FAST BACKWARD: A Matter of Transport Franchise

Fast Backward by Antonio V. Figueroa

Owning vehicles for public transport, then and now, has always been covered by certain limitations, especially in the matter of ownership. Under American rule, a certificate of public conveyance, the equivalent of a franchise, was granted to a foreigner, subject to conditions.

An interesting case involving a Japanese resident of Davao reached Supreme Court (SC).

On December 18, 1929, under Case No. 21268, the Public Service Commission, forerunner of the Land Transport Franchising and Regulatory Board, issued a franchise to Genanichi Ishi, a Japanese, allowing him to operate a single Ford automobile to be used in the transport of passengers within Davao Province. The franchise carried the following proviso:

“And  without authorization… this commission  previously had, the applicant shall not alter the  manner of operating his car as prescribed herein, increase or decrease the number thereof,  substitute them with others, change the form of the carriage with a different one, or in  any case send  them on a trip outside  the zone  of operation of the service herein  authorized…

“The certificate of public convenience to be issued to him… shall take effect on the date the [franchise] is issued and shall continue [to be] in force until further order to the contrary [is released] from this commission.”

Prior to the effectivity of the Commonwealth charter on November 15, 1935, Genanichi filed on October 23, 1935, an application to add another unit to his solo transport, citing as reason the lack of public utility vehicles to address the demand for transport among inhabitants.

The commission, however, denied the application on February 14, 1936, citing the constitutional provision which states that “no franchise, certificate, or any other form of authorization for the operation of a public utility  shall be granted except to citizens of  the  Philippines or to corporations or other entities organized under the laws of the Philippines, sixty per centum of the capital of which is owned by citizens of the Philippines.”

As a remedy, the Japanese filed a petition for a writ of certiorari against the commission’s order. Given that the SC had the authority to review the PSC order, the issue was elevated to the high court where it was docketed as G. R. No. 45134.

In its decision issued on September 10, 1936, the SC said the petition did not state that the commission exceeded its authority by issuing the order under Case No. 21268. Under Act No. 3108, as amended, the allegations in the petition failed to justify the issuance of a writ, pointing out that the right remedy was to review the order based on the same statute.

Section 35 of Act No. 3108, as amended, states:

“Any order made by the Commission may be reviewed on the application of any person or public utility affected thereby, by certiorari in appropriate cases, or by petition, to the Supreme Court, within thirty days from the date upon which such order becomes effective, as herein provided; said petition shall be filed with the clerk of that Supreme Court and a copy thereof served upon the secretary of the Commission either personally or by leaving same at the office of said Commission in the City of Manila.

“The Supreme Court is hereby given jurisdiction to review said order of the Commission, and to modify or set aside such order when it clearly appears that there was no evidence before the Commission to support reasonably such order, or that the same was without the jurisdiction of the Commission. The evidence presented to the Commission, together with the finding of the Commission and any order issued thereon, shall be certified by the secretary of the Commission to the Supreme Court. The procedure for review, except as herein provided, shall be prescribed by rules of the Supreme Court.”

On the matter of constitutional question raised, the SC ruled that Genanichi’s application for an increase in equipment falls within the prohibition of Article XIII, Section 8, of the 1935 Constitution despite that the franchise was issued before the same charter took effect.

The court also made it clear that the petitioner is not a Filipino or a corporation with 60% of its capital owned by citizens of the Philippines, adding there was no need to issue a new franchise but an authorization limited to Filipinos or corporations held in majority by Filipinos.

“The Constitution,” the high court argued, “provides for the nationalization not only of the natural resources and of all forces of potential energy, but also of all public services or utilities, except only those rights that might have been acquired prior to [its] adoption… This court cannot agree to the suggestion that, as the petitioner is the lawful holder of a certificate of public convenience… he has a vested right to be authorized to increase his equipment by the addition of one or more cars thereto.”

In short, Genanichi’s new application was denied.