Jessa, Candice, Jabie, Cels, Joni, Rai, Aldous, Pat, Russ, Mark, Celeni, Ros

FIXING OF RATES, WAGES, PRICES

PANAY AUTOBUS COMPANY v PHILIPPINE RAILWAY CO. (PRC)
FACTS:
Hancock, VP and general manager of PRC, filed a petition requesting the
Public Service Commission (Commission) to:
o Allow PRC to alter its freight and passenger rates on the Cebu and
Panay Divisions in order to meet the competition of road trucks and
autobuses
o Consider the present rates as the maximum, and that the PRC be
authorized to fix lower rates
PRC asserts that:
o It is placed at a great disadvantage in not being able to bid for the
business, and consequently loses out whenever the road autos can
charge a slightly lower rate
o The fixing of the rates was to be left entirely to the discretion of the
officials on the Railway Company, who would apply the rates without
discrimination and notify the commission
Cebu Autobus Company filed an opposition contending that the granting of
sliding/flexible rates:
o Is repugnant to the fundamental principles of Public Utility Regulations
o Will promote unnecessary and ruinous competition between the
operators
o Will promote discrimination with regard to its enforcement
The Commission ruled in favor of PRC
Panay Autobus Company subsequently filed an opposition to PRCs petition
and asked for a rehearing alleging that the Commission delegated to PRC its
powers and duties to fix and determine what are just and reasonable rates
The motion was denied by the Commission

shipper a rate of P4 a ton. IN EFFECT, the commission gives up once of its

most important functions, and leaves it to competition to fix the rates
KMU vs. GARCIA, JR. | Kapunan, J. (23 December 1994)
FACTS
1.
DOTC Sec. Oscar Orbos, issued a memorandum to 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.
2.

Finding the implementation of the fare range scheme "not legally feasible",
Fernando replied to Orbos saying that xxxthe Public Service Act prescribes
(a) the rates to be approved should be proposed by public service operators;
(b) there should be a publication and notice to concerned or affected parties in
the territory affected; (c) a public hearing should be held for the fixing of the
rates; hence, implementation of the proposed fare range scheme without
complying with the requirements of the PSA may not be legally feasible. xxx

3.

Provincial Bus Operators Association of the Philippines, Inc. (PBOAP) filed

an application for fare rate increase. (An across-the-board increase of P0.085
per km for all types of provincial buses with a minimum-maximum fare range of
15% over and below the proposed basic per km fare rate, with the said
minimum-maximum fare range applying only to ordinary, first class and
premium class buses and a P0.50 minimum per km fare for aircon buses, was
sought.)

4.

PBOAP reduced its applied proposed fare to an across-the-board increase

of P0.065 centavos per km for ordinary buses. The decrease was due to the
drop in the expected price of diesel.

5.

The application was opposed by the Philippine Consumers Foundation,

Inc. and Perla C. Bautista alleging that the proposed rates were exorbitant and
unreasonable and that the application contained no allegation on the rate of
return of the proposed increase in rates.

ISSUE: WoN PRC can be allowed to change its freight rates at will
DECISION: NO.
The legislature has delegated to the Commission the power of fixing the rates
of public services, BUT IT HAS NOT AUTHORIZED the Commission to
delegate that power to common carrier or other public service
The RULE under the law is that the Commission must be the one to approve or
fix the rates of public services and any change in such rates must be
authorized or approved by the Commission after they have been shown to be
just and reasonable. THIS MEANS THAT the public service may only propose
new rates but it cannot lawfully make said new rates effective without the
approval of the Commission. AS SUC, the petition of PRC cannot be allowed
for being contrary to the public service law
Moreover, PRCs petition is contrary to Section 16 of the Public Service
Commission, which prohibits any public service from exacting any unjustly. This
is because allowing PRC to alter its rates at will would inevitably result in
DISCRIMATION as it may charge one shipper P5 a ton, but immediately
thereafter in order to meet competition it may be obliged to give another

6.

The LTFRB rendered a decision granting the fare rate increase.

7.

Sometime in March 1994, 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 16 March 1994.

8.

16 March 1994: KMU filed a petition before the LTFRB opposing the
upward adjustment of bus fares.

9.

24 March 1994: The LTFRB issued one of the assailed orders dismissing
the petition for lack of merit.

Jessa, Candice, Jabie, Cels, Joni, Rai, Aldous, Pat, Russ, Mark, Celeni, Ros

10.

20 June 1994: The SC issued a TRO enjoining, prohibiting and preventing

respondents from implementing the bus fare rate increase as well as the
questioned orders and memorandum circulars.

11.

A moratorium was likewise enforced on the issuance of franchises for the

operation of buses, jeepneys, and taxicabs.

12.

KMUs Contention:
First, the authority given by respondent LTFRB to provincial bus
operators to set a fare range without having to file a petition for the
purpose, is unconstitutional, invalid and illegal.
Second, the 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.

a.
b.

13.
a.
b.

PBOAP, DOTC & LTFRBs Contention:

ALL 3 assert that the petitioner has no legal standing to sue or
has no real interest in the case at bench and in obtaining the reliefs prayed
for.
They further claim that it is within DOTC and LTFRB's authority to
set a fare range scheme and establish a presumption of public need in
applications for certificates of public convenience.

ISSUES

1.
2.

WON KMU has locus standi

WON 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

HELD
1.
YES. KMU has the standing to sue. KMUs members had suffered and
continue to suffer grave and irreparable injury and damage from the
implementation of the questioned memoranda, circulars and/or orders.
Principle of locus standi of a party litigant: One who is directly affected
by and whose interest is immediate and substantial in the controversy has the
standing to sue. The rule therefore requires that a party must show a personal
stake in the outcome of the case or an injury to himself that can be redressed
by a favorable decision so as to warrant an invocation of the court's jurisdiction
and to justify the exercise of the court's remedial powers in his behalf.
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.
Even if KMU didnt have legal standing, the SC will take cognizance
because of the transcendental importance of the issues raised.
2.

YES. 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.

On Fixing Rates Wages and Prices

The power to fix rates cannot be delegated to a common carrier or other
public service. The latter may propose new rates, but these will not be effective
without the approval of the administrative agency.
A further delegation of such power would constitute a negation of the duty
in violation of the trust reposed in the delegate mandated to discharge it
directly. The policy of allowing the provincial bus operators to change and
increase their fares at will would result not only to a chaotic situation but
to an anarchic state of affairs. 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.
Rate making or rate fixing is not an easy task. Given the complexity of the
nature of the function of rate-fixing and its far-reaching effects on millions of
commuters, the government must not relinquish this important function in
favor of those who would benefit and profit from the industry. Neither
should the requisite notice and hearing be done away with.
The present administrative procedure, already mirrors an orderly and
satisfactory arrangement for all parties involved. To 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.
LTFRB is vested with the same under EO No. 202. Sec. 5(c) of the said
EO 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. As
subjects for governmental regulation multiply, so does the difficulty of
administering the laws. Hence, specialization even in legislation has become
necessary.
Given the task of determining sensitive and delicate matters as route-fixing
and rate-making for the transport sector, the responsible regulatory body is
entrusted with the power of subordinate legislation. 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.

Jessa, Candice, Jabie, Cels, Joni, Rai, Aldous, Pat, Russ, Mark, Celeni, Ros

On 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. The issuance of a CPC is determined by public need. The
presumption of public need for a service shall be deemed in favor of the
applicant, while the burden of proving that there is no need for the proposed
service shall be the oppositor's (as per LTFRBs Memorandum).
The above-quoted provision is entirely incompatible and inconsistent
with Sec 16(c)(iii) of the PSA 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. On the contrary, the policy guideline states that the presumption of
public need for a public service shall be deemed in favor of the applicant. In
case of conflict between a statute and an administrative order, the former must
prevail.
As one of the basic requirements for the grant of a CPC, public
convenience and necessity exists when the proposed facility or service meets a
reasonable want of the public and supply a need which the existing facilities do
not adequately supply.
The existence or non-existence of public convenience and necessity is
therefore a question of fact that must be established by evidence, real and/or
testimonial; empirical data; statistics and such other means necessary, in a
public hearing conducted for that purpose. The object and purpose of such
procedure, among other things, is to look out for, and protect, the interests of
both the public and the existing transport operators. (Hence, the need for a
public hearing where the applicant can establish such facts necessary.)
The establishment of public need in favor of an applicant reverses
well-settled
and
institutionalized
judicial,
quasi-judicial
and
administrative procedures. It allows the party who initiates the
proceedings to prove, by mere application, his affirmative allegations.
Moreover, the offending provisions of the LTFRB memorandum circular in
question would in effect amend the Rules of Court by adding another
disputable presumption in the enumeration of 37 presumptions under Rule 131,
Section 5 of the Rules of Court. Such usurpation of this Court's authority cannot
be countenanced as only this Court is mandated by law to promulgate rules
concerning pleading, practice and procedure.

ISSUE/HELD
WoN the rates fixed by the Public Utility Commissioner were fair and
reasonable.NO.
RATIO

KMUs petition was granted by the SC.

Ynchausti Steamship Co., et al. v. Public Utility Commissioner (1922)
FACTS

Ynchausti Steamship Co. et al. (Ynchausti, et al.) are

members of the Philippine Shipowners Association (PSA).

Due to the decrease in the volume of business, the

PSA filed with the Public Utility Commissioner (Commissioner) a
declaration that it would make a 10% increase in shipping rates above
those allowed by Order No. 16 of the Board of Rate Regulation. This was
allowed and made effective by order of the Commissioner.

Later, there was a general strike of seamen and

officers which necessitated an increase in wages, effectively increasing
operating expenses, which rendered the 10% increase insufficient.
The PSA filed an amended declaration to the
Commissioner praying for the further increase of another 10% on freight
rates, making a 15% increase on the freight rates fixed by Order No. 16.
The proposed 15% increase was suspended and a
hearing was ordered, which resulted in the decision of the Commissioner:
o Not to increase the rates of the steamers of Ynchausti, et al.
o But grant a 10% increase to Ty Camco Sobrino and Li Seng Giap,
a 20% increase to Yangco, and 25% increase to the rest of the
steamers.
The rate allowed by the Commissioners was based
upon the original cost of the vessel (and not its present value).
The Board of Appeal affirmed the decision of the
Commissioner.

The fixing of rates by the Government through its

authorized agents, involves the exercise of reasonable discretion and
unless there is abuse of that discretion, the courts shall not interfere.
o But, whether a given rate is fair and reasonable is a judicial
question over which the courts have complete control.
4 theories of ascertaining fair and reasonable rates
fixed:
o Original cost
o Cost of reproduction
o Outstanding capitalization
o Present value
Based upon US jurisprudence, there must be a fair
return upon the reasonable value of the property at the time it is
being used for the public, and such value is to be determined as of the
time when the inquiry regarding the rates was made.
The test in determining the value is the market price of
the property upon which the current rate of interest is commonly regarded
as a fair return and a proper basis for fixing the rate.
o It has been held for real property, roads, appurtenances and
equipments that it is the actual value upon which a just and fair
return must be allowed (and not the cost when it was acquired).
Similarly, a public utility should have a fair and
reasonable return upon its property, and its rates must be based
upon the physical valuation of the property because in effect, the
property is both used and consumed by the public.

Jessa, Candice, Jabie, Cels, Joni, Rai, Aldous, Pat, Russ, Mark, Celeni, Ros

The vessel is deemed taken and condemned to public use and

that the rates should go up and down as the physical valuation of
the vessel goes up and down.
o The purpose of the hearing is to place a physical valuation on the
vessel and base the reasonable rate upon that valuation.
In fixing rates, it would not be fair to the public to
base it upon its peak cost, and similarly, it would not be fair to the
owner to base the rates upon the minimum cost, and neither would it
be fair to either party to base the rates upon any abnormal
conditions.
o Although every utility must be allowed a fair and reasonable
return on investment, it is may not be assured to every utility
when the conditions are grossly abnormal on account of the war.
o Such rates should be adequate to permit such utility to
continue to operate but must not be so high as to be
oppressive.
The purpose of the hearing with the Commissioner
was to determine what was a just and reasonable rate. However, the
Commissioner was only had two data upon which to base such rate: (1)
the original cost, and (2) the estimated cost of reproduction.
o Neither were deemed appropriate as the original cost would not
be fair to one and the estimated cost would not be fair to the
other, especially since there is a big disparity between the two
(i.e., Venus: OCP115,00, ECRP409,446.
Authorities hold that the original cost should only be
considered for the purpose of determining the present or market
value.
o The failure of the owners to submit other evidence does not justify
the basing of the rate on the original cost, it should have required
competent proof of the necessary facts regarding the present
market value of the vessel under reasonably normal
circumstances, upon which the rates would be based.

The same principle should have also been applied to the

5% depreciation.
o

DISPOSITIVE

The case is REMANDED to the Commissioner, with

directions to require and take proof of the present or market value of the
vessel, and fix a reasonable return on investment based on such value ad
well as the depreciation percentage.
Vigan Electric Light Co., Inc v. Public Service Commission
January 30, 1964 | J. Concepcion
Facts

RA 316 granted petitioner Vigan Electric Light Company a franchise for

electric light, heat and/or power within the province of Ilocos Sur.

Petitioner secured from respondent on May 31, 1950 a certificate of public

convencience.

May 22, 1957- petitioner entered into a contract for the purchase of electric
power and energy from the National Power Corporation.
About 5 years later, respondent advised petitioner of a conference to be
held on Feb 12, 1962 for the purpose of revising its authorized rates.
Petitioner received a letter of respondent informing the former of an
alleged letter-petitioner of Congressman Crisologo and 107 alleged
residents of Vigan, Ilocos Sur.
March 15, 1962 petitioner received a communication from the General
Auditing Office notifying him that one Mr. Cesar A. Damole had been
instructed to make an audit and examination of the books and other
records of account of petitioner under CA 325 and in accordance with the
request of the Public Service Commission and directing petitioner to
cooperate with Mr. Damole.
Respondent issued a subpoena duces tecum requiring petitioner to
produce before it certain books of accounts and financial statements.
May 21, 1962- the scheduled conference had been cancelled and the
petition to quash the subpoena duces tecum had been granted.
May 17, 1962- respondent issued an order directing Vigan Electric to
reduce its present meter rates for its electric services effective upon the
billing for the month of June 1962.

Issue
WoN the order directing Vigan Electric to reduce its rates is a legislative
function, hence no need for previous notice or hearing.
NO

Although the rule making power and even the power to fix rateswhen
such rules and/or rates are meant to apply to all enterprises of a given kind
throughout the Philippinesmay partake of a legislative character, such is
not the nature of the order complained of.

The order applies exclusively to petitioner herein. Moreover, it is predicated

upon a finding of fact based upon a report submitted by the General
Auditing Office that petitioner is making a profit of more than 12% of its
invested capital, which is denied by petitioner.

Petitioner is entitled to cross-examine the maker of said report, and to

introduce evidence to disprove the contents thereof and/or explain or
complement the same, as well as refute the conclusion drawn therefrom by
the respondent.

In making said finding of fact, respondent performed a function partaking of

a quasi-judicial character, the valid exercise of which demands previous
notice and hearing.

Since compliance with law must be presumed, it should be assumed that

petitioners current rates were fixed by respondent after proper notice and
hearing.

A modification of such rates cannot be made without previous notice and

hearing, particularly considering that the factual basis of the action taken
by respondent is assailed by petitioner.
Having issued without previous notice and hearing, said order is clearly violative of
the due process clause, and, hence, null and void.

Jessa, Candice, Jabie, Cels, Joni, Rai, Aldous, Pat, Russ, Mark, Celeni, Ros

PHILIPPINE COMMUNICATIONS SATELLITE CORPORATION v JOSE ALCUAZ,

as NTC Commissioner | Regalado | 1989
FACTS

This case is one of first impression as it involves the public utility services
rendered only by petitioner Philippine Communications Satellite
Corporation (PHILCOMSAT).

R.A. No. 5514 granted a franchise to establish, construct, maintain and

operate in the Philippines stations and equipment and facilities for
international satellite communications.

The satellite services provided by PHILCOMSAT enable international

carriers to serve the public with indispensable communications services.

Sec. 6 of RA. No. 5514 exempted PHILCOMSAT from the jurisdiction of

the National Telecommunications Commission (NTC), then Public Service
Commission. However, the issuance of E.O. No. 196, placed
PHILCOMSAT under the control, jurisdiction and regulation of NTC,
including the fixing of rates.

In implementing said E.O., NTC required PHLCOMSAT to apply for the

requisite certificate of public convenience and necessity covering services
rendered and authority to charge rates.

PHILCOMSAT applied for authority to continue operating and maintaining

facilities it has been operating since 1967 and to charge currents for
rendering services. Pending hearing, it applied for provisional authority to
continue operations if such facilities.

NTC granted the provisional authority for 6 months, which was extended
for another 6 months. After the end of such period, NTC further extended
to another 6 months but NTC Commissioner Alcuaz ordered PHILCOMSAT
to reduce rates by 15%.
o The reduction was based on the evaluation conducted on the
financial statements of PHILCOMSAT.

PHILCOMSAT assails that E.O. 546 unduly delegated legislative power,

particularly adjudicative powers, to NTC by empowering the latter to fix
rates for public service communications and not proving the necessary
standards constitutionally required.
o If the rate-fixing power was property conferred, it was exercised in
an unconstitutional manner in violating procedural and
substantive due process.
ISSUES:
1. WoN there was a valid delegation of legislative power in granting NTC
authority to fix rates
2. WoN the NTCs Order was violative of PHILCOMSATs right to substantive
and procedural process
DECISION:
Issue #1: YES. NTC, in the exercise of rate-fixing power, is limited by the
requirements of public safety, public interest, reasonable finality and reasonable

rates. These more than satisfy the requirements of a valid delegation of legislative
power
Issue #2: YES
Since the NTC Order was a quasi-judicial adjudication as it pertains to
PHILCOMSAT exclusively, it has to comply with the procedural
requirement of notice and hearing, as well as the substantive requirement
of reasonableness
IN THIS CASE, no notice was issued to PHILCOMSAT and it was not
given the benefit of hearing
Since there was no hearing, NTCs decision, which is based solely on its
initial evaluation of PHILCOMSATs financial statements, could result in
detriment in the public service, if the order turns out to be unreasonable,
OR in the cessation of the business

MANILA INTERNATIONAL AIRPORT AUTHORITY VS AIRSPAN CORP

Facts:
Petitioner Manila International Airport Authority (MIAA) is a government-owned and
controlled corporation which owns, operates, and manages the Ninoy Aquino
International Airport (NAIA). Its properties, facilities, and services are available for
public use subject to such fees, charges, and rates as may be fixed in accordance
with law. Herein respondents are the users, lessees and occupants of petitioners
properties, facilities, and services.
Petioner MIAA issued several resolutions increasing fees and charges for the use of
its facilities.
o On May 19, 1997, petitioner issued Resolution No. 97-5 announcing
an increase in the rentals of its terminal buildings, VIP lounge, other
airport buildings and land, as well as check-in and concessions
counters. Business concessions, particularly concessionaire privilege
fees, were also increased.
o On April 2, 1998, petitioner passed Resolution No. 98-30 adopting
twenty percent (20%) of the increase recommended by Punongbayan
and Araullo, to take effect immediately on June 1, 1998. Thus,
petitioner issued the corresponding Administrative Order No. 1, Series
of 1998 to reflect the new schedule of fees, charges, and rates.
o On February 5, 1999, petitioner issued Resolution No. 99-11, which
further increased the other airport fees and charges, specifically for
parking and porterage services, and the rentals for hangars.
Accordingly, petitioner amended Administrative Order No. 1, Series of
1998.
Respondents requested that the implementation of the new fees, charges, and
rates be deferred due to lack of prior notice and hearing. The request was
denied.
Some of the respondents herein filed with the Regional Trial Court of Makati a
complaint for Injunction with Application for a Writ of Preliminary Injunction

Jessa, Candice, Jabie, Cels, Joni, Rai, Aldous, Pat, Russ, Mark, Celeni, Ros

and/or Temporary Restraining Order. After due hearing, the RTC issued a Writ
of Preliminary Injunction.
On February 17, 2003, after due hearing, the RTC rendered a summary
judgment on the Complaint for Injunction NULLIFYING MIAAs resolutions Nos.
98-30 and 99-11 as well as their accompanying administrative orders for want
of the required notice and public hearing.

Issues:
WON prior notice and conduct of public hearing are required before petitioner can
increase its rates and charges for the use of its facilities.

WON the increases brought about by petitioners resolutions and administrative

orders are fair and reasonable.
Held:
Yes, prior notice and public hearing required. Resolutions and Administrative Orders
issued by MIAA null and void.

SEC. 9. Public Participation. - (2) In the fixing of rates, no rule or final order
shall be valid unless the proposed rates shall have been published in a
newspaper of general circulation at least two (2) weeks before the first hearing
thereon.

Rationale:
The Charter of the Manila International Airport Authority as amended by
Executive Order No. 903 states that:

The last clause, which incorporated Batas Pambansa Blg. 325 into the MIAA
Charter, did not appear in the original Charter of the MIAA. The clause was
deliberately inserted by the amending law, E.O. No. 903. In this connection,
B.P. Blg. 325, provides:
SEC. 2. Determination of rates. The fees and charges shall be revised at
just and reasonable rates sufficient to cover administrative costs and,
wherever practicable, be uniform for similar or comparable services and
functions. The revision of rates shall be determined by the respective
ministry heads or equivalent functionaries conformably with the rules and
regulations of the Ministry of Finance issued pursuant to Section 4 hereof,
upon recommendation of the imposing and collecting authorities
concerned, subject to the approval of the Cabinet.

As an attached agency of the DOTC, the MIAA is governed by the

Administrative Code of 1987.The Administrative Code specifically requires
notice and public hearing in the fixing of rates:
BOOK VII. Administrative Procedure

Reasonableness of the increases is a question of fact that has has been passed
upon by the lower court.

SEC. 17. Increase or Decrease of Rates. The Authority may increase or

decrease the rates of the dues, charges, fees or assessments collectible
by the Authority to protect the interest of the Government and provide a
satisfactory return on the Authoritys assets, and may adjust the schedule
of such rates so as to reflect the cost of facilities or services provided or
rendered. The Authority may periodically review all dues, charges, fees or
assessments collectible by the Authority, and shall make such adjustments
to the schedule of rates as shall adequately reflect any increase in price
levels and (in the case of concession rental) of volume of traffic through the
Airport, subject to the provisions of Batas Pambansa Blg. 325, whenever
practicable.

Under the original Charter of the MIAA, petitioner was given blanket authority to
adjust its fees, charges, and rates. However, E.O. No. 903 limited such
authority to a mere recommendatory power. Petitioners charter itself, as
amended, directly vests the power to determine revision of fees, charges, and
rates in the ministry head and requires approval of the Cabinet.
As as an attached agency of the Ministry of Transportation and
Communications, the ministry head who has the power to determine the
revision of fees, charges, and rates of the MIAA is the DOTC Secretary.
Clearly, petitioner has no authority to increase its fees, charges, or rates as the
power to do so is vested solely in the DOTC Secretary, although its prerogative
to recommend possible increases thereon is duly recognized.

It follows that the rate increases imposed by petitioner are invalid for lack of the
required prior notice and public hearing. They are also ultra vires because, to
begin with, petitioner is not the official authorized to increase the subject fees,
charges, or rates, but rather the DOTC Secretary.

LICENSING FUNCTION
GONZALO SY TRADING VS. CENTRAL BANK Martin, J.| April 30, 1976
FACTS:
Gonzalo Sy Trading (GST) is engaged in the business of importation of fresh
fruits. It wrote to the Deputy Governor of the Central Bank requesting
authority to import fresh fruits from Japan on no-dollar basis.
The Executive Director denied the request, so GST sent another letter to the
Monetary Board of the Central Bank requesting for an authority to import on
no Letter of Credit basis, or for the issuance of a Special Import Permit to
enable GST to import fresh fruits during the Christmas Season. (NOTE: In
GSTs letter, it said that the purpose for the request was so that it could
serve its customers better during the Christmas Season for the year 1968.)
The Monetary Board issued RESOLUTION NO. 2083 approving GSTs
request subject to the time deposit of 100% which shall be held by the bank
concerned for a period of 120 days.
GST then made its importations where Prudential Bank acted as the agent
for the Central Bank in the issuance of the corresponding release certificates
for the entry of goods.

Jessa, Candice, Jabie, Cels, Joni, Rai, Aldous, Pat, Russ, Mark, Celeni, Ros

In the year 1969, GST requested for an amendment such that they be
allowed to import from other countries other than communist ones. This
request was denied by the Deputy Governor stating that the authority
granted to them was only for the Christmas Season of 1968, and does not
extend to 1969.
Two days after, however, the Director of the Foreign Exchange Department
sent a letter to Prudential Bank allowing the latter to continue issuing release
certificates in favor of GST since the grant given to the latter had not yet
been exhausted. This, however, was subject to the same terms and
conditions provided for by the Central Bank. * (see Ratio)
Finally in the year 1970, the Collector of Customs issued warrants of seizure
and detention against several importations of GST for being violative of
Central Bank Circular 239 in relation to Section 2530 (f) of the Tariff and
Customs Code.
GST, in this petition, prayed for the issuance of a writ of mandamus to direct
the Central Bank to release the imported fruits.

ISSUE:
WON GSTs Special Import Permit had already expired when it made the
importations which were seized by the Central Bank.

JUDICIAL FUNCTION
EVANGELISTA vs. JARENCIO | Martin, J. (27 November 1975)
FACTS
1. Pursuant to his special powers and duties under Sec. 64 of the Revised
Administrative Code, the President of the Philippines created the Presidential
Agency on Reforms and Government Operations (PARGO) under EO No. 4 of
07 January 1966. Purposedly, he charged the Agency with the following
functions and responsibilities:
b. To investigate all activities involving or affecting immoral practices,
graft and corruptions, smuggling (physical or technical), lawlessness,
subversion, and all other activities which are prejudicial to the government
and the public interests, and to submit proper recommendations to the
President of the Philippines.
xxx
e. To investigate cases of graft and corruption and violations of RA
Nos. 1379 and 3019, and gather necessary evidence to establish prima
facie, acts of graft and acquisition of unlawfully amassed wealth.
xxx
h. To receive and evaluate, and to conduct fact-finding investigations
of sworn complaints against the acts, conduct or behavior of any public
official or employee and to file and prosecute the proper charges with the
appropriate agency.

HELD:
YES, their permit was only for a limited period Christmas Season of 1968
and it does not extend up to 1969 and 1970. PETITION DENIED.
RATIO:
A license or a permit is not a contract between the sovereignty and the
licensee, and it is not property in any constitutional sense, hence the nonimpairment of contracts doctrine cannot apply.
A license is in the nature of a special privilege, of a permission or authority to
do what is within its terms. It is not absolute, and a license granted by the
State is always revocable. The absence of an expiry date does not make the
license perpetual.
The Special Import Permit covers only the Christmas Season of 1968. In the
application of GST, it made manifest that the reason for its application was so
that it could cope with the demands of its buyers during the Christmas Season
of 1968. In effect, it was GST itself which furnished the period for the permit,
and should only subsist within such period.
The equitable principle of estoppel forbids GST from taking an inconsistent
position now and claim that the permit extends beyond the period it itself
asked for.
The doctrine of promissory estoppel1 was here invoked by GST pointing to the
letter issued by the Director of Foreign Exchange.* (see Facts)
The SC, held, however, that a promise cannot, by itself, be the basis of
estoppel without any justifiable reliance or irreparable detriment to the
promisee. The latter element is lacking in this case. The letter referred to
1

An estoppel may arise from the making of a promise, even though without consideration,
if it was intended that the promise should be relied upon and in fact it was relied upon, and if
a refusal to enforce it would sanction the perpetration of a fraud or would result in injustice.

specifically mentioned that it was subject to the existing terms imposed by the
Monetary Board. Moreover, the Director could not have modified the Special
Permit since it was not given the authority to do so, as in fact it was the
Monetary Board who issued it and only the latter has the power to modify it.
Even assuming arguendo, however, that the aforementioned letter really
tended to impress that further importations could be made, still the doctrine of
estoppel cannot apply, as it does not operate against the Government. The
Government is never estopped by the errors of its agents (in this case, the
Monetary Board).

2.

The President vested in the Agency all the powers of an investigating

committee under Sections 71 and 580 of the Rev. Admin. Code, including the
power to summon witnesses by subpoena or subpoena duces tecum,
administer oaths, take testimony or evidence relevant to the investigation.

3.

Evangelista, as PARGO Undersecretary, issued to respondent Fernando

Manalastas, then Acting City Public Service Officer of Manila, a subpoena ad
testificandum commanding him "to be and appear as witness at the Office of
PARGO... then and there to declare and testify in a certain investigation
pending therein."

4.

Instead of obeying the subpoena, respondent Fernando Manalastas filed with

CFI Manila an Amended Petition for prohibition, certiorari and/or injunction with
preliminary injunction and/or restraining order docketed as Civil Case No.

Jessa, Candice, Jabie, Cels, Joni, Rai, Aldous, Pat, Russ, Mark, Celeni, Ros

73305 and assailed its legality. Respondent issued the assailed order which
reads:
IT IS ORDERED that, upon the filing of a bond in the amount of
P5,000.00, let the writ of preliminary injunction prayed for by the
petitioner [private respondent] be issued restraining the respondents
[petitioners], their agents, representatives, attorneys and/or other
persons acting in their behalf from further issuing subpoenas in
connection with the fact-finding investigations to the petitioner [private
respondent] and from instituting contempt proceedings against the
petitioner [private respondent] under Section 530 of the Revised
Administrative Code.
ISSUE
WON the Agency, acting thru its officials, enjoys the authority to issue subpoenas in
its conduct of fact-finding investigations.
HELD
YES. Administrative agencies may enforce subpoenas issued in the
course of investigations, whether or not adjudication is involved, and whether
or not probable cause is shown and even before the issuance of a complaint.
The SC recognizes that the petitioner Agency draws its subpoena power from
EO No. 4, para. 5 which, in an effectuating mood, empowered it to "summon
witness, administer oaths, and take testimony relevant to the investigation" with the
authority "to require the production of documents under a subpoena duces tecum or
otherwise, subject in all respects to the same restrictions and qualifications as apply
in judicial proceedings of a similar character." Such subpoena power operates in
extenso to all the functions of the Agency as laid out in the aforequoted subparagraphs (b), (e), and (h). It is not bordered by nor is it merely exercisable, as
respondents would have it, in quasi-judicial or adjudicatory function under subparagraph (b). The functions enumerated in all these sub-paragraphs (b), (e), and
(h) interlink or intertwine with one another with the principal aim of meeting the very
purpose of the creation of the Agency, which is to forestall and erode nefarious
activities and anomalies in the civil service. To hold that the subpoena power of
the Agency is confined to mere quasi-judicial or adjudicatory functions would
therefore imperil or inactivate the Agency in its investigatory functions under
sub-paragraphs (e) and (h). More than that, the enabling authority itself (EO No. 4,
para. 5) fixes no distinction when and in what function should the subpoena power
be exercised.
It is not necessary, as in the case of a warrant, that a specific charge or
complaint of violation of law be pending or that the order be made pursuant to one.
It is enough that the investigation be for a lawfully authorized purpose. The
purpose of the subpoena is to discover evidence, not to prove a pending charge,
but upon which to make one if the discovered evidence so justifies. Its obligation
cannot rest on a trial of the value of testimony sought; it is enough that the proposed
investigation be for a lawfully authorized purpose, and that the proposed witness be
claimed to have information that might shed some helpful light. Because judicial
power is reluctant if not unable to summon evidence until it is shown to be relevant
to issues on litigations it does not follow that an administrative agency charged with
seeing that the laws are enforced may not have and exercise powers of original

inquiry. The administrative agency has the power of inquisition which is not
dependent upon a case or controversy in order to get evidence, but can
investigate merely on suspicion that the law is being violated or even just
because it wants assurance that it is not. When investigative and accusatory
duties are delegated by statute to an administrative body, it, too may take steps to
inform itself as to whether there is probable violation of the law. In sum, it may be
stated that a subpoena meets the requirements for enforcement if the inquiry is (1)
within the authority of the agency; (2) the demand is not too indefinite; and (3) the
information is reasonably relevant.
There is no doubt that the fact-finding investigations being conducted by the
Agency upon sworn statements implicating certain public officials of the City
Government of Manila in anomalous transactions fall within the Agency's sphere of
authority and that the information sought to be elicited from respondent Manalastas,
of which he is claimed to be in possession, is reasonably relevant to the
investigations.
The privilege against self-incrimination extends in administrative
investigations, generally, in scope similar to adversary proceedings. In the
present case, respondent Manalastas is not facing any administrative charge. He is
merely cited as a witness in connection with the fact-finding investigation of
anomalies and irregularities in the City Government of Manila with the object of
submitting the assembled facts to the President of the Philippines or to file the
corresponding charges. Since the only purpose of investigation is to discover facts
as a basis of future action, any unnecessary extension of the privilege would thus
be unwise. Anyway, by all means, respondent Manalastas may contest any attempt
in the investigation that tends to disregard his privilege against self-incrimination.
The order is set aside and declared of no force and effect.
GUEVARA v. COMELEC
FACTS:

The Commission on Elections (COMELEC) awarded contracts for ballot boxes

to the National Shipyards & Steel Corporation (NASSCO), Acme Steel Mfg.
Co., Inc. (ACME) and Asiatic Steel Mfg. Co. Inc. (ASIATIC).

ACME did not sign, so its contract was split between NASSCO and ASIATIC.

ACME asked for reconsideration which was heard by the Commission.

Pending hearing, Jos L. Guevara published in Sunday Times, a newspaper of

national circulation an article entitled Ballot Boxes Contract Hit.

COMELEC ordered Guevara to show cause why he should not be punished for
contempt, since the article tended to interfere with and influence the COMELEC
and its members in the adjudication of a controversy then pending investigation
and would likewise bring into disrepute and undermine the exclusive
constitutional function of the Commission.

Guevara filed a motion to quash, which was denied, but was allowed to elevate
the matter to the Supreme Court.
ISSUE: Whether the COMELEC has the power and jurisdiction to conduct contempt
proceedings against petitioner with a view to imposing upon him the necessary
disciplinary penalty in connection with the publication of an article.
RULING: Yes, COMELEC has the power, but such power does not apply in this
case.

Jessa, Candice, Jabie, Cels, Joni, Rai, Aldous, Pat, Russ, Mark, Celeni, Ros

The COMELEC is an independent administrative body established by the

Constitution to take charge of the enforcement of all laws relative to the
conduct of elections and devise means and methods that will insure the
accomplishment of free, orderly and honest elections.
The Constitution speaks of a power wherein the commission shall decide all
administrative questions affecting elections.
The Revised Election Code supplements this power, and among this is Section
5 (of Republic Act No. 180), which grants the Commission the power to punish
contempts in the same manner as enumerated in Rule 64 of the Rules of Court.
In short, the Commission, although not a court of justice within the meaning of
the Constitution (but rather an independent administrative body), may exercise
quasi-judicial functions in so far as controversies that by express provision of
the law come under its jurisdiction.
o Such jurisdiction has been loosely drawn by the Constitution and
statute and has been given boundaries by jurisprudence.
The Supreme Court recognised the value of citing individuals in contempt in
order to give the COMELECs quasi-judicial power some teeth (otherwise,
enforcement would be troublesome).
However, in the controversial proceeding at hand, the Court referred to it as
merely a discharge of the COMELECs ministerial duty since the
controversy arose from negotiations of the COMELECs suppliers.
Such being the case, it cannot exercise the power to punish for contempt as
postulated by law, for such power is inherently judicial in nature, and therefore
cannot be exercised when the function was merely ministerial and not judicial.

Catura vs. CIR | Fernando (1971)

FACTS
- A complaint was lodged against Catura and Salvador, the President and Treasurer,
respectively, of the Philippine Virginia Tobacco Administration Employees
Association, a legitimate labor organization.
- The principal complainants are respondent Tabaniag as well as other employees
constituting more than ten percent of the entire membership of such labor
organization.
- It was charged that during the tenure of office of petitioners, they were responsible
for "unauthorized disbursement of union funds".
- Complainants filed a case with the DOLE.
- Associate Judge Salvador of the CIR required and directed Catura and Salvador to
deliver and deposit to the Court all the said Association's book of accounts, bank
accounts, pass books, union funds, receipts, vouchers and other documents related
to the finances of the said labor union at the hearing.
- There was a motion for reconsideration by petitioners on the ground that they were
not heard before such order was issued, which moreover in their opinion was
beyond the power of the CIR. With Associate Judge Paredes dissenting, the order
was sustained in a resolution by the Court en banc.
ISSUE/S & HELD:
WON the CIR had the power to issue such Order. YES.

RATIONALE
- Paragraphs (b), (h), and (l) of Section 17 of the Industrial Peace Act provide:
"The members shall be entitled to full and detailed reports from their officers and
representatives of all financial transactions as provided in the constitution and bylaws of the organization." ... "The books of accounts and other records of the
financial activities of a legitimate labor organization shall be open to inspection by
any officer or member thereof."
- All that the challenged order did was to require petitioners, as President and
Treasurer of the labor organization, to "deliver and deposit" with respondent Court
all of its book of accounts, bank accounts, pass books, union funds, receipts,
vouchers and other documents related to its finances at the hearing of the petition
- On its face, it cannot be said that such a requirement is beyond the statutory
power conferred. If it were otherwise, the specific provisions of law allegedly
violated may not be effectively complied with. The authority to investigate might be
rendered futile.
- To paraphrase Justice Laurel, the power to investigate, to be conscientious and
rational at the very least, requires an inquiry into existing facts and conditions. The
documents required to be produced constitutes evidence of the most solid character
as to whether or not there was a failure to comply with the mandates of the law.
- It is not for this Court to whittle down the authority conferred on administrative
agencies to assure the effective administration of a statute, in this case intended to
protect the rights of union members against its officers.
- The matter was properly within its cognizance and the means necessary to give it
force and effectiveness should be deemed implied unless the power sought to be
exercised is so arbitrary. No such showing has been made; no such showing can be
made. To repeat, there should be no question about the correctness of the order
herein challenged.
- Nor is the validity of the order in question to be impugned by the allegation that
there was a denial of procedural due process. If the books and records were the
private property of petitioners, perhaps the allegation of the absence of due process
would not be entirely lacking in plausibility. Such is not the case however.
- The pertinent section of the Industrial Peace Act makes clear that such books of
accounts and other records of the financial activities are open to inspection by any
member of a labor organization.
- For the court to require their submission at the hearing of the petition is, as above
noted, beyond question, and no useful purpose would be served by first hearing
petitioners before an order to that effect can be issued. Moreover, since as was
shown in the very brief of petitioners, there was a motion for reconsideration, the
absence of any hearing, even if on the assumption purely for argument's sake that
there was such a requirement, has been cured.
- What the law prohibits is not the absence of previous notice, but the absolute
absence thereof and lack of opportunity to be heard.
- The hearing on a motion for reconsideration meets the strict requirement of due
process.
Tolentino vs. Inciong | Fernando
FACTS

On 12 December 1972, respondent Domingo Cinco (Cinco) filed a complaint

with the National Labor Relations Commission (NLRC) charging petitioner

Jessa, Candice, Jabie, Cels, Joni, Rai, Aldous, Pat, Russ, Mark, Celeni, Ros

Arcadio R. Tolentino (Tolentino) with violating the constitution of the Batangas

Labor Union (Union) by refusing, as its president, to call for the election of
officers in the month of November 1972, and praying that such election be
conducted immediately.
On the day of receiving the complaint, Tolentino sent an urgent telegram to the
NLRC for the cancellation of the as he had to appear on the date set before the
CIR; a formal motion was subsequently filed.
Tolentino was not informed of the action taken on the motion; instead, he was
later notified that the NLRC issued an order directing the Union to hold its
election.
Tolentino filed a motion for reconsideration.
As the MR was not acted upon despite repeated requests, Tolentino filed a
notice of appeal with the Secretary of Labor.
The NLRC, through its Chairman Amado Inciong (Inciong) informed Tolentino
that the election would proceed.
Subsequently, the Union filed a petition with the CFI for prohibition and
preliminary injunction seeking to annul the order.
Jude Jaime delos Angeles (Angeles) set the application for the preliminary
injunction for hearing; after hearing, Angeles reserved his resolution on the
matter at issue in view of the intricate legal questions raised.
On the same date, Tolentino and Angeles were served with copies of a
subpoena, issued by Inciong, requiring them to appear at the NLRC to explain
why they should not be held in contempt for trying to use old society tactics to
prevent a union election duly ordered by the Commission.
Tolentino filed a petition for prohibition with preliminary injunction with the
Supreme Court and the Court issued a resolution issuing a TRO and requiring
respondents to answer.
Inciong wrote a letter to the SC stating: (1) the issue is academic since he did
not intend to continue with the contempt proceedings and the union election
had been held; (2) the SC has no jurisdiction over the NLRC; and (3) they were
evolving a de-legalized labor management system and expected the SC to
cooperate in their efforts.
The SC expunged the letter from the records and enforced their resolution.

ISSUES/HELD

Is the case moot and academic? NO.

Should the NLRC be prohibited from conducting the contempt proceedings?
YES.

RATIONALE
1ST ISSUE

The issue is not academic because there was no retreat by Inciong from his
indefensible position.
o All that was alleged was that he would not enforce the contempt citation.
o Thus, the legal issues presented should be decided.
2ND ISSUE

The undeniable concern of respondent Inciong that the objectives of

Presidential Decree No. 21 be attained thus afforded no warrant for

exercising a power not conferred by such decree.
o Nothing is better settled in the law than that a public official exercises
power, not rights. The government itself is merely an agency through which
the will of the State is express and enforced. Its officers therefore are
likewise agents entrusted with the responsibility of discharging its
functions. As such there is no presumption that they are empowered
to act. There must be a delegation of such authority, either express or
implied. In the absence of a valid grant, they are devoid of power.

In this case, Inciong should have known that the competence, "to hold any
person in contempt for refusal to comply" certainly cannot extend to a
judge of the court of first instance and cannot cover the case likewise of a
party to a controversy who took the necessary steps to avail himself of a
judicial remedy.
o Inciongs use of the phrase "old society tactics," is an implied admission of
his actuation being devoid of support in law.
o It must ever be borne in mind by an administrative official that courts exist
precisely to assure that there be compliance with the law.
o There was no contumacious act committed by petitioner in seeking judicial
remedy; it would be a reproach to any legal system if an individual is
denied access to the courts under these circumstances.