EN BANC

[G.R. No. 100481. January 22, 1997.]

PHILIPPINE INTERISLAND SHIPPING ASSOCIATION OF THE PHILIPPINES, CONFERENCE OF INTERISLAND
SHIP-OWNERS AND OPERATORS, UNITED PETROLEUM TANKER OPERATORS ASSOCIATION OF THE
PHILIPPINES, LIGHTERAGE ASSOCIATION OF THE PHILIPPINES and PILOTAGE INTEGRATED SERVICES
CORPORATION, Petitioners, v. COURT OF APPEALS, UNITED HARBOR PILOTS ASSOCIATION OF THE
PHILIPPINES, INC. and MANILA PILOTS ASSOCIATION, Respondents.
[G.R. Nos. 103716-17. January 22, 1997.]
HON. PETE NICOMEDES PRADO, in his capacity as Secretary of Transportation and Communications and the
PHILIPPINE PORTS AUTHORITY, Petitioners, v. COURT OF APPEALS, UNITED HARBOR PILOTS ASSOCIATION OF
THE PHILIPPINES, INC., Respondents.
[G.R. No. 107720. January 22, 1997.]
HON. JESUS B. GARCIA, JR., in his capacity as Secretary of Transportation and Communications and Chairman of
the PHILIPPINE PORTS AUTHORITY, COMMODORE ROGELIO A. DAYAN, in his capacity as General Manager of the
Philippine Ports Authority, and SIMEON T. SILVA, JR., in his capacity as the South Harbor Manager, Philippine
Ports Authority,Petitioners, v. HON. NAPOLEON R. FLOJO, in his capacity as the Presiding Judge of Branch 2,
Regional Trial Court - Manila, UNITED HARBOR PILOTS ASSOCIATION OF THE PHILIPPINES and the MANILA
PILOTS ASSOCIATION, Respondents.
P. V. Vergel de Dios, Jr. for petitioners in G. R. No. 100481.
Edwin A. Villasor for private respondents in G.R. No. 100481.
The Solicitor General for petitioners in G.R. No. 107720.
Jesus P. Amparo for private respondents in G.R. No. 107720.

SYLLABUS

1. ADMINISTRATIVE LAW; SUBORDINATE LEGISLATION SUCH AS FIXING OF PILOTAGE RATE; MAY BE REVISED BY LAW
(Executive Order No. 1088). Petitioners contend that E.O. No. 1088 was merely an administrative issuance and, as such, it
could be superseded by an order of the PPA. They also contend that to consider E.O. No. 1088 a statute would be to deprive
the PPA of its power under its charter to fix pilotage rates. The contention has no merit. The fixing of rates is essentially a
legislative power. The orders previously issued by the PPA were in the nature of subordinate legislation, promulgated by it in
the exercise of delegated power. As such these could only be amended or revised by law, as the President did by E.O No.
1088. What determines whether an act is a law or an administrative issuance is not its form but its nature.
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2. POLITICAL LAW; PRESIDENT; POWER TO LEGISLATE; AUTHORIZED UNDER THE CONSTITUTION. Neither is there any
doubt of the power of the then President to fix rates. When he issued E.O. No. 1088, President Marcos was authorized under
Amendment No. 6 of the 1973 Constitution to exercise legislative power, just as he was under the original 1973 Constitution,
when he issued P.D. No. 857 which created the PPA, endowing it with the power to regulate pilotage service in Philippine
ports. Although the power to fix rates for pilotage had been delegated to the PPA, it became necessary to rationalize the
rates of charges fixed by it through the imposition of uniform rates. That is what the President did in promulgating E.O. No.
1088. As the President could delegate the ratemaking power to the PPA, so could he exercise it in specific instances without
thereby withdrawing the power vested by P.D. No. 857, 20 (a) in the PPA "to impose, fix, prescribe, increase or decrease
such rates, charges or fees . . . for the services rendered by the Authority or by any private organization within a Port
District."
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3. ID.; ID.; ID.; EXECUTIVE ORDER NO. 1088; A VALID STATUTE. E.O. No. 1088 is not meant simply to fix new pilotage
rates. Its legislative purpose is the "rationalization of pilotage service charges, through the imposition of uniform and
adjusted rates for foreign and coastwise vessels in all Philippine ports." Petitioners refused to implement E.O. No. 1088 on
the ground that it was issued without notice to the PPA and that it was nothing but a "political gimmick". But lack of notice to
the PPA is not proof that the necessary factual basis for the order was wanting. The presumption is that the President had
before him pertinent data on which he based the rates prescribed in his order. It is not unusual for lawmakers to have in
mind partisan political consideration in sponsoring legislation. Yet that is not a ground for invalidating a statute. Moreover, an
inquiry into legislative motivation is not proper since the only relevant question is whether in issuing it the President violated
constitutional and statutory restrictions on his power. The PPA did not-have any objection to the order based on constitutional
grounds. There is, therefore, no legal basis for PPAs intransigence, after failing to get the new administration of President
Aquino to revoke the order by issuing its own order in the form of A.O. No. 02-88. It is noteworthy that if President Marcos
had legislative power under Amendment No. 6 of the 1973 Constitution so did President Aquino under the Provincial

(Freedom) Constitution who could have revoked her predecessors order E.O. No. 1088 is a valid statute and that the PPA is
duty bound to comply with its provisions. The PPA may increase the rates but it may not decrease them below those
mandated by E. O. No.1088. Finally, the PPA cannot refuse to implement E.O. No. 1088 or alter it or abrogate the rates fixed
and leave the fixing of rates for pilotage service to the contracting parties.
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4. REMEDIAL LAW; APPEAL; DISMISSAL THEREOF, AN ADJUDICATION ON THE MERITS. The Court of Appeals dismissed
the joint appeal of the government and the intervenors from the trial courts decision in Civil Case No. 88-44726 on the
ground that the issues raised were purely legal questions. Both the government and the intervenors separately brought
petitions for review to this Court. In G.R. No. 100109, the governments petition was dismissed for lack of showing that the
appellate court committed reversible error. The dismissal of the governments petition goes far to sustain the dismissal of the
intervenors petition in in G.R. No. 100481 for the review of the same decision of the Court of Appeals. After all, the
intervenors petition is based on substantially the same grounds as those stated in the governments petition. It is now
settled that the dismissal of a petition for review on certiorari is an adjudication on the merits of a controversy. Such
dismissal can only mean that the Supreme Court agrees with the findings and conclusions of the Court of Appeals or that the
decision sought to be reviewed is correct.
5. ID.; JURISDICTION; TRIAL COURT; CONTEMPT FOR VIOLATION OF ITS DECISION. Following the dismissal of the
governments appeal in G.R. No. 100109, the PPA abandoned A.O. No.02-88 which provided for "Open Pilotage System." But
it subsequently promulgated Administrative Order No. 05-92. The UHPAP and the MPA saw the adoption of this system as a
return to the "Open Pilotage System" and, therefore, a violation of the trial courts decision invalidating the "Open Pilotage
System." They considered this to be a contempt of the trial court. The decision of the trial court in Civil Case No. 88-44726
enjoined petitioners from implementing the so-called "Open Pilotage System" embodied in A.O. No.02-88. If, as alleged, A.O.
No. 05-92 is in substance a reenactment of A.O. No.02-88, then there is basis for private respondents invocation of the trial
courts jurisdiction to punish for contempt. Still it is argued that the trial court lost jurisdiction over Civil Case No.88-7426,
upon the perfection of their appeal from its decision. That is indeed true. "The appeal transfers the proceedings to the
appellate court, and this last court becomes thereby charged with the authority to deal with contempts committed after
perfection of the appeal." The trial court would have jurisdiction only in the event of an attempt to block execution of its
decision and that would be after the remand of the case to the trial court. Until then the trial court would have no jurisdiction
to deal with alleged contemptuous acts. The fly in the ointment, however, is that by accepting the dismissal of their petition
for review in G.R. No. 100109, petitioners rendered execution of the decision of the trial court superfluous. Any attempt by
them, therefore, to disobey the courts final injunction as embodied in its decision would be properly subject to punishment
for contempt. Petitioners contention that private respondents complaint must be the subject of a separate action would
nullify contempt proceedings as means of securing obedience to the lawful processes of a court. Petitioners theory would
reward ingenuity and cunning in devising orders which substantially are the same as the order previously prohibited by the
court. We hold that the trial court has jurisdiction to hear the motions for contempt filed by private respondent, subject to
any valid defense which petitioners may interpose.
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DECISION

MENDOZA, J.:

Private respondent United Harbor Pilots Association of the Philippines, Inc. (UHPAP) is the umbrella organization of various
groups rendering pilotage service in different ports of the Philippines. The service consists of navigating a vessel from a
specific point, usually about two (2) miles off shore, to an assigned area at the pier and vice versa. When a vessel arrives, a
harbor pilot takes over the ship from its captain to maneuver it to a berth in the port, and when it departs, the harbor pilot
also maneuvers it up to a specific point off shore. The setup is required by the fact that each port has peculiar topography
with which a harbor pilot is presumed to be more familiar than a ship captain.
The Philippine Ports Authority (PPA) is the government agency which regulates pilotage. Pursuant to Presidential Decree No.
857, it has the power "to supervise, control, regulate . . . such services as are necessary in the ports vested in, or belonging
to the Authority" 1 and to "control, regulate and supervise pilotage and the conduct of pilots in any Port District." 2 It also
has the power "to impose, fix, prescribe, increase or decrease such rates, charges or fees. . . for the services rendered by
the Authority or by any private organization within a Port District. 3
These cases arose out of the efforts of harbor pilots to secure enforcement of Executive Order No. 1088, which fixes the rates
of pilotage service, and the equally determined efforts of the PPA and its officials, the herein petitioners, to block
enforcement of the executive order, even as they promulgated their own orders which in the beginning fixed lower rates of
pilotage and later left the matter to self determination by parties to a pilotage contract.
I. THE FACTS
G.R. No. 103716
On February 3, 1986, shortly before the presidential elections, President Ferdinand E. Marcos, responding to the clamor of
harbor pilots for an increase in pilotage rates, issued Executive Order No. 1088, PROVIDING FOR UNIFORM AND MODIFIED

RATES FOR PILOTAGE SERVICES RENDERED TO FOREIGN AND COASTWISE VESSELS IN ALL PRIVATE AND PUBLIC PORTS.
The executive order increased substantially the rates of the existing pilotage fees previously fixed by the PPA.
However, the PPA refused to enforce the executive order on the ground that it had been drawn hastily and without prior
consultation; that its enforcement would create disorder in the ports as the operators and owners of the maritime vessels
had expressed opposition to its implementation; and that the increase in pilotage, as mandated by it, was exorbitant and
detrimental to port operations. 4
The UHPAP then announced its intention to implement E.O. No. 1088 effective November 16, 1986. This in turn drew a
warning from the PPA that disciplinary sanctions would be applied to those who would charge rates under E.O. No. 1088. The
PPA instead issued Memorandum Circular No. 43-86, fixing pilotage fees at rates lower than those provided in E.O. No. 1088.
Consequently, the UHPAP filed on January 7, 1987 a complaint for injunction with the Regional Trial Court of Manila, against
the then Minister of Transportation and Communications, Hernando Perez, and PPA General Manager, Primitivo S. Solis, Jr. It
sought a writ of preliminary mandatory injunction for the immediate implementation of E.O. No. 1088, as well as a temporary
restraining order to stop PPA officials from imposing disciplinary sanctions against UHPAP members charging rates in
accordance with E.O. No. 1088.
The case, docketed as Civil Case No. 87-38913, was raffled to Branch 28 of the Regional Trial Court of Manila which issued a
temporary restraining order, enjoining the PPA from threatening the UHPAP, its officers and its members with suspension and
other disciplinary action for collecting pilotage fees pursuant to E.O. No. 1088.
On March 16, 1987, the Chamber of Maritime Industries of the Philippines, William Lines, Inc., Loadstar Shipping Co., Inc.
and Delsen Transport Lines, Inc., after obtaining leave, filed a joint answer in intervention.
On February 26, 1988, while the case was pending, the PPA issued Administrative Order No. 02-88, entitled IMPLEMENTING
GUIDELINES ON OPEN PILOTAGE SERVICE. The PPA announced in its order that it was leaving to the contracting parties, i.e.,
the shipping lines and the pilots, the fixing of mutually acceptable rates for pilotage services, thus abandoning the rates fixed
by it (PPA) under Memorandum Circular No. 43-86, as well as those provided in E.O. No. 1088. The administrative order
provided:
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Section 3. Terms/Conditions on Pilotage Service. The shipping line or vessels agent/representative and the harbor
pilot/firm chosen by the former shall agree between themselves, among others, on what pilotage service shall be performed,
the use of tugs and their rates, taking into consideration the circumstances stated in Section 12 of PPA AO No. 03-85, and
such other conditions designed to ensure the safe movement of the vessel in pilotage areas/grounds.
The PPA then moved to dismiss the case, contending that the issuance of its order had rendered the case moot and academic
and that consequently E.O. No. 1088 had ceased to be effective. The UHPAP opposed the motion. Together with the Manila
Pilots Association (MPA), it filed on May 25, 1988 a petition for certiorari and prohibition in the RTC-Manila, questioning the
validity of A.O. No. 02-88. This petition was docketed as Civil Case No. 88-44726 (United Harbor Pilots Association and
Manila Pilots Association v. Hon. Rainerio Reyes, as Acting Secretary of the Department of Transportation and
Communications and Chairman of the Philippine Ports Authority (PPA) and Maximo Dumlao, Jr., as General Manager of the
Philippine Ports Authority(PPA), Et Al.) and raffled to Branch 2 of RTC-Manila. The factual antecedents of this case are
discussed in G.R. No. 100481 below.
Meanwhile, in Civil Case 87-38913, the court, without resolving the motion to dismiss filed by the PPA, rendered a decision 5
holding that A.O. No. 02-88 did not render the case moot and academic and that the PPA was under obligation to comply
with E.O. No. 1088 because the order had the force of law which the PPA could not repeal.
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The then Transportation Minister Hernando Perez and the PPA filed a petition for review. The petition was filed in this Court
which later referred the case to the Court of Appeals where it was docketed as CA G.R. SP. No. 18072. On the other hand the
intervenors appealed to the Court of Appeals where this case was docketed as CA G.R. No. 21590. The two cases were then
consolidated.
In a decision rendered on October 4, 1991, the Twelfth Division 6 of the Court of Appeals affirmed the decision of the trial
court, by dismissing CA G.R. No. 21590 and denying CA G.R. SP. No. 18072. Hence, this petition by the Secretary of
Transportation and Communications and the PPA. The intervenor shipping lines did not appeal.
G.R. No. 100481
Meanwhile, in a petition for certiorari filed before RTC-Manila, Branch 2 (Civil Case No. 88-44726), the UHPAP and the MPA
sought the annulment of A.O. No. 02-88, which in pertinent parts provided:
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Section 1. Statement of Policy. It is hereby declared that the provision of pilotage in ports/harbors/areas defined as
compulsory in Section 8 of PPA Administrative Order No. 03-85, entitled, "Rules and Regulations Governing Pilotage Services,
the Conduct of Pilots and Pilotage Fees in Philippine Ports" shall be open to all licensed harbor pilots/pilotage
firms/associations appointed/accredited by this authority to perform pilotage service.
Section 2. Persons Authorized to Render Pilotage. The following individuals, persons or groups shall be

appointed/accredited by this Authority to provide pilotage service:

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a. Harbor Pilots of the present Pilotage Associations of the different pilotage districts in the Philippines. Their probationary
training as required under Section 31 of PPA AO No. 03-85 shall be undertaken by any member of said Association.
b. Members/employees of any partnership/corporation or association, including Filipino shipmasters/ captains of vessel
(domestic/foreign) of Philippine Registry and individuals who meet the minimum qualifications and comply with the
requirements prescribed in Sec. 29 of PPA AO No. 03-85, aforestated, and who are appointed by said firm or association and
accredited as harbor pilots by this authority. New Harbor Pilots who wish to be appointed/accredited by PPA under the open
pilotage system either as an individual pilot or as a member of any Harbor Pilot partnership/association shall be required to
undergo a practical examination, in addition to the written examination given by the Philippine Coast Guard, prior to their
appointment/ accreditation by this Authority.
The UHPAP and MPA, as petitioners below, contended (1) that A.O. No. 02-88 was issued without the benefit of a public
hearing; (2) that E.O. No. 1088 had not been repealed by any other Executive Order or Presidential Decree and, therefore,
should be given effect; and (3) that A.O. No. 02-88 contravened P.D. No. 857.
On August 21, 1989, the Philippine Interisland Shipping Association, Conference of Interisland Shipowners and Operators,
United Petroleum Tanker Operators of the Philippines, Lighterage Association of the Philippines, and Pilotage Integrated
Services Corp., were allowed to intervene.
On September 8, 1989, a writ of preliminary injunction was issued by the court, enjoining the PPA from implementing A.O.
No. 02-88 and, on October 26, 1989, judgment was rendered in favor of the petitioners therein. The dispositive portion of
the courts decision 7 reads:
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WHEREFORE, for all of the foregoing, the petition is hereby granted.

1. Respondents are hereby declared to have acted in excess of jurisdiction and with grave abuse of discretion amounting to
lack of jurisdiction in approving Resolution No. 860 and in enacting Philippine Ports Authority Administrative Order No. 02-88,
the subject of which is "Implementing Guidelines on Open Pilotage Service";
2. Philippine Ports Authority Administrative Order No. 02-88 is declared null and void;
3. The preliminary injunction issued on September 8, 1989 is made permanent; and
4. Without costs.
SO ORDERED.
Respondents and the intervenors below filed a joint petition for certiorari in the Court of Appeals (CA G.R. SP No. 19570),
assailing the decision of the trial court. But their petition was dismissed for lack of jurisdiction on the ground that the issue
raised was purely legal.
The parties separately filed petitions for review before this Court. The first one, by the PPA and its officers, was docketed as
G.R. No. 100109 (Hon. Pete Nicomedes Prado, Philippine Ports Authority and Commodore Rogelio Dayan v. United Harbor
Pilots Association of the Philippines and Manila Pilots Association), while the second one, by the intervenors, was docketed
as G.R. No. 100481 (Philippine Interisland Shipping Association of the Philippines, Conference of Interisland Ship Owners and
Operators, United Petroleum Tanker Operators Association of the Philippines, Inc. v. The Court of Appeals, United Harbor
Pilots Association of the Philippines and Manila Pilots Association.)
The petition filed by the government in G.R. No. 100109 was dismissed for failure of petitioners to show that the Court of
Appeals committed a reversible error. 8 On the other hand, the petition of the intervenors in G.R. No. 100481 was given due
course.
G.R. No. 107720
Following the denial of its petition in G.R. No. 100109, the PPA issued on July 31, 1992, Administrative Order No. 05-92,
placing harbor pilots under the control of the PPA with respect to the scheduling and assignment of service of vessels. The
PPA cited as justification "pilotage delays . . . under the set-up where private respondents (UHPAP & MPA) assign the pilots.
Intentionally or otherwise, several vessels do not receive the pilotage service promptly, causing them operational disruptions
and additional expenses/costs." 9
Private respondents UHPAP and MPA viewed the matter differently. On October 28, 1992, they asked the RTC-Manila, Branch
2 which heard and decided Civil Case No. 88-44726 to cite PPA officials in contempt of court. On the same day, the trial court
issued an order restraining the herein petitioners from implementing Administrative Order No. 05-92. However. the PPA
proceeded to implement its order, prompting the UHPAP and MPA to move again to cite petitioners in contempt, even as they
questioned the validity of A.O. No. 05-92. Accordingly the trial court issued another order on November 4, 1992, reiterating
its previous order of October 28, 1992 to petitioners to refrain from implementing A.O. No. 05-92 pending resolution of the
petitions.

Making a special appearance, petitioners questioned the jurisdiction of the court and moved for the dismissal of the petitions
for contempt. Allegedly to prevent the disruption of pilotage services, petitioners created a special team of reserve pilots to
take over the pilotage service in the event members of UHPAP/MPA refused to render pilotage services.
For the third time respondents moved to cite petitioners in contempt of court. Again petitioners questioned the courts
jurisdiction and manifested that they were adopting their previous motion to dismiss petitions for contempt filed against
them.
On November 17, 1992, the trial court denied the petitioners motion and set the contempt petitions for hearing on
November 19, 1992. Hence, this petition, which was docketed as G.R. No. 107720 (Hon. Jesus B. Garcia, Jr. in his capacity as
Secretary of Transportation and Communications and Chairman of the Philippine Ports Authority, Commodore Rogelio A.
Dayan, in his capacity as General Manager of the Philippine Ports Authority and Simeon T. Silva, Jr., in his capacity as the
South Harbor Manager, Philippine Ports Authority v. Hon. Napoleon Flojo, in his capacity as the Presiding Judge of Branch 2,
RTC, Manila, UHPAP and MPA).
Pending resolution of this case, the Court ordered the parties to maintain the status quo as of October 31, 1992.
II. THE ISSUES AND THEIR DISPOSITION
The issues raised are:

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I. WHETHER OR NOT RESPONDENT COURT OF APPEALS ERRED IN AFFIRMING THE CHALLENGED DECISION OF RTC-MANILA,
BRANCH 41, WHICH RULED THAT:
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(A) CIVIL CASE NO. 87-38913 HAS NOT BECOME MOOT AND ACADEMIC WITH THE ISSUANCE OF ADMINISTRATIVE ORDER
NO. 02-88; AND
(B) HEREIN PETITIONERS ARE BOUND TO COMPLY WITH E.O. NO. 1088;
II. WHETHER OR NOT THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN DISMISSING CA G.R. SP. NO. 19570 FOR
LACK OF JURISDICTION?
III. WHETHER OR NOT RESPONDENT JUDGE NAPOLEON FLOJO COMMITTED GRAVE ABUSE OF DISCRETION IN ASSUMING
JURISDICTION OVER THE PETITIONS FOR CONTEMPT FILED BY PRIVATE RESPONDENTS AS A RESULT OF THE ISSUANCE OF
A.O. NO. 05-92?
These issues will be discussed in seriatim.
A. Whether Executive Order No. 1088 is Valid and
Petitioners are Bound to Obey it
(G.R. Nos. 103716-17)
Executive Order No. 1088 reads:

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EXECUTIVE ORDER No. 1088

PROVIDING FOR UNIFORM AND MODIFIED RATES FOR PILOTAGE SERVICES RENDERED TO FOREIGN AND COASTWISE
VESSELS IN ALL PRIVATE OR PUBLIC PHILIPPINE PORTS.
WHEREAS, the United Harbor Pilots Association of the Philippines has clamored for the rationalization of pilotage service
charges, through the imposition of uniform and adjusted rates for foreign and coastwise vessels in all Philippine ports,
whether public or private;
WHEREAS, the plea of the Association has been echoed by a great number of Members of Parliament and other persons and
groups;
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by the
Constitution and by law, do hereby direct and order:
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Section 1. The following shall be the rate of pilotage fees or charges based on tonnage for services rendered to both foreign
and coastwise vessels;
For Foreign Vessels Rate in US $ or
its Peso

Equivalent
Less than 500GT $ 30.00
500GT to 2,500GT 43.33
2,500GT to 5,000GT 71.33
5,000GT to 10,000GT 133.67
10,000GT to 15,000GT 181.67
15,000GT to 20,000GT 247.00
20,000GT to 30,000GT 300.00
30,000GT to 40,000GT 416.67
40,000GT to 60,000GT 483.33
60,000GT to 80,000GT 550.00
80,000GT to 100,000GT 616.67
100,000GT to 120,000GT 666.67
120,000GT to 130,000GT 716.67
130,000GT to 140,000GT 766.67
Over 140,000 gross tonnage $0.05 or its peso equivalent every excess tonnage. Rate for docking and undocking anchorage,
conduction and shifting other related special services is equal to 100%. Pilotage services shall be compulsory in government
and private wharves or piers,
For Coastwise Vessels: Regular
100 and under 500 gross tons P 41.70
500 and under 600 gross tons 55.60
600 and under 1,000 gross tons 69.60
1,000 and under 3,000 gross tons 139.20
3,000 and under 5,000 gross tons 300.00
5,000 and over gross tons
SEC. 2. With respect to foreign vessels, payment of pilotage services shall be made in dollars or in pesos at the prevailing
exchange rate.
SEC. 3. All orders, letters of instruction, rules, regulations and other issuances inconsistent with this Executive Order are
hereby repealed or amended accordingly.
SEC. 4. This Executive Order shall take effect immediately.
Done in the City of Manila, this 3rd day of February, in the year of our Lord, nineteen hundred and eighty-six.
(Sgd.) FERDINAND E. MARCOS
President of the Philippines
By the President:

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(Sgd.) JUAN C. TUVERA

Presidential Executive Assistant

Petitioners contend that E.O. No. 1088 was merely an administrative issuance of then President Ferdinand E. Marcos and, as
such, it could be superseded by an order of the PPA. They argue that to consider E.O. No. 1088 a statute would be to deprive
the PPA of its power under its charter to fix pilotage rates.
The contention has no merit. The fixing of rates is essentially a legislative power. 10 Indeed, the great battle over the validity
of the exercise of this power by administrative agencies was fought in the 1920s on the issue of undue delegation precisely
because the power delegated was legislative. The growing complexity of modern society, the multiplication of the subjects of
governmental regulations and the increased difficulty of administering the laws made the creation of administrative agencies
and the delegation to them of legislative power necessary. 11
There is no basis for petitioners argument that rate fixing is merely an exercise of administrative power; that if President
Marcos had power to revise the rates previously fixed by the PPA through the issuance of E.O. No. 1088, the PPA could in
turn revise those fixed by the President, as the PPA actually did in A.O. No. 43-86, which fixed lower rates of pilotage fees,
and even entirely left the fees to be paid for pilotage to the agreement of the parties to a contract. The orders previously
issued by the PPA were in the nature of subordinate legislation, promulgated by it in the exercise of delegated power. As such
these could only be amended or revised by law, as the President did by E.O. No. 1088.
It is not an answer to say that E.O. No. 1088 should not be considered a statute because that would imply the withdrawal of
power from the PPA. What determines whether an act is a law or an administrative issuance is not its form but its nature.
Here, as we have already said, the power to fix the rates of charges for services, including pilotage service, has always been
regarded as legislative in character.
Nor is there any doubt of the power of the then President to fix rates. On February 3, 1986, when he issued E.O. No. 1088,
President Marcos was authorized under Amendment No. 6 of the 1973 Constitution to exercise legislative power, just as he
was under the original 1973 Constitution, when he issued P.D. NO. 857 which created the PPA, endowing it with the power to
regulate pilotage service in Philippine ports. Although the power to fix rates for pilotage had been delegated to the PPA, it
became necessary to rationalize the rates of charges fixed by it through the imposition of uniform rates. That is what the
President did in promulgating E.O. No. 1088. As the President could delegate the ratemaking power to the PPA, so could he
exercise it in specific instances without thereby withdrawing the power vested by P.D. No. 857, Section 20(a) in the PPA "to
impose, fix, prescribe, increase or decrease such rates, charges or fees... for the services rendered by the Authority or by
any private organization within a Port District."
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It is worthy to note that E.O. No. 1088 provides for adjusted pilotage service rates without withdrawing the power of the PPA
to impose, prescribe, increase or decrease rates, charges or fees. The reason is because E.O. NO. 1088 is not meant simply
to fix new pilotage rates. Its legislative purpose is the "rationalization of pilotage service charges, through the imposition of
uniform and adjusted rates for foreign and coastwise vessels in all Philippine ports."
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The case presented is similar to the fixing of wages under the Wage Rationalization Act (R.A. No. 6727) whereby minimum
wages are determined by Congress and provided by law, subject to revision by Wage Boards should later conditions warrant
their revision. It cannot be denied that Congress may intervene anytime despite the existence of administrative agencies
entrusted with wage-fixing powers, by virtue of the formers plenary power of legislation. When Congress does so, the result
is not the withdrawal of the powers delegated to the Wage Boards but cooperative lawmaking in an area where initiative and
expertise are required. The Court of Appeals is correct in holding that
The power of the PPA to fix pilotage rates and its authority to regulate pilotage still remain notwithstanding the fact that a
schedule for pilotage fees has already been prescribed by the questioned executive order. PPA is at liberty to fix new rates of
pilotage subject only to the limitation that such new rates should not go below the rates fixed under E.O. 1088. The rationale
behind the limitation is no different from what has been previously stated. Being a mere administrative agency, PPA cannot
validly issue orders or regulations that would have the effect of rendering nugatory the provisions of the legislative issuance
such as those of the executive order in question. (Emphasis supplied)
Petitioners refused to implement E.O. No. 1088 on the ground that it was issued without notice to the PPA and that it was
nothing but a "political gimmick" resorted to by then President Marcos. This perception obviously stemmed from the fact that
E.O. No. 1088 was issued shortly before the presidential elections in 1986.
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But lack of notice to the PPA is not proof that the necessary factual basis for the order was wanting. To the contrary, the
presumption is that the President had before him pertinent data on which he based the rates prescribed in his order. Nor is
the fact that the order might have been issued to curry favor with the voters a reason for the PPA to refuse to enforce the
order in question. It is not unusual for lawmakers to have in mind partisan political consideration in sponsoring legislation.
Yet that is not a ground for invalidating a statute.
Moreover, an inquiry into legislative motivation is not proper since the only relevant question is whether in issuing it the
President violated constitutional and statutory restrictions on his power. The PPA did not have any objection to the order
based on constitutional ground. In fact the nearest to a challenge on constitutional grounds was that mounted not by the PPA
but by the intervenors below which claimed that the rates fixed in E.O. NO. 1088 were exorbitant and unreasonable.
However, both the trial court and the Court of Appeals overruled the objections and the intervenors apparently accepted the
ruling because they did not appeal further to this Court.
There is, therefore, no legal basis for PPAs intransigence, after failing to get the new administration of President Aquino to

revoke the order by issuing it own order in the form of A.O. NO. 02-88. It is noteworthy that if President Marcos had
legislative power under Amendment No. 6 of the 1973 Constitution 12 so did President Aquino under the Provisional
(Freedom) Constitution 13 who could, had she thought E.O. No. 1088 to be a mere "political gimmick," have just as easily
revoked her predecessors order. It is tempting to ask if the administrative agency would have shown the same act of
defiance of the Presidents order had there been no change of administration. What this Court said in La Perla Cigar and
Cigarette Factory v. Capapas," 14 mutatis mutandis may be applied to the cases at bar:
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Was it within the powers of the then Collector Ang-angco to refuse to collect the duties that must be paid? That is the crucial
point of inquiry. We hold that it was not.
Precisely, he had to give the above legal provisions, quite explicit in character, force and effect. His obligation was to collect
the revenue for the government in accordance with existing legal provisions, executive agreements and executive orders
certainly not excluded. He would not be living up to his official designation if he were permitted to act otherwise. He was not
named Collector of Customs for nothing. . . .
Certainly, if the President himself were called upon to execute the laws faithfully, a Collector of Customs, himself a
subordinate executive official, cannot be considered as exempt in any wise from such an obligation of fealty. Similarly, if the
President cannot suspend the operation of any law, it would be presumptuous in the extreme for one in the position of then
Collector Ang-angco to consider himself as possessed of such a prerogative. . . .
We conclude that E.O. No. 1088 is a valid statute and that the PPA is duty bound to comply with its provisions. The PPA may
increase the rates but it may not decrease them below those mandated by E.O. No. 1088. Finally, the PPA cannot refuse to
implement E.O. No. 1088 or alter it as it did in promulgating Memorandum Circular No. 43-86. Much less could the PPA
abrogate the rates fixed and leave the fixing of rates for pilotage service to the contracting parties as it did through A.O. No.
02-88, Section 3. Theretofore the policy was one of governmental regulation of the pilotage business. By leaving the matter
to the determination of the parties, the PPA jettisoned this policy and changed it to laissez-faire, something which only the
legislature, or whoever is vested with lawmaking authority, could do.
B. Whether the Court of Appeals had Jurisdiction over the
Appeal of Intervenors from the Decision of the
Trial Court Invalidating Administrative Order
No. 02-88 of the PPA
(G.R. No. 100481)
The Court of Appeals dismissed the joint appeal of the government and the intervenors from the trial courts decision in Civil
Case No. 88-44726 on the ground that the issues raised were purely legal questions. 15 The appellate court stated:
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After a painstaking review of the records We resolved to dismiss the petition for lack of jurisdiction.
From the facts, it is clear that the main issue proffered by the appellant is whether or not the respondent Philippine Ports
Authority could validly issue rules and regulations adopting the "open pilotage policy" pursuant to its charter (P.D. 857).
x

It must be noted that while the court a quo had clearly recognized the intricate legal issue involved, it nevertheless decided it
on the merits which apparently resolved only the procedural aspect that justified it in declaring the questioned order as null
and void. While We recognize the basic requirements of due process, the same cannot take precedence in the case at bar in
lieu of the fact that the resolution of the present case is purely a legal question.
Moreover, it appears that appellants in the court below had filed a manifestation and motion waiving their presentation of
evidence. Instead, they opted to submit a comprehensive memorandum of the case on the ground that the pivotal issue
raised in the petition below is purely legal in character. (p. 231, Records)
At this juncture, We are at a loss why appellants had elevated the present action before Us where at the outset they already
noted that the issue is purely legal.
If in the case of Murillo v. Consul (UDK-9748, Resolution en banc, March 1, 1990) the Supreme Court laid down the rule that
"if an appeal by notice of appeal is taken from the Regional Trial Court to the Court of Appeals, and in the latter Court, the
appellant raised naught but issues of law, the appeal should be dismissed for lack of jurisdiction (page 5, Resolution in
Murillo)," then with more reason where as in the case at bar public-appellants thru the Office of the Solicitor General in their
memorandum manifested that the controversy has reference to the pure legal question of the validity of the questioned
administrative order. Consequently, We have no other recourse but to dismiss the petition on the strength of these
pronouncements.

As already stated, from this decision, both the government and the intervenors separately brought petitions for review to this
Court. In G.R. No. 100109, the governments petition was dismissed for lack of showing that the appellate court committed
reversible error. The dismissal of the governments petition goes far to sustain the dismissal of the intervenors petition in
G.R. No. 100481 for the review of the same decision of the Court of Appeals. After all, the intervenors petition is based on
substantially the same grounds as those stated in the governments petition. It is now settled that the dismissal of a petition
for review on certiorari is an adjudication on the merits of a controversy. 16 Such dismissal can only mean that the Supreme
Court agrees with the findings and conclusions of the Court of Appeals or that the decision sought to be reviewed is correct.
17
It is significant to note that the Secretary of Transportation and Communications and the PPA, petitioners in G.R. No. 100109,
have conceded the finality of the dismissal of their appeal. 18 Thus, the administrative policy, the validity of which herein
petitioners seek to justify by their appeal, has already been abandoned by the very administrative agency which adopted it,
with the result that the question of validity of A.O. No. 02-88 is now moot and academic.
C. Whether the Trial Court has Jurisdiction to Hear and
Decide the Contempt Charges
against Petitioners
(G.R. No. 107720)
As already noted, following the dismissal of the governments appeal in G.R. No. 100109, the PPA abandoned A.O. No. 02-88
which provided for "Open Pilotage System." But it subsequently promulgated Administrative Order No. 05-92, under which
the PPA assumed the power of scheduling and assigning pilots to service vessels, allegedly regardless of whether the pilots
assigned are or are not members of the UHPAP and the MPA which theretofore had been the exclusive agencies rendering
pilotage service in Philippine ports. The UHPAP and the MPA saw the adoption of this system as a return to the "Open Pilotage
System" and, therefore, a violation of the trial courts decision invalidating the "Open Pilotage System." They considered this
to be a contempt of the trial court.
Petitioners moved to dismiss the motions for contempt against them. They contend that even if the motions were filed as
incidents of Civil Case No. 88-44726, the RTC-Manila, Branch 2 did not have jurisdiction to hear them because the main case
was no longer before the court and the fact was that the contempt citation was not an incident of the case, not even of its
execution, but a new matter raising a new cause of action which must be litigated in a separate action, even as petitioners
denied they had committed any contumacious act by the issuance of A.O. No. 05-92.
Private respondents maintained that their petitions were mere incidents of Civil Case No. 88-44726 and that the trial court
has jurisdiction because in fact this Court had not yet remanded the case to the court a quo for execution of its decision.
Private respondents complain that petitioners are trying to circumvent the final and executory decision of the court in Civil
Case No. 88-44726, through the issuance of A.O. No. 05-92.
As already noted, however, the decision of the trial court in Civil Case No. 88-44726 enjoined petitioners from implementing
the so called "Open Pilotage System" embodied in A O. No. 02-88. If, as alleged, A.O. No. 05-92 is in substance a
reenactment of A.O. No. 02-88, then there is basis for private respondents invocation of the trial courts jurisdiction to
punish for contempt.
Still it is argued that the trial court lost jurisdiction over Civil Case No. 887426, upon the perfection of their appeal from its
decision. That is indeed true. "The appeal transfers the proceedings to the appellate court, and this last court becomes
thereby charged with the authority to deal with contempts committed after perfection of the appeal." 19 The trial court
would have jurisdiction only in the event of an attempt to block execution of its decision and that would be after the remand
of the case to the trial court. 20 Until then the trial court would have no jurisdiction to deal with alleged contemptuous acts.
The fly in the ointment, however, is that by accepting the dismissal of their petition for review in G.R. No. 100109, petitioners
rendered execution of the decision of the trial court superfluous. Any attempt by them, therefore, to disobey the courts final
injunction as embodied in its decision would be properly subject to punishment for contempt. Petitioners contention that
private respondents complaint must be the subject of a separate action would nullify contempt proceedings as means of
securing obedience to the lawful processes of a court. Petitioners theory would reward ingenuity and cunning in devising
orders which substantially are the same as the order previously prohibited by the court.
We hold that the trial court has jurisdiction to hear the motions for contempt filed by private respondent, subject to any valid
defense which petitioners may interpose.
III. JUDGMENT
WHEREFORE, the several petitions in these cases are DISMISSED.
SO ORDERED.

FIRST DIVISION
[G.R. Nos. 49664-67. November 22, 1990.]
PANTRANCO SOUTH EXPRESS, INC., Petitioner, v. BOARD OF TRANSPORTATION and BATANGAS LAGUNA
TAYABAS BUS CO., INC., Respondents.
Parco, Sabillo, Regondola & Maronilla for Petitioner.
Pablito A. Gahol for BLTB Co.

SYLLABUS

1. CIVIL LAW; COMMON CARRIERS; CERTIFICATE OF PUBLIC CONVENIENCE; BOARD OF TRANSPORTATION, GIVEN THE
POWER AND DISCRETION TO DECREE OR REFUSE THE CANCELLATION OF THE SAME IF SUPPORTED WITH EVIDENCE;
OTHER BASES FOR BOTS DECISIONS. There can be no dispute that the law (Section 16 (n) of the Public Service Act)
gives to the BOT (successor of the Public Service Commission) ample power and discretion to decree or refuse the
cancellation of a certificate of public convenience issued to an operator as long as there is evidence to support its action, as
held by this Court in a long line of cases, wherein it was even intimated that in matters of this nature so long as the action is
justified this Court will not substitute its discretion for that of the BOT (see Javier, Et. Al. v. de Leon, Et Al., 109 Phil. 751;
Santiago Ice Plant and Co. v. Lahoz, 87 Phil. 221; Raymundo Transportation Co. v. Cedra, 99 Phil. 99; Manila Yellow Taxicab
Co., Inc. v. Castelo, 108 Phil. 394; Dagupan Ice Plant Co., Inc. v. de Lucero, Et. Al. citing Manila Yellow Taxicab Co.; Inc., Et
Al., v. Araullo, 34 O.G. 241; Sambrano v. Northern Luzon Transportation Co., 35 O.G. 2271). The BOT, in refusing to cancel
the certificates of public convenience of BLTB, relied on these pieces of evidence; (1) the letter of BLTB dated September 18,
1972; (2) reports/complaints from the general public; (3) reports of its fieldmen; and (4) its own observations acquired thru
inspection trips, all of which form part of its records. As We have ruled before, the BOT is particularly a fact-finding body
whose decisions on questions regarding certificates of public convenience are influenced not only by the facts as disclosed by
the evidence in the case before it but also by the reports of its field agents and inspectors that are periodically submitted to it
(see La Mallorca and Pampanga Bus Co., Inc. v. Mercado, G.R. No. L-19120, November 29, 1965, 15 SCRA 343). Likewise,
the BOT has the power to take into consideration the result of its own observation and investigation of the matter submitted
to it for decision, in connection with other evidence presented at the hearing of a case (Manila Yellow Taxicab Co., Inc., Et. Al.
v. N. & B. Stables Co., Inc., 60 Phil. 851 citing Manila Yellow Taxicab Co., Inc., Et. Al. v. Danon, 58 Phil. 75; Manila Electric
Co. v. Balagtas, 58 Phil. 429).
2. ID.; ID.; ID.; MERE FAILURE TO TEMPORARILY OPERATE THE TRANSPORTATION LINES SHOULD NOT BE A GROUND FOR
THE CANCELLATION THEREOF. Taking into consideration BLTBs letter dated September 18, 1972, it acted in good faith
when it did not immediately operate on those lines and not because of a design to prejudice public interest. Certificates of
public convenience involve investment of a big amount of capital, both in securing the certificate and in maintaining the
operation of the lines covered thereby, and mere failure to operate temporarily should not be a ground for cancellation,
especially as when, in the case at bar, the suspension of the service was directly caused by circumstances beyond the
operators control (Pangasinan Transportation Co. v. F.F. Halili, Et Al., 95 Phil. 694).
3. ID.; ID.; ID.; MAY NOT BE VALIDLY REVOKED IN THE ABSENCE OF WILLFUL AND CONTUMACIOUS VIOLATION BY THE
UTILITY OPERATOR; BOT GUIDED BY PUBLIC NECESSITY AND CONVENIENCE AS PRIMARY CONSIDERATIONS. In absence
of showing that there is willful and contumacious violation on the part of the utility operator, no certificate of public
convenience may be validly revoked (Manzanal v. Ausejo, Et Al., G.R. No. L-31056, August 4, 1988, 164 SCRA 36). More
importantly, what cannot be ignored is that the needs of the public are paramount, as elucidated by the BOT in its order. In
the exercise of its power to grant or cancel certificates of public convenience, the BOT is guided by public necessity and
convenience as primary considerations (see Dizon v. Public Service Commission, Et Al., G.R. No. L-34820, April 30, 1973, 50
SCRA 500).

DECISION

MEDIALDEA, J.:

This is a petition for certiorari and/or prohibition with prayer for the issuance of a restraining order seeking to annul the order
of public respondent Board of Transportation dated January 4, 1979.
The antecedent facts, as culled from the pleadings, are as follows:

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On August 5, 1971, the then Public Service Commission granted certificates of public convenience to private respondent
Batangas Laguna Tayabas Bus Co., Inc. (BLTB) for the operation of twelve (12) bus units on the Pasay City Legaspi City
line (Case No. 70-5749); six (6) bus units on the Pasay City Bulan, Sorsogon line (Case No. 70-5750), and ten (10) bus

units on the Pasay City Sorsogon line (Case No. 70-5751) (pp. 59-64, Rollo).

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On April 4, 1975, petitioner Pantranco South Express, Inc. (PANTRANCO) filed a complaint against BLTB before public
respondent Board of Transportation (BOT), docketed as Case No. 75-31-C, charging it with abandonment of services on said
lines from August, 1971 to April, 1975 and praying for the cancellation of BLTBs certificates of public convenience (pp. 6970, Rollo).
On March 24, 1976, in Cases Nos. 70-5749, 70-5750 and 70-5751, PANTRANCO filed an urgent petition charging BLTB with
abandoning said services from March, 1975 to March, 1976 and reiterating its prayer for the cancellation of the certificates of
public convenience (pp. 77-78, Rollo).
BLTB did not file any written answer either to the complaint in Case No. 75-31-C or to the urgent petition in Cases Nos. 705749, 70-5750, and 70-5751. Rather, in a Motion dated July 26, 1978, BLTB, referring to hearings before the BOT on March
24, 1977 and April 13, 1977, alleged (pp. 126-128, Rollo):
jgc:chanroble s.com.ph

"3. At said hearings, Respondent admitted non-operation of the bus services authorized in Cases Nos. 70-5749,70-5750 and
70-5751 and thus the need for Complainant to present evidence in both proceedings may be dispensed with.
"4. At the said hearings, Respondent advanced affirmative defenses on Complainants Urgent Motion of March 24, 1977 (sic)
which Respondent, in its Rejoinder of May 5, 1977, adopted also as its affirmative defenses with respect to Case No. 75-31C.
"Briefly, these affirmative defenses are:

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(a) Respondent actually registered under PUB denomination all the twenty eight (28) buses authorized for operation under
the certificates sought to be cancelled (Annex A);
(b) The following supervening factors which are beyond Respondents control however, arose and prevented Respondent from
operating the lines at issue:
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(1) The gasoline crises starting 1971;

(2) The destructive big floods in 1972 and 1974;
(3) The general troubled conditions of peace and order in 1971 and 1972 leading to the declaration of martial law;
(4) Starting 1973 and on to 1974,1975 and 1976 the nearly prohibitive cost of units and spare parts (if available at all), the
higher costs of operations and acute tire shortages particularly in 1974;
(5) All these, which are of general public knowledge and known to the Board, brought the whole land transportation industry
in what might be termed as in extremis condition causing the bankruptcy of many operators, big and small; and
(6) Complainant Pantranco South Express, Inc. was not spared the ill effects of these adverse conditions to the extent that
up to the present it has not registered all the buses required for its regular bus operations (Annex B, B-1).
"5. At the said hearings also, Respondent prayed that these incidents in these proceedings be considered and decided in the
light of present conditions which are:
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(a) The certificates of public convenience of Respondent are still valid;

(b) Respondent is willing and desirous to operate (sic) the said certificates;
(c) Respondent has the capability to operate, in fact, has ready the full twenty-eight (28) buses needed for full operation of
the authorized services;
(d) Complainant is not operating all its authorized bus services for lack of sufficient rolling stock;
(e) The need for the services sought to be cancelled is patent, in fact, urgent at the present time; and
(f) That the public interest is paramount against other considerations such as the incidents in these cases."
On January 4, 1979, the BOT issued an order, the dispositive portion of which reads (p. 133, Rollo):

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jgc:chanrobles.com .ph

"In view of all the foregoing, this Board, in addition to its rulings mentioned above
"1. Orders respondent to operate within fifteen (15) days from date hereof the whole complement of twenty-eight (28) units
authorized under the said certificates, utilizing for the purpose such units presently authorized as RESERVES and inform the
Board within ten (10) days from commencement of operation, the makes and motor numbers of the units to be operated for
each line and the case numbers under which they are authorized for appropriate entry in the records of the above-entitled

cases, and
"2. Orders the fine of P10,000.00 imposed above to be paid to this Board within ten (10) days from receipt by it of a copy of
this Order and declares the consolidated complaints filed in the above-entitled cases closed and terminated.
"Failure of respondent/applicant to comply with any of the foregoing requirements shall be considered sufficient cause for this
Board to withdraw the authority herein granted.
"SO ORDERED."

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It rationalized the non-cancellation of BLTBs certificates of public convenience, as follows (pp. 128 A-133, Rollo):

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"Obviously, cancellation of a certificate of public convenience is a penalty of the severest degree. Its consequences are
suffered not exclusively by the operator; it extends to the travelling public whose needs for transportation facilities would
further be aggravated by a diminution of needed services. Consequently, where such a penalty is prayed for, this Board
requires the evidence to be strong. Less than that this Board must apply the less severe penalties provided for by law, but
equally disciplinary in nature.
"Sec. 16 (n) of the Public Service Law empowers this Board to suspend or revoke any certificate . . . whenever the holder
thereof has violated or wilfully (sic) and contumaciously refused to comply with any order, rule or regulation of the Board or
any provision of this Act.. . .
"Sec. 21 of the same law provides that every public service violating or failing to comply with the terms and conditions of
any certificate or any orders, decisions or regulations of the Commission shall be subject to a fine not exceeding two hundred
pesos per day for every day of service during which such default or violation continues . . .
"A reading of both provisions would show that failure to comply with the terms and conditions of any certificate of public
convenience is basically punished with a fine, unless the violation is willful or contumacious, in which case the penalty of
suspension, or cancellation may be imposed.
"Judged by the foregoing standards, this Board declares the evidence of the complainant to be sadly lacking in elements that
would qualify the respondents failure to operate as wilful and contumacious. True the respondent did not operate on its
certificate from the time it was granted on August 4, 1971 up to the present. It had not justified its non-operation from said
date up to September 2, 1972. But on September 2, 1972, the respondent justified its non-operation by writing to the Board,
that because of unfinished portions of the road it could not render the service authorized by the Board to be rendered. The
Board never overruled the Respondent.
"x

"At this point, it must be borne in mind that whether in the case of application for new services, or for the cancellation of
lines already granted, this Board must determine what the public need is.
"This leads us into discussing what the public need is in the areas covered by the certificates of public convenience in
question.
"The Board, in its desire to be responsive to public need, has always kept itself informed of actual and latest transportation
conditions in the provinces, including the Bicol region. Thru reports/complaints from the general public, from reports of its
fieldmen, and from its own personal observations acquired thru inspection trips, this Board is aware that buses which are
operating are very much less than what has been authorized. This was officially confirmed in a meeting of provincial and
Metro-Manila bus operators held in Malacaang Palace on June 21, 1976, presided over by His Excellency, President
Ferdinand E. Marcos himself.
"In Bicol region, for instance, in the past four years (1974, 1975, 1976 and 1977) PSEI (PANTRANCO) registered and
operated less than 50% of its authorized units:
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Year Authorized Units Registered

1974 466 159 units
1975 (not available) 162 units
1976 453 227 units
1977 464 221 units
and among the lines not so operated or only partially operated, either through expiration of certificates, petitioned
suspension of operation or for sheer lack of units are long distance lines from Manila to the provinces of Quezon, Camarines
Norte, Camarines Sur, Albay and Sorsogon aside from lines serving inter-provincial and local needs in Quezon province and
the whole Bicol Region. Among them are the following lines which are concurrert in whole or in portions of the lines Pasay

City Legaspi City, Pasay Sorsogon and Pasay Bulan, all the said lines requiring the operation of some two hundred
twenty seven (227) buses:
jgc:chanroble s.com.ph

"x

"The non-operation by PSEI (PANTRANCO) of these more than two hundred (200) buses clearly requires the entry or
operation of an equal number of buses. Any prohibition against an effort to fill up a public need would be contrary to public
interest.
"Public interest will better be served if respondent is allowed to operate the service authorized in its certificate of public
convenience. To cancel these certificates at a time when the clamor and demand for such service have been increasing day to
day, prodded by the peoples desire to avail of the excellent road conditions, which in turn conduces to fast and convenient
travel, would be to negate and turn back the clock of progress which has been seeping steadily and constantly to the long
neglected vast communal area that is the Bicol Region. To authorize the operation of these services will complement the
governments multi-purpose development effort to hasten the Socio-Economic growth of these areas, notable among which
are the Philippines-Japan Friendship Highway, of which the routes covered by applicant/respondents certificates traverse and
the Bicol River Basin Development Project, a program designed to tap the rich natural resources of the region."
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Hence, the present petition.

On January 15, 1979, We issued a temporary restraining order enjoining the BOT from enforcing its January 4, 1979 order
(pp. 147-148, Rollo).
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In this petition, PANTRANCO imputes grave abuse of discretion, acting without or in excess of jurisdiction on the part of the
BOT when it issued the questioned order, as indicated by several circumstance that it enumerated. Among these, only the
following deserve discussion:
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1) refusal to cancel the certificates of public convenience of BLTB despite its abandonment and/or non-operation on the
subject lines since August 5, 1971 up to the present;
2) using as basis for its questioned order BLTBs letter dated September 2, 1972 (wherein it justified its non-operation on
account of unfinished portions of the road) which is not part of the records of the case; and
3) resorting to extraneous facts not supported by competent evidence as basis for its conclusion that the demand of public
need would be more paramount than the need to penalize BLTB.
For its part, BLTB contends that:

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1) the cancellation or non-cancellation of its certificates of public convenience is addressed to the sound discretion of the
BOT;
2) its letter dated September 18, 1972 (erroneously referred to as the letter dated September 2, 1972) forms part of the
BOTs records; and
3) the BOT acted correctly in the exercise of its sound discretion and within its jurisdiction when it found that the demand of
public need would be paramount than the need to penalize it (BLTB).
There can be no dispute that the law (Section 16 (n) of the Public Service Act) gives to the BOT (successor of the Public
Service ommission) * ample power and discretion to decree or refuse the cancellation of a certificate of public convenience
issued to an operator as long as there is evidence to support its action, as held by this Court in a long line of cases, wherein
it was even intimated that in matters of this nature so long as the action is justified this Court will not substitute its discretion
for that of the BOT (see Javier, Et. Al. v. de Leon, Et Al., 109 Phil. 751; Santiago Ice Plant and Co. v. Lahoz, 87 Phil. 221;
Raymundo Transportation Co. v. Cedra, 99 Phil. 99; Manila Yellow Taxicab Co., Inc. v. Castelo, 108 Phil. 394; Dagupan Ice
Plant Co., Inc. v. de Lucero, Et. Al. citing Manila Yellow Taxicab Co.; Inc., Et Al., v. Araullo, 34 O.G. 241; Sambrano v.
Northern Luzon Transportation Co., 35 O.G. 2271). The BOT, in refusing to cancel the certificates of public convenience of
BLTB, relied on these pieces of evidence; (1) the letter of BLTB dated September 18, 1972; (2) reports/complaints from the
general public; (3) reports of its fieldmen; and (4) its own observations acquired thru inspection trips, all of which form part
of its records. As We have ruled before, the BOT is particularly a fact-finding body whose decisions on questions regarding
certificates of public convenience are influenced not only by the facts as disclosed by the evidence in the case before it but
also by the reports of its field agents and inspectors that are periodically submitted to it (see La Mallorca and Pampanga Bus
Co., Inc. v. Mercado, G.R. No. L-19120, November 29, 1965, 15 SCRA 343). Likewise, the BOT has the power to take into
consideration the result of its own observation and investigation of the matter submitted to it for decision, in connection with
other evidence presented at the hearing of a case (Manila Yellow Taxicab Co., Inc., Et. Al. v. N. & B. Stables Co., Inc., 60 Phil.
851 citing Manila Yellow Taxicab Co., Inc., Et. Al. v. Danon, 58 Phil. 75; Manila Electric Co. v. Balagtas, 58 Phil. 429).
Taking into consideration BLTBs letter dated September 18, 1972, it acted in good faith when it did not immediately operate
on those lines and not because of a design to prejudice public interest. Certificates of public convenience involve investment
of a big amount of capital, both in securing the certificate and in maintaining the operation of the lines covered thereby, and
mere failure to operate temporarily should not be a ground for cancellation, especially as when, in the case at bar, the

suspension of the service was directly caused by circumstances beyond the operators control (Pangasinan Transportation Co.
v. F.F. Halili, Et Al., 95 Phil. 694). In the absence of showing that there is willful and contumacious violation on the part of the
utility operator, no certificate of public convenience may be validly revoked (Manzanal v. Ausejo, Et Al., G.R. No. L-31056,
August 4, 1988, 164 SCRA 36). More importantly, what cannot be ignored is that the needs of the public are paramount, as
elucidated by the BOT in its order. In the exercise of its power to grant or cancel certificates of public convenience, the BOT is
guided by public necessity and convenience as primary considerations (see Dizon v. Public Service Commission, Et Al., G.R.
No. L-34820, April 30, 1973, 50 SCRA 500).
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Apparently, PANTRANCOs purpose in instituting the proceedings for cancellation of BLTBs certificates of public convenience is
to remove it (BLTB) as a competitor in the business in which they are both engaged (see Pangasinan Transportation Co. v.
F.F. Halili, Et Al., supra), which is detestable. Experience has demonstrated that healthy competition always redounds to the
benefit of the commuters and the development of transportation as a whole.
ACCORDINGLY, the petition is hereby DISMISSED. The order of the Board of Transportation dated January 4, 1979 is
AFFIRMED. The temporary restraining order issued on January 15, 1979 is LIFTED.
SO ORDERED.

THIRD DIVISION

[G.R. No. 139492. November 19, 2002.]

LAGUNA CATV NETWORK, INC., Petitioner, v. HON. ALEX E. MARAAN, Regional Director, Region IV, Dept. of
Labor and Employment (DOLE), ENRICO SAGMIT, Acting Deputy Sheriff, DOLE Region IV, PEDRO IGNACIO,
DIOMEDES CASTRO, FE ESPERANZA CANDILLA, RUBEN, LAMINA, JR., JOEL PERSIUNCULA, ALVINO PRUDENTE,
JOEL RAYMUNDO, REGIE ROCERO, LINDA, RODRIGUEZ, JOHN SALUDO, ALBERTO REYES, and ANACLETA
VALOIS, Respondents.
DECISION

SANDOVAL-GUTIERREZ, J.:

On March 3, 1998, private respondents Pedro Ignacio, Diomedes Castro, Fe Esperanza Candilla, Ruben Lamina, Jr., Joel
Persiuncula, Alvino Prudente, Joel Raymundo, Regie Rocero, Linda Rodriguez, John Seludo, Alberto Reyes and Anacleta Valois
filed with the Department of Labor and Employment, Regional Office No. IV (DOLE Region IV), separate complaints for
underpayment of wages and non-payment of other employee benefits. 1 Impleaded as respondent was their employer,
Laguna CATV Network, Inc. (Laguna CATV).
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Private respondents filed their separate complaints pursuant to Article 128 of the Labor Code, as amended by Republic Act
No. 7730, 2 which provides:
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"Article 128. Visitatorial and enforcement powers. (a) The Secretary of Labor or his duly authorized representatives,
including labor regulation officers, shall have access to employers records and premises at any time of the day or night
whenever work is being undertaken therein, and the right to copy therefrom, to question any employee and investigate any
fact, condition or matter which may be necessary to determine violations or which may aid in the enforcement of this Code
and of any labor law, wage order or rules and regulations issued pursuant thereto.
"(b) . . .
"An order issued by the duly authorized representative of the Secretary of Labor and Employment under this article may be
appealed to the latter. In case said order involves a monetary award, an appeal by the employer may be perfected only upon
the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Secretary of Labor and
Employment in the amount equivalent to the monetary award in the order appealed from. (emphasis added)
"x

x."

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On April 1, 1998, DOLE Region IV conducted an inspection within the premises of Laguna CATV and found that the latter
violated the laws on payment of wages and other benefits. Thereupon, DOLE Region IV requested Laguna CATV to correct its
violations but the latter refused, prompting Regional Director Alex E. Maraan to set the case for summary investigation. 3
Thereafter, he issued an Order dated August 19, 1998 4 directing Laguna CATV to pay the concerned employees the sum of
Two Hundred Sixty-One Thousand, Nine and 19/100 (P261,009.19) Pesos representing their unpaid claims, within 10 days
from notice, and to submit proof of payment within the same period. Forthwith, Laguna CATV filed a motion for
reconsideration. 5
In view of Laguna CATVs failure to comply with the Order directing it to pay the unpaid claims of its employees, DOLE
Regional Director Maraan issued a writ of execution on January 29, 1999 6 ordering Sheriff Enrico Sagmit to collect in cash
from Laguna CATV the amount specified in the writ or, in lieu thereof, to attach its goods and chattels or those of its owner,
Dr. Bernardino Bailon. Sheriff Sagmit subsequently levied on Dr. Bailons L300 van and garnished his bank deposits.
On March 2, 1999, Laguna CATV and Dr. Bailon, in his personal capacity, filed a motion to quash the writ of execution, notice
of levy and sale on execution and garnishment of bank deposits, 7 alleging that the writ was premature because Laguna
CATVs motion for reconsideration of the Order dated August 19, 1998 has not yet been resolved by Regional Director
Maraan. On April 21, 1999, he issued an Order 8 denying the motion to quash the writ of execution, stating inter alia, that
Laguna CATV failed to perfect its appeal of the August 19, 1998 Order because it did not comply with the mandatory
requirement of posting a bond equivalent to the monetary award of P261,009.19; and that the writ of execution dated
January 29, 1999 should be considered as an "overt denial" of Laguna CATVs motion for reconsideration. 9
Instead of appealing to the Secretary of Labor, Laguna CATV filed with the Court of Appeals a motion for extension of time to
file a petition for review. 10 Laguna CATV was of the view that an appeal to the Secretary of Labor "would be an exercise in
futility considering that the said appeal will be filed with the Regional Office and it will surely be disapproved." 11
On May 13, 1999, the Court of Appeals issued a Resolution 12 denying Laguna CATVs motion for extension and dismissing
the case. The Appellate Court found, among others, that it failed to exhaust administrative remedies.
Laguna CATV filed a motion for reconsideration but was denied by the Court of Appeals in its Resolution dated July 22, 1999.
13 Hence, it filed the instant petition for review on certiorari. 14

Specifically, petitioner contends that the Court of Appeals erred in denying its motion for extension and in dismissing the
case.
Private respondents, in their comment on the petition, claim that the assailed Orders of DOLE Region IV have become final
and executory for petitioners failure to appeal to the Secretary of Labor.
The petition lacks merit. The Court of Appeals was correct in holding that petitioner failed to exhaust all administrative
remedies.
As provided under Article 128 of the Labor Code, as amended, earlier quoted, an order issued by the duly authorized
representative of the Secretary of Labor may be appealed to the latter. Thus, petitioner should have first appealed to the
Secretary of Labor instead of filing with the Court of Appeals a motion for extension of time to file a petition for review.
Courts, for reasons of law, comity and convenience, should not entertain suits unless the available administrative remedies
have first been resorted to and the proper authorities have been given an appropriate opportunity to act and correct their
alleged errors, if any, committed in the administrative forum. 15 Observance of this doctrine is a sound practice and policy.
As succinctly explained by this Court in Carale v. Abarintos. 16
"It (the doctrine of exhaustion of administrative remedies) ensures an orderly procedure which favors a preliminary sifting
process, particularly with respect to matters peculiarly within the competence of the administrative agency, avoidance of
interference with functions of the administrative agency by withholding judicial action until the administrative process had
run its course, and prevention of attempts to swamp the courts by a resort to them in the first instance." 17
This Court, in a long line of cases, has consistently held that if a remedy within the administrative machinery can still be
resorted to by giving the administrative officer concerned every opportunity to decide on a matter that comes within his
jurisdiction, then such remedy should be exhausted first before the courts judicial power can be sought. 18 The party with
an administrative remedy must not merely initiate the prescribed administrative procedure to obtain relief but also pursue it
to its appropriate conclusion before seeking judicial intervention in order to give the administrative agency an opportunity to
decide the matter itself correctly and prevent unnecessary and premature resort to the court. 19 The underlying principle of
the rule rests on the presumption that the administrative agency, if afforded a complete chance to pass upon the matter will
decide the same correctly. 20 Therefore, petitioner should have completed the administrative process by appealing the
questioned Orders to the Secretary of Labor.
Although this Court has allowed certain exceptions to the doctrine of exhaustion of administrative remedies, such as:

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1) when there is a violation of due process;

2) when the issue involved is a purely legal question;
3) when the administrative action is patently illegal amounting to lack or excess of jurisdiction;
4) when there is estoppel on the part of the administrative agency concerned;
5) when there is irreparable injury;
6) when the respondent is a Department Secretary whose acts as an alter ego of the President bears the implied and
assumed approval of the latter;
7) when to require exhaustion of administrative remedies would be unreasonable;
8) when it would amount to a nullification of a claim;
9) when the subject matter is a private land in land case proceedings;
10) when the rule does not provide a plain, speedy, adequate remedy;
11) when there are circumstances indicating the urgency of judicial intervention;
12) when no administrative review is provided by law;
13) where the rule of qualified political agency applies; and
14) when the issue of non-exhaustion of administrative remedies has been rendered moot, 21
petitioner fails to show that the instant case falls under any of the exceptions. Its contention that an appeal to the Secretary
of Labor would be futile as "it will surely be disapproved," is purely conjectural and definitely misplaced.
In the recent case of Republic of the Philippines v. Express Telecommunication Co., 22 this Court held that "the premature

invocation of the courts intervention is fatal to ones cause of action." Accordingly, absent any finding of waiver, estoppel, or
any of the exceptions to the doctrine of exhaustion of administrative remedies, the case is susceptible of dismissal for lack of
cause of action. 23
WHEREFORE, the instant petition for review is DENIED.
SO ORDERED.

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