Freedom From Debt

Coalition (FDC) vs. Energy

Regulatory Commission (EDC),
G.R. No. 161113, June 15, 2004

Topic: Provisional Rates

Rafael Ian L. Andal
FACTS OF THE CASE

š MERALCO filed with the ERC an Application for an increase in rates. MERALCO also prayed ex parte for the grant of a
provisional authority to implement the increase according to the schedule attached to its Application.
š The ERC issued an Order provisionally approving MERALCO’s ex parte application for rate increases and set the hearing of
the case on a latter date. On the scheduled date of the hearing, the ERC did not revoke the provisional granted to
MERALCO per its prior Order.
š The petitioner FDC did not move for reconsideration but filed the instant Petition, arguing that the Order of the ERC is void
for having been issued without legal or statutory authority. It also contends that Rule 3, Section 4(e) of the Implementing
Rules of the EPIRA is unconstitutional for being an undue delegation of legislative power. It further asserts that the Order is
void for having been issued by the ERC with grave abuse of discretion and manifest bias.
š The ERC countered and insists that it is authorized to issue provisional orders under the law. ERC argues that it must not
have been the intention of Congress to expand the functions of the ERC, as the successor of the Energy Regulatory Board
(ERB), and clip its powers at the same time.
ISSUES

š Whether the ERC has legal authority to grant provisional rate adjustments
under Republic Act (R.A.) No. 9136, otherwise known as the "Electric Power
Industry Reform Act of 2001" (EPIRA); and
š Assuming that the ERC has the authority to grant provisional orders, whether
the grant by the ERC of the provisional rate adjustment in question was
committed with grave abuse of discretion amounting to lack or excess of
jurisdiction.
 ISSUE:
Whether the ERC has legal authority to grant provisional rate
adjustments under Republic Act (R.A.) No. 9136, otherwise
RULING known as the "Electric Power Industry Reform Act of 2001"
(EPIRA)

š The ERC is endowed with the statutory authority to

approve provisional rate adjustments under the aegis
Sec. 44. Transfer of Powers and Functions. — The powers of Sections 44 and 80 of the Electric Power Industry
and functions of the Energy Regulatory Board not
Reform Act (EPIRA).
inconsistent with the provisions of this Act are hereby
transferred to the ERC. X X X š The principal powers of the ERB relative to electric
public utilities transferred to the ERC are the
Sec. 80. Applicability and Repealing Clause. — The
applicability provisions of Commonwealth Act No. 146, following:
as amended, otherwise known as the "Public Services 1. To regulate and fix the power rates to be charged by
Act;" elective companies;
2. To issue certificates of public convenience for the
XXX
operation of electric power utilities;
…shall continue to have full force and effect except insofar 3. To grant or approve provisional electric rates.
as they are inconsistent with this Act. X X X
 ISSUE:
Assuming that the ERC has the authority to grant provisional
orders, whether the grant by the ERC of the provisional rate
RULING adjustment in question was committed with grave abuse of
discretion amounting to lack or excess of jurisdiction.

š The publication of the application itself is required, not

merely the notice of hearing issued by the ERC. The record
shows that MERALCO failed to comply with the publication
Section 4(e), Rule 3, IRR of EPIRA. Any application or petition for rate adjustment or requirement prescribed by the IRR as its published Notice
for any relief affecting the consumers must be verified and accompanied with an
acknowledgement of receipt of a copy thereof by the LGU Legislative body of the failed to include the actual application itself.
locality where the applicant or petitioner principally operates together with the
certification of the notice of publication thereof in a newspaper of general circulation in š In granting a provisional authority, the ERC must consider not
the same locality. only the evidence submitted by the applicant in support
The ERC may grant provisionally or deny the relief prayed for not later than seventy five thereof, but also the comments of the consumers and the
(75) calendar days from the filing of the application or petition, based on the same or
supporting documents attached thereto and such comments or pleadings the customers or Local Government Units (LGUs) concerned. Without even
the LGU concerned may have filed within thirty (30) calendar days from receipt of a mentioning the motions and opposition of FDC and other
copy of the application or petition or from the publication thereof as the case may be.
Thereafter, the ERC shall conduct a formal hearing on the application or petition, giving interested parties, ERC granted the motion for provisional rate
proper notices to all parties concerned, with at least one public hearing in the affected increase in its Order.
locality, and shall decide the matter on the merits not later than twelve (12) months from
the issuance of the aforementioned provisional order.
END OF CASE
[BF Homes v. Meralco, GR 171624, Dec.
6, 2010 ]

Topic: Other means of regulation

s]

Reporter: BOBBY BRIAN BORRE

FACTS OF THE CASE
- In June 2003, MERALCO demanded for unpaid bills, but petitioners refused invoking their right to refund based on
the 2002 SC ruling in Republic vs. Manila Electric Company ordering MERALCO to refund its customers.

- When its repeated demands remained unheeded, MERALCO, threatened to cut off electric power to all petitioners'
pumps if bills remained unpaid. Thus on, petitioners filed a petition in RTCLas Piñas with prayer for issuance of writ
of injunction and restraining order against MERALCO alleging that it refused to set off the P4.7M unpaid bills against
the P11.8M amount refundable to petitioners based on the cited ruling.

- MERALCO in its Answer, argued that RTC has no jurisdiction over the case on the ground that matters regarding the
guidelines, schedules and details of refund is under the authority and approval of Energy Regulatory Commission
(ERC), MERALCO's regulatory agency, as provided by law and the cited ruling. It likewise opposed the issuance of the
writ.

- RTC granted the application for the issuance of writ of injunction. When its motion to reconsider was denied,
MERALCO appealed to CA. The CA reversed RTC decision thereby dissolving the writ of injunction. When their
motion for reconsideration was denied, petitioners filed the present petition for review on certiorari under Rule 45.
ISSUE(S)

š 1. Whether or not BF HOMES is entitled for refund and ERC is the

regulating body in terms of rate and refund

š 2. Whether or not ERC is the regulatory agency of the government

having the authority and supervision over MERALCO (Public Utility).
š 3. Public Utilities as Defined by Laws
 ISSUE:
1. Whether or not the Plaintiff is entitled for refund and ERC
is the regulating body in terms of rate and refund
RULING

Yes. Although [MERALCO] recognizes the right of [BF Homes and

PWCC] to the refund as provided in the Meralco Refund Decision, it is
the ERC which has the authority to implement the same according to its
approved schedule, it being a dispute arising from the exercise of its
š (1) Rule 43(u) of the jurisdiction.
EPIRA Moreover, it bears to stress that the Meralco Refund Decision was
brought into fore by the Decision dated 16 February 1998 of the ERC
(then Energy Regulatory Board) granting refund to [MERALCO’s]
š (2) Section 4(o) of the consumers. Being the agency of origin, the ERC has the jurisdiction to
EPIRA Implementing execute the same. Besides, as stated, it is empowered to promulgate rules
Rules and Regulation that are essential in the discharge of its functions as an independent quasi-
provides that judicial body.
 ISSUE:
2. Whether or not ERC is the regulatory agency of the
government having the authority and supervision over
RULING MERALCO (Public Utility).

Presently, the ERC has original and exclusive jurisdiction over all cases
contesting rates, fees, fines, and penalties imposed by the ERC in the exercise of
its powers, functions and responsibilities, and over all cases involving disputes
between and among participants or players in the energy sector. (Rule 43(u) of
the EPIRA)

the ERC "shall also be empowered to issue such other rules that are essential in
š (1) Rule 43(u) of the EPIRA the discharge of its functions as in independent quasi-judicial body.” (Section
4(o) of the EPIRA Implementing Rules and Regulation provides)

š (2) Section 4(o) of the EPIRA The ERC is the regulatory agency of the government having the authority and
Implementing Rules and supervision over MERALCO. Thus, the task to approve the guidelines,
schedules, and details of the refund by MERALCO to its consumers, to
Regulation provides that implement the judgment of this Court in the MERALCO Refund cases, also falls
upon the ERC. By filing their Petition before the RTC, BF Homes and PWCC
intend to collect their refund without submitting to the approved schedule of the
ERC, and in effect, enjoy preferential right over the other equally situated
MERALCO consumers.
END OF CASE
FRANCISCO, JR. & HIZON v. TOLL
REGULATORY BOARD, ET AL.
G.R. NO. 166810 OCTOBER 19,2010

Topic: RATE FIXING VIS-A-VIS POWER TO GRANT AUTHORITY

Janela B. Cabungcal
FACTS OF THE CASE

š President Marcos issued P.D. 1112 in which it created the Toll Regulatory Board and vested it with the power to
enter into contracts for the construction, maintenance and operation tollways, grant authority to operate toll facility,
issue therefor the necessary Toll Operation Certificate ("TOC") and fix initial toll rates, and, from time to time,
adjust the same after due notice and hearing.
š PD 1113 was issued which granted the Philippine National Construction Corporation (PNCC), a franchise to
operate toll facilities in the North Luzon and South Luzon Expressways, with the right to collect toll fees at such
rates as TRB may authorize.
š PD 1894 was issued, granting PNCC a franchise over the MMEX, and the expanded NLEX and SLEX. PNCC was
granted the "right, privilege and authority to construct, maintain and operate any and all such extensions,
together with the toll facilities in any part of NLEX & SLEX and to divert routes as may be approved by the TRB.
FACTS OF THE CASE

š Government Corporate Counsel (GCC), on PNCC‘s request, issued an Opinion, later

affirmed by the Secretary of Justice, holding that PNCC may enter into a joint venture
(JV) agreement (JVA) with private entities without going into public bidding.
š In 1994, DPWH, TRB, PNCC, and other private and govt entities executed a
Memorandum of Understanding (MOU)
š PNCC entered into JVAs with private entities for toll operation of its franchised areas.
FACTS OF THE CASE

• executed Supplemental Toll Operation Agreements (STOA) to implement the TOA

• Once the requisite STOA approval is given, project prosecution starts and upon the
completion of the toll road project or of a divisible phase thereof, the TRB fixes or
approves the initial toll rate after which, it passes a board resolution prescribing
toll rate adjustment.
FACTS OF THE CASE

š Petitioners (as taxpayers and expressway users) seek to nullify the STOAs
and the corresponding TRB resolutions fixing initial rates and approving
toll rate adjustments.
š Petitioners assail the constitutionality of some sections of PD 1112 because
they vested the TRB, on one hand, toll operation awarding power while, on
the other hand, granting it also the power to issue, modify and promulgate
toll rate charges.
FACTS OF THE CASE

š The CITRA, SLTC and MNTC STOAs tie the hands of the TRB as it is
bound by the stipulated periodic and interim toll rate adjustments provided
therein. Petitioners contend that the SMMS (CITRA STOA), the SLTC and
the MNTC STOA's provisions on initial toll rates and periodic/interim toll
rate adjustments, by using a built-in automatic toll rate adjustment
formula, allegedly guaranteed fixed returns for the investors and negated
the public hearing requirement
ISSUE(S)

š Whether the TRB has power to issue, modify & promulgate toll rates
and rule on petitions relative to toll rates level & increase
 Whether the TRB has power to issue, modify &
RULING promulgate toll rates and rule on petitions relative
to toll rates level & increase

š If in case the TRB finds the change in the rates to be

reasonable and therefore merited, the increase shall
Section 3 (d) of P.D. 1112 then be implemented after the formalities of
TRB has the power to "[i]ssue, modify and promulgate from public hearing and publication are complied
time to time the rates of toll that will be charged the direct with. In this case, it is clear that the change in the
users of toll facilities." toll fees is immediately effective and
Section 8 of P.D. 1894 implementable. This is notwithstanding that, in case
The [TRB] shall have the authority to approve such initial of an increase in the toll fees, an appeal thereon is
toll rates without the necessity of any notice and hearing, filed.
except as provided in the immediately succeeding paragraph
of this Section
 Whether the TRB has power to issue, modify &
RULING promulgate toll rates and rule on petitions relative
to toll rates level & increase

š the TRB should exercise its rate-fixing powers vested

to it by law within the context of the agreed formula,
but always having in mind that the rates should be
just and reasonable. Conversely, it is very well
within the power of the TRB under the law to approve
the change in the current toll fees.
Section 3 (d) of P.D. 1112 š But the reasonableness of a possible increase in the
TRB has the power to "[i]ssue, modify and promulgate from fees must first be clearly and convincingly
time to time the rates of toll that will be charged the direct established by the petitioning entities, i.e. the toll
users of toll facilities." operators. Otherwise, the same should not be granted
by the approving authority concerned.
 Whether the TRB has power to issue, modify &
RULING promulgate toll rates and rule on petitions relative
to toll rates level & increase

š It is, therefore, imperative that in implementing and

imposing new, i.e. subsequent toll rates arrived at using the
toll rate adjustment formula, the subject tollway operators
and the TRB must necessarily comply not only with the
requirement of publication but also with the equally
important public hearing.
Section 8 of P.D. 1894 š Any fixing of the toll rate, which did not or does not comply
and Section 3 (d) of P.D. 1112 with the twin requirements of public hearing and
publication, must therefore be struck down as void.
the Toll Regulatory Board (TRB) is authorized to approve the š In such case, the previously valid toll rate shall
initial toll rates without the necessity of a hearing; it is only consequently apply, pending compliance with the twin
when a challenge on the initial toll rates fixed ensues that requirements for the new toll rate.
public hearings are required.
END OF CASE
NAPOCOR vs. Court of Appeals, 279
SCRA 506 September 1997

Topic: Area Operation

Denise Laureen P. Celestial
FACTS OF THE CASE
š On June 17, 1961, the Cagayan Electric and power Light Company (CEPALCO) was enfranchised by
RA 3247 "to construct, maintain and operate an electric light, heat and power system for the purpose of generating and/or
distributing electric light, heat and/or power for sale within the City of Cagayan de Oro and its suburbs" for fifty (50) years
(Expansion of areas RA 3570 & RA 6020).
š (PD 243) vested with authority to
Philippine Veterans Investment Development Corporation (PHIVIDEC)
engage in "commercial, industrial, mining, agricultural and other enterprises" among other
powers and "to allow the full and continued employment of the productive capabilities of and
investment of the veterans and retirees of the Armed Forces of the Philippines."
š PHIVIDEC Industrial Authority (PIA), a subsidiary of PHIVIDEC (PD 538) to carry out the government
policy
š Under Sec. 3 of P.D. No. 538, the first area for development shall be located in the municipalities of Tagoloan and Villanueva.  This
area forms part of the PHIVIDEC Industrial Estate Misamis Oriental (PIE-MO).
FACTS OF THE CASE

š As manager of PIE-MO, PIA granted the Ferrochrome Philippines, Inc. (FPI) and Metal
Alloys Corporation (MAC) authority to operate in its area of development.
š On July 6, 1979, PIA granted CEPALCO a temporary authority to retail electric power to the industries operating
within the PIE-MO. ”To operate, administer, construct and distribute electric power within the PHIVIDEC Industrial
Estate, Misamis Oriental, such authority to be co-extensive with the territorial jurisdiction of PHIVIDEC Industrial
Estate, as defined in Sec. 3 of P.D. No. 538 and shall be for a period of five (5) years, renewable for another five (5)
years at the option of CEPALCO.”
š The parties (PIA & CEPALCO) provided further: . . should this Agreement be thus renewed, PIA has the option to
take over the operation of the electric service and acquire by purchase CEPALCO's assets within PIE-MO. . .
FACTS OF THE CASE

š According to PIA, CEPALCO proved no match to the power demands of the industries in PIE-MO that most of
these companies operating therein closed shop.
š Impelled by a "desire to provide cheap power costs to power-intensive industries operating within the Estate," PIA
applied with the National Power Corporation (NPC) for direct power connection which the latter in due course
approved.
š One of the companies which entered into an agreement with the NPC for a direct sale and supply of power was the
Ferrochrome Phils., Inc. (FPI).
FACTS OF THE CASE

š 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.
š NPC claimed that it was authorized by its Charter to sell electric power "in bulk" to industrial enterprises.
š The lower court ordered the NPC to "permanently desist" from effecting direct supply of power to the FPI and "from
entering into and/or implementing any agreement or arrangement for such direct power connection, unless coursed
through the power line" of CEPALCO.
FACTS OF THE CASE

š NPC’s appeal was denied on December 1989 on the ground that the statutory authority given to the NPC as regards
direct supply of power to BOI-registered enterprises "should always be subordinate to the 'total-electrification-of-
the-entire-country-on-an-area-coverage basis policy' enunciated in P. D. No. 40,”
š CEPALCO filed in the Regional Trial Court of Pasig (Branch 68). Noting all the cases filed by CEPALCO all
seeking exclusivity in the distribution of electric power to areas covered by its franchise, the court ruled that "the
right of petitioner to supply electric power in the aforesaid area to the exclusion of other entities had been settled
once and for all by the Regional Trial Court of Quezon City wherein petitioner obtained a favorable judgment."
Hence, the petition was dismissed on the ground of res judicata.
FACTS OF THE CASE
š CEPALCO elevated the case. However, the Court referred it to the Court of Appeals.
š The Court of Appeals elucidated the ruling in both NPC v. Court of Appeals & Del Monte [Philippines], Inc. v. Hon.
Felix M. de Guzman, etc., etc., et al. categorically held that before a direct connection to the NPC maybe granted, a
proper administrative body must conduct a hearing "to determine which entity, the franchise holder or the NPC, has
the right to supply electric power to the entity applying for direct connection,”
š The Court of Appeals affirmed the lower court's dismissal of the case neither on the grounds of res
judicata nor ligis pendentia but on the "only one unresolved issue, which is whether the NPC itself
has the power to determine the propriety of direct power connection from its lines to
any entity located within the franchise area of another public utility."
ISSUE(S)

š Whether or not the National Power Corporation (NPC) has jurisdiction

to determine whether it may supply electric power directly to the
facilities of an industrial corporation in areas where there is an existing
and operating electric power franchisee.
 ISSUE:
Whether or not the National Power Corporation (NPC) has
jurisdiction to determine whether it may supply electric power
RULING directly to the facilities of an industrial corporation in areas
where there is an existing and operating electric power
franchisee.

š The determination of which of two public utilities has

the right to supply electric power to an area which is
š Republic Act No. 7638 (An Act Creating the Department of within the coverage of both is certainly not a rate-
Energy, Rationalizing the Organization and Functions of fixing function which should remain with the Energy
Government Agencies Related to Energy, and for Other
Purposes), Approved on December 9, 1992, specifically provides: Regulation Board (ERB). It deals with the regulation
š Sec. 18. Rationalization or Transfer of Functions of of the distribution of energy resources which, under
Attached or Related Agencies. — The non-price Executive Order No. 172, was expressly a function of
regulatory jurisdiction, powers, and functions of the ERB. However, with the enactment of Republic Act
Energy Regulatory Board as provided for in Section 3 No. 7638, the Department of Energy took over such
of Executive Order No. 172 are hereby transferred to function. Hence, it is this Department which shall
the Department. then determine whether CEPALCO or PIA should
š . . . The power of the NPC to determine, fix, and prescribe the supply power to PIE-MO.
rates being charged to its customers under Section 4 of
Republic Act No. 6395, as amended, as well as the power of
electric cooperatives to fix rates under Section 16 (o), Chapter
II of Presidential Decree No. 269, as amended, are hereby
transferred to the Energy Regulatory Board. The Board shall
exercise its new powers only after due notice and hearing and
under the same procedure provided for in Executive Order No.
172.
END OF CASE
 Montoya v. Ignacio
G.R. No. L-5868
December 29, 1953

Approval of Sale and Mortgages of Public Utility Assets or Equity

Putri Sohrea B. Dirongawan
 FACTS OF THE CASE

š Tomasita Arca, a public school teacher in Tanza, Cavite boarded the jeepney driven by Leonardo de Guzman at
Tanza in order to go to Cavite City. The jeepney collided with a bus of the Luzon Bus Line causing the death of
Tomasita.

š Her widower and children instituted an action praying that the owners of the jeepney, be ordered to pay them an
indemnity.

š Defendants set up as a special defense that the result of the investigation was the driver of the bus was the one
at fault. Defendant added that he is not and has never been the owner of the jeepney and cannot therefore be
held responsible for the damages caused by it.
ISSUE

Whether or not defendant’s jeepney covered by a franchise and leased to another is

binding upon the public even without obtaining prior approval.
RULING š The law requires the approval of the Public Service Commission
in order that a franchise, or any privilege pertaining thereto, may
be sold or leased without infringing the certificate issued to the
grantee.
š Since a franchise is personal in nature any transfer or lease
thereof should be notified to the Public Service Commission so
that the latter may take proper safeguards to protect the interest of
the public
š The law requires that, before the approval is granted, there should be a
public hearing, with notice to all interested parties, in order that the
THE PUBLIC SERVICE LAW Commission may determine if there are good and reasonable grounds
SECTION 20. Acts requiring the approval of the Commission. - Subject to justifying the transfer or lease of the property covered by the franchise,
established limitations and exceptions and saving provisions to the or if the sale or lease is detrimental to public interest.
contrary, it shall be unlawful for any public service or for the owner,
lessee or operator thereof, without the approval and authorization of š If the property covered by the franchise is transferred, or leased to
the Commission previously had another without obtaining the requisite approval, the transfer is
(g) To sell, alienate, mortgage, encumber or lease its property,
not binding against the Public Service Commission and in
franchises, certificates, privileges, or rights or any part thereof; or contemplation of law the grantee continues to be responsible
merge or consolidate its property, franchises privileges or rights, or any under the franchise in relation to the Commission and to the
part thereof, with those of any other public service. The approval public
herein required shall be given, after notice to the public and hearing the
persons interested at a public hearing, if it be shown that there are just š Since the lease of the jeepney in question was made without such
and reasonable grounds for making the mortgaged or encumbrance, for approval, the only conclusion that can be drawn is that Marcelino
liabilities of more than one year maturity, or the sale, alienation, lease, Ignacio still continues to be its operator in contemplation of law, and as
merger, or consolidation to be approved, and that the same are not such is responsible for the consequences incident to its operation, one
detrimental to the public interest, and in case of a sale, the date on of them being the collision under consideration.
which the same is to be consummated shall be fixed in the order of
approval: Provided, however, that nothing herein contained shall be
construed to prevent the transaction from being negotiated or
completed before its approval or to prevent the sale, alienation, or lease
by any public service of any of its property in the ordinary course of its
business.
END OF CASE
Y TRANSIT Co., Inc. v. NLRC,
229 SCRA 508, January 27, 1994

Topic: Approval of Sale and Mortgages of Public Utility Assets or Equity

GORGONIA, Sheila
FACTS OF THE CASE
o Yujuico Transit Co., Inc. mortgaged ten of its buses to
Development Bank of the Philippines to secure a loan of
P 2.7 M
o The Board of Directors of Yujuico Transit Co., Inc.,
passed a resolution authorizing its president, Jesus
Yujuico to enter into a dacion en pago
arrangement with the DBP, whereby Jesus Yujuico
would transfer to the DBP the Saint Martin Technical
Institute in consideration of the full settlement of the
obligations of three companies, one of which was
Yujuico Transit Co, Inc.,
FACTS OF THE CASE
o Consequently, the company transferred the ownership
of its mortgaged properties, including the buses, to
Jesus Yujuico.
o The Yujuico Transit Employees Union (Associated
Labor Union) filed two consolidated complaints
against Yujuico Transit Co., Inc. for unfair labor
practice and non-payment of living allowance.
o Jesus Yujuico sold the subject buses to herein
petitioner Y Transit Co., Inc for P 3.4M
FACTS OF THE CASE
o Labor Arbiter dismissed the complaint for unfair
labor practice but holding Yujuico Transit Co., Inc.
liable for non-payment of living allowances in the
amount of P 142, 790.49.
o The 10 buses were levied, hence, Y Transit filed
affidavits for Third Party Claim.
o Private respondents opposed the third party claim on
the ground that the transfer was void because of lack
of approval of the BOT as required by the Public
Service Act.
FACTS OF THE CASE
o Accordingly, the third party claim was granted by the
LA and the release of all the buses levied for
execution was ordered.
o However, the NLRC reversed the LA’s decision on
the ground that the transfer of the buses lacked the
BOT approval and ordered the reinstatement of the
levy and the auction of the properties.
ISSUE(S)

š WON the transfer of the buses, without the BOT approval, was valid insofar as the private respondents are
concerned
 ISSUE:
WON the transfer of the buses, without the BOT approval,
was valid insofar as the private respondents are concerned
RULING

š No. Where the registered owner is liable for

obligations to third parties and vehicles registered
under his name are levied upon to satisfy his
Public Service Act, Section 20 (g) obligations, the transferee of such vehicles cannot
The approval herein required shall be given, after notice to the public and prevent the levy by asserting his ownership
after hearing the persons interested at a public hearing, if it be shown that because as far as the law is concerned, the one in
there are just and reasonable grounds for making the mortgage or whose name the vehicle is registered remains to be
encumbrance, for liabilities of more than one year maturity, or the sale,
alienation, lease, merger, or consolidation to be approved, and that the
the owner and the transferee merely holds the
same are not detrimental to the public interest, and in case of a sale, that vehicles for the registered owner.
date on which the same is to be consummated shall be fixed in the order of
approval:
 ISSUE:
WON the transfer of the buses, without the BOT approval,
was valid insofar as the private respondents are concerned
RULING

š Thus, Y Transit Co. Inc., cannot now argue that the

buses could not be levied upon to satisfy the money
judgment in favor of herein private respondents.
Public Service Act, Section 20 (g) š There being no prior BOT approval in the transfer
of property from Yujuico Transit Co., Inc. to Jesus
xxx Provided, however, that nothing herein contained shall
Yujuico, it only follows that as far as the BOT and
be construed to prevent the transaction from being
third parties are concerned, Yujuico Transit Co.,
negotiated or completed before its approval or to prevent
Inc., still owned the properties and Yujuico, and
the sale, alienation, or lease by any public service of any
later “Y” transit Co., Inc. only held the same as
of its property in the ordinary course of its business. xxx
agents of the former.
END OF CASE
Republic of the Philippines v. International
Communications Corporation, G.R. No.
141667, July 17,2006

Topic: Power to set fees and other charges

Gerard S. Sta. Cruz
FACTS OF THE CASE

š International Communications Corporation (ICC) is a holder of a legislative franchise under R.A. 7633 which
allows it to establish radio stations for domestic telecommunications.
š ICC filed with the National Telecommunications Commission (NTC) an application for Certificate of Public
Convenience and Necessity to install operate and maintain an international telecommunications leased service
circuit.
š NTC granted the application but it was subject to the payment of a permit fee in the amount of Php 1,190, 750.00.
š ICC filed for partial reconsideration with the NTC but it was denied.
š ICC filed a petition for certiorari with prayer for a temporary restraining order against the imposition of the said
permit fee with the Court of Appeals (CA). Said motion was denied but the CA reversed itself upon reconsideration
of ICC.
š CA stated that Sec. 40(g) of the Public Service Act has been amended by Sec.5(g) of R.A. 7925
ISSUE(S)

š Whether or not the NTC has the power to impose and collect such fees

š Whether or not NTC’s imposition of the permit fee is exorbitant

 Whether or not the NTC has the power to
RULING impose and collect such fees

š NTC is directed to “continue to impose

such fees and charges”.
š The passage of R.A. 7925 and the
removal of the word “authorization” in
Sec.5(g) did not deprive NTC of the
R.A. 7925 power to collect fees.
Sec. 5(g) - In the exercise of its regulatory powers, continue š The commission’s functions go hand in
to impose such fees and charges as may be necessary to cover hand and cannot be considered singly
reasonable costs and expenses for the regulation and without destroying the commission’s
supervision of the operations of telecommunications entities. regulatory functions.
 ISSUE:

RULING Whether or not NTC’s imposition of the

permit fee is exorbitant

š The Supreme Court held that the fees charged

by the NTC is exorbitant
P.D. 947 š The fees charged by the NTC must be
Section 6. In consideration of the franchise and rights commensurate to the cost and expenses
hereby granted, the grantee shall pay to the Republic of involved in discharging its supervisory and
the Philippines during the life of this franchise a tax of regulatory functions
one-half percent of gross earnings derived by the grantee š The “parity clause” in Sec. 23 of R.A. 7925
from its operation under this franchise and which allows ICC to enjoy the rights under Sec. 6 of
originate from the Philippines. Such tax shall be due and P.D. 947
payable annually within ten days after the audit and
approval of the accounts by the Commission on Audit as š ICC cannot be made to pay such fees since it
prescribed in Section 11 hereof and shall be in lieu of all is subject to Franchise tax in lieu of all other
taxes, assessments, charges, fees, or levies of any kind, taxes and fees
nature, or description levied, established or collected by
any municipal, provincial, or national authority
END OF CASE
Philippine Long Distance Telephone Co. vs National
Telecommunications Commission
190 SCRA 717 [GR No. 88404 October 18, 1990]

Topic: Approval of Sale and Mortgages of Public Utility Assets or Equity

Manimtim, Cristina Flor S.
FACTS OF THE CASE

š On June 22, 1958, 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.” Felix Alberto & Co. Inc. was the original corporate name, which
was changed to ETCI with amendment of the articles of incorporation in 1964.
š On May 13, 1987, alleging urgent public need, ETCI filed an application with public respondent NTC
for the issuance of a certificate of public convenience and necessity to construct, install, establish,
operate, and maintain a cellular mobile telephone system and an alpha numeric paging system in Metro
Manila and in the Southern Luzon regions, with prayer for provisional authority to operate phase A of
its proposal within Metro Manila.
FACTS OF THE CASE

š PLDT filed an opposition with motion to dismiss, however NTC over ruled it. NTC granted ETC provisional
authority to install, operate, and maintain a cellular mobile telephone system initially in Metro Manila subject to
terms and conditions, one of which is that ETCI and PLDT shall enter into an interconnection agreement for the
provision of adequate interconnection facilities between applicant’s cellular mobile telephone switch and the
public switched telephone network and shall jointly submit such interconnection agreement to the commission for
approval.
š ETCI admits that in 1964, the Albertos, as original owners of more than 40% of the outstanding capital stock sold
their holdings to Orbes. In 1968, the Albertos reacquired the shares they had sold to the Orbes
š In 1987, the Albertos sold more than 40% of their shares to Horacio Yalung. Thereafter, the present stockholders
acquired their ETCI shares. Moreover, in 1964, ETCI had increased its capital stock from Php40,000 to
Php360,000; and in 1987, from Php360,000 to Php40,000,000.
ISSUE

š 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.
 ISSUE:
Whether or not the transfers in 1987 of the shares of stock to
the new stockholders amount to a transfer of ETCI’s franchise
RULING which needs congressional approval pursuant to RA 2090

š 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
Section 20(h) of the Public Service Act (Commonwealth Act No. 146) stockholders.
Section 20. Acts requiring the approval of the Commission. - š The sale of shares of stock of a public utility is governed by
Subject to established limitations and exceptions and saving another law, i.e., Section 20(h) of the Public Service Act
provisions to the contrary, it shall be unlawful for any public (Commonwealth Act No. 146). Pursuant thereto, the public
service or for the owner, lessee or operator thereof, without service commission (now NTC) is the government agency vested
the approval and authorization of the Commission previously with the authority to approve the transfer of more than 40% of
had –
(h) To sell or register in its books the transfer or sale of shares of its
the subscribed capital stock of a telecommunications company to
capital stock, if the result of that sale in itself or in connection with a single transferee.
another previous sale, shall be to vest in the transferee more than forty per
centum of the subscribed capital of said public service. Any transfer made š In other words, transfer of shares of a public utility corporation
in violation of this provision shall be void and of no effect and shall not be need only NTC approval, not congressional authorization.
registered in the books of the public service corporation. Nothing herein
contained shall be construed to prevent the holding of shares lawfully
acquired. (As amended by Com. Act No. 454.)
 What transpired in ETCI were a series of transfers of shares
starting in 1964 until 1987.

RULING The approval of the NTC may be deemed to have been met when
it authorized the issuance of the provisional authority to ETCI.
There was full disclosure before the NTC of the transfers. In fact,
the NTC order of November 12,1987 required ETCI to submit its
present capital and ownership structure. Further, ETCI even filed
a motion before the NTC, dated November 8, 1987 or more than
a year prior to the grant of provisional authority, seeking approval
of the increase in its capital stock from Php360,000 to
Php40,000,000 and the stock transfers made by its stockholders.
Section 20(h) of the Public Service Act (Commonwealth Act No. 146)
A distinction should be made between shares of stock, which are
Section 20. Acts requiring the approval of the Commission. - Subject to
established limitations and exceptions and saving provisions to the contrary, it owned by stockholders, the sale of which requires only NTC
shall be unlawful for any public service or for the owner, lessee or operator approval, and the franchise itself which is owned by the
thereof, without the approval and authorization of the Commission previously corporation as the grantee thereof, the sale or transfer of which
had – (h) To sell or register in its books the transfer or sale of shares of its requires congressional sanction. Since stockholders own the
capital stock, if the result of that sale in itself or in connection with another shares of stock, they may dispose of the same as they see fit.
previous sale, shall be to vest in the transferee more than forty per centum of They may not, however, transfer or assign the property of a
the subscribed capital of said public service. Any transfer made in violation of corporation, like its franchise. In other words, even if the original
this provision shall be void and of no effect and shall not be registered in the stockholders had transferred their shares to another group of
books of the public service corporation. Nothing herein contained shall be shareholders, the franchise granted to the corporation subsists as
construed to prevent the holding of shares lawfully acquired. (As amended by long as the corporation as an entity, continues to exist. The
Com. Act No. 454.) 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.
END OF CASE
Taxicab Operators of Metro Manila Inc. v.
The Board of Transportation, G.R. no. L-
59234, September 30, 1982

Topic: Other  means  of  regulation

Gerard S. Sta. Cruz
FACTS OF THE CASE

š The petitioner is a corporation composed of taxi operators who are grantees of Certificate of Public Convenience to
operate taxicabs within the City of Manila to any point in Luzon
š On October 1977, the Board of Transportation (BOT) issued memorandum circular no. 77-42 which phases out old
and dilapidated taxicabs. The said memorandum disallows the registration of taxicabs that are older than six years
and ban their operations within Metro Manila.
š Petitioners are stating that the memorandum circular is unconstitutional since it violates their right to equal
protection of the law, substantive due process and protection against arbitrary and unreasonable classification.
ISSUE(S)

š Whether or not the act of BOT in issuing such memorandum circular

without notice and hearing violative of the petitioners right to
procedural due process
 ISSUE:
Whether or not the act of BOT in issuing such

RULING memorandum circular without notice and hearing

violative of the petitioners right to procedural due
process

š The act of the BOT is not violative of the petitioner’s

right to procedural due process
Presidential Decree no.101 š BOT is provided with a wide range of choice in
Sec. 2. Exercise of powers. — In the exercise of the powers granted in the gathering the necessary information or data in the
preceding section, the Board shag proceed promptly along the method of formulation of any policy, plan or program.
legislative inquiry. š Inquiry with the holder of public conveyances are not
mandatory since they are not the only primary sources
Apart from its own investigation and studies, the Board, in its discretion, of data and information.
may require the cooperation and assistance of the Bureau of
Transportation, the Philippine Constabulary, particularly the Highway š The court sustained the constitutionality of the said
Patrol Group, the support agencies within the Department of Public memorandum since the petitioner’s failed to show that
Works, Transportation and Communications, or any other government there is indeed a constitutional infirmity.
office or agency that may be able to furnish useful information or data in
the formulation of the Board of any policy, plan or program in the
implementation of this Decree.

The Board may also can conferences, require the submission of position
papers or other documents, information, or data by operators or other persons
that may be affected by the implementation of this Decree, or employ any
other suitable means of inquiry.
END OF CASE
 PANTRANCO v. PSC,
70 PHIL. 221, June 26, 1940

Topic: Due Process Requirements

GORGONIA, Sheila
FACTS OF THE CASE
o PANTRANCO, a holder of an existing Certificate of
Public Convenience applied for authorization to operate
additional buses with the Public Service Commission
(PSC).
o The PSC granted the application but added several
conditions for PANTRANCO’s compliance.
o 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 of twenty five years.
ISSUE(S)

š WON PANTRANCO should be granted the right to a hearing to present its own case before the PSC.
 ISSUE:
WON PANTRANCO should be granted the right to a hearing
to present its own case before the PSC.
RULING

š Yes. The petitioner's application here was for an

increase of its equipment to enable it to comply
with the conditions of its certificates of public
convenience.
š On the matter of limitation to twenty five (25)
Public Service Act, Section 16 (m)
years of the life of its certificates of public
š To amend, modify or revoke at any time any certificate issued under
the provisions of this Act, whenever the facts and circumstances on the convenience, there had been neither notice nor
strength of which said certificate was issued have been misrepresented opportunity given the petitioner to be heard or
or materially changed. present evidence.
 ISSUE:
WON PANTRANCO should be granted the right to a hearing
to present its own case before the PSC.
RULING

š The Commission appears to have taken advantage of the

petitioner to augment petitioner's equipment in imposing
the limitation of twenty-five (25) years which might as
well be twenty or fifteen or any number of years.
š This is, to say the least, irregular and should not be
sanctioned. There are cardinal primary rights which must
Public Service Act, Section 16 (m) be respected even in proceedings of this character.
š To amend, modify or revoke at any time any certificate issued under š The first of these rights is the right to a hearing, which
the provisions of this Act, whenever the facts and circumstances on the
includes the right of the party interested or affected to
present his own case and submit evidence in support
strength of which said certificate was issued have been misrepresented thereof. 
or materially changed.
END OF CASE