EASTERN SHIPPING LINES, INC., PETITIONER, VS. COURT OF APPEALS AND DAVAO PILOTS ASSOCIATION, RESPONDENTS.

In Philippine Interisland Shipping Association of the Philippines vs. Court of Appeals,^[1] the Court, en banc, ruled that Executive Order 1088^[2] was not unconstitutional. We adhere to said ruling in this case.

The Case

This is a petition for certiorari under Rule 45, assailing the Decision^[3] of the Court of Appeals^[4] in CA-GR CV No. 34487 promulgated on July 18, 1994, the dispositive portion of which reads:

“WHEREFORE, finding no reversible error in the decision appealed from, the same is hereby AFFIRMED in toto. With costs against defendant-appellant.”

The Decision affirmed by Respondent Court disposed as follows:

“WHEREFORE, judgment is rendered directing the defendant:

1. To pay plaintiff the sum of P602,710.04 with legal rate of
   interest commencing from the filing of the complaint representing unpaid
   pilotage fees;
2. To pay attorney’s fees in the sum of P50,000.00;
3. And costs.

SO ORDERED.”

Hence, this appeal.^[5]

The Facts

As found by the trial court, these are the undisputed facts:

“On September 25, 1989, plaintiff [herein private respondent]
elevated a complaint against defendant [herein petitioner] for sum of
money and attorney’s fees alleging that plaintiff had rendered pilotage
services to defendant between January 14, 1987 to July 22, 1989 with
total unpaid fees of P703,290.18. Despite repeated demands, defendant
failed to pay and prays that the latter be directed to pay P703,290.18
with legal rate of interest from the filing of the complaint; attorney’s
fees equivalent to 25% of the principal obligation and such other
relief.

On November 18, 1989 defendant answered vigorously disputing the
claims of plaintiff. It assailed the constitutionality of the Executive
Order 1088 upon which plaintiff bases its claims; alleged that there is a
pending case before the Court of Appeals elevated by the United Harbor
Pilots Association of the Philippines of which plaintiff is a member[;]
whereas defendant is a member of the Chamber of Maritime Industries of
the Philippine[s] which is an Intervenor in CA-G.R. SP No. 18072; that
there therefore is lis pendens by Section 1 (e), Rule 16 of the
Rules; that the subject of the complaint falls within the scope and
authority of the Philippine Ports Authority by virtue of PD No. 857
dated December 23, 1975; that Executive Order No. 1088 is an unwarranted
repeal or modification of the Philippine Ports Authority Charter; that
the fees charged by plaintiff are arbitrary and confiscatory; and the
basis of the Executive Order 1088 is offensive, sourced from Amendment
No. 6 of the 1973 Constitution and rendered inoperative by the Freedom
Constitution of March 25, 1986 and the present Constitution; and that
the only agency vested by law to prescribe such rates, charges or fees
for services rendered by any private organization like the plaintiff
within a Port District is governed by Section 20 of PD 857. As regular
patron of plaintiff, defendant has never been remiss in paying
plaintiff’s claim for pilotage fees and the present complaint under the
foregoing circumstances is without legal foundation. Defendant prays
that plaintiff be advised to await the final outcome of the identical
issues already elevated to and pending before the Court of Appeals as
CA-G.R. SP No. 18072. Defendant prays for an award of damages,
attorney’s fees, litigation expense and costs.

At the Pre-Trial Conference, the only issue raised by plaintiff is
whether the defendant is liable to the plaintiff for the money claims
alleged in the complaint.
The defendant on the other hand raised the following issues:

1. Whether or not Executive Order 1088 is constitutional;
2. Whether or not Executive Order 1088 is illegal;
3. Whether or not the plaintiff may motu proprio and independently
   of the Public Estates Authority enforce Executive Order 1088 and
   collect the pilotage fees prescribed thereunder;
4. Assuming Executive Order 1088 is constitutional, valid and
   self-executory, whether or not the defendant is liable; and if so, to
   what extent and for what particular items; and
5. Whether or not the plaintiff is liable under the counterclaims (p. 102, Expediente).

On September 5, 1990, plaintiff presented witness Capt. Felix N.
Galope, in the course of which testimony identified among others
EXHIBITS “B” to “E-2” and “J” to to “I-2” consisting of documents
related to the collection of the unpaid pilotage fees; basis for such
computations; Statement of Accounts; demand letter and official
recipients of payment made.

On September 6, 1990, Simplicio Barao, plaintiff’s Billing Clerk
testified among others on the records of plaintiff’s Captain’s
Certificate/Pilotage Chits and Bills/Statements of Accounts on the
claims against defendant (EXHIBITS “G” to “H-48-A”) and the details of
the outstanding accounts in favor of plaintiff. The records show
defendant raised no objection thereto and by virtue of which all of
plaintiff’s documentary exhibits were admitted. (Order dated January 14,
1991, p. 277 Expediente).

On March 14, 1991, defendant presented Celso Occidental, employee
of defendant shipping company, in the course of which testimony
submitted EXHIBITS “1” to “1-D” which is plaintiff’s Billing Rate, both
old and new with a payment of P79,585.64; and “2” to “2-G” representing
plane ticket paid for by defendant for transportation expenses of its
counsel and cost of stenographic transcripts.

Defendant’s last witness, Capt. Jose Dubouzet, Jr. and a Harbor Pilot was briefly presented.”^[6]

After due trial, the trial court rendered its ruling, viz.:

“Plaintiff’s evidence as to the unpaid pilotage services due from
defendant duly supported by voluminous documentary exhibits has not
been refuted nor rebutted by defendant. On the contrary, when
plaintiff’s documentary exhibits were formally offered, defendant did
not raise any objection thereby leaving the documents unchallenged and
undisputed.

Upon the other hand, while the records show that defendant raised
no less than five (5) issues the evidence fails to show any proof to
sustain defendant’s posture. On the contrary, neither of defendant’s two
witnesses appear to have even grazed the outer peripheries of what
could have been interesting issues with far-reaching consequences if
resolved.”^[7]

The factual antecedents of the controversy are simple. Petitioner
insists on paying pilotage fees prescribed under PPA circulars. Because
EO 1088 sets a higher rate, petitioner now assails its
constitutionality.

Public Respondent’s Ruling

As stated earlier, Respondent Court of Appeals affirmed the trial
court’s decision. Respondent Court pointed out that petitioner, during
the pre-trial, limited the issues to whether: (1) EO 1088 is
unconstitutional; (2) EO 1088 is illegal; (3) private respondent itself
may enforce and collect fees under EO 1088; and (4) petitioner is liable
and, if EO 1088 is legal, to what extent. It then affirmed the factual
findings and conclusion of the trial court that petitioner “fail[ed] to
show any proof” to support its position. Parenthetically, Respondent
Court also noted two other cases decided by the Court of Appeals,
upholding the constitutionality of EO 1088.^[8]

The Issue

In sum, petitioner raises this main issue: whether Executive Order 1088 is unconstitutional.^[9]

The Court’s Ruling

The petition is unmeritorious.

EO 1088 Is Valid

Petitioner contends that EO 1088^[10] is unconstitutional, because (1) its interpretation and application are left to private respondent, a private person,^[11]
and (2) it constitutes an undue delegation of powers. Petitioner
insists that it should pay pilotage fees in accordance with and on the
basis of the memorandum circulars issued by the PPA, the administrative
body vested under PD 857^[12]
with the power to regulate and prescribe pilotage fees. In assailing the
constitutionality of EO 1088, the petitioner repeatedly asks: “Is the
private respondent vested with power to interpret Executive Order No.
1088?”^[13]

The Court is not persuaded. The pertinent provisions of EO 1088 read:

“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 instructions, 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.”

In Philippine Interisland Shipping Association of the Philippines vs. Court of Appeals,^[14]
the Supreme Court, through Mr. Justice Vicente V. Mendoza, upheld the
validity and constitutionality of Executive Order 1088 in no uncertain
terms. We aptly iterate our pronouncement in said case, viz.:

“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.

x x x                                x x x                             x x x

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.

x x x                                 x x x                             x x x

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. x x x.”^[15]

We see no reason to depart from this ruling. The Court’s holding
clearly debunks petitioner’s insistence on paying its pilotage fees
based on memorandum circulars issued by the PPA.^[16]
Because the PPA circulars are inconsistent with EO 1088, they are void
and ineffective. “Administrative or executive acts, orders and
regulations shall be valid only when they are not contrary to the laws
or the Constitution.”^[17] As stated by this Court in Land Bank of the Philippines vs. Court of Appeals,^[18]
“[t]he conclusive effect of administrative construction is not
absolute. Action of an administrative agency may be disturbed or set
aside by the judicial department if there is an error of law, a grave
abuse of power or lack of jurisdiction, or grave abuse of discretion
clearly conflicting with either the letter or spirit of the law.”^[19]
It is axiomatic that an administrative agency, like the PPA, has no
discretion whether to implement the law or not. Its duty is to enforce
it. Unarguably, therefore, if there is any conflict between the PPA
circular and a law, such as EO 1088, the latter prevails.^[20]

Based on the foregoing, petitioner has no legal basis to refuse
payment of pilotage fees to private respondent, as computed according to
the rates set by EO 1088. Private respondent cannot be faulted for
relying on the clear and unmistakable provisions of EO 1088. In fact, EO
1088 leaves no room for interpretation, thereby unmistakably showing
the duplicity of petitioner’s query: “Is the private respondent vested
with power to interpret Executive Order No. 1088?”

WHEREFORE, the petition is hereby DENIED and the assailed Decision of the Court of Appeals is AFFIRMED. Costs against petitioner.

SO ORDERED.

Davide Jr. (Chairman), Bellosillo, Vitug, and Quisumbing JJ., concur.

^[1] 266 SCRA 489, January 22, 1997.

^[2] Entitled “Providing
For Uniform And Modified Rates For Pilotage Services Rendered To Foreign
And Coastwise Vessels In All Private Or Public Philippine Ports” and
enacted on February 3, 1986.

^[3] Rollo, pp. 40-50.

^[4] Special Fourth
Division, composed of JJ. Artemon D. Luna, ponente; Asaali S. Isnani,
acting chairman; and Ruben T. Reyes, concurring.

^[5] The case was deemed
submitted for resolution on March 6, 1997, when the Court received the
private respondent’s Explanation dated February 17, 1997.

^[6] Decision of the Regional Trial Court, pp. 1-4; CA rollo, pp. 65-68.

^[7] Ibid., p. 4; CA rollo, p. 68.

^[8] Decision of the Court of Appeals, pp. 5-6; rollo, pp. 11-12.

^[9] See Petition, pp. 1 and 12 and Petitioner’s Memorandum, pp. 2-3; rollo, pp. 23, 34, and 80-81.

^[10] Providing for
uniform and modified rates for pilotage services rendered to foreign and
coastwise vessels in all private or public Philippine ports.

^[11] Petitioner’s Memorandum, pp. 18-19; rollo, pp. 96-97.

^[12] Otherwise known as
the Revised Charter of the Philippine Ports Authority, created under
Presidential Decree No. 505 dated July 11, 1974.

^[13] Petitioner’s Memorandum, p. 20; rollo, p. 98.

^[14] Supra, see p. 510.

^[15] Ibid., pp. 507, 510.

^[16] Petitioner’s Memorandum, p. 21; rollo, p. 99.

^[17] Art. 7, Civil Code of the Philippines.

^[18] 249 SCRA 149, October 6, 1995, per Francisco, J.

^[19] Ibid., pp. 157-158; citing Peralta vs. Civil Service Commission, 212 SCRA 425, 432, (1992).

^[20] Ibid., p. 158.