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TRANSPORTATION DIGEST – PUBLIC SERVICE A.M.+D.G. TRANSPORTATION – Atty. Abano
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KILOSANG MAYO UNO LABOR CENTER vs. GARCIA
FACTS
On June 26 1990, then Secretary of DOTC, Oscar Orbos, issued
Memorandum Circular No. 90-395 to then LTFRB Chairman, Remedios A.S.
Fernando allowing provincial bus operators to charge passengers rates
within a range of 15% above and 15% below the LTFRB official rate for a
period of one (1) year.
On December 5, 1990, private respondent Provincial Bus Operators
Association of the Philippines, Inc. (PBOAP) filed an application for fare
rate increase. An across-the-board increase of eight and a half centavos
(P.0085) per kilometre for all types of provincial buses with a minimum-
maximum fare range of 15% over and below the proposed basic per
kilometre fare rate, with the said minimum-maximum fare range applying
only to ordinary, first class and premium class buses and a fifty-centavo
(P0.50) per kilometre fare for aircon buses were sought. Later on, PBOAP
reduced its applied proposed fare to an across-the-board increase of six
and a half (P0.065) centavos per kilometre for ordinary buses. Although
opposed, the LTRFB rendered a decision granting the fare rate increase.
On March 30, 1992, then Secretary of the Department of Transportation
and Communications Pete Nicomedes Prado issued Department Order No.
92-587 defining the policy framework on the regulation of transport
services. Relevant portions to this case are:
In determining public need, the presumption of need for a service
shall be deemed in favor of the applicant. The burden of proving
that there is no need for a proposed service shall be with the
oppositor(s).
Passenger fares shall also be deregulated, except for the lowest
class of passenger service (normally third class passenger
transport) for which the government will fix indicative or reference
fares. Operators of particular services may fix their own fares
within a range 15% above and below the indicative or reference
rate.
3B DIGEST GROUP 2009-2010 Ad Deum Per Excellentia
TRANSPORTATION DIGEST – PUBLIC SERVICE A.M.+D.G. TRANSPORTATION – Atty. Abano
Sometime in March, 1994, private respondent PBOAP, availing itself of the
deregulation policy of the DOTC allowing provincial bus operators to collect
plus 20% and minus 25% of the prescribed fare without first having filed a
petition for the purpose and without the benefit of a public hearing,
announced a fare increase of twenty (20%) percent of the existing fares.
Said increased fares were to be made effective on March 16, 1994.
On March 16, 1994, petitioner KMU filed a petition before the LTFRB
opposing the upward adjustment of bus fares.
On March 24, 1994, the LTFRB issued one of the assailed orders dismissing
the petition for lack of merit.
ISSUE
1. W/N petitioner has locus standi YES
2. W/N the authority given by respondent LTFRB to provincial bus
operators to set a fare range of plus or minus fifteen (15%)
percent, later increased to plus twenty (20%) and minus twenty-
five (-25%) percent, over and above the existing authorized fare
without having to file a petition for the purpose, is
unconstitutional, invalid and illegal. YES
3. W/N establishment of a presumption of public need in favor of an
applicant for a proposed transport service without having to prove
public necessity, is illegal for being violative of the Public Service
Act and the Rules of Court. YES
RULING
1. In the case at bench, petitioner, whose members had suffered and
continue to suffer grave and irreparable injury and damage from
the implementation of the questioned memoranda, circulars and/or
orders, has shown that it has a clear legal right that was violated
and continues to be violated with the enforcement of the
challenged memoranda, circulars and/or orders. KMU members,
who avail of the use of buses, trains and jeepneys everyday, are
directly affected by the burdensome cost of arbitrary increase in
passenger fares. They are part of the millions of commuters who
comprise the riding public. Certainly, their rights must be
protected, not neglected nor ignored.
2. The Legislature delegated to the defunct Public Service
Commission the power of fixing the rates of public services.
Respondent LTFRB, the existing regulatory body today, is likewise
vested with the same under Executive Order No. 202 dated June
19, 1987. Section 5(c) of the said executive order authorizes
LTFRB "to determine, prescribe, approve and periodically review
and adjust, reasonable fares, rates and other related charges,
relative to the operation of public land transportation services
provided by motorized vehicles.
Such delegation of legislative power to an administrative agency is
permitted in order to adapt to the increasing complexity of modern
life. With this authority, an administrative body and in this case,
the LTFRB, may implement broad policies laid down in a statute by
"filling in" the details which the Legislature may neither have time
or competence to provide. However, nowhere under the aforesaid
provisions of law are the regulatory bodies, the PSC and LTFRB
alike, authorized to delegate that power to a common carrier, a
transport operator, or other public service.
In the case at bench, the authority given by the LTFRB to the
provincial bus operators to set a fare range over and above the
authorized existing fare, is illegal and invalid as it is tantamount to
an undue delegation of legislative authority. Potestas delegata non
delegari potest. What has been delegated cannot be delegated.
A further delegation of such power would indeed constitute a
negation of the duty in violation of the trust reposed in the
delegate mandated to discharge it directly. This would leave the
riding public at the mercy of transport operators who may increase
fares every hour, every day, every month or every year, whenever
it pleases them or whenever they deem it "necessary" to do so.
One veritable consequence of the deregulation of transport fares is
a compounded fare. If transport operators will be authorized to
impose and collect an additional amount equivalent to 20% over
and above the authorized fare over a period of time, this will
unduly prejudice a commuter who will be made to pay a fare that
has been computed in a manner similar to those of compounded
bank interest rates.
The present administrative procedure, to our mind, already mirrors
an orderly and satisfactory arrangement for all parties involved. To
3B DIGEST GROUP 2009-2010 Ad Deum Per Excellentia
TRANSPORTATION DIGEST – PUBLIC SERVICE A.M.+D.G. TRANSPORTATION – Atty. Abano
do away with such a procedure and allow just one party, an
interested party at that, to determine what the rate should be, will
undermine the right of the other parties to due process. The
purpose of a hearing is precisely to determine what a just and
reasonable rate is. Discarding such procedural and constitutional
right is certainly inimical to our fundamental law and to public
interest.
3. On the presumption of public need.
A certificate of public convenience (CPC) is an authorization
granted by the LTFRB for the operation of land transportation
services for public use as required by law. One of its requirements
is that the applicant must prove 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. It is also
understood that there must be proper notice and hearing before
the PSC can exercise its power to issue a CPC.
The “presumption of a public need for a service” provision is
entirely incompatible and inconsistent with Section 16(c)(iii) of the
Public Service Act which requires that before a CPC will be issued,
the applicant must prove by proper notice and hearing that the
operation of the public service proposed will promote public
interest in a proper and suitable manner.
The power of a regulatory body to issue a CPC is founded on the
condition that after full-dress hearing and investigation, it shall
find, as a fact, that the proposed operation is for the convenience
of the public. Basic convenience is the primary consideration for
which a CPC is issued, and that fact alone must be consistently
borne in mind. Also, existing operators in subject routes must be
given an opportunity to offer proof and oppose the application.
Therefore, an applicant must, at all times, be required to prove his
capacity and capability to furnish the service which he has
undertaken to render. And all this will be possible only if a public
hearing were conducted for that purpose.
NOTE: Public utilities are privately owned and operated businesses whose
service are essential to the general public. They are enterprises which
specially cater to the needs of the public and conduce to their comfort and
convenience. As such, public utility services are impressed with public
interest and concern. The same is true with respect to the business of
common carrier which holds such a peculiar relation to the public interest
that there is superinduced upon it the right of public regulation when
private properties are affected with public interest, hence, they cease to be
juris privati only.
PAL vs. CAB
FACTS
GrandAir applied with the Civil Aeronautivcs Board for a Certificate of
Public Convenience and Necessity for the MLA-CEBU and MLA-DAVAO
route. Accordingly, the Chief Hearing Officer of the CAB issued a Notice of
Hearing setting the application for initial hearingn and directing GrandAir
to serve a copy of the application and corresponding notice to all
scheduled Philippine Domestic operators. GrandAir filed its Compliance,
and requested for the issuance of a Temporary Operating Permit. PAL,
itself the holder of a legislative franchise to operate air transport services,
filed an opposition to the application on several grounds which include
LACK OF JURISDICTION ON THE PART OF THE BOARD to hear the
application until GrandAir has obtained a franchise to operate from
Congress. (Other grounds were deficient form and substance of the
application; violation of the equal protection clause if application is
granted; no urgent need for new service; granting of application would
result in ruinous competition.)
The Board ruled that it had jurisdiction to hear the application. The Board
even granted GrandAir a Temporary Operating License. PAL’s motion for
reconsideration was denied. The Board even granted a 6-month extension
to GrandAir’s temporary permit.
PAL says: Board acted beyond its powers and jurisdiction: (1) in
taking cognizance of GrandAir's application for the issuance of a Certificate
of Public Convenience and Necessity, and (2) in issuing a temporary
operating permit in the meantime.
Reasoning of PAL: GrandAir has not been granted and does not possess a
legislative franchise to engage in scheduled domestic air transportation. A
legislative franchise is necessary before anyone may engage in air
transport services, and a franchise may only be granted by Congress.
3B DIGEST GROUP 2009-2010 Ad Deum Per Excellentia
TRANSPORTATION DIGEST – PUBLIC SERVICE A.M.+D.G. TRANSPORTATION – Atty. Abano
This is the meaning given by the PALupon a reading of Section 11, Article
XII, and Section 1, Article VI, of the Constitution. In support of this, PAL
presents a 1994 DOJ opinion by Secretary Ordonez where a distinction was
made between the franchise to operate and a permit to commence
operation. According to the opinion, “it is clear that a franchise is the
legislative authorization to engage in a business activity or enterprise of a
public nature, whereas a certificate of public convenience and necessity is
a regulatory measure which constitutes the franchise's authority to
commence operations. It is thus logical that the grant of the former should
precede the latter.”
GrandAir argues: The Board has: (1) the authority to hear the
application and, (2)can grant temporary operating permits and
certificates of public convenience and necessity.
GrandAir’s reasoning:
(1) Section 10 (specifically 10-C1) of RA 776 grants it such authority
“to issue, deny, amend revise, alter, modify, cancel, suspend or revoke, in
whole or in part, upon petitioner-complaint, or upon its own initiative, any
temporary operating permit or Certificate of Public Convenience and
Necessity”.
(2) Jurisprudence:
• SC ruled in another PAL vs CAB case (1968) that CAB could, even
on its own initiative, grant a temporary operating permit (TOP)
even before the presentation of evidence.
• CA cases which held that CAB can grant not only temporary
operating permit (TOP) but also a Certificate of Public Convenience
and Necessity (CPCN)
• SC decision in Albano vs Reyes: a) Franchises by Congress are
not required before each and every public utility may operate
when the law has granted certain administrative agencies the
power to grant licenses for or to authorize the operation of certain
public utilities; (b) The Constitutional provision in Article XII,
Section 11 that the issuance of a franchise, certificate or other
form of authorization for the operation of a public utility does not
necessarily imply that only Congress has the power to grant such
authorization...
(3) EO 219: a minimum of 2 operators in each route/ link shall be
encouraged.
ISSUE
W/N Congress, in enacting Republic Act 776, has delegated the authority
to authorize the operation of domestic air transport services to the
respondent Board, such that Congressional mandate for the approval of
such authority is no longer necessary
RULING
Yes. The Board has the authority.
• The trend of modern legislation is to vest the Public Service
Commissioner with the power to regulate and control the operation
of public services under reasonable rules and regulations, and as a
general rule, courts will not interfere with the exercise of that
discretion when it is just and reasonable and founded upon a legal
right. It is this policy which was pursued by the Court
in Albano vs. Reyes (cited above).
• There is nothing in the law nor in the Constitution, which indicates
that a legislative franchise is an indispensable requirement for an
entity to operate as a domestic air transport operator. Although
Section 11 of Article XII recognizes Congress' control over any
franchise, certificate or authority to operate a public utility, it does
not mean Congress has exclusive authority to issue the same.
Franchises issued by Congress are not required before each and
every public utility may operate. In many instances, Congress has
seen it fit to delegate this function to government agencies,
specialized particularly in their respective areas of public service.
• Reading Section 10 of RA 776 shows the clear intent of Congress
to grant CAB the authority to issue TOP and CPCN.
• The SC did not agree with PAL’s argument that granting of a
franchise and granting a TOP or CPCN are two different things; and
that a grant of franchise from Congress is necessary before the
Board can grant either TOP or CPCN.
• “Congress, by giving the respondent Board the power to issue
permits for the operation of domestic transport services, has
delegated to the said body the authority to determine the
capability and competence of a prospective domestic air transport
operator to engage in such venture. This is not an instance of
transforming the respondent Board into a mini-legislative body,
with unbridled authority to choose who should be given authority
to operate domestic air transport services.”
o Congress set specific limitations on the Boards authority in
Sec. 4 of the RA776 (Declaration of Policies).
3B DIGEST GROUP 2009-2010 Ad Deum Per Excellentia
TRANSPORTATION DIGEST – PUBLIC SERVICE A.M.+D.G. TRANSPORTATION – Atty. Abano
o More importantly, under Sec. 12-24 of RA 776, Congress
has spelled out the requirements for determining the
competency of a prospective operator, as well as the
procedure for the processing of the applications.
• SC dismissed PAL’s opposition to the hearings set by CAB for
GrandAir’s application for CPCN.
NPC vs. CA
FACTS
Cagayan Electric and power Light Company (CEPALCO) was enfranchised
by Republic Act No. 3247 "to construct, maintain and operate an electric
light, heat and power system for the purpose of generating and/or
distributing electric light, heat and/or power for sale within the City of
Cagayan de Oro and its suburbs" for fifty (50) years.
Presidential Decree No. 243, issued on July 12, 1973, created a "body
corporate and politic" to be known as the Philippine Veterans Investment
Development Corporation (PHIVIDEC) vested with authority to engage in
"commercial, industrial, mining, agricultural and other enterprises" among
other powers and "to allow the full and continued employment of the
productive capabilities of and investment of the veterans and retirees of
the Armed Forces of the Philippines." On August 13, 1974, Presidential
Decree No. 538 was promulgated to create the PHIVIDEC Industrial
Authority (PIA), a subsidiary of PHIVIDEC, to carry out the government
policy "to encourage, promote and sustain the economic and social growth
of the country and that the establishment of professionalized management
of well-planned industrial areas shall further this objective." Under Sec. 3
of P.D. No. 538, the first area for development shall be located in the
municipalities of Tagoloan and Villanueva. This area forms part of the
PHIVIDEC Industrial Estate Misamis Oriental (PIE-MO).
As manager of PIE-MO, PIA granted the Ferrochrome Philippines, Inc. (FPI)
and Metal Alloys Corporation (MAC) authority to operate in its area of
development. On July 6, 1979, PIA granted CEPALCO a temporary
authority to retail electric power to the industries operating within the PIE-
MO. The Agreement executed by PIA and CEPALCO authorized CEPALCO
"to operate, administer, construct and distribute electric power within the
PHIVIDEC Industrial Estate, Misamis Oriental, such authority to be co-
extensive with the territorial jurisdiction of PHIVIDEC Industrial Estate, as
defined in Sec. 3 of P.D. No. 538 and shall be for a period of five (5) years,
renewable for another five (5) years at the option of CEPALCO." The
parties provided further that:
9. At the end of the fifth year, or at the end of the 10th year,
should this Agreement be thus renewed, PIA has the option to take
over the operation of the electric service and acquire by purchase
CEPALCO's assets within PIE-MO. This option shall be
communicated to CEPALCO in writing at least 24 months before
the date of acquisition of assets and takeover of operation by PIA.
Should PIA exercise its option to purchase the assets of CEPALCO
in PIE-MO, PIA shall respect the right of ownership of and
maintenance by CEPALCO of those assets inside PIE-MO not
covered by such purchase. . . .
According to PIA, CEPALCO proved no match to the power demands of the
industries in PIE-MO that most of these companies operating therein
closed shop. Impelled by a "desire to provide cheap power costs to power-
intensive industries operating within the Estate," PIA applied with the
National Power Corporation (NPC) for direct power connection which the
latter in due course approved. One of the companies which entered into an
agreement with the NPC for a direct sale and supply of power was the
Ferrochrome Phils., Inc. (FPI).
Contending that the said agreement violated its right as the authorized
operator of an electric light and power system in the area and the national
electrification policy, CEPALCO filed Civil Case No. Q-35945, a petition for
prohibition, mandamus and injunction before the Regional Trial Court of
Quezon City against the NPC. Notwithstanding NPC's claim that it was
authorized by its Charter to sell electric power "in bulk" to industrial
enterprises, the lower court rendered a decision on May 2, 1984,
restraining the NPC from supplying power directly to FPI upon the ground
that such direct sale, supply and delivery of electric power by the NPC to
FPI was violative of the rights of CEPALCO under its legislative franchise.
Hence, the lower court ordered the NPC to "permanently desist" from
effecting direct supply of power to the FPI and "from entering into and/or
implementing any agreement or arrangement for such direct power
connection, unless coursed through the power line" of CEPALCO.
ISSUE
Whether or not the NPC may supply power directly to PIA in the PIE-MO
area where CEPALCO has a directly franchise.
3B DIGEST GROUP 2009-2010 Ad Deum Per Excellentia
TRANSPORTATION DIGEST – PUBLIC SERVICE A.M.+D.G. TRANSPORTATION – Atty. Abano
RULING
Petitioner PIA asserts that it may receive power directly from the NPC
because it is a public utility. It avers that P.D. No. 538, as amended,
empowers PIA "as and to be a public utility to operate and serve the power
needs within PIE-MO, i.e., a specific area constituting a small portion of
petitioner's franchise coverage," without, however, specifying the
particular provision which so empower PIA.
A "public utility" is a business or service engaged in regularly supplying the
public with some commodity or service of public consequence such as
electricity, gas, water, transportation, telephone or telegraph service. The
term implies public use and service.
Petitioner PIA is a subsidiary of the PHIVIDEC with "governmental and
proprietary functions." Sec. 4 of P.D. No. 538 specifically confers upon it
the following powers:
a. To operate, administer and manage the PHIVIDEC Industrial
Areas and other areas which shall hereafter be proclaimed,
designated and specified in subsequent Presidential Proclamation;
to construct acquire, own, lease, operate and maintain
infrastructure facilities, factory buildings, warehouses, dams,
reservoirs, water distribution, electric light and power systems,
telecommunications and transportation networks, or such other
facilities and services necessary or useful in the conduct of
industry and commerce or in the attainment of the purposes and
objectives of this Decree; (Emphasis supplied.)
Clearly then, the PIA is authorized to render indirect service to the public
by its administration of the PHIVIDEC industrial areas like the PIE-MO and
may, therefore, be considered a public utility. As it is expressly authorized
by law to perform the functions of a public utility, a certificate of public
convenience, as suggested by the Court of Appeals, is not necessary for it
to avail of a direct power connection from the NPC. However, such
authority to be a public utility may not be exercised in such a manner as to
prejudice the rights of existing franchisees. In fact, by its actions, PIA
recognized the rights of the franchisees in the area.
Accordingly, in pursuit of its powers "to grant such franchise for and to
operate and maintain within the Areas electric light, heat or power
systems," etc. under Sec. 4 (i) of P.D. No. 538 and its rule-making power
under Sec. 4 (1) of the same law, on July 20, 1979, the PIA Board of
Directors promulgated the "Rules and Regulations To Implement the Intent
and Provisions of Presidential Decree No. 538." 48
Rule XI thereof on
"Utilities and Services" provides as follows:
Sec. 1. Utilities — It is the responsibility of the Authority to provide
all required utilities and services inside the Estate:
xxx xxx xxx
a) Contracts for the purchase of
public utilities and/or services shall
be subject to the prior approval of
the Authority; Provided, however,
that similar contract(s) existing
prior to the effectivity of this Rules
and Regulations shall continue to
be in full force and effect.
xxx xxx xxx
(Emphasis supplied.)
It should be noted that the Rules and Regulations took effect thirty (30)
days after its publication in the Official Gazette on September 24, 1979 or
more than three (3) months after the July 6, 1979 contract between PIA
and CEPALCO was entered into. As such, the Rules and Regulations itself
allowed the continuance of the supply of electric power to PIE-MO by
CEPALCO.
That the contract of July 6, 1979 was not renewed by the parties after the
expiration of the five-year period stipulated therein did not change the fact
that within that five-year period, in violation of both the contract and its
Rules and Regulations, PIA applied with the NPC for direct power
connection. The matter was aggravated by NPC's favorable action on the
application, totally unmindful of the extent of its powers under the law
which, in National Power Corporation v. Court of Appeals, 49
the Court
delimits as follows:
. . . . It is immaterial whether the direct connection is merely an
improvement or an increase in existing voltage, as alleged by
petitioner, or a totally new and separate electric service as claimed
by private respondent. The law on the matter is clear. PD 40
promulgated on 7 November 1972 expressly provides that the
generation of electric power shall be undertaken solely by the NPC.
However Section 3 of the same decree also provides that the
3B DIGEST GROUP 2009-2010 Ad Deum Per Excellentia
TRANSPORTATION DIGEST – PUBLIC SERVICE A.M.+D.G. TRANSPORTATION – Atty. Abano
distribution of electric power shall be undertaken by cooperatives,
private utilities (such as the CEPALCO), local governments and
other entities duly authorized, subject to state regulation.
( Emphasis supplied.)
The same case ruled that "(i)t is only after a hearing (or an opportunity for
such a hearing) where it is established that the affected private franchise
holder is incapable or unwilling to match the reliability and rates of NPC
that a direct connection with NPC may be granted." As earlier stated, the
Court arrived at the same ruling in the later cases of G.R. Nos. 72085,
84695 and 87697.
Petitioner NPC attempted to abide by these rulings when it conducted a
hearing to determine whether it may supply power directly to PIA. While it
notified CEPALCO of the hearing, the NPC is not the proper authority
referred to by this Court in the aforementioned earlier decisions, not only
because the subject of the hearing is a matter involving the NPC itself, but
also because the law has created the proper administrative body vested
with authority to conduct a hearing.
CEPALCO shares the view of the Court of Appeals that the Energy
Regulatory Board (ERB) is the proper administrative body for such
hearings. However, a recent legislative development has overtaken said
view.
The ERB, which used to be the Board of Energy, by virtue of EO 172, whre
the ERB is basically a price or rate-fixing agency. Apparently recognizing
this basic function, Republic Act No. 7638 (An Act Creating the Department
of Energy, Rationalizing the Organization and Functions of Government
Agencies Related to Energy, and for Other Purposes) was promulgated.
The determination of which of two public utilities has the right to supply
electric power to an area which is within the coverage of both is certainly
not a rate-fixing function which should remain with the ERB. It deals with
the regulation of the distribution of energy resources which, under
Executive Order No. 172, was expressly a function of ERB. However, with
the enactment of Republic Act No. 7638, the Department of Energy took
over such function. Hence, it is this Department which shall then
determine whether CEPALCO or PIA should supply power to PIE-MO.
Clearly, petitioner NPC's assertion that its "authority to entertain and hear
direct connection applications is a necessary incident of its express
authority to sell electric power in bulk" is now baseless. Even without the
new legislation affecting its power to conduct hearings, it is certainly
irregular, if not downright anomalous for the NPC itself to determine
whether it should supply power directly to the PIA or the industries within
the PIE-MO. It simply cannot arrogate unto itself the authority to exercise
non-rate fixing powers which now devolves upon the Department of
Energy and to hear and eventually grant itself the right to supply power in
bulk.
QUISUMBING vs. MERALCO
FACTS
Inspectors from MERALCO went to the furniture shop of the Quisumbing
Spouses to conduct their routinary inspections with the permission of the
Spouses and witnessed by their secretary. The inspectors found the
electric meter tampered. Because of this, they disconnected the electric
supply of the furniture shop. To make sure of the accuracy of their
findings, they subjected the electric meter to laboratory testing. The tests
show that the meter was really tampered. As a result, the inspectors billed
the Quisumbing Spouses the differential caused by the tampering and until
they pay, their electric supply will be disconnected. However, on the same
day the inspector’s officer caused the reconnection of their electric supply.
But despite this, the Spouses still filed a complaint for damages against
MERALCO alleging that they acted with wanton, capricious, malicious, and
malevolent manner in disconnecting their power supply which was done
without due process, and without due regard to their rights, feelings,
peace of mind, social and business standing.
ISSUE
Is MERALCO liable to the Quisumbing Spouses because the inspectors
disconnected their electric supply immediately?
RULING
YES. Sec. 4 of RA 7832 necessitates that immediate disconnection by
MERALCO of a consumer’s electric supply can only be had IF an officer of
the law or a duly authorized representative of the Energy Regulatory Board
personally witnessed and attested the disconnection. Even if the secretary
of the company witnessed the inspection and disconnection, MERALCO
cannot claim that they complied with the law because the provisions
categorically provide for the people required to be present during
inspection and disconnection and the secretary of the company of the
3B DIGEST GROUP 2009-2010 Ad Deum Per Excellentia
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Quisumbing Spouses clearly does not fall under any of the enumerated
persons. Moreover, the presence of an ERB officer during the examination
of the electric meter in the laboratory would not cure the defect in due
process. The law is CLEAR that the ERB officer must have attested to the
disconnection BEFORE its occurrence unlike what happened in this case.
The presence of government agents who may authorize immediate
disconnection go into the essence of due process. Indeed, the Court
cannot allow MERALCO to act virtually as prosecutor and judge in imposing
the penalty of disconnection due to alleged meter tampering. That would
not sit well in a democratic country. After all, MERALCO is a monopoly that
derives its power from the government. Clothing it with unilateral authority
to disconnect would be equivalent to giving it a license to tyrannize its
hapless customers.
COGEO-CUBAO vs. CA
FACTS
It appears that a certificate of public convenience to operate a jeepney
service was ordered to be issued in favor of Lungsod Silangan to ply the
Cogeo-Cubao route. On the other hand, Cogeo-Cubao Association was
registered as a non-stock, non-profit organization with the main purpose
of representing the appellee for whatever contract and/or agreement it will
have regarding the ownership of units, and the like, of the members of the
Association.
Perturbed by appellee’s Board Resolution No. 9 adopting a Bandera'
System under which a member of the cooperative is permitted to queue
for passenger at the disputed pathway in exchange for the ticket worth 20
pesos the proceeds of which shall be utilized for Christmas programs of the
drivers and other benefits, the Association decided to form a human
barricade on and assumed the dispatching of passenger jeepneys. This
development as initiated by the Association gave rise to the suit for
damages.
The Association's Answer contained vehement denials to the insinuation of
take over and at the same time raised as a defense the circumstance that
the organization was formed not to compete with plaintiff-cooperative. It,
however, admitted that it is not authorized to transport passengers.
The trial court rendered a decision in favor of respondent Lungsod Corp
and ordered. The CA affirmed the findings of the TC except with regard to
the award of actual damages.
ISSUE
W/N the petitioner usurped the property right of the respondent which
shall entitle the latter to the award of nominal damages? - YES
RULING
Under the Public Service Law, a certificate of public convenience is an
authorization issued by the Public Service Commission for the operation of
public services for which no franchise is required by law. In the instant
case, a certificate of public convenience was issued to respondent
corporation on to operate a public utility jeepney service on the Cogeo-
Cubao route.
A certification of public convenience is included in the term "property" in
the broad sense of the term. Under the Public Service Law, a certificate of
public convenience can be sold by the holder thereof because it has
considerable material value and is considered as valuable asset. Although
there is no doubt that it is private property, it is affected with a public
interest and must be submitted to the control of the government for the
common good. Hence, insofar as the interest of the State is involved, a
certificate of public convenience does not confer upon the holder any
proprietary right or interest or franchise in the route covered thereby and
in the public highways. However, with respect to other persons and other
public utilities, a certificate of public convenience as property, which
represents the right and authority to operate its facilities for public service,
cannot be taken or interfered with without due process of law. Appropriate
actions may be maintained in courts by the holder of the certificate against
those who have not been authorized to operate in competition with the
former and those who invade the rights which the former has pursuant to
the authority granted by the Public Service Commission.
In the case at bar, the trial court found that petitioner association forcibly
took over the operation of the jeepney service in the Cogeo-Cubao route
without any authorization from the Public Service Commission and in
violation of the right of respondent corporation to operate its services in
the said route under its certificate of public convenience. These were its
findings which were affirmed by the appellate court.
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It is clear form the facts of this case that petitioner formed a barricade and
forcibly took over the motor units and personnel of the respondent
corporation. This paralyzed the usual activities and earnings of the latter
during the period of ten days and violated the right of respondent Lungsod
Corp to conduct its operations thru its authorized officers.
No compelling reason exists to justify the reversal of the ruling of the
respondent appellate court in the case at bar. Considering the
circumstances of the case, the respondent corporation is entitled to the
award of nominal damages.
PHILCOMSAT vs. ALCUAZ
FACTS
By virtue of Republic Act No. 5514, PHILCOMSAT was granted "a franchise
to establish, construct, maintain and operate in the Philippines, at such
places as the grantee may select, station or stations and associated
equipment and facilities for international satellite communications." Under
this franchise, it was likewise granted the authority to "construct and
operate such ground facilities as needed to deliver telecommunications
services
Section 5 of Republic Act No. 5514, petitioner was exempt from the
jurisdiction of the then Public Service Commission, now respondent NTC.
However, pursuant to Executive Order No. 196 issued on June 17, 1987,
petitioner was placed under the jurisdiction, control and regulation of
respondent NTC, including all its facilities and services and the fixing of
rates. Implementing said Executive Order No. 196, respondents required
petitioner to apply for the requisite certificate of public convenience and
necessity covering its facilities and the services it renders,
Petitioner sought the extension for the operation of his facilities and the
rendering of services.
NTC order now in controversy had further extended the provisional
authority of the petitioner for another six (6) months, counted from
September 16, 1988, but it directed the petitioner to charge modified
reduced rates through a reduction of fifteen percent (15%) on the present
authorized rates.
PHILCOMSAT assails the abovesaid order.
ISSUE
1) Was there an undue delegation of legislative power because the
NTC is empowered to fix rates for public service communications
does not provide the necessary standards constitutionally
required? NO
2) Does Executive Order No. 546, which provides for the creation of
respondent NTC, have provisions that grant its rate-fixing powers?
YES
3) Does Executive Order No. 196, placing petitioner under the
jurisdiction of respondent NTC, provide for any standard in the
exercise of its rate-fixing and adjudicatory powers? YES
4) Was there a violation of due process (Procedural and Substantive)?
YES
5) Is the Order on the reduction of rates invalid? YES
RULING
1) When the administrative agency concerned, respondent NTC in this
case, establishes a rate, its act must both be non- confiscatory and
must have been established in the manner prescribed by the
legislature; otherwise, in the absence of a fixed standard, the
delegation of power becomes unconstitutional. In case of a
delegation of rate-fixing power, the only standard which the
legislature is required to prescribe for the guidance of the
administrative authority is that the rate be reasonable and just.
However, it has been held that even in the absence of an express
requirement as to reasonableness, this standard may be implied.
2) And 3) Pursuant to Executive Orders Nos. 546 and 196,
respondent NTC is empowered, among others, to determine and
prescribe rates pertinent to the operation of public service
communications which necessarily include the power to
promulgate rules and regulations in connection therewith.
And, under Section 15(g) of Executive Order No. 546, respondent
NTC should be guided by the requirements of public safety, public
interest and reasonable feasibility of maintaining effective
competition of private entities in communications and broadcasting
facilities. Likewise, in Section 6(d) thereof, which provides for the
creation of the Ministry of Transportation and Communications
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with control and supervision over respondent NTC, it is specifically
provided that the national economic viability of the entire network
or components of the communications systems contemplated
therein should be maintained at reasonable rates.
NTC, in the exercise of its rate-fixing power, is limited by the
requirements of public safety, public interest, reasonable feasibility
and reasonable rates, which conjointly more than satisfy the
requirements of a valid delegation of legislative power.
4)PROCEDURAL DUE PROCESS: Where the function of the
administrative agency is legislative, notice and hearing are not
required, but where an order applies to a named person, as in the
instant case, the function involved is adjudicatory and so notice
and hearing is necessary.
In The Central Bank of the Philippines vs. Cloribel, et al.
'If the nature of the administrative agency is
essentially legislative, the requirements of
notice and hearing are not necessary. The
validity of a rule of future action which affects a
group, if vested rights of liberty or property are
not involved, is not determined according to the
same rules which apply in the case of the direct
application of a policy to a specific
individual)XXXXX
“Aside from statute, the necessity of notice and
hearing in an administrative proceeding
depends on the character of the proceeding and
the circumstances involved. In so far as
generalization is possible in view of the great
variety of administrative proceedings, it may be
stated as a general rule that notice and hearing
are not essential to the validity of
administrative action where the administrative
body acts in the exercise of executive,
administrative, or legislative functions; but
where a public administrative body acts in a
judicial or quasi-judicial matter, and its acts are
particular and immediate rather than general
and prospective, the person whose rights or
property may be affected by the action is
entitled to notice and hearing”
he order in question which was issued by respondent Alcuaz no
doubt contains all the attributes of a quasi-judicial adjudication.
Foremost is the fact that said order pertains exclusively to
petitioner and to no other. Further, it is premised on a finding of
fact, although patently superficial, that there is merit in a
reduction of some of the rates charged- based on an initial
evaluation of petitioner's financial statements-without affording
petitioner the benefit of an explanation as to what particular
aspect or aspects of the financial statements warranted a
corresponding rate reduction.
There remains the categorical admission made by respondent NTC that the
questioned order was issued pursuant to its quasi-judicial functions. It,
however, insists that notice and hearing are not necessary since the
assailed order is merely incidental to the entire proceedings and,
therefore, temporary in nature. This postulate is bereft of merit.
While respondents may fix a temporary rate pending final determination of
the application of petitioner, such rate-fixing order, temporary though it
may be, is not exempt from the statutory procedural requirements of
notice and hearing, as well as the requirement of reasonableness.
Assuming that such power is vested in NTC, it may not exercise the same
in an arbitrary and confiscatory manner. Categorizing such an order as
temporary in nature does not perforce entail the applicability of a different
rule of statutory procedure than would otherwise be applied to any other
order on the same matter unless otherwise provided by the applicable law.
16(c) of the Public Service Act which provides:
Section 16. 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:
xxx xxx xxx
(c) To fix and determine individual or joint rates, ... which
shall be imposed, observed and followed thereafter by any
public service; ...
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There is no reason to assume that the aforesaid provision does not apply
to respondent NTC, there being no limiting, excepting, or saving provisions
to the contrary in Executive Orders Nos. 546 and 196.
It is thus clear that with regard to rate-fixing, respondent has no authority
to make such order without first giving petitioner a hearing, whether the
order be temporary or permanent, and it is immaterial whether the same
is made upon a complaint, a summary investigation, or upon the
commission's own motion as in the present case.
NTC should act solely on the basis of the evidence before it and not on
knowledge or information otherwise acquired by it but which is not offered
in evidence or, even if so adduced, petitioner was given no opportunity to
controvert.
SUBSTANTIVE DUE PROCESS: There is no question that petitioner is a
mere grantee of a legislative franchise which is subject to amendment,
alteration, or repeal by Congress when the common good so requires.
Apparently, therefore, such grant cannot be unilaterally revoked absent a
showing that the termination of the operation of said utility is required by
the common good.
The inherent power and authority of the State, or its authorized agent, to
regulate the rates charged by public utilities should be subject always to
the requirement that the rates so fixed shall be reasonable and just. A
commission has no power to fix rates which are unreasonable or to
regulate them arbitrarily. This basic requirement of reasonableness
comprehends such rates which must not be so low as to be confiscatory,
or too high as to be oppressive.
A cursory perusal of the assailed order reveals that the rate reduction is
solely and primarily based on the initial evaluation made on the financial
statements of petitioner, contrary to respondent NTC's allegation that it
has several other sources of information without, however, divulging such
sources. Furthermore, it did not as much as make an attempt to elaborate
on how it arrived at the prescribed rates. It just perfunctorily declared that
based on the financial statements, there is merit for a rate reduction
without any elucidation on what implications and conclusions were
necessarily inferred by it from said statements. Nor did it deign to explain
how the data reflected in the financial statements influenced its decision to
impose a rate reduction.
Petitioner is engaged in several projects aimed at refurbishing,
rehabilitating, and renewing its machinery and equipment in order to keep
up with the continuing charges of the times and to maintain its facilities at
a competitive level with the technological advances abroad. There
projected undertakings were formulated on the premise that rates are
maintained at their present or at reasonable levels. Hence, an undue
reduction thereof may practically lead to a cessation of its business. While
we concede the primacy of the public interest in an adequate and efficient
service, the same is not necessarily to be equated with reduced rates.
Reasonableness in the rates assumes that the same is fair to both the
public utility and the consumer.
5)The challenged order, particularly on the issue of rates provided therein,
being violative of the due process clause is void and should be nullified.
Respondents should now proceed, as they should heretofore have done,
with the hearing and determination of petitioner's pending application for a
certificate of public convenience and necessity.
ENERGY REGULATORY BOARD vs. CA
FACTS
Petitioner Pilipinas Shell Petroleum Corporation (Shell) is engaged in the
business of importing crude oil, refining the same and selling various
petroleum products through a network of service stations throughout the
country.. Private respondent Petroleum Distributors and Service
Corporation (PDSC) owns and operates a Caltex service station at the
corner of the MIA and Domestic Roads in Pasay City.
On June 30,1983, Shell filed with the quondam Bureau of Energy
Utilization (BEU) an application for authority to relocate its Shell Service
Station at Tambo, Paraaque, Metro Manila, to Imelda Marcos Avenue of
the same municipality. The application, which was docketed as BEU Case
No. 83-09-1319, was initially rejected by the BEU because Shells old site
had been closed for five (5) years such that the relocation of the same to a
new site would amount to a new construction of a gasoline outlet, which
construction was then the subject of a moratorium. Subsequently,
however, BEU relaxed its position and gave due course to the application.
PDSC filed an opposition to the application on the grounds that: 1.] there
are adequate service stations attending to the motorists requirements in
the trading area covered by the application; 2.] ruinous competition will
result from the establishment of the proposed new service station; and 3.]
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there is a decline not an increase in the volume of sales in the area. Two
other companies, namely Petrophil and Caltex, also opposed the
application on the ground that Shell failed to comply with the jurisdictional
requirements.
BEU: denying Shells application on a finding that there was no necessity
for an additional petroleum products retail outlet in Imelda Marcos Avenue,
Paraaque. Thus, Shell appealed to the Office of Energy Affairs (OEA).
Meanwhile, on May 8, 1987, Executive Order No. 172 was issued
creating the Energy Regulatory Board (ERB) and transferring to it
the regulatory and adjudicatory functions of the BEU.
OEA: denied appeal
⇒Thus, Shell moved for reconsideration and prayed for a new
hearing or the remand of the case for further proceedings. It also
submitted a new feasibility study to justify its application.--> OEA
remanded to ERB
ERB: decision allowing Shell to establish the service station in Benigno
Aquino, Jr. Avenue.
PDSC filed a MR of the foregoing Decisiondenied by ERB
⇒Thus, PDSC elevated Order of denial to CA
CA: reversed
⇒ also denied ERB and Shell’s MR HENCE THIS PETITION
ISSUE
W/N CA erred? YES. Decision reversed.
RULING
1) The policy of the government in this regard has been to allow a free
interplay of market forces with minimal government supervision. The
purpose of governing legislation is to liberalize the downstream oil industry
in order to ensure a truly competitive market under a regime of fair prices,
adequate and continuous supply, environmentally clean and high-quality
petroleum products.[5] Indeed, exclusivity of any franchise has not been
favored by the Court,[6] which is keen on promoting free competition and
the development of a free market consistent with the legislative policy of
deregulation as an answer to the problems of the oil industry
The interpretation of an administrative government agency like the ERB,
which is tasked to implement a statute, is accorded great respect and
ordinarily controls the construction of the courts. A long line of cases
establish the basic rule that the courts will not interfere in matters which
are addressed to the sound discretion of government agencies entrusted
with the regulation of activities coming under the special technical
knowledge and training of such agencies.
The rationale for this rule relates not only to the emergence of the
multifarious needs of a modern or modernizing society and the
establishment of diverse administrative agencies for addressing and
satisfying those needs; it also relates to the accumulation of experience
and growth of specialized capabilities by the administrative agency
charged with implementing a particular statute. In Asturias Sugar Central,
Inc. v. Commissioner of Customs the Court stressed that executive officials
are presumed to have familiarized themselves with all the considerations
pertinent to the meaning and purpose of the law, and to have formed an
independent, conscientious and competent expert opinion thereon. The
courts give much weight to the government agency or officials charged
with the implementation of the law, their competence, expertness,
experience and informed judgment, and the fact that they frequently are
drafters of the law they interpret.
When an administrative agency renders an opinion or issues a statement
of policy, it merely interprets a pre-existing law and the administrative
interpretation is at best advisory for it is the courts that finally determine
what the law means.[ Thus, an action by an administrative agency may
be set aside by the judicial department if there is an error of law, abuse of
power, lack of jurisdiction or grave abuse of discretion clearly conflicting
with the letter and spirit of the law. (FOR REFERENCE sake: ERB’s
Powers)1
1
SEC. 3. Jurisdiction, Powers and Functions of the Board. When warranted and only when public
necessity requires, the Board may regulate the business of importing, exporting, re-exporting,
shipping, transporting, processing, refining, marketing and distributing energy resources. The
Board shall, upon prior notice and hearing, exercise the following, among other powers and
functions (a) Fix and regulate the prices of petroleum products
(b) Fix and regulate the rate schedule or prices
of piped gas to be charged by duly franchised gas companies which distribute gas by means of
underground pipe systems;
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Time and again this Court has ruled that in reviewing administrative
decisions, the findings of fact made therein must be respected as long as
they are supported by substantial evidence, even if not overwhelming or
preponderant; that it is not for the reviewing court to weigh the conflicting
evidence, determine the credibility of the witnesses or otherwise substitute
its own judgment for that of the administrative agency on the sufficiency
of evidence; that the administrative decision in matters within the
executive jurisdiction can only be set aside on proof of grave abuse of
discretion, fraud or error of law.[26] Petitioner ERB is in a better position
to resolve petitioner Shells application, being primarily the agency
possessing the necessary expertise on the matter. The power to determine
whether the building of a gasoline retail outlet in a trading area would
benefit public interest and the oil industry lies with the ERB not the
appellate courts.
Finally, while it is probable that the operation of the proposed Shell outlet
may, to a certain extent, affect PDSCs business, private respondent
nevertheless failed to show that its business would not have sufficient
profit to have a fair return of its investment. The mere possibility of
reduction in the earnings of a business is not sufficient to prove ruinous
competition. a climate of fear and pessimism generated by
unsubstantiated claims of ruinous competition already rejected in the past
should not be made to retard free competition, consistently with legislative
policy of deregulating and liberalizing the oil industry to ensure a truly
competitive market under a regime of fair prices, adequate and continuous
supply, environmentally clean and high-quality petroleum products.
PADUA vs. RANADA
FACTS
(c) Fix and regulate the rates of pipeline concessionaires under the provisions of
Republic Act No. 387, as amended, otherwise know as the Petroleum Act of 1949, as amended by
Presidential Decree No. 1700;chanroblesvirtuallawlibrary (d) Regulate the
capacities of new refineries or additional capacities of existing refineries and license refineries that
may be organized after the issuance of this Executive Order, under such terms and conditions as are
consistent with the national interest; (e) Whenever the Board has determined that there is a
shortage of any petroleum product, or when public interest so requires, it may take such steps as it
may consider necessary, including the temporary adjustment of the levels of prices of petroleum
products and the payment to the Oil Price Stabilization Fund created under Presidential Decree No.
1956 by persons or entities engaged in the petroleum industry of such amounts as may be
determined by the Board, which will enable the importer to recover its costs of importation.
On February 27, 2001 the Citra Metro Manila Tollways Corporation (CITRA)
filed with the TRB an application for an interim adjustment of the toll rates
at the Metro Manila Skyway Project – Stage 1CITRA moored its petition on
the provisions of the "Supplemental Toll Operation Agreement"
(STOAauthorizing it, to apply for, and if warranted be granted an interim
adjustment of toll rates in the event of a "significant currency
devaluation." Claiming that the peso exchange rate to a U.S. dollar had
devaluated from P26.1671 in 1995 to P48.00 in 2000, CITRA alleged that
there was a compelling need for the increase of the toll rates to meet the
loan obligations of the Project and the substantial increase in debt-service
burden.
Due to heavy opposition, CITRA’s petition remained unresolved. This
prompted CITRA to file on October 9, 2001 an "Urgent Motion for
Provisional Approval," On October 30, 2001, CITRA moved to withdraw its
"Urgent Motion for Provisional Approval" without prejudice to its right to
seek or be granted provisional relief under the above-quoted provisions of
the TRB Rules of Procedure, obviously, referring to the power of the Board
to act on its own initiative.
On November 7, 2001, CITRA wrote a letter to TRB expressing its concern
over the undue delay in the proceeding, stressing that any further setback
would bring the Project’s financial condition, as well as the Philippine
banking system, to a total collapse. CITRA recounted that out of the
US$354 million funding from creditors. Thus, CITRA requested TRB to find
a timely solution to its predicament. On November 9, 2001, TRB granted
CITRA’s motion to withdraw the Urgent Motion for Provisional Approval .
TRB: issued Resolution No. 2001-89 authorizing provisional toll rate
adjustments at the Metro Manila Skyway, effective January 1, 2002,
: On December 17, 24 and 31, 2001, the above Resolution approving
provisional toll rate adjustments was published in the newspapers of
general circulation.
Petitioner Ceferino Padua, as a toll payer, filed an "Urgent Motion for a
Temporary Restraining Order to Stop Arbitrary Toll Fee Increases" [in G.R.
No. 141949a petition for mandamus earlier filed by him. In that petition,
Padua seeks to compel respondent Judge Santiago Ranada of the Regional
Trial Court, Branch 137, Makati City, to issue a writ of execution for the
enforcement of the Court of Appeals’ Decision dated August 4, 1989 in CA-
G.R. SP No. 13235. In its Decision, the Court of Appeals ordered the
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exclusion of certain portions of the expressways (from Villamor Air Base to
Alabang in the South, and from Balintawak to Tabang in the North) from
the franchise of the PNCC.
On the other hand petitioner Eduardo Zialcita, as a taxpayer and as
Congressman of Parañaque City, filed the present petition for prohibition
with prayer for a temporary restraining order and/or writ of preliminary
injunction against TRB and CITRA, docketed as G.R. No. 151108,
impugning the same Resolution No. 2001-89. Petitioner Zialcita asserts
that the provisional toll rate adjustments are exorbitant and that the TRB
violated its own Charter, Presidential Decree No. 1112 when it
promulgated Resolution No. 2001-89 without the benefit of any public
hearing. He also maintains that the TRB violated the Constitution when it
did not express clearly and distinctly the facts and the law on which
Resolution No. 2001-89 was based. And lastly, he claims that Section 3,
Rule 10 of the TRB Rules of Procedure is not sanctioned by P.D. No. 1112.
CITRA, in its comment on Congressman Zialcita’s petition, counters that:
(1) the TRB has primary administrative jurisdiction over all matters
relating to toll rates; (2) prohibition is an inappropriate remedy because its
function is to restrain acts about to be done and not acts already
accomplished; (3) Resolution No. 2001-89 was issued in accordance with
law; (4) Section 3, Rule 10 of the TRB Rules is constitutional; and (5)
private respondent and the Republic of the Philippines would suffer more
irreparable damages than petitioner. The TRB, through the OSG, filed a
separate comment reiterating the same arguments raised by private
respondent CITRA. Thus, both petitions were consolidated.
ISSUE
1) Was the resolution void for being violative of due process?
2) Is hearing necessary to grant provisional toll rate adjustments?
3) Did CITRA have locus standing?
RULING
1) Records show that they were published on December 17, 24 and 31,
2001 in 3 newspapers of general circulation, particularly the Philippine
Star, Philippine Daily Inquirer and The Manila Bulletin. Surely, such
publications sufficiently complied with Section 5 of P.D. No. 1112 which
mandates that "no new rates shall be collected unless published in a
newspaper of general publication at least once a week for three
consecutive weeks." At any rate, it must be pointed out that under Letter
of Instruction No. 1334-A the TRB may grant and issue ex-parte to any
petitioner, without need of notice, publication or hearing, provisional
authority to collect, pending hearing and decision on the merits of the
petition, the increase in rates prayed for or such lesser amount as the TRB
may in its discretion provisionally grant. That LOI No. 1334-A has the force
and effect of law finds support in a catena of cases decreeing that "all
proclamations, orders, decrees, instructions, and acts promulgated,
issued, or done by the former President (Ferdinand E. Marcos) are part of
the law of the land, and shall remain valid, legal, binding, and effective,
unless modified, revoked or superseded by subsequent proclamations,
orders, decrees, instructions, or other acts of the President.
2) The SC stressed that the TRB’s authority to grant provisional toll rate
adjustments does not require the conduct of a hearing. Pertinent laws and
jurisprudence support this conclusion.2
From the foregoing, it is clear that
a hearing is not necessary for the grant of provisional toll rate adjustment.
The language of LOI No. 1334-A is not susceptible of equivocation. It
2
To clarify the intent of P.D. No. 1112 as to the extent of the TRB’s power,[35] Former President
Marcos further issued LOI No. 1334-A expressly allowing the TRB to grant ex-parte provisional or
temporary increase in toll rates, thus:
"NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Republic of the Philippines, by
virtue of the powers vested in me by the Constitution, do hereby direct, order and instruct the
Toll Regulatory Board to grant and issue ex-parte to any petitioner, without need of notice,
publication or hearing, provisional authority to collect, pending hearing of and decision on the
merits of such petition, the increase in rates prayed for or such lesser amount as the Board may
in its discretion provisionally grant, upon (a) a finding that the said petition is sufficient in form
and substance, (b) the submission of an affidavit by the petitioner showing that the increase in rates
substantially conforms to the formula, if any stipulated in the franchise or toll operation
agreement/certificate of the petitioner and that failure to immediately impose and collect the
increase in rates would result in outright delay or stoppage of urgently needed improvements,
expansion or repairs of toll facilities and/or in great irreparable injury to the petitioner, and (c) the
submission by the petitioner to the Board of a bond, in such amount and from such surety or
sureties and under such terms and conditions as the Board shall fix, to guarantee the refund of the
increase in rates to the affected toll payers in case it is finally determined, after notice and hearing,
that the petitioner is not entitled, in whole or in part, to the same. Any provisional toll rate increases
shall be effective immediately upon approval without need of publication."
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"directs, orders and instructs" the TRB to issue provisional toll rates
adjustment ex-parte without the need of notice, hearing and publication.
All that is necessary is that it be issued upon (1) a finding that the main
petition is sufficient in form and substance; (2) the submission of an
affidavit showing that the increase in rates substantially conforms to the
formula, if any is stipulated in the franchise or toll operation agreement,
and that failure to immediately impose and collect the increase in rates
would result in great irreparable injury to the petitioner; and (3) the
submission of a bond. Again, whether or not CITRA complied with these
requirements is an issue that must be addressed to the TRB.
The practice is not something peculiar. We have ruled in a number of
cases that an administrative agency may be empowered to approve
provisionally, when demanded by urgent public need, rates of public
utilities without a hearing. The reason is easily discerned from the fact that
provisional rates are by their nature temporary and subject to adjustment
in conformity with the definitive rates approved after final hearing
In the light thereof, public respondent Board need not even have
conducted formal hearings in these cases prior to issuance of its Order of
14 August 1987 granting a provisional increase of prices. The Board, upon
its own discretion and on the basis of documents and evidence submitted
by private respondents, could have issued an order granting provisional
relief immediately upon filing by private respondents of their respective
applications. In this respect, the Court considers the evidence presented
by private respondents in support of their applications -–.i.e., evidence
showing that importation costs of petroleum products had gone up; that
the peso had depreciated in value; and that the Oil Price Stabilization Fund
(OPSF) had been depleted – as substantial and hence constitutive of at
least prima facie basis for issuance by the Board of a provisional relief
order granting an increase in the prices of petroleum products.
Thereafter, the TRB promulgated as part of its Rules of Procedure, the following provision: "RULE 5:
PROCEDURE FOR APPROVAL OF TOLL RATE
"Section 2. Provisional Relief – Upon initial findings of the Board that the Petition for the approval of
initial toll rate or the petition for toll rate adjustment is in accordance with Sections 1 and 2 of Rule 2,
Section 2 of Rule 3 and Section 1 of Rule 4 hereof, the Board within a reasonable time after the
filing of the Petition, may in an en banc decision provisionally approve the initial toll rate or
toll rate adjustment, without the necessity of any notice and hearing."
3) Anent petitioner Padua’s contention that CITRA has no standing to apply
for a toll fee increase, suffice it to say that CITRA’s right stems from the
STOA which was entered into by no less than the Republic of the
Philippines and by the PNCC. Section 7.04 of the STOA provides that the
Investor, CITRA, and/or the Operator, PNCC, shall be entitled to apply for
and if warranted, to be granted an interim adjustment of toll rates in case
of force majeure and a significant currency valuation. Now, unless set
aside through proper action, the STOA has the force and effect of law
between the contracting parties, and is entitled to recognition by this
Court. On the same breath, we cannot sustain Padua’s contention that the
term "Metro Manila Skyway" Project excludes the at-grade portions of the
South Luzon Expressway considering that under the same STOA the
"Metro Manila Skyway" includes: "(a) the South Metro Manila Skyway,
coupled with the rehabilitated at-grade portion of the South Luzon
Expressway, from Alabang to Quirino Avenue; (b) the Central Metro Manila
Skyway, from Quirino Avenue to A. Bonifacio Avenue.
3B DIGEST GROUP 2009-2010 Ad Deum Per Excellentia

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193389352 transpo-digests-public-service

  • 1. TRANSPORTATION DIGEST – PUBLIC SERVICE A.M.+D.G. TRANSPORTATION – Atty. Abano Get Homework/Assignment Done Homeworkping.com Homework Help https://www.homeworkping.com/ Research Paper help https://www.homeworkping.com/ Online Tutoring https://www.homeworkping.com/ click here for freelancing tutoring sites KILOSANG MAYO UNO LABOR CENTER vs. GARCIA FACTS On June 26 1990, then Secretary of DOTC, Oscar Orbos, issued Memorandum Circular No. 90-395 to then LTFRB Chairman, Remedios A.S. Fernando allowing provincial bus operators to charge passengers rates within a range of 15% above and 15% below the LTFRB official rate for a period of one (1) year. On December 5, 1990, private respondent Provincial Bus Operators Association of the Philippines, Inc. (PBOAP) filed an application for fare rate increase. An across-the-board increase of eight and a half centavos (P.0085) per kilometre for all types of provincial buses with a minimum- maximum fare range of 15% over and below the proposed basic per kilometre fare rate, with the said minimum-maximum fare range applying only to ordinary, first class and premium class buses and a fifty-centavo (P0.50) per kilometre fare for aircon buses were sought. Later on, PBOAP reduced its applied proposed fare to an across-the-board increase of six and a half (P0.065) centavos per kilometre for ordinary buses. Although opposed, the LTRFB rendered a decision granting the fare rate increase. On March 30, 1992, then Secretary of the Department of Transportation and Communications Pete Nicomedes Prado issued Department Order No. 92-587 defining the policy framework on the regulation of transport services. Relevant portions to this case are: In determining public need, the presumption of need for a service shall be deemed in favor of the applicant. The burden of proving that there is no need for a proposed service shall be with the oppositor(s). Passenger fares shall also be deregulated, except for the lowest class of passenger service (normally third class passenger transport) for which the government will fix indicative or reference fares. Operators of particular services may fix their own fares within a range 15% above and below the indicative or reference rate. 3B DIGEST GROUP 2009-2010 Ad Deum Per Excellentia
  • 2. TRANSPORTATION DIGEST – PUBLIC SERVICE A.M.+D.G. TRANSPORTATION – Atty. Abano Sometime in March, 1994, private respondent PBOAP, availing itself of the deregulation policy of the DOTC allowing provincial bus operators to collect plus 20% and minus 25% of the prescribed fare without first having filed a petition for the purpose and without the benefit of a public hearing, announced a fare increase of twenty (20%) percent of the existing fares. Said increased fares were to be made effective on March 16, 1994. On March 16, 1994, petitioner KMU filed a petition before the LTFRB opposing the upward adjustment of bus fares. On March 24, 1994, the LTFRB issued one of the assailed orders dismissing the petition for lack of merit. ISSUE 1. W/N petitioner has locus standi YES 2. W/N the authority given by respondent LTFRB to provincial bus operators to set a fare range of plus or minus fifteen (15%) percent, later increased to plus twenty (20%) and minus twenty- five (-25%) percent, over and above the existing authorized fare without having to file a petition for the purpose, is unconstitutional, invalid and illegal. YES 3. W/N establishment of a presumption of public need in favor of an applicant for a proposed transport service without having to prove public necessity, is illegal for being violative of the Public Service Act and the Rules of Court. YES RULING 1. In the case at bench, petitioner, whose members had suffered and continue to suffer grave and irreparable injury and damage from the implementation of the questioned memoranda, circulars and/or orders, has shown that it has a clear legal right that was violated and continues to be violated with the enforcement of the challenged memoranda, circulars and/or orders. KMU members, who avail of the use of buses, trains and jeepneys everyday, are directly affected by the burdensome cost of arbitrary increase in passenger fares. They are part of the millions of commuters who comprise the riding public. Certainly, their rights must be protected, not neglected nor ignored. 2. The Legislature delegated to the defunct Public Service Commission the power of fixing the rates of public services. Respondent LTFRB, the existing regulatory body today, is likewise vested with the same under Executive Order No. 202 dated June 19, 1987. Section 5(c) of the said executive order authorizes LTFRB "to determine, prescribe, approve and periodically review and adjust, reasonable fares, rates and other related charges, relative to the operation of public land transportation services provided by motorized vehicles. Such delegation of legislative power to an administrative agency is permitted in order to adapt to the increasing complexity of modern life. With this authority, an administrative body and in this case, the LTFRB, may implement broad policies laid down in a statute by "filling in" the details which the Legislature may neither have time or competence to provide. However, nowhere under the aforesaid provisions of law are the regulatory bodies, the PSC and LTFRB alike, authorized to delegate that power to a common carrier, a transport operator, or other public service. In the case at bench, the authority given by the LTFRB to the provincial bus operators to set a fare range over and above the authorized existing fare, is illegal and invalid as it is tantamount to an undue delegation of legislative authority. Potestas delegata non delegari potest. What has been delegated cannot be delegated. A further delegation of such power would indeed constitute a negation of the duty in violation of the trust reposed in the delegate mandated to discharge it directly. This would leave the riding public at the mercy of transport operators who may increase fares every hour, every day, every month or every year, whenever it pleases them or whenever they deem it "necessary" to do so. One veritable consequence of the deregulation of transport fares is a compounded fare. If transport operators will be authorized to impose and collect an additional amount equivalent to 20% over and above the authorized fare over a period of time, this will unduly prejudice a commuter who will be made to pay a fare that has been computed in a manner similar to those of compounded bank interest rates. The present administrative procedure, to our mind, already mirrors an orderly and satisfactory arrangement for all parties involved. To 3B DIGEST GROUP 2009-2010 Ad Deum Per Excellentia
  • 3. TRANSPORTATION DIGEST – PUBLIC SERVICE A.M.+D.G. TRANSPORTATION – Atty. Abano do away with such a procedure and allow just one party, an interested party at that, to determine what the rate should be, will undermine the right of the other parties to due process. The purpose of a hearing is precisely to determine what a just and reasonable rate is. Discarding such procedural and constitutional right is certainly inimical to our fundamental law and to public interest. 3. On the presumption of public need. A certificate of public convenience (CPC) is an authorization granted by the LTFRB for the operation of land transportation services for public use as required by law. One of its requirements is that the applicant must prove 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. It is also understood that there must be proper notice and hearing before the PSC can exercise its power to issue a CPC. The “presumption of a public need for a service” provision is entirely incompatible and inconsistent with Section 16(c)(iii) of the Public Service Act which requires that before a CPC will be issued, the applicant must prove by proper notice and hearing that the operation of the public service proposed will promote public interest in a proper and suitable manner. The power of a regulatory body to issue a CPC is founded on the condition that after full-dress hearing and investigation, it shall find, as a fact, that the proposed operation is for the convenience of the public. Basic convenience is the primary consideration for which a CPC is issued, and that fact alone must be consistently borne in mind. Also, existing operators in subject routes must be given an opportunity to offer proof and oppose the application. Therefore, an applicant must, at all times, be required to prove his capacity and capability to furnish the service which he has undertaken to render. And all this will be possible only if a public hearing were conducted for that purpose. NOTE: Public utilities are privately owned and operated businesses whose service are essential to the general public. They are enterprises which specially cater to the needs of the public and conduce to their comfort and convenience. As such, public utility services are impressed with public interest and concern. The same is true with respect to the business of common carrier which holds such a peculiar relation to the public interest that there is superinduced upon it the right of public regulation when private properties are affected with public interest, hence, they cease to be juris privati only. PAL vs. CAB FACTS GrandAir applied with the Civil Aeronautivcs Board for a Certificate of Public Convenience and Necessity for the MLA-CEBU and MLA-DAVAO route. Accordingly, the Chief Hearing Officer of the CAB issued a Notice of Hearing setting the application for initial hearingn and directing GrandAir to serve a copy of the application and corresponding notice to all scheduled Philippine Domestic operators. GrandAir filed its Compliance, and requested for the issuance of a Temporary Operating Permit. PAL, itself the holder of a legislative franchise to operate air transport services, filed an opposition to the application on several grounds which include LACK OF JURISDICTION ON THE PART OF THE BOARD to hear the application until GrandAir has obtained a franchise to operate from Congress. (Other grounds were deficient form and substance of the application; violation of the equal protection clause if application is granted; no urgent need for new service; granting of application would result in ruinous competition.) The Board ruled that it had jurisdiction to hear the application. The Board even granted GrandAir a Temporary Operating License. PAL’s motion for reconsideration was denied. The Board even granted a 6-month extension to GrandAir’s temporary permit. PAL says: Board acted beyond its powers and jurisdiction: (1) in taking cognizance of GrandAir's application for the issuance of a Certificate of Public Convenience and Necessity, and (2) in issuing a temporary operating permit in the meantime. Reasoning of PAL: GrandAir has not been granted and does not possess a legislative franchise to engage in scheduled domestic air transportation. A legislative franchise is necessary before anyone may engage in air transport services, and a franchise may only be granted by Congress. 3B DIGEST GROUP 2009-2010 Ad Deum Per Excellentia
  • 4. TRANSPORTATION DIGEST – PUBLIC SERVICE A.M.+D.G. TRANSPORTATION – Atty. Abano This is the meaning given by the PALupon a reading of Section 11, Article XII, and Section 1, Article VI, of the Constitution. In support of this, PAL presents a 1994 DOJ opinion by Secretary Ordonez where a distinction was made between the franchise to operate and a permit to commence operation. According to the opinion, “it is clear that a franchise is the legislative authorization to engage in a business activity or enterprise of a public nature, whereas a certificate of public convenience and necessity is a regulatory measure which constitutes the franchise's authority to commence operations. It is thus logical that the grant of the former should precede the latter.” GrandAir argues: The Board has: (1) the authority to hear the application and, (2)can grant temporary operating permits and certificates of public convenience and necessity. GrandAir’s reasoning: (1) Section 10 (specifically 10-C1) of RA 776 grants it such authority “to issue, deny, amend revise, alter, modify, cancel, suspend or revoke, in whole or in part, upon petitioner-complaint, or upon its own initiative, any temporary operating permit or Certificate of Public Convenience and Necessity”. (2) Jurisprudence: • SC ruled in another PAL vs CAB case (1968) that CAB could, even on its own initiative, grant a temporary operating permit (TOP) even before the presentation of evidence. • CA cases which held that CAB can grant not only temporary operating permit (TOP) but also a Certificate of Public Convenience and Necessity (CPCN) • SC decision in Albano vs Reyes: a) Franchises by Congress are not required before each and every public utility may operate when the law has granted certain administrative agencies the power to grant licenses for or to authorize the operation of certain public utilities; (b) The Constitutional provision in Article XII, Section 11 that the issuance of a franchise, certificate or other form of authorization for the operation of a public utility does not necessarily imply that only Congress has the power to grant such authorization... (3) EO 219: a minimum of 2 operators in each route/ link shall be encouraged. ISSUE W/N Congress, in enacting Republic Act 776, has delegated the authority to authorize the operation of domestic air transport services to the respondent Board, such that Congressional mandate for the approval of such authority is no longer necessary RULING Yes. The Board has the authority. • The trend of modern legislation is to vest the Public Service Commissioner with the power to regulate and control the operation of public services under reasonable rules and regulations, and as a general rule, courts will not interfere with the exercise of that discretion when it is just and reasonable and founded upon a legal right. It is this policy which was pursued by the Court in Albano vs. Reyes (cited above). • There is nothing in the law nor in the Constitution, which indicates that a legislative franchise is an indispensable requirement for an entity to operate as a domestic air transport operator. Although Section 11 of Article XII recognizes Congress' control over any franchise, certificate or authority to operate a public utility, it does not mean Congress has exclusive authority to issue the same. Franchises issued by Congress are not required before each and every public utility may operate. In many instances, Congress has seen it fit to delegate this function to government agencies, specialized particularly in their respective areas of public service. • Reading Section 10 of RA 776 shows the clear intent of Congress to grant CAB the authority to issue TOP and CPCN. • The SC did not agree with PAL’s argument that granting of a franchise and granting a TOP or CPCN are two different things; and that a grant of franchise from Congress is necessary before the Board can grant either TOP or CPCN. • “Congress, by giving the respondent Board the power to issue permits for the operation of domestic transport services, has delegated to the said body the authority to determine the capability and competence of a prospective domestic air transport operator to engage in such venture. This is not an instance of transforming the respondent Board into a mini-legislative body, with unbridled authority to choose who should be given authority to operate domestic air transport services.” o Congress set specific limitations on the Boards authority in Sec. 4 of the RA776 (Declaration of Policies). 3B DIGEST GROUP 2009-2010 Ad Deum Per Excellentia
  • 5. TRANSPORTATION DIGEST – PUBLIC SERVICE A.M.+D.G. TRANSPORTATION – Atty. Abano o More importantly, under Sec. 12-24 of RA 776, Congress has spelled out the requirements for determining the competency of a prospective operator, as well as the procedure for the processing of the applications. • SC dismissed PAL’s opposition to the hearings set by CAB for GrandAir’s application for CPCN. NPC vs. CA FACTS Cagayan Electric and power Light Company (CEPALCO) was enfranchised by Republic Act No. 3247 "to construct, maintain and operate an electric light, heat and power system for the purpose of generating and/or distributing electric light, heat and/or power for sale within the City of Cagayan de Oro and its suburbs" for fifty (50) years. Presidential Decree No. 243, issued on July 12, 1973, created a "body corporate and politic" to be known as the Philippine Veterans Investment Development Corporation (PHIVIDEC) vested with authority to engage in "commercial, industrial, mining, agricultural and other enterprises" among other powers and "to allow the full and continued employment of the productive capabilities of and investment of the veterans and retirees of the Armed Forces of the Philippines." On August 13, 1974, Presidential Decree No. 538 was promulgated to create the PHIVIDEC Industrial Authority (PIA), a subsidiary of PHIVIDEC, to carry out the government policy "to encourage, promote and sustain the economic and social growth of the country and that the establishment of professionalized management of well-planned industrial areas shall further this objective." Under Sec. 3 of P.D. No. 538, the first area for development shall be located in the municipalities of Tagoloan and Villanueva. This area forms part of the PHIVIDEC Industrial Estate Misamis Oriental (PIE-MO). As manager of PIE-MO, PIA granted the Ferrochrome Philippines, Inc. (FPI) and Metal Alloys Corporation (MAC) authority to operate in its area of development. On July 6, 1979, PIA granted CEPALCO a temporary authority to retail electric power to the industries operating within the PIE- MO. The Agreement executed by PIA and CEPALCO authorized CEPALCO "to operate, administer, construct and distribute electric power within the PHIVIDEC Industrial Estate, Misamis Oriental, such authority to be co- extensive with the territorial jurisdiction of PHIVIDEC Industrial Estate, as defined in Sec. 3 of P.D. No. 538 and shall be for a period of five (5) years, renewable for another five (5) years at the option of CEPALCO." The parties provided further that: 9. At the end of the fifth year, or at the end of the 10th year, should this Agreement be thus renewed, PIA has the option to take over the operation of the electric service and acquire by purchase CEPALCO's assets within PIE-MO. This option shall be communicated to CEPALCO in writing at least 24 months before the date of acquisition of assets and takeover of operation by PIA. Should PIA exercise its option to purchase the assets of CEPALCO in PIE-MO, PIA shall respect the right of ownership of and maintenance by CEPALCO of those assets inside PIE-MO not covered by such purchase. . . . According to PIA, CEPALCO proved no match to the power demands of the industries in PIE-MO that most of these companies operating therein closed shop. Impelled by a "desire to provide cheap power costs to power- intensive industries operating within the Estate," PIA applied with the National Power Corporation (NPC) for direct power connection which the latter in due course approved. One of the companies which entered into an agreement with the NPC for a direct sale and supply of power was the Ferrochrome Phils., Inc. (FPI). Contending that the said agreement violated its right as the authorized operator of an electric light and power system in the area and the national electrification policy, CEPALCO filed Civil Case No. Q-35945, a petition for prohibition, mandamus and injunction before the Regional Trial Court of Quezon City against the NPC. Notwithstanding NPC's claim that it was authorized by its Charter to sell electric power "in bulk" to industrial enterprises, the lower court rendered a decision on May 2, 1984, restraining the NPC from supplying power directly to FPI upon the ground that such direct sale, supply and delivery of electric power by the NPC to FPI was violative of the rights of CEPALCO under its legislative franchise. Hence, the lower court ordered the NPC to "permanently desist" from effecting direct supply of power to the FPI and "from entering into and/or implementing any agreement or arrangement for such direct power connection, unless coursed through the power line" of CEPALCO. ISSUE Whether or not the NPC may supply power directly to PIA in the PIE-MO area where CEPALCO has a directly franchise. 3B DIGEST GROUP 2009-2010 Ad Deum Per Excellentia
  • 6. TRANSPORTATION DIGEST – PUBLIC SERVICE A.M.+D.G. TRANSPORTATION – Atty. Abano RULING Petitioner PIA asserts that it may receive power directly from the NPC because it is a public utility. It avers that P.D. No. 538, as amended, empowers PIA "as and to be a public utility to operate and serve the power needs within PIE-MO, i.e., a specific area constituting a small portion of petitioner's franchise coverage," without, however, specifying the particular provision which so empower PIA. A "public utility" is a business or service engaged in regularly supplying the public with some commodity or service of public consequence such as electricity, gas, water, transportation, telephone or telegraph service. The term implies public use and service. Petitioner PIA is a subsidiary of the PHIVIDEC with "governmental and proprietary functions." Sec. 4 of P.D. No. 538 specifically confers upon it the following powers: a. To operate, administer and manage the PHIVIDEC Industrial Areas and other areas which shall hereafter be proclaimed, designated and specified in subsequent Presidential Proclamation; to construct acquire, own, lease, operate and maintain infrastructure facilities, factory buildings, warehouses, dams, reservoirs, water distribution, electric light and power systems, telecommunications and transportation networks, or such other facilities and services necessary or useful in the conduct of industry and commerce or in the attainment of the purposes and objectives of this Decree; (Emphasis supplied.) Clearly then, the PIA is authorized to render indirect service to the public by its administration of the PHIVIDEC industrial areas like the PIE-MO and may, therefore, be considered a public utility. As it is expressly authorized by law to perform the functions of a public utility, a certificate of public convenience, as suggested by the Court of Appeals, is not necessary for it to avail of a direct power connection from the NPC. However, such authority to be a public utility may not be exercised in such a manner as to prejudice the rights of existing franchisees. In fact, by its actions, PIA recognized the rights of the franchisees in the area. Accordingly, in pursuit of its powers "to grant such franchise for and to operate and maintain within the Areas electric light, heat or power systems," etc. under Sec. 4 (i) of P.D. No. 538 and its rule-making power under Sec. 4 (1) of the same law, on July 20, 1979, the PIA Board of Directors promulgated the "Rules and Regulations To Implement the Intent and Provisions of Presidential Decree No. 538." 48 Rule XI thereof on "Utilities and Services" provides as follows: Sec. 1. Utilities — It is the responsibility of the Authority to provide all required utilities and services inside the Estate: xxx xxx xxx a) Contracts for the purchase of public utilities and/or services shall be subject to the prior approval of the Authority; Provided, however, that similar contract(s) existing prior to the effectivity of this Rules and Regulations shall continue to be in full force and effect. xxx xxx xxx (Emphasis supplied.) It should be noted that the Rules and Regulations took effect thirty (30) days after its publication in the Official Gazette on September 24, 1979 or more than three (3) months after the July 6, 1979 contract between PIA and CEPALCO was entered into. As such, the Rules and Regulations itself allowed the continuance of the supply of electric power to PIE-MO by CEPALCO. That the contract of July 6, 1979 was not renewed by the parties after the expiration of the five-year period stipulated therein did not change the fact that within that five-year period, in violation of both the contract and its Rules and Regulations, PIA applied with the NPC for direct power connection. The matter was aggravated by NPC's favorable action on the application, totally unmindful of the extent of its powers under the law which, in National Power Corporation v. Court of Appeals, 49 the Court delimits as follows: . . . . It is immaterial whether the direct connection is merely an improvement or an increase in existing voltage, as alleged by petitioner, or a totally new and separate electric service as claimed by private respondent. The law on the matter is clear. PD 40 promulgated on 7 November 1972 expressly provides that the generation of electric power shall be undertaken solely by the NPC. However Section 3 of the same decree also provides that the 3B DIGEST GROUP 2009-2010 Ad Deum Per Excellentia
  • 7. TRANSPORTATION DIGEST – PUBLIC SERVICE A.M.+D.G. TRANSPORTATION – Atty. Abano distribution of electric power shall be undertaken by cooperatives, private utilities (such as the CEPALCO), local governments and other entities duly authorized, subject to state regulation. ( Emphasis supplied.) The same case ruled that "(i)t is only after a hearing (or an opportunity for such a hearing) where it is established that the affected private franchise holder is incapable or unwilling to match the reliability and rates of NPC that a direct connection with NPC may be granted." As earlier stated, the Court arrived at the same ruling in the later cases of G.R. Nos. 72085, 84695 and 87697. Petitioner NPC attempted to abide by these rulings when it conducted a hearing to determine whether it may supply power directly to PIA. While it notified CEPALCO of the hearing, the NPC is not the proper authority referred to by this Court in the aforementioned earlier decisions, not only because the subject of the hearing is a matter involving the NPC itself, but also because the law has created the proper administrative body vested with authority to conduct a hearing. CEPALCO shares the view of the Court of Appeals that the Energy Regulatory Board (ERB) is the proper administrative body for such hearings. However, a recent legislative development has overtaken said view. The ERB, which used to be the Board of Energy, by virtue of EO 172, whre the ERB is basically a price or rate-fixing agency. Apparently recognizing this basic function, Republic Act No. 7638 (An Act Creating the Department of Energy, Rationalizing the Organization and Functions of Government Agencies Related to Energy, and for Other Purposes) was promulgated. The determination of which of two public utilities has the right to supply electric power to an area which is within the coverage of both is certainly not a rate-fixing function which should remain with the ERB. It deals with the regulation of the distribution of energy resources which, under Executive Order No. 172, was expressly a function of ERB. However, with the enactment of Republic Act No. 7638, the Department of Energy took over such function. Hence, it is this Department which shall then determine whether CEPALCO or PIA should supply power to PIE-MO. Clearly, petitioner NPC's assertion that its "authority to entertain and hear direct connection applications is a necessary incident of its express authority to sell electric power in bulk" is now baseless. Even without the new legislation affecting its power to conduct hearings, it is certainly irregular, if not downright anomalous for the NPC itself to determine whether it should supply power directly to the PIA or the industries within the PIE-MO. It simply cannot arrogate unto itself the authority to exercise non-rate fixing powers which now devolves upon the Department of Energy and to hear and eventually grant itself the right to supply power in bulk. QUISUMBING vs. MERALCO FACTS Inspectors from MERALCO went to the furniture shop of the Quisumbing Spouses to conduct their routinary inspections with the permission of the Spouses and witnessed by their secretary. The inspectors found the electric meter tampered. Because of this, they disconnected the electric supply of the furniture shop. To make sure of the accuracy of their findings, they subjected the electric meter to laboratory testing. The tests show that the meter was really tampered. As a result, the inspectors billed the Quisumbing Spouses the differential caused by the tampering and until they pay, their electric supply will be disconnected. However, on the same day the inspector’s officer caused the reconnection of their electric supply. But despite this, the Spouses still filed a complaint for damages against MERALCO alleging that they acted with wanton, capricious, malicious, and malevolent manner in disconnecting their power supply which was done without due process, and without due regard to their rights, feelings, peace of mind, social and business standing. ISSUE Is MERALCO liable to the Quisumbing Spouses because the inspectors disconnected their electric supply immediately? RULING YES. Sec. 4 of RA 7832 necessitates that immediate disconnection by MERALCO of a consumer’s electric supply can only be had IF an officer of the law or a duly authorized representative of the Energy Regulatory Board personally witnessed and attested the disconnection. Even if the secretary of the company witnessed the inspection and disconnection, MERALCO cannot claim that they complied with the law because the provisions categorically provide for the people required to be present during inspection and disconnection and the secretary of the company of the 3B DIGEST GROUP 2009-2010 Ad Deum Per Excellentia
  • 8. TRANSPORTATION DIGEST – PUBLIC SERVICE A.M.+D.G. TRANSPORTATION – Atty. Abano Quisumbing Spouses clearly does not fall under any of the enumerated persons. Moreover, the presence of an ERB officer during the examination of the electric meter in the laboratory would not cure the defect in due process. The law is CLEAR that the ERB officer must have attested to the disconnection BEFORE its occurrence unlike what happened in this case. The presence of government agents who may authorize immediate disconnection go into the essence of due process. Indeed, the Court cannot allow MERALCO to act virtually as prosecutor and judge in imposing the penalty of disconnection due to alleged meter tampering. That would not sit well in a democratic country. After all, MERALCO is a monopoly that derives its power from the government. Clothing it with unilateral authority to disconnect would be equivalent to giving it a license to tyrannize its hapless customers. COGEO-CUBAO vs. CA FACTS It appears that a certificate of public convenience to operate a jeepney service was ordered to be issued in favor of Lungsod Silangan to ply the Cogeo-Cubao route. On the other hand, Cogeo-Cubao Association was registered as a non-stock, non-profit organization with the main purpose of representing the appellee for whatever contract and/or agreement it will have regarding the ownership of units, and the like, of the members of the Association. Perturbed by appellee’s Board Resolution No. 9 adopting a Bandera' System under which a member of the cooperative is permitted to queue for passenger at the disputed pathway in exchange for the ticket worth 20 pesos the proceeds of which shall be utilized for Christmas programs of the drivers and other benefits, the Association decided to form a human barricade on and assumed the dispatching of passenger jeepneys. This development as initiated by the Association gave rise to the suit for damages. The Association's Answer contained vehement denials to the insinuation of take over and at the same time raised as a defense the circumstance that the organization was formed not to compete with plaintiff-cooperative. It, however, admitted that it is not authorized to transport passengers. The trial court rendered a decision in favor of respondent Lungsod Corp and ordered. The CA affirmed the findings of the TC except with regard to the award of actual damages. ISSUE W/N the petitioner usurped the property right of the respondent which shall entitle the latter to the award of nominal damages? - YES RULING Under the Public Service Law, a certificate of public convenience is an authorization issued by the Public Service Commission for the operation of public services for which no franchise is required by law. In the instant case, a certificate of public convenience was issued to respondent corporation on to operate a public utility jeepney service on the Cogeo- Cubao route. A certification of public convenience is included in the term "property" in the broad sense of the term. Under the Public Service Law, a certificate of public convenience can be sold by the holder thereof because it has considerable material value and is considered as valuable asset. Although there is no doubt that it is private property, it is affected with a public interest and must be submitted to the control of the government for the common good. Hence, insofar as the interest of the State is involved, a certificate of public convenience does not confer upon the holder any proprietary right or interest or franchise in the route covered thereby and in the public highways. However, with respect to other persons and other public utilities, a certificate of public convenience as property, which represents the right and authority to operate its facilities for public service, cannot be taken or interfered with without due process of law. Appropriate actions may be maintained in courts by the holder of the certificate against those who have not been authorized to operate in competition with the former and those who invade the rights which the former has pursuant to the authority granted by the Public Service Commission. In the case at bar, the trial court found that petitioner association forcibly took over the operation of the jeepney service in the Cogeo-Cubao route without any authorization from the Public Service Commission and in violation of the right of respondent corporation to operate its services in the said route under its certificate of public convenience. These were its findings which were affirmed by the appellate court. 3B DIGEST GROUP 2009-2010 Ad Deum Per Excellentia
  • 9. TRANSPORTATION DIGEST – PUBLIC SERVICE A.M.+D.G. TRANSPORTATION – Atty. Abano It is clear form the facts of this case that petitioner formed a barricade and forcibly took over the motor units and personnel of the respondent corporation. This paralyzed the usual activities and earnings of the latter during the period of ten days and violated the right of respondent Lungsod Corp to conduct its operations thru its authorized officers. No compelling reason exists to justify the reversal of the ruling of the respondent appellate court in the case at bar. Considering the circumstances of the case, the respondent corporation is entitled to the award of nominal damages. PHILCOMSAT vs. ALCUAZ FACTS By virtue of Republic Act No. 5514, PHILCOMSAT was granted "a franchise to establish, construct, maintain and operate in the Philippines, at such places as the grantee may select, station or stations and associated equipment and facilities for international satellite communications." Under this franchise, it was likewise granted the authority to "construct and operate such ground facilities as needed to deliver telecommunications services Section 5 of Republic Act No. 5514, petitioner was exempt from the jurisdiction of the then Public Service Commission, now respondent NTC. However, pursuant to Executive Order No. 196 issued on June 17, 1987, petitioner was placed under the jurisdiction, control and regulation of respondent NTC, including all its facilities and services and the fixing of rates. Implementing said Executive Order No. 196, respondents required petitioner to apply for the requisite certificate of public convenience and necessity covering its facilities and the services it renders, Petitioner sought the extension for the operation of his facilities and the rendering of services. NTC order now in controversy had further extended the provisional authority of the petitioner for another six (6) months, counted from September 16, 1988, but it directed the petitioner to charge modified reduced rates through a reduction of fifteen percent (15%) on the present authorized rates. PHILCOMSAT assails the abovesaid order. ISSUE 1) Was there an undue delegation of legislative power because the NTC is empowered to fix rates for public service communications does not provide the necessary standards constitutionally required? NO 2) Does Executive Order No. 546, which provides for the creation of respondent NTC, have provisions that grant its rate-fixing powers? YES 3) Does Executive Order No. 196, placing petitioner under the jurisdiction of respondent NTC, provide for any standard in the exercise of its rate-fixing and adjudicatory powers? YES 4) Was there a violation of due process (Procedural and Substantive)? YES 5) Is the Order on the reduction of rates invalid? YES RULING 1) When the administrative agency concerned, respondent NTC in this case, establishes a rate, its act must both be non- confiscatory and must have been established in the manner prescribed by the legislature; otherwise, in the absence of a fixed standard, the delegation of power becomes unconstitutional. In case of a delegation of rate-fixing power, the only standard which the legislature is required to prescribe for the guidance of the administrative authority is that the rate be reasonable and just. However, it has been held that even in the absence of an express requirement as to reasonableness, this standard may be implied. 2) And 3) Pursuant to Executive Orders Nos. 546 and 196, respondent NTC is empowered, among others, to determine and prescribe rates pertinent to the operation of public service communications which necessarily include the power to promulgate rules and regulations in connection therewith. And, under Section 15(g) of Executive Order No. 546, respondent NTC should be guided by the requirements of public safety, public interest and reasonable feasibility of maintaining effective competition of private entities in communications and broadcasting facilities. Likewise, in Section 6(d) thereof, which provides for the creation of the Ministry of Transportation and Communications 3B DIGEST GROUP 2009-2010 Ad Deum Per Excellentia
  • 10. TRANSPORTATION DIGEST – PUBLIC SERVICE A.M.+D.G. TRANSPORTATION – Atty. Abano with control and supervision over respondent NTC, it is specifically provided that the national economic viability of the entire network or components of the communications systems contemplated therein should be maintained at reasonable rates. NTC, in the exercise of its rate-fixing power, is limited by the requirements of public safety, public interest, reasonable feasibility and reasonable rates, which conjointly more than satisfy the requirements of a valid delegation of legislative power. 4)PROCEDURAL DUE PROCESS: Where the function of the administrative agency is legislative, notice and hearing are not required, but where an order applies to a named person, as in the instant case, the function involved is adjudicatory and so notice and hearing is necessary. In The Central Bank of the Philippines vs. Cloribel, et al. 'If the nature of the administrative agency is essentially legislative, the requirements of notice and hearing are not necessary. The validity of a rule of future action which affects a group, if vested rights of liberty or property are not involved, is not determined according to the same rules which apply in the case of the direct application of a policy to a specific individual)XXXXX “Aside from statute, the necessity of notice and hearing in an administrative proceeding depends on the character of the proceeding and the circumstances involved. In so far as generalization is possible in view of the great variety of administrative proceedings, it may be stated as a general rule that notice and hearing are not essential to the validity of administrative action where the administrative body acts in the exercise of executive, administrative, or legislative functions; but where a public administrative body acts in a judicial or quasi-judicial matter, and its acts are particular and immediate rather than general and prospective, the person whose rights or property may be affected by the action is entitled to notice and hearing” he order in question which was issued by respondent Alcuaz no doubt contains all the attributes of a quasi-judicial adjudication. Foremost is the fact that said order pertains exclusively to petitioner and to no other. Further, it is premised on a finding of fact, although patently superficial, that there is merit in a reduction of some of the rates charged- based on an initial evaluation of petitioner's financial statements-without affording petitioner the benefit of an explanation as to what particular aspect or aspects of the financial statements warranted a corresponding rate reduction. There remains the categorical admission made by respondent NTC that the questioned order was issued pursuant to its quasi-judicial functions. It, however, insists that notice and hearing are not necessary since the assailed order is merely incidental to the entire proceedings and, therefore, temporary in nature. This postulate is bereft of merit. While respondents may fix a temporary rate pending final determination of the application of petitioner, such rate-fixing order, temporary though it may be, is not exempt from the statutory procedural requirements of notice and hearing, as well as the requirement of reasonableness. Assuming that such power is vested in NTC, it may not exercise the same in an arbitrary and confiscatory manner. Categorizing such an order as temporary in nature does not perforce entail the applicability of a different rule of statutory procedure than would otherwise be applied to any other order on the same matter unless otherwise provided by the applicable law. 16(c) of the Public Service Act which provides: Section 16. 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: xxx xxx xxx (c) To fix and determine individual or joint rates, ... which shall be imposed, observed and followed thereafter by any public service; ... 3B DIGEST GROUP 2009-2010 Ad Deum Per Excellentia
  • 11. TRANSPORTATION DIGEST – PUBLIC SERVICE A.M.+D.G. TRANSPORTATION – Atty. Abano There is no reason to assume that the aforesaid provision does not apply to respondent NTC, there being no limiting, excepting, or saving provisions to the contrary in Executive Orders Nos. 546 and 196. It is thus clear that with regard to rate-fixing, respondent has no authority to make such order without first giving petitioner a hearing, whether the order be temporary or permanent, and it is immaterial whether the same is made upon a complaint, a summary investigation, or upon the commission's own motion as in the present case. NTC should act solely on the basis of the evidence before it and not on knowledge or information otherwise acquired by it but which is not offered in evidence or, even if so adduced, petitioner was given no opportunity to controvert. SUBSTANTIVE DUE PROCESS: There is no question that petitioner is a mere grantee of a legislative franchise which is subject to amendment, alteration, or repeal by Congress when the common good so requires. Apparently, therefore, such grant cannot be unilaterally revoked absent a showing that the termination of the operation of said utility is required by the common good. The inherent power and authority of the State, or its authorized agent, to regulate the rates charged by public utilities should be subject always to the requirement that the rates so fixed shall be reasonable and just. A commission has no power to fix rates which are unreasonable or to regulate them arbitrarily. This basic requirement of reasonableness comprehends such rates which must not be so low as to be confiscatory, or too high as to be oppressive. A cursory perusal of the assailed order reveals that the rate reduction is solely and primarily based on the initial evaluation made on the financial statements of petitioner, contrary to respondent NTC's allegation that it has several other sources of information without, however, divulging such sources. Furthermore, it did not as much as make an attempt to elaborate on how it arrived at the prescribed rates. It just perfunctorily declared that based on the financial statements, there is merit for a rate reduction without any elucidation on what implications and conclusions were necessarily inferred by it from said statements. Nor did it deign to explain how the data reflected in the financial statements influenced its decision to impose a rate reduction. Petitioner is engaged in several projects aimed at refurbishing, rehabilitating, and renewing its machinery and equipment in order to keep up with the continuing charges of the times and to maintain its facilities at a competitive level with the technological advances abroad. There projected undertakings were formulated on the premise that rates are maintained at their present or at reasonable levels. Hence, an undue reduction thereof may practically lead to a cessation of its business. While we concede the primacy of the public interest in an adequate and efficient service, the same is not necessarily to be equated with reduced rates. Reasonableness in the rates assumes that the same is fair to both the public utility and the consumer. 5)The challenged order, particularly on the issue of rates provided therein, being violative of the due process clause is void and should be nullified. Respondents should now proceed, as they should heretofore have done, with the hearing and determination of petitioner's pending application for a certificate of public convenience and necessity. ENERGY REGULATORY BOARD vs. CA FACTS Petitioner Pilipinas Shell Petroleum Corporation (Shell) is engaged in the business of importing crude oil, refining the same and selling various petroleum products through a network of service stations throughout the country.. Private respondent Petroleum Distributors and Service Corporation (PDSC) owns and operates a Caltex service station at the corner of the MIA and Domestic Roads in Pasay City. On June 30,1983, Shell filed with the quondam Bureau of Energy Utilization (BEU) an application for authority to relocate its Shell Service Station at Tambo, Paraaque, Metro Manila, to Imelda Marcos Avenue of the same municipality. The application, which was docketed as BEU Case No. 83-09-1319, was initially rejected by the BEU because Shells old site had been closed for five (5) years such that the relocation of the same to a new site would amount to a new construction of a gasoline outlet, which construction was then the subject of a moratorium. Subsequently, however, BEU relaxed its position and gave due course to the application. PDSC filed an opposition to the application on the grounds that: 1.] there are adequate service stations attending to the motorists requirements in the trading area covered by the application; 2.] ruinous competition will result from the establishment of the proposed new service station; and 3.] 3B DIGEST GROUP 2009-2010 Ad Deum Per Excellentia
  • 12. TRANSPORTATION DIGEST – PUBLIC SERVICE A.M.+D.G. TRANSPORTATION – Atty. Abano there is a decline not an increase in the volume of sales in the area. Two other companies, namely Petrophil and Caltex, also opposed the application on the ground that Shell failed to comply with the jurisdictional requirements. BEU: denying Shells application on a finding that there was no necessity for an additional petroleum products retail outlet in Imelda Marcos Avenue, Paraaque. Thus, Shell appealed to the Office of Energy Affairs (OEA). Meanwhile, on May 8, 1987, Executive Order No. 172 was issued creating the Energy Regulatory Board (ERB) and transferring to it the regulatory and adjudicatory functions of the BEU. OEA: denied appeal ⇒Thus, Shell moved for reconsideration and prayed for a new hearing or the remand of the case for further proceedings. It also submitted a new feasibility study to justify its application.--> OEA remanded to ERB ERB: decision allowing Shell to establish the service station in Benigno Aquino, Jr. Avenue. PDSC filed a MR of the foregoing Decisiondenied by ERB ⇒Thus, PDSC elevated Order of denial to CA CA: reversed ⇒ also denied ERB and Shell’s MR HENCE THIS PETITION ISSUE W/N CA erred? YES. Decision reversed. RULING 1) The policy of the government in this regard has been to allow a free interplay of market forces with minimal government supervision. The purpose of governing legislation is to liberalize the downstream oil industry in order to ensure a truly competitive market under a regime of fair prices, adequate and continuous supply, environmentally clean and high-quality petroleum products.[5] Indeed, exclusivity of any franchise has not been favored by the Court,[6] which is keen on promoting free competition and the development of a free market consistent with the legislative policy of deregulation as an answer to the problems of the oil industry The interpretation of an administrative government agency like the ERB, which is tasked to implement a statute, is accorded great respect and ordinarily controls the construction of the courts. A long line of cases establish the basic rule that the courts will not interfere in matters which are addressed to the sound discretion of government agencies entrusted with the regulation of activities coming under the special technical knowledge and training of such agencies. The rationale for this rule relates not only to the emergence of the multifarious needs of a modern or modernizing society and the establishment of diverse administrative agencies for addressing and satisfying those needs; it also relates to the accumulation of experience and growth of specialized capabilities by the administrative agency charged with implementing a particular statute. In Asturias Sugar Central, Inc. v. Commissioner of Customs the Court stressed that executive officials are presumed to have familiarized themselves with all the considerations pertinent to the meaning and purpose of the law, and to have formed an independent, conscientious and competent expert opinion thereon. The courts give much weight to the government agency or officials charged with the implementation of the law, their competence, expertness, experience and informed judgment, and the fact that they frequently are drafters of the law they interpret. When an administrative agency renders an opinion or issues a statement of policy, it merely interprets a pre-existing law and the administrative interpretation is at best advisory for it is the courts that finally determine what the law means.[ Thus, an action by an administrative agency may be set aside by the judicial department if there is an error of law, abuse of power, lack of jurisdiction or grave abuse of discretion clearly conflicting with the letter and spirit of the law. (FOR REFERENCE sake: ERB’s Powers)1 1 SEC. 3. Jurisdiction, Powers and Functions of the Board. When warranted and only when public necessity requires, the Board may regulate the business of importing, exporting, re-exporting, shipping, transporting, processing, refining, marketing and distributing energy resources. The Board shall, upon prior notice and hearing, exercise the following, among other powers and functions (a) Fix and regulate the prices of petroleum products (b) Fix and regulate the rate schedule or prices of piped gas to be charged by duly franchised gas companies which distribute gas by means of underground pipe systems; 3B DIGEST GROUP 2009-2010 Ad Deum Per Excellentia
  • 13. TRANSPORTATION DIGEST – PUBLIC SERVICE A.M.+D.G. TRANSPORTATION – Atty. Abano Time and again this Court has ruled that in reviewing administrative decisions, the findings of fact made therein must be respected as long as they are supported by substantial evidence, even if not overwhelming or preponderant; that it is not for the reviewing court to weigh the conflicting evidence, determine the credibility of the witnesses or otherwise substitute its own judgment for that of the administrative agency on the sufficiency of evidence; that the administrative decision in matters within the executive jurisdiction can only be set aside on proof of grave abuse of discretion, fraud or error of law.[26] Petitioner ERB is in a better position to resolve petitioner Shells application, being primarily the agency possessing the necessary expertise on the matter. The power to determine whether the building of a gasoline retail outlet in a trading area would benefit public interest and the oil industry lies with the ERB not the appellate courts. Finally, while it is probable that the operation of the proposed Shell outlet may, to a certain extent, affect PDSCs business, private respondent nevertheless failed to show that its business would not have sufficient profit to have a fair return of its investment. The mere possibility of reduction in the earnings of a business is not sufficient to prove ruinous competition. a climate of fear and pessimism generated by unsubstantiated claims of ruinous competition already rejected in the past should not be made to retard free competition, consistently with legislative policy of deregulating and liberalizing the oil industry to ensure a truly competitive market under a regime of fair prices, adequate and continuous supply, environmentally clean and high-quality petroleum products. PADUA vs. RANADA FACTS (c) Fix and regulate the rates of pipeline concessionaires under the provisions of Republic Act No. 387, as amended, otherwise know as the Petroleum Act of 1949, as amended by Presidential Decree No. 1700;chanroblesvirtuallawlibrary (d) Regulate the capacities of new refineries or additional capacities of existing refineries and license refineries that may be organized after the issuance of this Executive Order, under such terms and conditions as are consistent with the national interest; (e) Whenever the Board has determined that there is a shortage of any petroleum product, or when public interest so requires, it may take such steps as it may consider necessary, including the temporary adjustment of the levels of prices of petroleum products and the payment to the Oil Price Stabilization Fund created under Presidential Decree No. 1956 by persons or entities engaged in the petroleum industry of such amounts as may be determined by the Board, which will enable the importer to recover its costs of importation. On February 27, 2001 the Citra Metro Manila Tollways Corporation (CITRA) filed with the TRB an application for an interim adjustment of the toll rates at the Metro Manila Skyway Project – Stage 1CITRA moored its petition on the provisions of the "Supplemental Toll Operation Agreement" (STOAauthorizing it, to apply for, and if warranted be granted an interim adjustment of toll rates in the event of a "significant currency devaluation." Claiming that the peso exchange rate to a U.S. dollar had devaluated from P26.1671 in 1995 to P48.00 in 2000, CITRA alleged that there was a compelling need for the increase of the toll rates to meet the loan obligations of the Project and the substantial increase in debt-service burden. Due to heavy opposition, CITRA’s petition remained unresolved. This prompted CITRA to file on October 9, 2001 an "Urgent Motion for Provisional Approval," On October 30, 2001, CITRA moved to withdraw its "Urgent Motion for Provisional Approval" without prejudice to its right to seek or be granted provisional relief under the above-quoted provisions of the TRB Rules of Procedure, obviously, referring to the power of the Board to act on its own initiative. On November 7, 2001, CITRA wrote a letter to TRB expressing its concern over the undue delay in the proceeding, stressing that any further setback would bring the Project’s financial condition, as well as the Philippine banking system, to a total collapse. CITRA recounted that out of the US$354 million funding from creditors. Thus, CITRA requested TRB to find a timely solution to its predicament. On November 9, 2001, TRB granted CITRA’s motion to withdraw the Urgent Motion for Provisional Approval . TRB: issued Resolution No. 2001-89 authorizing provisional toll rate adjustments at the Metro Manila Skyway, effective January 1, 2002, : On December 17, 24 and 31, 2001, the above Resolution approving provisional toll rate adjustments was published in the newspapers of general circulation. Petitioner Ceferino Padua, as a toll payer, filed an "Urgent Motion for a Temporary Restraining Order to Stop Arbitrary Toll Fee Increases" [in G.R. No. 141949a petition for mandamus earlier filed by him. In that petition, Padua seeks to compel respondent Judge Santiago Ranada of the Regional Trial Court, Branch 137, Makati City, to issue a writ of execution for the enforcement of the Court of Appeals’ Decision dated August 4, 1989 in CA- G.R. SP No. 13235. In its Decision, the Court of Appeals ordered the 3B DIGEST GROUP 2009-2010 Ad Deum Per Excellentia
  • 14. TRANSPORTATION DIGEST – PUBLIC SERVICE A.M.+D.G. TRANSPORTATION – Atty. Abano exclusion of certain portions of the expressways (from Villamor Air Base to Alabang in the South, and from Balintawak to Tabang in the North) from the franchise of the PNCC. On the other hand petitioner Eduardo Zialcita, as a taxpayer and as Congressman of Parañaque City, filed the present petition for prohibition with prayer for a temporary restraining order and/or writ of preliminary injunction against TRB and CITRA, docketed as G.R. No. 151108, impugning the same Resolution No. 2001-89. Petitioner Zialcita asserts that the provisional toll rate adjustments are exorbitant and that the TRB violated its own Charter, Presidential Decree No. 1112 when it promulgated Resolution No. 2001-89 without the benefit of any public hearing. He also maintains that the TRB violated the Constitution when it did not express clearly and distinctly the facts and the law on which Resolution No. 2001-89 was based. And lastly, he claims that Section 3, Rule 10 of the TRB Rules of Procedure is not sanctioned by P.D. No. 1112. CITRA, in its comment on Congressman Zialcita’s petition, counters that: (1) the TRB has primary administrative jurisdiction over all matters relating to toll rates; (2) prohibition is an inappropriate remedy because its function is to restrain acts about to be done and not acts already accomplished; (3) Resolution No. 2001-89 was issued in accordance with law; (4) Section 3, Rule 10 of the TRB Rules is constitutional; and (5) private respondent and the Republic of the Philippines would suffer more irreparable damages than petitioner. The TRB, through the OSG, filed a separate comment reiterating the same arguments raised by private respondent CITRA. Thus, both petitions were consolidated. ISSUE 1) Was the resolution void for being violative of due process? 2) Is hearing necessary to grant provisional toll rate adjustments? 3) Did CITRA have locus standing? RULING 1) Records show that they were published on December 17, 24 and 31, 2001 in 3 newspapers of general circulation, particularly the Philippine Star, Philippine Daily Inquirer and The Manila Bulletin. Surely, such publications sufficiently complied with Section 5 of P.D. No. 1112 which mandates that "no new rates shall be collected unless published in a newspaper of general publication at least once a week for three consecutive weeks." At any rate, it must be pointed out that under Letter of Instruction No. 1334-A the TRB may grant and issue ex-parte to any petitioner, without need of notice, publication or hearing, provisional authority to collect, pending hearing and decision on the merits of the petition, the increase in rates prayed for or such lesser amount as the TRB may in its discretion provisionally grant. That LOI No. 1334-A has the force and effect of law finds support in a catena of cases decreeing that "all proclamations, orders, decrees, instructions, and acts promulgated, issued, or done by the former President (Ferdinand E. Marcos) are part of the law of the land, and shall remain valid, legal, binding, and effective, unless modified, revoked or superseded by subsequent proclamations, orders, decrees, instructions, or other acts of the President. 2) The SC stressed that the TRB’s authority to grant provisional toll rate adjustments does not require the conduct of a hearing. Pertinent laws and jurisprudence support this conclusion.2 From the foregoing, it is clear that a hearing is not necessary for the grant of provisional toll rate adjustment. The language of LOI No. 1334-A is not susceptible of equivocation. It 2 To clarify the intent of P.D. No. 1112 as to the extent of the TRB’s power,[35] Former President Marcos further issued LOI No. 1334-A expressly allowing the TRB to grant ex-parte provisional or temporary increase in toll rates, thus: "NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Republic of the Philippines, by virtue of the powers vested in me by the Constitution, do hereby direct, order and instruct the Toll Regulatory Board to grant and issue ex-parte to any petitioner, without need of notice, publication or hearing, provisional authority to collect, pending hearing of and decision on the merits of such petition, the increase in rates prayed for or such lesser amount as the Board may in its discretion provisionally grant, upon (a) a finding that the said petition is sufficient in form and substance, (b) the submission of an affidavit by the petitioner showing that the increase in rates substantially conforms to the formula, if any stipulated in the franchise or toll operation agreement/certificate of the petitioner and that failure to immediately impose and collect the increase in rates would result in outright delay or stoppage of urgently needed improvements, expansion or repairs of toll facilities and/or in great irreparable injury to the petitioner, and (c) the submission by the petitioner to the Board of a bond, in such amount and from such surety or sureties and under such terms and conditions as the Board shall fix, to guarantee the refund of the increase in rates to the affected toll payers in case it is finally determined, after notice and hearing, that the petitioner is not entitled, in whole or in part, to the same. Any provisional toll rate increases shall be effective immediately upon approval without need of publication." 3B DIGEST GROUP 2009-2010 Ad Deum Per Excellentia
  • 15. TRANSPORTATION DIGEST – PUBLIC SERVICE A.M.+D.G. TRANSPORTATION – Atty. Abano "directs, orders and instructs" the TRB to issue provisional toll rates adjustment ex-parte without the need of notice, hearing and publication. All that is necessary is that it be issued upon (1) a finding that the main petition is sufficient in form and substance; (2) the submission of an affidavit showing that the increase in rates substantially conforms to the formula, if any is stipulated in the franchise or toll operation agreement, and that failure to immediately impose and collect the increase in rates would result in great irreparable injury to the petitioner; and (3) the submission of a bond. Again, whether or not CITRA complied with these requirements is an issue that must be addressed to the TRB. The practice is not something peculiar. We have ruled in a number of cases that an administrative agency may be empowered to approve provisionally, when demanded by urgent public need, rates of public utilities without a hearing. The reason is easily discerned from the fact that provisional rates are by their nature temporary and subject to adjustment in conformity with the definitive rates approved after final hearing In the light thereof, public respondent Board need not even have conducted formal hearings in these cases prior to issuance of its Order of 14 August 1987 granting a provisional increase of prices. The Board, upon its own discretion and on the basis of documents and evidence submitted by private respondents, could have issued an order granting provisional relief immediately upon filing by private respondents of their respective applications. In this respect, the Court considers the evidence presented by private respondents in support of their applications -–.i.e., evidence showing that importation costs of petroleum products had gone up; that the peso had depreciated in value; and that the Oil Price Stabilization Fund (OPSF) had been depleted – as substantial and hence constitutive of at least prima facie basis for issuance by the Board of a provisional relief order granting an increase in the prices of petroleum products. Thereafter, the TRB promulgated as part of its Rules of Procedure, the following provision: "RULE 5: PROCEDURE FOR APPROVAL OF TOLL RATE "Section 2. Provisional Relief – Upon initial findings of the Board that the Petition for the approval of initial toll rate or the petition for toll rate adjustment is in accordance with Sections 1 and 2 of Rule 2, Section 2 of Rule 3 and Section 1 of Rule 4 hereof, the Board within a reasonable time after the filing of the Petition, may in an en banc decision provisionally approve the initial toll rate or toll rate adjustment, without the necessity of any notice and hearing." 3) Anent petitioner Padua’s contention that CITRA has no standing to apply for a toll fee increase, suffice it to say that CITRA’s right stems from the STOA which was entered into by no less than the Republic of the Philippines and by the PNCC. Section 7.04 of the STOA provides that the Investor, CITRA, and/or the Operator, PNCC, shall be entitled to apply for and if warranted, to be granted an interim adjustment of toll rates in case of force majeure and a significant currency valuation. Now, unless set aside through proper action, the STOA has the force and effect of law between the contracting parties, and is entitled to recognition by this Court. On the same breath, we cannot sustain Padua’s contention that the term "Metro Manila Skyway" Project excludes the at-grade portions of the South Luzon Expressway considering that under the same STOA the "Metro Manila Skyway" includes: "(a) the South Metro Manila Skyway, coupled with the rehabilitated at-grade portion of the South Luzon Expressway, from Alabang to Quirino Avenue; (b) the Central Metro Manila Skyway, from Quirino Avenue to A. Bonifacio Avenue. 3B DIGEST GROUP 2009-2010 Ad Deum Per Excellentia