G.R. No. L-14051; January 13, 1920
TEODORO R. YANGCO, petitioner, vs. THE PUBLIC UTILITY COMMISSION and MARIANO CUI, JOSE A. SANTOS and E. J. WESTERHOUSE, as members of the board created by section 19 of Act No. 2694 , respondents.

FACTS:
Petitioner Teodoro R. Yangco, a common carrier, submitted a new schedule of freight and passenger rates to the Public Utility Commissioner for approval. The schedule contained a proviso imposing a 20% surcharge on shipments by the Government of the Philippine Islands, its provinces, municipalities, branches, and other entities, as well as on shipments by any private person requiring similar conditions. The Director of Public Works, the Insular Purchasing Agent, and the Insular Auditor protested this surcharge. During the hearing before the Public Utility Commissioner, Yangco presented evidence that the conditions and requirements imposed by these shippers significantly increased the cost of transporting their merchandise, and the 20% surcharge was intended to cover these additional expenses. The protestants presented no evidence to refute this. The Public Utility Commissioner approved the schedule, including the proviso, reasoning that a common carrier may charge additional rates for additional services rendered. Upon motion for reconsideration, a Board composed of the Commissioner and two other officials revoked the Commissioner’s approval and refused to authorize the schedule with the proviso. Yangco appealed to the Supreme Court.

ISSUE:
Whether a common carrier has the right to establish different freight rates for different shippers based on different and additional services rendered.

RULING:
Yes. The Supreme Court ruled in favor of the petitioner. The Court held that the Public Utility Commissioner is authorized to approve reasonable freight rates. In determining reasonableness, the cost of transportation is a key consideration. If a shipper requires additional services from the carrier, which entail greater expense, the carrier is justified in charging an additional, reasonable rate to cover that cost. Since Yangco proved that transporting the merchandise of the entities mentioned in the proviso required additional services and expense, and the protestants did not refute this evidence, the 20% surcharge was justified. The Court therefore annulled the Board’s order, reinstated the approval of the Public Utility Commissioner, and affirmed the schedule of freight rates including the proviso. No costs were awarded.