Constitution

Section 11. 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 associations
organized under the laws of the Philippines, at least sixty per centum of whose capital is owned by
such citizens; nor shall s

uch franchise, certificate, or authorization be exclusive in character or for a longer period than fifty
years. Neither shall any such franchise or right be granted except under the condition that it shall be
subject to amendment, alteration, or repeal by the Congress when the common good so requires.
The State shall encourage equity participation in public utilities by the general public. The
participation of foreign investors in the governing body of any public utility enterprise shall be limited
to their proportionate share in its capital, and all the executive and managing officers of such
corporation or association must be citizens of the Philippines.

Public Service Act

Section 13. (a) The Commission shall have jurisdiction, supervision, and control over all public
services and their franchises, equipment, and other properties, and in the exercise of its authority, it
shall have the necessary powers and the aid of the public force: Provided, That public services
owned or operated by government entities or government-owned or controlled corporations shall be
regulated by the Commission in the same way as privately-owned public services, but certificates of
public convenience or certificates of public convenience and necessity shall not be required of such
entities or corporations: And provided, further, That it shall have no authority to require steamboats,
motor ships and steamship lines, whether privately-owned, or owned or operated by any Government
controlled corporation or instrumentality to obtain certificate of public convenience or to prescribe their
definite routes or lines of service.

(b) The term "public service" includes every person that now or hereafter may own, operate,
manage, or control in the Philippines, for hire or compensation, with general or limited
clientele, whether permanent, occasional or accidental, and done for general business
purposes, any common carrier, railroad, street railway, traction railway, sub-way motor vehicle,
either for freight or passenger, or both with or without fixed route and whether may be its
classification, freight or carrier service of any class, express service, steamboat or steamship
line, pontines, ferries, and water craft, engaged in the transportation of passengers or freight or
both, shipyard, marine railways, marine repair shop, [warehouse] wharf or dock, ice plant, ice-
refrigeration plant, canal, irrigation system, gas, electric light, heat and power water supply and
power, petroleum, sewerage system, wire or wireless communications system, wire or wireless
broadcasting stations and other similar public services: Provided, however, That a person
engaged in agriculture, not otherwise a public service, who owns a motor vehicle and uses it
personally and/or enters into a special contract whereby said motor vehicle is offered for hire
or compensation to a third party or third parties engaged in agriculture, not itself or themselves
a public service, for operation by the latter for a limited time and for a specific purpose directly
connected with the cultivation of his or their farm, the transportation, processing, and
marketing of agricultural products of such third party or third parties shall not be considered as
operating a public service for the purposes of this Act.

(c) The word "person" includes every individual, co-partnership, joint-stock company or
corporation, whether domestic or foreign, their lessees, trustees, or receivers, as well as any
municipality, province, city, government-owned or controlled corporation, or agency of the
Government of the Philippines, and whatever other persons or entities that may own or
possess or operate public services. (As amended by Com. Act 454 and RA No. 2677)

What is a Certificate of Public Convenience (CPC)?

An authorization issued for the operation of public services for which no franchise, either municipal or
legislative, is required by law, such as a common carrier.
Under the Public Service Law, a certificate of public convenience can be sold by the holder thereof
because it has considerable material value and is considered a valuable asset (Raymundo v. Luneta
Motor Co., G.R. No. 39902, Nov. 29, 1933).

Does the CPC confer upon the holder any proprietary right or interest in the route covered thereby?

No. (Luque v. Villegas, G.R. No. L-22545, Nov. 28, 1969). However, with respect to other persons
and other public utilities, a certificate of public convenience as property, which represents the right
and authority to operate its facilities for public service, cannot be taken or interfered with without due
process of law. Appropriate actions may be maintained in courts by the holder of the certificate
against those who have not been authorized to operate in competition with the former and those who
invade the rights which the former has pursuant to the authority granted by the Public Service
Commission (A.L. Animen Transportation Co. v. Golingco, G.R. No. 17151, Apr. 6, 1922)

What are the requirements for the grant of certificate of public convenience?

1. Applicant must be a citizen of the Philippines. If the applicant is a Corporation, 60% of its capital
must be owned by Filipinos
2. Applicant must prove public necessity
3. Applicant must prove the operation of proposed public service will promote public interest in a
proper and suitable manner; and
4. Applicant must have sufficient financial capability to undertake proposed services and meeting
responsibilities incidental to its operation. (Kilusang Mayo Uno v. Garcia G.R. No. 108584, Dec. 22,
1994)

Cite instances where a certificate of public convenience is not necessary?

1. Warehouses
2. Animal-drawn vehicles or banca powered by oar or by sail; tug boats and lighters
3. Airships except as to fixing rates
4. Radio companies, except as to fixing of rates
5. Ice plants
6. Public market
7. Public utilities operated by the national government or political subdivision except as to rates.

What are the grounds that oppositors may raise to the application for a certificate of public
convenience?

1. The area has already a well-established operator prior operator rule.

2. Interpose an objection stating that the grant of the application would result to a ruinous competition.
3. Attack the citizenship of the applicant (Sec. 11, Art. XII of the 1987 Constitution prohibits the
granting of franchise or certificate for the operation of public utility in favor of non-Filipino citizens); or
4. The applicant does not have the necessary financial capacity.
What are the guidelines to eliminate the sale and transfer of expired and/or dead Certificate of Public
Conveniences (CPCs)?

1. No approval of sale and transfer of a CPC shall be accepted where the validity of CPC being
conveyed is less than 6 months on the date of its filing with the LTFRB.
2. No application for approval of sale and transfer of a CPC shall be accepted unless the units
authorized therein are registered with the LTO for the current year.
3. Where the authorized units under the CPC conveyed have all not been registered with the LTO for
the current year, the application for the approval of sale and transfer will be accepted and processed
only for the actual number of registered units corresponding to the CPC conveyed.
4. No application for approval of sale and transfer of a CPC shall be accepted, unless all fees/dues
have been fully paid to the LTO and LTFRB, and taxes to the BIR (DOTC Order 2010-34).