Prelim Notes

TelePrac Session 2
a) Public Service and Public Utility, Defined:
a. Section 13 a to c, Commonwealth Act 146 (Public Service Law)
i. Jurisdiciton of the Public Service Commission
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. ***Authority of
MARINA?***
- NOTE: Difference between GOCC and Private grantee of
franchise, GOCC not required to have Certificates of Public
Convenience unlike private.
ii. What is Public Service defined under CA
- Section 13 (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
o common carrier,  steamboat or  gas,
o railroad, steamship line,  electric light,
o street railway,  pontines,  heat and power water supply and power,
o traction railway,  ferries, and water  petroleum,
o sub-way motor craft, engaged in  sewerage system,
vehicle, either for the transportation  wire or wireless communications system,
freight or passenger, of passengers or  wire or wireless broadcasting stations and other
or both with or freight or both, similar public services:
without fixed route  shipyard,
and whether may be  marine railways,
its classification, o marine repair
freight or carrier shop, [
service of any class, o warehouse] wharf
o express service, or dock,
o ice plant, ice-
refrigeration plant,
o canal,
o irrigation system,
Prelim Notes
TelePrac Session 2
- What is NOT A PUBLIC SERVICE as provided by law:
a. 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.
iii. Section 13-C
- Person:
a. Every Individual,
b. Co-partnership
c. Joint-stock
d. Corporation
e. Lessees,
f. Trustees
g. Receivers
h. Municipality
i. Province
j. City
k. GOCC
l. Agency of Gov’t
m. May own or operate public services
b) Pages 260-265 by Almario
i. Public Utility:
- Business Org
- Regularly supplies the public with some commodity or service
- No definite and straightjacket definition
- Public Utility is also considered as a devotion of one’s private
property by the owner or one in control for the use and benefit of
the general public or that part of the public which has been
served, and has accepted the service, has the right to demand
that the use or service, so long as it is continued, shall be
conducted with reasonable efficiency and under proper charges.
- Public Utility implies public use
- Carrying with it a duty to serve the public
- Treat all persons alike
ii. Public Service
- Every person that now or hereafter may own, operate, manage,
or control in the PH for hire or compensation with tgeneral or
limited clientele whether permanent, occasional, or accidental,
and done for general biz purposes.
iii. Determination of public or private character:
- What is the TEST in Characterizing the Service being rendered?
You look at what is being done or conducted as service…
- It is what the purveryor or producer of the service or commodity
has undertaken to perform in behalf of the public generally, or of
any defined portion of it, which stamps him as public utility
- There are no formalities which must be met before a biz
enterprise becomes public utility
Prelim Notes
TelePrac Session 2
- Essential element of all; IMPRESSED WITH A PUBLIC
INTEREST.
iv. Public Use – Use by the public
- It is confined to privileged individuals but is open to the indefinite
public
- Indefinite or unrestrained quality that gives it its public character
b. Napocor vs. CA 279 SCRA 506 – Public Utility
i. A "public utility" is a business or service engaged in regularly supplying
the public with some commodity or service of public consequence such
as electricity, gas, water, transportation, telephone or telegraph
service.45 The term implies public use and service.46
ii. Questioning the jurisdiction of Napocor in directly supplying power to
facilities of an industrial corporation where there is an existing operating
electric power franchise. NO JURISDICTION NAPOCOR. Niether ERB.
iii. The determination of which of two public utilities has the right to supply
electric power to an area which is within the coverage of both is certainly
not a rate-fixing function which should remain with the ERB. It deals with
the regulation of the distribution of energy resources which, under
Executive Order No. 172, was expressly a function of ERB. However,
with the enactment of Republic Act No. 7638, the Department of Energy
took over such function. Hence, it is this Department which shall then
determine whether CEPALCO or PIA should supply power to PIE-MO.
iv. This involves the industrial corporation set up by PHIVIDEC in Cagayan
De Oro wherein the industrial complex along with the structures demand
high load of electricity from the current Cagayan Electric and Power Light
Company. Deeming CEPALCO as not capacitated to cost-effectively and
efficiently service the needs of the Estate of PHIVIDEC Industrial
Authority (PIA), PIA resorted to seek supply agreements with NAPOCOR
for a steady and cheap power supply in the Industrial Estate.
Temporarily, CEPALCO is given allowed by PIA to supply locators
(Ferrachrome and Alloy something) in the Industrial Estate.
v. Contending that the said agreement violated its right as the authorized
operator of an electric light and power system in the area and the
national electrification policy, CEPALCO filed Civil Case No. Q-35945, a
petition for prohibition, mandamus and injunction before the Regional
Trial Court of Quezon City against the NPC.
vi. Notwithstanding NPC's claim that it was authorized by its Charter to sell
electric power "in bulk" to industrial enterprises, the lower court rendered
a decision on May 2, 1984, restraining the NPC from supplying power
directly to FPI upon the ground that such direct sale, supply and delivery
of electric power by the NPC to FPI was violative of the rights of
CEPALCO under its legislative franchise.
vii. Exclusivity of CEPALCO being invoked by it.
viii. Petitioner PIA is a subsidiary of the PHIVIDEC with "governmental and
proprietary functions."47 Sec. 4 of P.D. No. 538 specifically confers upon
it the following powers:
- a. To operate, administer and manage the PHIVIDEC Industrial
Areas and other areas which shall hereafter be proclaimed,
designated and specified in subsequent Presidential
Proclamation; to construct acquire, own, lease, operate and
maintain infrastructure facilities, factory buildings, warehouses,
dams, reservoirs, water distribution, electric light and power
systems, telecommunications and transportation networks, or
such other facilities and services necessary or useful in the
conduct of industry and commerce or in the attainment of the
purposes and objectives of this Decree; (Emphasis supplied.)
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TelePrac Session 2
ix. Clearly then, the PIA is authorized to render indirect service to the
public by its administration of the PHIVIDEC industrial areas like the PIE-
MO and may, therefore, be considered a public utility. As it is expressly
authorized by law to perform the functions of a public utility, a certificate
of public convenience, as suggested by the Court of Appeals, is not
necessary for it to avail of a direct power connection from the NPC.
x. However, such authority to be a public utility may not be exercised in
such a manner as to prejudice the rights of existing franchisees. In fact,
by its actions, PIA recognized the rights of the franchisees in the area.
xi. Sec. 1. Utilities — It is the responsibility of the Authority to provide all
required utilities and services inside the Estate:
xii. x x x xxx xxx
xiii. a) Contracts for the purchase of public utilities and/or services shall be
subject to the prior approval of the Authority; Provided, however, that
similar contract(s) existing prior to the effectivity of this Rules and
Regulations shall continue to be in full force and effect.
xiv. xxx xxx xxx
xv. (Emphasis supplied.)
xvi. It should be noted that the Rules and Regulations took effect thirty (30)
days after its publication in the Official Gazette on September 24, 1979
or more than three (3) months after the July 6, 1979 contract between
PIA and CEPALCO was entered into. As such, the Rules and
Regulations itself allowed the continuance of the supply of electric power
to PIE-MO by CEPALCO.
xvii. That the contract of July 6, 1979 was not renewed by the parties after the
expiration of the five-year period stipulated therein did not change the
fact that within that five-year period, in violation of both the contract and
its Rules and Regulations, PIA applied with the NPC for direct power
connection. The
matter was aggravated by NPC's favorable action on the application,
totally unmindful of the extent of its powers under the law which,
in National Power Corporation v. Court of Appeals,49 the Court delimits
as follows:
xviii. . . . . It is immaterial whether the direct connection is merely an
improvement or an increase in existing voltage, as alleged by petitioner,
or a totally new and separate electric service as claimed by private
respondent. The law on the matter is clear. PD 40 promulgated on 7
November 1972 expressly provides that the generation of electric power
shall be undertaken solely by the NPC. However Section 3 of the same
decree also provides that the distribution of electric power shall be
undertaken by cooperatives, private utilities (such as the
CEPALCO), local governments and other entities duly authorized,
subject to state regulation.
xix. ERB only regulates in price issues
xx. Non-price issues is transferred to the jurisdiction of DOE.
- . . . we believe that since the provision of Section 18 on the
transfer of certain powers and functions from ERB to DOE is
clear and unequivocal, and devoid of any ambiguity, in the sense
that it categorically refers to "non-price jurisdiction, powers and
functions" of ERB under Section 3 of E.O. No. 172, there is no
room for interpretation, but only for application, of the law. This is
a cardinal rule of statutory construction.
xxi. Clearly, the parameters of the transfer of functions from ERB to DOE
pursuant to Section 18, are circumscribed by the provision of Section 3
of E.O. No. 172 alone so that, if there are other "related" functions of
ERB under other provisions of E.O. No. 172 or other energy laws, these
Prelim Notes
TelePrac Session 2
"related" functions, which may conceivably refer to what you call "non-
power rate powers and functions" of ERB, are clearly not contemplated
by Section 18 and are, therefore, not to be deemed included in the
transfer of functions from ERB to DOE under the said provision.
xxii. It may be argued that Section 26 of R.A. No. 7638 contains a repealing
clause which provides that:
xxiii. All laws, presidential decrees, executive orders, rules and regulations or
parts thereof, inconsistent with the provisions of this Act, are hereby
repealed or modified accordingly. . . .
xxiv. and, therefore, all provisions of E.O. No. 172 and related laws which are
inconsistent with the policy, purpose and intent of R.A. No. 7638 are
deemed repealed.

c) Basic Principles of Public Utility Regulation

a. Taxicab Operators of Metro Manila vs. Board of Transportation 117 SCRA
597 - Regulation of Public Utility is covered by the Equal Protection Clause
i. Regulation part of the Police Power of the State:
ii. Regulation of Public Utility is covered by the Equal Protection Clause:
- Must not be arbitrary, oppressive, utterly discriminatory
iii. Phasing out of old and dilapidated Taxis
iv. Issue: Issue: WON a circular phasing out taxicabs more than 6 years old
is unreasonable and arbitrary.
v. Pursuant to BOT Memo-Circular No. 77-42, taxi units with year models
over six (6) years old are now banned from operating as public
utilities in Metro Manila. As such the units involved should be
considered as automatically dropped as public utilities and, therefore, do
not require any further dropping order from the BOT.
vi. cabs of model 1971 were phase-out in registration year 1978; those of
model 1972, in 1979; those of model 1973, in 1980; and those of model
1974, in 1981.
vii. On January 27, 1981, petitioners filed a Petition with the BOT, docketed
as Case No. 80-7553, seeking to nullify MC No. 77-42 or to stop its
implementation; to allow the registration and operation in 1981 and
subsequent years of taxicabs of model 1974, as well as those of
earlier models which were phased-out, provided that, at the time of
registration, they are roadworthy and fit for operation.
viii. Petitioners seek to declare the nullity of the circulars on the ground that
fixing the ceiling at 6 years is arbitrarily and oppressive because the road
worthiness of taxicabs depends upon their kind of maintenance and the
use to which they are subjected and therefore their actual physical
condition should be taken into consideration at the time of the
registration.
ix. No. A reasonable standard must be adopted to apply to all vehicles
uniformly, fairly and justly. The span of 6 yearsw supplies that reaonable
standard. By the time taxis have fully depreciated, theircost recovered,
and a fair return on investment obtained. Thyey are also generally
dilapidated and no longer fit for safe and comfortable service to the
public. Taxicabs in Manila, compared to those in other places are subject
to heavier traffic pressure and constant use.
x. The Board's reason for enforcing the Circular initially in Metro Manila is
that taxicabs in this city, compared to those of other places, are
subjected to heavier traffic pressure and more constant use. This is of
common knowledge. Considering that traffic conditions are not the same
in every city, a substantial distinction exists so that infringement of the
equal protection clause can hardly be successfully claims
Prelim Notes
TelePrac Session 2

b. Municipality of Daet vs. Hidalgo Enterprises 138 SCRA 265 – Public Service
Commission must observe DUE PROCESS in Admin Tribunal.
i. Doctrine: Public Service Commission, although an administrative tribunal
with juridical powers, cannot entirely disregard the fundamental and
essential requirements of due process.
ii. On September 1, 1975, the Board handed down the questioned decision.
To petitioner's mind, the respondent Board acted with grave abuse of
discretion amounting to a denial of due process because it rendered said
decision without prior resolution of petitioner's June 6, 1975 motion for
appointment of commissioners, and without awaiting the GAO audit
report on the respondent Hidalgo's books and records of accounts.
Hence, the instant petition.
iii. In addition, the Board takes judicial notice of the several increases in the
prices of fuel oil, bunker fuel, lubricants and other oil products; that the
cost of machinery spare parts has likewise increased tremendously; that
there have been a general increase in the cost of labor due to the
implementation of the Minimum Wage Law and the rise in the cost of
living index; and that the value of the Philippine peso vis a vis the
American dollar has also substantially decreased.
iv. The Board is also aware of the fact that as a consequence of price
increases, a corresponding increase in cost of operations of public
utilities has inevitably resulted and unless relief is granted in the form of
reasonable and realistic increases in rates, their service will deteriorate
to the prejudice of the general public.
v. xxx xxx xxx
vi. An analysis of applicant's Audited Financial Statements for a 6-month
period ending June 30, 1974 shows that on an invested capital entitled to
return of P3,333,481.86, it sustained a deficiency revenue by rates
amounting to P590,346.62 which is about 70.27% to the actual revenue
by rates amounting to P840,146.08 and incurred a net operating loss of
P390,337.71 which is equivalent to a rate of return of negative 11.70%
on invested capital.
vii. The analysis further shows that for the whole year period ending
December 30, 1974, applicant, with a total invested capital entitled to
return of P3,335,568.03, likewise suffered a deficiency revenue by rates
amounting to P1,167,238.58 which is about 54.24% to the actual
revenue by rates of P 2,152,008.14 and incurred a net operating loss of
P766,970.42 which is equivalent to a rate of return of negative 22.99%
on invested capital.
viii. Based on the foregoing analysis and findings, an increase by 55%
across-the-board on applicant's authorized rate appears to be just,
reasonable and sufficient to give applicant its needed financial relief.
ix. Without discounting the fact that public interest may be better served
with a GAO audit of the applicant's valuation of its properties and
equipment, we nevertheless find nothing in the phraseology of the
above-quoted provision that makes such audit mandatory or obligatory.
A GAO valuation is merely advisory. It is neither final nor binding, as
illustrated in MERALCO v. Public Service Commission, 6 where this
Court upheld the decision of the Public Service Commission to fix rates
on the basis of Meralco's own valuation of its properties, rather than on
the assessment made by the GAO.
Prelim Notes
TelePrac Session 2

c. Vda. De Lat vs. Public Service Commission 180 SCRA 108 – REQUISITES
OF GRANTING CERTIFICATE OF PUBLIC CONVENIENCE
i. Operation of Ice Plant service in Davao City. Application for issuance of
Certificate of Public Convenience.
ii. it is apt to stress the principle that nobody has the exclusive right to
secure a franchise or a Certificate of Public Convenience. The
paramount consideration should always be the public interest and public
convenience.
iii. Requisites of Granting Certificate of Public Convenience:
- (1) 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, 60
per centum at least of the stock or paid-up capital of which
belong entirely to citizens of the Philippines;
- (2) the applicant must be financially capable of undertaking
the proposed service and meeting the responsibilities
incident to its operations; and
- (3) 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.
iv. And We have held before, in order that the opposition based on ruinous
competition may prosper, it must be shown that the opponent would be
deprived of their profits on the capital invested in its business. The mere
possibility of reduction in the earnings of a business is not sufficient to
prove ruinous competition.
v. On May 11, 1970, the herein private respondent Roberto C. Diaz filed an
application with the respondent Public Service Commission for a
Certificate of Public Convenience and Necessity to operate and maintain
an ice plant service in Davao City alleging among others that he is
financially capable to operate and maintain the proposed service, and
that public necessity and convenience will be promoted in a proper and
suitable manner with the approval of his application. 1 Said application
was published in two newspapers of general circulation namely: El
Debate and The Philippine Herald, and copies thereof were sent to
affected operators including the herein petitioners Angeles C. Vda. de
Lat Carolina Lat, Perez de Tagle and Pedro C. Lat, Jr. Only the
petitioners filed an Opposition to the Application and the same was
submitted on July 3,1970.
vi. However, when the case was called for hearing as late as 10 o'clock in
the morning on the said date, neither the oppositors nor their counsel
was present. Hence, the respondent Commission declared the case
uncontested and received the evidence of the private respondent.
vii. August 18,1970,the petitioners filed a motion for reopening of the case
and allowance to present evidence but unfortunately, on the same date
respondent Commission issued an Order granting the private respondent
provisional authority to operate the ice plant for six (6) months. This was
based on the findings of the Commission that there was indeed an
urgent need for an ice plant in Davao City as its population has
increased tremendously. Petitioners then filed a motion for
reconsideration but this was denied in a Resolution signed by all the
members of the respondent Commission, said motion having been heard
by the Commission en banc.
viii. The first extension was given on February 12, 1971 and the second, on
December 10, 1971. Finally on February 24, 1972, the respondent
Commission handed down a Decision approving the Application of the
Prelim Notes
TelePrac Session 2
private respondent and granting him a Certificate of Public Convenience
to operate a 2-ton ice plant in Davao City.
ix. In this petition for review, the petitioners are asking that the Decision
rendered by the respondent Commission on February 24, 1972 be set
aside and declared null and void, as it has been rendered without due
process. Their claim is that they were deprived of their day in court when
they were not allowed to cross-examine the witnesses of the private
respondent and to present their evidence in support of their Opposition
x. The Petitioners should have known about the date of the hearing. Yet,
when the case was called, neither they nor their counsel showed up.
There was not even any word from them. Their lame excuse that their
lawyer made the mistake of noting down the healing on a Sunday
instead of a Monday is unacceptable. There were three of them who
presented themselves as oppositors. It is unbelievable that no one of
them found out about the mistake of their counsel had they shown any
slight interest in the case. Their negligence cannot now be passed on
to the respondent Commission which only did the right thing of
proceeding with the case, which had become uncontested.
xi. We are convinced that the private respondent deserves to be awarded
the Certificate of Public Convenience. He was able to fully satisfy the
requisites before such a certificate may be granted, namely:
- (1) 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, 60
per centum at least of the stock or paid-up capital of which
belong entirely to citizens of the Philippines;
- (2) the applicant must be financially capable of undertaking
the proposed service and meeting the responsibilities
incident to its operations; and
- (3) 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.

d. Manzanal vs. Ausejo 164 SCRA 36 -

i. While an employer may be subsidiarily liable for the employee's civil
liability in a criminal action, subsidiary liability presupposes that there
was a criminal action. Besides, in order that an employer may be
subsidiarily liable, it should be shown that the employee committed the
offense in the discharge of his duties. While it is true also that an
employer may be primarily liable under Article 2180 of the Civil Code for
the acts or omissions of persons for whom one is responsible, this
liability extends only to damages caused by his employees acting within
the scope of their assigned tasks. Clearly, the act in question is totally
alien to the business of petitioner as an operator and hence, the driver's
illicit act is not within the scope of the functions entrusted to him.
ii. We find the petition impressed with merit and agree with petitioner that
the charges lodged against her have not been duly proved. The
respondent Public Service Commission anchors the charges against
petitioner on the following provisions, to wit: 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 refine 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 or
otherwise. (The Public Service Act, as amended) Section 47. Courtesy,
character, record, etc. Each operator shag employ only such chauffeurs,
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conductors, agents, inspectors, auditors, and other employees who are
courteous and of good moral character, and in no case shall he employ
any person who has been convicted by competent court of homicide
and/or serious physical injuries, theft, estafa, robbery, and crimes against
chastity. Operators are prohibited from employing as chauffeurs persons
who do not have professional drivers" license. (Revised Order No. 1)
iii. The facts of the case are bereft and wanting of any evidence to the effect
that petitioner rendered a service that is unsafe, inadequate and
improper. There was no testimony whatsoever that her vehicles are of
such kind which may endanger the lives of the passengers or are not
suitable for the peculiar characteristics of the area serviced. There is no
proof that petitioner is not in a position to cope with the obligations and
responsibilities of the service and to maintain a complete number of units
as authorized.
iv. We find that petitioner has successfully refuted the alleged participation
of her taxi. The decision dated December 28, 1965 of respondent
Commission granting her petition for approval of her color scheme which
authorized all her five (5) units to be painted with emerald green; the
certification of Mr. Pedro Morales of the Land Transportation
Commission, Chief of the Plate Section, to the effect that the plates for
taxis for 1965 have a maroon background; and the certification of Mr.
Marcelo Vasquez of the Vasquez Bros. & Co., Inc., the makers of vehicle
plates for the Land Transportation Commission that the orange colored
plates are given to privately owned vehicles and that No. 6100 has been
given to both taxis and privately owned vehicles all cast a cloud of doubt
on the real Identity of the vehicle used by the malefactors.

e. PLDT vs. NTC 190 SCRA 717 – Franchise is owned by the corporation-
grantee. The franchise granted to the corporation subsists as long as the
corporation as an entity, continues to exist. The franchise is not thereby
invalidated by the transfer of shares. A corporation has a personality
separate and distinct from that of each stockholder. It has the right to
continuity or perpetual succession.
i. Republic Act No. 2090, was enacted otherwise known as “An Act
Granting Felix Alberto and Company, Incorporated, a franchise to
establish radio stations for domestic and transoceanic
telecommunications.”
ii. Whether or not the transfers in 1987 of the shares of stock to the new
stockholders amount to a transfer of ETCI’s franchise which needs
congressional approval pursuant to RA 2090.
iii. No. Section 10 of RA 2090 is directed to the grantee of the franchise,
which is the corporation itself and refers to a sale, lease or assignment of
that franchise. It does not include the transfer or sale of shares of stock
of a corporation by the latter’s stockholders
iv. The sale of shares of stock of a public utility is governed by another law,
in section 20 (h) of the Public Service Act (CA 146). Pursuant thereto,
the public service commission (now NTC) is the government agency
vested with the authority to approve the transfer of more than 40% of the
subscribed capital stock of a telecommunications company to a single
transferee.
v. In other words, transfer of shares of a public utility corporation need only
NTC approval, not congressional authorization.
vi. A distinction should be made between shares of stock, which are owned
by stockholders, the sale of which requires only NTC approval, and the
franchise itself which is owned by the corporation as the grantee thereof,
the sale or transfer of which requires congressional sanction. Since
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stockholders own the shares of stock, they may dispose of the same as
they see fit. They may not, however, transfer or assign the property of a
corporation, like its franchise. In other words, even if the original
stockholders had transferred their shares to another group of
shareholders, the franchise granted to the corporation subsists as
long as the corporation as an entity, continues to exist. The
franchise is not thereby invalidated by the transfer of shares. A
corporation has a personality separate and distinct from that of
each stockholder. It has the right to continuity or perpetual
succession.

f. Kilusang Mayo-Uno Labor Center vs. Garcia, Jr. 239 SCRA 386 -
The doctrine of Potestas delegate non delegari (what has been delegated
cannot be delegated) is applicable because a delegated power constitutes
not only a right but a duty to be performed by the delegate thru
instrumentality of his own judgment.
i. In 1990, DOTC Sec. Oscar Orbos issued Memo Circular to LTFRB Chair
Remedios Fernando to allow provincial bus to change passenger rates
w/in a fare range of 15% above or below the LTFRB official rate for a 1yr.
period. This is in line with the liberalization of regulation in the transport
sector which the government intends to implement and to make progress
towards greater reliance on free market forces.

ii. Petitioner Kilusang Mayo Uno (KMU) opposed the move and filed a
petition before LTFRB w/c was denied. Hence the instant petition for
certiorari w/ urgent prayer for a TRO, w/c was readily granted by the
Supreme Court.

iii. Whether the authority granted by LTFB to provincial buses to set a fare
range above existing authorized fare range is unconstitutional and
invalid.

iv. The grant of power by LTFRB of its delegated authority is

unconstitutional. The doctrine of Potestas delegate non
delegari (what has been delegated cannot be delegated) is applicable
because a delegated power constitutes not only a right but a duty to be
performed by the delegate thru instrumentality of his own
judgment. To delegate this power is a negation of the duty in violation of
the trust reposed in the delegate mandated to discharge such duty. Also,
to give provincial buses the power to charge their fare rates will
result to a chaotic state of affairs ad this would leave the riding
public at the mercy of transport operators who can increase their
rates arbitrarily whenever it pleases or when they deem it
necessary.

g. Napocor vs. CA 279 SSCRA 506

i. However, such authority to be a public utility may not be exercised in
such a manner as to prejudice the rights of existing franchisees. In fact,
by its actions, PIA recognized the rights of the franchisees in the area.
ii. Sec. 1. Utilities — It is the responsibility of the Authority to provide all
required utilities and services inside the Estate:
iii. x x x xxx xxx
iv. a) Contracts for the purchase of public utilities and/or services shall be
subject to the prior approval of the Authority; Provided, however, that
similar contract(s) existing prior to the effectivity of this Rules and
Regulations shall continue to be in full force and effect.
Prelim Notes
TelePrac Session 2
v. It should be noted that the Rules and Regulations took effect thirty (30)
days after its publication in the Official Gazette on September 24, 1979
or more than three (3) months after the July 6, 1979 contract between
PIA and CEPALCO was entered into. As such, the Rules and
Regulations itself allowed the continuance of the supply of electric power
to PIE-MO by CEPALCO.
vi. That the contract of July 6, 1979 was not renewed by the parties after the
expiration of the five-year period stipulated therein did not change the
fact that within that five-year period, in violation of both the contract and
its Rules and Regulations, PIA applied with the NPC for direct power
connection. The
matter was aggravated by NPC's favorable action on the application,
totally unmindful of the extent of its powers under the law which,
in National Power Corporation v. Court of Appeals,49 the Court delimits
as follows:
vii. . . . . It is immaterial whether the direct connection is merely an
improvement or an increase in existing voltage, as alleged by petitioner,
or a totally new and separate electric service as claimed by private
respondent. The law on the matter is clear. PD 40 promulgated on 7
November 1972 expressly provides that the generation of electric power
shall be undertaken solely by the NPC. However Section 3 of the same
decree also provides that the distribution of electric power shall be
undertaken by cooperatives, private utilities (such as the
CEPALCO), local governments and other entities duly authorized,
subject to state regulation.
viii. ERB only regulates in price issues
ix. Non-price issues is transferred to the jurisdiction of DOE.
- . . . we believe that since the provision of Section 18 on the
transfer of certain powers and functions from ERB to DOE is
clear and unequivocal, and devoid of any ambiguity, in the sense
that it categorically refers to "non-price jurisdiction, powers and
functions" of ERB under Section 3 of E.O. No. 172, there is no
room for interpretation, but only for application, of the law. This is
a cardinal rule of statutory construction.
x. Clearly, the parameters of the transfer of functions from ERB to DOE
pursuant to Section 18, are circumscribed by the provision of Section 3
of E.O. No. 172 alone so that, if there are other "related" functions of
ERB under other provisions of E.O. No. 172 or other energy laws, these
"related" functions, which may conceivably refer to what you call "non-
power rate powers and functions" of ERB, are clearly not contemplated
by Section 18 and are, therefore, not to be deemed included in the
transfer of functions from ERB to DOE under the said provision.
xi. It may be argued that Section 26 of R.A. No. 7638 contains a repealing
clause which provides that:
xii. All laws, presidential decrees, executive orders, rules and regulations or
parts thereof, inconsistent with the provisions of this Act, are hereby
repealed or modified accordingly. . . .
xiii. and, therefore, all provisions of E.O. No. 172 and related laws which are
inconsistent with the policy, purpose and intent of R.A. No. 7638 are
deemed repealed.
Prelim Notes
TelePrac Session 2
h. Republic vs. RETELCO 265 SCRA 1
i. Right of Prior Operator – Franchise holder
- The right of the prior operator under the aforecited provision is to
be unfailingly and seriously considered in case it chooses to
propose arrangements or such terms and conditions whereby
BUTELCO is to coordinate its efforts to set up and operate a
telephone system with the existing operator. BUTELCO, in that
case, would be obligated to exercise good faith and exert
optimal cooperative efforts so that it may save government some
money and prevent competition by "utilizing existing facilities in
cities, towns and provinces . . . [of] the present owners or
operators," as mandated by Section 79 (b) of Executive Order
No. 94.
- BUT lack of prior negotiation w/ the existing telephone
system operator does not render illegal the operation by the
bureau of telecoms of telephone system. The very provision
in question phrases the negotiation requirement less than
mandatory
ii. This case arose from a complaint filed on May 17, 1972 by petitioner-
appellee, the Republic Telephone Company [RETELCO], seeking to
enjoin the respondents Director or Acting Director of the Bureau of
Telecommunications; its Regional Superintendent; the Exchange
Manager and Chief Operator of the Bureau of Telecommunications at
Malolos, Bulacan, and the agents and representatives acting in their
behalf, from operating and maintaining their local telephone system in
Malolos, Bulacan and from soliciting subscribers in that municipality and
its environs, alleging inter alia that such operations and maintenance of
the telephone system and solicitation of subscribers by respondents
constituted an unfair and ruinous competition to the detriment of
petitioner [RETELCO] who is a grantee of both municipal and legislative
franchises for the purpose
iii. WON BUTELCO (DOTC) can operate its own telephone system in
Malolos Bulacan w/o violating the franchise of RETELCO?
iv. Yes.
v. In the case at bench, BUTELCO admittedly did not fulfill this obligation.
Such failure, however, is not violative of any mandatory provision of law.
There was no violation of Section 79 (b) of Executive Order No. 94 but
only an irregularity in the procedure by which BUTELCO undertook
the operation of a telephone system in Malolos, Bulacan. It cannot
be denied that, even if prior negotiations were undertaken by BUTELCO
with RETELCO, and they both could not agree on mutually acceptable
terms and conditions, nothing in Sections 79 (b) of Executive Order
No. 94 prohibits BUTELCO from proceeding with the setting up and
operation of a telephone system in Malolos, Bulacan, despite the
presence of a prior operator in the person of RETELCO Thus, any
injunction prohibiting BUTELCO from operating its telephone system
finds no sufficiently legal and just basis under Section 79 (b) of Executive
Order No. 94.
vi. BUTELCO's initiative to operate and maintain a telephone system in
Malolos, Bulacan, was undertaken pursuant to Section 79 (b) of
Executive Order No. 94, Series of 1947. Said provision vested in
BUTELCO the following power and duties, among others: ". . . (b) To
investigate, consolidate, negotiate for, operate and maintain wire-
telephone or radio telephone communication on service throughout the
Philippines by utilizing such existing facilities in cities, towns, and
provinces as may be found feasible and under such terms and conditions
Prelim Notes
TelePrac Session 2
or arrangements with the present owners or operators thereof as may be
agreed upon to the satisfaction of all concerned . . ."
vii. While we affirmed in the case of Republic v. PLDT, 11(11) that "[t]he
Bureau of Telecommunications, under Section 79 (b) of Executive Order
No. 94, may operate and maintain wire telephone or radio telephone
communications throughout the Philippines by utilizing existing facilities
in cities, towns, and provinces under such terms and conditions or
arrangement with present owners or operators as may be agreed upon
to the satisfaction of all concerned," 12(12) we also at the same time
clarified that "nothing in these provisions limits the Bureau to non-
commercial activities or prevents it from serving the general public."
13(13) ". . . It may be that in its original prospectuses the Bureau
officials had stated that the service would be limited to government
offices; but such limitations could not block future expansion of the
system, as authorized by the terms of the Executive Order, nor
could the officials of the Bureau bind the Government not to engage
in services that are authorized by law." 14(14) In other words,
BUTELCO cannot be said to be prohibited under the aforecited legal
provision from operating and maintaining its own telephone system in
Malolos, Bulacan.
viii. In the said case of Aligaen, we foregrounded the need for BUTELCO to
first enter into negotiation or arrangement with the operator or owner of
the existing telephone system
ix. This is not to say, however, that the lack of prior negotiation with the
existing telephone system operator renders illegal the operation by
BUTELCO of a telephone system. After all, the very provision in question
phrases the prior negotiation requirement in less than mandatory terms.
Section 79 (b) of Executive Order No. 94, Series of 1947 provides: "(b)
To . . . negotiate for, operate and maintain wire-telephone or radio
telecommunications service throughout the Philippines by utilizing such
existing facilities in cities, towns, and provinces as may be found feasible
and under such terms and conditions or arrangements with the present
owners or operators thereof as may be agreed upon to the satisfaction of
all concerned"

i. Telefast Comms/Phil. Wireless vs. Castro 158 SRA 445

i. Art. 1170 of the Civil Code provides that "those who in the performance
of their obligations are guilty of fraud, negligence or delay, and those
who in any manner contravene the tenor thereof, are liable for damages."
Art. 2176 also provides that "whoever by act or omission causes
damage to another, there being fault or negligence, is obliged to
pay for the damage done."
ii. Unsent wire message from Lingayen. Fraud, Malice, Recklessness.
This, petitioner did not do, despite performance by said private
respondent of her obligation by paying the required charges.
Petitioner was therefore guilty of contravening its obligation to said
private respondent and is thus liable for damage
iii. On 2 November 1956, Consolacion Bravo-Castro, wife of plaintiff Ignacio
Castro, Sr. and mother of the other plaintiffs, passed away in Lingayen,
Pangasinan. On the same day, her daughter Sofia C. Crouch, who was
then vacationing in the Philippines, addressed a telegram to plaintiff
Ignacio Castro, Sr. at 685 Wanda, Scottsburg, Indiana, U.S.A., 47170
announcing Consolacion's death. The telegram was accepted by the
defendant in its Dagupan office, for transmission, after payment of the
required fees or charges
iv. telegram never reached its addressee.
Prelim Notes
TelePrac Session 2
v. Consolacion was interred with only her daughter Sofia in attendance.
Neither the husband nor any of the other children of the deceased, then
all residing in the United States, returned for the burial.
vi. She and the other plaintiffs thereupon brought action for damages arising
from defendant's breach of contract.
vii. Petitioner appeals from the judgment of the appellate court, contending
that the award of moral damages should be eliminated as defendant's
negligent act was not motivated by "fraud, malice or recklessness." In
other words, under petitioner's theory, it can only be held liable for
P31.92, the fee or charges paid by Sofia C. Crouch for the telegram that
was never sent to the addressee thereof. Petitioner's contention is
without merit. Art. 1170 of the Civil Code provides that "those who in the
performance of their obligations are guilty of fraud, negligence or delay,
and those who in any manner contravene the tenor thereof, are liable for
damages." Art. 2176 also provides that "whoever by act or omission
causes damage to another, there being fault or negligence, is obliged to
pay for the damage done."
viii. In the case at bar, petitioner and private respondent Sofia C. Crouch
entered into a contract whereby, for a fee, petitioner undertook to send
said private respondent's message overseas by telegram. This,
petitioner did not do, despite performance by said private
respondent of her obligation by paying the required charges.
Petitioner was therefore guilty of contravening its obligation to said
private respondent and is thus liable for damage
ix. "[Who] can seriously dispute the shock, the mental anguish and the
sorrow that the overseas children must have suffered upon learning of
the death of their mother after she had already been interred, without
being given the opportunity to even make a choice on whether they
wanted to pay her their last respects? There is no doubt that these
emotional sufferings were proximately caused by appellant's omission
and substantive law provides for the justification for the award of moral
damages." 4