Académique Documents
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581
RESOLUTION
PUNO, J.:
1.4 Neither party shall sell, transfer or assign all or any part of
its interest in SNS [PHILSECO] to any third party without giving
the other under the same terms the right of first refusal. This
provision shall not apply if the transferee is a corporation owned
or controlled by the GOVERNMENT or by a KAWASAKI affiliate.
[2]
On November 25, 1986, NIDC transferred all its rights, title and interest in
PHILSECO to the Philippine National Bank (PNB). Such interests were
subsequently transferred to the National Government pursuant to
Administrative Order No. 14. On December 8, 1986, President Corazon C.
Aquino issued Proclamation No. 50 establishing the Committee on
Privatization (COP) and the Asset Privatization Trust (APT) to take title to,
and possession of, conserve, manage and dispose of non-performing
assets of the National Government. Thereafter, on February 27, 1987, a
trust agreement was entered into between the National Government and
the APT wherein the latter was named the trustee of the National
Government's share in PHILSECO. In 1989, as a result of a quasi-
reorganization of PHILSECO to settle its huge obligations to PNB, the
National Government's shareholdings in PHILSECO increased to 97.41%
thereby reducing KAWASAKI's shareholdings to 2.59%.[3]
In the interest of the national economy and the government, the COP and
the APT deemed it best to sell the National Government's share in
PHILSECO to private entities. After a series of negotiations between the
APT and KAWASAKI, they agreed that the latter's right of first refusal
under the JVA be "exchanged" for the right to top by five percent (5%) the
highest bid for the said shares. They further agreed that KAWASAKI would
be entitled to name a company in which it was a stockholder, which could
exercise the right to top. On September 7, 1990, KAWASAKI informed APT
[4]
that Philyards Holdings, Inc. (PHI) would exercise its right to top.
...
2.0 The highest bid, as well as the buyer, shall be subject to the
final approval of both the APT Board of Trustees and the
Committee on Privatization (COP).
2.1 APT reserves the right in its sole discretion, to reject any or
all bids.
...
6.0 The highest qualified bid will be submitted to the APT Board
of Trustees at its regular meeting following the bidding, for the
purpose of determining whether or not it should be endorsed by
the APT Board of Trustees to the COP, and the latter approves
the same. The APT shall advise Kawasaki Heavy Industries, Inc.
and/or its nominee, Philyards Holdings, Inc., that the highest
bid is acceptable to the National Government. Kawasaki Heavy
Industries, Inc. and/or Philyards Holdings, Inc. shall then have
a period of thirty (30) calendar days from the date of receipt of
such advice from APT within which to exercise their "Option to
Top the Highest Bid" by offering a bid equivalent to the highest
bid plus five (5%) percent thereof.
...
As petitioner was declared the highest bidder, the COP approved the sale
on December 3, 1993 "subject to the right of Kawasaki Heavy Industries,
Inc./Philyards Holdings, Inc. to top JGSMI's bid by 5% as specified in the
[8]
bidding rules."
On December 29, 1993, petitioner informed APT that it was protesting the
offer of PHI to top its bid on the grounds that: (a) the KAWASAKI/PHI
consortium composed of Kawasaki, Philyards, Mitsui, Keppel, SM Group,
ICTSI and Insular Life violated the ASBR because the last four (4)
companies were the losing bidders thereby circumventing the law and
prejudicing the weak winning bidder; (b) only KAWASAKI could exercise
the right to top; (c) giving the same option to top to PHI constituted
unwarranted benefit to a third party; (d) no right of first refusal can be
exercised in a public bidding or auction sale; and (e) the JG Summit
[9]
consortium was not estopped from questioning the proceedings.
On February 2, 1994, petitioner was notified that PHI had fully paid the
balance of the purchase price of the subject bidding. On February 7, 1994,
the APT notified petitioner that PHI had exercised its option to top the
highest bid and that the COP had approved the same on January 6, 1994.
On February 24, 1994, the APT and PHI executed a Stock Purchase
Agreement.[10] Consequently, petitioner filed with this Court a Petition for
Mandamus under G.R. No. 114057. On May 11, 1994, said petition was
referred to the Court of Appeals. On July 18, 1995, the Court of Appeals
denied the same for lack of merit. It ruled that the petition for mandamus
was not the proper remedy to question the constitutionality or legality of
the right of first refusal and the right to top that was exercised by
KAWASAKI/PHI, and that the matter must be brought "by the proper party
in the proper forum at the proper time and threshed out in a full blown
trial." The Court of Appeals further ruled that the right of first refusal and
the right to top are prima facie legal and that the petitioner, "by
participating in the public bidding, with full knowledge of the right to top
granted to KASAWASAKI/Philyards is . . .estopped from questioning the
validity of the award given to Philyards after the latter exercised the right
to top and had paid in full the purchase price of the subject shares,
pursuant to the ASBR." Petitioner filed a Motion for Reconsideration of said
Decision which was denied on March 15, 1996. Petitioner thus filed a
Petition for Certiorari with this Court alleging grave abuse of discretion on
the part of the appellate court.[11]
On November 20, 2000, this Court rendered the now assailed Decision
ruling among others that the Court of Appeals erred when it dismissed the
petition on the sole ground of the impropriety of the special civil action of
[12]
mandamus because the petition was also one of certiorari. It further
ruled that a shipyard like PHILSECO is a public utility whose capitalization
[13]
must be sixty percent (60%) Filipino-owned. Consequently, the right
to top granted to KAWASAKI under the Asset Specific Bidding Rules
(ASBR) drafted for the sale of the 87.67% equity of the National
Government in PHILSECO is illegal---not only because it violates the rules
on competitive bidding--- but more so, because it allows foreign
corporations to own more than 40% equity in the shipyard.[14] It also held
that "although the petitioner had the opportunity to examine the ASBR
before it participated in the bidding, it cannot be estopped from
questioning the unconstitutional, illegal and inequitable provisions
thereof."[15] Thus, this Court voided the transfer of the national
government's 87.67% share in PHILSECO to Philyard Holdings, Inc., and
upheld the right of JG Summit, as the highest bidder, to take title to the
said shares, viz:
[16]
SO ORDERED.
I.
Whether PHILSECO is a Public Utility.
Applying the criterion laid down in Iloilo to the case at bar, it is crystal
clear that a shipyard cannot be considered a public utility.
[23]
A "shipyard" is "a place or enclosure where ships are built or repaired."
Its nature dictates that it serves but a limited clientele whom it may
choose to serve at its discretion. While it offers its facilities to whoever
may wish to avail of its services, a shipyard is not legally obliged to
render its services indiscriminately to the public. It has no legal
obligation to render the services sought by each and every client. The fact
that it publicly offers its services does not give the public a legal right to
demand that such services be rendered.
Since the enactment of Act No. 2307 which created the Public Utility
Commission (PUC) until its repeal by Commonwealth Act No. 146,
establishing the Public Service Commission (PSC), a shipyard, by
legislative declaration, has been considered a public utility.[25] A Certificate
of Public Convenience (CPC) from the PSC to the effect that the operation
of the said service and the authorization to do business will promote the
public interests in a proper and suitable manner is required before any
[26]
person or corporation may operate a shipyard. In addition, such
persons or corporations should abide by the citizenship requirement
[27]
provided in Article XIII, section 8 of the 1935 Constitution, viz:
In addition, P.D. No. 666 removed the shipbuilding and ship repair industry
from the list of public utilities, thereby freeing the industry from the 60%
citizenship requirement under the Constitution and from the need to obtain
Certificate of Public Convenience pursuant to section 15 of C.A No. 146.
Section 1 (d) of P.D. 666 reads:
Any law, decree, executive order, or rules and regulations inconsistent with
P.D. No. 666 were repealed or modified accordingly.[28] Consequently,
sections 13 (b) and 15 of C.A. No. 146 were repealed in so far as the
former law included shipyards in the list of public utilities and required the
certificate of public convenience for their operation. Simply stated, the
repeal was due to irreconcilable inconsistency, and by definition, this kind
[29]
of repeal falls under the category of an implied repeal.
On April 28, 1983, Batas Pambansa Blg. 391, also known as the
"Investment Incentive Policy Act of 1983," was enacted. It laid down the
general policy of the government to encourage private domestic and
foreign investments in the various sectors of the economy, to wit:
With the new investment incentive regime, Batas Pambansa Blg. 391
repealed the following laws, viz:
All other incentive systems which are not in any way affected by
the provisions of this Act may be restructured by the President
so as to render them cost-efficient and to make them conform
with the other policy guidelines in the declaration of policy
provided in Section 2 of this Act. (emphasis supplied)
From the language of the afore-quoted provision, the whole of P.D. No.
666, section 1 was expressly and categorically repealed. As a
consequence, the provisions of C.A. No. 146, which were impliedly
[30]
repealed by P.D. No. 666, section 1 were revived. In other words, with
the enactment of Batas Pambansa Blg. 391, a shipyard reverted back to its
status as a public utility and as such, requires a CPC for its operation.
The crux of the present controversy is the effect of the express repeal of
Batas Pambansa Blg. 391 by Executive Order No. 226 issued by former
President Corazon C. Aquino under her emergency powers.
We rule that the express repeal of Batas Pambansa Blg. 391 by E.O. No.
226 did not revive Section 1 of P.D. No. 666. But more importantly, it also
put a period to the existence of sections 13 (b) and 15 of C.A. No. 146. It
bears emphasis that sections 13 (b) and 15 of C.A. No. 146, as originally
written, owed their continued existence to Batas Pambansa Blg. 391. Had
the latter not repealed P.D. No. 666, the former should have been modified
accordingly and shipyards effectively removed from the list of public
utilities. Ergo, with the express repeal of Batas Pambansa Blg. 391 by E.O.
No. 226, the revival of sections 13 (b) and 15 of C.A. No. 146 had no more
leg to stand on. A law that has been expressly repealed ceases to exist and
becomes inoperative from the moment the repealing law becomes
effective.[31] Hence, there is simply no basis in the conclusion that
shipyards remain to be a public utility. A repealed statute cannot be the
basis for classifying shipyards as public utilities.
In view of the foregoing, there can be no other conclusion than to hold that
a shipyard is not a pubic utility. A shipyard has been considered a public
utility merely by legislative declaration. Absent this declaration, there is no
more reason why it should continuously be regarded as such. The fact that
the legislature did not clearly and unambiguously express its intention to
include shipyards in the list of public utilities indicates that that it did not
intend to do so. Thus, a shipyard reverts back to its status as non-public
utility prior to the enactment of the Public Service Law.
Furthermore, of the 441 Ship Building and Ship Repair (SBSR) entities
[33]
registered with the MARINA, none appears to have an existing
franchise. If we continue to hold that a shipyard is a pubic utility, it is a
necessary consequence that all these entities should have obtained a
franchise as was the rule prior to the enactment of P.D. No. 666. But
[34]
MARINA remains without authority, pursuant to P.D. No. 474 to issue
franchises for the operation of shipyards. Surely,
A careful reading of the 1977 Joint Venture Agreement reveals that there is
nothing that prevents KAWASAKI from acquiring more than 40% of
PHILSECO's total capitalization. Section 1 of the 1977 JVA states:
1.4 Neither party shall sell, transfer or assign all or any part of
its interest in SNS [renamed PHILSECO] to any third party
without giving the other under the same terms the right of first
refusal. This provision shall not apply if the transferee is a
corporation owned and controlled by the GOVERMENT [of the
Philippines] or by a Kawasaki affiliate.
Under section 1.3, the parties agreed to the amount of P330 million as the
total capitalization of their joint venture. There was no mention of the
amount of their initial subscription. What is clear is that they are to infuse
the needed capital from time to time until the total subscribed and paid-up
capital reaches P312 million. The phrase "maintaining a proportion of
60%-40%" refers to their respective share of the burden each time the
Board of Directors decides to increase the subscription to reach the target
paid-up capital of P312 million. It does not bind the parties to maintain the
sharing scheme all throughout the existence of their partnership.
Furthermore, the phrase "under the same terms" in section 1.4 cannot be
given an interpretation that would limit the right of KAWASAKI to purchase
PHILSECO shares only to the extent of its original proportionate
contribution of 40% to the total capitalization of the PHILSECO. Taken
together with the whole of section 1.4, the phrase "under the same
terms" means that a partner to the joint venture that decides to
sell its shares to a third party shall make a similar offer to the non-
selling partner. The selling partner cannot make a different or a more
onerous offer to the non-selling partner.
Apart from the right of first refusal, the parties also have preemptive
rights under section 1.5 in the unissued shares of Philseco. Unlike the
former, this situation does not contemplate transfer of a partner's shares
to third parties but the issuance of new Philseco shares. The grant of
preemptive rights preserves the proportionate shares of the original
partners so as not to dilute their respective interests with the issuance of
the new shares. Unlike the right of first refusal, a preemptive right gives a
partner a preferential right over the newly issued shares only to the extent
that it retains its original proportionate share in the joint venture.
The case at bar does not concern the issuance of new shares but the
transfer of a partner's share in the joint venture. Verily, the operative
protective mechanism is the right of first refusal which does not impose
any limitation in the maximum shares that the non-selling partner may
acquire.
III.
Whether the right to top granted to KAWASAKI
in exchange for its right of first refusal violates
the principles of competitive bidding.
We also hold that the right to top granted to KAWASAKI and exercised by
private respondent did not violate the rules of competitive bidding.
In the instant case, the sale of the Government shares in PHILSECO was
publicly known. All interested bidders were welcomed. The basis for
comparing the bids were laid down. All bids were accepted sealed and were
opened and read in the presence of the COA's official representative and
before all interested bidders. The only question that remains is whether or
not the existence of KAWASAKI's right to top destroys the essence of
competitive bidding so as to say that the bidders did not have an
opportunity for competition. We hold that it does not.
The essence of competition in public bidding is that the bidders are placed
on equal footing. This means that all qualified bidders have an equal
chance of winning the auction through their bids. In the case at bar, all of
the bidders were exposed to the same risk and were subjected to the same
condition, i.e., the existence of KAWASAKI's right to top. Under the ASBR,
the Government expressly reserved the right to reject any or all bids, and
manifested its intention not to accept the highest bid should KAWASAKI
decide to exercise its right to top under the ABSR. This reservation or
qualification was made known to the bidders in a pre-bidding conference
held on September 28, 1993. They all expressly accepted this condition in
writing without any qualification. Furthermore, when the Committee on
Privatization notified petitioner of the approval of the sale of the National
Government shares of stock in PHILSECO, it specifically stated that such
approval was subject to the right of KAWASAKI Heavy Industries,
Inc./Philyards Holdings, Inc. to top JGSMI's bid by 5% as specified in the
bidding rules. Clearly, the approval of the sale was a conditional one. Since
Philyards eventually exercised its right to top petitioner's bid by 5%, the
sale was not consummated. Parenthetically, it cannot be argued that the
existence of the right to top "set for naught the entire public bidding." Had
Philyards Holdings, Inc. failed or refused to exercise its right to top, the
sale between the petitioner and the National Government would have been
consummated. In like manner, the existence of the right to top cannot be
likened to a second bidding, which is countenanced, except when there is
failure to bid as when there is only one bidder or none at all. A prohibited
second bidding presupposes that based on the terms and conditions of the
sale, there is already a highest bidder with the right to demand that the
seller accept its bid. In the instant case, the highest bidder was well aware
that the acceptance of its bid was conditioned upon the non-exercise of the
right to top.
Assuming that the parties did not swap KAWASAKI's right of first refusal
with the right to top, KAWASAKI would have been able to buy the National
Government's shares in PHILSECO under the same terms as offered by
the highest bidder. Stated otherwise, by exercising its right of first refusal,
KAWASAKI could have bought the shares for only P2.03 billion and not the
higher amount of P2.1315 billion. There is, thus, no basis in the
submission that the right to top unfairly favored KAWASAKI. In fact, with
the right to top, KAWASAKI stands to pay higher than it should had it
settled with its right of first refusal. The obvious beneficiary of the scheme
is the National Government.
If at all, the obvious consideration for the exchange of the right of first
refusal with the right to top is that KAWASAKI can name a nominee, which
it is a shareholder, to exercise the right to top. This is a valid contractual
stipulation; the right to top is an assignable right and both parties are
aware of the full legal consequences of its exercise. As aforesaid, all
bidders were aware of the existence of the right to top, and its possible
effects on the result of the public bidding was fully disclosed to them. The
petitioner, thus, cannot feign ignorance nor can it be allowed to repudiate
[43]
its acts and question the proceedings it had fully adhered to.
The fact that the losing bidder, Keppel Consortium (composed of Keppel,
SM Group, Insular Life Assurance, Mitsui and ICTSI), has joined Philyards
in the latter's effort to raise P2.131 billion necessary in exercising the right
to top is not contrary to law, public policy or public morals. There is
nothing in the ASBR that bars the losing bidders from joining either the
winning bidder (should the right to top is not exercised) or KAWASAKI/PHI
(should it exercise its right to top as it did), to raise the purchase price.
The petitioner did not allege, nor was it shown by competent evidence,
that the participation of the losing bidders in the public bidding was done
with fraudulent intent. Absent any proof of fraud, the formation by
Philyards of a consortium is legitimate in a free enterprise system. The
appellate court is thus correct in holding the petitioner estopped from
questioning the validity of the transfer of the National Government's
shares in PHILSECO to respondent.
Finally, no factual basis exists to support the view that the drafting of the
ASBR was illegal because no prior approval was given by the COA for it,
specifically the provision on the right to top the highest bidder and that the
public auction on December 2, 1993 was not witnessed by a COA
representative. No evidence was proffered to prove these allegations and
the Court cannot make legal conclusions out of mere allegations.
Regularity in the performance of official duties is presumed[44] and in the
absence of competent evidence to rebut this presumption, this Court is
duty bound to uphold this presumption.
SO ORDERED.
[1]
JG Summit Holdings, Inc. v. Court of Appeals, et al., 345 SCRA 143,
145 (2000). The Decision was penned by Associate Justice Consuelo
Ynares-Santiago and concurred in by Chief Justice Hilario G. Davide, Jr.
and Associate Justices Reynato S. Puno, Santiago M. Kapunan and
Bernardo P. Pardo.
[2]
Ibid.
[3]
Id. at 146.
[4]
Ibid.
[5]
The heading of the ASBR states that the rules were specifically set up
for "97.4 equity of the national government in Philippine Shipyard &
Engineering Corporation (PHILSECO)," Rollo, p. 1146. However, only
87.67% of the shares were offered for sale since "the remaining 9.73% of
the National Government's equity in PHILSECO will be offered separately to
PHILSECO's employees and to local small investors," Id. at par. 1.1.
[6]
Rollo, pp. 1146-1151.
[7]
Id. at 1144-1145. The bid, as well as the acknowledgement of its
conformity with the ASBR was signed by Johnson Robert I. Go, Executive
Vice President of J.G. Summit Holdings, Inc.
[8]
Supra note 1 at 148.
[9]
Id. at 147-148.
[10]
Id. at 148.
[11]
Id. at 148-149.
[12]
Id. at 153.
[13]
Id. at 156.
[14]
Id. at 157-158.
[15]
Id. at 166.
[16]
Ibid.
[17]
Private respondent Philyard Holdings, Inc., through counsel filed its
Motion for Reconsideration on December 28, 2000, Rollo, pp. 936-980. On
the other hand, public respondents Committee on Privatization (COP) and
Asset Privatization Trust (APT), represented by the Office of the Solicitor
General, jointly filed their Motions for Reconsideration on January 2, 2001,
Rollo, pp. 1053-1068.
[18]
Almario, Generoso O., "Transportation and the Public Service Law," 3rd
ed. (1977), p. 267 citing 73 CJS 990-991; Albano v. Reyes, 175 SCRA 264
(1989) citing Am Jur. 2d v. 64, p. 549; NAPOCOR v. Court of Appeals, 279
SCRA 506 (1997).
[19]
Ibid.
[20]
Commonwealth v. Lafferty, 426 Pa 541, 233 A2d 256.
[21]
Iloilo Ice and Cold Storage Co. vs. Public Utility Board, 44 Phil. 551,
557 (1923).
[22]
Id. at 557-558.
[23]
Webster's Third New International Dictionary (1993), p. 2098.
[24]
Supra note 20 at 560.
[25]
Act No. 2307 was amended by Act No. 2694. It was subsequently
repealed by Act No. 3108. Later however, Act No. 3108 was also repealed
by Commonwealth Act No. 146. The series of amendments and repeals did
not alter the character of shipyards as public utilities. Section 13 (b) of
C.A. No. 146 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, subway 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, 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, ice refrigeration plant, canal, irrigation
system, gas, electric light, heat and power, water supply and power
petroleum, sewerage system, wire or wireless communications systems,
wire or wireless broadcasting stations and other similar public services. x x
x" (Underscoring supplied).
[26]
See C. A. No. 146, section 15.
[27]
This provision is substantially reproduced in Article XIV, section 5 of the
1973 Constitution and in Article XII, section 11 of the 1987 Constitution.
[28]
See Section 4, P.D. No. 666.
[29]
A declaration in the statute, usually in its repealing clause, that a
particular and specific law, identified by its number of title, is repealed is
an express repeal; all other repeals are implied repeals. See Mecano v.
Commission on Audit, 216 SCRA 500 (1992) citing Agpalo, Statutory
Construction, 289 (1986).
[30]
Book I, Chapter 5, section 22 provides: "Revival of Law Impliedly
Repealed. When a law which impliedly repeals a prior law is itself repealed,
the prior law shall thereby be revived, unless the repealing law provides
otherwise."
[31]
Agpalo, Statutory Construction (1995), p. 330.
[32]
Annexes 1-5 of the Motion for Reconsideration, Rollo, pp. 982-1043.
[33]
Industry Profile, Shipbuilding and Ship Repair Industry 2001, p. 3;
Rollo, p. 1721.
[34]
"An Act for the Reorganization of Maritime functions in the Philippines,
creating the Maritime Industry Authority, and for other purposes," June 1,
1974.
[35]
1977 Joint Venture Agreement as amended by Addendum No. 2 dated
December 8, 1983.
[36]
Supra note 1 at 157-158. The assailed Decision reads: "A joint venture
is an association of persons or companies jointly undertaking some
commercial enterprise with all of them generally contributing assets and
risks. It requires a community of interest in the performance of the subject
matter, a right to direct and govern the policy in connection therewith, and
duty, which may be altered by agreement to share both in profit or losses.
Persons and business enterprises enter into a joint venture because it is
exempt from corporate income tax. Considered more of a partnership, a
joint venture is governed by the laws on contracts and on partnership."
[37]
Literally, choice of person(s).
[38]
Supra note 1 at 162.
[39]
Ibid.
[40]
7 Am Jur 2d § 21, p. 238.
[41]
B. Fernandez, Treatise on Government Contracts Under Philippine Law
(1991), p. 26, citing Gutierrez v. Ins. Life Assurance Co., Ltd., 102 Phil.
524 (1957); C & C Commercial Corp. v. Menor, 120 SCRA 112 (1982);
A.C. Esguerra & Sons v. Aytona, 4 SCRA 1245 (1962).
[42]
Fernandez, supra at 25.
[43]
Medina v. Patcho, 132 SCRA 551 (1984).
[44]
Rules of Court, Rule 131, section 3(m).
SEPARATE OPINION
TINGA, J.:
Although I take a different route, I reach the same result as Mr. Justice
Puno.
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, ice-refrigeration 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.[3] 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
[4]
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
[5]
for it.
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[31] in
1987 has effectively laid the issue to rest once and for all.
[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.
[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.
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