due to collisions.

Petitioner contends that PSA applies only to common carriers, or those which have franchises to operate as public utilities. Its truck is a private commercial vehicle for business use, which is not offered for service to the general public. With the enactment of RA 8556, financing companies have been absolved from liability for the consequences of quasi-delictual acts or omissions involving financially leased property.

ISSUE

Whether or not the petitioner is liable to the respondent even though the vehicle is on lease to another when the incident happened.

RULING

Yes, the petitioner is still liable to the respondent.

In contemplation of law, the registered owner of a motor vehicle is the employer of its driver, with the actual operator and employer, such as a lessee, being considered as merely the owner's agent. Even if a sale has been executed before a tortious incident, the sale, if unregistered, has no effect as to the right of the public and third persons to recover from the registered owner.  The public has the right to conclusively presume that the registered owner is the real owner and may sue accordingly.

In this case, there is not even a sale of the vehicle involved, but a mere lease, which remained unregistered up to the time of the occurrence of the quasi-delict. Since a lease does not even transfer title or ownership, there is more reason to uphold the policy behind the law On financing companies. The new law, RA 8556, does not supersede or repeal the law on compulsory motor vehicle registration. Thus, the rule remains the same: a sale, lease, or financial lease, for that matter, that is not registered with the Land Transportation Office, still does not bind third persons who are aggrieved in tortious incidents, for the latter need only to rely on the public registration of a motor vehicle as conclusive evidence of ownership. A lease such as the one involved in the instant case is an encumbrance in contemplation of law, which needs to be registered in order for it to bind third parties.

The failure to register a lease, sale, transfer or encumbrance, should not benefit the parties responsible to the prejudice of innocent victims. The non-registration of the lease contract between petitioner and its lessee precludes the former from enjoying the benefits under RA 8556. The registered owner is primarily responsible for the damage caused to the vehicle of the plaintiff, but he has a right to be indemnified by the real or actual owner of the amount that he may be required to pay as damage for the injury caused to the plaintiff.

Case Digest: First Malayan Leasing and Finance Corp. vs. CA, 209 SCRA 660, GR. No. 91378

 

First Malayan Leasing and Finance Corp. vs. CA, 209 SCRA 660, GR. No. 91378, June 9, 1992

Subject: Transportation Law

FACTS

Respondent Vitug got into a three-vehicle collision with another car and an ​Isuzu cargo truck registered in the name of Petitioner FMLFC​. Bystanders were able to save Vitug; however, Vitug’s two other passengers were burned to death. Vitug also lost some personal items and had to go to US twice for medical treatment. FMLFC denied any liability, alleging that even if they were the registered owners of the Isuzu cargo truck, they had already ​sold the truck to a certain Vicente Trinidad​.

RTC ruled in favor of Vitug and ordered FMLFC to pay Vitug damages. CA affirmed but also modified RTC’s decision by ordering the estate of Vicente Trinidad to indemnify FMLFC for any amount it pays to Vitug.

ISSUE

Whether or not FMLFC is liable for damages despite it not being the actual owner of the truck.​

RULING

Yes, FMLFC is liable for damages.

Under the law, regardless of who the ​actual owner of a motor vehicle might be, the registered owner is the operator of the same with respect to the public and third persons, and as such, directly and primarily responsible for the consequences of its operation. In contemplation of law, the owner/operator ​of record is the employer of the driver, the actual operator and employer being considered merely as his agent.

In this case, FMLFC is liable. First, the trial court’s factual finding that FMLFC is the REGISTERED owner of the truck cannot be disturbed by the SC. Second, the Court ruled that it is the ​registered owner or operator of record​, despite there being a different actual owner, who is the one liable for damages caused by a vehicle regardless of any alleged sale or lease made thereon.

Case Digest: Benedicto vs. IAC, G.R. No. 70876

 

Benedicto vs. IAC, G.R. No. 70876, July 19, 1990

Subject: Transportation Law

FACTS

In May 1980, Greenhills, a lumber manufacturing firm, was obligated to deliver 100,000 board feet of sawn lumber to Blue Star Mahogany, Inc. in Valenzuela, Bulacan. The company's resident manager, Dominador Cruz, contracted Virgilio Licuden, the driver of a cargo truck, to transport the lumber. Licuden was charged with two invoices, one for 5,374 board feet and the other for 2,316 board feet. However, the lumber had not arrived in Valenzuela, and Blue Star's manager informed Greenhills' president. Greenhills filed criminal and civil cases against Licuden and Benedicto for estafa and recovery of the lost lumber. Benedicto denied liability, claiming she was a stranger to the contract and that the truck had been sold to Benjamin Tee. The Intermediate Appellate Court affirmed the trial court's decision, holding that since Benedicto was the registered owner of the truck, Licuden was her employee and that she should be responsible for the negligence of the driver and bear the loss of the lumber plus damages.

ISSUE

Whether or not Petitioner is liable for the value of the undelivered or lost sawn lumber.

RULING

Yes, there is no dispute that petitioner Benedicto has been holding herself out to the public as engaged in the business of hauling or transporting goods for hire or compensation. Petitioner Benedicto is, in brief, a common carrier.

The prevailing doctrine on common carriers makes the registered owner liable for consequences flowing from the operations of the carrier, even though the specific vehicle involved may already have been transferred to another person. This doctrine rests upon the principle that in dealing with vehicles registered under the Public Service Law, the public has the right to assume that the registered owner is the actual or lawful owner thereof It would be very difficult and often impossible as a practical matter, for members of the general public to enforce the rights of action that they may have for injuries inflicted by the vehicles being negligently operated if they should be required to prove who the actual owner is. The registered owner is not allowed to deny liability by proving the identity of the alleged transferee.

In this case, contrary to the petitioner's claim, private respondent is not required to go beyond the vehicle's certificate of registration to ascertain the owner of the carrier. In this regard, the letter presented by the petitioner allegedly written by Benjamin Tee admitting that Licuden was his driver, had no evidentiary value not only because Benjamin Tee was not presented in court to testify on this matter but also because of the aforementioned doctrine. To permit the ostensible or registered owner to prove who the actual owner is, would be to set at naught the purpose or public policy which infuses that doctrine.

Case Digest: Lim vs. CA, G.R. No. 125817

 

Lim vs. CA, G.R. No. 125817, January 16, 2002

Subject: Transportation Law

FACTS

Sometime in 1982 private respondent Donato Gonzales purchased an Isuzu passenger jeepney from Gomercindo Vallarta, holder of a certificate of public convenience for the operation of public utility vehicle plying the Monumento- Bulacan route.

While private respondent Gonzales continued offering the jeepney for public transport services he did not have the registration of the vehicle transferred in his name nor did he source for himself a certificate of public convenience for its operation. Thus, Vallarta remained on record as its registered owner and operator.

On 22 July 1990, while the jeepney was running northbound along the North diversion road somewhere in Meycauayan, Bulacan, it collided with a ten-wheeler- truck owned by petitioner Abelardo Lim and driven by his co-petitioner Esmadito Gunnaban. Gunnaban owned responsibility for the accident, explaining that while he was traveling towards Manila the truck suddenly lost its brakes.

Petitioner Lim shouldered the costs for hospitalization of the wounded, compensated the heirs of the deceased passenger, and had the Ferroza restored to good condition.He also negotiated with private respondent and offered to have the passenger jeepney repaired at his shop. Private respondent however did not accept the offer so Lim offered him P20,000.00, the assessment of the damage as estimated by his chief mechanic.

Again, petitioner Lim’s proposition was rejected; instead, private respondent was unyielding. Under the circumstances, negotiations had to be abandoned; hence, the filing of the complaint for damages by private respondent against petitioners.

RTC upheld the private respondent’s claim. On appeal, CA affirmed RTC’s ruling.

Petitioner contends that the Court of Appeals erred in sustaining the decision of the trial court despite their opposition to the well-established doctrine that an operator of a vehicle continues to be its operator as long as he remains the operator of record. According to them, to recognize an operator under the kabit system as the real party in interest and to countenance his claim for damages is utterly subversive of public policy.

ISSUE

Whether or not the new owner have any legal personality to bring the action, or is he the real party in interest in the suit, despite the fact that he is not the registered owner under the certificate of public convenience.

RULING

Yes, the new owner have any legal personality to bring the action, or is he the real party in interest in the suit, despite the fact that he is not the registered owner under the certificate of public convenience.

The kabit system is an arrangement whereby a person who has been granted a certificate of public convenience allows other persons who own motor vehicles to operate them under his license, sometimes for a fee or percentage of the earnings.

The kabit system is invariably recognized as being contrary to public policy and therefore void and inexistent under Art. 1409 of the Civil Code. One of the primary factors considered in the granting of a certificate of public convenience for the business of public transportation is the financial capacity of the holder of the license, so that liabilities arising from accidents may be duly compensated.

The kabit system renders illusory such purpose and, worse, may still be availed of by the grantee to escape civil liability caused by a negligent use of a vehicle owned by another and operated under his license. If a registered owner is allowed to escape liability by proving who the supposed owner of the vehicle is, it would be easy for him to transfer the subject vehicle to another who possesses no property with which to respond financially for the damage done.

Thus, for the safety of passengers and public who may have been wronged and deceived through the baneful kabit system, the registered owner of the vehicle is not allowed to prove that another person has become the owner so that he may be thereby relieved of responsibility.

In this case, it is at once apparent that the evil sought to be prevented in enjoining the kabit system does not exist. First, neither of the parties to the pernicious kabit system is being held liable for damages. Second, the case arose from the negligence of another vehicle in using the public road to whom no representation, or misrepresentation, was necessary. Thus it cannot be said that private respondent Gonzales and the registered owner of the jeepney were in estoppel for leading the public to believe that the jeepney belonged to the registered owner. Third, the riding public was not bothered nor inconvenienced at the very least by the illegal arrangement. On the contrary, it was private respondent himself who had been wronged and was seeking compensation for the damage done to him. Certainly, it would be the height of inequity to deny him his right. It is evident that private respondent has the right to proceed against petitioners for the damage caused on his passenger jeepney as well as on his business. Any effort then to frustrate his claim of damages by the ingenuity with which petitioners framed the issue should be discouraged, if not repelled.

Case Digest: Jardin vs. National Labor Relations Commission, G.R. No. 119268

 

Jardin vs. National Labor Relations Commission, G.R. No. 119268, February 23, 2000

Subject: Transportation Law

FACTS

Petitioners worked as drivers for Philjama International Inc., fulfilling responsibilities within a 24-hour work schedule under a boundary system. Notably, the private respondent consistently deducted P30.00 from the daily earnings of the petitioners, citing it as a fee for washing taxi units. Suspecting the legality of this deduction, the petitioners, in an effort to protect their rights and interests, formed a labor union. However, tensions arose when, on August 6, 1991, the private respondent, suspecting union formation, prohibited the petitioners from driving.

In response to this restriction, petitioners filed a comprehensive complaint, encompassing allegations of unfair labor practices, illegal dismissal, and illegal deduction. Despite their efforts, the labor arbiter dismissed the complaint for lack of merit. Subsequently, the National Labor Relations Commission (NLRC) intervened, reversing the labor arbiter's decision and officially recognizing the petitioners as employees.

While the private respondent's initial motion for reconsideration was denied, a subsequent attempt proved successful. This turn of events prompted the petitioners to seek reconsideration, alleging grave abuse of discretion in the proceedings.

ISSUE/S

1. Whether NLRC has jurisdiction to entertain the second motion for reconsideration.

2. Whether the existence of an employer-employee relationship is a settled issue.

3. Whether existing jurisprudence supports the view that petitioners are employees.

RULING

1. Yes, the court held that NLRC's acceptance of the second motion for reconsideration was a violation of its own rules, constituting grave abuse of discretion. NLRC's rules explicitly allow only one motion for reconsideration from the same party. The court emphasized the importance of adhering to procedural rules to ensure an expeditious resolution of labor cases. The court noted that the rationale for allowing only one motion for reconsideration is to promote the swift and cost-effective settlement of labor disputes.

2. Yes, the court disagreed with NLRC's ruling that there was no employer-employee relationship between the parties. It cited prevailing jurisprudence that establishes the relationship between taxi owners/operators and taxi drivers under the boundary system as that of employer-employee, not lessor-lessee. The court emphasized that control is a crucial factor in determining an employer-employee relationship, and the owners/operators did exercise supervision and control over the drivers.

3. Yes, the court reiterated that termination of employment must follow legal procedures and be based on just and authorized causes. Since the termination of petitioners was without valid cause and lacked compliance with notice and hearing requirements, it was deemed illegal. The court ordered private respondent to reinstate the petitioners to their positions and pay them full backwages, computed from the date of dismissal until their actual reinstatement.

Case Digest: Paguio Transport Corp. vs. National Labor Relations Commission, G.R. No. 119500

 

Paguio Transport Corp. vs. National Labor Relations Commission, G.R. No. 119500, August 28, 1998

Subject: Transportation Law

FACTS

Complainant Melchor was hired by PTC as a taxi driver under the boundary system. He was advised to stop working and have a rest after a car accident involving the taxi unit he was driving. He was told by the PTC that his service was no longer needed. Then the complaint for illegal dismissal was raised. The petitioner concludes that he had no control over the number of hour’s private respondent had to work and the routes he had to take; therefore no employer-employee relationship exists.

ISSUE

Whether or not an employer-employee relationship exists.

RULING

Yes, there is an employee-employer relationship between them.

Under the law, boundary system is that of employer-employee and not of lessor-lessee. The “boundary system” the drivers do not receive fixed wages; all the excess in the amount of boundary was considered his income but it is not sufficient to withdraw the relationship between them from that of employer and employee.

In this case, private respondents were employees because they had been engaged to perform activities which were usually necessary or desirable in the usual trade or business of the employer. The petition was dismissed, the private respondent was entitled for the claim of damages and illegal dismissal.

Case Digest: Fisher vs. Yangco Steamship Company, G.R. No. L8095

 

Fisher vs. Yangco Steamship Company, G.R. No. L8095, March 31, 1915

Subject: Transportation Law

FACTS

The plaintiff, a stockholder in the Yangco Steamship Company, is suing the company for refusing to accept dynamite, powder, or other explosives for carriage on its vessels. The company's directors have declared that the classes of merchandise to be carried do not include such explosives, and prohibiting officers, agents, and servants from carrying or accepting such explosives. The Acting Collector of Customs demanded the company's acceptance and carriage of such explosives, and the company has refused to issue clearance documents until the company consents.

The plaintiff believes that if the company declines to accept such explosives, the Attorney-General of the Philippine Islands and the prosecuting attorney of Manila intend to institute proceedings against the company, its managers, agents, and servants to enforce the requirements. As a result, the company's managers and agents refuse to cease the carriage of such explosives.

The plaintiff filed a case to enjoin the steamship company from accepting such explosives under any conditions, prohibit the Collector of Customs and prosecuting officers from compel the company to accept such explosives, and prohibit officials from invoked penal provisions of Act No. 98 in case of refusal. The petitioner argued that a common carrier in the Philippine Islands may decline to accept any shipment of merchandise of a class it expressly or impliedly declines to accept from all shippers, as the duty of a common carrier to carry for all who offer arises from their public profession.

ISSUE

Whether or not a steam vessel's owners and officers, licensed to engage in coastwise trade of the Philippine Islands, can refuse to accept "dynamite, powder, or other explosives" from any shippers offering such explosives for carriage, if they are a common carrier.

RULING

No, a steam vessel's owners and officers, licensed to engage in the coastwise trade of the Philippine Islands, cannot refuse to accept "dynamite, powder, or other explosives" from any shippers offering such explosives for carriage, if they are a common carrier.

Under the law, common carriers cannot decline to accept certain goods for carriage due to traffic prejudice unless it is reasonable and necessary. Discrimination must be substantial, justifying the courts' decision. The state has the power to impose just regulations in the public's interest, but these must not deprive property owners without due process, confiscate private property without just compensation, or limit vested rights or privileges acquired under a charter or franchise. Mere prejudice or whim will not suffice.

The provisions of the Philippine statute (Act No. 98) do not force a common carrier to engage in any business against their will or make use of their facilities in a manner or for a purpose for which they are not reasonably adapted. It only prescribes that a common carrier must treat all alike, may not pick and choose which customer he will serve, and shall not make any undue or unreasonable preferences or discriminations whatsoever to the prejudice not only of any person or locality but also of any particular kind of traffic.

In the case of a steamship company, the refusal of a vessel to accept explosives for carriage on any of its vessels subjects the traffic in such explosives to a manifest prejudice and discrimination. The mere fact that violent and destructive explosions can be obtained by the use of dynamite under certain conditions is not sufficient to justify the refusal of a vessel, duly licensed as a common carrier of merchandise, to accept it for carriage. If the carrier can exercise due diligence and take reasonable precautions, the carrier would not be justified in subjecting the traffic in this commodity to prejudice or discrimination by proof that there would be a possibility of danger from explosion when no such precautions are taken.

Case Digest: Batangas CATV vs. Court of Appeals, 439 SCRA 326, G.R. No. 138810

 

Batangas CATV vs. Court of Appeals, 439 SCRA 326, G.R. No. 138810, September 29, 2004

Subject: Transportation Law

FACTS

On July 28, 1986, respondent Sangguniang Panlungsod enacted Resolution No. 210 granting petitioner a permit to construct, install, and operate a CATV system in Batangas City. Section 8 of the Resolution provides that petitioner is authorized to charge its subscribers the maximum rates specified therein, “provided, however, that any increase of rates shall be subject to the approval of the Sangguniang Panlungsod.

Sometime in November 1993, petitioner increased its subscriber rates from P88.00 to P180.00 per month. As a result, respondent Mayor wrote petitioner a letter threatening to cancel its permit unless it secures the approval of respondent Sangguniang Panlungsod, pursuant to Resolution No. 210.

Petitioner then filed with the RTC, Branch 7, Batangas City, a petition for injunction alleging that respondent Sangguniang Panlungsod has no authority to regulate the subscriber rates charged by CATV operators because under Executive Order No. 205, the National Telecommunications Commission (NTC) has the sole authority to regulate the CATV operation in the Philippines.

ISSUE

Whether or not a local government unit (LGU) regulate the subscriber rates charged by CATV operators within its territorial jurisdiction

RULING

No, a local government unit (LGU) cannot regulate the subscriber rates charged by CATV operators within its territorial jurisdiction.

The logical conclusion, therefore, is that in light of the above laws and E.O. No. 436, the NTC exercises regulatory power over CATV operators to the exclusion of other bodies. Like any other enterprise, CATV operation maybe regulated by LGUs under the general welfare clause. This is primarily because the CATV system commits the indiscretion of crossing public properties. (It uses public properties in order to reach subscribers.) The physical realities of constructing CATV system – the use of public streets, rights of ways, the founding of structures, and the parceling of large regions – allow an LGU a certain degree of regulation over CATV operators.

SC held that while it recognizes the LGUs’ power under the general welfare clause, it cannot sustain Resolution No. 210. The respondents strayed from the well-recognized limits of its power. The flaws in Resolution No. 210 are: (1) it violates the mandate of existing laws and (2) it violates the State’s deregulation policy over the CATV industry. LGUs must recognize that technical matters concerning CATV operation are within the exclusive regulatory power of the NTC.

Case Digest: Philcomsat vs. Alcuaz, 180 SCRA 218, G.R. No. 84818

 

Philcomsat vs. Alcuaz, 180 SCRA 218, G.R. No. 84818, December 18, 1989

Subject: Transportation Law

FACTS

The petition seeks to annul and set aside an Order 1 issued by respondent Commissioner Jose Luis Alcuaz of the NTC which directs the provisional reduction of the rates which may be charged by petitioner for certain specified lines of its services by fifteen percent (15%) with the reservation to make further reductions later, for being violative of the constitutional prohibition against undue delegation of legislative power and a denial of procedural, as well as substantive, due process of law.

Petitioner was exempt from the jurisdiction of the then Public Service Commission, now respondent NTC. However, pursuant to Executive Order No. 196 placed under the jurisdiction, control and regulation of respondent NTC, including all its facilities and services and the fixing of rates. Implementing said Executive Order No. 196, respondents required petitioner to apply for the requisite certificate of public convenience and necessity covering its facilities and the services it renders, as well as the corresponding authority to charge rates therefor.

Petitioner filed with respondent NTC an application for authority to continue operating and maintaining the same facilities it has been continuously operating and maintaining since 1967, to continue providing the international satellite communications services it has likewise been providing since 1967, and to charge the current rates applied for in rendering such services.

Pending hearing, it also applied for a provisional authority so that it can continue to operate and maintain the above-mentioned facilities, provide the services and charge therefor the aforesaid rates therein applied for. petitioner was granted a provisional authority which was valid for six (6) months which was extended 3 times, but the last extension directed the petitioner to charge modified reduced rates through a reduction of fifteen percent (15%) on the present authorized rates. Hence this petition.

ISSUE

Whether or not the Respondent violates procedural due process for having been issued without prior notice and hearing in exercising its power to fix the rate of the Petitioner?

RULING

Yes, the respondent violated the procedural due process.

Under the law, if the authorities that where the function of the administrative body is legislative, notice of hearing is not required by due process of law, aside from statute, the necessity of notice and hearing in an administrative proceeding depends on the character of the proceeding and the circumstances involved. 

In so far as generalization is possible in view of the great variety of administrative proceedings, it may be stated as a general rule that notice and hearing are not essential to the validity of administrative action where the administrative body acts in the exercise of executive, administrative, or legislative functions; but where a public administrative body acts in a judicial or quasi-judicial matter, and its acts are particular and immediate rather than general and prospective, the person whose rights or property may be affected by the action is entitled to notice and hearing.

Case Digest: Republic vs. MERALCO, 391 SCRA 700, G.R. No. 141314

 

Republic vs. MERALCO, 391 SCRA 700, G.R. No. 141314, November 15, 2002

Subject: Transportation Law

FACTS

MERALCO filed with petitioner ERB an application for the revision of its rate schedules to reflect an average increase in its distribution charge. ERB granted a provisional increase subject to the condition that should the COA thru its audit report find MERALCO is entitled to a lesser increase, all excess amounts collected from the latter’s customers shall either be refunded to them or correspondingly credited in their favor.

The COA report found that MERALCO is entitled to a lesser increase, thus ERB ordered the refund or crediting of the excess amounts. On appeal, the CA set aside the ERB decision. MRs were denied.

ISSUE

Whether or not the regulation of ERB as to the adjustment of rates of MERALCO is valid.

RULING

Yes, the regulation of ERB as to the adjustment of rates of MERALCO is valid.

The regulation of rates to be charged by public utilities is founded upon the police powers of the State and statutes prescribing rules for the control and regulation of public utilities are a valid exercise thereof. When private property is used for a public purpose and is affected with public interest, it ceases to be juris privati only and becomes subject to regulation. The regulation is to promote the common good. Submission to regulation may be withdrawn by the owner by discontinuing use; but as long as use of the property is continued, the same is subject to public regulation.

In regulating rates charged by public utilities, the State protects the public against arbitrary and excessive rates while maintaining the efficiency and quality of services rendered. However, the power to regulate rates does not give the State the right to prescribe rates which are so low as to deprive the public utility of a reasonable return on investment. Thus, the rates prescribed by the State must be one that yields a fair return on the public utility upon the value of the property performing the service and one that is reasonable to the public for the services rendered. The fixing of just and reasonable rates involves a balancing of the investor and the consumer interests.

Case Digest: Meralco vs. Marco Textiles, 374 SCRA 69, G.R. No. 126243

 

Meralco vs. Marco Textiles, 374 SCRA 69, G.R. No. 126243, January 18, 2002

Subject: Transportation Law

FACTS

Pursuant to the contract between MERALCO and MACRO, petitioner installed at respondent’s premises metering devices and necessary appurtenances thereto to record the latter’s electric energy consumption. The metering devices were duly identified by their meter and serial numbers: DB 351-86-02-315 and DB 351-85-04-362 while the installation of electric service was under billing account No. 9400-1822-19. Prior to installation, the BOE pre-tested, pre-calibrated and sealed the metering devices. Upon their installation at respondent’s premises, the devices were properly sealed and ascertained to be in perfect operating condition.

When respondent’s weaving department was gutted by fire on February 27, 1982, it caused a slump in the business resulting in irregular electric reading. It started operations in 1983 but was confined to dyeing textiles. Private respondent’s electric consumption varied, 30,000 to 66,000 kilowatt-hours (kwh) in 1984, 9,000 to 33,000 kwh in 1985 and 9,000 to 12,000 kwh in 1986.

MERALCO made several inspections. Each inspection resulted in a different billing.

The inspection report revealed that the meter tampering was committed once again. The meter seals were missing, and the polarity and non-polarity jaw of upper & lower elements were forcibly opened and hence, the meter disc stopped for all tests with loads on.

 MACRO filed with the Regional Trial Court a complaint for injunction with an application for a restraining order against MERALCO to restrain MERALCO from cutting MACRO’S electric service and to compel MERALCO to explain its billing.

The RTC issued a temporary restraining order enjoining the parties to maintain the status quo. After trial RTC rendered decision in favor of MACRO ordering MERALCO to restrain from disconnecting the power installation of MACRO, likewise, the Court of Appeals affirmed the RTC decision.

ISSUE

Whether or not MACRO tampered with the electric consumption meters.

RULING

No, MACRO did not tamper with the electric consumption meter

Under the law, the private electric utility or rural electric cooperative have the right and authority to disconnect the electric service after serving notice or warning to that effect without the need of a court or administrative order if someone caught in flagrante delicto doing of any acts tampers, jumpers or other devices whereby water, electricity or piped gas is stolen

In this case, Macro did not commit tampering act, as MACRO religiously paid its Monthly billing. Here, MERALCO committed wrongful and injurious invasion of MACRO''s rights by insinuating tampering of meters and demanding bills which are arbitrary, unjust, baseless and unexplained. "MERALCO should bear the loss. Public service companies which do not exercise prudence in the discharge of their duties shall be made to bear the consequences of such oversight.

Case Digest: Republic vs. Express Telecom, 373 SCRA 316, G.R. No. 147096

 

Republic vs. Express Telecom, 373 SCRA 316, G.R. No. 147096, January 15, 2002

Subject: Transportation Law

FACTS

In 1992, Bayantel filed an application with the NTC for a Certificate of Public Convenience or Necessity (CPCN) to operate a CMTS.

On May 17, 1999, Bayantel filed an Ex-Parte Motion to Revive Case, citing the availability of new frequency bands for CMTS operators, as provided for under Memorandum Circular No. 3-3-99.

On February 1, 2000, the NTC granted BayanTel's motion to revive the latter's application and set the case for hearings. Extelcom filed in NTC an Opposition (With Motion to Dismiss) praying for the dismissal of Bayantel's application and alleged that there was no public need for the service applied for by Bayantel.

On May 3, 2000, the NTC issued an Order granting in favor of Bayantel a provisional authority to operate CMTS service. With this, Extelcom filed with the Court of Appeals a petition for certiorari and prohibition, seeking the annulment of the NTC’s order.

On September 13, 2000, the Court of Appeals granted the writs of certiorari and prohibition prayed for by Extelcom. The orders of NTC were annulled and set aside and the Amended Application of respondent Bayantel is dismissed without prejudice to the filing of a new CMTS application.

Bayantel filed a motion for reconsideration. NTC, represented by OSG, also filed its own motion for reconsideration. On the other hand, Extelcom filed a Motion for Partial Reconsideration, praying that NTC Memorandum Circular No. 9-3-2000 be also declared null and void.  CA denied all of the motions for reconsideration of the parties for lack of merit. Hence, the NTC and Bayantel filed separate petitions for review.

ISSUE

Whether or not CA seriously erred in declaring the May 3, 2000 order granting Bayantel a provisional authority should be set aside and reversed.

RULING

Yes, CA seriously erred in declaring the May 3, 2000 order granting Bayantel a provisional authority should be set aside and reversed.

Section 16 of the Public Service Act authorizes the then PSC, upon notice and hearing, to issue Certificates of Public Convenience for the operation of public services 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 interests in a proper and suitable manner."

Section 29 of the Public Service Act states that all hearings and investigations before the Commission shall be governed by rules adopted by the Commission, and in the conduct thereof, the Commission shall not be bound by the technical rules of legal evidence.

In this case, the Court of Appeals erred in annulling the Order of the NTC dated May 3, 2000, granting Bayantel a provisional authority to install, operate and maintain CMTS. The general rule is that purely administrative and discretionary functions may not be interfered with by the courts. The established exception to the rule is where the issuing authority has gone beyond its statutory authority, exercised unconstitutional powers or clearly acted arbitrarily and without regard to his duty or with grave abuse of discretion. None of these obtains in the case at bar.

Case Digest: Telecom vs. COMELEC, 289 SCRA 337, G.R. No. 132922

 

Telecom vs. COMELEC, 289 SCRA 337, G.R. No. 132922, April 21, 1998

Subject: Transportation Law

FACTS

Petitioner Telecommunications and Broadcast Attorneys of the Philippines, Inc. and GMA Network, Inc. challenge the validity of Section 92 of BP 881 on the ground (1) that it takes property without due process of law and without just compensation; (2) that it denies radio and television broadcast companies the equal protection of the laws; and (3) that it is in excess of the power given to the COMELEC to supervise or regulate the operation of media of communication or information during the period of election.

Petitioner GMA Network claims that it suffered losses in providing COMELEC Time in the 1992 presidential election and the 1995 senatorial election and that it stands to suffer even more should it be required to do so again this year. Petitioners contend that Section 92 of BP 881 violates the due process clause and the eminent domain provision of the Constitution by taking airtime from radio and television broadcasting stations without payment of just compensation claiming that the primary source of revenue of the radio and television stations is the sale of air time to advertisers. Petitioners claim that Section 92 is an invalid amendment of R.A. No. 7252 which granted GMA Network, Inc. a franchise for the operation of radio and television broadcasting stations. They argue that although Section 5 of R.A. No. 7252 gives the government the power to temporarily use and operate the stations of petitioner GMA Network or to authorize such use and operation, the exercise of this right must be compensated. Petitioners also complain that B.P. 881, Section 92 singles out radio and television stations to provide free airtime.

Finally, it is argued that the power to supervise or regulate given to the COMELEC under Art. IX-C, Section 92 of the Constitution does not include the power to prohibit.

ISSUE

Whether or not the power to supervise or regulate given to the COMELEC under Art. IX-C, Section 92 of the Constitution includes the power to prohibit.

RULING

Yes, the power to supervise or regulate given to the COMELEC under Art. IX-C, Section 92 of the Constitution includes the power to prohibit.

The Constitution allows the COMELEC to regulate the use of media information, while Congress prohibits the sale or donation of print space or airtime for political ads. This distinction between the object of supervision and regulation is a fallacy. Section 11(b) of R.A. No. 6646 only half of the regulatory provision, mandated by the COMELEC to procure print space and airtime for allocation to candidates. The law ensures free, orderly, honest, peaceful, and credible elections by allocating equal time and space for all candidates.

The prohibition on media advertising by candidates limits the COMELEC Time and COMELEC Space, which are the only means through which candidates can advertise their qualifications and programs of government. Failure to provide airtime unless paid by the government would deprive the people of their right to know. The Constitution recognizes the right of the people to information on matters of public concern and states that the use of property bears a social function and is subject to the state's duty to promote distributive justice and intervene when the common good demands it.

To affirm the validity of Section 92 of B.P. 881, public broadcasters must ensure the variety and vigor of public debate on election issues. Broadcast media are not just common carriers but also public trustees responsible for ensuring access to the diversity of views on political issues. The use of property bears a social function and is subject to the state's duty to intervene for the common good. Broadcast media can find their reward in providing altruistic service in connection with election holdings.

Case Digest: Luzon Stevedoring Company, Inc. vs. The Public Service Commission, G.R. No. L-5458

 

Luzon Stevedoring Company, Inc. vs. The Public Service Commission, G.R. No. L-5458, September 16, 1953

Subject: Transportation Law

FACTS

Petitioners are engaged in the stevedoring or lighterage and harbor towage business. They are also engaged in interisland service which consist of hauling cargoes such as sugar, oil, fertilizer and other commercial commodities. There is no fixed route in the transportation of these cargoes, the same being left at the indication of the owner or shipper of the goods. Petitioners, in their hauling business, serve only a limited portion of the public.

The Philippine Shipowners’ Association complained to the Public Service Commission that petitioners were engaged in the transportation of cargo in the Philippines for hire or compensation without authority or approval of the Commission. The rates petitioners charged resulted in ruinous competition.

The Public Service Commission restrained petitioners from further operating their watercraft to transport goods for hire or compensation between points in the Philippines until the commission approves the rates they propose to charge.

ISSUE

Whether the petitioners fall under the definition in Section 13 (b) of the Public Service Law (C.A. Act No. 146).

RULING

Yes. It is not necessary under said definition that one holds himself out as serving or willing to serve the public in order to be considered public service. It is not necessary, in order to be a public service, that an organization be dedicated to public use, i.e., ready and willing to serve the public as a class. It is only necessary that it must in some way be impressed with a public interest; and whether the operation of a business is a public utility depends upon whether or not the service rendered by it is of a public character and of public consequence and concern.

It can scarcely be denied that the contracts between the owners of the barges and the owners of the cargo at bar were ordinary contracts of transportation and not of lease. Petitioners’ watercraft was manned entirely by crews in their employ and payroll, and the operation of the said craft was under their direction and control, the customers assuming no responsibility for the goods handled on the barges.

C.A. No. 146 clearly declares that an enterprise of any of the kinds therein enumerated is a public service if conducted for hire or compensation even if the operator deals only with a portion of the public or limited clientele. Public utility, even where the term is not defined by statute, is not determined by the number of people actually served.

The Public Service Law was enacted not only to protect the public against unreasonable charges and poor, inefficient service, but also to prevent ruinous competition.

Just as the legislature may not declare a company or enterprise to be a public utility when it is not inherently such, a public utility may not evade control and supervision of its operation by the government by selecting its customers under the guise of private transactions.