THE CITY OF MANILA, PETITIONER, VS. THE PUBLIC SERVICE COMMISSION, RESPONDENT.

The fundamental legal question in these proceedings is as to
which of two existing agencies of the Government of the Philippine Islands, the
City of Manila or the Public Service Commission is confided the power to
authorize the Manila Electric Company to abandon a trolley bus service and a
street car service, and to substitute therefor exclusively an auto bus service.
The Attorney-General and counsel for the Manila Electric Company unite in
sustaining the Public Service Commission in the exercise of this power. The
fiscal of the City of Manila upholds the side of the city.

The Manila Electric Company first applied to the Public Service
Commission for authority to abandon the trolley bus service then operating in
Intramuros, Manila, and the street car service then operating on Taft Avenue,
Manila, and to substitute therefor temporarily an auto bus service to operate on
a specified route. The Commission granted a permit for an experimental period of
thirty days and later extended the permit for another period of thirty days.
Before the time thus delimited had expired, the Manila Electric Company applied
for permanent authority for the operation of an auto bus service “under the
terms of petitioner’s franchise.” In support of this application, petitioner
alleged “that the proposed service has been demonstrated to be a public
convenience and necessity.” The City of Manila opposed the petition on the
ground that the bus service, although involving a change for the better, is in
violation of the franchise of the Manila Electric Company, and under the
franchise, requires the city’s consent to the substitution and abandonment of
the electric car service. After taking the testimony of the Vice-President of
the Manila Electric Company, a decision was handed down by the Commissioner
which dismissed the opposition of the city, and ratified the authority formerly
given the petitioner by making it permanent.

The franchise of the Manila Electric Company was granted that
company by Act No. 484 of the Philippine Commission, as carried into effect by
Ordinance No. 44 of the City of Manila in 1903, and as later amended by Act No.
1112 of the Philippine Commission, as carried into effect by Ordinance No. 70 of
the City of Manila in 1904. The franchise was to run for a period of fifty years
and authorized the construction and maintenance of an electric street railway in
the streets of the City of Manila “in accordance with the terms and conditions
set forth in the two parts” of the franchise “and the laws and ordinances, not
inconsistent herewith, now or hereafter in force.” The streets, thoroughfares,
bridges, and public places upon which the grantee was authorized to make
excavations and constructions were enumerated. Then it was provided that “The
Manila Electric Railroad and Light Company shall be authorized to make
excavations and constructions for the purposes prescribed in Part One of said
Ordinance Numbered Forty-four, upon such further streets, thoroughfares,
bridges, and public places within the City of Manila as may, from time to time,
be approved by the Municipal Board.” Of a similar tenor was the following
provision of the amended franchise: “All reasonable or proper or necessary
changes on the lines or routes of the grantee, or the abandonment of any part of
its franchise, or of any street or streets which it may not be desirable or
advisable to use, may be made by the grantee, with the approval of the municipal
authorities.” The grantee was to “pave and keep in good and permanent repair the
surface of the street between its rails and between its tracks and for eighteen
inches on each side of its tracks under the supervision of the municipal
authorities and in such manner as they shall prescribe.” As to the system of
electric railroad to be installed, it was to be the “overhead trolley system,”
but the “grantee shall have the right and privilege to modify, improve, and
change such system in such manner as the progress of science and improvements in
and the development of motive power may make reasonable and proper.” Finally, it
was provided that the “franchises here granted shall be subject to amendment,
alteration, or repeal by the Congress of the United States.”

From time to time, changes in the lines of the Manila Electric
Company have been requested and permitted. One such concession as to single
tracks and removal was provided for by the Philippine Commission in Act No. 1447
enacted in 1906. Other changes were approved by ordinances enacted by the
Municipal Board of the City of Manila beginning with 1904 and continuing until
1924. (Among others, Ordinances Nos. 71, 144, 272, 167, 192, 490, 903, 988,
1162, 1244.)

The Board of Public Utility Commissioners was created by Act
No. 2307 which went into force in 1913. That law repealed any act or part of act
inconsistent with its provisions. Act No. 2307 has subsequently been amended and
superseded by Acts Nos. 2362, 2694, and 3108. The latter act known as the Public
Service Law, as amended by Act No. 3316, is the prevailing law.

To the Public Service Commission has been delegated “general
supervision and regulation of, jurisdiction and control over, all public
services, and also over their property, property rights, equipment, facilities
and franchises so far as may be necessary for the purposes of carrying out the
provisions of this Act. The term ‘public service’ is hereby defined to include
every * * * corporation * * * that now or hereafter may own, operate, manage, or
control within the Philippine Islands, for hire or compensation any * * * street
railway, * * *” (Act No. 3108, sec. 13, as amended by Act No. 3316, sec. 6.) The
Commission shall also have power to do a number of specified things in
connection with public services, as for instance “To permit any street railway
or traction company to change its existing gauge to standard steam railway
gauge, upon such terms and conditions as said Commission shall prescribe” (sec.
14). The Commission shall also have power, after hearing, upon notice, by order
in writing to require every public service “To comply with the laws of the
Philippine Islands and with any provincial resolution or municipal ordinance
relating thereto and to conform to the duties imposed upon it thereby or by the
provisions of its own charter, whether obtained under any general or special law
of the Philippine Islands;” and “to establish, construct, maintain, and operate
any reasonable extension of its existing facilities” (sec. 15). The tracks of
any street railway cannot be laid across any highway, so as to make a new
crossing at grade; nor shall the tracks of any street railway be laid across the
tracks of any other railroad or street railway or traction company without first
obtaining permission therefor from the Commission (sec. 19 in connection with
sec. 20). Also “No privilege or franchise hereafter granted to any public
utility as herein defined, by any political subdivision of the Philippine
Islands, shall be valid until approved by said Commission” (sec. 22). Along
towards the end of the law is the repealing clause specifically repealing Acts
Nos. 2307, 2362, and 2694, and generally repealing “any Act or part of Act
inconsistent with the provisions of this Act” (sec. 40).

The material parts of the franchise of the Manila Electric
Company lie before us. So likewise do the important portions of the Public
Service Law. The franchise granted by the City of Manila to the Manila Electric
Company is in the nature of a contract which the parties to it must respect.
That is true. But it is not a contract such as is protected from impairment by
the Constitution. The franchise was originally authorized by the Legislature. It
was made effective by a municipal corporation acting pursuant to delegated
power. What the principal has given into the hands of the agent may subsequently
be recalled by the principal. So uncomplicated by constitutional limitations,
the question recurs if the Philippine Legislature by placing on the statute
books Act No. 2307 and its successors intended thereby to withdraw from the City
of Manila certain power previously conferred by the Philippine Commission, or
whether the contrary was the legislative purpose. The question whether by the
establishment of the Public Service Commission municipal jurisdiction is
excluded or alone obtains, or is concurrent with that of the State, is solely
one of legislative intent.

The previous decisions of this court have touched lightly upon
the point. For instance, the franchise of the Manila Electric Company contained
the following provision: “Members of the police and fire department of the City
of Manila wearing official badges shall be entitled to ride free upon the cars
of the grantee, subject to such reasonable and proper restrictions as may be
imposed.” The Public Utility Commissioners issued an order requiring the Manila
Electric Company to carry on its street cars free of charge the members of the
secret service force of the City of Manila. The company raised many questions
relative to the jurisdiction, authority, and power of the Board of Public
Utility Commissioners. But this court avoided the discussion of the same, and
contented itself with sustaining the construction placed by the company and the
city on the clause of the franchise already referred to. As a result, the order
of the Board of Public Utility CQmmissioners was vacated, set aside, and
annulled. (Manila Electric Railroad & Light Co. vs. Board of Public Utility
Commissioners [1915], 30 Phil., 387.)

Again the franchise of the Manila Electric Company provided
that the maximum rate of speed at which the grantee shall operate its cars shall
be fixed by the municipal authorities. So the city authorities enacted section
391 of the Revised Ordinances concerning the speed of street cars. The opinion
of the Attorney-General was requested as to whether or not the provisions of Act
No. 2307, as amended, operated to take away from the City of Manila the
authority of regulating the speed of vehicles conferred by its charter. The
Attorney-General stated that it did. Relying upon this opinion, the Board of
Public Utility Commissioners entertained a petition of the Manila Electric
Company only to be met with the objection of the city that the Board has no
jurisdiction to regulate the speed of cars in the City of Manila, and that said
power is vested in the Municipal Board. This objection was overruled by the
Board of Public Utility Commissioners, and a decision was rendered allowing the
Manila Electric Company to operate its cars at the speed desired. The Supreme
Court, speaking through Mr. Justice Moreland, said: “There can be no doubt that,
until the establishment of the Board of Public Utility Commissioners, the City
of Manila had the regulatory power for which it now contends. But it is equally
true that the city held this power at the pleasure of the Legislature.

“Act No. 2307, creating a Board of Public Utility
Commissioners, does not specifically repeal any provision of the Manila charter
nor of Act No. 484 (the franchise of the Manila Electric Company); but it does,
in general terms, repeal ‘any Act or part of Act inconsistent with the
provisions of this Act.’ It follows that, if Act No. 2307 grants to the Board of
Public Utility Commissioners the right to regulate the speed of street cars, it
thereby repeals the corresponding right previously vested in the City of Manila.
Our inquiry is therefore narrowed to an examination of Act No. 2307, for the
purpose of determining whether it authorizes the Board of Public Utility
Commissioners to regulate the speed of street cars.” Continuing, the court ruled
that the order of the Board of Public Utility Commissioners should be vacated
and set aside, with two Justices dissenting. (City of Manila vs. Manila Electric
Railroad & Light Co. and Board of Public Utility Commissioners [19173, 36
Phil., 89.)

In another case, the Supreme Court was called upon to decide if
the Manila Railroad Company could be required to pay an internal revenue tax
under the Act of Congress of October 3, 1913. The Railroad Company contended
that it was not required to pay this tax on account of its special charter
exempting it from the obligation to satisfy all taxes. The court, speaking
through Mr. Justice Johnson, reached the conclusion that the franchise of the
Manila Railroad Company had not been amended, altered, or repealed by any Act of
Congress, and that accordingly the company was relieved from the payment of the
internal “revenue tax collected by the Government. The basis of the decision as
disclosed by the syllabus is as follows:

“1. TAXES; EXEMPTION; SPECIAL LAWS, REPEAL OF, BY GENERAL LAWS.—Special laws or charters may not be amended, altered, or repealed by a
general law, by mere implication.

“2. ID.; ID.; ID.—Repeal of laws by implication is not
favored. The mere repugnancy between two statutes should be very clear in order
to warrant the court in holding that the later in time repeals the former, when
it does not in terms purport to do so.

“3. ID.; ID.; ID.—It is well settled that a special and
local statute is not repealed by a subsequent statute unless the intent to
repeal or alter it is manifest, although the terms of the general act are broad
enough to include the cases in the special law.

“4. ID.; ID.; ID.—Where there are two statutes, the earlier
special and the later general—the terms of the general broad enough to include
the matter provided for in the special—the fact that one is special and the
other is general creates a presumption that the special is to be considered as
remaining an exception to the general—one as a general law of the land, the
other as the law of a particular case.

“5. ID.; ID.; ID.—Charters or special laws granted and enacted
by the Legislature are in the nature of private contracts. They do not
constitute a part of the machinery of the general government. They are usually
adopted after careful consideration of the private rights in relation with
resultant benefits to the State. They stand upon a different footing from
general laws.

“6. ID.; ID.; ID.—The reason why a general law will not
repeal a special law or charter is because in passing a special charter the
attention of the Legislature is directed to the facts and circumstances which
the act or charter is intended to meet. The Legislature consider and make
provision for all the circumstances of a particular case. The Legislature having
specially considered all of the facts and circumstances in a particular case in
granting a special charter, it will not be considered that the Legislature, by
adopting a general law without any mention of its intention to amend or modify
the charter, intended to amend, repeal, or modify the special act or charter.”
(Manila Railroad Co. vs. Rafferty [1919], 40 Phil., 224.)

While the three Philippine decisions which are mentioned do not
decide the issue in these proceedings, they do disclose that the Supreme Court
on two occasions has been constrained to vacate orders provided by the Public
Service Commission, and to require adherence to the provisions of the franchise
of the Manila Electric Company. On the third occasion, it was shown that when
there is a conflict between a franchise, a special law, and a later general law,
the court will proceed cautiously before permitting of an implied repeal of any
portion of the franchise. While the American authorities on the subject have
been investigated, and to an extent are enlightening, each of them, of course,
must be understood in relation with the exact phraseology of Philippine law.

For the purposes of this decision, it may be conceded that the
substitution of a bus line for a street railway service is effective under a
franchise requiring street railway operation, but which contemplates
improvements and changes in the system such as the progress of science and the
development of motive power may make reasonable and proper. That impresses us as
the better and more liberal view. (Contrast City of Spartanburg vs. South
Carolina Gas & Elec. Co. [1924], 125 S. E., 295; P. U. R. An., 1925C, 459
with two out of five members dissenting, with Re Boise Street Car Company, P. U.
R. An., 1926-E, 637.) Nor need we decide if a showing that the street railroad
is operating at a loss, as has been required in practically all the pertinent
public utility cases, is necessary. (See Re Utah Light and Traction Company, P.
U. R. An., 1927-A, 310.) That contingency does not seem to be contemplated by
the paragraph of the franchise of the Manila Electric Company dealing with
changes of routes, and it is our understanding that the instant case goes no
further than this. The point is if the consent of the city authorities must be
obtained before the Manila Electric Company can take up its street railway
tracks and in lieu thereof begin a subsidiary business with motor busses.

Contrasting the Philippine law with the law of Oklahoma which
came before the Supreme Court of the United States on review, an essential
difference is noted. The complaint in the Oklahoma case had to do with an order
of the Corporation Commission regulating the rates and services of a gas
company. The state legislature gave to the Corporation Commission “general
supervision over all public utilities, with power to fix and establish rates and
to prescribe rules, requirements and regulations, affecting their services.”
Dealing with the contention of the Oklahoma City, the state court, while fully
conceding that the earlier statute delegated to the city the authority claimed
by it, held that under the state Constitution, the legislature could withdraw
that authority from the city whenever, in its judgment, the public interest
would be subserved thereby; and that it was effectively withdrawn from the city
and confided to the Corporation Commission by the Act of 1913. The United States
Supreme Court dismissed the writ of error upon the ground that only a question
of local law was involved. The deduction to be drawn from the Oklahoma law as
construed by the courts is that in addition to a grant of general power to the
Commission, there was necessary a grant of a special right to fix rates which
was enforced. (City of Pawhuska vs. Pawhuska Oil & Gas Co. [1919], 250 U.
S., 394.)

Again, in a New Jersey decision pertaining to the New Jersey
Law from which the Philippine law was derived, it was held that an order of the
Public Utility Commissioners, directing a change of gauge of the tracks of the
Phillipsburg Horse Car Railroad Company, was within the jurisdiction of the
commissioners, under the provisions of the Public Utility Act. But it is to be
observed that by the terms of the Public Utility Act, it was given general
supervision, jurisdiction, and control “over all public utilities, and also over
their property rights, equipments, facilities and franchises,” and particular
power “to permit any street railway to change its existing gauge to standard
steam railway gauge, upon such terms and conditions as said board shall
prescribe.” (Inhabitants of Town of Phillipsburg vs. Board of Public Utility
Commissioners [1913], 85 N. J. L., 141; 88 Atl., 1096.) In Re Burling County
Transit Co. (May 25, 1926), in approving the discontinuance of street railway
service, the new Jersey Board said: “The Burlington County Transit Company has
been operating at a financial loss for at least a considerable period and has
established a bus service over practically the same route as is followed by the
trolley service under the authority of local permits approved by this Board;
that the operation of the bus service appears to be a more satisfactory means of
transportation in the particular territory in question than the operation of the
existing trolley line and that the public convenience and necessity of the
patrons will be better served through the operation of the auto bus line” (P. U.
R. An., 1927-A, 417. )

In a California case, it appeared that the Union Traction
Company had petitioned the Railroad Commission for an order authorizing the
discontinuance of street railway service, abandonment, and removal of tracks and
appurtenances on a portion of its street railway system in the City of Santa
Cruz. The applicant alleged that the operation of the line proposed to be
abandoned was unprofitable. The applicant proposed, if the application be
granted, to install an automobile bus service in lieu of the street railway
service over the line sought to be abandoned. The California Railroad Commission
promulgated the following:

“ORDER

“A public hearing having been held in the above entitled
proceeding, the matter having been duly submitted, the Commission being now
fully advised and basing its order on the finding of fact as appearing in the
opinion which precedes this order;

“It is hereby ordered, that applicant, Union Traction Company,
a corporation, be and the same hereby is authorized to discontinue operation of
its street car service heretofore rendered in the City of Santa Cruz over the
following described route:

“Commencing at the intersection of Pacific Avenue and Mission
Street, thence along Mission Street to its intersection with Younglove Avenue,
thence along Younglove Avenue to its intersection with Errett circle, thence
along Errett circle to its intersection with Woodrow Avenue (formerly Garfield
Avenue), thence along Woodrow Avenue to the intersection of Woodrow Avenue and
Cliff Drive, all in the City of Santa Cruz, and to abandon and remove its tracks
and appurtenances thereto, subject to the following terms and conditions:

“I. Applicant will be required to file with this Commission a
certified copy of an ordinance or other appropriate authorization of the city
council of the City of Santa Cruz granting relinquishment of such franchises or
portion of franchises which have heretofore been granted by the city council of
the City of Santa Cruz covering the line herein authorized to be abandoned.

“II. Applicant will be required to file with this Commission a
certified copy of an ordinance or other appropriate authorization of the city
council of the City of Santa Cruz granting authority for the operation of an
automobile bus line over the route heretofore served by street railway
transportation, such automobile bus service to be initially established on
schedule similar to that heretofore rendered by the street railway service
herein authorized to be abandoned.

“This order shall become effective upon the filing by the
applicant of certified copies of ordinances or other appropriate authorizations
of the city council of the City of Santa Cruz as hereinabove required.” (Re
Union Traction Company, P. U. R. An., 1925-E, 503.)

The Public Service Law grants to the Public Service Commission
general jurisdiction and control over public utilities. The main purpose,
speaking in broad terms, is the supervision and regulation of the operation and
maintenance of public utilities. The law also specifies certain particular
powers of the Public Service Commission. But among these specified powers, there
can be found no mention of a prerogative of the Commission to allow street
railways to make changes on its lines or routes or to abandon any part of its
franchise. With a general law on the one side, and a special law although
earlier on the other side, the provisions of the special law must continue in
the face of a lack of intention shown by the Legislature to repeal it by the
later general law.

The attitude assumed by the city authorities is strengthened in
this instance by the obvious fact that a change in route or abandonment of a
line of the street railway relates to a matter which peculiarly concerns the
city. The City of Manila is given wide authority by ita charter to regulate the
use of the city streets. An important part of the consideration for the
franchise contract permitting the Manila Electric Company to place its tracks on
the city streets was the repair and maintenance of the portion of the streets
used.

Whenever any change in the lines of the Manila Electric Company
has been made heretofore, it has invariably been pursuant to express legislative
permission. In one case, the change was authorized by the Philippine Commission,
and in the other cases by the Municipal Board of the City of Manila. This was
true even after the Public Utility Commission was provided, for subsequent to
December 19, 1913, when the Public Utility Law was enacted, the Manila Electric
Company applied a number of times to the city for the right to make certain
changes in its routes, and this permission was authorized by the city. In one
aspect, therefore, the Manila Electric Company is estopped through conformity to
settled practice to contest the legal power of the city in the premises. If
ambiguity exists, which we doubt, that construction should be adopted which the
parties have placed upon the law by their own acts.

It is our conclusion that it was not the legislative intent as
disclosed by the Public Service Law to grant power to the Public Service
Commission to abrogate the franchise provisions of the Manila Electric Company
concerning abandonment and substitution of service. The agency of the Government
of the Philippine Islands to which is confided the power to authorize the Manila
Electric Company to abandon a trolley bus service and a street car service and
to substitute therefor exclusively an auto bus service is the City of Manila and
not the Public Service Commission.

While the proper legal ruling impresses itself on the mind in a
clear-cut manner, yet in deciding the abstract question, it should not be
forgotten that very important property rights are involved. The Manila Electric
Company has already proceeded to make the desired changes and substitutions in
conformity with permits conceded by supposedly competent authority. The company
undoubtedly is not at all interested in who grants the permission but is vitally
concerned in getting it. The property rights of the company and the public
convenience should not be unnecessarily disturbed while two branches of the
Government contend as to which has the superior power. The consent of the
municipal authorities as evidenced by an ordinance passed by the Municipal Board
and approved by the Mayor of the City of Manila should have been made the basis
of any action taken by the Public Service Commission in the instant case, and
then should have been limited to confirming and enforcing the same. Inasmuch,
however, as the reverse procedure has been attempted, the Manila Electric
Company should be allowed a reasonable period of time within which to secure
municipal approval of the desired changes, which is fixed at three months from
final judgment, the decision of the Public Service Commissioner in the meantime
being left as it is.

Subject to the qualification above indicated, the decision of
the Public Service Commissioner under review will be vacated and set aside. So
ordered without special pronouncement as to costs.

Avanceña, C. J., Johnson, Street, Villamor, Ostrand, Johns, and
Romualdez, JJ., concur.