G.R. No. L-15940. March 29, 1961.
VICENTE CAMBARE, plaintiff-appellant, vs. UNION OBRERA DE TABACO LINES, INCORPORATED, defendant-appellee.

FACTS

Plaintiff Vicente Cambare, a licensed operator of motor launches for public freight and passenger service between Tabaco, Albay and points in Catanduanes, filed a complaint for damages and sought a writ of preliminary attachment against defendant Union Obrera de Tabaco Lines, Inc. The complaint alleged that the defendant, after obtaining a provisional authority from the Public Service Commission (PSC) on July 18, 1958, which was later revoked on October 2, 1958, continued to operate along the same routes. The defendant operated under a coastwise license issued by the Bureau of Customs. Cambare claimed the defendant charged rates lower than those he was authorized to charge by the PSC, causing him substantial daily financial losses and moral damages, thereby engaging in ruinous and illegal competition.
The Court of First Instance of Albay dismissed Cambare’s complaint for lack of cause of action, relying on the Supreme Court’s ruling in Brown v. Suezo. In that case, it was held that a coastwise license from the Bureau of Customs was sufficient for the legal operation of ferry services, and the PSC could not require a separate certificate of public convenience for such interisland trade. The trial court concluded that since the defendant’s operation under a customs license was legal, Cambare had no actionable claim against it for damages arising from competition, even if it involved undercutting authorized rates.

ISSUE

Whether the trial court erred in dismissing the complaint, given that the defendant, while legally operating under a coastwise license, was charging passenger and freight rates without approval from the Public Service Commission.

RULING

Yes, the trial court erred. The Supreme Court reversed the dismissal order and remanded the case for further proceedings. The legal logic distinguishes this case from Brown v. Suezo. The principal issue here is not the legality of the defendant’s operation per se, which is permitted by its Bureau of Customs license for interisland coastwise trade, but the legality of its practice of charging rates without PSC approval. The Court clarified that while a certificate of public convenience from the PSC is not required for such coastwise operations, the PSC retains regulatory authority under the Javellana v. Public Service Commission doctrine to prescribe and approve the schedule of trips and the rates to be charged by operators. Therefore, an operator must submit its rates to the PSC for approval.
Consequently, the plaintiff’s complaint, which was predicated on the defendant charging unauthorized and damagingly low rates, indeed stated a cause of action. The defendant’s alleged failure to have its rates approved by the PSC could constitute illegal competition, potentially entitling the plaintiff to damages. The trial court’s reliance on Brown v. Suezo was misplaced, as that case only addressed the right to operate, not the right to set unregulated rates. The complaint should not have been dismissed, as it raised a valid claim requiring adjudication on the merits regarding the defendant’s rate-setting practices.