Issuance of franchise under the Commonwealth was very pro-Filipino such that even the Americans, enjoying the best during their occupation of the islands, had their rights greatly diminished. One of the celebrated cases cited in legal opinions affecting the issuance of franchise was the Genehichi Ishi vs. Public Service Commission (G. R. No. 45134).
Under Art. XIII, Sec. 8, of the 1935 Constitution, it states:
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 of other entities organized under the laws of the Philippines, sixty per centum of the capital of which is owned by citizens of the Philippines, nor shall such franchise, certificate, or authorization be exclusive in character or for a longer period than fifty years. 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.
In the case, the PSC, on December 18, 1929, granted to Ishi a CPC to transport passengers in the Province of Davao on conditions that (i) the franchisee would not alter the manner of operating his car; (ii) he was not allowed to increase or decrease the number of cars operated or substitute them, such as changing the form of the carriage, and (iii) he was barred from using the franchised car for trip outside its zone of operation as authorized.
Moreover, the CPC issued to Ishi, the PSC ruled, “shall take effect on the date the same is issued and shall continue in force until further order to the contrary from [the] commission.”
Six years later, the Japanese subject filed another application with the PSC on October 23, 1935, seeking authorization to add another Ford automobile claiming the number of public utility vehicles serving the province of Davao could not meet the actual demand.
In an order dated February 14, 1936, the PSC, citing the 1935 Constitution, invoked the provision that only citizens of the Philippines or corporation and entities registered under the laws of the country, with sixty percent ownership by Filipinos, can be issued a franchise, certificate or other form of authorization to operate a public utility. Dissatisfied with the PSC decision, Ishi, filed a petition for a writ of certiorari against the order.
The Supreme Court, in sustaining PSC’s decision, ruled on September 10, 1936, stating:
“The question presented is whether petitioner’s application for an increase of his equipment comes within the constitutional prohibition contained in section 8, Article XIII of the Constitution of the Philippines, it appearing that petitioner had been granted, before the Constitution took effect on November 15, 1935, a certificate of public convenience to operate an automobile ‘Ford’ for transportation of passengers in the province of Davao. We must answer the question in the affirmative. Petitioner is admittedly not a citizen of the Philippines, nor a corporation sixty per centum of the capital of which is owned by citizens of the Philippines.
“His application for an increase of equipment may not call for the granting of a new franchise or certificate, but it certainly calls for an ‘authorization’ the granting of any form of which is limited by the Constitution to citizens and corporations above mentioned. This was clearly admitted by the petitioner himself when he made the averment in paragraph 3 of his petition for a writ of certiorari that in filing below the application which was afterwards denied by the respondent Commission, he sought for “authority” to increase his equipment. In other words, it is conceded by petitioner that he may not increase his equipment without previously being “authorized’ to do so by the respondent Commission, as provided in express terms in his certificate of public convenience. The phrase ‘any other form of authorization’ used in sec. 8, Article XIII, of the Constitution is comprehensive enough to include the “authority” asked for by petitioner.
“The Constitution provides for the nationalization not only of national resources and all forces of potential energy but also of public utilities, saving solely those rights which were acquired prior to its adoption. This was one of the avowed purposes of the framers of that fundamental law, as declared in its preamble. We cannot agree to the suggestion that because petitioner is the lawful holder of a certificate of public convenience to operate an automobile ‘Ford’ in the province of Davao, he has a vested right to be authorized to increase his equipment by the addition of one or more cars. The challenged order of the respondent Commission is in conformity both with the letter and spirit of the Constitution and it must be upheld.” (Paragraphing mine.)
Commonwealth Act 146, the amended ‘The Public Service Act’ approved on November 7, 1936, further delineated PSC’s authority. The statute was ‘an Act to recognize the Philippine Service Commission, prescribe its powers and duties, define and regulate public services, provide and fix the rates and quota of expenses to be paid by the same for other purposes.’ As to the petition for certiorari, the high court ruled:
“The allegations of the petition fail to state that the respondent exceeded its jurisdiction in issuing the order in question. They do not, therefore, justify the issuance of the writ applied for, in accordance with section 35 of Act No. 3108, as amended. The proper remedy would have been to apply for the review of the disputed order in accordance with said section 35 of said Act. Before disposing of the case, this court deems it advisable, however, to state its opinion on the constitutional question raised in order to decide the case once and for all.”