G.R. No. L-19850. January 30, 1964
VIGAN ELECTRIC LIGHT COMPANY, INC., PETITIONER, VS. THE PUBLIC SERVICE COMMISSION, RESPONDENT.
CONCEPCION, J.:
respondent Public Service Commission. Upon the filing of the petition
and the submission and approval of the corresponding bond, we issued a
writ of injunction restraining said respondent from enforcing the order
complained of.
Republic Act No. 316, approved on June 19, 1948, granted petitioner
Vigan Electric Light Company, Inc., a franchise to contruct, maintain
and operate an electric light heat and/or power plant for the purpose
of generating and distributing light, heat and/or power, for sale
within the limits of several municipalities of the province of Ilocos
Sur. Accordingly, petitioner secured from respondent, on May 31, 1950,
a certificate of public convenience to render electric light, heat
and/or power services in said municipalities and to charge its
customers and/or consumers the following rates:
1—20 watt bulb per month 1—25 watt bulb per month 1—40 watt bulb per month 1—50 watt bulb per month 1—60 watt bulb per month 1—75 watt bulb per month 1—80 watt bulb per month 1—100 watt bulb per month 1—150 watt bulb per month 1—200 watt bulb per month
For the first 15 w. hrs P0.40 For the next 35 w. hrs .30 For the next 50 w. hrs .25 For all over 100 w. hrs .20
Minimum Charges P6.00 per month for connection of
200 watts or less; plus P0.01 per watt per month for connection in
excess of 200 watts.
“Temporary Rate
P0.01 per watt per night”
On May 22, 1957, petitioner, acting with respondent’s approval,
entered into a contract for the purchase of electric power and energy
from the National Power Corporation, for resale, in the course of the
business of said petitioner, to its customers, to whom, in fact,
petitioner resold said electric power and energy, in accordance with
the above schedule of rates. About five (5) years later, or on January
16, 1962, respondent advised petitioner of a conference to be held on
February 12, 1962 for the purpose: of revising its authorized rates.
Soon thereafter, petitioner received a letter of respondent informing
the former of an alleged letter-petition of “Congressman Floro
Crisologo and 107 alleged residents of Vigan, Ilocos Sur”, charging the
following:
“We also denounce the sale of Two Thousand (2,000)
Electric Meters in blackmarket by the Vigan Electric Light Company to
Avegon Co., as anomalous and illegal. Said electric meters were
imported from Japan by the Vigan Electric Light Company in behalf of
the consumers of electric current from said electric company. The Vigan
Electric Light Company has commercialized these privileges which
properly belongs to the people.“We also report that the
electric meters in Vigan used by the consumers had been installed in
bad faith and they register excessive rates much more than, the actual
consumption.”
and directing the petitioner to comment on these charges. In reply
to said communications, petitioner’s counsel wrote to respondent, on
February 1, 1962, a letter asking that the conference scheduled for
February 12 be postponed to March 12, and another letter stating inter alia:
“In connection therewith, please be informed that my
client, the Vigan Electric Light Co., Inc., has not had any dealing
with the Avegon Co., Inc., relative to the 2,000 electric meters
mentioned in the petition. Attached hereto as Annex ‘1’ and made an
integral part hereof is a certification to that effect by Avegon Co.,
Inc.“Furthermore, as counsel for Vigan Electric Light Co.
Inc., I wish to inform this Honorable Commission that the charge that
said company installed the electric meters in bad faith and that said
meters register excessive rates could have no valid basis because all
of these meters have been inspected, checked, tested and sealed by your
office.
On March 15, 1962, petitioner received a communication from the
General Auditing Office notifying him that one Mr. Cesar A. Damole had
“been instructed to make an audit and examination of the books and
other records of account” of said petitioner, “under the provisions of
Commonwealth Act No. 325 and in accordance with the request of the
Public Service Commission contained in its letter dated March 12,
1962”, and directing petitioner to cooperate with said Mr. Damole “for
the successful accomplishment of his work”. Subsequently, respondent
issued a subpoena duces tecum requiring petitioner to produce
before the former, during a conference scheduled for April 10, 1962,
certain books of account and financial statements specified in said
process. On the date last mentioned petitioner moved to quash the subpoena duces tecum.
The motion was not acted upon in said conference of April 10, 1962.
However, it was then decided that the next conference be held on April
30, 1962, which was later postponed to May 21, 1962. When petitioner’s
representatives appeared before respondent, on the date last mentioned,
they were advised by the latter that the scheduled conference had been
cancelled, that the petition to quash the subpoena duces tecum had been granted, and that, on May 17, 1962, respondent had issued an order, from which we quote;
“We now have the audit report of tho General
Auditing Office dated May 4, 1962, covering the operation of the Vigan
Electric Light Co., Inc. in Vigan, Bantay and Caoayan IIocos Sur, for
the period from. January 1 to December 31, 1961. We find from the
report that the total invested capital of the utility as of December
31, 1961 entitled to return amounted to P118,132.55 and its net
operating income for the rate purposes of P53,692.34 represents 45.45%
of its invented capital; that in order to earn 12% per annum, tho
utility should have a computed revenue by rates of P182,012.78; and
that since it realized an actual revenue by rates of P221,529.17, it
had an excess revenue by rates of P39,516.39, which is 17.84% of the
actual revenue by rates and 33.45% of the invested capital. In other
words, the present rates of the Vigan Electric Light Co., Inc. may be
reduced fay 17.84% or in round figure by 18%.“Upon
consideration of the foregoing, and finding that the Vigan Electric
Light Co., Inc. is making a net operating profit in excess of the
allowable return of 12% on its invested capital, we believe that it is
in the public interest and in consonance with Section 3 of Republic Act
No. 3043 that reduction of its rates to the extent of its excess
revenue be put into effect immediately,“Wherefore, Vigan
Electric Light Co., Inc. is hereby ordered to reduce the present meter
rates for its electric service effective upon the billing for the month
of June, 1962, to wit:Meter Rate—24-Hour Service
For the first 15 kwh per month at P0.328 per kwh
For the next 35 kwh per month at P0.246 per kwh
For the next 50 kwh per month at P0.205 per kwh
For all over 100 kwh per month at P0.164 per kwh
Minimum Charge: P4.90 per month for connection of 200 watts or less
plus 0.01 watt per month, for connection in excess of 200 watts.Temporary Lighting
P0.01
per watt per night Minimum Charge: P1.00 Billings to customers shall be
made to the nearest multiple of five centavos. The above rates may be
revised, modified or altered at anytime for any just cause and/or in
the public interest.”
Soon later, or on June 25, 1962, petitioner herein instituted the
present action for certiorari to annul said order of May 17, 1962, upon
the ground that, since its corporate inception in 1948, petitioner
“never was able to give and never made a single dividend declaration in
favor of its stockholders” because its operation from 1949 to 1961 had
resulted in an aggregate lose of P118,851.523; that in the conferences
above mentioned petitioner had called the attention of respondent to
the fact that the latter had not furnished the former a “copy of the
alleged letter-petition of Congressman Crisologo and others”; that
respondent then expressed the view that there was no necessity of
serving copy of said letter to petitioner, because respondent was
merely holding informal conferences to ascertain whether petitioner
would consent to the reduction of its rates; that petitioner objected
to said reduction without a hearing, alleging that its rates could be
reduced only if proven by evidence validly adduced to be excessive;
that petitioner offered to introduce evidence to show the
reasonableness of its aforementioned rates, and even the fairness of
its increase; that petitioner was then assured that it would be
furnished a copy of the aforementioned letter-petition and that a
hearing would be held, if a reduction of its rates could not be agreed
upon; that petitioner had not even been served a copy of the auditor’s
report upon which the order complained of is based, that such order had
been issued without notice and hearing; and that, accordingly,
petitioner had been denied due process.
In its answer respondent admitted some allegations of the complaint
and denied other allegations thereof, particularly the conclusions
drawn by petitioner. Likewise, respondent alleged that it granted
petitioner’s motion to quash the aforementioned subpoena duces tecum
because the documents therein referred to had already been audited and
examined by the General Auditing Office, the report of which was on
file with said respondent; that the latter had directed that petitioner
be served a copy of said report; and that, although this has not, as
yet, been actually done, petitioner could have seen and examined said
report had it really wanted to do so. By way of special defenses,
respondent, moreover, alleged that the disputed order had been issued
under its delegated legislative authority, the exercise of which does
not require previous notice and hearing; and that petitioner had not
sought a reconsideration of said order, and had, accordingly, failed to
exhaust all administrative remedies.
In support of its first special defense, respondent maintains that
rate fixing is a legislative function; that legislative or rule-making
powers may constitutionally be exercised without previous notice or
hearing; and that the decision in Ang Tibay vs. Court of
Industrial Relations (69 Phil., 635)—in which we held that such notice
and hearing are essential to the validity of a decision of the Public
Service Commission—is not in point because, unlike the order complained
of—which respondent claims to be legislative in nature—the Ang Tibay
case referred, to a proceeding involving the exercise of judicial
functions.
At the outset, it should be noted, however, that, consistently with
the principle of separation of powers, which underlies our
constitutional system, legislative powers may not be delegated except to
local governments, and only as to matters purely of local concern (Rubi
vs. Provincial Board, 39 Phil., 660; U.S. vs.
Heinazen, 206 U.S. 370). However, Congress may delegate to
administrative agencies of the government the power to supply the
details in the execution or enforcement of a policy laid down by a law which is complete in itself (Calalang vs. Williams, 70 Phil., 726; Pangasinan Transp. Co. vs. Public Service Commission, 70 Phil.1, 221; People vs. Roaenthal, 68 Phil., 328; People vs. Vera, 65 Phil., 56; Cruz vs. Youngberg, 56 Phil., 234; Alegre vs. Collector of Customs, 53 Phil., 394; U.S. vs. Ang Tang Ho, 43 Phil., 1; Schechter vs. U.S., 295 U.S., 495; Mulford vs. Smith, 307 U.S., 38; Bowles vs.
Willingham, 321 U.S. 503). Such law is not deemed complete unless it
lays down a standard or pattern sufflciently fixed or determinate, or,
at least, determinable without requiring another legislation, to guide
the administrative body concerned in the performance of its duty to
implement or enforce said policy (People vs. Lim Ho, 100 Phil., 887; Araneta vs. Gatmaitan, 101 Phil., 328; Cervantes vs. Auditor General, 91 Phil., 3591; Philippine Association of Colleges vs. Secretary of Education, 97 Phil., 806; 51 Off. Gaz., 6230; People vs. Arnault, 92 Phil., 252; 48 Off. Gaz., 4805; Antamok Gold Fields vs. Court of Industrial Relations,. 68 Phil., 340; U.S. vs. Barrias, 11 Phil., 827; Yakus vs. White, 321 U.S., 414; Ammann vs. Mallonce, 332 U.S., 245; U.S. vs. Rock Royal Coop., 307 U.S., 533; Mutual Film Corp. vs.
Industrial Commission, 276 U.S. 230). Otherwise there would he no
reasonable means to ascertain whether or not .said body has acted
within the scope of its authority, and, as a consequence, the power of
legislation would eventually be exercised by a branch of the Government
other than that in which it is lodged by the Constitution, in
violation, not only of the allocation of powers therein made, but,
also, of the principle of separation of powers. Hence, Congress has not
delegated, and cannot delegate legislative powers to the Public Service
Commission.
Moreover, although the rule-making power and even the power to fix rates-when such rules and/or rates are meant to apply to all enterprises of a given kind throughout
the Philippines—may partake of a legislative character,such is not the
nature of the order complained of. Indeed, the same applies exclusively
to petitioner herein. What is more, it is predicated upon the finding
of fact—based upon a report submitted by the General Auditing
Office—that petitioner is making a profit of more than 12% of its
invested capital, which is denied by petitioner. Obviously,
the latter is entitled to cross-examine the maker of said report, and
to introduce evidence to disprove the contents thereof and/or explain
or complement the same, as well as to refute the conclusion drawn
therefrom by the respondent. In other words, in making said finding of
fact, respondent performed a function partaking of a quasi judicial character, the valid exercise of which demands previous notice and hearing.
Indeed, sections 16 and 20 (a) of Commonwealth Act No. 146
explicitly require notice and hearing. The pertinent parts thereof
provide:
“Sec. 16. The Commission shall have the power, upon
proper notice and hearing in accordance with the rules and provisions
of this Act, subject to the limitations and exceptions mentioned and
Saving provisions to the contrary:* * * * * * *
“(c)
To fix and determine individual or join rates, tolls, charges
classifications, or schedules thereof, as well as commutation, mileage,
kilometrage, and oilier special rates “which shall be imposed,
observed, and followed thereafter by any public service: Provided, That
the Commission may, in its discretion, approve rates proposed by public
services provisionally and without necessity of any hearing; but it shall call a hearing thereon within thirty days thereafter, upon publication and notice
to the concerns operating in the territory affected: Provided, further,
that in case the public service equipment of an operator is used
principally or secondarily for the promotion of a private business, the
net profits of said private business shall be considered in relation
with the public service of such operator for the purpose of fixing the
rates.“Sec. 20. Acts requiring the approval of the
Commission.—Subject to established limitations and exceptions and
saving provisions to the contrary, it shall be unlawful for any public
service or for the owner, lessee or operator thereof, without the
approval and authorization of the Commission previously had—“(a)
To adopt, establish, fix, impose, maintain, collect or carry into
effect any individual or joint rates, commutation, mileage or other
special rate, toll, fare, charge, classification or itinerary. The
Commission shall approve only those that are just and reasonable and
not any that are unjustly discriminatory or unduly preferential, only
upon reasonable notice to the public services and other parties
concerned, giving them a reasonable opportunity to be heard, * * *.” (Italics supplied.)
Since compliance with law must be presumed, it should be assumed
that petitioner’s current rates were fixed by respondent after proper
notice and hearing. Hence, a modification of such rates cannot be made,
over petitioner’s objection, without such notice and hearing,
particularly considering that the factual basis of the action taken by
respondent is assailed by petitioner. The rule applicable is set forth
in the American Jurisprudence in the following language:
“Whether notice and a hearing is proceedings before a public service commission are necessary depends chiefly upon statutory or constitutional provisions applicable to such proceedings, which make notice and hearing, prerequisite to action by the commission, and upon the, nature and object of such proceedings,
that is, whether the proceedings, are on the one hand, legislative and
rule-making in character, or are, on the other hand, determinative and
judicial or quasi-judicial, affecting the rights and property of
private or specific persons. As a general rule, a public utility be
afforded some opportunity to be heard as to the, propriety and
reasonableness of rates fixed for its services by a public service
commission.” (43 Am. Jut., 716; Italics supplied.)
Wherefore, we hold that the determination of the issue involved in
the order complained of partakes of the nature of a quasi-judicial
function and that, having been issued without previous notice and
hearing, said order is clearly violative of the due process clause,
and, hence, null and void, so that a motion for reconsideration thereof
is not an absolute prerequisite to the institution of the present
action lor certiorari. (Ayson vs. Republic, 96 Phil. 271; 50
Off. Gaz., 5810). For this reason, and considering that said order was
being made effective on June 1, 1962, or almost immediately after its
issuance (on May 17, 1962, although petitioner was not notified until
May 21, 1962), we find that petitioner was justified in commencing this
proceedings without first filing said motion (Guerrero vs. Carbonell, L-7180, March 15, 1955).
Wherefore, the writ prayed for is granted and the preliminary
injunction issued by this Court hereby made permanent. It is so ordered.
Bengzon, C. J., Padilla, Bautista Angelo, Labrador, Reyes, J. B. L., Paredes, Dizon, Regala and Makalintal, JJ., concur.