Observaciones específicas

Prevent ruinous and wasteful competition and interest of public will be preserved.

EXCEPTIONS TO THE PRIOR OPERATOR RULE:

1. Operator fails/ neglects to make improvement or affect the increase in service when given the opportunity. 2. When Prior operator offers to

meet increases in demand only when another operator offered to render additional service

3. Abandonment of operation 4. Prior operators did not

oppose application

5. Prior operator cannot satisfy needs of the public

6. When opportunity to improve service is raised by prior

operator only on appeal. 7. CPC granted to the applicant

is a maiden franchise covering a new route, albeit

overlapping with that of the old operator

8. Expiration of corporate existence of prior operator. 9. Monopoly

10. Pass

age through private

subdivision which granted permit to another

Prior Applicant Rule

Where there are various applicants for a public utility over the same authority, all conditions being equal, priority in the filing of the application for a certificate of public convenience becomes an important factor in granting or refusal of a certificate of convenience and the Commission is authorized to determine which of the applicants can best meet

the requirements of public convenience (delos Santos v. Pasay Trans. Co.).

Protection of Investment Rule

One of the purposes of the Public Service Act is to protect and conserve investments which have already been made for that purpose by public service operators

Registered Owner Rule

The registered owner of a certificate of a public convenience is liable to the public for the injuries or damages suffered by third persons caused by the operation of said vehicle, even though the same had been transferred to a third person.

The registered owner is not allowed to escape responsibility by proving that a third person is the actual and real owner.

The registered owner is the lawful operator insofar as the public and third persons are concerned; consequently, it is directly and primarily responsible for the consequences of its operation. In contemplation of law, the owner/operator of record is the employer of the driver, the actual operator and employer being considered as merely its agent. The same principle applies even if the registered of any vehicle does not use it for public service (Equitable Leasing Corp. v. Suyom, G. R. No.143360,

September 5, 2002), or otherwise stated, to privately- owned vehicles.

A sale, lease or financial lease that is not registered with the LTO does not bind third persons who are aggrieved in tortuous incidents, for the latter need only to rely on the public registration of a motor vehicle as conclusive evidence of ownership. A lease is an encumbrance in contemplation of law, which needs to be registered in order for it to bind third parties (PCI Leasing Corp and Finance Inc. v. UCPB General Insurance Co., Inc. G.R. No. 162267, 4 July 2008).

Registered Owner had

Recourse against Vendee/ Transferee

A registered owner who has already sold or transferred a vehicle has a recourse to a third- party complaint, in the same action brought against him to recover for the damage or injury done, against the vendee or transferee of the vehicle (Villanueva v. Domingo, 438 SCRA 485, 2004).

Kabit System( 2005 Bar exams)

It is an arrangement whereby a person who has been granted a certificate of public convenience allows other persons who own motor vehicles to operate under such license, for a fee or percentage of such

earnings. Although the parties to such agreement are not out rightly penalized by law,the kabit system is invariably recognized as being contrary to public policy and therefore void and inexistent under Art.1409, New Civil Code ( Lim v. C.A. G.R.No. 125817, 16 January 2002)

Effects

1. The transfer, sale, lease or assignment of the privilege granted is valid between the contracting parties but not upon the public or third persons (Gelisan v. Alday No.L- 30212, 30 September 1987)

2. The registered owner is primarily liable for all the consequences flowing from the operations of the carrier. The public has the right to assume that the registered owner is the actual or lawful owner thereof. It would be very difficult and often impossible, as a particular matter, for the public to enforce their rights of action for injuries inflicted by the vehicle if they should be required to prove who the actual owner is (Benedicto v. IAC G.R No. 70876, 19 July 1990).

3. The thrust of the law in enjoining the Kabit system is to identify the person upon whom responsibility may be fixed with the end in view of

protecting the riding public.(Lim v. C.A. G.R. No 125817, 16 January 2002) 4. Application of Article 1412

of the NCC or in pari delicto rule. The registered owner cannot recover from the actual owner and the latter cannot obtain transfer of the vehicle to himself, both being in pari delicto. (Teja Marketing Vs. IAC)

5. For the better protection of the public, both the registered owner and the actual owner are jointly and severally liable with the driver (Zamboanga Transporatation Co. v. C.A, 29 November 1969)

6. The determining factor which negates the existence of Kabit system is the possession of the franchise to operate and not the issuance of one SS I.D. Number for both bus line (Baliwag Transit V. C.A, 7 January 1987)

Requisites for the

Inapplicability of the Kabit System

1. When neither of the parties to the pernicious Kabit system is being held liable for damages.

2. When the case arose from the negligence of another vehicle using the public road to which no representation or misrepresentation as

regards the ownership and operation of passenger jeepney was made.

3. When the riding public was

not bothered of

inconvenienced at the very least by the illegal arrangement (Lim v. C.A. 16 January 2002)

Boundary System

1. The driver does not receive a fixed wage but gets only the excess of the receipt of the fares collected by him over the amount he pays to the jeep owner.

2. The gasoline consumed by the jeep is for the account of the driver.

These two features are not sufficient to withdraw the relationship between the owner and the driver from that of employer and employee. The jeepney owner is subsidiarily liable as employer in accordance with Art.103 of RPC (Magboo v. Bernardo, 30 April 1963).

Indeed to exempt from liability the owner of public vehicle who operates it under the boundary system on the ground that he is a mere lessor would be not only to abet flagrant violations of the public service law, but also to take place the riding public at the mercy of reckless and irresponsible drivers (Spouses Henandez v. Spouses Dolor, 30 July 2004)

The Civil Aeronautics Board is expressly authorized by R.A. No. 776 to issue a temporary operating permit of certificate of Public Convenience and Necessity (PAL v. CAB 26 March 1997)

The Legislature has delegated to the defunct Public Service Commission and presently the LTFRB, the power of fixing rates of public services. But nowhere under the provisions of law are the regulatory bodies, the PSC and LTFRB alike, authorized to delegate that power to a common carrier like transport operator, or other public service (KMU Labor v. Garcia, 23 December 1984).

A public Utility is entitled to reasonable compensation in return for the service it provides and that it may exact reasonable charges in accordance with the service provided of the rates established therefore. In computing the just and reasonable rates to be charged by a public utility, three major factors are to be considered: 1). Rate of Return; 20. The rate base, 3) the return itself or the computed revenue to be earned by the public utility based on the rate of return and base rate (Davao Light and Power Company, Inc., 3 April 2003)

A rate is just and reasonable if it conforms to the following requirements:

1. One which yields to the carrier a fair return upon the value of the property employed in performing the service; and

2. One which is fair to the public for the service rendered.

Service of a Public Utility considered Unlawful

It shall be unlawful for any public service to provide or maintain ant service that is unsafe, improper, or inadequate, or withhold or refuse any service which can be reasonably be demanded and furnished as founded and determined by the Commission in a final order which shall be conclusive and shall effect and shall effect in accordance with this Act, upon Appeal for otherwise (Sec.19 (a) Public Service Act)

Certificate of Public

Convenience and Necessity

a. A certificate of Public Convenience is issued where no special government franchise is required.

b. A certificate of Certificate of Public Convenience and Necessity is issued where the public service would require in its operation the use of government property, such as the installation of

electric and telephone posts and lines along public streets requiring a previous franchise therefore

c. No certificate is necessary where the service of utility is owned, operated and managed for a private use or where the owner is not engaged in public service.

Liability of Registered Owner and Authorized Operator under

the Kabit System and Boundary System

Both the registered owner and the Authorized operator of a common carrier under the Kabit System are jointly and severally (solidarily) liable for any death or injury to the passengers and loss/damage to the goods.

Under the Boundary System the authorized operator of a common carrier is liable for the conduct of the driver, there being

an employer-employee

relationship between the operator and the driver.

SPECIAL COMMERCIAL LAWS