LPU | First part

Brief facts of Kuwait vs. PAL

Kuwait Airways shared revenue with PAL by virtue of a commercial agreement and a JSA. However, a CMU between the Philippines and Kuwait terminated revenue-sharing arrangements.

Issue in Kuwait vs. PAL

Whether the execution of the CMU between the Philippine and Kuwait governments could have automatically terminated the Commercial Agreement, as well as the Joint Services Agreement between Philippine Airlines and Kuwait Airways

One-sentence ruling in Kuwait vs PAL

NO. The CMU could NOT automatically terminate the Commercial Agreement, as well as the Joint Services Agreement between Philippine Airlines and Kuwait Airways, especially given PAL’s status as a privately-owned carrier during the CMU’s execution.

Role of the government in PAL’s pre and post-privatization

Prior to privatization, the government had the authority to bind the airline as its owner.

Post-privatization, only as a regulator.

Can’t the State just use its police power to impair the contract?

NO. Deprivation of property still requires due process of law. In order to validate petitioner’s position, we will have to concede that the right to due process may be extinguished by executive command. While we sympathize with petitioner, who reasonably could rely on the commitment made to it by the Philippine government, we still have to respect the segregate identity of the government and that of a private corporation and give due meaning to that segregation, vital as it is to the very notion of democracy.

Brief facts in MORE vs. PECO

PECO’s franchise has already expired. However, as MORE has yet to set up its service, the law granting MORE’s franchise allows PECO to operate the existing distribution system in the interim. At the same time, the said law expressly provides that, even as PECO is operating the distribution system, this interim, arrangement shall not prevent MORE from acquiring the system through the exercise of the right of eminent domain. PECO filed a petition, assailing the constitutionality of MORE’s franchise, granting power of eminent domain to MORE.

PECO assails that such expropriation will be nothing but a corporate takeover impelled by corporate greed rather than by public necessity. Property of a private corporation that is already devoted to public use cannot be taken for the same use, because no public use or necessity can be served by such a taking.

MORE claims that the expropriation serves the distinct emergency public purpose of ensuring the continuous and uninterrupted supply of electricity.

Issue in MORE vs. PECO

1. Whether Sections 10 and 17 of R.A. No. 11212 are unconstitutional, in that these provisions authorize MORE to expropriate the existing distribution system of PECO and apply it to the very same public use for which it is already devoted

2. Whether expropriation of MORE is for a genuine public purpose

One-sentence ruling in in MORE vs. PECO

1. NO. The assailed provisions are NOT unconstitutional

2. YES. MORE’s expropriation is for a genuine purpose.

Limitations of eminent domain

• Article 3, Section 3 of the Constitution, stating that no person shall be deprived of property without due process of law

• Article 3, Section 9 of the Constitution, stating that private property shall not be taken for public use without just compensation

Requisites of a valid exercise of eminent domain

1. A valid delegation to a public utility to exercise the power of eminent domain or pursue expropriation proceedings over a particular private property

2. An identified public use, purpose or welfare for which eminent domain or expropriation is exercised

3. Previous tender of a valid and definite offer to the owner of the property sought to be expropriated, but which offer is not accepted

4. Payment of just compensation

What requisites are at issue in the case

1. A valid delegation to a public utility to exercise the power of eminent domain or pursue expropriation proceedings over a particular private property

2. An identified public use, purpose or welfare for which eminent domain or expropriation is exercised

Can private property already devoted to public use be expropriated?

YES, provided it is expressly authorized by law or necessarily implied in the law. The underlying reason for this is that the power of eminent domain is an attribute of sovereignty which is not exhausted by use; otherwise, the promotion of the public good, which is the purpose of sovereignty, would be frustrated.

Ruling of the Court as to expropriation

The legislative provisional franchises of PECO is susceptible to expropriation for the same public purpose of power and electricity distribution, and that the expropriation by MORE of the distribution system of PECO is in accordance with the constitutional requirements of due process and equal protection.

Is PECO’s distribution system private property?

NO. To begin with, the very installation of the distribution system depends on a franchise. Ownership was co-existent with the franchise. Moreover, the distribution system is burdened with public use even after the termination of the franchise either by expiration or decision of the government. This is evident in the original franchise which provides that upon expiration of the franchise, the distribution system automatically becomes the property of the government

Who has the power to define public necessity or purpose

Legislature

Who has the power to review whether such necessity is genuine and public in character

The Court, by applying as standards the constitutional requirements of due process and equal protection

What is the general purpose and distinct public purpose of expropriation

General purpose: Electricity distribution

Distinct purpose: The protection of the public interest by ensuring the uninterrupted supply of electricity in the city during the transition from the old franchise to the new franchise

Can PECO claim that the PA issued to them extends their franchise?

NO.

Claims of PECO under the Resolution

1. Allowing the expropriation of PECO’s distribution system for the same public purpose it was already devoted to is faulted. While PECO concedes that its previous legislative franchise allows expropriation of its assets and distribution system upon the termination of its franchise, this power maybe exercised only by the government and its political subdivisions, should it desire to operate and maintain the system by itself, and not by private entities such as MORE. 

2. PECO disagrees that its ownership of the distribution system is co-existent with its franchise. PECO insists that franchise merely pertains to the privilege granted by the government and not synonymous to ownership of the facilities used thereof.

3. PECO insists that there is no genuine public purpose served by the transfer of its distribution system to MORE. PECO alleges that the inexperience and incompetence of MORE in the business of electric distribution adversely affects the public. PECO proposes that MORE should establish, operate, and maintain its own distribution system.

4. PECO maintains that the expropriation of its distribution system violates its right to due process of law. According to PECO, to successfully invoke the exercise of eminent domain, it is required that there is a compelling state interest and that the means employed to effect it should be least restrictive.

5. PECO insists that Sections 10 and 17 of R.A. No. 11212 violate its constitutional right to equal protection of laws because MORE was given undue and unwarranted benefits and for having been singled out as the only entity against whom expropriation may be directed

Issue in MORE vs. PECO, Resolution

Whether Sections 10 and 17 of R.A. No. 11212 are constitutional

One sentence ruling in MORE vs. PECO, Resolution

YES. Sections 10 and 17 of R.A. No. 11212 are constitutional. Therefore, there is no reason to depart from its Decision

As to who has the power to grant franchises

The power of Congress to award the franchise to MORE is broad and plenary, subject only to limitations given by the Constitution and the fundamental principle of due process. It is beyond the power of the Court to question the wisdom of Congress in granting the franchise to MORE. Thus, Sections 10 and 17 of R.A. No. 11212, giving MORE the power to expropriate the distribution system of PECO, are but integral parts of the grant of the franchise by Congress. Since the exercise of eminent domain is necessary to carry out the franchise, it is prudent that the Court accords respect to the legislative will

As the the validity of the delegation of expropriation

The exercise of the right to expropriate given to MORE under its franchise is a delegated authority granted by Congress. Being a private enterprise allowed by the Congress to operate a public utility for public interest, the delegation by Congress of the power to expropriate PECO's distribution system is valid.

As to the presence of all requisites of eminent domain

It is settled that a property already devoted to public use can still be subject to expropriation, provided this is done directly by the national legislature or under a specific grant of authority to a delegate, as in the case of MORE.

As to the allegation that PECO was singled-out and the benefits enjoyed by MORE

The right to exercise eminent domain conferred by Section 10 of R.A. No. 11212 remains valid, regardless of any perceived incidental benefit to be gained or enjoyed by MORE, for as long as the requisites for the exercise of a valid expropriation was complied with.

Constitutional provisions for bases of regulation

• ARTICLE XII, Section 6. The use of property bears a social function, and all economic agents shall contribute to the common good. Individuals and private groups, including corporations, cooperatives, and similar collective organizations, shall have the right to own, establish, and operate economic enterprises, subject to the duty of the State to promote distributive justice and to intervene when the common good so demands

• ARTICLE IX-C, Section 4. The Commission may, during the election period, supervise or regulate the enjoyment or utilization of all franchises or permits for the operation of transportation and other public utilities, media of communication or information, all grants, special privileges, or concessions granted by the Government or any subdivision, agency, or instrumentality thereof, including any government-owned or controlled corporation or its subsidiary. Such supervision or regulation shall aim to ensure equal opportunity, time, and space ,and the right to reply, including reasonable, equal rates therefor, for public information campaigns and forums among candidates in connection with the objective of holding free, orderly, honest, peaceful, and credible elections

Brief facts in Republic vs MERALCO

MERALCO filed an application for the revision of its rate schedules, and also called for the provisional approval of the increase. The COA report recommended to not include income taxes paid by MERALCO as part of its operating expenses for purposes of rate determination and the use of the net average investment method for the computation of the proportionate value of the properties used by MERALCO during the test year for the determination of the rate base, which the ERB adopted.

Issue in Republic vs MERALCO

Whether income tax should be treated as part of MERALCO’s operating expenses, and thus considered in determining the amount of increase in rates imposed by MERALCO

One-sentence ruling in Republic vs MERALCO

NO. Income tax should NOT be treated as part of MERALCO’s operating expenses, and thus NOT considered in determining the amount of increase in rates imposed by MERALCO.

Basis of regulation of rates

The regulation of rates to be charged by public utilities is founded upon the police powers of the State and statutes prescribing rules for the control and regulation of public utilities are a valid exercise thereof. When private property is used for a public purpose and is affected with public interest, it ceases to be juris privati only and becomes subject to regulation. The regulation is to promote the common good. Submission to regulation may be withdrawn by the owner by discontinuing use; but as long as use of the property is continued, the same is subject to public regulation

What does the State protect when it regulates rates

The public against arbitrary and excessive rates while maintaining the efficiency and quality of services rendered

Limitation of the State in regulating rate

It does not give the State the right to prescribe rates which are so low as to deprive the public utility of a reasonable return on investment. Thus, the rates prescribed by the State must be one that yields a fair return on the public utility upon the value of the property performing the service and one that is reasonable to the public for the services rendered. The fixing of just and reasonable rates involves a balancing of the investor and the consumer interests

Who has the power to fix rates

Legislature

Who determines whether the rates are reasonable and just

The court

Brief facts in PLDT vs NTC and ETCI

PLDT opposed ETCI’s application for a CPCN, alleging that:

1. ETCI is not capacitated or qualified under its legislative franchise to operate a systemwide telephone or network of telephone service such as the one proposed in its application

2. ETCI lacks the facilities needed and indispensable to the successful operation of the proposed service

3. Prior operator/protection of investment doctrine of PLDT’s pending application

4. It will result in uneconomical and harmful duplication

Nevertheless, ETCI was granted a PA, and one of the conditions imposed was that the latter and PLDT were to enter into an interconnection agreement to be jointly submitted to NTC for approval. PLDT refuses to connect

Issue in PLDT vs NTC and ETCI

Whether PLDT can justifiably refuse to reconnect

One-sentence ruling in PLDT vs NTC and ETCI

NO. PLDT CANNOT justifiably refuse to reconnect

Basis of the regulation

Police power, for the promotion of general welfare

Nature of the interconnection order

A form of intervention with property rights dictated by the objective of government to promote the rapid expansion of telecommunications services in all areas of the Philippines to maximize the use of telecommunications facilities available, in recognition of the vital role of communications in nation building and to ensure that all users of the public telecommunications service have access to all other users of the service wherever they may be within the Philippines at an acceptable standard of service and at reasonable cost

What does the NTC merely order

Allows the parties themselves to discuss and agree upon the specific terms and conditions of the interconnection agreement instead of the NTC itself laying down the standards of interconnection which it can very well impose

Brief facts in 1-United vs. COMELEC

The Fair Elections Act was passed, which prohibits campaign material to be posted in PUVs. Petitioner claims that it impedes the right of free speech. COMELEC denies, claiming that having placed their property for use by the general public and having secured a license or permit to do so petitioners cannot now complain that their property is subject to regulation by the State

Issue in 1-United vs. COMELEC

Whether the assailed provisions, which prohibit the posting of any election campaign or propaganda material in PUVs and public transport terminals are valid regulations

One-sentence ruling in 1-United vs. COMELEC

NO. Prohibiting the posting of any election campaign or propaganda material in PUVs and public transport terminals are NOT valid regulations

Ruling in 1-United vs. COMELEC

The assailed provisions of Reso. No. 9615 unduly infringe on the fundamental right of the people to freedom of speech. Central to the prohibition is the freedom of individuals. The prohibition constitutes a clear prior restraint on the right to free expression of the owners of PUVs and transport terminals. As a result of the prohibition, owners of PUVs and transport terminals are forcefully and effectively inhibited from expressing their preferences under the pain of indictment for an election offense and the revocation of their franchise or permit to operate.

Who has jurisdiction over all public services

The Commission

Administrative agency

Relevant government agencies, to which the powers and duties of the Public Service Commission were transferred pursuant to existing

Enumeration of administrative agencies

1. Civil Aeronautics Board (CAB)

2. Civil Aviation Authority of the Philippines (CAAP)

3. Department of Energy (DOE)

4. Department of Environment and Natural Resources (DENR)

5. Department of Information and Communications Technology (DICT)

6. Department of Transportation (DOTr)

7. Energy Regulatory Commission (ERC)

8. Land Transportation Franchising and Regulatory Board (LTFRB)

9. Land Transportation Office (LTO)

10. Local Water Utilities Administration (LWUA)

11. Maritime Industry Authority (MARINA)

12. Metropolitan Waterworks and Sewerage System (MWSS)

13. National Telecommunications Commission (NTC)

14. National Water Resources Board (NWRB)

15. Philippine National Railways (PNR)

16. Philippine Ports Authority (PPA)

17. Toll Regulatory Board (TRB)

18. All other Administrative Agencies that have, or may be authorized to exercise, a similar function as approved by Congress or the responsible authority, as appropriate

Brief facts in Bagong Reporma vs. Mandaluyong

Bagong Reporma sought to enforce its members' rightful passage through the road under the flyover based on their CPC. For its part, the City of Mandaluyong invoked Ordinance No. 358 or the City's Traffic Management Code. Under the Ordinance, it noted, the Traffic and Parking Management Office is authorized to adjust the turning points and terminals of public utility buses and jeepneys

Issue in Bagong Reporma vs. Mandaluyong

Whether the member-drivers, through their certificates of public convenience, have a clear legal right to ply through the road under the Shaw Boulevard-EDSA flyover

One-sentence ruling in Bagong Reporma vs. Mandaluyong

NO. The member-drivers, through their certificates of public convenience, have NO clear legal right to ply through the road under the Shaw Boulevard-EDSA flyover.

Ruling in the case

The authority to issue certificates of public convenience does not remove a local government's power to regulate traffic in its locality. A grantee is still required to comply with national laws and municipal ordinances. The powers conferred by law upon the Public Service Commission were not designated to deny or supersede the regulatory power of local governments over motor traffic, in the streets subject to their control

Brief facts in Batangas CATV vs. CA

The permit granted to Batangas CATV provided that petitioner is authorized to charge its subscribers the maximum rates specified therein, "provided, however, that any increase of rates shall be subject to the approval of the Sangguniang Panlungsod." When it increased its rates, the Mayor wrote a letter threatening to cancel its permit unless it secures the approval of the latter.

Petitioner claims that only the NTC has the power to regulate CATV

Issue in Batangas CATV vs. CA

Whether a local government unit regulate the subscriber rates charged by CATV operators within its territorial jurisdiction

Ruling in Batangas CATV vs. CA

NO. A LGU CANNOT regulate the subscriber rates charged by CATV operators within its territorial jurisdiction

What regulatory powers does the NTC have

1. Determination of rates

2. Issuance of certificates of authority

3. Establishment of areas of operation

4. Examination and assessment of the legal, technical and financial qualifications of applicant operators

5. Granting of permits for the use of frequencies

6. Regulation of ownership and operation

7. Adjudication of issues arising from its functions

8. Other similar matters

Extent of the power of the LGU to regulate

They can create laws and regulations under the Local Government Code’s general welfare clause. This allows them to protect the well-being of their communities, such as regulating gambling, transportation, and businesses

Limit of the power

CATV operations can be regulated by LGUs to some extent, especially because they use public spaces like streets. However, this regulatory power is limited

Implication of power

When the national government adopts a deregulation policy to reduce control and encourage competition—especially in telecommunications—LGUs must follow. They cannot go against national policies. As such, the LGU cannot require approval for CATV rate increases, and it cannot grant franchises for CATV services without legal authority

Brief contentions in Maynilad vs NWRB

Maynilad maintains that there is no law conferring it with jurisdiction. It argues that the legislative history of water rate-fixing in the Philippines shows that the Board did not inherit the Public Service Commission's power to review water rates set by the Metropolitan Waterworks and Sewerage System.

NWRB counters that it is possessed of jurisdiction to fix and review the water rates set by Maynilad, arguing that it is the successor of the Public Service Commission named in Section 12 of Republic Act No. 6234. It adds that its power is not limited to verifying the rate base and rate of return of the water rates set by the Metropolitan Waterworks and Sewerage System but includes the power to adjudicate cases contesting these water rates

Issue in Maynilad vs NWRB

Whether the National Water Resources Board inherited the adjudicatory powers of thy Public Service Commission with respect to cases contesting water rates set by the Metropolitan Waterworks and Sewerage

Ruling in Maynilad vs NWRB

YES. The NWRB inherited the adjudicatory powers of the PSC with respect to cases contesting water rates set by the MWSS.

Section 12 of Republic Act No. 6234 provides “the PSC shall have exclusive original jurisdiction over all cases contesting said rates or fees.” This does not mean that the Board cannot take cognizance of controversies involving water rates fixed by the Metropolitan Waterworks and Sewerage System. History shows that the National Water Resources Board is the successor of the Public Service Commission with respect to water regulation.