Public Utility and Service in view of the Transpotation Law in The Philippines

(a) What is a public utility?

            A public utility is a business or service engaged in regularly supplying the public with some commodity or service of public consequence such as electricity, gas, water, transportation, telephone or telegraph service.  Apart from statutes which define the public utilities that are within the purview of such statutes, it would be difficult to construct a definition of a public utility which would fit every conceivable case.  As its name indicates, however, the term public utility implies a public use and service to the public. (Am. Jur. 2d V. 64, p.549.) (Albano vs Reyes)

(b) What is a public service?

            The Public Service Act (CA No. 146 as amended) provides that 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 whatever may be its classification, freight or carrier service or any class, express service, steamboat, or steamship line, pontines, ferries, and water craft, engaged in the transportation of passengers and freight or both, shipyard, marine repairshop, [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..." [Sec. 13(b)] (Albano vs Reyes)

Albano vs Reyes 175 SCRA 264

Fact:         On 20 April 1987, the Phil. Ports Authority (PPA) adopted a resolution directing mgmt. to prepare the Invitation to Bid and all relevant bidding documents necessary for the public bidding of the development, mgmt., and operation of the Manila Intl. Container Terminal  (MICT) and authorized the Board Chairman Secretary Reyes to oversee and implement the project.

                Secretary Reyes created a 7-man MICT Bidding Committee to evaluate all bids and recommend to the Board the best bid.  The PPA published the Invitation to Bid with the reservation that it had the right to reject any bid and to accept such bid it may deem advantageous to the govt.

                Seven companies submitted bids.  The Committee recommended that the contract be awarded to Intl. Container Terminal Services (ICTSI) on the ground that it offered the best technical and financial proposal.  Secretary Reyes awarded the contract to ICTSI.  Before the contract could be signed, two cases were filed questioning the legality or regularity of the bidding.  The first was a special action for prohibition with prelim injunction filed by Alo, a concerned taxpayer. The second was a civil case for prohibition with prayer for TRO filed by Sharp Co. which actively participated in the bidding.

                The President approved the proposed MICT contract. The PPA and ICTFSI perfected the contract.  Rodolfo Albano, a member of the House of Representatives filed the present case assailing the award of the contract on the ground that since the MICT is a public utility, it needs a legislative franchise before it can legally operate as a public utility.

Issue : Wether or not a legislative franchise is necessary.

Held : NO. Petition dismissed.

            A franchise specially granted by Congress is not necessary for the operation of the MICT by a private entity. A contract entered into by the PPA and such entity is substantial compliance with the law. 1. Executive Order No. 30 authorized the PPA to take over, manage and operate the MICT in accordance with PD 857 (Revised Charter of the PPA).  PD 857 expressly empowers the PPA to provide services within Port Districts "whether on its own, by contract or otherwise."  Therefore, under EO 30 and PD 857, the PPA may contract with ICTSI for the mgmt., operation and devt. of the MICT.

2. Even if the MICT be considered a public utility or a public service on the theory that it is a wharf or a dock as contemplated by the Public Service Act, its operation would not necessarily call for a legislative franchise.  Legislative franchises are not required before each and every public utility may operate.  The law has granted certain administrative agencies the power to grant licenses for or to  authorize the operation of certain public utilities. 

            That the Consti provides that the issuance of a franchise for the operation of a public utility shall be subject to amendment, alteration or repeal by Congress does not necessarily imply that only Congress has the power to grant such authorization.  There are several laws granting specified agencies in the Executive Dept. the power to issue such authorization for certain classes of public utilities. [ 1. LTFRB wrt Certificates of Public Convenience authorizing the operation of public land transportation services provided by motorized vehicles; 2. ERB wrt operation of electric power utilities and services except electric coops]

            Reading EO 30 and PD 857 together, the PPA has been empowered to undertake by itself or to authorize the operation and mgmt. of the MICT by another by contract.  The latter power having been delegated to the PPA, a legislative franchise is no longer necessary.  In this case, the PPA's contracting with ICTSI is wholly within its jurisdiction and powers.

3. The award of the contract to ICTSI is all the authorization that is necessary. The award made by the PPA and the President enjoys the presumption of validity and regularity of official action.  There is no evidence to the contrary.

4. Albano has standing to assail the contract.  While the expenditure of public funds may not be involved under the contract, public interest is definitely involved considering the important role of the MICP in the economic devt. of the country and the magnitude of the amount involved.  He has sufficient standing since a public right (disclosure provision) is sought to be enforced.

5. There in no conflict among the 3 branches of govt.  The Executive Dept. has not contravened an act of Congress.  There is no usurpation of powers of another branch.

6.  The determination of the winning bid should be left to the sound judgment of the PPA. It is in the best position to evaluate the bids.  It has the technical expertise which neither the Court nor Congress has. No abuse of discretion has been shown.