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Transpo - Week 2 - Regulatory Control - Coggle Diagram

- - - - Ownership - The right to operate a public utility may exist independently and separately from the ownership of the facilities thereof.
        
        Art. XII Sec. 11(1) Constitution
        
        SEC MC No. 8-2013 (Guidelines on Compliance with Filipino-Foreign Ownership Requirements) in relation to Public Service Act, Sec 16(a) and Sec 20 (i)
        
        Executive Order No. 65 (2018)
        
        AKA The Eleventh Regular Foreign Investment Negative List
        
        Lists down industries where no foreign equity (FE) is allowed, 25% FE is allowed, 30% FE is allowed,40% FE is allowed.
        
        Also lists down the professions which foreigners can practice in the PH, provided that their home country also allows Filipinos to practice the same there.
        
        Mahaba so just click the link hehe
        
        Const. Art XII, 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 such 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.
        
        PSA, Sec. 16 (a). Proceedings of the Commission, upon notice and hearing. - The Commission shall have power, upon proper notice and hearing in accordance with the rules and provisions of this Act, subject to the limitations and exceptions mentioned and saving provisions to the contrary
        a. To issue certificates which shall be known as certificates of public convenience, authorizing the operation of public service within the Philippines whenever the Commission finds that the operation of the public service proposed and the authorization to do business will promote the public interest in a proper and suitable manner. Provided, That thereafter, certificates of public convenience and certificates of public convenience and necessity will be granted only to citizens of the Philippines or of the United States or to corporations, co-partnerships, associations or joint-stock companies constituted and organized under the laws of the Philippines; Provided, That sixty per centum of the stock or paid-up capital of any such corporations, co-partnership, association or joint-stock company must belong entirely to citizens of the Philippines or of the United States: Provided, further, That no such certificates shall be issued for a period of mo
        
        Sec. 20 (i). Acts requiring the approval of the Commission. - Subject to established limitations and exceptions and saving provisions to the contrary, it shall be unlawful for any public service or for the owner, lessee or operator thereof, without the approval and authorization of the Commission previously had
        i. To sell, alienate or in any manner transfer shares of its capital stock to any alien if the result of that sale, alienation, or transfer in itself or in connection with another previous sale shall be the reduction to less than sixty per centum of the capital stock belonging to Philippine citizens. Such sale, alienation or transfer shall be void and of no effect and shall be sufficient cause for ordering the cancellation of the certificate.
        
        Employment of Aliens (Luzon Stevedoring) -
        
        GR - the employment of a person who is not a Filipino citizen even in a minor or clerical or non-control position is prohibited
        
        XCPN - In a previous opinion, the Commission held that foreigners can be elected as directors in proportion to their participation or share in the capital of corporations engaged in activities that are reserved to Filipinos, but are prohibited from being elected in management positions such as the President.
      - Gamboa [2011] - Did not clarify 60-40 rule against the class of shares which did not have the right to vote. But 60-40 surely applies to those with the right to vote.
        
        Roy Ruling [2016] - Clarified that Gamboa ruling applied only 60-40 rule to shares that have the right to vote. Provided voting control and beneficial ownership tests.
        
        Voting Control Test - Compliance with the 60% ownership was based on the ownership of the stocks entitled to vote.
        
        Beneficial Ownership Test - This required that full beneficial ownership of the stock plus, appropriate voting rights to be vested in Filipino nationals.
        
        Beneficial Ownership - [A]ny person who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares voting power (which includes the power to vote or direct the voting of such security) and/or investment returns or power (which includes the power to dispose of, or direct the disposition of such security) x x x.
        
        Basis of 60-40 prohibition - 1987 Constitution
        
        60% of total shares
        
        60% of voting shares
        
        Bayantel [2012] - term capital in constiutional provision only applies to common shares, but it was clarified in this case that preferred shares would be considered too if it gives the holders right to vote. TLDR, right to vote = included in 60-40 prohibition.
        
        Classification of Shares
        
        common shares
        
        preferred shares with voting power
        
        preferred shares with no voting power
      - Sir says Congress may be able to redefine Capital, but ultimate decider is SC if it complies.
        
        Definition of Capital (Roy v. Herbosa) - Capital as understood in Art. XII, Sec. 11 of the Constitution, refers only to shares of stock that can vote in the election of directors.
    - - Tatad v. Garcia - No violation of 60-40 prohibition. Take note of difference between "Owning/building" the facilities in a public utility vs. "Operating" the public utility. BLT scheme relevant here.
  - - - Domestic Air Transport (PAL v. Civil Aeuronatics Board) - No need for a legislative franchise. A franchise may be derived indirectly from the state through a duly designated agency i.e., delegation of legislative power. Any license from delegated agency is in effect, a legislative franchise granted by Congress. Nothing in the constitution which requires franchise. RA 776 delegated CBA power to authorize operation of air transport services.
        
        Case after PSC became defunct. Here, CAB had delegated authority to determine if requirement of franchise. Here, Franchise/License are the same under the constitution.
        
        Subsequent Delegations post PSC -
        
        Civil Aeronautics Board - Had function to grant permission to domestic air carrier operation.
        
        Toll Roads - PD 112 to the Toll Regulatory Board
        
        Motorized Vehicles - Administrative Code to LTFRB
        
        Public Land and Rail Transportation Utilities and Services - From PSC to the DOTC
        
        Water Utilities - National Water Resources Board
        
        ACWS-UBN v. NTC - departed from Albano, PD 576-A which required a franchise for operation of radio and television stations. Clarified that Albano does not mean congressional franchise is no longer necessary, if a law requires franchise, then a franchise is required until that law is repealed. (Franchise = grant of privilege, CPC = form of regulation)
        
        Broadcast Station - Unique that franchise required, not delegated to administrative agency.
        
        This caused ABS-CBN scramble, as a broadcast station is dependent on the legislative franchise. Not enough that the NTC grants license.
        
        Telecomms - Public Telecomm Act Sec. 16, requires legislative franchise + administrative license.
        
        Rationale (Divinagracia v. CBS) -
        
        Right to broadcast airwaves is determined by Congress, which determines rights and obligations.
        
        Function of administering the broadcast spectrum among legislative franchises was delegated to the NTC, via grant to issue CPC/CPCN
        
        SCARCITY OF RESOURCES DOCTRINE - This split is due to scarcity of airwaves. Airwaves are not susceptible to physical appropriation or private ownership.
        
        Non-Preferred Rights - If CPC/CPCN does not affect preferred rights, sir thinks different holding. Can lead to power to imply means power to revoke.
        
        2 more items...
        
        Revocation of CPC/CPCN (Divinagracia v. CBS) - Grant of authority to issue the CPC/CPCN does not imply power to revoke it. However, here subject to constitutional test. There, strict scrutiny.
        
        Tl;DR sir says Congress has full authority to determine if CPC/CPCN + Franchise, or Franchise, or both. Even Constitution does not specify if grant of authority is via franchise, license, etc. Check the law una agad.
        
        Remedy of Divinagracia according to court: Quo Warranto. Forfeiture of franchise must be filed in a direct proceeding. Note that Quo Warranto is a correct remedy because all kinds of authority will always be rooted in legislative mandate.
        
        Internet :- Same level of protection as free speech, essentially print media in the Philippines.
        
        Requirement of Both CPCN and Franchise - The law only requires both issuances for specific industries, such as radio-broadcasting. But generally, one or the other is sufficient.
    - - Authority to Grant Franchises (Hontiveros-Baraquel v. TRB) - If law delegates to an administrative agency atuhority to grant administrative franchises, then any grant is valid without need for approval by Congress.
        
        Franchise v. CPC (Associated Communications v. NTC) - A franchise is distinguished from a Certificate of Public Convenience in that the former is a grant or privilege from the sovereign power, while the latter is a form of regulation through the administrative agencies
        
        Regulatory Power of NTC Batangas v. CA - Within these matters, the NTC reigns supreme as it possesses the exclusive power to regulate
        
        determination of rates
        
        issuance of "certificates of authority,
        
        establishment of areas of
        operation,
        
        examination and assessment of the legal, technical and financial qualifications of
        applicant operators,
        
        granting of permits for the use of frequencies,
        
        regulation of ownership and
        operation,
        
        adjudication of issues arising from its functions, and
        
        other similar matters
        
        LGUs Power to Regulate - This is under the General Welfare Clause, but this is subordinate to legislative issuances.
        
        Conditions on which Franchise May be Made (Del Mar v. PAGCOR) - thus, the ff are almost always defined in clear and unequivocal language:
        
        the manner of granting the franchise
        
        to whom it may be granted
        
        the mode of conductingthe business
        
        the character and quality of the service to be rendered
        
        the duty of the granteeto the public in exercising the franchise
        
        In the absence of any of the terms above, any claim to the a legislative franchise to operate a game played for bets and denounced as a menace to morality ought to be rejected
        
        ABSCBN v. NTC - moot, franchise is required, no temporary statutory privileges can be given if there is no duly passed law (sir reyes actually agrees with the SC)
        
        Effectivity of Franchises (MCWD v. Adala) - Under Art. XII, Sec. 11 of the Constitution, no franchise may exceed 50 year period.
        
        Amendment of Franchise (CONST. XII, Sec. 11) - Franchise grant subject to the condition that it may be amended, altered, repealed by the Congress when the common good so requires.
      - Broadening Deifnition (Francisco v. TRB) - Now includes authorizations by congress, but also those granted by administrative agencies vested with authority by Congress. Ultimately, from Congress parin.
    - - Exceptions -
        
        Grantees - of legislative franchises may be expressly exempted from securing a certificate from PSC.
        
        Government - Public services owned or operated by GOCCs or government entities are not required to secure certificates from the PSC.
        
        Public Service (CA 146, S. 13b) - Includes every person that may own/operate/manage/control in the Philippines any:
        
        Common carrier, railroad, street railway, traction railway, sub-way motor vehicle for freight or passenger
        
        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
        
        other similar public services
        
        Distinction between CPC and CPCN (PAL v. CAB) - Public convenience and necessity exists when the proposed facility will meet a reasonable want of the public and supply a need which the existing facilities do not adequately afford.
        
        Requirements of Grant of CPC
        
        Applicant must be a citizen of the Philippines. If the applicant is a Corporation, 60% of its capital must be owned by Filipinos
        
        Applicant must prove public necessity
        
        Applicant must prove the operation of proposed public service will promote public interest in a proper and suitable manner; and
        
        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)
        
        Exceptions -
        
        Warehouses
        
        Animal-‐drawn vehicles or banca powered by oar or by sail; tug boats and lighters
        
        Airships except as to fixing rates
        
        Radio companies, except as to fixing of rates
        
        Ice plants
        
        Public market
        
        Public utilities operated by the national government or political subdivision except as to rates.
        
        Grounds for Opposition of Issuance of CPC -
        
        The area has already a well-established operator – prior operator rule.
        
        Interpose an objection stating that the grant of the application would result to a ruinous competition.
        
        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
        
        The applicant does not have the necessary financial capacity.
      - Sir says generally, if CPC/CPCN no need for legislative franchise, subject to exemptions. Essentially, Congress can require one or both CPC/N & legislative franchise. This is determined by the applicable law.