5/16/2020 PANGASINAN TRANSPORTATION CO. v.

PUBLIC SERVICE COMMISSION

70 Phil. 221

[ G.R. No. 47065, June 26, 1940 ]

PANGASINAN TRANSPORTATION CO., INC., PETITIONER, VS. THE PUBLIC

SERVICE COMMISSION, RESPONDENT.

DECISION
LAUREL, J.:
The petitioner has been engaged for the past twenty years in the business of
transporting passengers in the Provinces of Pangasinan and Tarlac and, to a certain
extent, in the Provinces 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, 3U973, 36831, 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 lo 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 conveniencia
publica expedidos en los expedientes Nos. 24948, 30973, 36831, 32014 y la
automation concedida en el expediente No. 53090, asi que se consideran
incorporadas en los mismos las dos siguientes condiciones:

"Que los certificados de conveniencia publica y autorizacion arriba mencionados

seran yalidos y subsistentes solamente durante el periodo de veinticinco (25)
anos, contados desde la fecha de la promulgation de esta decision.

"Que la empresa de la solicitante podra ser adquirida por el Commonwealth de

Filipinas o por alguna dependencia del mismo en cualquier tiempo que lo
deseare previo pago del precio de costo de su equipo util, menos una
depreciation razonable que se ha de 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
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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 a
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 (a) 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 of 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 prescribe 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 be 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 in force and to those which may hereafter be issued, to
permits to modify itineraries and time schedules of public services and to
authorizations to renew and increase equipment and properties."

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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 promote "public interests in a proper and
suitable manner.'* Under the second paragraph, one of the conditions which the
Public Service Commission may prescribe for the issuance of the certificate provided
for in the first paragraph is that "the service can be acquired by the Conmmonwealth
of the Philippines or by any instrumentality 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 prescribe, 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 Osmena, G. R. Nos. 46076 and
46077, promulgated June 12, 1939, citing New York Central Securities Corporation v.
U. S. A., 287 U. S. 12, 24, 25, 77 Law. ed. 138, 145, 146; Schenchter Poultry
Corporation vs. U. S., 295 U. S. 495, 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 prescribe 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

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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 of
discretion, to carry out the will of the National Assembly having in view, in addition,
the promotion of "public interests in a proper and suitable manner." The 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.

Tne 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 despotism.
Thereby, the "rule of law" was established which narrows the range of governmental
action and makes it subject to control by certain legal 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 pronouncements, 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 Legibus 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 Osmena, 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 courts. (Dillon
Catfish Drainage Dist. v. Bank of Dillon, 141 S. E. 274, 275, 143 S. Ct. 178; State v.
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 Compania General de Tabacos
de Filipinas vs. Board of Public Utility Commissioners (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., 366; Alegre vs. Collector of Customs, 53 Phil., 394; Cebu
Autobus Co. vs. De Jesus, 56 Phil., 446; People vs. Fernandez & Trinidad, G. R. No,
45655, promulgated June 15,1938; People vs. Rosenthal & Osmefia, 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
prescribe 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 depreciation," and "that the certificate shall be valid
only for a definite period of time" is expressly made applicable "to any extension or

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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:

*******
"Sr. CUENCO. Señor Presidente, para otra enmienda. En la misma pagina, lineas
23 y 24, pido que se supriman las palabras 'and likewise, that the certificate shall
be valid only for a definite period of time.' Esta disposicion del proyecto autoriza
a la Comision de Servicios Publicos a fijar un plazo de vigencia del certificado de
conveniencia publica. Todo el mundo sabe que no se puede determinar cuando
los intereses del servicio publico requieren la explotacion de un servicio publico y
como ha de saber la Comisio'n de Servicios Publicos, si en un tiempo
determinado, la explotacion de algunos buses en cierta ruta ya no tiene razon de
ser, sobre todo, si se tiene en cuenta; que la explotacidn de los servicios publicos
depende de condiciones fiuctuantes, asi como del volumen del trafico y de otras
condiciones. Ademas, el servicio publico se concede por la Comision de Servicios
Publicos cuando el interes publico asi lo exige. El interes publico no tiene
duration fija, no es permanente; es un proceso mas o menos indefinido en cuanto
al tiempo. Se ha acordado eso en el caucus de anoche.

"El Presidente Pro Tempore. Que dice el Comite?

"Sr. Alano. El Comite siente tener que rechazar esa enmienda, en vista de que
esto de los certificados de conveVOLUME 70. 231 niencia publica es igual que la
franquicia: se puede extender. Si los servicios prestados por la compania durante
el tiempo de su certificado lo requiere, puede pedir la extension y se le extendera;
pero no creo conveniente el que nosotros demos un certificado de conveniencia
publica de uria manera que podria pasar de cincuenta afios, porque seria
anticonstitucional."

*******
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 bj the Congress
of the United States." Lastly, the Constitution of the Philippines provides, in section 8
of Article XIII, that "no franchise or right shall be granted to any individual, firm, or
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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. Producers' 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 is 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 com panies securing their operative rights prior to May 1, 1917. is,
against those subsequently securing such rights under a certificate of public
convenience and necessity. (Motor Iransit Co. et al. v. Railroad Commission of
California et ai., 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. Smith 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

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discontinuing 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 as
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 use 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.) This is the more soin the light of authorities which
hold that a certificate of public convenience constitutes neither a franchise nor a
contract, confers no property right, and is a mere license or privilege. (Burgess vs.
Mayor & Aldermen of Brockton, 235 Mass. 95, 100, 126 N. E. 456; Roberto vs.
Commissioners of Department of Public Utilities, 262 Mass. 583, 160 N. E. 321;
Scheible vs. Hogan, 113 Ohio St. 83, 148 N. E. 581; Mate vs. Curtis [J. L.] Cartage Co.
[1937], 132 Ohio St. 271, 7 N. E. [2d] 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. [w], 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 twentyfive
(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 lis case and to adduce evidence tending to establish the rights

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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 :he
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. ?uch right is conspicuously futile if the person or persons to whom the evidence
is presented can thrust it aside without notice or consideration." While the duty to
deliberate ioes not impose the obligation to decide right, it does imply i 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 :ase remanded to the Public
Service Commission for further proceedings in accordance with law and this decision,
withjut any pronouncement regarding costs. So ordered

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

Writ granted.

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