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Thus, while the PPA has been tasked, under E.O. No. 30, with the management and operation
of the Manila International Port Complex and to undertake the providing of cargo handling and
port related services thereat, the law provides that such shall be "in accordance with P.D. 857
and other applicable laws and regulations." On the other hand, P.D. No. 857 expressly
empowers the PPA to provide services within Port Districts "whether on its own, by contract, or
otherwise" [See. 6(a) (v)]. Therefore, under the terms of E.O. No. 30 and P.D. No. 857, the
PPA may contract with the International Container Terminal Services, Inc. (ICTSI) for the
management, operation and development of the MICP.
That the Constitution provides in Art. XII, Sec. 11 that the issuance of a franchise, certificate or
other form of authorization for the operation of a public utility shall be subject to amendment,
alteration or repeal by Congress does not necessarily, imply, as petitioner posits that only
Congress has the power to grant such authorization. Our statute books are replete with laws
granting specified agencies in the Executive Branch the power to issue such authorization for
certain classes of public utilities. 4
In the instant case, the PPA, in the exercise of the option granted it by P.D. No. 857, chose to
contract out the operation and management of the MICP to a private corporation. This is
clearly within its power to do. Thus, PPA's acts of privatizing the MICT and awarding the MICT
contract to ICTSI are wholly within the jurisdiction of the PPA under its Charter which
empowers the PPA to "supervise, control, regulate, construct, maintain, operate and provide
such facilities or services as are necessary in the ports vested in, or belonging to the PPA."
(Section 6(a) ii, P.D. 857)

There can be no question that the NTC is the regulatory agency of the national government
with jurisdiction over all telecommunications entities. It is legally clothed with authority and
given ample discretion to grant a provisional permit or authority. In fact, NTC may, on its own
initiative, grant such relief even in the absence of a motion from an applicant.
In other words, transfers of shares of a public utility corporation need only NTC approval, not
Congressional authorization.
The decisive consideration are public need, public interest, and the common good. Those were
the overriding factors which motivated NTC in granting provisional authority to ETCI. Article II,
Section 24 of the 1987 Constitution, recognizes the vital role of communication and information
in nation building. It is likewise a State policy to provide the environment for the emergence of
communications structures suitable to the balanced flow of information into, out of, and across
the country (Article XVI, Section 10, Ibid.). A modern and dependable communications network
rendering efficient and reasonably priced services is also indispensable for accelerated
economic recovery and development. To these public and national interests, public utility
companies must bow and yield.
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.
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.
In the instant case, public convenience would be properly served if commuters from
Norzagaray going to the Piers in Manila could go to their destination without the need of
changing buses. Certainly the Public Service Commission has power to grant a certificate of
public convenience to a new operator, and the old operator cannot with reason complain that it
had not been given opportunity to improve its equipment and service, if it is shown that the old
operator has not placed in the service all the units of equipment that it had been authorized to
operate, and also when the old operator has violated, or has not complied with, important
conditions in its certificate. In the instant case, it has been shown that petitioner had not
operated all the units that it was authorized to operate.
Petitioner's argument pales on the face of the fact that the very nature of a certificate of public
convenience is at cross purposes with the concept of vested rights. To this day, the accepted
view, at least insofar as the State is concerned, is that "a certificate of public convenience
constitutes neither a franchise nor a contract, confers no property right, and is a mere license
or privilege."9 The holder of such certificate does not acquire a property right in the route
covered thereby. Nor does it confer upon the holder any proprietary right or interest of
franchise in the public highways.10 Revocation of this certificate deprives him of no vested
right.11 Little reflection is necessary to show that the certificate of public convenience is granted
with so many strings attached. New and additional burdens, alteration of the certificate, and
even revocation or annulment thereof is reserved to the State.
We need but add that the Public Service Commission, a government agency vested by law
with "jurisdiction, supervision, and control over all public services and their franchises,
equipment, and other properties"12 is empowered, upon proper notice and hearing, amongst
others: (1) "[t]o amend, modify or revoke at any time a certificate issued under the provisions of
this Act [Commonwealth Act 146, as amended], whenever the facts and circumstances on the
strength of which said certificate was issued have been misrepresented or materially
changed";13 and (2) "[t]o suspend or revoke any certificate issued under the provisions of this
Act whenever the holder thereof has violated or wilfully and contumaciously refused to comply
with any order, rule or regulation of the Commission or any provision of this Act: Provided, That
the Commission, for good cause, may prior to the hearing suspend for a period not to exceed
thirty days any certificate or the exercise of any right or authority issued or granted under this
Act by order of the Commission, whenever such step shall in the judgment of the Commission
be necessary to avoid serious and irreparable damage or inconvenience to the public or to
private interests."14 Jurisprudence echoes the rule that the Commission is authorized to make
reasonable rules and regulations for the operation of public services and to enforce them. 15 In
reality, all certificates of public convenience issued are subject to the condition that all public
services "shall observe and comply [with] ... all the rules and regulations of the Commission
relative to" the service.16 To further emphasize the control imposed on public services, before
any public service can "adopt, maintain, or apply practices or measures, rules, or regulations to
which the public shall be subject in its relation with the public service," the Commission's
approval must first be had.17
And more. Public services must also reckon with provincial resolutions and municipal
ordinances relating to the operation of public utilities within the province or municipality
concerned. The Commission can require compliance with these provincial resolutions or
municipal ordinances
Considering the environmental circumstances of the case, the conveyance of passengers,
trucks and cargo from Matnog to Allen is certainly not a ferry boat service but a coastwise or
interisland shipping service. Under no circumstance can the sea between Matnog and Allen be
considered a continuation of the highway. While a ferry boat service has been considered as a
continuation of the highway when crossing rivers or even lakes, which are small body of waters
- separating the land, however, when as in this case the two terminals, Matnog and Allen are
separated by an open sea it can not be considered as a continuation of the highway.
Respondent PANTRANCO should secure a separate CPC for the operation of an interisland or
coastwise shipping service in accordance with the provisions of law. Its CPC as a bus
transportation cannot be merely amended to include this water service under the guise that it is
a mere private ferry service.
It appears to the Court that private respondent is properly characterized as a common carrier
even though he merely "back-hauled" goods for other merchants from Manila to Pangasinan,
although such back-hauling was done on a periodic or occasional rather than regular or
scheduled manner, and even though private respondent's principal occupation was not the
carriage of goods for others. There is no dispute that private respondent charged his
customers a fee for hauling their goods; that fee frequently fell below commercial freight rates
is not relevant here.
Under Article 1745 (6) above, a common carrier is held responsible — and will not be allowed
to divest or to diminish such responsibility — even for acts of strangers like thieves or robbers,
except where such thieves or robbers in fact acted "with grave or irresistible threat, violence or
force." We believe and so hold that the limits of the duty of extraordinary diligence in the
vigilance over the goods carried are reached where the goods are lost as a result of a robbery
which is attended by "grave or irresistible threat, violence or force."
In these circumstances, we hold that the occurrence of the loss must reasonably be regarded
as quite beyond the control of the common carrier and properly regarded as a fortuitous event.
It is necessary to recall that even common carriers are not made absolute insurers against all
risks of travel and of transport of goods, and are not held liable for acts or events which cannot
be foreseen or are inevitable, provided that they shall have complied with the rigorous
standard of extraordinary diligence.
In addition, there is a need to square the functioning of administrative bodies vis-a-vis
contemporary realities. As we have observed, the increasing pattern of law and legal
development has been to entrust "special cases" to "special bodies" rather than the courts. As
we have also held, the shift of emphasis is attributed to the need to slacken the encumbered
dockets of the judiciary and so also, to leave "special cases" to specialists and persons trained
2. Failure to exhaust administrative remedies is arrayed against Qualitrans.
Hence, it can not validly revoke our ruling in Arrow Transportation Corp. v. Board
of Transportation. 24 That case was impelled by urgent need, which the courts
could address more swiftly. It is not the case here. Not much is at stake in the
"limo" business. We hold that the Commission should have better been left alone
to discharge its duty without court interference.
3. We are not impressed that Qualitrans has successfully shown that it is entitled
to the injunctive writ. Its appeal to "ruinous competition" 25 is not well-taken.
Under the Constitution, the national economy stands for, "competi[tion] in both
domestic and foreign markets." 26 Obviously, not every kind of competition is
"ruinous competition". All things considered and all things equal, competition is a
healthy thing. Besides, there is no showing that Qualitrans stood to lose its
capital investment with the approval of Royal Class' franchise. 27 Our considered
opinion is that Qualitrans should improve its services as a counter-balance to
Royal Class' own toehold in the market. And let that be its challenge.
Applied to the case at bar, it mill have to be held that, contrary to the rationale in the Decision
of respondent Court, it was appropriate, as a matter of procedure, for SANTOS, as an ordinary
third-party claimant, to vindicate his claim of ownership in a separate action under Section 17
of Rule 39. And the judgment rendered in his favor by Branch X, declaring him to be the owner
of the property, did not as a basic proposition, constitute interference with the powers or
processes of Branch XVII which rendered the judgment, to enforce which the was levied upon.
And this is so because property belonging to a stranger is not ordinarily subject to levy. While it
is true that the vehicle in question was in custodia legis, and should not be interfered with
without the permission of the proper Court, the property must be one in which the defendant
has proprietary interest. Where the Sheriff seizes a stranger's property, the rule does not apply
and interference with his custody is not interference with another Court's Order of attachment.

However, as a matter of substance and on the merits, the ultimate conclusion of respondent
Court nullifying the Decision of Branch X permanently enjoining the auction sale, should be
upheld. Legally speaking, it was not a "stranger's property" that was levied upon by the Sheriff
pursuant to the judgment rendered by Branch XVII. The vehicle was, in fact, registered in the
name of VIDAD, one of the judgment debtors. And what is more, the aspect of public service,
with its effects on the riding public, is involved. Whatever legal technicalities may be invoked,
we find the judgment of respondent Court of Appeals to be in consonance with justice.
While the Court therein ruled that the registered owner or operator of a passenger vehicle is
jointly and severally liable with the driver of the said vehicle for damages incurred by
passengers or third persons as a consequence of injuries or death sustained in the operation
of the said vehicle, the Court did so to correct the erroneous findings of the Court of Appeals
that the liability of the registered owner or operator of a passenger vehicle is merely subsidiary,
as contemplated in Art. 103 of the Revised Penal Code. In no case did the Court exempt the
actual owner of the passenger vehicle from liability. On the contrary, it adhered to the rule
followed in the cases of Erezo vs. Jepte, 8 Tamayo vs. Aquino, 9 and De Peralta vs.
Mangusang, 10 among others, that the registered owner or operator has the right to be
indemnified by the real or actual owner of the amount that he may be required to pay as
damage for the injury caused.
The right to be indemnified being recognized, recovery by the registered owner or operator
may be made in any form-either by a cross-claim, third-party complaint, or an independent
action. The result is the same.
"Ex pacto illicito non oritur actio" [No action arises out of an illicit bargain] is the tune-honored
maxim that must be applied to the parties in the case at bar. Having entered into an illegal
contract, neither can seek relief from the courts, and each must bear the consequences of his
Unquestionably, the parties herein operated under an arrangement, comonly known as the
"kabit system", whereby a person who has been granted a certificate of convenience allows
another person who owns motors vehicles to operate under such franchise for a fee. A
certificate of public convenience is a special privilege conferred by the government . Abuse of
this privilege by the grantees thereof cannot be countenanced. The "kabit system" has been
Identified as one of the root causes of the prevalence of graft and corruption in the government
transportation offices. In the words of Chief Justice Makalintal, 1 "this is a pernicious system
that cannot be too severely condemned. It constitutes an imposition upon the goo faith of the
Although not outrightly penalized as a criminal offense, the "kabit system" is invariably
recognized as being contrary to public policy and, therefore, void and inexistent under Article
1409 of the Civil Code, It is a fundamental principle that the court will not aid either party to
enforce an illegal contract, but will leave them both where it finds them. Upon this premise, it
was flagrant error on the part of both the trial and appellate courts to have accorded the parties
relief from their predicament. Article 1412 of the Civil Code denies them such aid. It
ART. 1412. if the act in which the unlawful or forbidden cause consists does not
constitute a criminal offense, the following rules shall be observed;
(1) when the fault, is on the part of both contracting parties, neither may recover
what he has given by virtue of the contract, or demand the performance of the
other's undertaking.
The defect of inexistence of a contract is permanent and incurable, and cannot be cured by
ratification or by prescription. As this Court said in Eugenio v. Perdido, 2 "the mere lapse of
time cannot give efficacy to contracts that are null void."
The principle of in pari delicto is well known not only in this jurisdiction but also in the United
States where common law prevails. Under American jurisdiction, the doctrine is stated thus:
"The proposition is universal that no action arises, in equity or at law, from an illegal contract;
no suit can be maintained for its specific performance, or to recover the property agreed to be
sold or delivered, or damages for its property agreed to be sold or delivered, or damages for its
violation. The rule has sometimes been laid down as though it was equally universal, that
where the parties are in pari delicto, no affirmative relief of any kind will be given to one against
the other." 3 Although certain exceptions to the rule are provided by law, We see no cogent
reason why the full force of the rule should not be applied in the instant case.
Unquestionably, the parties herein operated under an arrangement, commonly known as the
"kabit system" whereby a person who has been granted a certificate of public convenience
allows another person who owns motor vehicles to operate under such franchise for a fee. A
certificate of public convenience is a special privilege conferred by the government. Abuse of
this privilege by the grantees thereof cannot be countenanced. The "kabit system" has been
Identified as one of the root causes of the prevalence of graft and corruption in the government
transportation offices.
Although not outrightly penalized as a criminal offense, the kabit system is invariably
recognized as being contrary to public policy and, therefore, void and in existent under Article
1409 of the Civil Code. It is a fundamental principle that the court will not aid either party to
enforce an illegal contract, but will leave both where it finds then. Upon this premise it would be
error to accord the parties relief from their predicament. Article 1412 of the Civil Code denies
them such aid. It provides:
Art. 1412. If the act in which the unlawful or forbidden cause consists does not
constitute a criminal offense, the following rules shall be observed:
1. When the fault is on the part of both contracting parties, neither may recover
that he has given by virtue of the contract, or demand, the performance of the
other's undertaking.
The defect of in existence of a contract is permanent and cannot be cured by ratification or by
prescription. The mere lapse of time cannot give efficacy to contracts that are null and void.
Even on the assumption that it was petitioner's taxicab that was used by the escaping hold-
uppers, there is no evidence that the driver is a co-conspirator in the commission of the
offense of robbery. Conspiracy must be proved by clear and convincing evidence. The mere
claim that the taxicab was there and probably waiting is not proof of conspiracy in this case as
it should be recalled that there were about twelve vehicles that stopped to view the spectacle.
Further, it is possible that the driver did not act voluntarily as no person in his right senses
would defy the wishes of armed passengers. Even on the assumption that the driver had
participated voluntarily in the incident, his culpability should not be made a ground for the
cancellation of the certificate of petitioner. While an employer may be subsidiarily liable for the
employee's civil liability in a criminal action, subsidiary liability presupposes that there was a
criminal action. Besides, in order that an employer may be subsidiarily liable, it should be
shown that the employee committed the offense in the discharge of his duties. While it is true
also that an employer may be primarily liable under Article 2180 of the Civil Code for the acts
or omissions of persons for whom one is responsible, this liability extends only to damages
caused by his employees acting within the scope of their assigned tasks. Clearly, the act in
question is totally alien to the business of petitioner as an operator and hence, the driver's illicit
act is not within the scope of the functions entrusted to him. Moreover, the action before
respondent Commission is neither a criminal prosecution nor an action for quasi-delict. Hence,
there is absolutely no ground to hold petitioner liable for the driver's act.
Finally, under Section 16 (n) of the Public Service Act, the power of the Commission to
suspend or revoke any certificate received under the provisions of the Act may only be
exercised whenever the holder thereof has violated or willfully and contumaciously refused to
comply with any order, rule or regulation of the Commission or any provision of the Act. In the
absence of showing that there is willful and contumacious violation on the part of petitioner, no
certificate of public convenience may be validly revoked.
The following are some instances where the cancellation of a certificate of public convenience
where held valid: (1) where the holder is a mere dummy (Pecson vs. Pecson, 78 Phil. 522); (2)
where the operator ceased operation and placed his buses on storage (Parades vs. Public
Service Commission, L-7111, May 30, 1955); and (3) where the operator abandons, totally the
service (Collector vs. Buan, L-11438, July 31, 1958; Regodon vs. Public Service Commission,
L-11899, Sept. 23, 1958; Paez vs. Marcelo, L-1530, March 30, 1962). None of the willful acts
in patent violation of the Public Service Law can be attributed to petitioner herein.
Such delegation of legislative power to an administrative agency is permitted in order to adapt
to the increasing complexity of modern life. As subjects for governmental regulation multiply,
so does the difficulty of administering the laws. Hence, specialization even in legislation has
become necessary. Given the task of determining sensitive and delicate matters as
route-fixing and rate-making for the transport sector, the responsible regulatory body is
entrusted with the power of subordinate legislation. With this authority, an administrative body
and in this case, the LTFRB, may implement broad policies laid down in a statute by "filling in"
the details which the Legislature may neither have time or competence to provide. However,
nowhere under the aforesaid provisions of law are the regulatory bodies, the PSC and LTFRB
alike, authorized to delegate that power to a common carrier, a transport operator, or other
public service.
In the case at bench, the authority given by the LTFRB to the provincial bus operators to set a
fare range over and above the authorized existing fare, is illegal and invalid as it is tantamount
to an undue delegation of legislative authority. Potestas delegata non delegari potest. What
has been delegated cannot be delegated. This doctrine is based on the ethical principle that
such a delegated power constitutes not only a right but a duty to be performed by the delegate
through the instrumentality of his own judgment and not through the intervening mind of
another. 10 A further delegation of such power would indeed constitute a negation of the duty in
violation of the trust reposed in the delegate mandated to discharge it directly. 11 The policy of
allowing the provincial bus operators to change and increase their fares at will would result not
only to a chaotic situation but to an anarchic state of affairs. This would leave the riding public
at the mercy of transport operators who may increase fares every hour, every day, every
month or every year, whenever it pleases them or whenever they deem it "necessary" to do so.
The rather wild and fantastic nature of the charge of oppressiveness of this Letter of Instruction
was exposed in the Answer of the Solicitor General thus: "Such early warning device
requirement is not an expensive redundancy, nor oppressive, for car owners whose cars are
already equipped with 1) blinking lights in the fore and aft of said motor vehicles,' 2) "battery-
powered blinking lights inside motor vehicles," 3) "built-in reflectorized tapes on front and rear
bumpers of motor vehicles," or 4) "well-lighted two (2) petroleum lamps (the Kinke) * * *
because: Being universal among the signatory countries to the said 1968 Vienna Conventions,
and visible even under adverse conditions at a distance of at least 400 meters, any motorist
from this country or from any part of the world, who sees a reflectorized rectangular early
seaming device installed on the roads, highways or expressways, will conclude, without
thinking, that somewhere along the travelled portion of that road, highway, or expressway,
there is a motor vehicle which is stationary, stalled or disabled which obstructs or endangers
passing traffic. On the other hand, a motorist who sees any of the aforementioned other built in
warning devices or the petroleum lamps will not immediately get adequate advance warning
because he will still think what that blinking light is all about. Is it an emergency vehicle? Is it a
law enforcement car? Is it an ambulance? Such confusion or uncertainty in the mind of the
motorist will thus increase, rather than decrease, the danger of collision. 31
It was likewise contended that Memorandum Circular No. 39, issued by the then respondent
Minister of Public Works, Transportation and Communications, and then respondent Land
Transportation Commissioner, imposing the penalties "of fine, confiscation of vehicle and
cancellation of license is likewise unconstitutional," petitioners invoking the principle of non-
delegation of legislative power. 34 To that extent that a Letter of Instruction may be viewed as
an exercise of the decree-making power of the President, then such an argument is futile. If,
however, viewed as a compliance with the duty to take care that the laws be faithfully
executed, as a consequence of which subordinate executive officials may in turn issue
implementing rules and regulations, then the objection would properly be considered as an
ultra vires allegation. There is this relevant excerpt from Teoxon v. Member of the Board of
Administrators: 35 "1. The recognition of the power of administrative officials to promulgate
rules in the implementation of the statute, necessarily limited to what is provided for in the
legislative enactment, may be found in the early case of United States v. Barrias decided in
1908. Then came, in a 1914 decision, United States v. Tupasi Molina, a delineation of the
scope of such competence. Thus: 'Of course the regulations adopted under legislative
authority by a particular department must be in harmony with the provisions of the law, and for
the sole purpose of carrying into effect its general provisions. By such regulations, of course,
the law itself can not be extended. So long, however, as the regulations relate solely to
carrying into effect the provisions of the law, they are valid.' In 1936, in People v. Santos, this
Court expressed its disapproval of an administrative order that would amount to an excess of
the regulatory power vested in an administrative official. We reaffirmed such a doctrine in a
1951 decision, where we again made clear that where an administrative order betrays
inconsistency or repugnancy to the provisions of the Act, 'the mandate of the Act must prevail
and must be followed.' Justice Barrera, speaking for the Court in Victorias Milling Company,
Inc. v. Social Security Commission, citing Parker as well as Davis did tersely sum up the
matter thus: 'A rule is binding on tile courts so long as the procedure fixed for its promulgation
is followed and its scope is within the statutory granted by the legislature, even if the courts are
not in agreement with the policy stated therein or its innate wisdom * * *. On the other hand,
administrative interpretation of the law is at best merely advisory, for it is the courts that finally
determine what the law means.' It cannot be otherwise as the Constitution limits the authority
of the President, in whom all executive power resides, to take care that the laws be faithfully
executed. No lesser administrative executive office or agency then can, contrary to the express
language of the Constitution, assert for itself a more extensive prerogative." 36 It was alleged in
the Answer of Solicitor General Estelito P. Mendoza that Letter of Instruction 869 and
Memorandum Circular No. 39 were adopted pursuant to the Land Transportation and Traffic
Code. 37 It contains a specific provision as to penalties. 38 Thus: "For violation of any provisions
of this Act or regulations promulgated pursuant hereto, not hereinbefore specifically punished,
a fine of not less than ten nor more than fifty pesos shall be imposed." 39 Memorandum Circular
No. 39 cannot be held to be ultra vires as long as the fine imposed is not less than ten nor
more than fifty pesos. As to suspension of registration, 40 the Code, insofar as applicable,
provides: "Whenever it shall appear from the records of the Commission that during any
twelve-month period more than three warnings for violations of this Act have been given to the
owner of a motor vehicle, or that the said owner has been convicted by a competent court
more than once for violation of such laws, the Commissioner may, in his discretion, suspend
the certificate of registration for a period not exceeding ninety days and, thereupon, shall
require the immediate surrender of the number plates * * *." 41 It follows that while the
imposition of a fine or the suspension of registration under the conditions therein set forth is
valid under the Land Transportation and Traffic Code, the impounding of a vehicle finds no
statutory justification. To apply that portion of Memorandum Circular No. 39 would be ultra
vires. It must likewise be made clear that a penalty even if warranted can only be imposed in
accordance with the procedure required by law. 42
Finally, the claim of petitioners that the Commission has the right to seize and impound the car
under Section 60 of Republic Act 4136 which reads:
Sec. 60. The lien upon motor vehicles. Any balance of fees for registration, re-
registration or delinquent registration of a motor vehicle, remaining unpaid and all
fines imposed upon any vehicle owner, shall constitute a first lien upon the motor
vehicle concerned.
is untenable. it is clear from the provision of said Section 60 of Republic Act 4136 that the
Commissioner's right to seize and impound subject property is only good for the proper
enforcement of lien upon motor vehicles. The Land Transportation Commission may issue a
warrant of constructive or actual distraint against motor vehicle for collection of unpaid fees for
registration, re-registration or delinquent registration of vehicles.
It is quite apparent that vehicle registration fees were originally simple exceptional. intended
only for rigidly purposes in the exercise of the State's police powers. Over the years, however,
as vehicular traffic exploded in number and motor vehicles became absolute necessities
without which modem life as we know it would stand still, Congress found the registration of
vehicles a very convenient way of raising much needed revenues. Without changing the earlier
deputy. of registration payments as "fees," their nature has become that of "taxes."
In view of the foregoing, we rule that motor vehicle registration fees as at present exacted
pursuant to the Land Transportation and Traffic Code are actually taxes intended for additional
revenues. of government even if one fifth or less of the amount collected is set aside for the
operating expenses of the agency administering the program.
May the respondent administrative agency be required to refund the amounts stated in the
complaint of PAL? The answer is NO.
The claim for refund is made for payments given in 1971. It is not clear from the records as to
what payments were made in succeeding years. We have ruled that Section 24 of Rep. Act
No. 5448 dated June 27, 1968, repealed all earlier tax exemptions Of corporate taxpayers
found in legislative franchises similar to that invoked by PAL in this case.
From the foregoing, a Certificate of Clearance or confirmation is mandatory for all transfers of
ownership of motor vehicles when done in an agency, or district office as the case may be
other than the issuing agency of such certificate of registration. When the requirement is
dispensed with, the evil sought to be avoided and eliminated, that is, the concealment of the
true status and identity of the motor vehicle, remains unabated.
In the case at bench, it was clearly established from the records that petitioner did not require
the submission of Certificates of Clearance from the agencies of previous registration affecting
the twelve (12) motor vehicles in question. For had he done so, he would have discovered that
the documents submitted to him were spurious per verification from the alleged agencies of
previous registration. This amply demonstrates petitioner's obvious disregard of the law, rules
and regulations, gross neglect of duty, dishonesty and incompetence in the performance of
official functions. To our mind, the evidence is clear and substantial to support the conclusion
that petitioner indeed failed to discharge an essential official function reposed on him. In
administrative proceedings where evidence submitted is substantial, meaning, evidence that a
reasonable mind might accept as adequate to support conclusion, 14 the proper penalty must
be imposed on that erring official.
We find that there is no inconsistency between LOI 43 and PD 1605, whichever is considered
the special law either because of its subject or its territorial application. The former deals with
motor vehicles that have stalled on a public road while the latter deals with motor vehicles that
have been deliberately parked in a no-parking area; and while both cover illegal parking of
motor vehicles, the offense is accidental under the first measure and intentional under the
second. This explains why the sanctions are different. The purpose of the LOI is to discourage
the use of the public streets by motor vehicles that are likely to break down while that of the
decree is to penalize the driver for his defiance of the traffic laws.
As it has not been shown that the private respondent's motor vehicle had stalled because of an
engine defect or some other accidental cause and, no less importantly, that it had stalled on
the road for a second or subsequent time, confiscation of the license plate cannot be justified
under LOI 43. And neither can that sanction be sustained under PD 1605, which clearly
provides that "in case of traffic violations, (even) the driver's license shall not be confiscated,"
let alone the license plate of the motor vehicle. If at all, the private respondent may be held
liable for illegal parking only and subjected to any of the specific penalties mentioned in
Section 3 of the decree.
It appears clearly from the Conditions aforementioned that the original vessel covered by the
License and Certificate could not be substituted with another vessel, Such being the case,
private respondent could not legally sell and transfer his CPC in 1985 to Atilano when at that
time, the "M/V Young Lady" subject of the Certificate was no longer operational. Without the
original and basic motor vessel, the CPC became unenforceable and incapable of being the
subject matter of a sale and transfer. This alone had the effect of invalidating the CPC and
private respondent therefore, had no valid CPC to sell and transfer to Atilano. Consequently,
MARINA Case No. 85-079 had no legal basis to proceed. Better still, it should not have been
instituted for lack of right of action.
A common carrier, both from the nature of its business and for insistent reasons of public
policy is burdened by law with the duty of exercising extraordinary diligence not only in
ensuring the safety of passengers, but in caring for the goods transported by it. The loss or
destruction or deterioration of goods turned over to the common carrier for the conveyance to
a designated destination raises instantly a presumption of fault or negligence on the part of the
carrier, save only where such loss, destruction or damage arises from extreme circumstances
such as a natural disaster or calamity ... (Benedicto v. IAC, G.R. No. 70876, July 19, 1990, 187
SCRA 547) (Emphasis supplied).
In order that the common carrier may be exempted from responsibility, the natural disaster
must have been the proximate and only cause of the loss. However, the common carrier must
exercise due diligence to prevent or minimize the loss before, during and after the occurrence
of flood, storm or other natural disaster in order that the common carrier may be exempted
from liability for the destruction or deterioration of the goods (Article 1739, New Civil Code).
A common carrier is obliged to observe extraordinary diligence and the failure of Babao to
ascertain the direction of the storm and the weather condition of the path they would be
traversing, constitute lack of foresight and minimum vigilance over its cargoes taking into
account the surrounding circumstances of the case.
While the goods are in the possession of the carrier, it is but fair that it exercises extraordinary
diligence in protecting them from loss or damage, and if loss occurs, the law presumes that it
was due to the carrier's fault or negligence; that is necessary to protect the interest of the
shipper which is at the mercy of the carrier (Art. 1756, Civil Code, Aboitiz Shipping Corporation
v. Court of Appeals, G.R. No. 89757, Aug. 6, 1990, 188 SCRA 387).
Furthermore, the records show that the crew of M/L Maya did not have the required
qualifications provided for in P.D. No. 97 or the Philippine Merchant Marine Officers Law, all of
whom were unlicensed. While it is true that they were given special permit to man the vessel,
such permit was issued at the risk and responsibility of the owner (Rollo, p. 36).
Finally, petitioner claims that the factual findings of the Special Board of Marine Inquiry
exonerating the owner/operator, crew officers of the ill-fated vessel M/L Maya from any
administrative liability is binding on the court.
In rejecting petitioner's claim, respondent court was correct in ruling that "such exoneration
was but with respect to the administrative liability of the owner/operator, officers and crew of
the ill-fated" vessel. It could not have meant exoneration of appellee from liability as a common
carrier for his failure to observe extraordinary diligence in the vigilance over the goods it was
transporting and for the negligent acts or omissions of his employees. Such is the function of
the Court, not the Special Board of Marine Inquiry." (Rollo, P. 37, Annex A, p. 7)
The Philippine Merchant Marine Rules and Regulations particularly Chapter XVI thereof
entitled "Marine Investigation and Suspension and Revocation Proceedings" prescribes the
Rules governing maritime casualties or accidents, the rules and Procedures in administrative
investigation of all maritime cases within the jurisdiction or cognizance of the Philippine Coast
Guard and the grounds for suspension and revocation of licenses/certificates of marine officers
and seamen (1601 — SCOPE); clearly, limiting the jurisdiction of the Board of Marine Inquiry
and Special Board of Marine Inquiry to the administrative aspect of marine casualties in so far
as it involves the shipowners and officers.
It is not disputed that private respondent is a common carrier as defined in Article 1732 of the
Civil Code. 3 The following facts are also not contested: (1) that the cargo-carrying vessel was
wrecked and partially sank on 18 October 1985 due to typhoon "Saling"; (2) that typhoon
"Saling" was a fortuitous event; and (3) that at the time said vessel sank, the remaining
undischarged cargo, consisting of 26,424 cement bags and 4,000 pieces of G.I. sheets, were
still on board the vessel.
However, the Court notes the fact that as of 17 October 1985, the time when the Pasacao area
was placed under storm signal No. 3 due to "Saling", the unloading of the cargo from the
vessel was still unfinished, notwithstanding the lapse of forty (40) days from the time the vessel
arrived in Pasacao on 7 September 1985, or the lapse of thirty-four (34) days from the time
actual discharge of the cargo commenceds on 13 September 1985.
In the opinion of the trial court, this lapse of thirty four (34) days with private respondent not
having completed the unloading of the goods, is tantamount to unreasonable delay, which
delay exposed the unloaded cargo to accident. The trial court held private respondent liable for
the loss of goods under Article 1740 of the Civil Code which provides that if the common
carrier negligently incurs in delay in transporting the goods, a natural disaster shall not free the
carrier from responsibility.
On the other hand, the appellate court ruled out any negligence committed by private
respondent and held that the delay in fully unloading the cargo from the vessel "was
occasioned by causes that may not be attributed solely to human factors, among which were
the natural conditions of the port where the M/V "Crazy Horse" had docked, the customs of the
place and the weather conditions. 4
The appellate court in exempting private respondent from liability applied Article 1739 of the
Civil Code which provides as follows:
In order that the common carrier may be exempted from responsibility, the
natural disaster must have been the proximate and only cause of the loss.
However, the common carrier must exercise due diligence to prevent or minimize
loss before, during and after the occurrence of flood, storm, or other natural
disaster in order that the common carrier may be exempted from liability for the
loss, destruction, or deterioration of the goods.
The appellate court ruled that the loss of cargo in the present case was due solely to typhoon
"Saling" and that private respondent had shown that it had observed due diligence before,
during and after the occurrence of "Saling"; hence, it should not be liable under Article 1739.
It is, of course, well established in our jurisdiction that, while the making of laws is a
non-delegable power that pertains exclusively to Congress, nevertheless, the latter may
constitutionally delegate the authority to promulgate rules and regulations to implement a given
legislation and effectuate its policies, for the reason that the legislature finds it impracticable, if
not impossible, to anticipate situations that may be met in carrying the law into effect. All that is
required is that the regulation should be germane to the objects and purposes of the law; that
the regulation be not in contradiction to but in conformity with the standards prescribed by the
law. 9 This is the principle of subordinate legislation XXXXXX
Verily, the freedom to contract is not absolute; all contracts and all rights are subject to the
police power of the State and not only may regulations which affect them be established by the
State, but all such regulations must be subject to change from time to time, as the general,
well-being of the community may require, or as the circumstances may change, or as
experience may demonstrate the necessity XXXXX
The last issue concerns the contention that without the appointment by the President of the
third member of the governing board, the POEA cannot legally function and exercise its
powers. This contention merits scant consideration. Section 4 of E.O. No. 797 indubitably
declares the immediate creation of the POEA. Thus upon the effectivity of E.O. No. 797, the
POEA attained its juridical personality. The appointment of the third member "who shall be well
versed, in the field of overseas employment," provided for in paragraph (b) of the said Section,
was not meant to be a sine gua non to the birth of the POEA, much less to the validity of the
acts of the Board. As a matter of fact, in the same paragraph the President is given the
"discretion [to] designate a Deputy Administrator as the third member of the Board."
In the questioned order, Pernito, et al., were allowed to operate individually and render arrastre
and stevedoring services in the port of Cebu while the case is pending because according to
the respondent judge, this was the last peaceable uncontested status before the present
controversy. His appreciation of the facts is incorrect. The present controversy arose when
Pernito, et al., sought, but were denied, permits to operate in the port of Cebu. PPA denied
their applications because of its policy of integration. Before the case was filed, therefore, the
status quo was that Pernito, et al., had no permit to operate individually. Prior to their
application for separate permits, Pernito, et al., operated pursuant to the various and
respective licenses of the different arrastre operators, Pernito Arrastre Services, Inc., in
particular, operated under the license issued to Vismin Stevedores & Forwarders, Inc, This
scheme is what is commonly known in the transportation business as the "kabit-system."
Long before the case below was filed, Pernito, et al., was in conformity with the integration
policy of the PPA. They never questioned its validity and legality. In fact, in the petition for
declaratory relief and mandamus they filed below, they even admitted having pleaded with
PPA for the integration of the eleven (11) arrastre operators into two (2) corporations: one
corporation to be composed of the arrastre corporations controlled by shipping magnates and
the other one to be composed of the bona fide small arrastre operators to service the needs of
small and medium sized vessels or that, in the alternative, the eleven be integrated into one
arrastre corporation, 51% to be owned by the bona fide arrastre operators and 49% by
shipping magnates (See Rollo, p. 60). Although these alternative proposals were rejected by
PPA, Pernito, et al., continued to accede and conform to the integration policy when they
agreed to join USDI after obtaining some concessions from its big stockholders. It was only
when the controlling interests in USDI allegedly reneged on their alleged commitments to
Pernito, et al., that the latter seceded from USDI and applied for separate permits. The actual
controversy is not really between PPA and Pernito, et al., but between the latter and the
controlling interests of USDI. What petitioners appear to be actually assailing, therefore, is not
the integration policy of PPA but the management policies of the integrated or merged
corporation, USDI.
Undoubtedly, therefore, the State in the exercise of its police power through its agency, the
PPA, has the power to revoke the temporary permits of petitioners, assuming the existence of
valid temporary permits, and take over the operations of the port of Tacloban whenever the
need to promote the public interest and welfare both if the stevedoring industry and the
workers therein justifies such take over. This Court has already ruled that the statute which
gives PPA the authority to implement the take over cannot be assailed on the constitutional
grounds raised by the petitioners may have acquired on the basis of the temporary permits
earlier given them must yield to the State's valid exercised of police power.
Neither can petitioners argue that their right to non-impairment of contract had been violated.
In the same case of Anglo-Fil Trading Corporation v. Lazaro (supra, p. 519), we held that the
subvservience of the contract clause to the police power enacting public regulations intended
for the general welfare of the community has been settled by this Court.
In these present cases, as stated by respondent PPA, when PPA-TAPS took over arrastre
operations, it also absorbed the entire labor force that existed at the time of the cancellation of
LIPSI's permit. Hence, it can be safely said that PPA-TAPS is also composed of all the labor
contractors and the workers under them which have been integrated t develop and improve the
planning, growth, financing, construction, maintenance and operation of ports throughout the
country and make them responsive to the needs of their individual localities.
Several factors indicate strongly that this was in all likelihood what happened for: (1) the
site of the crash was more than a mile (over three [3] miles, according to the defendant) off the
plotted course, altho, under normal conditions, no reasonably prudent pilot — according to
appellants witness, Capt. Manzano — would have attempted to land in the vicinity of the scene
of the occurrence; (2) the wrecked helicopter emitted no smell of gasoline and there was no
sign of fire resulting from the crash, despite the fact that the helicopter was using high octane
gasoline, which, admittedly, is highly inflammable and would have probably set the craft aflame
upon hitting the pine tree above referred to, had there been some gasoline in the tank at that
time; and (3) the helicopter was a total wreck, thus showing that the impact must have been
The foregoing considerations suggest, also, that Capt. Hernandez and Lt. Imperial had
acted recklessly in undertaking the flight with a supply of fuel hardly sufficient to enable them
to reach their destination. Besides, the landing report (Exhibit 9) shows that the portions
thereof pertaining to the pilot were accomplished or filled in by Lt. Imperial upon landing at the
Rosales airport. In fact, he signed said report as pilot of the helicopter. Again, it appears that
during the flight from Rosales to Mankayan, the helicopter had deviated from one to three
miles from the course plotted by Capt. Hernandez, in which Col. Arnaiz concurred "because
that was the most logical route to follow." Had Capt. Hernandez been piloting the machine from
Rosales to Mankayan, he would have had no reason to deviate from the course planned by
him, for the "visibility and ceiling were unlimited in the area and vicinity where the helicopter
fell." All indications are, therefore, to the effect that, at the time of the accident, the helicopter
was being piloted, not by Capt. Hernandez but by Lt. Imperial, in violation of Aeronautics
Bulletin No. 1, Civil Aviation Regulations, of the Bureau of Aeronautics (CAA)1 as well as of
Republic Act No. 776, Section 42 (H),2 for Lt. Imperial was not a lincesed helicopter pilot and
was merely in the initial stage of his training as such pilot.
It is next urged that defendant was negligent in failing to give notice to the Civil
Aeronautics Administration of the presence of the aforementioned tram cables, which,
appellants maintain, constituted a hazard to aerial navigation. However, this pretense is not
borne out by the record. Appellants' witness, Capt. Manzano, testified that although, in
searching for the missing helicopter, his plane flew so low that there was danger of collision
with the mountains, he did not notice said cables. The same were not, therefore, within the
navigable air space. Similarly, Capt. Rohlings described the area over which the cables were
strung as "a congested area full of pine trees" and a "mountainous terrain — slopping valley,"
thereby implying that the space from the cables down was not suitable for air navigation. In
short, it has not been satisfactorily shown that the cables were a hazard to aerial navigation, or
that the defendant should have or could have reasonably foreseen that aircrafts would fly so
low over the place as to get entangled with said cables, for the area is dangerous to navigation
owing to its mountainous terrain "full of pine trees."
In short plaintiffs-appellants have failed to establish their pretense by a preponderance
of evidence, in view of which the decision appealed from must be, as it is hereby affirmed, with
costs against them.
(C) The Board shall have the following specific powers and duties:
(1) In accordance with the provisions of Chapter IV of this Act, to issue, deny, amend,
revise, alter, modify, cancel suspend or revoke, in whole or in part, upon petitioner
complaint, or upon its own initiative, any temporary operating permit or Certificate of
Public Convenience and Necessity; Provided, however, That in the case of foreign air
carriers, the permit shall be issued with the approval of the President of the Republic of
the Philippines....
explicitly authorizes CAB to issue a "temporary operating permit," and nothing contained,
either in said section, or in Chapter IV of Republic Act No. 776, negates the power to issue
said "permit", before the completion of the applicant's evidence and that of the oppositor
thereto on the main petition. Indeed, the CAB's authority to grant a temporary permit "upon its
own initiative," strongly suggests the power to exercise said authority, even before the
presentation of said evidence has begun.
Moreover, we perceive no cogent reason to depart, in connection with the commercial air
transport service, from the policy of our public service law, which sanctions the issuance of
temporary or provisional permits or certificates of public convenience and necessity, before the
submission of a case for decision on the merits.1 The overriding considerations in both
instances are the same, namely, that the service be required by public convenience and
necessity, and, that the applicant is fit, as well as willing and able to render such service
properly, in conformity with law and the pertinent rules, regulations and requirements.2
Such presumption is particularly strong as regards administrative agencies, like the CAB,
vested with powers said to be quasi-judicial in nature, in connection with the enforcement of
laws affecting particular fields of activity, the proper regulation and/or promotion of which
requires a technical or special training, aside from a good knowledge and grasp of the overall
conditions, relevant to said field, obtaining in the nation.3 The consequent policy and practice
underlying our Administrative Law is that courts of justice should respect the findings of fact of
said administrative agencies, unless there is absolutely no evidence in support thereof or such
evidence is clearly, manifestly and patently insubstantial.4 This, in turn, is but a recognition of
the necessity of permitting the executive department to adjust law enforcement to changing
conditions, without being unduly hampered by the rigidity and the delays often attending
ordinary court proceedings or the enactment of new or amendatory legislations. In the case at
bar, petitioner has not satisfactorily shown that the aforementioned findings of the CAB are
lacking in the necessary evidentiary support.
Such is not the case however. The above recital of the circumstances under which the
provisional grant of authority to respondent Lim, a prior grantee of a certificate of public
convenience and necessity to increase his equipment by four (4) DC-3 aircrafts for the
operation of the domestic non-scheduled services, negates the imputation of arbitrariness on
the part of respondent CAB. It is undisputed that the CAB was not precipitate in approving
such application for provisional authority. It required a submission of a project study for the
operation of the increased equipment together with a program for the development of a rural
service and a notarized undertaking by a principal who would extend a loan in the sizeable
amount of P1,000,000.00 to finance the project. Moreover, there was a conference with prior
notice to existing airlines to consider the above points, PAL being notified but not sending any
Nor should it be overlooked that respondent Lim asserted that before the resolution granting
such provisional permit to operate was granted by the CAB on February 4, 1965, there was a
hearing at which the profitability of Lim's proposed DC-3 service and the feasibility of such
operation on a scheduled basis were discussed and debated by the technical staff of the CAB
as well as those of PAL and respondent Lim. There was no express denial of such on
assertion by PAL in its Brief. Considering moreover that under the Civil Aeronautics Act, the
CAB has the specific power "to issue, deny, amend, revise, alter, modify, cancel, suspend, or
revoke, in whole or in part, upon petition or complaint or upon its own initiative any temporary
operating permit,6 the invocation by PAL of Ang Tibay vs. Court is futile and unavailing.
There is thus no reason to sustain petitioner's plea. The statute aside, it bears repeating that
the burden of showing essential unfairness must be shouldered by him who claims such
injustice. In this instance, the task proved too much for petitioner. The action taken by the CAB
in granting such provisional authority did not offend against procedural due process. Tested
then either under the controlling statute or the applicable judicial doctrines, the resolution of the
CAB cannot be set at naught and stigmatized as void.

It has been correctly said that administrative proceedings are not exempt from the operation of
certain basic and fundamental procedural principles, such as the due process requirements in
investigations and trials. 1 And this administrative due process is recognized to include (a) the
right to notice, be it actual or constructive, of the institution of the proceedings that may affect a
person's legal rights; (b) reasonable opportunity to appear and defend his rights, introduce
witnesses and relevant evidence in his favor, (c) a tribunal so constituted as to give him
reasonable assurance of honesty and impartiality, and one of competent Jurisdiction; and (4) a
finding or decision by that tribunal supported by substantial evidence presented at the hearing,
or at least contained in the records or disclosed to the parties affected. 2
It may be true that the temporary approval of DTS-35 resulted in the immediate operation of
the opposed flights before the existence of economic justification therefor has been finally
determined. But this fact alone would not work against the validity of the provisional
authorization thus issued. For, under the law, the Civil Aeronautics Board is not only
empowered to grant certificates of public convenience and necessity; it can also issue, deny,
revise, alter, modify, cancel, suspend or revoke, in whole or in part, any temporary operating
permit, upon petition or complaint of another or even at its own initiative. 5 The exercise of the
power, of course, is supposed to be conditioned upon the paramount consideration of public
convenience and necessity, and nothing has been presented in this case to prove that the
disputed action by the Board has been prompted by a cause other than the good of the
Be that as it may, the well-established principle is that implied repeals are not favored and
consequently statutes must be so construed as to harmonize all apparent conflicts and give
effect to all the provisions whenever possible. 3 This rule makes it imperative to reconcile both
section 14 of the Public Service Act as amended by Republic Act No. 2677, and section 10(c)
(2) of Republic Act No. 776, recognizing the power of the Civil Aeronautics Board "fix and
determine reasonable individual, joint or special rates, charges or fares" for air carriers (under
Republic Act 776) but subject to the "maximum rates on freight and passengers" that may be
set by the Public Service Commission (as per Republic Act 2677); so that the rates, charges or
fares allowed or fixed by CAB may in no case exceed the maxima prescribed now or to be
prescribed in the future by the PSC.
The respondents have suggested that the retention in Republic Act 2677 of the power of the
PSC to fix maximum rates on air freight and passengers was the result of legislative
inadvertence, considering that in House Bill No. 4030 the phrase conferring such power on the
PSC appeared in brackets, indicating that said passage was to be eliminated. But however
plausible the suggestion should be, this Court is powerless to ignore the express grant of the
authority in question in the wording of Republic Act 2677 as finally approved. The elimination
of the words "except as regards the fixing of their maximum rates on freight and passengers"
from section 14(c) of the Public Service Act, as amended by Republic Act 2677, in order to
avoid conflict with Republic Act 776, and to unify jurisdiction and control over civil aviation in
the Philippines, can only be obtained from the Legislature itself.
PREMISES CONSIDERED, the questioned order of the Civil Aeronautics Board, asserting its
jurisdiction to fix the reasonable fares that air carriers may demand, are in accord with law,
there being no showing that the Public Service Commission has fixed any maximum rates
We have no quarrel with appellant PAL's contention that the C.A.B. has no power to impose
fines in the nature of criminal penalty and that only courts of justice can do so. It could easily
be discerned from a scrutiny of the provision on Chapter VII of Republic Act 776, on "Violation
and penalties" that whenever the law provides a penalty for a violation involving fine and/or
imprisonment (criminal in nature), the words "in the discretion of the court" always appear
(Sec. 42 (E) (F) (G) (N) Republic Act 776) for the very simple reason that the C.A.B. is not
authorized to impose a criminal penalty, but in those cases where the violation is punishable
by a fine or civil penalty, the law does not include the words "in the discretion of the court".
There exists but an insignificant doubt in Our mind that the C.A.B. is fully authorized by law
(Republic Act 776) to impose fines in the nature of civil penalty for violations of its rules and
regulations. To deprive the C.A.B. of that power would amount to an absurd interpretation of
the pertinent legal provision because the CAB is given full power on its own initiative to
determine whether to "impose, remit, mitigate, increase or compromise" "fines and civil
penalties", a power which is expressly given to the Civil Aeronautics Administrator whose
orders or decision may be reviewed, revised, reversed, modified or affirmed by the C.A.B..
Besides, to deprive the C.A.B. of its power to impose civil penalties would negate its effective
general supervision and control over air carriers if they can just disregard with impunity the
rules and regulations designed to insure public safety and convenience in air transportation. If
everytime the C.A.B. would like to impose a civil penalty on an erring airline for violation of its
rules and regulations it would have to resort to courts of justice in protracted litigations then it
could not serve its purpose of exercising a competent, efficient and effective supervision and
control over air carriers in their vital role of rendering public service by affording safe and
convenient air transit.
It is appellant's view that the fine imposed by the CAB was not commensurate with the nature
and extent of violation done, since according to its argument the Tuguegarao-Manila flight
F213 actually served a public need when it made a flagstop at Baguio on May 12, 1970 to pick
up 20 passengers who could not be accommodated in the Baguio-Manila flight. Appellant's
argument overlooks the fact that when it violated the rule on unauthorized flagstop, it might
have done some public service to the 20 Baguio passengers but to the prejudice and
inconvenience of the five Tuguegarao-Manila passengers. The appellant was under obligation
to bring the five Tuguegarao-Manila passengers directly to Manila and not to make a flagstop
in Baguio City to pick up additional passengers, which is not scheduled in that flight. There is
no question that for that plane to descend and ascend at the airport in Baguio City resulted in
additional risk to its five Tuguegarao- Manila passengers and also to their inconvenience.
Besides, it is an established fact that the C.A.B. imposed the civil penalty not only for
appellant's violation of May 12, 1970, but also for violation "on previous occasions" and the
"need to stress upon the air carriers to desist from wanton disregard of existing rules,
regulation or requirements of the government regulating agency". To Our Mind, the rules
regulating flight of air carriers must be strictly complied with because they are designed for the
passenger's safety and convenience and violations thereof should not be slightly treated since
said violations might result in irremediable disaster. The C.A.B. did not commit any mistake in
imposing a civil penalty on appellant for its violation of the rule prohibiting unauthorized
flagstop to serve "as a warning to all air carriers from operating flag-stops without prior
authority". It appears, however, that the PAL committed the violation of the C.A.B. regulation
against flagstops without malice and with no deliberate intent to flout the same. For this
reason, the penalty imposed by the C.A.B. may be mitigated and reduced to a nominal sum.