G.R. No.

47065 June 26, 1940

PANGASINAN TRANSPORTATION CO., INC., petitioner,

vs.
THE PUBLIC SERVICE COMMISSION, respondent.

C. de G. Alvear for petitioner.

Evaristo R. Sandoval for respondent.

LAUREL, J.:

The petitioner has been engaged for the past twenty years in the business of
transporting passengers in the Province of Pangasinan and Tarlac and, to a certain
extent, in the Province of Nueva Ecija and Zambales, by means of motor vehicles
commonly known as TPU buses, in accordance with the terms and conditions of the
certificates of public convenience issued in its favor by the former Public Utility
Commission in cases Nos. 24948, 30973, 36830, 32014 and 53090. On August 26,
1939, the petitioner filed with the Public Service Commission an application for
authorization to operate ten additional new Brockway trucks (case No. 56641), on the
ground that they were needed to comply with the terms and conditions of its existing
certificates and as a result of the application of the Eight Hour Labor Law. In the decision
of September 26, 1939, granting the petitioner's application for increase of equipment,
the Public Service Commission ordered:

Y de acuerdo con que se provee por el articulo 15 de la ley No. 146 del
Commonwealth, tal como ha sido enmendada por el articulo 1 de la Ley No. 454,
por la presente se enmienda las condiciones de los certificados de
convenciencia publica expedidos en los expedientes Nos. 24948, 30973, 36831,
32014 y la authorizacion el el expediente No. 53090, asi que se consideran
incorporadas en los mismos las dos siguientes condiciones:

Que los certificados de conveniencia publica y authorizacion arriba mencionados

seran validos y subsistentes solamente durante de veinticinco (25) anos,
contados desde la fecha de la promulgacion de esta decision.

Que la empresa de la solicitante porda ser adquirida por el Commonwealth de

Filipinas o por alguna dependencia del mismo en cualquier tiempo que lo
deseare previo pago del precio d costo de su equipo util, menos una
depreciacion razonable que se ha fijar por la Comision al tiempo de su
adquisicion.

Not being agreeable to the two new conditions thus incorporated in its existing
certificates, the petitioner filed on October 9, 1939 a motion for reconsideration which
was denied by the Public Service Commission on November 14, 1939. Whereupon, on
November 20, 1939, the present petition for a writ of certiorari was instituted in this court
praying that an order be issued directing the secretary of the Public Service Commission
to certify forthwith to this court the records of all proceedings in case No. 56641; that this
court, after hearing, render a decision declaring section 1 of Commonwealth Act No. 454
unconstitutional and void; that, if this court should be of the opinion that section 1 of
Commonwealth Act No. 454 is constitutional, a decision be rendered declaring that the
provisions thereof are not applicable to valid and subsisting certificates issued prior to
June 8, 1939. Stated in the language of the petitioner, it is contended:

1. That the legislative powers granted to the Public Service Commission by

section 1 of Commonwealth Act No. 454, without limitation, guide or rule except
the unfettered discretion and judgment of the Commission, constitute a complete
and total abdication by the Legislature of its functions in the premises, and for
that reason, the Act, in so far as those powers are concerned, is unconstitutional
and void.

2. That even if it be assumed that section 1 of Commonwealth Act No. 454, is

valid delegation of legislative powers, the Public Service Commission has
exceeded its authority because: (a) The Act applies only to future certificates and
not to valid and subsisting certificates issued prior to June 8, 1939, when said Act
took effect, and (b) the Act, as applied by the Commission, violates constitutional
guarantees.

Section 15 of Commonwealth Act No. 146, as amended by section 1 of Commonwealth

Act No. 454, invoked by the respondent Public Service Commission in the decision
complained of in the present proceedings, reads as follows:

With the exception to those enumerated in the preceding section, no public

service shall operate in the Philippines without possessing a valid and subsisting
certificate from the Public Service Commission, known as "certificate of public
convenience," or "certificate of convenience and public necessity," as the case
may be, to the effect that the operation of said service and the authorization to do
business will promote the public interests in a proper and suitable manner.

The Commission may prescribed as a condition for the issuance of the certificate
provided in the preceding paragraph that the service can be acquired by the
Commonwealth of the Philippines or by any instrumentality thereof upon payment
of the cost price of its useful equipment, less reasonable depreciation; and
likewise, that the certificate shall valid only for a definite period of time; and that
the violation of any of these conditions shall produce the immediate cancellation
of the certificate without the necessity of any express action on the part of the
Commission.

In estimating the depreciation, the effect of the use of the equipment, its actual
condition, the age of the model, or other circumstances affecting its value in the
market shall be taken into consideration.

The foregoing is likewise applicable to any extension or amendment of

certificates actually force and to those which may hereafter be issued, to permits
to modify itineraries and time schedules of public services and to authorization to
renew and increase equipment and properties.

Under the first paragraph of the aforequoted section 15 of Act No. 146, as amended, no
public service can operate without a certificate of public convenience or certificate of
convenience and public necessity to the effect that the operation of said service and the
authorization to do business will "public interests in a proper and suitable manner."
Under the second paragraph, one of the conditions which the Public Service
Commission may prescribed the issuance of the certificate provided for in the first
paragraph is that "the service can be acquired by the Commonwealth of the Philippines
or by any instrumental thereof upon payment of the cost price of its useful equipment,
less reasonable depreciation," a condition which is virtually a restatement of the principle
already embodied in the Constitution, section 6 of Article XII, which provides that "the
State may, in the interest of national welfare and defense, establish and operate
industries and means of transportation and communication, and, upon payment of just
compensation, transfer to public ownership utilities and other private enterprises to be
operated by the Government. "Another condition which the Commission may prescribed,
and which is assailed by the petitioner, is that the certificate "shall be valid only for a
definite period of time." As there is a relation between the first and second paragraphs of
said section 15, the two provisions must be read and interpreted together. That is to say,
in issuing a certificate, the Commission must necessarily be satisfied that the operation
of the service under said certificate during a definite period fixed therein "will promote the
public interests in a proper and suitable manner." Under section 16 (a) of
Commonwealth Act. No. 146 which is a complement of section 15, the Commission is
empowered to issue certificates of public convenience whenever it "finds that the
operation of the public service proposed and the authorization to do business will
promote the public interests in a proper and suitable manner." Inasmuch as the period to
be fixed by the Commission under section 15 is inseparable from the certificate itself,
said period cannot be disregarded by the Commission in determining the question
whether the issuance of the certificate will promote the public interests in a proper and
suitable manner. Conversely, in determining "a definite period of time," the Commission
will be guided by "public interests," the only limitation to its power being that said period
shall not exceed fifty years (sec. 16 (a), Commonwealth Act No. 146; Constitution, Art.
XIII, sec. 8.) We have already ruled that "public interest" furnishes a sufficient standard.
(People vs. Fernandez and Trinidad, G. R. No. 45655, promulgated June 15, 1938;
People vs. Rosenthal and Osmeña, G. R. Nos. 46076 and 46077, promulgated June 12,
1939, citing New York Central Securities Corporation vs. U.S.A., 287 U.S. 12, 24, 25, 77
Law. ed. 138, 145, 146; Schenchter Poultry Corporation vs. I.S., 295, 540, 79 Law. ed.
1570, 1585; Ferrazzini vs. Gsell, 34 Phil., 697, 711-712.)

Section 8 of Article XIII of the Constitution provides, among other things, that no
franchise, certificate, or any other form of authorization for the operation of a public utility
shall be "for a longer period than fifty years," and when it was ordained, in section 15 of
Commonwealth Act No. 146, as amended by Commonwealth Act No. 454, that the
Public Service Commission may prescribed as a condition for the issuance of a
certificate that it "shall be valid only for a definite period of time" and, in section 16 (a)
that "no such certificates shall be issued for a period of more than fifty years," the
National Assembly meant to give effect to the aforesaid constitutional mandate. More
than this, it has thereby also declared its will that the period to be fixed by the Public
Service Commission shall not be longer than fifty years. All that has been delegated to
the Commission, therefore, is the administrative function, involving the use discretion, to
carry out the will of the National Assembly having in view, in addition, the promotion of
"public interests in a proper and suitable manner." The fact that the National Assembly
may itself exercise the function and authority thus conferred upon the Public Service
Commission does not make the provision in question constitutionally objectionable.

The theory of the separation of powers is designed by its originators to secure action
and at the same time to forestall overaction which necessarily results from undue
concentration of powers, and thereby obtain efficiency and prevent deposition. Thereby,
the "rule of law" was established which narrows the range of governmental action and
makes it subject to control by certain devices. As a corollary, we find the rule prohibiting
delegation of legislative authority, and from the earliest time American legal authorities
have proceeded on the theory that legislative power must be exercised by the legislature
alone. It is frankness, however, to confess that as one delves into the mass of judicial
pronouncement, he finds a great deal of confusion. One thing, however, is apparent in
the development of the principle of separation of powers and that is that the maxim
of delegatus non potest delegari or delegata potestas non potest delegari, attributed to
Bracton (De Legius et Consuetedinious Angliae, edited by G. E. Woodbine, Yale
University Press, 1922, vol. 2, p. 167) but which is also recognized in principle in the
Roman Law (D. 17.18.3), has been made to adapt itself to the complexities of modern
governments, giving rise to the adoption, within certain limits, of the principle of
"subordinate legislation," not only in the United States and England but in practically all
modern governments. (People vs. Rosenthal and Osmeña, G. R. Nos. 46076 and
46077, promulgated June 12, 1939.) Accordingly, with the growing complexity of modern
life, the multiplication of the subjects of governmental regulation, and the increased
difficulty of administering the laws, there is a constantly growing tendency toward the
delegation of greater powers by the legislature, and toward the approval of the practice
by the court. (Dillon Catfish Drainage Dist, v. Bank of Dillon, 141 S. E. 274, 275, 143 S.
Ct. 178; State vs. Knox County, 54 S. W. 2d. 973, 976, 165 Tenn. 319.) In harmony with
such growing tendency, this Court, since the decision in the case of Compañia General
de Tabacos de Filipinas vs. Board of Public Utility Commissioner (34 Phil., 136), relied
upon by the petitioner, has, in instances, extended its seal of approval to the "delegation
of greater powers by the legislature." (Inchausti Steamship Co. vs. Public Utility
Commissioner, 44 Phil., Autobus Co. vs. De Jesus, 56 Phil., 446; People vs. Fernandez
& Trinidad, G. R. No. 45655, promulgated June 15, 1938; People vs. Rosenthal &
Osmeña, G. R. Nos. 46076, 46077, promulgated June 12, 1939; and Robb and
Hilscher vs. People, G. R. No. 45866, promulgated June 12, 1939.).

Under the fourth paragraph of section 15 of Commonwealth Act No. 146, as amended by
Commonwealth Act No. 454, the power of the Public Service Commission to prescribed
the conditions "that the service can be acquired by the Commonwealth of the Philippines
or by any instrumentality thereof upon payment of the cost price of its useful equipment,
less reasonable," and "that the certificate shall be valid only for a definite period of time"
is expressly made applicable "to any extension or amendment of certificates actually in
force" and "to authorizations to renew and increase equipment and properties." We have
examined the legislative proceedings on the subject and have found that these
conditions were purposely made applicable to existing certificates of public convenience.
The history of Commonwealth Act No. 454 reveals that there was an attempt to
suppress, by way of amendment, the sentence "and likewise, that the certificate shall be
valid only for a definite period of time," but the attempt failed:

By a majority vote the proposed amendment was defeated. (Sesion de 17 de mayo de

1939, Asamblea Nacional.)

The petitioner is mistaken in the suggestion that, simply because its existing certificates
had been granted before June 8, 1939, the date when Commonwealth Act No. 454,
amendatory of section 15 of Commonwealth Act No. 146, was approved, it must be
deemed to have the right of holding them in perpetuity. Section 74 of the Philippine Bill
provided that "no franchise, privilege, or concession shall be granted to any corporation
except under the conditions that it shall be subject to amendment, alteration, or repeal
by the Congress of the United States." The Jones Law, incorporating a similar mandate,
provided, in section 28, that "no franchise or right shall be granted to any individual, firm,
or corporation except under the conditions that it shall be subject to amendment,
alteration, or repeal by the Congress of the United States." Lastly, the Constitution of the
Philippines provided, in section 8 of Article XIII, that "no franchise or right shall be
granted to any individual, firm, or corporation, except under the condition that it shall be
subject to amendment, alteration, or repeal by the National Assembly when the public
interest so requires." The National Assembly, by virtue of the Constitution, logically
succeeded to the Congress of the United States in the power to amend, alter or repeal
any franchise or right granted prior to or after the approval of the Constitution; and when
Commonwealth Acts Nos. 146 and 454 were enacted, the National Assembly, to the
extent therein provided, has declared its will and purpose to amend or alter existing
certificates of public convenience.

Upon the other hand, statutes enacted for the regulation of public utilities, being a proper
exercise by the state of its police power, are applicable not only to those public utilities
coming into existence after its passage, but likewise to those already established and in
operation.

Nor is there any merit in petitioner's contention, that, because of the

establishment of petitioner's operations prior to May 1, 1917, they are not subject
to the regulations of the Commission. Statutes for the regulation of public utilities
are a proper exercise by the state of its police power. As soon as the power is
exercised, all phases of operation of established utilities, become at once subject
to the police power thus called into operation. Procedures' Transportation Co. v.
Railroad Commission, 251 U. S. 228, 40 Sup. Ct. 131, 64 Law. ed. 239, Law v.
Railroad Commission, 184 Cal. 737, 195 Pac. 423, 14 A. L. R. 249. The statute is
applicable not only to those public utilities coming into existence after its
passage, but likewise to those already established and in operation. The 'Auto
Stage and Truck Transportation Act' (Stats. 1917, c. 213) is a statute passed in
pursuance of the police power. The only distinction recognized in the statute
between those established before and those established after the passage of the
act is in the method of the creation of their operative rights. A certificate of public
convenience and necessity it required for any new operation, but no such
certificate is required of any transportation company for the operation which was
actually carried on in good faith on May 1, 1917, This distinction in the creation of
their operative rights in no way affects the power of the Commission to supervise
and regulate them. Obviously the power of the Commission to hear and dispose
of complaints is as effective against companies securing their operative rights
prior to May 1, 1917, as against those subsequently securing such right under a
certificate of public convenience and necessity. (Motor Transit Co. et al. v.
Railroad Commission of California et al., 209 Pac. 586.)

Moreover, Commonwealth Acts Nos. 146 and 454 are not only the organic acts of the
Public Service Commission but are "a part of the charter of every utility company
operating or seeking to operate a franchise" in the Philippines. (Streator Aqueduct Co. v.
et al., 295 Fed. 385.) The business of a common carrier holds such a peculiar relation to
the public interest that there is superinduced upon it the right of public regulation. When
private property is "affected with a public interest it ceased to be juris privati only." When,
therefore, one devotes his property to a use in which the public has an interest, he, in
effect, grants to the public an interest in that use, and must submit to be controlled by
the public for the common good, to the extent of the interest he has thus created. He
may withdraw his grant by discounting the use, but so long as he maintains the use he
must submit to control. Indeed, this right of regulation is so far beyond question that it is
well settled that the power of the state to exercise legislative control over public utilities
may be exercised through boards of commissioners. (Fisher vs. Yangco Steamship
Company, 31 Phil., 1, citing Munn vs. Illinois, 94 U.S. 113; Georgia R. & Bkg.
Co. vs. Smith, 128 U.S. 174; Budd vs. New York, 143 U.S. 517; New York etc. R.
Co. vs. Bristol 151 U.S. 556, 571; Connecticut etc. R. Co. vs. Woodruff, 153 U.S. 689;
Louisville etc. Ry Co. vs. Kentucky, 161 U.S. 677, 695.) This right of the state to regulate
public utilities is founded upon the police power, and statutes for the control and
regulation of utilities are a legitimate exercise thereof, for the protection of the public as
well as of the utilities themselves. Such statutes are, therefore, not unconstitutional,
either impairing the obligation of contracts, taking property without due process, or
denying the equal protection of the laws, especially inasmuch as the question whether or
not private property shall be devoted to a public and the consequent burdens assumed
is ordinarily for the owner to decide; and if he voluntarily places his property in public
service he cannot complain that it becomes subject to the regulatory powers of the state.
(51 C. J., sec. 21, pp. 9-10.) in the light of authorities which hold that a certificate of
public convenience constitutes neither a franchise nor contract, confers no property
right, and is mere license or privilege. (Burgess vs. Mayor & Alderman of Brockton, 235
Mass. 95, 100, 126 N. E. 456; Roberto vs. Commisioners of Department of Public
Utilities, 262 Mass. 583, 160 N. E. 321; Scheible vs. Hogan, 113 Ohio St. 83, 148 N. E.
581; Martz vs. Curtis [J. L.] Cartage Co. [1937], 132 Ohio St. 271, 7 N. E. [d] 220; Manila
Yellow Taxicab Co. vs. Sabellano, 59 Phil., 773.)

Whilst the challenged provisions of Commonwealth Act No. 454 are valid and
constitutional, we are, however, of the opinion that the decision of the Public Service
Commission should be reversed and the case remanded thereto for further proceedings
for the reason now to be stated. The Public Service Commission has power, upon
proper notice and hearing, "to amend, modify or revoke at any time any certificate issued
under the provisions of this Act, whenever the facts and circumstances on the strength
of which said certificate was issued have been misrepresented or materially changed."
(Section 16, par. [m], Commonwealth Act No. 146.) 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. On the matter of limitation to twenty five (25) years of
the life of its certificates of public convenience, there had been neither notice nor
opportunity given the petitioner to be heard or present evidence. 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. This is, to say the least, irregular and should not be sanctioned.
There are cardinal primary rights which must be respected even in proceedings of this
character. The first of these rights is the right to a hearing, which includes the right of the
party interested or affected to present his own case and submit evidence in support
thereof. In the language of Chief Justice Hughes, in Morgan v. U.S., (304 U.S. 1, 58 S.
Ct. 773, 999, 82 Law. ed. 1129), "the liberty and property of the citizen shall be protected
by the rudimentary requirements of fair play." Not only must the party be given an
opportunity to present his case and to adduce evidence tending to establish the rights
which he asserts but the tribunal must consider the evidence presented. (Chief Justice
Hughes in Morgan vs. U.S., 298 U.S. 468, 56 S. Ct. 906, 80 :Law. ed. 1288.) In the
language of this Court in Edwards vs. McCoy (22 Phil., 598), "the right to adduce
evidence, without the corresponding duty on the part of the board to consider it, is vain.
Such right is conspicuously futile if the person or persons to whom the evidence is
presented can thrust it aside without or consideration." While the duty to deliberate does
not impose the obligation to decide right, it does imply a necessity which cannot be
disregarded, namely, that of having something to support its decision. A decision with
absolutely nothing to support it is a nullity, at least when directly attacked.
(Edwards vs. McCoy, supra.) This principle emanates from the more fundamental
principle that the genius of constitutional government is contrary to the vesting of
unlimited power anywhere. Law is both a grant and a limitation upon power.

The decision appealed from is hereby reversed and the case remanded to the Public
Service Commission for further proceedings in accordance with law and this decision,
without any pronouncement regarding costs. So ordered.

Avanceña, C.J., Imperial, Diaz, Concepcion and Moran, JJ., concur.