EPITACIO SAN PABLO, (SUBSTITUTED BY HEIRS OF E. SAN PABLO), PETITIONERS, VS. PANTRANCO SOUTH EXPRESS, INC., RESPONDENT. CARDINAL SHIPPING CORPORATION, PETITIONER, VS. HONORABLE …

“A. DID THE
RESPONDENT BOARD VIOLATE PETITIONERS’ RIGHT TO DUE PROCESS, THE RULES OF
PROCEDURE AND SECTION 16 (m) OF THE PUBLIC SERVICE ACT, WHEN IT ISSUED IN A
COMPLAINT CASE THE DECISION DATED
OCTOBER 23, 1981 WHICH MOTU PROPIO AMENDED RESPONDENT
PANTRANCO’S PUB CERTIFICATE TO INCLUDE AND AUTHORIZE OPERATION OF A SHIPPING SERVICE ON THE ROUTE MATNOG, SORSOGON-ALLEN,
SAMAR – – – EVEN AS THERE MUST BE A FORMAL APPLICATION FOR AMENDMENT AND
SEPARATE PROCEEDINGS HELD THEREFOR, ASSUMING AMENDMENT IS PROPER?

B.   DID THE RESPONDENT BOARD ERR IN FINDING IN
ITS DECISION OF OCTOBER 23, 1981, THAT THE SEA FROM THE PORT OF MATNOG,
SORSOGON, LUZON ISLAND TO THE PORT OF ALLEN, SAMAR ISLAND, OR FROM LUZON ISLAND
TO SAMAR ISLAND IS A MERE FERRY OR CONTINUATION OF THE HIGHWAY- – – IT BEING 23 KILOMETERS OF ROUGH AND OPEN SEA AND ABOUT 2 HOURS TRAVEL TIME
REQUIRING BIG INTER-ISLAND VESSELS, NOT MERE BARGES, RAFTS OR SMALL BOATS UTILIZED IN FERRY SERVICE?

C.   DID
THE RESPONDENT BOARD ERR WHEN IT RULED THAT RESPONDENT PANTRANCO’S VESSEL M/V
BLACK DOUBLE IS MERELY A PRIVATE CARRIER, NOT A PUBLIC FERRY OPERATING FOR
PUBLIC SERVICE (ASSUMING THAT THE MATNOG-ALLEN SEA ROUTE IS A MERE FERRY OR
CONTINUATION OF HIGHWAY) EVEN IF SAID VESSEL IS FOR HIRE AND COLLECTS SEPARATE
FARES AND CATERS TO THE PUBLIC EVEN FOR A LIMITED CLIENTELE?

D.   DID THE
RESPONDENT BOARD ERR WHEN IT GRANTED
RESPONDENT PANTRANCO AUTHORITY TO OPERATE A SHIPPING SERVICE IN THE FACE OF THE
LATTER’S CONTENTION AS AN AFTERTHOUGHT THAT IT NEED NOT APPLY THEREFOR, AND IN
SPITE OF ITS FAILURE TO SECURE THE PRE-REQUISITE MARITIME INDUSTRY AUTHORITY
(MARINA) APPROVAL TO ACQUIRE A VESSEL UNDER ITS MEMO­RANDUM CIRCULAR NO. 8-A AS
WELL AS ITS PRIOR FAVORABLE ENDORSEMENT BEFORE ANY SHIPPING AUTHORIZATION MAY
BE GRANTED UNDER BOT-MARINA AGREEMENT OF
AUGUST 10, 1976
AND FEBRUARY 26, 1982?

E.   DID RESPONDENT BOARD ERR WHEN IT GRANTED
RESPONDENT PANTRANCO AUTHORITY TO OPERATE A SHIPPING
SERVICE ON A ROUTE ADEQUATELY SERVICED IF NOT
ALREADY ‘SATURATED’ WITH THE SERVICES OF TWO (2) EXISTING OPERATORS
(PETITIONERS AND CARDINAL SHIPPING CORP.) IN VIOLATION OF THE PRINCIPLE OF
‘PRIOR OPERATOR RULE’?”^[11]

By the same token Cardinal Shipping Corporation filed a separate petition raising similar issues, namely:

“a. the decision did not conform to the procedures laid
down by law for an amendment of the original certificate of public convenience,
and the authority to operate a private ferry boat service to PANTRANCO was
issued without ascertaining the established essential requisites for such grant, hence, violative of due process requirements;

b.  the grant to PANTRANCO of authority to operate
a ferryboat service as a private carrier on said route contravenes exist­ing
government policies relative to the rationalization of operations of all water
transport utilities;

c.  it contravenes the memorandum of agreement
between MARINA and the Board of Transportation;

d.  the grant of authority to operate a ferry service as a private carrier
is not feasible; it lessens PANTRANCO’s liability to
passengers and cargo to a degree less than extraordinary diligence;

e.  PANTRANCO is not a private carrier when it
operates its ferry service;

f.   it runs counter to the ‘old operator’
doctrine; and

g.  the operation by PANTRANCO of the ferry
service constitutes undue competition.

The foregoing considerations
constitutes the substantial errors committed by the respondent Board which
would more than amply justify a review
of the questioned decision by this Honorable Court.”^[12]

Both cases were
consolidated and as now submitted
for decision.

The resolution of all said issues raised involves on the validity
of the questioned BOT decision.

The BOT resolved the issue of whether a ferry service is an
extension of the highway and thus is a part of the authority originally granted
PANTRANCO in the following manner:

“A ferry service, in law, is treated as a continuation of the
highway from one side of the water over which passes to the other side for
transportation of passengers or of travellers with
their teams vehicles and such other property as, they may carry or have with
them.  (U.S.
vs. Pudget Sound Nev. Co. D.C. Washington,
24 F. Supp. 431).  It maybe said to be a
necessary service of a specially constructed boat to carry passengers and
property across rivers or bodies of water from a place in one shore to a point
conveniently opposite on the other shore and continuation of the highway making
a connection with the thoroughfare at each terminal (U.S. vs. Canadian Pac,
N.Y. Co. 4 P. Supp. 85).  It comprises
not merely the privilege of transportation but also the use for that purpose of
the respective landings with outlets therefrom.  (Nole vs. Record,
74 OKL. 77; 176 Pac. 756).  A ferry service maybe a public ferry or a
private ferry.  A public ferry service is
one which all the public have the right to resort to and for which
a regular fare is established
and the ferryman is a common carrier be inbound to take all who apply and bound to keep his ferry in operation and good repair.  (Hudspeth V. Hall, 11 Oa.
510; 36 S.B. 770).  A ferry (private)
service is mainly for the use of the owner and though he may take pay for
ferriage, he does not follow it as a business. 
His ferry is not open to the public at its demand and he may or may not
keep it in operation (Hudspeth vs. Hall, supra, St. Paul Fire and Marine Ins.
696) Harrison, 140 Ark. 158; 215 S.W. 698).

The ferryboat service of Pantranco is a
continuation of the highway traversed by its buses from Pasay
City to Samar, Leyte
passing through Matnog (Sorsogon)
through San Bernardino Strait to Allen, (Samar).  It is a private carrier because it will be
used exclusively to transport its own buses, passengers and freight trucks
traversing the said route.  It will cater
exclusively to the needs of its own
clientele (passengers on board – Pantranco buses) and
will not offer itself indiscriminately for hire or for compen­sation to the
general public.  Legally there­fore, Pantranco has the right to operate the ferryboat M/V BLACK
DOUBLE, along the route from Matnog (Sorsogon) to Allen (Samar) and vice versa for the exclusive use of its own
buses, passengers and freight trucks without the need of applying for a
separate certificate of public convenience or provisional authority.  Since its operation is an integral part of
its land transport system, its original certificate of public convenience
should be amended to include the operation of such ferryboat for its own exclusive use.”^[13]

In Javellana^[14] this Court recited the following definition
of “ferry”:

“The term ‘ferry implied the continuation by means of
boats, barges, or rafts, of a highway or the connection of highways located on
the opposite banks of a stream or other body of water.  The term neces­sarily implies transportation
for a short distance, almost invariably between two points, which
is unrelated to other transportation, (Oppositors‘
Italic.)

The term ‘ferry’ is often employed to denote the right or franchise granted by the state or its
authorized mandatories to continue by means of
boats, an interrupted land
highway over the interrupting
waters and to charge toll for the use thereof by the public.  In
this sense it has also been defined as a privilege, a liberty, to take
tolls for transporting
passengers and goods across a lake or stream, or some other body of water, with
no essential difference from a bridge franchise except as to the mode of
transportation.  22 Am. Jur. 553.

A ‘ferry’ has been defined by many courts as ‘a public highway or thoroughfare
across a stream of water or river by boat instead of a bridge.’ (St. Clare Country v. Interstate
Car and Sand Transfer Co., 192 U.S. 454, 48 L. ed. 518; etc.)

‘The term ferry is often
employed to denote the right or franchise granted by the state or its authorized mandatories to continue by means of boats, an in­terrupted
land highway over the interrupt­ing waters and to charge toll for the use
thereof by the public.’ (Vallejo Ferry Co. vs. Solano Aquatic Club, 165 Cal.
255, 131 P. 864, Ann. Cas. 1914C, 1179; etc.) (Oppositors‘ Italics.)

‘Ferry’ is service necessity
for common good to reach point across a stream, lagoon, lake, or bay.  (U.S. vs. Canadian Pac. Ry.
Co. D.C. Was., 4 Supp. 851, 853)’

‘Ferry’ properly means a place of tran­sit across a river or arm
of the sea, but in law it is treated as a franchise, and defined as the exclusive right to carry
passengers across a river, or arm of the sea, from one vill
to another, or to connect a continuous
line of road leading from township or vill to
another.  (Canadian Pac. Ry. Co. vs. C.C.A. Wash., 73 F. 2d. 831, 832)’

‘Includes various waters: 
(1) But an arm of the sea may include various subordinate descriptions
of waters, where the tide ebbs and flows. 
It may be a river, harbor, creek, basin,
or bay; and it is sometimes used
to designate very extensive reaches of waters within the projecting capes or
points or a country.  (See Rex. vs.
Bruce, Deach, C.C. 1093).  (2) In an early case the court said:  ‘The distinction between rivers navigable and
not navigable, that is, where the sea does, or does not, ebb and flow, is very ancient.  Rex. vs. Smith, 2 Dougl.
441, 99 Reprint 283.  The former are
called arms of the sea, while the latter pass under the denomination of private
or inland rivers’ Adams vs. Pease 2
Conn. 481, 484.” (Underscoring supplied)

In the cases of Cababa vs. Public Service Commission,^[15] Cababa vs. Remigio & Carillo^[16] and Municipality of Gattaran
vs. Elizaga^[17] this Court considered as ferry service such
water service that crosses rivers.

However, in Javellana We made clear distinction between a ferry service and coastwise or interisland service by holding that:

“We are not unmindful of the reasons adduced by the Commission
in considering the motorboat service between Calapan
and Batangas as ferry; but from our consideration of
the law as it stands, particularly Common­wealth Act No. 146, known as the
Public Service Act and the provisions of the Revised Admi­nistrative Code regarding municipal ferries and those regarding the jurisdiction of
the Bureau of Customs over documentation, registration, licensing, inspection,
etc. of steamboats, m motorboats
or motor vessels, and the definition of ferry as above
quoted, we have the impression and we are inclined to believe that the
Legislature intended ferry to mean the service either by
barges or rafts, even by motor or steam
vessels, between the
banks of a river or stream to continue the highway which is interrupted by the body of water, or in some cases, to connect two
points on opposite shores of an arm of the sea such as bay or lake which does
not involve too great a distance
or too long a time to navigate.  But
where the line or service involves crossing the open sea like the body of water
between the province of Batangas and the island of Mindoro
which the oppositors describe thus “the inter­vening waters between Calapan and Batangas are wide and
dangerous with big waves where small boat, barge or raft are not adapted to the
service,” then it is more reasonable to regard said line or service as more properly belonging to interisland or coastwise trade.  According to the finding of the
Commission itself the distance between Calapan and Batangas is about 24 nautical miles or about 44.5
kilometers.  We do not believe that this
is the short distance contemplated by the Legislature in referring to ferries
whether within the jurisdiction of a single muni­cipality or ferries between
two municipalities or provinces.  If we
are to grant that water transportation between Calapan
and Batangas
is ferry service, then there would be no reason for not considering the same
service between the different islands of the Philippines, such as Boac, Marinduque and Batangas; Roxas City of Capiz and Romblon; Cebu City, Cebu and Ormoc, Leyte; Guian,
Samar and Surigao, Surigao; and Dumaguete, Negros Oriental and Oroquieta or Cagayan de Oro.

The Commission makes the
distinction between ferry service and motorship in
the coastwise trade, thus:

‘A ferry service is distinguished from a motorship
or motorboat service engaged in the coastwise trade in that the latter is
intended for the trans­portation of passengers and/or freight for hire or compensation between ports or
places in the Philippines without definite routes or lines of service.’

We cannot agree.  The definiteness of the route of a boat is
not the deciding factor.  A boat of say
the William Lines, Inc. goes from Manila to Davao via
Cebu, Tagbilaran, Dumaguete, Zamboanga, every
week.  It has a definite route, and yet it may not for that reason be regarded as
engaged in ferry service.  Again, a
vessel of the Compañia Maritima
makes the trip from Manila to Tacloban and back,
twice a week.  Certainly, it has a
definite route.  But that service is not
ferry service, but rather interisland or coastwise
trade.

We believe that it will be more in consonance
with the spirit of the law to consider steamboat or motorboat service between
the different islands, involving more or less great distance and over
more or less turbulent and dangerous waters of the open sea, to be coastwise or
inter­island service.  Anyway, whether said service between the
different islands is regarded as ferry service or coastwise trade service, as long as the water craft used are steamboats,
motorboats or motor vessels, the result will be the same as far as the Commission
is concerned.”^[18] (Underscoring supplied)

This Court takes judicial
notice of the fact, and as shown by an examination of the map of the
Philippines, that Matnog which is on the southern tip
of the island of Luzon and within the province of Sorsogon
and Allen which is on the northeastern tip of the island of Samar, is traversed by the San Bernardino
Strait which leads towards the Pacific Ocean. 
The parties admit that the distance between Matnog and Allen is about 23
kilometers which maybe negotiated by motorboat or vessel in about 1-1/2 hours as claimed by PANTRANCO to 2
hours according to petitioners,
As the San Bernardino Strait which separates Matnog and Allen leads to the ocean it must at
times be choppy and rough so that it will not be safe to navigate the same by
small boats or barges but only by such
steamboat or vessels as the M/V
“Black Double”.^[19]

Considering the
environmental circumstances of the case, the conveyance of passengers, trucks
and cargo from Matnog to Allen is certainly not a ferryboat
service but a coastwise or interisland shipping
service.  Under no circumstance can the
sea between Matnog and Allen be considered a
continuation of the highway.  While a
ferryboat service has been considered as a continuation of the highway when
crossing rivers or even lakes, which are small body of waters separating the
land, however, when as in this case the two terminals, Matnog and Allen are
separated by an open sea it can not be considered as a continuation of the
highway.  Respondent PANTRANCO should
secure a separate CPC for the operation of an interisland or coastwise shipping service in
accordance with the provisions of law. 
Its CVC as a bus
transportation cannot be merely amended to include this water service under
the guise that it is a mere private ferry service.

The contention of private
respondent PANTRANCO that its ferry service operation is as a
private carrier, not as a common carrier for its exclusive use in the ferrying of
its passenger buses and cargo trucks is absurd. 
PANTRANCO does not deny that it
charges its passengers separately from the charges for the bus trips and issues
separate tickets whenever they board the M/V “Black Double” that
crosses Matnog to Allen,^[20]
PANTRANCO cannot pretend that in issuing
tickets to its passengers it did so as a private carrier and not as a common
carrier.  The Court does not see
any reason why inspite of its amended franchise to operate a private ferryboat service it cannot
accept walk­-in passengers just for the purpose of crossing the sea
between Matnog and Allen.  Indeed evidence to this effect has been
submitted.^[21]
What is even more difficult to comprehend is that while in one breath
respondent PANTRANCO claims that it is a private carrier insofar as the
ferryboat service is concerned, in another breath it states that it does not
thereby abdicate from its obligation as a common carrier to observe
extraordinary diligence and vigilance in the transportation of its passengers
and goods.  Nevertheless, considering that
the authority granted to PANTRANCO is to operate a private ferry, it can still
assert that it cannot be held to account as a common carrier towards its passengers and cargo.  Such an anomalous situation that will
jeopardize the safety and interests of its passengers and the cargo owners
cannot be allowed.

What appears clear from
the record is that at the beginning PANTRANCO planned to operate such ferryboat service between Matnog and Allen as a common carrier so it requested
authority from MARINA to purchase the vessel M/V “Black
Double”^[22]
in accordance with the procedure
provided for by law for such application for a certificate of public
convenience.^[23] However when its request was denied as the
said routes “are adequately
serviced by existing/authorized operators,”^[24] it nevertheless purchased the vessel and
started operating the same.  Obviously to
go about this obstacle to its operation, it then contrived a novel
theory that what it proposes to operate is a private ferryboat service across a
small body of water for the exclusive use of its buses, trucks and
passengers as an incident to its franchise to convey passengers and cargo on
land from Pasay City to Tacloban
so that it believes it need not secure a separate certificate of public
convenience.^[25]
Based on this representation, no less than the Secretary of Justice was led to render an affirmative opinion on October
20, 1981^[26] followed
a few days later by the questioned decision of public respondent of October 23,
1981.^[27]
Certainly the Court cannot give its imprimatur to such a situation.

Thus the Court holds that
the water transport service between Matnog and Allen is not a ferryboat service but a coastwise
or interisland shipping service.  Before private respondent may be issued a
franchise or CPC for the operation of the said service as a common carrier, it must comply with the usual requirements of filing an
application, payment of the fees, publication, adducing evidence at a hearing
and affording the oppositors the opportunity to be
heard, among others, as provided by law.^[28]

WHEREFORE, the petitions are hereby GRANTED and the
Decision of the respondent Board of Transportation (BOT) of October 23,
1981 in BOT Case No. 81-348-C and its Order of July 21,
1982 in the same case denying the motions for reconsideration filed by petitoners are hereby Reversed and set aside and declared null and void.  Respondent PANTRANCO is hereby permanently
enjoined from operating the ferryboat service and/or coastwise/interisland services between Matnog
and Allen until it shall have secured the appropriate Certificate of Public
Convenience (CPC) in accordance with the requirements of the law, with costs
against respondent PANTRANCO.

SO ORDERED.

Teehankee, C.J., Narvasa,
Cruz, and Paras,
JJ., concur.

^[1]
Annex “C” to Petition of San Pablo, G.R. No. 61461.

^[2]
Annex “E” to Petition, Supra.

^[3]
98 Phils. 964 (1956).

^[4]
Annex “H” to Petition, Supra.

^[5]  Annex “I” to Petition, Supra.

^[6]
Annex “1” to Comment of PANTRANCO.

^[7]
P. 142, Rollo, Annex “1” to Comment
of PANTRANCO.

^[8]
Decision in BOT Case No. 81-348-C, Annex “K” Petition, Supra.

^[9]
Annex “O” Petition, San Pablo.

^[10]
Petition, San Pablo, G.R. No.
61461.

^[11]
Pp. 17-18, Rollo,
Petition, San
Pablo.

^[12]
Pp. 20-21, Rollo,
Petition, Cardinal Shipping Corp.

^[13]
Decision, Pp. 85-86.

^[14]
Supra, pp. 969-970.

^[15]
102 Phil. 1013.

^[16]
118 Phil. 56.

^[17]
 91 Phil. 440.

^[18]
 98 Phil. pp. 970-972.

^[19]
P. 22, San Pablo, Petition.

^[20]
Annex “N” to
the Petition, San Pablo.

^[21]
Annex “M” to Cardinal
Shipping Petition.

^[22]
Annex “G”, San Pablo Petition.

^[23]
.Annex “F”, Supra.

^[24]
Annex “E”, Supra.

^[25]
 Annex “H”, Supra.

^[26]
P. 142, Rollo,
San Pablo Petition, Annex “1” to
PANTRANCO Comment.

^[27]
 Annex “K”, Supra.

^[28]
Olongapo Jeepney Operators
Association vs. PSC, 13 SCRA 303.