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SEPARATE OPINION

TINGA, J.:

Whether a shipyard is a public utility is at the heart of the present controversy.


Although I take a different route, I reach the same result as Mr. Justice Puno.
Since the enactment of Commonwealth Act No. 454 on June 8, 1939, shipyards
have never been considered public utilities, whether by legislative declaration or
executive fiat, or even in administrative practice.
True, shipyard is mentioned along with other business operations in the course of
the definition by enumeration of public service in the Public Service Act. The terms
public service and public utility, however, do not have the same legal meaning, at least
since the enactment of C.A. No. 454. The terms are related though.
[1]

[2]

The definition of public service in the Public Service Act, as last amended by
Republic Act No. 2677, includes every person who owns, operates, manages or
controls, for hire or compensation, 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 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 railway, marine repair shop, wharf or
dock, ice plant, icerefrigeration plant, canal, irrigation system, gas, electric light, heat
and power, water supply and power, petroleum, sewerage system, wire or wireless
communications systems, broadcasting stations and other similar public services. A
public utility, on the other hand, 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. Simply stated, a public utility
provides a service or facility needed for present day living which cannot be denied to
any one who is willing to pay for it.
[3]

[4]

[5]

Formerly, there was a statutory definition of public utility, but it was abandoned in
C.A. No. 454. The definition was instead solely applied to public service apparently
because it did not exactly fit the concept of public utility. It is significant in this regard
that while the 1935 Constitution which took effect on February 2, 1935 specifically
mentioned public utility, C.A. No. 454 shifted from public utility to public service as the
sole reference term in the Public Service Act.
[6]

[7]

Another dissimilarity is that a public utility requires a franchise, aside from a


certificate of public necessity and convenience, for its operation, while a public service
which is not a public utility requires only a certificate of public convenience. The
dichotomy in requirements flows from the enforced indeterminacy of the market for the
service provided by a public utility. Thus, it may be pointed out that all public utilities
[8]

are public services but the converse is not true. This is so because the term public
utility connotes public use and service to the public.
[9]

A legislative declaration such as the definition by enumeration in the Public Service


Act does not ipso facto render a business or service a public utility. For, as this Court
held in North Negros Sugar Co. v. Hidalgo, whether or not one is a public utility is a
matter of judicial, not legislative determination.
[10]

[11]

* * * Whether or not a given business, industry, or service is a public utility


does not depend upon legislative definition, but upon the nature of the business
or service rendered, and an attempt to declare a company or enterprise to be a public
utility, where it is inherently not such, is, by virtue of the guaranties of the federal
constitution, void whenever it interferes with private rights of property or contract. So
a legislature cannot by mere fiat or regulatory order convert a private business or
enterprise into a public utility, and the question whether or not a particular
company or service is a public utility is a judicial one, and must be determined as
such by a court of competent jurisdiction; * * *. (51 C.J., sec. 3, p. 5) [Emphasis
supplied.]
[12]

Paraphrasing a decision of the United States Supreme Court, a private


enterprise doing business under private contracts with customers of its choice
and therefore not devoted to public use cannot by legislative enactment or
administrative order be converted into a public utility, for that would constitute
taking of private property for public use without just compensation in derogation
of the Constitution.
[13]

Again, the categorization of a business or service as a public utility or other wise is


a judicial prerogative. Hence, this Court held in a significant number of cases that the
business or services involved were not public utilities despite contradicting
legislative classifications.
In one case, we declared that an oil company is not a public utility,
notwithstanding the law which categorizes petroleum operation, including refining, as a
public utility:
[14]

[15]

A public utility under the Constitution and the Public Service Law is one organized
for hire or compensation to serve the public, which is given the right to demand its
service. PETRON is not engaged in oil refining to process the oil of other parties.
[16]

In another case, we intimated that a wharf or dock as contemplated under the


Public Service Act is not necessarily a public utility.
[17]

[18]

An operator of trucks who furnished service under special agreements to carry


particular persons and property was held to be not a public utility as he did not hold
himself out to serve any and all persons. So is a mere owner and lessor of the
equipment and facilities needed to operate a rail system not a public utility since the
[19]

right to operate a public utility may exist independently of and separately from the
ownership of the facilities thereof.
[20]

An ice plant, although included in the definition of a public service under Act No.
2307, is not a public utility if it is organized solely for particular persons under strictly
private contracts, and never was devoted by its owner to public use. However, it is
treated as a public utility if the ice it produces is sold to the public.
[21]

[22]

The test, therefore, in determining if a service is a public utility, is whether the public
may enjoy it by right or only by permission. A shipyard fails this test. As Justice Puno
points out, a shipyard is not, by nature or tradition, a public utility in much the same way
as automobile or airplane manufacturers are not public utilities.
[23]

[24]

Apart from shipyards, marine repair shops, wharves or docks, canals, irrigation
systems, petroleum supply and wire or wireless broadcasting stations, although
included in the definition of public service in the Public Service Act, as amended, are
clearly not public utilities. Services which were once included in the definition of public
service were later on excluded from the statutory enumeration, indicating the
impermanence of public service as a concept in the law on utilities.
[25]

Still on the legislative side, to the best of my knowledge, no person or firm has
secured a legislative franchise to operate a shipyard or even applied for one. On the
administrative side, as noted by Mr. Justice Puno, the Maritime Industry Authority
(MARINA) has not been empowered to issue franchise for shipyard operation. It is
authorized under Executive Orders No. 124 and NO. 125-A, effective as of January 10
and April 13, 1987, respectively, to issue certificates of public convenience to domestic
and water carriers. But the presidential issuances have no similar provision with
respect to shipyard operation.
[26]

[27]

[28]

To reiterate, shipyards have never been in legal contemplation considered as public


utilities. The promulgation of P.D. No. 666 in 1975 which required, in Section 1(d)
thereof, the registration of shipyards merely as such, definitely not as public utilities,
served simply to remove any doubt as to their nonpublic utility status. Note in this regard
that MARINA was created by P.D. No. 474 on June 1, 1974, or prior to the
promulgation of P.D. No. 666. And P.D. No. 474 did not authorize MARINA to issue
franchise for shipyard operation, not unlike E.O. Nos. 125 and 125-A which were
promulgated after it.
[29]

[30]

The repeal of Section 1 of P.D. No. 666 by Batas Pambansa Blg. 391, enacted in
1983, did not convert shipyards into public utilities. Of course, the subsequent repeal of
Batas Pambansa Blg. 391 by E.O. No. 226 in 1987 has effectively laid the issue to rest
once and for all.
[31]

Except for this divergence, I concur in Mr. Justice Punos well-reasoned opinion.
I vote to GRANT respondents motions for reconsideration.

[1]

C.A. No. 146, as amended.

[2]

Public utility was used in Act No. 2307, Act No. 269 and Act No. 3108. Public service and public utility
were interchangeably used in C.A. No. 146. Public utility was abandoned and public service used
in its place in C.A. No. 454. The subsequent enactments, R.A. No. 1270 and R.A. No. 2677, also
defined public service only.

[3]

Sec. 1, R.A. No. 2677, amending Sec. 13(b), C.A. No. 146 as amended.

[4]

National Power Corporation v. Court of Appeals, 345 Phil. 9 (1997), citing Albano v. Reyes, G.R. No.
83551, July 11, 1989, 175 SCRA 264, and 64 Am. Jur. 2d, p. 549.

[5]

A more comprehensive definition of public utility has been offered by a noted American author:

In its most extended sense the term public utilities is designed to cover certain industries which in the
course of time have been classified apart from industry in general and have likewise been
distinguished from governmental services with which, however, they often are intimately
related. The basis of the classification is essentially economic and technological, although the
meaning of the term is derived from the law.
(Martin G. Glaeser, PUBLIC UTILITIES IN AMERICAN CAPITALISM [New York: The MacMillan Co.,
1957], p. 8.)
[6]

See note 2, supra.

[7]

1935 CONST., Art. XIV, Sec. 8.

[8]

See Agbayani, Commentaries and Jurisprudence on the Commercial Laws of the Philippines, 1972 ed.
Vol. 4, p. 307; Sec. 14(i), Act No. 3108.

[9]

64 Am Jur 2d, p. 549, cited in Albano v. Reyes and National Power Corporation v. Court of
Appeals, supra, note 4.

[10]

See note 3, supra.

[11]

63 Phil. 664 (1936).

[12]

Id., at 691.

[13]

Pipe Line Cases, 234 U.S. 548, cited in Iloilo Ice and Cold Storage Co. v. Public Utility Board, 44 Phil.
551, at 560 (1923).

[14]

Bagatsing v. Committee or Privatization, G.R. No. 112399, Gonzales v. Lazaro, G.R. No. 115334, July
14, 1995, 246 SCRA 334.

[15]

R.A. No. 387, otherwise known as the Petroleum Act of 1949. Act No. 3108 and C.A. No. 146, included
oil in the definition of public utility while the definition of public service in C.A. No. 146 and No.
454, R.A. No. 1270 and No. 2677 covered petroleum.

[16]

Supra note 13, at 358.

[17]

Albano v. Reyes, supra 8.

[18]

Id., at 270-271.

[19]

United States v. Tan Piaco, 40 Phil. 853, 855 (1949). Under Sec. 13 (b), C.A. No. 146, as amended, a
freight or carrier service of any class...engaged in the transportation of passenger or freight or
both" is a public service.

[20]

Tatad V. Garcia, G.R. No. 114222, April 6, 1995, 243 SCRA 436. Also under Sec. 13(b), C.A. No. 146,
as amended, a railway engaged in the transportation of passengers or freight or both is a public
service.

[21]

This Act is one of the precursors of C.A. No. 146.

[22]

La Paz Ice Plant & cold Storage Co., Inc. v. John Bordman and Iloilo Commercial & Ice Co., 65 Phil.
401 (1938).

[23]

United States v. Tan Piaco, supra, note 16.

[24]

Resolution, J. Puno, p. 13.

[25]

E.g., Warehouses, radio companies, small watercraft, plant or equipment.

[26]

This writer was the chairman of the House Committee on Corporations and Franchises in the Eight
Congress (1987-1992).

[27]

Resolution, J. Puno, p 21..

[28]

Sec. 14(c ), E.O. No. 125; Sec. 3, E.O. No. 125-A, amending Sec. 14, E.O. No. 125.

[29]

Sec. 1(d). Registration required but not as Public Utility. The business of constructing and repairing
vessels or parts thereof shall not be considered a public utility and no Certificate of Public
Convenience shall be required therefor.However, no shipyard, graving dock, marine railway or
marine repair shop and no person or enterprise shall engage in the construction and/or repair of
any vessel, or any phase or part thereof, without a valid Certificate of Registration and license for
this purpose from the Maritime Industry Authority, except those owned or operated by the Armed
Forces of the Philippines or by foreign governments pursuant to a treaty or agreement (P.D. No.
666).

[30]

An Act for the Reorganization of Maritime Functions in the Philippine, creating the Maritime Industry
Authority, and for other purposes.

[31]

This Order, other wise known as the Omnibus Investments Code of 1987, was promulgated by then
President Corazon C. Aquino in the exercise of her residual legislative powers.