lawphil

Today is Sunday, December 01, 2013

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION

G.R. No. 115381 December 23, 1994 KILUSANG MAYO UNO LABOR C N! R, petitioner, vs. "ON. # SUS B. GARCIA, #R., $%e LAND !RANS&OR!A!ION 'RANC"ISING AND R GULA!ORY BOARD, ()* $%e &RO+INCIAL BUS O& RA!ORS ASSOCIA!ION O' !" &"ILI&&IN S, respondents. Potenciano A. Flores for petitioner. Robert Anthony C. Sison, Cesar B. Brillantes and Jose Z. Galsim for private respondent. Jose F. iravite for movants.

KA&UNAN, J.: 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 o the public and conduce to their com ort and convenience. !s such, public utility services are impressed with public interest and concern. The same is true with respect to the business o common carrier which holds such a peculiar relation to the public interest that there is superinduced upon it the right o public regulation when private properties are a ected with public interest, hence, they cease to be !"ris privati only. "hen, there ore, one devotes his property to a use in which the public has an interest, he, in e ect grants to the public an interest in that use, and must submit to the control by the public or the common good, to the e#tent o the interest he has thus created. 1 !n abdication o the licensing and regulatory government agencies o their unctions as the instant petition see$s to show, is indeed lamentable. %ot only is it an unsound administrative policy but it is inimical to public trust and public interest as well. The instant petition or certiorari assails the constitutionality and validity o certain memoranda, circulars and&or orders o the Department o Transportation and 'ommunications (D)T'* and the +and Transportation ,ranchising and -egulatory .oard +T,-.* 2 which, among others, (a* authori/e provincial bus and 0eepney operators to increase or decrease the prescribed transportation ares without application there or with the +T,-. and without hearing and approval thereo by said agency in violation o Sec. 11(c* o 'ommonwealth !ct %o. 121, as amended, otherwise $nown as the Public Service !ct, and in derogation o +T,-.3s duty to i# and determine 0ust and reasonable ares by delegating that unction to bus operators, and (b* establish a presumption o public need in avor o applicants or certi icates o public convenience ('P'* and place on the oppositor the burden o proving that there is no need or the proposed service, in patent violation not only o Sec. 11(c* o '! 121, as amended, but also o Sec. 20(a* o the same !ct mandating that ares should be 40ust and reasonable.4 5t is, li$ewise, violative o the -ules o 'ourt which places upon each party the burden to prove his own a irmative allegations. 3 The o ending provisions contained in the 6uestioned issuances pointed out by petitioner, have resulted in the introduction into our highways and thorough ares thousands o old and smo$e7belching buses, many o which are right7hand driven, and have e#posed our consumers to the burden o spiraling costs o public transportation without hearing and due process. The ollowing memoranda, circulars and&or orders are sought to be nulli ied by the instant petition, vi#8 (a* D)T' 9emorandum )rder :073:;, dated <une 21, 1::0 relative to the implementation o a are range scheme or provincial bus services in the country= (b* D)T' Department )rder %o. :27;>?, dated 9arch 30, 1::2, de ining the policy ramewor$ on the regulation o transport services= (c* D)T' 9emorandum dated )ctober >, 1::2, laying down rules and procedures to implement Department )rder %o. :27 ;>?= (d* +T,-. 9emorandum 'ircular %o. :2700:, providing implementing guidelines on the D)T' Department )rder %o. :27;>?= and (e* +T,-. )rder dated 9arch 22, 1::2 in 'ase %o. :273112. The relevant antecedents are as ollows8 )n <une 21, 1::0= then Secretary o D)T', )scar 9. )rbos, issued 9emorandum 'ircular %o. :073:; to then +T,-. 'hairman, -emedios !.S. ,ernando allowing provincial bus operators to charge passengers rates within a range o 1;@ above and 1;@ below the +T,-. o icial rate or a period o one (1* year. The te#t o the memorandum order reads in ull8
)ne o the policy re orms and measures that is in line with the thrusts and the priorities set out in the 9edium7 Term Philippine Development Plan (9TPDP* 1:>? A 1::2* is the liberali/ation o regulations in the transport sector. !long this line, the Bovernment intends to move away gradually rom regulatory policies and ma$e

progress towards greater reliance on ree mar$et orces. .ased on several surveys and observations, bus companies are already charging passenger rates above and below the o icial are declared by +T,-. on many provincial routes. 5t is in this conte#t that some orm o liberali/ation on public transport ares is to be tested on a pilot basis. 5n view thereo , the +T,-. is hereby directed to immediately publici/e a are range scheme or all provincial bus routes in country (e#cept those operating within 9etro 9anila*. $ransport %perators shall be allo&ed to char'e passen'ers &ithin a ran'e of fifteen percent ()*+, above and fifteen percent ()*+, belo& the -$FRB official rate for a period of one year. Buidelines and procedures or the said scheme shall be prepared by +T,-. in coordination with the D)T' Planning Service. The implementation o the said are range scheme shall start on 1 !ugust 1::0. ,or compliance. (Cmphasis ours.*

,inding the implementation o the are range scheme 4not legally easible,4 -emedios !.S. ,ernando submitted the ollowing memorandum to )scar 9. )rbos on <uly 22, 1::0, to wit8
"ith re erence to D)T' 9emorandum )rder %o. :073:; dated 21 <une 1::0 which the +T,-. received on 1: <uly 1::0, directing the .oard 4to immediately publici/e a are range scheme or all provincial bus routes in the country (e#cept those operating within 9etro 9anila*4 that will allow operators 4to charge passengers within a range o i teen percent (1;@* above and i teen percent (1;@* below the +T,-. o icial rate or a period o one year4 the undersigned is respect ully adverting the Secretary3s attention to the ollowing or his consideration8 1. Section 11(c* o the Public Service !ct prescribes the ollowing or the i#ing and determination o rates A (a* the rates to be approved should be proposed by public service operators= (b* there should be a publication and notice to concerned or a ected parties in the territory a ected= (c* a public hearing should be held or the i#ing o the rates= hence, implementation o the proposed are range scheme on !ugust 1 without complying with the re6uirements o the Public Service !ct may not be legally easible. 2. To allow bus operators in the country to charge ares i teen (1;@* above the present +T,-. ares in the wa$e o the devastation, death and su ering caused by the <uly 11 earth6ua$e will not be socially warranted and will be politically unsound= most li$ely public criticism against the D)T' and the +T,-. will be triggered by the untimely mot" propio implementation o the proposal by the mere e#pedient o publici/ing the are range scheme without calling a public hearing, which scheme many as early as during the Secretary3s predecessor $now through newspaper reports and columnists3 comments to be !sian Development .an$ and "orld .an$ inspired. 3. 9ore than inducing a reduction in bus ares by i teen percent (1;@* the implementation o the proposal will instead trigger an upward ad0ustment in bus ares by i teen percent (1;@* at a time when hundreds o thousands o people in 'entral and %orthern +u/on, particularly in 'entral Pangasinan, +a Dnion, .aguio 'ity, %ueva Cci0a, and the 'agayan Ealley are su ering rom the devastation and havoc caused by the recent earth6ua$e. 2. 5n lieu o the said proposal, the D)T' with its agencies involved in public transportation can consider measures and re orms in the industry that will be socially upli ting, especially or the

people in the areas devastated by the recent earth6ua$e. 5n view o the oregoing considerations, the undersigned respect ully suggests that the implementation o the proposed are range scheme this year be urther studied and evaluated.

)n December ;, 1::0, private respondent Provincial .us )perators !ssociation o the Philippines, 5nc. (P.)!P* iled an application or are rate increase. !n across7the7board increase o eight and a hal centavos (P0.0>;* per $ilometer or all types o provincial buses with a minimum7ma#imum are range o i teen (1;@* percent over and below the proposed basic per $ilometer are rate, with the said minimum7ma#imum are range applying only to ordinary, irst class and premium class buses and a i ty7centavo (P0.;0* minimum per $ilometer are or aircon buses, was sought. )n December 1, 1::0, private respondent P.)!P reduced its applied proposed are to an across7the7board increase o si# and a hal (P0.01;* centavos per $ilometer or ordinary buses. The decrease was due to the drop in the e#pected price o diesel. The application was opposed by the Philippine 'onsumers ,oundation, 5nc. and Perla '. .autista alleging that the proposed rates were e#orbitant and unreasonable and that the application contained no allegation on the rate o return o the proposed increase in rates. )n December 12, 1::0, public respondent +T,-. rendered a decision granting the are rate increase in accordance with the ollowing schedule o ares on a straight computation method, vi/8
A.$/%R0Z12 FAR1S +DF)% 95%. ), ; G9S. SD''CCD5%B G9. -CBD+!- P1.;0 P0.3? STDDC%T P1.1; P0.2> E5S!H!S&95%D!%!) -CBD+!- P1.10 P0.3?; STDDC%T P1.20 P0.2>; ,5-ST '+!SS (PC- G9.* +DF)% P0.3>; E5S!H!S& 95%D!%!) P0.3:; P-C95C-C '+!SS (PC- G9.* +DF)% P0.3:; E5S!H!S& 95%D!%!) P0.20; !5-')% (PC- G9.* P0.21;. 4

)n 9arch 30, 1::2, then Secretary o the Department o Transportation and 'ommunications Pete %icomedes Prado issued Department )rder %o. :27;>? de ining the policy ramewor$ on the regulation o transport services. The ull te#t o the said order is

reproduced below in view o the importance o the provisions contained therein8

"IC-C!S, C#ecutive )rder %o. 12; as amended, designates the Department o Transportation and 'ommunications (D)T'* as the primary policy, planning, regulating and implementing agency on transportation= "IC-C!S, to achieve the ob0ective o a viable, e icient, and dependable transportation system, the transportation regulatory agencies under or attached to the D)T' have to harmoni/e their decisions and adopt a common philosophy and direction= "IC-C!S, the government proposes to build on the success ul liberali/ation measures pursued over the last ive years and bring the transport sector nearer to a balanced longer term regulatory ramewor$= %)", TIC-C,)-C, pursuant to the powers granted by laws to the D)T', the ollowing policies and principles in the economic regulation o land, air, and water transportation services are hereby adopted8 1. Cntry into and e#it out o the industry. ,ollowing the 'onstitutional dictum against monopoly, no ranchise holder shall be permitted to maintain a monopoly on any route. ! minimum o two ranchise holders shall be permitted to operate on any route. The re6uirements to grant a certi icate to operate, or certi icate o public convenience, shall be8 proo o ,ilipino citi/enship, inancial capability, public need, and su icient insurance cover to protect the riding public. 0n determinin' p"blic need, the pres"mption of need for a service shall be deemed in favor of the applicant. $he b"rden of provin' that there is no need for a proposed service shall be &ith the oppositor(s, . 5n the interest o providing e icient public transport services, the use o the 4prior operator4 and the 4priority o iling4 rules shall be discontinued. The route measured capacity test or other similar tests o demand or vehicle&vessel leet on any route shall be used only as a guide in weighing the merits o each ranchise application and not as a limit to the services o ered. "here there are limitations in acilities, such as congested road space in urban areas, or at airports and ports, the use o demand management measures in con ormity with mar$et principles may be considered. The right o an operator to leave the industry is recogni/ed as a business decision, sub0ect only to the iling o appropriate notice and ollowing a phase7out period, to in orm the public and to minimi/e disruption o services. 2. -ate and ,are Setting. ,reight rates shall be reed gradually rom government controls. Passen'er fares shall also be dere'"lated, e3cept for the lo&est class of passen'er service (normally third class passen'er transport, for &hich the 'overnment &ill fi3 indicative or reference fares. %perators of partic"lar services may fi3 their o&n fares &ithin a ran'e )*+ above and belo& the indicative or reference rate. "here there is lac$ o e ective competition or services, or on speci ic routes, or or the transport o particular commodities, ma#imum mandatory reight rates or passenger ares shall be set temporarily by the government pending actions to increase the level o competition. ,or unserved or single operator routes, the government shall contract such services in the most advantageous terms to the public and the government, ollowing public bids or the services. The advisability o bidding out the services or using other $inds o incentives on such routes shall be studied by the government. 3. Special 5ncentives and ,inancing or ,leet !c6uisition. !s a matter o policy, the government shall not

engage in special inancing and incentive programs, including direct subsidies or leet ac6uisition and e#pansion. )nly when the mar$et situation warrants government intervention shall programs o this type be considered. C#isting programs shall be phased out gradually. The +and Transportation ,ranchising and -egulatory .oard, the 'ivil !eronautics .oard, the 9aritime 5ndustry !uthority are hereby directed to submit to the ) ice o the Secretary, within orty7 ive (2;* days o this )rder, the detailed rules and procedures or the 5mplementation o the policies herein set orth. 5n the ormulation o such rules, the concerned agencies shall be guided by the most recent studies on the sub0ects, such as the Provincial -oad Passenger Transport Study, the 'ivil !viation 9aster Plan, the Presidential Tas$ ,orce on the 5nter7island Shipping 5ndustry, and the 5nter7island +iner Shipping -ate -ationali/ation Study. ,or the compliance o all concerned. (Cmphasis ours*

)n )ctober >, 1::2, public respondent Secretary o the Department o Transportation and 'ommunications <esus .. Barcia, <r. issued a memorandum to the !cting 'hairman o the +T,-. suggesting swi t action on the adoption o rules and procedures to implement above76uoted Department )rder %o. :27;>? that laid down deregulation and other liberali/ation policies or the transport sector. !ttached to the said memorandum was a revised dra t o the re6uired rules and procedures covering (i* Cntry 5nto and C#it )ut o the 5ndustry and (ii* -ate and ,are Setting, with comments and suggestions rom the "orld .an$ incorporated therein. +i$ewise, resplendent rom the said memorandum is the statement o the D)T' Secretary that the adoption o the rules and procedures is a pre7re6uisite to the approval o the Cconomic 5ntegration +oan rom the "orld .an$. 5 )n ,ebruary 1?, 1::3, the +T,-. issued 9emorandum 'ircular %o. :2700: promulgating the guidelines or the implementation o D)T' Department )rder %o. :27;>?. The 'ircular provides, among others, the ollowing challenged portions8
### ### ### 5E. Policy Buidelines on the 5ssuance o 'erti icate o Public 'onvenience. The issuance o a 'erti icate o Public 'onvenience is determined by public need. $he pres"mption of p"blic need for a service shall be deemed in favor of the applicant, &hile b"rden of provin' that there is no need for the proposed service shall be the oppositor4(s, . ### ### ### E. -ate and ,are Setting The control in pricing shall be liberali/ed to introduce price competition complementary with the 6uality o service, sub0ect to prior notice and public hearing. ,ares shall not be provisionally authori/ed without public hearing. !. )n the Beneral Structure o -ates 1. $he e3istin' a"thori#ed fare ran'e system of pl"s or min"s )* per cent for provincial b"ses and !eepneys shall be &idened to 56+ and 75*+ limit in )889 &ith the a"thori#ed fare to be replaced by an indicative or reference rate as the basis for the e3panded fare ran'e .

2. ,are systems or aircon buses are liberali/ed to cover irst class and premier services. ### ### ### (Cmphasis ours*.

Sometime in 9arch, 1::2, private respondent P.)!P, availing itsel o the deregulation policy o the D)T' allowing provincial bus operators to collect plus 20@ and minus 2;@ o the prescribed are without irst having iled a petition or the purpose and without the bene it o a public hearing, announced a are increase o twenty (20@* percent o the e#isting ares. Said increased ares were to be made e ective on 9arch 11, 1::2. )n 9arch 11, 1::2, petitioner G9D iled a petition be ore the +T,-. opposing the upward ad0ustment o bus ares. )n 9arch 22, 1::2, the +T,-. issued one o the assailed orders dismissing the petition or lac$ o merit. The dispositive portion reads8
P-C95SCS ')%S5DC-CD, this .oard a ter considering the arguments o the parties, hereby D5S95SSCS ,)- +!'G ), 9C-5T the petition iled in the above7entitled case. This petition in this case was resolved with dispatch at the re6uest o petitioner to enable it to immediately avail o the legal remedies or options it is entitled under e#isting laws. S) )-DC-CD. ,

Ience, the instant petition or certiorari with an urgent prayer or issuance o a temporary restraining order. The 'ourt, on <une 20, 1::2, issued a temporary restraining order en0oining, prohibiting and preventing respondents rom implementing the bus are rate increase as well as the 6uestioned orders and memorandum circulars. This meant that provincial bus ares were rolled bac$ to the levels duly authori/ed by the +T,-. prior to 9arch 11, 1::2. ! moratorium was li$ewise en orced on the issuance o ranchises or the operation o buses, 0eepneys, and ta#icabs. Petitioner G9D anchors its claim on two (2* grounds. ,irst, the authority given by respondent +T,-. to provincial bus operators to set a are range o plus or minus i teen (1;@* percent, later increased to plus twenty (20@* and minus twenty7 ive (72;@* percent, over and above the e#isting authori/ed are without having to ile a petition or the purpose, is unconstitutional, invalid and illegal. Second, the establishment o a presumption o public need in avor o an applicant or a proposed transport service without having to prove public necessity, is illegal or being violative o the Public Service !ct and the -ules o 'ourt. 5n its 'omment, private respondent P.)!P, while not actually touching upon the issues raised by the petitioner, 6uestions the wisdom and the manner by which the instant petition was iled. 5t asserts that the petitioner has no legal standing to sue or has no real interest in the case at bench and in obtaining the relie s prayed or. 5n their 'omment iled by the ) ice o the Solicitor Beneral, public respondents D)T' Secretary <esus .. Barcia, <r. and the +T,-. asseverate that the petitioner does not have the standing to maintain the instant suit. They urther claim that it is within D)T' and +T,-.3s authority to set a are range scheme and establish a

presumption o public need in applications or certi icates o public convenience. "e ind the instant petition impressed with merit. !t the outset, the threshold issue o loc"s standi must be struc$. Petitioner G9D has the standing to sue. The re6uirement o loc"s standi inheres rom the de inition o 0udicial power. Section 1 o !rticle E555 o the 'onstitution provides8
### ### ### <udicial power includes the duty o the courts o 0ustice to settle actual controversies involving rights which are legally demandable and en orceable, and to determine whether or not there has been a grave abuse o discretion amounting to lac$ or e#cess o 0urisdiction on the part o any branch or instrumentality o the Bovernment.

5n -amb v. Phipps, - we ruled that 0udicial power is the power to hear and decide causes pending between parties who have the right to sue in the courts o law and e6uity. 'orollary to this provision is the principle o loc"s standi o a party litigant. )ne who is directly a ected by and whose interest is immediate and substantial in the controversy has the standing to sue. The rule there ore re6uires that a party must show a personal sta$e in the outcome o the case or an in0ury to himsel that can be redressed by a avorable decision so as to warrant an invocation o the court3s 0urisdiction and to 0usti y the e#ercise o the court3s remedial powers in his behal . 8 5n the case at bench, petitioner, whose members had su ered and continue to su er grave and irreparable in0ury and damage rom the implementation o the 6uestioned memoranda, circulars and&or orders, has shown that it has a clear legal right that was violated and continues to be violated with the en orcement o the challenged memoranda, circulars and&or orders. G9D members, who avail o the use o buses, trains and 0eepneys everyday, are directly a ected by the burdensome cost o arbitrary increase in passenger ares. They are part o the millions o commuters who comprise the riding public. 'ertainly, their rights must be protected, not neglected nor ignored. !ssuming ar'"endo that petitioner is not possessed o the standing to sue, this court is ready to brush aside this barren procedural in irmity and recogni/e the legal standing o the petitioner in view o the transcendental importance o the issues raised. !nd this act o liberality is not without 0udicial precedent. !s early as the 1mer'ency Po&ers Cases, this 'ourt had e#ercised its discretion and waived the re6uirement o proper party. 5n the recent case o :ilosbayan, 0nc., et al. v. $eofisto G"in'ona, Jr., et al., 9 we ruled in the same lines and enumerated some o the cases where the same policy was adopted, vi#8
. . . ! party3s standing be ore this 'ourt is a procedural technicality which it may, in the e#ercise o its discretion, set aside in view o the importance o the issues raised. 5n the landmar$ 1mer'ency Po&ers Cases, JB.-. %o. +72022 (!raneta v. Dinglasan*= B.-. %o. +72?;1 (!raneta v. !ngeles*= B.-. %o. +730;2 (-odrigue/ v. Tesorero de ,ilipinas*= B.-. %o. +730;; (Buerrero v. 'ommissioner o 'ustoms*= and B.-. %o. +730;1 (.arredo v. 'ommission on Clections*, >2 Phil. 31> (1:2:*K, this 'ourt brushed aside this technicality because 4the transcendental importance to the public o these cases demands that they be settled promptly and de initely, brushing aside, i we must, technicalities o procedure. (!velino vs. 'uenco, B.-. %o. +72121*.4 5nso ar as ta#payers3 suits are concerned, this 'ourt had declared that it 4is not devoid o discretion as to whether or not it should be entertained,4 (Tan v. 9acapagal, 23 S'-! 1??, 1>0 J1:?2K* or that it 4en0oys an open discretion to entertain the same or not.4 JSanidad v. ')9C+C', ?3 S'-!

333 (1:?1*K. ### ### ### 5n line with the liberal policy o this 'ourt on loc"s standi, ordinary ta#payers, members o 'ongress, and even association o planters, and non7pro it civic organi/ations were allowed to initiate and prosecute actions be ore this court to 6uestion the constitutionality or validity o laws, acts, decisions, rulings, or orders o various government agencies or instrumentalities. !mong such cases were those assailing the constitutionality o (a* -.!. %o. 3>31 inso ar as it allows retirement gratuity and commutation o vacation and sic$ leave to Senators and -epresentatives and to elective o icials o both Iouses o 'ongress (Philippine 'onstitution !ssociation, 5nc. v. Bimene/, 1; S'-! 2?: J1:1;K*= (b* C#ecutive )rder %o. 2>2, issued by President 'ora/on '. !6uino on 2; <uly 1:>?, which allowed members o the cabinet, their undersecretaries, and assistant secretaries to hold other government o ices or positions ('ivil +iberties Dnion v. C#ecutive Secretary, 1:2 S'-! 31? J1::1K*= (c* the automatic appropriation or debt service in the Beneral !ppropriations !ct (Buingona v. 'arague, 1:1 S'-! 221 J1::1K= (d* -.!. %o. ?0;1 on the holding o desynchroni/ed elections ()smeLa v. 'ommission on Clections, 1:: S'-! ?;0 J1::1K*= (e* P.D. %o. 1>1: (the charter o the Philippine !musement and Baming 'orporation* on the ground that it is contrary to morals, public policy, and order (.asco v. Philippine !musement and Baming 'orp., 1:? S'-! ;2 J1::1K*= and ( * -.!. %o. 1:?;, establishing the Philippine %ational Police. ('arpio v. C#ecutive Secretary, 201 S'-! 2:0 J1::2K*. )ther cases where we have ollowed a liberal policy regarding loc"s standi include those attac$ing the validity or legality o (a* an order allowing the importation o rice in the light o the prohibition imposed by -.!. %o. 32;2 (5loilo Palay and 'orn Planters !ssociation, 5nc. v. ,eliciano, 13 S'-! 3?? J1:1;K= (b* P.D. %os. ::1 and 1033 inso ar as they proposed amendments to the 'onstitution and P.D. %o. 1031 inso ar as it directed the ')9C+C' to supervise, control, hold, and conduct the re erendum7plebiscite on 11 )ctober 1:?1 (Sanidad v. 'ommission on Clections, s"pra*= (c* the bidding or the sale o the 3,1?: s6uare meters o land at -oppongi, 9inato7$u, To$yo, <apan (+aurel v. Barcia, 1>? S'-! ?:? J1::0K*= (d* the approval without hearing by the .oard o 5nvestments o the amended application o the .ataan Petrochemical 'orporation to trans er the site o its plant rom .ataan to .atangas and the validity o such trans er and the shi t o eedstoc$ rom naphtha only to naphtha and&or li6ue ied petroleum gas (Barcia v. .oard o 5nvestments, 1?? S'-! 3?2 J1:>:K= Barcia v. .oard o 5nvestments, 1:1 S'-! 2>> J1::0K*= (e* the decisions, orders, rulings, and resolutions o the C#ecutive Secretary, Secretary o ,inance, 'ommissioner o 5nternal -evenue, 'ommissioner o 'ustoms, and the ,iscal 5ncentives -eview .oard e#empting the %ational Power 'orporation rom indirect ta# and duties (9aceda v. 9acaraig, 1:? S'-! ??1 J1::1K*= ( * the orders o the Cnergy -egulatory .oard o ; and 1 December 1::0 on the ground that the hearings conducted on the second provisional increase in oil prices did not allow the petitioner substantial cross7e#amination= (9aceda v. Cnergy -egulatory .oard, 1:: S'-! 2;2 J1::1K*= (g* C#ecutive )rder %o. 2?> which levied a special duty o P0.:; per liter o imported oil products (Barcia v. C#ecutive Secretary, 211 S'-! 21: J1::2K*= (h* resolutions o the 'ommission on Clections concerning the apportionment, by district, o the number o elective members o Sanggunians (De Buia vs. 'ommission on Clections, 20> S'-! 220 J1::2K*= and (i* memorandum orders issued by a 9ayor a ecting the 'hie o Police o Pasay 'ity (Pasay +aw and 'onscience Dnion, 5nc. v. 'uneta, 101 S'-! 112 J1:>0K*. 5n the 1:?; case o A;"ino v. Commission on 1lections (12 S'-! 2?; J1:?;K*, this 'ourt, despite its une6uivocal ruling that the petitioners therein had no personality to ile the petition, resolved nevertheless to pass upon the issues raised because o the ar7reaching implications o the petition. "e did no less in 2e G"ia v. C% 1-1C (S"pra, where, although we declared that De Buia 4does not appear to have loc"s standi, a standing in law, a personal or substantial interest,4 we brushed aside the procedural in irmity 4considering the importance o the issue involved, concerning as it does the political e#ercise o 6uali ied voters a ected by the apportionment, and petitioner alleging abuse o discretion and violation o the 'onstitution by respondent.4 %ow on the merits o the case.

%n the fare ran'e scheme.

Section 11(c* o the Public Service !ct, as amended, reads8

Sec. 11. Proceedin's of the Commission, "pon notice and hearin' . A The 'ommission shall have power, "pon proper notice and hearin' in accordance with the rules and provisions o this !ct, sub0ect to the limitations and e#ceptions mentioned and saving provisions to the contrary8 ### ### ### (c* To i# and determine individual or 0oint rates, tolls, charges, classi ications, or schedules thereo , as well as commutation, mileage $ilometrage, and other special rates which shall be imposed, observed, and ollowed therea ter by any public service8 Provided, That the 'ommission may, in its discretion, approve rates proposed by public services provisionally and without necessity o any hearing= but it shall call a hearing thereon within thirty days therea ter, upon publication and notice to the concerns operating in the territory a ected8 Provided, f"rther, That in case the public service e6uipment o an operator is used principally or secondarily or the promotion o a private business, the net pro its o said private business shall be considered in relation with the public service o such operator or the purpose o i#ing the rates. (Cmphasis ours*. ### ### ###

Dnder the oregoing provision, the +egislature delegated to the de unct Public Service 'ommission the power o i#ing the rates o public services. -espondent +T,-., the e#isting regulatory body today, is li$ewise vested with the same under C#ecutive )rder %o. 202 dated <une 1:, 1:>?. Section ;(c* o the said e#ecutive order authori/es +T,-. 4to determine, prescribe, approve and periodically review and ad0ust, reasonable ares, rates and other related charges, relative to the operation o public land transportation services provided by motori/ed vehicles.4 Such delegation o legislative power to an administrative agency is permitted in order to adapt to the increasing comple#ity o modern li e. !s sub0ects or governmental regulation multiply, so does the di iculty o administering the laws. Ience, speciali/ation even in legislation has become necessary. Biven the tas$ o determining sensitive and delicate matters as route7 i#ing and rate7ma$ing or the transport sector, the responsible regulatory body is entrusted with the power o subordinate legislation. "ith this authority, an administrative body and in this case, the +T,-., may implement broad policies laid down in a statute by 4 illing in4 the details which the +egislature may neither have time or competence to provide. Iowever, nowhere under the a oresaid provisions o law are the regulatory bodies, the PS' and +T,-. ali$e, authori/ed to delegate that power to a common carrier, a transport operator, or other public service. 5n the case at bench, the authority given by the +T,-. to the provincial bus operators to set a are range over and above the authori/ed e#isting are, is illegal and invalid as it is tantamount to an undue delegation o legislative authority. Potestas dele'ata non dele'ari potest . "hat has been delegated cannot be delegated. This doctrine is based on the ethical principle that such a delegated power constitutes not only a right but a duty to be per ormed by the delegate through the instrumentality o his own 0udgment and not through the intervening mind o another. 1. ! urther delegation o such power would indeed constitute a negation o the duty in violation o the trust reposed in the delegate mandated to discharge it directly. 11 The policy o allowing the provincial bus operators to change and increase their ares at will would result not only to a chaotic situation but to an anarchic state o a airs. This would leave the riding public at the mercy o transport operators who may increase ares

every hour, every day, every month or every year, whenever it pleases them or whenever they deem it 4necessary4 to do so. 5n Panay A"tob"s Co. v. Philippine Rail&ay Co., 12 where respondent Philippine -ailway 'o. was granted by the Public Service 'ommission the authority to change its reight rates at will, this 'ourt categorically declared that8
5n our opinion, the P"blic Service Commission &as not a"thori#ed by la& to dele'ate to the Philippine Rail&ay Co. the po&er of alterin' its frei'ht rates &henever it sho"ld find it necessary to do so in order to meet the competition of road tr"c<s and a"tob"ses, or to chan'e its frei'ht rates at &ill, or to re'ard its present rates as ma3im"m rates, and to fi3 lo&er rates &henever in the opinion of the Philippine Rail&ay Co. it &o"ld be to its advanta'e to do so. The mere recital o the language o the application o the Philippine -ailway 'o. is enough to show that it is untenable. $he -e'islat"re has dele'ated to the P"blic Service Commission the po&er of fi3in' the rates of p"blic services, b"t it has not a"thori#ed the P"blic Service Commission to dele'ate that po&er to a common carrier or other p"blic service. The rates o public services li$e the Philippine -ailway 'o. have been approved or i#ed by the Public Service 'ommission, and any change in such rates must be authori/ed or approved by the Public Service 'ommission a ter they have been shown to be 0ust and reasonable. The public service may, o course, propose new rates, as the Philippine -ailway 'o. did in case %o. 31>2?, but it cannot law ully ma$e said new rates e ective without the approval o the Public Service 'ommission, and the Public Service 'ommission itsel cannot authori/e a public service to en orce new rates without the prior approval o said rates by the commission. The commission must approve new rates when they are submitted to it, i the evidence shows them to be 0ust and reasonable, otherwise it must disapprove them. 'learly, the commission cannot determine in advance whether or not the new rates o the Philippine -ailway 'o. will be 0ust and reasonable, because it does not $now what those rates will be. 5n the present case the Philippine -ailway 'o. in e ect as$ed or permission to change its reight rates at will. 5t may change them every day or every hour, whenever it deems it necessary to do so in order to meet competition or whenever in its opinion it would be to its advantage. Such a procedure would create a most unsatis actory state o a airs and largely de eat the purposes o the public service law. 13 (Cmphasis ours*.

)ne veritable conse6uence o the deregulation o transport ares is a compo"nded fare. 5 transport operators will be authori/ed to impose and collect an additional amount e6uivalent to 20@ over and above the authori/ed are over a period o time, this will unduly pre0udice a commuter who will be made to pay a are that has been computed in a manner similar to those o compounded ban$ interest rates. Picture this situation. )n December 12, 1::0, the +T,-. authori/ed provincial bus operators to collect a thirty7 seven (P0.3?* centavo per $ilometer are or ordinary buses. !t the same time, they were allowed to impose and collect a are range o plus or minus 1;@ over the authori/ed rate. Thus P0.3? centavo per $ilometer authori/ed are plus P0.0; centavos (which is 1;@ o P0.3? centavos* is e6uivalent to P0.22 centavos, the allowed rate in 1::0. Supposing the +T,-. grants another ive (P0.0;* centavo increase per $ilometer in 1::2, then, the base or re erence or computation would have to be P0.2? centavos (which is P0.22 M P0.0; centavos*. 5 bus operators will e#ercise their authority to impose an additional 20@ over and above the authori/ed are, then the are to be collected shall amount to P0.;1 (that is, P0.2? authori/ed +T,-. rate plus 20@ o P0.2? which is P0.2:*. 5n e ect, commuters will be continuously sub0ected, not only to a double are ad0ustment but to a compounding are as well. )n their part, transport operators shall en0oy a bigger chun$ o the pie. !side rom are increase applied or, they can still collect an additional amount by virtue o the authori/ed are range. 9athematically, the situation translates into the ollowing8
Hear// +T,-. authori/ed ,are -ange ,are to be

rate/// collected per $ilometer 1::0 P0.3? 1;@ (P0.0;* P0.22 1::2 P0.22 M 0.0; N 0.2? 20@ (P0.0:* P0.;1 1::> P0.;1 M 0.0; N 0.11 20@ (P0.12* P0.?3 2002 P0.?3 M 0.0; N 0.?> 20@ (P0.11* P0.:2

9oreover, rate ma$ing or rate i#ing is not an easy tas$. 5t is a delicate and sensitive government unction that re6uires de#terity o 0udgment and sound discretion with the settled goal o arriving at a 0ust and reasonable rate acceptable to both the public utility and the public. Several actors, in act, have to be ta$en into consideration be ore a balance could be achieved. ! rate should not be con iscatory as would place an operator in a situation where he will continue to operate at a loss. Ience, the rate should enable public utilities to generate revenues su icient to cover operational costs and provide reasonable return on the investments. )n the other hand, a rate which is too high becomes discriminatory. 5t is contrary to public interest. ! rate, there ore, must be reasonable and air and must be affordable to the end user who will utili/e the services. Biven the comple#ity o the nature o the unction o rate7 i#ing and its ar7reaching e ects on millions o commuters, government must not relin6uish this important unction in avor o those who would bene it and pro it rom the industry. %either should the re6uisite notice and hearing be done away with. The people, represented by reputable oppositors, deserve to be given ull opportunity to be heard in their opposition to any are increase. The present administrative procedure, 14 to our mind, already mirrors an orderly and satis actory arrangement or all parties involved. To do away with such a procedure and allow 0ust one party, an interested party at that, to determine what the rate should be, will undermine the right o the other parties to due process. The purpose o a hearing is precisely to determine what a 0ust and reasonable rate is. 15 Discarding such procedural and constitutional right is certainly inimical to our undamental law and to public interest. %n the pres"mption of p"blic need. ! certi icate o public convenience ('P'* is an authori/ation granted by the +T,-. or the operation o land transportation services or public use as re6uired by law. Pursuant to Section 11(a* o the Public Service !ct, as amended, the ollowing re6uirements must be met be ore a 'P' may be granted, to wit8 (i* the applicant must be a citi/en o the Philippines, or a corporation or co7partnership, association or 0oint7stoc$ company constituted and organi/ed under the laws o the Philippines, at least 10 per cent"m o its stoc$ or paid7up capital must belong entirely to citi/ens o the Philippines= (ii* the applicant must be inancially capable o underta$ing the proposed service and meeting the responsibilities incident to its operation= and (iii* the applicant m"st prove that the operation of the p"blic service proposed and the a"thori#ation to do b"siness &ill promote the p"blic interest in a proper and s"itable manner. 5t is understood that there must be proper notice and hearing be ore the PS' can e#ercise its power to issue a 'P'. "hile adopting in toto the oregoing re6uisites or the issuance o a 'P', +T,-. 9emorandum 'ircular %o. :27 00:, Part 5E, provides or yet incongruous and contradictory policy guideline on the issuance o a 'P'. The guidelines states8
The issuance o a 'erti icate o Public 'onvenience is determined by public need. $he pres"mption of p"blic need for a service shall be deemed in favor of the applicant, &hile the b"rden of provin' that there is no need

for the proposed service shall be the oppositor4s. (Cmphasis ours*.

The above76uoted provision is entirely incompatible and inconsistent with Section 11(c*(iii* o the Public Service !ct which re6uires that be ore a 'P' will be issued, the applicant must prove by proper notice and hearing that the operation o the public service proposed will promote public interest in a proper and suitable manner. )n the contrary, the policy guideline states that the presumption o public need or a public service shall be deemed in avor o the applicant. 5n case o con lict between a statute and an administrative order, the ormer must prevail. .y its terms, public convenience or necessity generally means something itting or suited to the public need. 1, !s one o the basic re6uirements or the grant o a 'P', public convenience and necessity e#ists when the proposed acility or service meets a reasonable want o the public and supply a need which the e#isting acilities do not ade6uately supply. The e#istence or non7e#istence o public convenience and necessity is there ore a 6uestion o act that must be established by evidence, real and&or testimonial= empirical data= statistics and such other means necessary, in a public hearing conducted or that purpose. The ob0ect and purpose o such procedure, among other things, is to loo$ out or, and protect, the interests o both the public and the e#isting transport operators. Eerily, the power o a regulatory body to issue a 'P' is ounded on the condition that a ter ull7dress hearing and investigation, it shall ind, as a act, that the proposed operation is or the convenience o the public. 1- .asic convenience is the primary consideration or which a 'P' is issued, and that act alone must be consistently borne in mind. !lso, e#isting operators in sub0ect routes must be given an opportunity to o er proo and oppose the application. There ore, an applicant must, at all times, be re6uired to prove his capacity and capability to urnish the service which he has underta$en to render. 18 !nd all this will be possible only i a public hearing were conducted or that purpose. )therwise stated, the establishment o public need in avor o an applicant reverses well7settled and institutionali/ed 0udicial, 6uasi70udicial and administrative procedures. 5t allows the party who initiates the proceedings to prove, by mere application, his a irmative allegations. 9oreover, the o ending provisions o the +T,-. memorandum circular in 6uestion would in e ect amend the -ules o 'ourt by adding another disputable presumption in the enumeration o 3? presumptions under -ule 131, Section ; o the -ules o 'ourt. Such usurpation o this 'ourt3s authority cannot be countenanced as only this 'ourt is mandated by law to promulgate rules concerning pleading, practice and procedure. 19 Deregulation, while it may be ideal in certain situations, may not be ideal at all in our country given the present circumstances. !dvocacy o liberali/ed ranchising and regulatory process is tantamount to an abdication by the government o its inherent right to e#ercise police power, that is, the right o government to regulate public utilities or protection o the public and the utilities themselves. "hile we recogni/e the authority o the D)T' and the +T,-. to issue administrative orders to regulate the transport sector, we ind that they committed grave abuse o discretion in issuing D)T' Department )rder %o. :27;>? de ining the policy ramewor$ on the regulation o transport services and +T,-. 9emorandum 'ircular %o. :2700: promulgating the implementing guidelines on D)T' Department )rder %o. :27;>?, the said administrative issuances being amendatory and violative o the Public Service !ct and the -ules o 'ourt. 'onse6uently, we rule that the twenty (20@* per cent"m are increase imposed by respondent P.)!P on 9arch 11, 1::2 without the bene it o a petition and a public hearing is null and void and o no orce and e ect. %o grave abuse o discretion however was committed in the issuance o D)T' 9emorandum )rder %o. :073:; and

D)T' 9emorandum dated )ctober >, 1::2, the same being merely internal communications between administrative o icers. "IC-C,)-C, in view o the oregoing, the instant petition is hereby B-!%TCD and the challenged administrative issuances and orders, namely8 D)T' Department )rder %o. :27;>?, +T,-. 9emorandum 'ircular %o. :2700:, and the order dated 9arch 22, 1::2 issued by respondent +T,-. are hereby DC'+!-CD contrary to law and invalid inso ar as they a ect provisions therein (a* delegating to provincial bus and 0eepney operators the authority to increase or decrease the duly prescribed transportation ares= and (b* creating a presumption o public need or a service in avor o the applicant or a certi icate o public convenience and placing the burden o proving that there is no need or the proposed service to the oppositor. The Temporary -estraining )rder issued on <une 20, 1::2 is hereby 9!DC PC-9!%C%T inso ar as it en0oined the bus are rate increase granted under the provisions o the a orementioned administrative circulars, memoranda and&or orders declared invalid. %o pronouncement as to costs. S) )-DC-CD. Padilla, 2avide, Jr., Bellosillo and ="iason, JJ., conc"r.

'oo$)o$e1
1 Pantranco v. Public Service 'ommission, ?0 Phil. 221. 2 The 20th century ushered in the birth and growth o public utility regulation in the country. ! ter the !mericans introduced public utility regulation at the turn o the century, various regulatory bodies were created. They were the 'oastwise -ate 'ommission under !ct %o. ;20 passed by the Philippine 'ommission on %ovember 1?, 1:02= the .oard o -ate -egulation under !ct %o. 1??: dated )ctober 12, 1:0?= the .oard o Public Dtility 'ommission under !ct %o. 230? dated December 1:, 1:13= and the Public Dtility 'ommission under !ct %o. 310> dated 9arch 1:, 1:23. During the 'ommonwealth period, the %ational !ssembly passed a more comprehensive public utility law. This was 'ommonwealth !ct %o. 121, as amended or the Public Service !ct, as amended. Said law created a regulatory and ranchising body $nown as the Public Service 'ommission (PS'*. The 'ommission (PS'* e#isted or thirty7si# (31* years rom 1:31 up to 1:?2. )n September 22, 1:?2, Presidential Decree %o. 1 was issued and declared 4part o the law o the land.4 The same e ected a ma0or revamp o the e#ecutive department. Dnder !rticle 555, Part O o P.D. %o. 1, the Public Service 'ommission (PS'* was abolished and replaced by three (3* speciali/ed regulatory boards. These were the .oard o Transportation, the .oard o 'ommunications, and the .oard o Power and "aterwor$s. The .oard o Transportation (.)T* lasted or thirteen (13* years. )n 9arch 20, 1:>;, C#ecutive )rder %o. 1011 was issued abolishing the .oard o Transportation and the .ureau o +and Transportation. Their powers

and unctions were merged into the +and Transportation 'ommission (+T'*. Two (2* years later, +T' was abolished by C#ecutive )rder %os. 12; dated <anuary 30, 1:>? and 12;7! dated !pril 13, 1:>? which reorgani/ed the Department o Transportation and 'ommunications. )n <une 1:, 1:>?, the +and Transportation ,ranchising and -egulatory .oard (+T,-.* was created by C#ecutive )rder %o. 202. The +T,-., successor o +T', is the e#isting ranchising and regulatory body or overland transportation today. 3 Sec. 1, -ule 131, -ules o 'ourt. 2 Decision o +T,-. in 'ase %o. :072?:2, p. 2= Rollo, p. ;:. ; Rollo, p. 22. 1 )rder o +T,-., p. 2= Rollo, p. ;;. ? 22 Phil. 2;1 J1:12K. > "arth v. Seldin, 222 D.S. 2:0, 2:>72::, 2; +. Cd. 2d 323, :; S. 't. 21:? J1:?;K= Bu/man v. 9arrero, 1>0 D.S. >1, 2; +. Cd. 231, 21 S.'t. 2:3 J1:01K= 9c9ic$en v. Dnited States, :? D.S. 202, 22 +. Cd. :2? J1:?>K= Silver Star 'iti/ens3 'ommittee v. )rlando ,la. 1:2 So. 2d 1>1 J1:1?K= 5n -e Genison3s Buardianship, ?2 S.D. 1>0, 31 %.". 2d 321 J1:2>K. : B.-. %o. 1133?;, 9ay ;, 1::2. 10 Dnited States v. .arrias, 11 Phil. 32?, 330 J1:0>K= People v. Eera, 1; Phil. ;1, 113 J1:3?K. 11 'ru/, Philippine Political +aw, 1::1 Cdition, p. >2. 12 ;? Phil. >?2 J1:33K. 13 0d., at pp. >?>7>?:. // !ssume a our7year interval in are ad0ustment as a constant. /// !ssume urther a constant P0.0; centavo increase in are every our (2* years. 12 Steps in the ,iling o Petition or -ate 5ncrease8 ! Petition ,or !d0ustment o -ate (either or increase or reduction* may be iled only by a grantee o a 'P'. There ore, when ranchise&'P' grantees or e#isting public utility operators oresee that the new oil price increase, wage hi$es or similar actors would threaten the survival and viability o their operations, they may then institute a petition or increase o rates. Thus in the case o public utilities engaged in transportation, telecommunications, energy supply (electricity* and others, the ollowing steps are usually underta$en in see$ing, particularly upwards ad0ustments o rates8 1. ,iling o ormal Petition or -ate 5ncrease. A This petition alleges therein among others, the present schedule o rates, the reasons why the same is no longer economically viable and the revised schedule o rates it proposes to charge. !ttached to said Petition or inancial statements, pro0ections&studies showing possible losses rom oil price or wage hi$es under the old or e#isting rates and possible margin o pro it (which

should be within the 12@ allowable limit* under the new or revised rates= 2. ! ter the petition is doc$eted, a date is set or hearing or which %otice o Iearing is issued, the same to be published in a newspaper o general circulation in the area= 3. The parties a ected by the application are re6uired to be urnished copies o the petition and the %otice o Iearing usually by registered mail with return card. The Solicitor Beneral is also separately noti ied since he is the counsel or the Bovernment= 2. The Technical Sta o the regulatory body concerned evaluates the documentary evidence attached to the petition to determine whether there is warrant to the re6uest or rate revision= ;. Then the 'ommission on !udit (')!* is re6uested by the regulatory body to conduct an audit and e#amination o the boo$s o accounts and other pertinent inancial records o the public utility operator see$ing the rate revision= i the applicants&petitioners are numerous, a representative number or e#amination purposes would do, and the period o operation covered usually ranges rom si# (1* months to one (1* year= ')! audit report is compared with that o the regulatory body. 'opies o these audit reports are urnished the petitioners and oppositors may submit their e#ceptions or ob0ections thereto. 1. Then hearings are conducted. The petitioners may present accountants or such rate e#perts to e#plain their plea or rate revision. )ppositors are also allowed to rebut such evidence7in7chie with their own witnesses and documents. ! ter the hearings, the corresponding resolution is issued. To obviate protracted hearings, the parties may agree to submit their respective Position Papers in lieu o oral testimonies. 1; Hnchausti Steamship 'o. v. Public Dtility 'ommissioner, 22 Phil. 121, 131 J1:22K. 11 .lac$3s +aw Dictionary, ;th Cdition, p. 110;. 1? .atangas Transportation 'o. v. )rlanes, ;2 Phil. 2;; J1:2>K. 1> 9anila Clectric 'o. v. Pasay Transportation 'o., ;? Phil. >2; J1:33K= Please see also -aymundo Transportation v. Pere/, ;1 Phil. 2?2 J1:31K= Pampanga .us 'o. v. Cnri6ue/, 3> ).B. 3?2= Dela -osa v. 'orpus, 3> ).B. 201:. 1: !rticle E555, Section 1, 1:>? 'onstitution.

The +awphil Pro0ect 7 !rellano +aw ,oundation