Case Digest: Philippine Airlines, Inc. vs. Civil Aeronautics Board, G.R. No. 119528

Philippine Airlines, Inc. vs. Civil Aeronautics Board, G.R. No. 119528, March 26, 1997

Subject: Transportation Law

FACTS

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

ISSUE

Whether or not the CAB had the jurisdiction to hear the application because Grand Air did not possess a legislative franchise.

Whether or not the Congress, in enacting Republic Act 776, has delegated the authority to authorize the operation of domestic air transport services to the respondent Board, such that Congressional mandate for the approval of such authority is no longer necessary.

RULING

Yes, the CAB had the jurisdiction to hear the application because Grand Air did not possess a legislative franchise.

The Civil Aeronautics Board has the authority to issue a Certificate of Public Convenience and Necessity, or Temporary Operating Permit to a domestic air transport operator, who, though not possessing a legislative franchise, meets all the other requirements prescribed by the law.

There is nothing in the law nor in the Constitution, which indicates that a legislative franchise is an indispensable requirement for an entity to operate as a domestic air transport operator. Although Section 11 of Article XII recognizes Congress’ control over any franchise, certificate or authority to operate a public utility, it does not mean Congress has exclusive authority to issue the same. Franchises issued by Congress are not required before each and every public utility may operate. In many instances, Congress has seen it fit to delegate this function to government agencies, specialized particularly in their respective areas of public service.

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

Case Digest: LTO vs. City of Butuan, 322 SCRA 805, G.R. No. 131512

 

LTO vs. City of Butuan, 322 SCRA 805, G.R. No. 131512, January 20, 2000

Subject: Transportation Law

FACTS

The Sangguniang Panglungsod (SP) of Butuan on August 16, 1992 passed an ordinance entitled “An Ordinance Regulating the Operation of Tricycles for hire, providing mechanism for the issuance of Franchise, Registration and Permit, and imposing Penalties for Violations thereof and for other purposes.”

The ordinance provided for, among other things, the payment of franchise fees, fees for registration of the vehicle, and fees for the issuance of a permit for the driving thereof. The City of Butuan asserts that Sec. 129 and Sec.133 of the Local Government Code is their basis for said ordinance and that, said provisions authorize LGUs to collect registration fees or charges along with, in its view, the corresponding issuance of all kinds of licenses or permits for the driving of tricycles.

LTO explains that one of the functions of the National Government, that, indeed has been transferred to LGUs is the franchising authority over tricycles-for-hire of the LTFRB but NOT the authority of the LTO to register all motor vehicles and to issue to qualified persons of licenses to drive such vehicles.

The RTC of Butuan decreed an issuance of a PERMANENT WRIT OF INJUCTION against LTO prohibiting and enjoining LTO, as well as its employees and other persons acting in its behalf, from (a) registering tricycles and (b) issuing licenses to tricycle drivers. The CA sustained the trial court’s decision. The adverse rulings of both Courts prompted the LTO to file an instant petition for review on certiorari to annul and set aside the earlier Court decisions.

ISSUE

Whether or not under the present set-up the power of the LTO to register, tricycles in particular, as well as to issue licenses for the driving thereof has likewise devolved to Local Government Units.

RULING

No, under the present set-up the power of the LTO to register, tricycles in particular, as well as to issue licenses for the driving thereof has not likewise devolved to Local Government Units.

Under the Local Government Code (specifically Sec. 458 (8)(3)(VI)), the Local Government Units now have the power to REGULATE (to fix, establish or control, to adjust by rule, method or establish mode to direct by rule or restriction; or to subject to governing principles or laws) the operation of tricycles for hire and grant franchises thereof but they are still subject to the guidelines prescribed by the DOTC (Department of Transportation and Communications; under Article 458(a) [3-VI] of the RA 7160).

In this case, said powers [to register and issue licenses] remain under LTO’s exclusive jurisdiction. The registration and licensing functions are vested in the LTO (pursuant to Art. 3 Sec. 4(d) [1], 10 of RA 4136-Land Transportation and Traffic Code) while franchising and regulatory responsibilities are vested in the LTFRB (Land Transportation Franchising and Regulatory Board; pursuant to EO # 202).

Case Digest: Pangasinan Transportation, Inc. vs. The Public Service Commission, 70 Phil 221, G.R. No. 47065

 

Pangasinan Transportation, Inc. vs. The Public Service Commission, 70 Phil 221, G.R. No. 47065, June 26, 1940

Subject: Transportation Law

FACTS

PANTRANCO, a holder of an existing Certificate of Public Convenience is applying to operate additional buses with the Public Service Commission (PSC) has been engaged in transporting passengers in certain provinces by means of public transportation utility. Patranc applied for authorization to operate 10 additional trucks. The PSC granted the application but added several conditions for PANTRANCO’s compliance. One is that the service can be acquired by government upon payment of the cost price less depreciation, and that the certificate shall be valid only for a definite period of time.

ISSUE

Whether or not PSC can impose said conditions, if so, wouldn’t this power of the PSC constitute an undue delegation of powers.

 RULING

Yes, there was valid delegation of powers.

The theory of the separation of powers is designed by its originators to secure action at the same time forestall overaction which necessarily results from undue concentration of powers and thereby obtain efficiency and prevent deposition. But due to the growing complexity of modern life, the multiplication of subjects of governmental regulation and the increased difficulty of administering laws, there is a constantly growing tendency toward the delegation of greater powers by the legislature, giving rise to the adoption, within certain limits, of the principle of “subordinate legislation.”

All that has been delegated to the Commission is the administrative function, involving the use of discretion to carry out the will of the National Assembly having in view, in addition, the promotion of public interests in a proper and suitable manner.

The welfare and interest of the public are the paramount considerations in determining whether or not to temporarily take over a particular business. The State in effecting the temporary takeover is exercising its police power, which is the most essential, insistent, and illimitable of powers. Therefore, requiring the government to pay reasonable compensation for the reasonable use of the property pursuant to the operation of the business contravenes the Constitution.

Case Digest: Mecano vs. Commission on Audit, 216 SCRA 500, G.R. No. 103982

 

Mecano vs. Commission on Audit, 216 SCRA 500, G.R. No. 103982, December 11, 1992

Subject: Transportation Law

FACTS

Antonio Mecano is a Director II of the National Bureau of Investigation (NBI). He was hospitalized for cholecystitis on account of which he incurred medical and hospitalization expenses, the total amount of which he is claiming from the Commission on Audit.

Mecano requested for reimbursement for his expenses on the ground that he is entitled to the benefits under Section 699 of the Revised Administrative Code (RAC) which is a provision covering allowances of government employees in case of injury, death, or sickness incurred in performance of duty. Undersecretary of Justice Bello III denied Mecano’s claim reasoning that the RAC being relied upon was repealed by the Administrative Code of 1987 (Admin. Code). Mecano then re-­submitted his claim with a copy of the opinion of then Secretary of Justice Drilon stating that the Admin. Code did not operate to repeal or abrogate in its entirety the RAC, including the particular Section 699 of the latter as the repealing clause of the Admin. Code is merely a general repealing provision. The request was approved by the Department of Justice and forwarded to the Commission on Audit.

However, COA Chairman Eufemio C. Domingo denied Mecano’s claim on the ground that Section 699 of the RAC had been repealed by the Admin. Code, solely for the reason that the same section was not restated nor re-­enacted in the Admin. Code.

In the present petition, Mecano argue Sec. 699 of the RAC remains operative despite the enactment of the Admin. Code. On the other hand, COA contend that the enactment of the Admin. Code operated to revoke or supplant in its entirety the RAC as such was the clear intent of the legislature in enacting the Admin. Code.

ISSUE

Whether or not the Administrative Code repeal or abrogate Section 699 of the RAC.

RULING

No, the Administrative Code did not repeal or abrogate Sec. 699 of the RAC.

The Repealing Clause of the Admin. Code provides that “All laws, decrees, orders, rules and regulations, or portions thereof, inconsistent with this Code are hereby repealed or modified accordingly.” This is a general repealing provision (implied repeal) for it failed to identify or designate the act or acts that are intended to be repealed. There are two categories of repeal by implication. The first is where provisions in the two acts on the same subject matter are in an irreconcilable conflict, the later act to the extent of the conflict constitutes an implied repeal of the earlier one. The second is if the later act covers the whole subject of the earlier one and is clearly intended as a substitute, it will operate to repeal the earlier law.

It is clear that there can be no implied repeal of Sec. 699 of the RAC by the Admin. Code. Under the first category, it was not established that there is any irreconcilable conflict between the two codes. Irreconcilable inconsistency takes place when the two statutes cover the same subject matter;; they are so clearly inconsistent and incompatible with each other that they cannot be reconciled or harmonized;; and both cannot be given effect, that is, that one law cannot be enforced without nullifying the other. The new Code does not cover nor attempt to cover the entire subject matter of the old Code In fact, there is no provision on sickness benefits of the nature being claimed by petitioner in the Admin. Code. Nor is there implied repeal under the second category for such is only possible if the revised statute or code was intended to cover the whole subject to be a complete and perfect system in itself and that it is clear intent of the legislature that the later act be the substitute to the prior act. As stated in the opinion of Secretary Drilon, the Admin. Code cover only those aspects of government that pertain to administration, organization and procedure.

It is a well-­settled rule of statutory construction that repeals of statutes by implication are not favored. The presumption is against inconsistency and repugnancy for the legislature is presumed to know the existing laws on the subject and not to have enacted inconsistent or conflicting statutes. Hence, Sec. 699 of the RAC remains operative.

Case Digest: Tatad vs. Garcia, Jr., G.R. No. 114222

 

Tatad vs. Garcia, Jr., G.R. No. 114222, April 6, 1995

Subject: Transportation Law

FACTS

The petitioners, Francisco S. Tatad, John H. Osmena, and Rodolfo G. Biazon, who are members of the Philippine Senate, initiated a petition under Rule 65 of the Revised Rules of Court. Their objective was to prohibit the implementation and enforcement of the "Revised and Restated Agreement to Build, Lease and Transfer a Light Rail Transit System for EDSA" dated April 22, 1992, and the "Supplemental Agreement" dated May 6, 1993.

The respondents in this case include Jesus B. Garcia, Jr., the Secretary of the Department of Transportation and Communications (DOTC), and EDSA LRT Corporation, Ltd., a private corporation organized under the laws of Hong Kong.

The Department of Transportation and Communications (DOTC) had devised plans to construct a light railway transit line along EDSA, a major thoroughfare in Metropolitan Manila, known as EDSALRT III.Eli Levin Enterprises, Inc., proposed the construction of the EDSA LRT III on a Build-Operate-Transfer (BOT) basis, in accordance with Republic Act No. 6957, also known as the BOT Law. This law outlined two financing schemes for government projects through private initiative and investment: Build-Operate-Transfer (BOT) or Build-Transfer (BT).

To facilitate the prequalification process for contractors, the DOTC established the Prequalification Bids and Awards Committee (PBAC) and the Technical Committee. The PBAC issued guidelines for prequalification, resulting in five groups responding, with the EDSA LRT Consortium meeting the specified criteria.

Secretary Pete Nicomedes Prado, who replaced Secretary Orbos, became involved in negotiations with the EDSA LRT Consortium. The negotiations were recommended to President Aquino, who instructed the DOTC to proceed, leading to the submission of a bid proposal by the EDSA LRT Consortium.

However, the contract signing faced procedural issues, as conveyed by Executive Secretary Orbos. Subsequent renegotiations resulted in the "Revised and Restated Agreement" and the "Supplemental Agreement."

President Fidel V. Ramos approved these agreements, officially designating EDSA LRT Corp. Ltd. as the owner of rail facilities for the EDSA LRT III project. 

ISSUE/S

1. Whether or not the petitioners, acting as Senators and taxpayers, have legal standing to challenge the constitutionality and validity of the agreements.

2. Whether or not a foreign corporation, EDSA LRT Corp. Ltd., can own EDSA LRT III, considering the constitutional requirement for Filipino ownership of public utilities.

3. Whether or not the BLT (Build-Lease-Transfer) scheme, not explicitly recognized in the BOT Law, is valid and within the scope of permissible arrangements.

RULING

1. The court affirms the legal standing of the petitioners, who are acting as Senators and taxpayers, to challenge the constitutionality and validity of the agreements. This ruling is grounded in the precedent set by the Kilosbayan, Inc. v. Guingona case, allowing taxpayers to question contracts entered into by the government or government-owned corporations if they are believed to contravene the law. The court emphasizes that as long as this precedent stands, the petitioners have the right to raise legal challenges.

2. The court determines that EDSA LRT Corp. Ltd. is the owner and lessor of facilities, not a public utility. The distinction made between ownership and operation is crucial, as the Constitution requires Filipino ownership for the operation of a public utility, but not necessarily for ownership of facilities. The court clarifies that what constitutes a public utility is the use of facilities to serve the public, not their ownership. Therefore, the foreign ownership of EDSA LRT Corp. Ltd. is deemed acceptable as it pertains to ownership rather than operation.

3. The court accepts the BLT scheme as a valid variation within the context of the BOT Law. It emphasizes that the law does not explicitly preclude variations, and no provision restricts the arrangement for the payment by the government of the project cost. The court acknowledges that the burden on the government to raise funds is made lighter by allowing it to amortize payments out of the income from the operation of the LRT System. The court's decision underscores the flexibility of the law to accommodate variations and variations within the two recognized schemes.

Case Digest: KMU vs. Garcia, 239 SCRA 386, G.R. No. 115381

 

KMU vs. Garcia, 239 SCRA 386, G.R. No. 115381, December 23, 1994

Subject: Transportation Law

FACTS

The instant petition for certiorari assails the constitutionality and validity of certain memoranda, circulars and/or orders of the DOTC and LTFRB which, among others, 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 fares should be “just and reasonable.”

In Dec 1990, Provincial Bus Operators Association of the Philippines, Inc. (PBOAP) filed an application for fare rate increase. It was granted by LTFRB. In March 1992, the DOTC Secretary issued Department Order No. 92-587 defining the policy framework on the regulation of transport services. It provides among others: “The requirements to grant a certificate to operate, or certificate of public convenience, shall be: proof of Filipino citizenship, financial capability, public need, and sufficient insurance cover to protect the riding public. In determining public need, the presumption of need for a service shall be deemed in favor of the applicant. The burden of proving that there is no need for a proposed service shall be with the oppositor(s).”

The LTFRB then issued Memorandum Circular No. 92-009 promulgating the guidelines for the implementation of DOTC DO 92-587. The Circular provides, among others, the challenged portions: Part IV. Policy Guidelines on the Issuance of Certificate of Public Convenience. 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 burden of proving that there is no need for the proposed service shall be the oppositor(s).

In March 1994, petitioner KMU filed a petition before the LTFRB opposing the upward adjustment of bus fares. KMU claimed that the establishment of a presumption of public need in favor of an applicant for a proposed transport service without having to prove public necessity, is illegal for being violative of the Public Service Act. But the LTFRB dismissed the petition for lack of merit. Hence, the instant petition for certiorari with an urgent prayer for issuance of a temporary restraining order.

In their Comment filed by the OSG, public respondents DOTC Secretary Jesus B. Garcia, Jr. and the LTFRB claimed that it is within DOTC and LTFRB’s authority to set a fare range scheme and establish a presumption of public need in applications for certificates of public convenience.

ISSUE

Whether DOTC DO 92-587 and LTFRB Memorandum Circular No. 92-009 are violative of the Public Service Act insofar as they affect provisions creating a presumption of public need for a service in favor of the applicant for a certificate of public convenience and placing the burden of proving that there is no need for the proposed service to the opposition.

RULING

Yes, DOTC DO 92-587 and LTFRB Memorandum Circular No. 92-009 are violative of the Public Service Act insofar as they affect provisions creating a presumption of public need for a service in favor of the applicant for a certificate of public convenience and placing the burden of proving that there is no need for the proposed service to the opposition.

A certificate of public convenience (CPC) is an authorization granted by the LTFRB for the operation of land transportation services for public use as required by law. Pursuant to Section 16(a) of the Public Service Act, as amended, the following requirements must be met before a CPC may be granted, to wit

(i) the applicant must be a citizen of the Philippines, or a corporation or co-partnership, association or joint-stock company constituted and organized under the laws of the Philippines, at least 60 per centum of its stock or paid-up capital must belong entirely to citizens of the Philippines;

(ii) the applicant must be financially capable of undertaking the proposed service and meeting the responsibilities incident to its operation; and

(iii) the applicant must prove that the operation of the public service proposed and the authorization to do business will promote the public interest in a proper and suitable manner. It is understood that there must be proper notice and hearing before the PSC can exercise its power to issue a CPC.

In this case, Part IV of LTFRB Memorandum Circular No. 92- 009 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. 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 nonexistence 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.

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. Basic convenience is the primary consideration for which a CPC is issued, and that fact alone must be consistently borne in mind. Also, existing operators in subject routes must be given an opportunity to offer proof and oppose the application. Therefore, an applicant must, at all times, be required to prove his capacity and capability to furnish the service which he has undertaken to render. And all this will be possible only if a public hearing were conducted for that purpose. Therefore, DOTC DO 92-587 and LTFRB Memorandum Circular No. 92-009 are violative of the Public Service Act insofar as they affect provisions creating a presumption of public need for a service in favor of the applicant for a certificate of public convenience and placing the burden of proving that there is no need for the proposed service to the opposition. 

Case Digest: Agan, Jr. vs. Philippine International Air Terminals Co., Inc., G.R. No. 155001

Agan, Jr. vs. Philippine International Air Terminals Co., Inc., G.R. No. 155001, May 5, 2003

Subject: Transportation Law

FACTS

In 1989, DOTC engaged in the services of Aeroport de Paris (ADP) to conduct a study of the Ninoy Aquino International Airport (NAIA) to determine whether the airport can cope with traffic development by year 2010.

In 1993, Asia’s Emerging Dragon Corp (ADEA) was formed by John Gokongwei, Henry Sy, Lucio Tan, Andrew Gotianun, George Ty, and Alfonso Yuchengco, for the purpose of exploring the possibility of constructing a new international airport terminal. ADEA then submitted an unsolicited proposal to the government through the DOTC/MIAA and called the project NAIA International Airport Terminal III (NAIA ITP III) under the build-operate-and-transfer arrangement pursuant to the BOT Law.

DOTC/MIAA published in two daily newspapers the invitation for competitive or comparative proposals on AEDC’s proposal and the bidders were required to submit three separate envelopes containing the prequalification documents, technical proposal, and financial proposal.

The government granted Philippine International Airport Terminals Co, Inc. (PIATCO, formerly known as Pairgo), to operate and maintain NAIA IPT III during the concession period and to collect the fees, rentals and other charges in accordance with the rates or schedules stipulated in the 1997 Concession Agreement.

On November 26, 1998, the Government and PIATCO signed an Amended and Restated Concession Agreement (ARCA).

Subsequently, the Government and PIATCO signed three Supplements to the ARCA. The First Supplement was signed on August 27, 1999; the Second Supplement on September 4, 2000; and the Third Supplement on June 22, 2001 (collectively, Supplements).

Due to various issues and petitions, former President Arroyo did not honour the PIATCO contract.

ISSUE

Whether or not the exclusive right granted to PIATCO to solely operate a commercial international passenger terminal at the NAIA IPT III is unconstitutional.

RULING

No, the exclusive right granted to PIATCO to solely operate a commercial international passenger terminal at the NAIA IPT III is not unconstitutional, but the government must have strict regulation towards its operation.

Article XII, Section 19 of the 1987 Constitution states: The state shall regulate or prohibit monopolies when the public interest so requires. No combinations in restraint of trade or unfair competition shall be allowed. The operation of an international passenger airport terminal is no doubt an undertaking imbued with public interest.

In this case, while PIATCO may be authorized to exclusively operate NAIA IPT III as an international passenger terminal, the Government, through the MIAA, has the right and the duty to ensure that it is done in accord with public interest. PIATCO's right to operate NAIA IPT III cannot also violate the rights of third parties. PIATCO, by the mere expedient of claiming an exclusive right to operate, cannot require the Government to break its contractual obligations to the service providers. As the primary government agency tasked with the job, it is MIAA's responsibility to ensure that whoever by contract is given the right to operate NAIA IPT III will do so within the bounds of the law and with due regard to the rights of third parties and above all, the interest of the public.