Tatad v.

Garcia

In 1989, the government planned to build a railway transit line along EDSA. No bidding was made but certain
corporations were invited to prequalify. The only corporation to qualify was the EDSA LRT Consortium which was
obviously formed for this particular undertaking. An agreement was then made between the government, through the
Department of Transportation and Communication (DOTC), and EDSA LRT Consortium. The agreement was
based on the Build-Operate-Transfer scheme provided for by law (RA 6957, amended by RA 7718). Under the
agreement, EDSA LRT Consortium shall build the facilities, i.e., railways, and shall supply the train cabs. Every phase
that is completed shall be turned over to the DOTC and the latter shall pay rent for the same for 25 years. By the end
of 25 years, it was projected that the government shall have fully paid EDSA LRT Consortium. Thereafter, EDSA LRT
Consortium shall sell the facilities to the government for $1.00.
However, Senators Francisco Tatad, John Osmeña, and Rodolfo Biazon opposed the implementation of said
agreement as they averred that EDSA LRT Consortium is a foreign corporation as it was organized under
Hongkong laws; that as such, it cannot own a public utility such as the EDSA railway transit because this falls under
the nationalized areas of activities. The petition was filed against Jesus Garcia, Jr. in his capacity as DOTC Secretary.
ISSUE: Whether or not the petition shall prosper.
HELD: No. The Supreme Court made a clarification. The SC ruled that EDSA LRT Consortium, under the
agreement, does not and will not become the owner of a public utility hence, the question of its nationality is
misplaced. It is true that a foreign corporation cannot own a public utility but in this case what EDSA LRT Consortium
will be owning are the facilities that it will be building for the EDSA railway project. There is no prohibition against a
foreign corporation to own facilities used for a public utility. Further, it cannot be said that EDSA LRT Consortium will
be the one operating the public utility for it will be DOTC that will operate the railway transit. DOTC will be the one
exacting fees from the people for the use of the railway and from the proceeds, it shall be paying the rent due to EDSA
LRT Consortium. All that EDSA LRT Consortium has to do is to build the facilities and receive rent from the use thereof
by the government for 25 years – it will not operate the railway transit. Although EDSA LRT Consortium is a corporation
formed for the purpose of building a public utility it does not automatically mean that it is operating a public utility. The
moment for determining the requisite Filipino nationality is when the entity applies for a franchise, certificate or any
other form of authorization for that purpose.

PHILIPPINE AIRLINES, INC. vs. CIVIL AERONAUTICS BOARD and GRAND INTERNATIONAL AIRWAYS, INC.

G.R. No. 11952; March 26, 1997

FACTS:

This Special Civil Action seeks to prohibit respondent Civil Aeronautics Board from exercising jurisdiction over private
respondent's Application for the issuance of a Certificate of Public Convenience and Necessity, and to annul and set
aside a temporary operating permit issued by the Civil Aeronautics Board in favor of Grand International Airways,
allowing the same to engage in scheduled domestic air transportation services, particularly the Manila-Cebu, Manila-
Davao, and converse routes.

Philippine Airlines, Inc. (PAL) alleges that GrandAir does not possess a legislative franchise authorizing it to engage
in air transportation service within the Philippines or elsewhere. Such franchise is, as argued, a requisite for the
issuance of a Certificate of Public Convenience or Necessity by the respondent Board, as mandated under Section
11, Article XII of the Constitution.

Respondent GrandAir, on the other hand, posits that a legislative franchise is no longer a requirement for the
issuance of a Certificate of Public Convenience and Necessity or a Temporary Operating Permit, following the Court's
pronouncements in various jurisprudential cases.

ISSUE: Whether or not 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.

HELD: It is generally recognized that a franchise may be derived indirectly from the state through a duly designated
agency, and to this extent, the power to grant franchises has frequently been delegated, even to agencies other than
those of a legislative nature. In pursuance of this, it has been held that privileges conferred by grant by local
authorities as agents for the state constitute as much a legislative franchise as though the grant had been made by
an act of the Legislature. The trend of modern legislation is to vest the Public Service Commissioner with the power
to regulate and control the operation of public services under reasonable rules and regulations, and as a general rule,
courts will not interfere with the exercise of that discretion when it is just and reasonable and founded upon a legal
right.

The Civil Aeronautics Board has the authority to issue a Certificate of Public Convenience and Necessity, or
Temporary Operating Permit to a domestic air transport operator, who, though not possessing a legislative franchise,
meets all the other requirements prescribed by the law. Such requirements were enumerated in Section 21 of R.A.
776. There is nothing in the law nor in the Constitution, which indicates that a legislative franchise is an indispensable
requirement for an entity to operate as a domestic air transport operator. Although Section 11 of Article XII recognizes
Congress' control over any franchise, certificate or authority to operate a public utility, it does not mean Congress has
exclusive authority to issue the same. Franchises issued by Congress are not required before each and every public
utility may operate. In many instances, Congress has seen it fit to delegate this function to government agencies,
specialized particularly in their respective areas of public service.

LUZON STEVEDORING V. PUBLIC SERVICE COMMISSION (G.R. NO. L-5458)

Facts:

Petitioners are corporations mainly engaged in the stevedoring or lighterage and harbor towage business. At the
same time, they are also engaged in interisland service which consists of hauling cargoes such as sugar, oil, fertilizer
and other commercial commodities which are loaded in their barges and towed by their tugboats, for which service
petitioners charge freightage, but only serving a limited portion of the public. Respondent Philippine Shipowners
Association complains that petitioners were engaged in the transportation of cargo for hire or compensation without
authority or approval of the Commission, having adopted, filed and collected freight charges which said rates resulted
in ruinous competition. PSC restrained petitioners “from further operating their watercraft to transport goods for hire or
compensation between points in the Philippines until the rates they propose to charge are approved by this
Commission.”

Issue:

Whether or not petitioners can be considered public service.

Ruling: YES.

It is not necessary, under this definition, that one holds himself out as serving or willing to serve the public in order to
be considered public service.

Commonwealth Act No. 146 declares in unequivocal language 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.

It has been seen that public utility, even where the term is not defined by statute, is not determined by the number of
people actually served. Nor does the mere fact that service is rendered only under contract prevent a company from
being a public utility. On the other hand, casual or incidental service devoid of public character and interest, it must be
admitted, is not brought within the category of public utility. The demarcation line is not susceptible of exact
description or definitions, each case being governed by its peculiar circumstances.

The transportation service which was the subject of complaint was not casual or incidental. It had been carried on
regularly for years at almost uniform rates of charges. Although the number of the petitioners’ customers was limited,
the value of goods transported was not inconsiderable. Petitioners did not have the same customers all the time
embraced in the complaint, and there was no reason to believe that they would not accept, and there was nothing to
prevent them from accepting, new customers that might be willing to avail of their service to the extent of their
capacity.

Epitacio San Pablo v. Pantranco South Express, Inc.

G.R. No. L-61461 August 21, 1987
Gancayco, J.
FACTS:
 Pantranco – engaged in the land transportation business with PUB service for passengers and freight and various
certificates for public conveniences to operate passenger buses from Metro Manila to Bicol Region and Eastern
Samar; through its counsel, it wrote to Maritime Industry Authority (MARINA) requesting authority to lease/purchase
a vessel named M/V “Black Double” “to be used for its project to operate a ferryboat service from Matnog, Sorsogon
and Allen, Samar that will provide service to company buses and freight trucks that have to cross San Bernardo
Strait; request was denied by MARINA
 It nevertheless acquired the vessel MV “Black Double”; it wrote the Chairman of the Board of Transportation that it
proposes to operate a ferry service to carry its passenger buses and freight trucks between Allen and Matnog in
connection with its trips to Tacloban City for the purpose of continuing the highway, which is interrupted by a small
body of water, the said proposed ferry operation being merely a necessary and incidental service to its main service
and obligation of transporting its passengers; that being so, it believed that there was no need for it to obtain a
separate certificate for public convenience to operate a ferry service Matnog to cater exclusively to its passenger
buses and freight trucks. BOT granted the request. Cardinal Shipping Corporation and the heirs of San Pablo filed
separate motions for reconsideration.

ISSUES: 1. WON a ferry service is an extension of the highway and thus is a part of the authority originally granted
PANTRANCO; 2. WON a land transportation company can be authorized to operate a ferry service or coastwise or
interisland shipping service along its authorized route as an incident to its franchise without the need of filing a separate
application for the same

HELD: 1. No.
 ferry - continuation by means of boats, barges, or rafts, of a highway or the connection of highways located on the
opposite banks of a stream or other body of water. The term necessarily implies transportation for a short distance,
almost invariably between two points, which is unrelated to other transportation
 ferry service - service either by barges or rafts, even by motor or steam vessels, between the banks of a river or
stream to continue the highway which is interrupted by the body of water, or in some cases to connect two points on
opposite shores of an arm of the sea such as bay or lake which does not involve too great a distance or too long a
time to navigate
 coastwise or interisland service - service which involves crossing the open sea
 motorship, steamboat or motorboat service (engaged in the coastwise trade) – service between the different
islands, involving more or less great distance and over more or less turbulent and dangerous waters of the open sea,
to be coastwise or inter-island service; considered coastwise or inter-island service
 conveyance of passengers, trucks and cargo from Matnog to Allen is certainly not a ferry boat service but a coastwise
or interisland shipping service. Under no circumstance can the sea between Matnog and Allen be considered a
continuation of the highway. While a ferry boat service has been considered as a continuation of the highway when
crossing rivers or even lakes, which are small body of waters - separating the land, however, when as in this case
the two terminals, Matnog and Allen are separated by an open sea it can not be considered as a continuation of the
highway. PANTRANCO should secure a separate CPC for the operation of an interisland or coastwise shipping. Its
CPC as a bus transportation cannot be merely amended to include this water service under the guise that it is a mere
private ferry service.

COGEO-CUBAO OPERATORS AND DRIVERS ASSOCIATION vs. THE COURT OF APPEALS, LUNGSOD
SILANGAN TRANSPORT SERVICES, CORP., INC.
G.R. No. 100727 March 18, 1992

FACTS:
It appears that a certificate of public convenience to operate a jeepney service was ordered to be issued in favor of
Lungsod Silangan to ply the Cogeo-Cubao route sometime in 1983 on the justification that public necessity and
convenience will best be served, and in the absence of existing authorized operators on the lined apply for . . . On the
other hand, defendant-Association was registered as a non-stock, non-profit organization with the Securities and
Exchange Commission on October 30, 1985 . . . with the main purpose of representing plaintiff-appellee for whatever
contract and/or agreement it will have regarding the ownership of units, and the like, of the members of the Association
...

Perturbed by plaintiffs' Board Resolution No. 9 . . . adopting a Bandera' System under which a member of the
cooperative is permitted to queue for passenger at the disputed pathway in exchange for the ticket worth twenty pesos,
the proceeds of which shall be utilized for Christmas programs of the drivers and other benefits, and on the strength of
defendants' registration as a collective body with the Securities and Exchange Commission, defendants-appellants, led
by Romeo Oliva decided to form a human barricade on November 11, 1985 and assumed the dispatching of passenger
jeepneys . . . This development as initiated by defendants-appellants gave rise to the suit for damages.
Defendant-Association's Answer contained vehement denials to the insinuation of take over and at the same time
raised as a defense the circumstance that the organization was formed not to compete with plaintiff-cooperative. It,
however, admitted that it is not authorized to transport passengers . . .

ISSUE :
Whether or not the petitioner usurped the property right of the respondent.

HELD:
Yes.

xxx

Under the Public Service Law, a certificate of public convenience is an authorization issued by the Public Service
Commission for the operation of public services for which no franchise is required by law. In the instant case, a
certificate of public convenience was issued to respondent corporation on January 24, 1983 to operate a public utility
jeepney service on the Cogeo-Cubao route. x x x

A certification of public convenience is included in the term "property" in the broad sense of the term. Under the Public
Service Law, a certificate of public convenience can be sold by the holder thereof because it has considerable material
value and is considered as valuable asset (Raymundo v. Luneta Motor Co., et al., 58 Phil. 889). Although there is no
doubt that it is private property, it is affected with a public interest and must be submitted to the control of the government
for the common good (Pangasinan Transportation Co. v. PSC, 70 Phil 221). Hence, insofar as the interest of the State
is involved, a certificate of public convenience does not confer upon the holder any proprietary right or interest or
franchise in the route covered thereby and in the public highways (Lugue v. Villegas, L-22545, Nov . 28, 1969, 30 SCRA
409). However, with respect to other persons and other public utilities, a certificate of public convenience as property,
which represents the right and authority to operate its facilities for public service, cannot be taken or interfered with
without due process of law. Appropriate actions may be maintained in courts by the holder of the certificate against
those who have not been authorized to operate in competition with the former and those who invade the rights which
the former has pursuant to the authority granted by the Public Service Commission (A.L. Ammen Transportation Co. v.
Golingco. 43 Phil. 280).

In the case at bar, the trial court found that petitioner association forcibly took over the operation of the jeepney
service in the Cogeo-Cubao route without any authorization from the Public Service Commission and in violation of
the right of respondent corporation to operate its services in the said route

EE ELSER VS CA

FACTS:In 1945, goods except a case of vanishing cream were shipped on the 'S.S. Sea Hydra,' of Isthmian
Steamship Company, from New York to Manila, and were received by the consignee 'Udharam Bazar and Co.' As the
goods were insured against damage or loss by the 'Atlantic Mutual Insurance Co.'Udaharam Bazar and Co.' now
claimed for indemnity of the loss from the said insurer, 'and was subsequently paid by the latter's agent 'E. E. Elser
Inc.' the amount involved, that is, P159.78..

RTC as affirmed by the Court of Appeals held that petitioners have already lost their right to press their claim against
respondent because of their failure to serve notice thereof upon the carrier within 30 days after receipt of the notice of
loss or damage as required by clause 18 of the bill of lading which was issued concerning the shipment of the
merchandise which had allegedly disappeared.

In this respect, the court said that, "appellant unwittingly admitted that they were late in claiming the indemnity for the
loss of the case of the vanishing cream as their written claim was made on April 25, 1946, or more than 30 days after
they had been fully aware of said loss," and because of this failure, the Court said the action of petitioners should,
and must, fall. Petitioners now contend that this finding is erroneous in the light of the provisions of the Carriage of
Goods by Sea Act of 1936, which apply to this case, the same having been made an integral part of the covenants
agreed upon in the bill of lading.

ISSUE: Which of these two provisions should prevail? Is it that contained in clause 18 of the bill of lading, or that
appearing in the Carriage of Goods by Sea Act?.
HELD: The clause 18 of the bill of lading must of necessity yields to the provisions of the Carriage of Goods by Sea
Act in view of the proviso contained in the same Act which says: "any clause, covenant, or agreement in a contract of
carriage relieving the carrier or the ship from liability for loss or damage to or in connection with the goods . . . or
lessening such liability otherwise than as provided in this Act, shall be null and void and of no effect." (section 3.) This
means that a carrier cannot limit its liability in a manner contrary to what is provided for in said act. and so clause 18
of the bill of lading must of necessity be null and void.

Ancillary issue: But respondents contend that while the United States Carriage of Goods by Sea Act of 1936 was
accepted and adopted by our government by virtue of Commonwealth Act No. 65, however, said Act does not have
any application to the present case because the shipment in question was made in December, 1945, and arrived in
Manila in February, 1946 and at that time the Philippines was still a territory or possession of the United States and,
therefore it may be said that the trade then between the Philippines and the United States was not a "foreign trade".

SC: Granting arguendo that the Philippines was a territory or possession of the United States for the purposes of said
Act and that the trade between the Philippines and the United States before the advent of independence was not
foreign trade or can only be considered in a domestic sense, still we are of the opinion that the Carriage of Goods by
Sea Act of 1936 may have application to the present case it appearing that the parties have expressly agreed to
make and incorporate the provisions of said Act as integral part of their contract of carriage. This is an exception to
the rule regarding the applicability of said Act. This is expressly recognized by section 13 of said Act which contains
the following proviso:

Nothing in this Act shall be held to apply to contracts for carriage of gods by sea between any port of the United
States or its possessions, and any other port of the United States or its possessions: Provided, however, That any bill
of lading or similar document of title which evidence of a contract for the carriage of goods by sea between such
ports, containing an express statement that it shall be subject to the provisions of this Act, shall be subjected hereto
as fully as if subject hereto by the express provisions of this Act.

In sum, having reached the foregoing conclusion, it would appear clear that action of petitioners has not yet lapsed or
prescribed, as erroneously held by the Court of Appeals, it appearing that the present action was brought within one
year after the delivery of the shipment in question..

SEA LAND SERVICE INC. V. IAC

Facts: Sea-Land, a foreign shipping and forwarding company licensed to do business in the Philippines, received
from Sea-borne Trading Company in California, a shipment consigned to Sen Hiap Hing, the business name used by
Cue. The shipper not having declared the value of the shipment , no value was indicated in the bill of lading. The
shipment was discharged in Manila, and while awaiting transshipment to Cebu, the cargo was stolen and never
recovered.

The trial court sentenced Sea-Land to pay Cue P186,048 representing the Philippine currency value of the lost cargo,
P55, 814 for unrealized profit and P25,000 for attorney’s fees. CA affirmed the trial court’s decision.

Issue: Whether or not Sea-Land is liable to pay Cue.

Held: There is no question of the right of a consignee in a bill of lading to recover from the carrier or shipper for loss
of, or damage to, goods being transported under said bill, although that document may have been drawn up only by
the consignor and the carrier without the intervention of the consignee.

Since the liability of a common carrier for loss of or damage to goods transported by it under a contract of carriage os
governed by the laws of the country of destination and the goods in question were shipped from the United States to
the Philippines, the liability of Sea-Land has Cue is governed primarily by the Civil Code, and as ordained by the said
Code, supplementary, in all matters not cluttered thereby, by the Code of Commerce and special laws. One of these
supplementary special laws is the Carriage of goods by Sea Act (COGSA), made applicable to all contracts for the
carriage by sea to and from the Philippines Ports in Foreign Trade by Comm. Act. 65.

Even if Section 4(5) of COGSA did not list the validity and binding effect of the liability limitation clause in the bill of
lading here are fully substantial on the basis alone of Article 1749 and 1750 of the Civil Code. The justices of such
stipulation is implicit in its giving the owner or shipper the option of avoiding accrual of liability limitation by the simple
expedient of declaring the value of the shipment in the bill of lading.

The stipulation in the bill of lading limiting the liability of Sea-Land for loss or damages to the shipment covered by
said rule to US$500 per package unless the shipper declares the value of the shipment and pays additional charges
is valid and binding on Cue.

Mayer Steel Pipe Corporation vs Court of Appeals

In 1983, Hongkong Government Supplies Department (HGSD) contracted Mayer Steel Pipe Corporation for the latter
to manufacture and deliver various steel pipes and fittings. Before Mayer Steel shipped the said pipes, it insured them
with two insurance companies namely, South Sea Surety and Insurance Co., Inc. and Charter Insurance Corporation
– each insurer covering different portions of the shipment. The insurance policies cover “all risks” which include all
causes of conceivable loss or damage.

When the pipes reached Hongkong, the pipes were discovered to have been damaged. The insurance companies
refused to make payment. On April 17 1986, Mayer Steel sued the insurance companies. The case reached the
Court of Appeals. The CA ruled that the case filed by Mayer Steel should be dismissed. It held that the action is
barred under Section 3(6) of the Carriage of Goods by Sea Act since it was filed only on April 17, 1986, more than
two years from the time the goods were unloaded from the vessel. Section 3(6) of the Carriage of Goods by Sea Act
provides that “the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is
brought within one year after delivery of the goods or the date when the goods should have been delivered.” The CA
ruled that this provision applies not only to the carrier but also to the insurer, citing the case of Filipino Merchants
Insurance Co., Inc. vs Alejandro.

ISSUE: Whether or not the Court of Appeals is correct.

HELD: No. Section 3(6) of the Carriage of Goods by Sea Act states that the carrier and the ship shall be discharged
from all liability for loss or damage to the goods if no suit is filed within one year after delivery of the goods or the date
when they should have been delivered. Under this provision, only the carrier’s liability is extinguished if no suit is
brought within one year. But the liability of the insurer is not extinguished because the insurer’s liability is based not
on the contract of carriage but on the contract of insurance. A close reading of the law reveals that the Carriage of
Goods by Sea Act governs the relationship between the carrier on the one hand and the shipper, the consignee
and/or the insurer on the other hand. It defines the obligations of the carrier under the contract of carriage. It does
not, however, affect the relationship between the shipper and the insurer. The latter case is governed by the
Insurance Code.

The Filipino Merchants case is different from the case at bar. In Filipino Merchants, it was the insurer which filed a
claim against the carrier for reimbursement of the amount it paid to the shipper. In the case at bar, it was the shipper
which filed a claim against the insurer. The basis of the shipper’s claim is the “all risks” insurance policies issued by
the insurers to Mayer Steel.

The ruling in Filipino Merchants should apply only to suits against the carrier filed either by the shipper, the consignee
or the insurer.