G.R. No. 115381. December 23, 1994
KILUSANG MAYO UNO LABOR CENTER, PETITIONER, VS. HON. JESUS B. GARCIA, JR., THE LAND TRANSPORTATION FRANCHISING AND REGULATORY BOARD, AND THE PROVINCIAL BUSES OPERATORS ASSOCIATI…
KAPUNAN, J.:
Public utilities are privately owned and operated businesses
whose services are essential to the general public. They are enterprises which specially cater to the needs of the
public and conduce to their comfort and convenience. As such, public utility services are impressed with public
interest and concern. The same is true
with respect to the business of common carrier which holds such a peculiar
relation to the public interest that there is superinduced upon it the right of
public regulation when private properties are affected with public interest,
hence, they cease to be juris
privati only. When, therefore, one devotes his property to
a use in which the public has an interest, he, in effect grants to the public
an interest in that use, and must submit to the control by the public for the
common good, to the extent of the interest he has thus created.[1]
An abdication of the licensing and regulatory government agencies
of their functions as the instant petition seeks to show, is indeed
lamentable. Not only is it an unsound administrative policy
but it is inimical to public trust and public interest as well.
The instant petition for certiorari assails the
constitutionality and validity of certain memoranda, circulars and/or orders of
the Department of Transportation and Communications (DOTC) and the Land
Transportation Franchising and Regulatory Board (LTFRB)[2]
which, among others, (a) authorize provincial bus and jeepney operators to
increase or decrease the prescribed transportation fares without application
therefor with the LTFRB and without hearing and approval thereof by said agency
in violation of Sec. 16(c) of Commonwealth Act No. 146, as amended, otherwise
known as the Public Service Act, and in derogation of LTFRB’s duty to fix and
determine just and reasonable fares by delegating that function to bus
operators, and (b) establish a presumption of public need in favor of
applicants for certificates of public convenience (CPC) and place on the
oppositor the burden of proving that there is no need for the proposed service,
in patent violation not only of Sec. 16(c) of CA 146, as amended, but also of
Sec. 20(a) of the same Act mandating that fares should be “just and
reasonable.” It is, likewise, violative of the Rules of Court which places
upon each party the burden to prove his own affirmative allegations.[3]
The offending provisions contained in the questioned issuances pointed out by
petitioner, have resulted in the introduction into our highways and thoroughfares
thousands of old and smoke-belching buses,
many of which are right-hand driven, and have exposed our consumers to
the burden of spiraling costs of public transportation without hearing and due
process.
The following memoranda, circulars and/or orders are sought to be
nullified by the instant petition, viz: (a) DOTC Memorandum Order No. 90-395, dated June 26, 1990 relative to
the implementation of a fare range scheme for provincial bus services in the
country; (b) DOTC Department Order No. 92-587, dated March 30, 1992, defining
the policy framework on the regulation of transport services; (c) DOTC
Memorandum dated October 8, 1992, laying down rules and procedures to implement
Department Order No. 92-587; (d) LTFRB Memorandum Circular No. 92-009, providing
implementing guidelines on the DOTC Department Order No. 92-587; and (e) LTFRB
Order dated March 24, 1994 in Case No. 94-3112.
The relevant antecedents are as follows:
On June 26, 1990, then Secretary of DOTC, Oscar M. Orbos, issued
Memorandum Circular No. 90-395 to then LTFRB Chairman, Remedios A.S. Fernando
allowing provincial bus operators to charge passengers rates within a range of
15% above and 15% below the LTFRB official rate for a period of one (1)
year. The text of the memorandum order
reads in full:
One of the policy reforms and measures that
is in line with the thrusts and the priorities set out in the Medium-Term
Philippine Development Plan (MTPDP) 1987-1992) is the liberalization of
regulations in the transport sector. Along this line, the Government intends to move away gradually from
regulatory policies and make progress towards greater reliance on free market
forces.
Based on several surveys and observations,
bus companies are already charging passenger rates above and below the official
fare declared by LTFRB on many provincial routes. It is in this context that some form of liberalization on public
transport fares is to be tested on a pilot basis.
In view thereof, the LTFRB is hereby
directed to immediately publicize a fare range scheme for all provincial bus
routes in country (except those operating within Metro Manila). Transport Operators shall be allowed to
charge passengers within a range of fifteen percent (15%) above and fifteen
percent (15%) below the LTFRB official rate for a period of one year.
Guidelines and procedures for the said
scheme shall be prepared by LTFRB in coordination with the DOTC Planning
Service.
The implementation of the said fare range
scheme shall start on 6 August 1990.
For compliance. (Underscoring ours).
Finding the implementation of the fare range scheme “not
legally feasible,” Remedios A.S. Fernando submitted the following
memorandum to Oscar M. Orbos on July 24, 1990, to wit:
With reference to DOTC Memorandum Order No. 90-395 dated 26 June
1990 which the LTFRB received on 19 July 1990, directing the Board ‘to
immediately publicize a fare range scheme for all provincial bus routes in the
country (except those operating within Metro Manila)’ that will allow operators
‘to charge passengers within a range of fifteen percent (15%) above and fifteen
percent (15%) below the LTFRB official rate for a period of one year’ the
undersigned is respectfully adverting the Secretary’s attention to the
following for his consideration:
1. Section 16 (c) of the
Public Service Act prescribes the following for the fixing and determination of
rates – (a) the rates to be approved should be proposed by public service
operators; (b) there should be a publication and notice to concerned or
affected parties in the territory affected; (c) a public hearing should be held
for the fixing of the rates; hence, implementation of the proposed fare range
scheme on August 6 without complying with the requirements of the Public
Service Act may not be legally feasible.
2. To allow bus operators
in the country to charge fares fifteen (15%) above the present LTFRB fares in
the wake of the devastation, death and suffering caused by the July 16
earthquake will not be socially warranted and will be politically unsound; most
likely public criticism against the DOTC and the LTFRB be triggered by the
untimely motu propio implementation of the proposal by the mere expedient of
publicizing the fare range scheme without calling a public hearing, which
scheme many as early as during the Secretary’s predecessor know through
newspaper reports and columnists’ comments to be Asian Development Bank and
World Bank inspired.
3. More than inducing a
reduction in bus fares by fifteen percent (15%) the implementation of the
proposal will instead trigger an upward adjustment in bus fares by fifteen
percent (15%) at a time when hundreds of thousands of people in Central and
Northern Luzon, particularly in Central Pangasinan, La Union, Baguio City,
Nueva Ecija, and the Cagayan Valley are suffering from the devastation and
havoc caused by the recent earthquake.
4. In lieu of the said
proposal, the DOTC with its agencies involved in public transportation can
consider measures and reforms in the industry that will be socially uplifting,
especially for the people in the areas devastated by the recent earthquake.
In view of the foregoing considerations, the undersigned
respectfully suggests that the implementation of the proposed fare range scheme
this year be further studied and evaluated.
On December 5, 1990, private respondent Provincial Bus Operators
Association of the Philippines, Inc. (PBOAP) filed an application for fare rate
increase. An across-the-board increase
of eight and a half centavos (P0.085) per kilometer for all types of provincial
buses with a minimum-maximum fare range of fifteen (15%) percent over and below
the proposed basic per kilometer fare rate, with the said minimum-maximum fare
range applying only to ordinary, first class and premium class buses and a
fifty-centavo (P0.50) minimum per kilometer fare for aircon buses, was sought.
On December 6, 1990, private respondent PBOAP reduced its applied
proposed fare to an across-the-board increase of six and a half (P0.065)
centavos per kilometer for ordinary buses. The decrease was due to the drop in the expected price of diesel.
The application was opposed by the Philippine Consumers
Foundation, Inc. and Perla C. Bautista alleging that the proposed rates were
exorbitant and unreasonable and that the application contained no allegation on the rate of return of
the proposed increase in rates.
On December 14, 1990, public respondent LTFRB rendered a decision
granting the fare rate increase in accordance with the following schedule of
fares on a straight computation method, viz:
AUTHORIZED FARES
LUZON
MIN. OF 5
KMS. SUCCEEDING KM.
REGULAR P
1.50 P 0.37
STUDENT P 1.15 P 0.28
VISAYAS/MINDANAO
REGULAR P 1.60 P 0.375
STUDENT P 1.20 P 0.285
FIRST CLASS (PER KM.)
LUZON P 0.385
VISAYAS/
MINDANAO P 0.395
PREMIERE CLASS (PER KM.)
LUZON P 0.395
VISAYAS/
MINDANAO P 0.405
AIRCON (PER KM.) P 0.415.[4]
On March 30, 1992, then Secretary of the Department of
Transportation and Communications Pete Nicomedes Prado issued Department Order
No. 92-587 defining the policy framework on the regulation of transport
services. The full text of the said
order is reproduced below in view of the importance of the provisions contained
therein:
WHEREAS, Executive Order No. 125 as amended, designates the
Department of Transportation and Communications (DOTC) as the primary policy,
planning, regulating and implementing agency on transportation;
WHEREAS, to achieve the objective of a viable, efficient, and
dependable transportation system, the transportation regulatory agencies under
or attached to the DOTC have to harmonize their decisions and adopt a common
philosophy and direction;
WHEREAS, the government proposes to build on the successful
liberalization measures pursued over the last five years and bring the
transport sector nearer to a balanced longer term regulatory framework;
NOW THEREFORE, pursuant to the powers granted by laws to the DOTC,
the following policies and principles in the economic regulation of land, air,
and water transportation services are hereby adopted:
1. Entry into and exit out
of the industry. Following the
Constitutional dictum against monopoly, no franchise holder shall be permitted
to maintain a monopoly on any route. A
minimum of two franchise holders shall be permitted to operate on any route.
The requirements to grant a certificate to operate, or certificate
of public convenience, shall be: proof
of Filipino citizenship, financial capability, public need, and sufficient insurance
cover to protect the riding public.
In determining public need, the presumption of need for a
service shall be deemed in favor of the applicant. The burden of proving that there is no need for a proposed
service shall be with the oppositor(s).
In the interest of providing efficient public transport services,
the use of the ‘prior operator’ and the ‘priority of filing’ rules shall be
discontinued. The route measured
capacity test or other similar tests of demand for vehicle/vessel fleet on any
route shall be used only as a guide in weighing the merits of each franchise
application and not as a limit to the services offered.
Where there are limitations in facilities, such as congested road
space in urban areas, or at airports and ports, the use of demand management
measures in conformity with market principles may be considered.
The right of an operator to leave the industry is recognized as a
business decision, subject only to the filing of appropriate notice and
following a phase-out period, to inform the public and to minimize disruption
of services.
2. Rate and Fare
Setting. Freight rates shall be freed
gradually from government controls. Passenger fares shall also be deregulated, except for the lowest class
of passenger service (normally third class passenger transport) for which the
government will fix indicative or reference fares. Operators of particular services may fix their own fares within a
range 15% above and below the indicative or reference rate.
Where there is lack of effective competition for services, or on
specific routes, or for the transport of particular commodities, maximum
mandatory freight rates or passenger fares shall be set temporarily by the
government pending actions to increase the level of competition.
For unserved or single operator routes, the government shall
contract such services in the most advantageous terms to the public and the
government, following public bids for the services. The advisability of bidding out the services or using other kinds
of incentives on such routes shall be studied by the government.
3. Special Incentives and
Financing for Fleet Acquisition. As a
matter of policy, the government shall not engage in special financing and
incentive programs, including direct subsidies for fleet acquisition and
expansion. Only when the market
situation warrants government intervention shall programs of this type be
considered. Existing programs shall be
phased out gradually.
The Land Transportation Franchising and Regulatory Board, the Civil
Aeronautics Board, the Maritime Industry Authority are hereby directed to
submit to the Office of the Secretary, within forty-five (45) days of this
Order, the detailed rules and procedures for the Implementation of the policies
herein set forth. In the formulation of
such rules, the concerned agencies shall be guided by the most recent studies
on the subjects, such as the Provincial Road Passenger Transport Study, the
Civil Aviation Master Plan, the Presidential Task Force on the Inter-island
Shipping Industry, and the Inter-island Liner Shipping Rate Rationalization
Study.
For the compliance of all concerned. (Underscoring ours).
On October 8, 1992, public respondent Secretary of the Department
of Transportation and Communications Jesus B. Garcia, Jr. issued a memorandum
to the Acting Chairman of the LTFRB suggesting swift action on the adoption of
rules and procedures to implement above-quoted Department Order No. 92-587 that
laid down deregulation and other liberalization policies for the transport
sector. Attached to the said memorandum
was a revised draft of the required rules and procedures covering (i) Entry
Into and Exit Out of the Industry and (ii) Rate and Fare Setting, with comments
and suggestions from the World Bank incorporated therein. Likewise, resplendent from the said
memorandum is the statement of the DOTC Secretary that the adoption of the
rules and procedures is a pre-requisite to the approval of the Economic
Integration Loan from the World Bank.[5]
On February 17, 1993, the LTFRB issued Memorandum Circular No.
92-009 promulgating the guidelines for the implementation of DOTC Department
Order No. 92-587. The Circular
provides, among others, the following challenged portions:
xxx xxx xxx
IV. Policy Guidelines on
the Issuance of Certificate of Public Convenience.
The issuance of a Certificate of Public Convenience is determined
by public need. The presumption of
public need for a service shall be deemed in favor of the applicant, while
burden of proving that there is no need for the proposed service shall be the
oppositor’s.
xxx xxx xxx
V. Rate and Fare Setting
The control in pricing shall be liberalized
to introduce price competition complementary with the quality of service,
subject to prior notice and public hearing. Fares shall not be provisionally authorized without public hearing.
A. On the General
Structure of Rates
1. The existing authorized
fare range system of plus or minus 15 percent for provincial buses and jeepneys
shall be widened to 20% and -25% limit in 1994 with the authorized fare to be
replaced by an indicative or reference rate as the basis for the expanded fare
range.
2. Fare systems for aircon
buses are liberalized to cover first class and premier services.
xxx xxx xxx
(Underscoring ours).
Sometime in March, 1994, private respondent PBOAP, availing
itself of the deregulation policy of the DOTC allowing provincial bus operators
to collect plus 20% and minus 25% of the prescribed fare without first having
filed a petition for the purpose and without the benefit of a public hearing,
announced a fare increase of twenty (20%) percent of the existing fares. Said increased fares were to be made
effective on March 16, 1994.
On March 16, 1994, petitioner KMU filed a petition before the
LTFRB opposing the upward adjustment of bus fares.
On March 24, 1994, the LTFRB issued one of the assailed orders
dismissing the petition for lack of merit. The dispositive portion reads:
PREMISES CONSIDERED, this Board after considering the arguments of
the parties, hereby DISMISSES FOR LACK OF MERIT the petition filed in the
above-entitled case. This petition in
this case was resolved with dispatch at the request of petitioner to enable it
to immediately avail of the legal remedies or options it is entitled under existing
laws.
SO ORDERED.[6]
Hence, the instant petition for certiorari with an urgent
prayer for issuance of a temporary restraining order.
The Court, on June 20, 1994, issued a temporary restraining order
enjoining, prohibiting and preventing respondents from implementing the bus
fare rate increase as well as the questioned orders and memorandum
circulars. This meant that provincial
bus fares were rolled back to the levels duly authorized by the LTFRB prior to
March 16, 1994. A moratorium was
likewise enforced on the issuance of franchises for the operation of buses,
jeepneys, and taxicabs.
Petitioner KMU anchors its claim on two (2) grounds. First, the authority given by respondent
LTFRB to provincial bus operators to set a fare range of plus or minus fifteen
(15%) percent, later increased to plus twenty (20%) and minus twenty-five
(-25%) percent, over and above the existing authorized fare without having to
file a petition for the purpose, is unconstitutional, invalid and illegal. Second, the establishment of a presumption
of public need in favor of an applicant for a proposed transport service
without having to prove public necessity, is illegal for being violative of the
Public Service Act and the Rules of Court.
In its Comment, private respondent PBOAP, while not actually
touching upon the issues raised by the petitioner, questions the wisdom and the
manner by which the instant petition was filed. It asserts that the petitioner has no legal standing to sue or
has no real interest in the case at bench and in obtaining the reliefs prayed
for.
In their Comment filed by the Office of the Solicitor General,
public respondents DOTC Secretary Jesus B. Garcia, Jr. and the LTFRB asseverate
that the petitioner does not have the standing to maintain the instant suit. They further claim that it is within DOTC
and LTFRB’s authority to set a fare range scheme and establish a presumption of
public need in applications for certificates of public convenience.
We find the instant petition impressed with merit.
At the outset, the threshold issue of locus standi must be
struck. Petitioner KMU has the standing
to sue.
The requirement of locus standi inheres from the
definition of judicial power. Section 1
of Article VIII of the Constitution provides:
xxx xxx xxx
Judicial power includes the duty of the courts of justice to settle
actual controversies involving rights which are legally demandable and
enforceable, and to determine whether or not there has been a grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of any
branch or instrumentality of the Government.
In Lamb v. Phipps,[7] we ruled that judicial power is the
power to hear and decide causes pending between parties who have the right to
sue in the courts of law and equity. Corollary to this provision is the principle of locus standi of a party litigant. One
who is directly affected by, and whose interest is immediate and substantial in
the controversy has the standing to sue. The rule therefore requires that a party must show a personal stake in
the outcome of the case or an injury to himself that can be redressed by a
favorable decision so as to warrant an invocation of the court’s jurisdiction
and to justify the exercise of the court’s remedial powers in his behalf.[8]
In the case at bench, petitioner, whose members had suffered and
continue to suffer grave and irreparable injury and damage from the
implementation of the questioned memoranda, circulars and/or orders, has shown
that it has a clear legal right that was violated and continues to be violated
with the enforcement of the challenged memoranda, circulars and/or orders. KMU members, who avail of the use of buses,
trains and jeepneys everyday, are directly affected by the burdensome cost of
arbitrary increase in passenger fares. They are part of the millions of commuters who comprise the riding
public. Certainly, their rights must be
protected, not neglected nor ignored.
Assuming arguendo that petitioner is not possessed of
the standing to sue, this court is ready to brush aside this barren procedural
infirmity and recognize the legal standing of the petitioner in view of the
transcendental importance of the issues raised. And this act of liberality is not without judicial precedent. As early as the Emergency Powers Cases,
this Court had exercised its discretion and waived the requirement of
proper party. In the recent case of Kilosbayan,
Inc., et al. v. Teofisto
Guingona, Jr., et al.,[9] we ruled in the same lines and
enumerated some of the cases where the same policy was adopted, viz:
xxx A party’s
standing before this Court is a procedural technicality which it may, in the
exercise of its discretion, set aside in view of the importance of the issues
raised. In the landmark Emergency
Powers Cases, [G.R. No. L-2044 (Araneta v. Dinglasan); G.R. No. L-2756
(Araneta v. Angeles); G.R. No. L-3054 (Rodriguez v. Tesorero de Filipinas);
G.R. No. L-3055 (Guerrero v. Commissioner of Customs); and G.R. No. L-3056
(Barredo v. Commission on Elections), 84 Phil. 368 (1949)], this Court brushed
aside this technicality because ‘the transcendental importance to the public of
these cases demands that they be settled promptly and definitely, brushing
aside, if we must, technicalities of procedure. (Avelino vs. Cuenco, G.R. No. L-2621).’ Insofar as taxpayers’
suits are concerned, this Court had declared that it ‘is not devoid of
discretion as to whether or not it should be entertained,’ (Tan v. Macapagal,
43 SCRA 677, 680 [1972]) or that it ‘enjoys an open discretion to entertain the
same or not.’ [Sanidad v. COMELEC, 73
SCRA 333 (1976)].
xxx
xxx xxx
In line with the liberal policy of this Court on locus standi,
ordinary taxpayers, members of Congress, and even association of planters, and
non-profit civic organizations were allowed to initiate and prosecute actions
before this Court to question the constitutionality or validity of laws, acts,
decisions, rulings, or orders of various government agencies or
instrumentalities. Among such cases
were those assailing the constitutionality of (a) R.A. No. 3836 insofar as it
allows retirement gratuity and commutation of vacation and sick leave to
Senators and Representatives and to elective officials of both Houses of
Congress (Philippine Constitution Association, Inc. v. Gimenez, 15 SCRA 479
[1965]); (b) Executive Order No. 284, issued by President Corazon C. Aquino on
25 July 1987, which allowed members of the cabinet, their undersecretaries, and
assistant secretaries to hold other government offices or positions (Civil
Liberties Union v. Executive Secretary, 194 SCRA 317 [1991]); (c) the automatic
appropriation for debt service in the General Appropriations Act (Guingona v.
Carague, 196 SCRA 221 [1991]; (d) R.A. No. 7056 on the holding of
desynchronized elections (Osmena v. Commission on Elections, 199 SCRA 750
[1991]); (e) P.D. No. 1869 (the charter of the Philippine Amusement and Gaming
Corporation) on the ground that it is contrary to morals, public policy, and
order (Basco v. Philippine Gaming and Amusement Corp., 197 SCRA 52 [1991]); and
(f) R.A. No. 6975, establishing the Philippine National Police. (Carpio v. Executive Secretary, 206 SCRA 290
[1992]).
Other cases where we have followed a liberal policy regarding locus
standi include those attacking the validity or legality of (a) an order
allowing the importation of rice in the light of the prohibition imposed by
R.A. No. 3452 (Iloilo Palay and Corn Planters Association, Inc. v. Feliciano,
13 SCRA 377 [1965]); (b) P.D. Nos. 991 and 1033 insofar as they proposed
amendments to the Constitution and P.D. No. 1031 insofar as it directed the
COMELEC to supervise, control, hold, and conduct the referendum-plebiscite on
16 October 1976 (Sanidad v. Commission on Elections, supra); (c) the
bidding for the sale of the 3,179 square meters of land at Roppongi, Minato-ku,
Tokyo, Japan (Laurel v. Garcia, 187 SCRA 797 [1990]); (d) the approval without
hearing by the Board of Investments of the amended application of the Bataan
Petrochemical Corporation to transfer the site of its plant from Bataan to
Batangas and the validity of such transfer and the shift of feedstock from
naphtha only to naphtha and/or liquefied petroleum gas (Garcia v. Board of
Investments, 177 SCRA 374 [1989]; Garcia v. Board of Investments, 191 SCRA 288
[1990]); (e) the decisions, orders, rulings, and resolutions of the Executive
Secretary, Secretary of Finance, Commissioner of Internal Revenue, Commissioner
of Customs, and the Fiscal Incentives Review Board exempting the National Power
Corporation from indirect tax and duties (Maceda v. Macaraig, 197 SCRA 771
[1991]); (f) the orders of the Energy Regulatory Board of 5 and 6 December 1990
on the ground that the hearings conducted on the second provisional increase in
oil prices did not allow the petitioner substantial cross-examination; (Maceda
v. Energy Regulatory Board, 199 SCRA 454
[1991]); (g) Executive Order No. 478 which levied a special duty of P0.95 per
liter of imported oil products (Garcia v. Executive Secretary, 211 SCRA 219
[1992]); (h) resolutions of the Commission on Elections concerning the
apportionment, by district, of the number of elective members of Sanggunians
(De Guia vs. Commission on Elections, 208 SCRA 420 [1992]); and (i) memorandum
orders issued by a Mayor affecting the Chief of Police of Pasay City (Pasay Law
and Conscience Union, Inc. v. Cuneta, 101 SCRA 662 [1980]).
In the 1975 case of Aquino v. Commission on Elections (62 SCRA 275 [1975]), this Court, despite
its unequivocal ruling that the petitioners therein had no personality to file
the petition, resolved nevertheless to pass upon the issues raised because of
the far-reaching implications of the petition. We did no less in De
Guia v. COMELEC (Supra) where, although we declared that De Guia
‘does not appear to have locus standi, a standing in law, a personal or
substantial interest,’ we brushed aside the procedural infirmity ‘considering
the importance of the issue involved, concerning as it does the political
exercise of qualified voters affected by the apportionment, and petitioner
alleging abuse of discretion and violation of the Constitution by respondent.’
Now on the merits of the case.
On the fare range scheme.
Section 16 (c) of the Public Service Act, as amended, reads:
SEC. 16. Proceedings of
the Commission, upon notice and hearing. – The Commission shall have power, upon proper notice and hearing in accordance with the rules and provisions of this Act,
subject to the limitations and exceptions mentioned and saving provisions to
the contrary:
xxx xxx xxx
(c) To fix and determine individual
or joint rates, tolls, charges, classifications, or schedules thereof, as well
as commutation, mileage kilometrage, and other 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. (Underscoring ours).
xxx xxx xxx
Under the foregoing provision, the
Legislature delegated to the defunct Public Service Commission the power of
fixing the rates of public services. Respondent LTFRB, the existing regulatory body today, is likewise vested
with the same under Executive Order No. 202 dated June 19, 1987. Section 5 (c) of the said executive order
authorizes LTFRB “to determine, prescribe, approve and periodically review
and adjust, reasonable fares, rates and other related charges, relative to the
operation of public land transportation services provided by motorized
vehicles.”
Such delegation of legislative power to an administrative agency
is permitted in order to adapt to the increasing complexity of modern
life. As subjects for governmental
regulation multiply, so does the difficulty of administering the laws. Hence, specialization even in legislation
has become necessary. Given the task of
determining sensitive and delicate matters as route-fixing and rate-making for
the transport sector, the responsible regulatory body is entrusted with the
power of subordinate legislation. With
this authority, an administrative body and in this case, the LTFRB, may
implement broad policies laid down in a statute by “filling in” the
details which the Legislature may neither have time or competence to
provide. However, nowhere under the
aforesaid provisions of law are the regulatory bodies, the PSC and LTFRB alike,
authorized to delegate that power to a common carrier, a transport operator, or
other public service.
In the case at bench, the authority given by the LTFRB to the
provincial bus operators to set a fare range over and above the authorized
existing fare, is illegal and invalid as it is tantamount to an undue
delegation of legislative authority. Potestas delegata non delegari potest. What
has been delegated cannot be delegated. This doctrine is based on the ethical principle that such a delegated
power constitutes not only a right but a duty to be performed by the delegate
through the instrumentality of his own judgment and not through the intervening
mind of another.[10]
A further delegation of such power would indeed constitute a negation of the
duty in violation of the trust reposed in the delegate mandated to discharge it
directly.[11]
The policy of allowing the provincial bus operators to change and increase
their fares at will would result not only to a chaotic situation but to an
anarchic state of affairs. This would
leave the riding public at the mercy of transport operators who may increase
fares every hour, every day, every month or every year, whenever it pleases
them or whenever they deem it “necessary” to do so. In Panay Autobus Co. v. Philippine
Railway Co.,[12]
where respondent Philippine Railway Co. was granted by the Public Service
Commission the authority to change its freight rates at will, this Court
categorically declared that:
In our opinion, the
Public Service Commission was not authorized by law to delegate to the
Philippine Railway Co. the power of altering its freight rates whenever it
should find it necessary to do so in order to meet the competition of road
trucks and autobuses, or to change its freight rates at will, or to regard its
present rates as maximum rates, and to fix lower rates whenever in the opinion
of the Philippine Railway Co. it would be to its advantage to do so.
The mere recital of the
language of the application of the Philippine Railway Co. is enough to show
that it is untenable. The Legislature
has delegated to the Public Service Commission the power of fixing the rates of
public services, but it has not authorized the Public Service Commission to
delegate that power to a common carrier or other public service. The
rates of public services like the Philippine Railway Co. have been approved or
fixed by the Public Service Commission, and any change in such rates must be
authorized or approved by the Public Service Commission after they have been
shown to be just and reasonable. The public service may, of course, propose new rates, as the Philippine
Railway Co. did in case No. 31827, but it cannot lawfully make said new rates
effective without the approval of the Public Service Commission, and the Public
Service Commission itself cannot authorize a public service to enforce new
rates without the prior approval of said rates by the commission. The commission must approve new rates when
they are submitted to it, if the evidence shows them to be just and reasonable,
otherwise it must disapprove them. Clearly, the commission cannot determine in advance whether or not the
new rates of the Philippine Railway Co. will be just and reasonable, because it
does not know what those rates will be.
In the present case the Philippine Railway Co. in effect asked for
permission to change its freight rates at will. It may change them every day or every hour, whenever it deems it
necessary to do so in order to meet competition or whenever in its opinion it
would be to its advantage. Such a
procedure would create a most unsatisfactory state of affairs and largely
defeat the purposes of the
public service law.[13]
(Underscoring ours).
One veritable consequence of the deregulation of transport fares
is a compounded fare. If
transport operators will be authorized to impose and collect an additional
amount equivalent to 20% over and above the authorized fare over a period of
time, this will unduly prejudice a commuter who will be made to pay a fare that
has been computed in a manner similar to those of compounded bank interest
rates.
Picture this situation. On December 14, 1990, the LTFRB authorized provincial bus operators to
collect a thirty-seven (P0.37) centavo per kilometer fare for ordinary
buses. At the same time, they were
allowed to impose and collect a fare range of plus or minus 15% over the
authorized rate. Thus P0.37 centavo per
kilometer authorized fare plus P0.05 centavos (which is 15% of P0.37 centavos)
is equivalent to P0.42 centavos, the allowed rate in 1990. Supposing the LTFRB grants another five
(P0.05) centavo increase per kilometer in 1994, then, the base or reference for
computation would have to be P0.47 centavos (which is P0.42 + P0.05
centavos). If bus operators will
exercise their authority to impose an additional 20% over and above the
authorized fare, then the fare to be collected shall amount to P0.56 (that is,
P0.47 authorized LTFRB rate plus 20% of P0.47 which is P0.29). In effect, commuters will be continuously
subjected, not only to a double fare adjustment but to a compounding fare as
well. On their part, transport
operators shall enjoy a bigger chunk of the pie. Aside from fare increase applied for, they can still collect an
additional amount by virtue of the authorized fare range. Mathematically, the situation translates
into the following:
Year* LTFRB Fare Range Fare to be
Authorized collected
rate** per kilometer
1990 P0.37 15%
(P0.05) P0.42
1994 P0.42 + 0.05 20% (P0.09) P0.56
= 0.47
1998 P0.56 + 0.05 20% (P0.12) P0.73
= 0.61
2002 P0.73 + 0.05 20% (P0.16) P0.94
= 0.78
Moreover, rate making or rate fixing is not an easy task. It is a delicate and sensitive government
function that requires dexterity of judgment and sound discretion with the
settled goal of arriving at a just and reasonable rate acceptable to both the
public utility and the public. Several
factors, in fact, have to be taken into consideration before a balance could be
achieved. A rate should not be
confiscatory as would place an operator in a situation where he will continue
to operate at a loss. Hence, the rate
should enable public utilities to generate revenues sufficient to cover
operational costs and provide reasonable return on the investments. On the other hand, a rate which is too high
becomes discriminatory. It is contrary
to public interest. A rate, therefore,
must be reasonable and fair and must be affordable to the end user who
will utilize the services.
Given the complexity of the nature of the function of rate-fixing
and its far-reaching effects on millions of commuters, government must not
relinquish this important function in favor of those who would benefit and
profit from the industry. Neither
should the requisite notice and hearing be done away with. The people, represented by reputable
oppositors, deserve to be given full opportunity to be heard in their
opposition to any fare increase.
The present administrative procedure,[14]
to our mind, already mirrors an orderly and satisfactory arrangement for all
parties involved. To do away with such
a procedure and allow just one party, an interested party at that, to determine
what the rate should be, will undermine the right of the other parties to due
process. The purpose of a hearing is
precisely to determine what a just and reasonable rate is.[15]
Discarding such procedural and constitutional right is certainly inimical to
our fundamental law and to public interest.
On the presumption of public need.
A certificate of public convenience (CPC) is an authorization
granted by the LTFRB for the operation of land transportation services for
public use as required by
law. Pursuant to Section 16 (a) of the
Public Service Act, as amended, the following requirements must be met before a CPC may be granted, to wit: (i) the applicant must be a citizen of the
Philippines, or a corporation or co-partnership, association or joint-stock
company constituted and organized under the laws of the Philippines, at least
60 per centum of its stock or paid-up capital must belong entirely to citizens
of the Philippines; (ii) the applicant must be financially capable of
undertaking the proposed service and meeting the responsibilities incident to
its operation; and (iii) the applicant must prove that the operation of the
public service proposed and the authorization to do business will promote the
public interest in a proper and suitable manner. It is understood that there must be proper notice and hearing
before the PSC can exercise its power to issue a CPC.
While adopting in toto
the foregoing requisites for the issuance of a CPC, LTFRB Memorandum Circular
No. 92-009, Part IV, provides for yet incongruous and contradictory policy
guideline on the issuance of a CPC. The
guideline states:
The issuance of a Certificate of Public Convenience is determined
by public need. The presumption of
public need for a service
shall be deemed in favor of the applicant, while the burden of proving that
there is no need for the proposed service shall be the oppositor’s. (Underscoring ours).
The above-quoted provision is entirely incompatible and
inconsistent with Section 16(c)(iii) of the Public Service Act which requires
that before a CPC will be issued, the applicant must prove by proper notice and
hearing that the operation of the public service proposed will promote public
interest in a proper and suitable manner. On the contrary, the policy guideline states that the presumption of
public need for a public service shall be deemed in favor of the applicant. In case of conflict between a statute and an
administrative order, the former must prevail.
By its terms, public convenience or necessity generally means
something fitting or suited to the public need.[16] As
one of the basic requirements for the grant of a CPC, public convenience and
necessity exists when the proposed facility or service meets a reasonable want
of the public and supply a need which the existing facilities do not adequately
supply. The existence or non-existence
of public convenience and necessity is therefore a question of fact that must be established by evidence, real
and/or testimonial; empirical data; statistics and such other means necessary,
in a public hearing conducted for that purpose. The object and purpose of such procedure, among other things, is
to look out for, and protect, the interests of both the public and the existing
transport operators.
Verily, the power of a regulatory
body to issue a CPC is founded on the condition that after full-dress hearing
and investigation, it shall find, as a fact, that the proposed operation is for
the convenience of the public.[17]
Basic convenience is the primary consideration for which a CPC is issued, and
that fact alone must be consistently borne in mind. Also, existing operators in subject routes must be given an
opportunity to offer proof and oppose the application. Therefore, an applicant must, at all times,
be required to prove his capacity and capability to furnish the service which
he has undertaken to render.[18] And
all this will be possible only if a public hearing were conducted for that
purpose.
Otherwise stated, the establishment of public need in favor of an
applicant reverses well-settled and institutionalized judicial, quasi-judicial
and administrative procedures. It
allows the party who initiates the proceedings to prove, by mere application,
his affirmative allegations. Moreover,
the offending provisions of the LTFRB memorandum circular in question would in
effect amend the Rules of Court by adding another disputable presumption in the
enumeration of 37 presumptions under Rule 131, Section 5 of the Rules of
Court. Such usurpation of this Court’s
authority cannot be countenanced as only this Court is mandated by law to promulgate rules concerning pleading, practice and procedure.[19]
Deregulation, while it may be ideal in certain situations, may
not be ideal at all in our country given the present circumstances. Advocacy of liberalized franchising and
regulatory process is tantamount to an abdication by the government of its inherent right to exercise police
power, that is, the right of government to regulate public utilities for
protection of the public and the utilities themselves.
While we recognize the authority of the DOTC and the LTFRB to
issue administrative orders to regulate the transport sector, we find that they
committed grave abuse of discretion in issuing DOTC Department Order No. 92-587
defining the policy framework on
the regulation of transport services and LTFRB Memorandum Circular No. 92-009
promulgating the implementing guidelines on DOTC Department Order No. 92-587,
the said administrative issuances being amendatory and violative of the Public
Service Act and the Rules of Court. Consequently, we rule that the twenty (20%) per centum fare increase
imposed by respondent PBOAP on March 16, 1994 without the benefit of a petition
and a public hearing is null and void and of no force and effect. No grave abuse of discretion however was
committed in the issuance of DOTC Memorandum Order No. 90-395 and DOTC Memorandum
dated October 8, 1992, the same being merely internal communications between
administrative officers.
WHEREFORE, in view of the foregoing, the instant
petition is hereby GRANTED and
the challenged administrative issuances and orders, namely: DOTC Department Order No. 92-587, LTFRB
Memorandum Circular No. 92-009, and the order dated March 24, 1994 issued by
respondent LTFRB are hereby DECLARED contrary
to law and invalid insofar as they affect provisions therein (a) delegating to
provincial bus and jeepney operators the authority to increase or decrease the
duly prescribed transportation fares; and (b) creating a presumption of public
need for a service in favor of the applicant for a certificate of public
convenience and placing the burden of proving that there is no need for the
proposed service to the oppositor.
The Temporary Restraining Order issued on June 20, 1994 is hereby
MADE PERMANENT insofar as it
enjoined the bus fare rate increase granted under the provisions of the
aforementioned administrative circulars, memoranda and/or orders declared
invalid.
No pronouncement as to costs.
SO ORDERED.
Padilla, (Chairman), Davide, Jr., Bellosillo, and Quiason, JJ., concur.
[1]
Pantranco v. Public Service Commission, 70 Phil. 221.
[2]
The 20th century ushered in the birth and growth of public utility regulation
in the country. After the Americans
introduced public utility regulation at the turn of the century, various
regulatory bodies were created. They
were the Coastwise Rate Commission under Act No. 520 passed by the Philippine
Commission on November 17, 1902; the Board of Rate Regulation under Act No.
1779 dated October 12, 1907; the Board of Public Utility Commission under Act
No. 2307 dated December 19, 1913; and the Public Utility Commission under Act
No. 3108 dated March 19, 1923.
During the Commonwealth period, the
National Assembly passed a more comprehensive public utility law. This was Commonwealth Act No. 146, as
amended or the Public Service Act, as amended. Said law created a regulatory and franchising body known as the Public
Service Commission (PSC). The
Commission (PSC) existed for thirty-six (36) years from 1936 up to 1972.
On September 24, 1972, Presidential
Decree No. 1 was issued and declared “part of the law of the land.”
The same effected a major revamp of the executive department. Under Article III, Part X of P.D. No. 1, the Public Service
Commission (PSC) was abolished and replaced by three (3) specialized regulatory
boards. These were the Board of
Transportation, the Board of Communications, and the Board of Power and
Waterworks.
The Board of Transportation (BOT)
lasted for thirteen (13) years. On
March 20, 1985, Executive Order No. 1011 was issued abolishing the Board of
Transportation and the Bureau of Land Transportation. Their powers and functions were merged into the Land
Transportation Commission (LTC).
Two (2) years later, LTC was
abolished by Executive Order Nos. 125 dated January 30, 1987 and 125-A dated
April 13, 1987 which reorganized the Department of Transportation and
Communications. On June 19, 1987, the
Land Transportation Franchising and Regulatory Board (LTFRB) was created by
Executive Order No. 202. The LTFRB,
successor of LTC, is the existing franchising and regulatory body for overland
transportation today.
[3]
Sec. 1, Rule 131, Rules of Court.
[4]
Decision of LTFRB in Case No. 90-4794,
p. 4; Rollo, p. 59.
[5]
Rollo, p. 42.
[6]
Order of LTFRB, p. 4; Rollo, p. 55.
[7]
22 Phil. 456 [1912].
[8]
Warth v. Seldin, 422 U.S. 490,
498-499, 45 L.Ed. 2d 343, 95 S. Ct. 2197 [1975]; Guzman v. Marrero, 180
U.S. 81, 45 L.Ed. 436, 21 S.Ct. 293 [1901]; McMicken v. United States,
97 U.S. 204, 24 L.Ed. 947 [1978]; Silver Star Citizens’ Committee v.
Orlando Fla. 194 So. 2d 681 [1967]; In Re Kenison’s Guardianship, 72 S.D. 180,
31 N.W. 2d 326 [1948].
[9]
G.R. No. 113375, May 5, 1994.
[10]
United States v. Barrias, 11 Phil. 327, 330 [1908]; People v.
Vera, 65 Phil. 56,113 [1937].
[11]
Cruz, Philippine Political Law, 1991 Edition, p. 84.
[12]
57 Phil. 872 [1933].
[13]
Id., at pp. 878-879.
* Assume a four-year interval in fare adjustment as a constant.
** Assume further a constant P0.0.5 centavo increase in fare every four
(4) years.
[14]
Steps in the Filing of Petition for
Rate Increase:
A Petition For Adjustment of Rate (either for increase or reduction)
may be filed only by a grantee of a CPC. Therefore, when franchise/CPC grantees or existing public utility
operators foresee that the new oil price increase, wage hikes or similar factors
would threaten the survival and viability of their operations, they may then
institute a petition for increase of rates. Thus in the case of public utilities engaged in transportation,
telecommunications, energy supply (electricity) and others, the following steps
are usually undertaken in seeking, particularly upwards adjustments of rates:
1. Filing of formal Petition for Rate Increase.- This petition
alleges therein among others, the present schedule of rates, the reasons why
the same is no longer economically viable and the revised schedule of rates it
proposes to charge. Attached to said
Petition for financial statements, projections/studies showing possible losses
from oil price or wage hikes under the old or existing rates and the possible
margin of profit (which should be within the 12% allowable limit) under the new
or revised rates;
2. After the petition is docketed, a date is set for hearing for which a
Notice of Hearing is issued, the same to be published in a newspaper of general
circulation in the area;
3. The
parties affected by the application are required to be furnished copies of the
petition and the Notice of Hearing usually by registered mail with return
card. The Solicitor General is also
separately notified since he is the counsel for the Government;
4. The Technical Staff of the regulatory body concerned evaluates the
documentary evidence attached to the petition to determine whether there is warrant to the
request for rate revision;
5. Then the Commission of Audit (COA) is requested by the regulatory body
to conduct an audit and examination of the books of accounts and other
pertinent financial records of the public utility operator seeking the rate
revision; if the applicants/petitioners are numerous, a representative number
for examination purposes would do; and the period of operation covered usually
ranges from six (6) months to one (1) year;
COA audit report is compared with
that of the regulatory body. Copies of these audit reports are furnished the
petitioners and oppositors may submit their exceptions or objections thereto.
6. Then hearings are conducted. The
petitioners may present accountants or such rate experts to explain their plea
for rate revision. Oppositors are also
allowed to rebut such evidence-in-chief with their own witnesses and
documents. After the hearings, the
corresponding resolution is issued.
To obviate protracted
hearings, the parties may agree to submit their respective Position Papers in
lieu of oral testimonies.
[15]
Ynchausti Steamship Co. v. Public Utility Commissioner, 42 Phil. 621,
631 [1922]).
[16]
Black’s Law Dictionary, 5th Edition, p.
1105.
[17]
Batangas Transportation Co. v.
Orlanes, 52 Phil. 455 [1928]).
[18]
Manila Electric Co. v. Pasay
Transportation Co., 57 Phil. 825 [1932]; Please see also Raymundo
Transportation v. Perez, 56 Phil. 274 [1931]; Pampanga Bus Co. v. Enriquez, 38 O.G.
374; Dela Rosa v. Corpus, 38 O.G. 2069.
[19]
Article VIII, Section 6, 1987
Constitution.