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G.R. No.

115381 December 23, 1994 are affected with public interest, hence, favor of applicants for certificates of
they cease to be juris privati only. When, public convenience (CPC) and place on
KILUSANG MAYO UNO LABOR therefore, one devotes his property to a the oppositor the burden of proving that
CENTER, petitioner, use in which the public has an interest, there is no need for the proposed
vs. he, in effect grants to the public an service, in patent violation not only of
HON. JESUS B. GARCIA, JR., the interest in that use, and must submit to Sec. 16(c) of CA 146, as amended, but
LAND TRANSPORTATION the control by the public for the common also of Sec. 20(a) of the same Act
FRANCHISING AND REGULATORY good, to the extent of the interest he has mandating that fares should be "just and
BOARD, and the PROVINCIAL BUS thus created.1 reasonable." It is, likewise, violative of
OPERATORS ASSOCIATION OF THE the Rules of Court which places upon
PHILIPPINES, respondents. An abdication of the licensing and each party the burden to prove his own
regulatory government agencies of their affirmative allegations.3 The offending
Potenciano A. Flores for petitioner. functions as the instant petition seeks to provisions contained in the questioned
show, is indeed lamentable. Not only is it issuances pointed out by petitioner, have
an unsound administrative policy but it is resulted in the introduction into our
Robert Anthony C. Sison, Cesar B.
inimical to public trust and public interest highways and thoroughfares thousands
Brillantes and Jose Z. Galsim for private
as well. of old and smoke-belching buses, many
respondent.
of which are right-hand driven, and have
The instant petition for certiorari assails exposed our consumers to the burden of
Jose F. Miravite for movants. spiraling costs of public transportation
the constitutionality and validity of certain
memoranda, circulars and/or orders of without hearing and due process.
the Department of Transportation and
Communications (DOTC) and the Land The following memoranda, circulars
KAPUNAN, J.: Transportation Franchising and and/or orders are sought to be nullified
Regulatory Board LTFRB)2 which, among by the instant petition, viz: (a) DOTC
Public utilities are privately owned and others, (a) authorize provincial bus and Memorandum Order 90-395, dated June
operated businesses whose service are jeepney operators to increase or 26, 1990 relative to the implementation
essential to the general public. They are decrease the prescribed transportation of a fare range scheme for provincial bus
enterprises which specially cater to the fares without application therefor with the services in the country; (b) DOTC
needs of the public and conduce to their LTFRB and without hearing and approval Department Order No.
comfort and convenience. As such, thereof by said agency in violation of 92-587, dated March 30, 1992, defining
public utility services are impressed with Sec. 16(c) of Commonwealth Act No. the policy framework on the regulation of
public interest and concern. The same is 146, as amended, otherwise known as transport services; (c) DOTC
true with respect to the business of the Public Service Act, and in derogation Memorandum dated October 8, 1992,
common carrier which holds such a of LTFRB's duty to fix and determine just laying down rules and procedures to
peculiar relation to the public interest that and reasonable fares by delegating that implement Department Order No. 92-
there is superinduced upon it the right of function to bus operators, and (b) 587; (d) LTFRB Memorandum Circular
public regulation when private properties establish a presumption of public need in No. 92-009, providing implementing
guidelines on the DOTC Department observations, bus The implementation of
Order No. 92-587; and (e) LTFRB Order companies are already the said fare range
dated March 24, 1994 in Case No. 94- charging passenger rates scheme shall start on 6
3112. above and below the August 1990.
official fare declared by
The relevant antecedents are as follows: LTFRB on many For compliance.
provincial routes. It is in (Emphasis ours.)
On June 26, 1990; then Secretary of this context that some
DOTC, Oscar M. Orbos, issued form of liberalization on Finding the implementation of the fare
Memorandum Circular No. 90-395 to public transport fares is range scheme "not legally feasible,"
then LTFRB Chairman, Remedios A.S. to be tested on a pilot Remedios A.S. Fernando submitted the
Fernando allowing provincial bus basis. following memorandum to Oscar M.
operators to charge passengers rates Orbos on July 24, 1990, to wit:
within a range of 15% above and 15% In view thereof, the
below the LTFRB official rate for a period LTFRB is hereby directed With reference to DOTC
of one (1) year. The text of the to immediately publicize Memorandum Order No.
memorandum order reads in full: a fare range scheme for 90-395 dated 26 June
all provincial bus routes 1990 which the LTFRB
One of the policy reforms in country (except those received on 19 July 1990,
and measures that is in operating within Metro directing the Board "to
line with the thrusts and Manila). Transport immediately publicize a
the priorities set out in Operators shall be fare range scheme for all
the Medium-Term allowed to charge provincial bus routes in
Philippine Development passengers within a the country (except those
Plan (MTPDP) 1987 — range of fifteen percent operating within Metro
1992) is the liberalization (15%) above and fifteen Manila)" that will allow
of regulations in the percent (15%) below the operators "to charge
transport sector. Along LTFRB official rate for a passengers within a
this line, the Government period of one year. range of fifteen percent
intends to move away (15%) above and fifteen
gradually from regulatory Guidelines and percent (15%) below the
policies and make procedures for the said LTFRB official rate for a
progress towards greater scheme shall be period of one year" the
reliance on free market prepared by LTFRB in undersigned is
forces. coordination with the respectfully adverting the
DOTC Planning Service. Secretary's attention to
Based on several the following for his
surveys and consideration:
1. Section should be the wake
16(c) of held for of the
the Public the fixing devastatio
Service of the n, death
Act rates; and
prescribe hence, suffering
s the implemen caused by
following tation of the July
for the the 16
fixing and proposed earthquak
determina fare range e will not
tion of scheme be
rates — on August socially
(a) the 6 without warranted
rates to complying and will
be with the be
approved requireme politically
should be nts of the unsound;
proposed Public most
by public Service likely
service Act may public
operators; not be criticism
(b) there legally against
should be feasible. the DOTC
a and the
publicatio 2. To LTFRB
n and allow bus will be
notice to operators triggered
concerne in the by the
d or country to untimely
affected charge motu
parties in fares propioimp
the fifteen lementati
territory (15%) on of the
affected; above the proposal
(c) a present by the
public LTFRB mere
hearing fares in expedient
of fares by Ecija, and
publicizin fifteen the
g the fare percent Cagayan
range (15%) the Valley are
scheme implemen suffering
without tation of from the
calling a the devastatio
public proposal n and
hearing, will havoc
which instead caused by
scheme trigger an the recent
many as upward earthquak
early as adjustme e.
during the nt in bus
Secretary' fares by 4. In lieu
s fifteen of the
predeces percent said
sor know (15%) at proposal,
through a time the DOTC
newspape when with its
r reports hundreds agencies
and of involved
columnist thousand in public
s' s of transporta
comment people in tion can
s to be Central consider
Asian and measures
Developm Northern and
ent Bank Luzon, reforms in
and World particularl the
Bank y in industry
inspired. Central that will
Pangasin be
3. More an, La socially
than Union, uplifting,
inducing a Baguio especially
reduction City, for the
in bus Nueva people in
the areas centavos per kilometer for ordinary (PER KM.)
devastate buses. The decrease was due to the LUZON P0.395
d by the drop in the expected price of diesel. VISAYAS/
recent MINDANAO P0.405
earthquak The application was opposed by the
e. Philippine Consumers Foundation, Inc. AIRCON (PER KM.)
and Perla C. Bautista alleging that the P0.415.4
In view of the foregoing proposed rates were exorbitant and
considerations, the unreasonable and that the application On March 30, 1992, then Secretary of
undersigned respectfully contained no allegation on the rate of the Department of Transportation and
suggests that the return of the proposed increase in rates. Communications Pete Nicomedes Prado
implementation of the issued Department Order No.
proposed fare range On December 14, 1990, public 92-587 defining the policy framework on
scheme this year be respondent LTFRB rendered a decision the regulation of transport services. The
further studied and granting the fare rate increase in full text of the said order is reproduced
evaluated. accordance with the following schedule below in view of the importance of the
of fares on a straight computation provisions contained therein:
On December 5, 1990, private method, viz:
respondent Provincial Bus Operators WHEREAS, Executive
Association of the Philippines, Inc. AUTHORIZED FARES Order No. 125 as
(PBOAP) filed an application for fare rate amended, designates the
increase. An across-the-board increase LUZON Department of
of eight and a half centavos (P0.085) per MIN. OF 5 KMS. SUCCEEDING KM. Transportation and
kilometer for all types of provincial buses Communications (DOTC)
with a minimum-maximum fare range of as the primary policy,
REGULAR P1.50 P0.37
fifteen (15%) percent over and below the planning, regulating and
STUDENT P1.15 P0.28
proposed basic per kilometer fare rate, implementing agency on
with the said minimum-maximum fare transportation;
range applying only to ordinary, first VISAYAS/MINDANAO
class and premium class buses and a WHEREAS, to achieve
fifty-centavo (P0.50) minimum per REGULAR P1.60 P0.375
the objective of a viable,
kilometer fare for aircon buses, was STUDENT P1.20 P0.285
efficient, and dependable
sought. FIRST CLASS (PER
transportation system,
KM.)
the transportation
On December 6, 1990, private LUZON P0.385
regulatory agencies
respondent PBOAP reduced its applied VISAYAS/
under or attached to the
proposed fare to an across-the-board MINDANAO P0.395
DOTC have to harmonize
increase of six and a half (P0.065) PREMIERE CLASS
their decisions and adopt
a common philosophy public convenience, shall Where there are
and direction; be: proof of Filipino limitations in facilities,
citizenship, financial such as congested road
WHEREAS, the capability, public need, space in urban areas, or
government proposes to and sufficient insurance at airports and ports, the
build on the successful cover to protect the riding use of demand
liberalization measures public. management measures
pursued over the last five in conformity with market
years and bring the In determining public principles may be
transport sector nearer to need, the presumption of considered.
a balanced longer term need for a service shall
regulatory framework; be deemed in favor of the The right of an operator
applicant. The burden of to leave the industry is
NOW, THEREFORE, proving that there is no recognized as a business
pursuant to the powers need for a proposed decision, subject only to
granted by laws to the service shall be with the the filing of appropriate
DOTC, the following oppositor(s). notice and following a
policies and principles in phase-out period, to
the economic regulation In the interest of inform the public and to
of land, air, and water providing efficient public minimize disruption of
transportation services transport services, the services.
are hereby adopted: use of the "prior operator"
and the "priority of filing" 2. Rate and Fare Setting.
1. Entry into and exit out rules shall be Freight rates shall be
of the industry. Following discontinued. The route freed gradually from
the Constitutional dictum measured capacity test government
against monopoly, no or other similar tests of controls. Passenger fares
franchise holder shall be demand for shall also be deregulated,
permitted to maintain a vehicle/vessel fleet on except for the lowest
monopoly on any route. A any route shall be used class of passenger
minimum of two franchise only as a guide in service (normally third
holders shall be weighing the merits of class passenger
permitted to operate on each franchise transport) for which the
any route. application and not as a government will fix
limit to the services indicative or reference
The requirements to offered. fares. Operators of
grant a certificate to particular services may
operate, or certificate of fix their own fares within
a range 15% above and special financing and the Inter-island Liner
below the indicative or incentive programs, Shipping Rate
reference rate. including direct subsidies Rationalization Study.
for fleet acquisition and
Where there is lack of expansion. Only when For the compliance of all
effective competition for the market situation concerned. (Emphasis
services, or on specific warrants government ours)
routes, or for the intervention shall
transport of particular programs of this type be On October 8, 1992, public respondent
commodities, maximum considered. Existing Secretary of the Department of
mandatory freight rates programs shall be Transportation and Communications
or passenger fares shall phased out gradually. Jesus B. Garcia, Jr. issued a
be set temporarily by the memorandum to the Acting Chairman of
government pending The Land Transportation the LTFRB suggesting swift action on the
actions to increase the Franchising and adoption of rules and procedures to
level of competition. Regulatory Board, the implement above-quoted Department
Civil Aeronautics Board, Order No. 92-587 that laid down
For unserved or single the Maritime Industry deregulation and other liberalization
operator routes, the Authority are hereby policies for the transport sector. Attached
government shall directed to submit to the to the said memorandum was a revised
contract such services in Office of the Secretary, draft of the required rules and
the most advantageous within forty-five (45) days procedures covering (i) Entry Into and
terms to the public and of this Order, the detailed Exit Out of the Industry and (ii) Rate and
the government, following rules and procedures for Fare Setting, with comments and
public bids for the the Implementation of the suggestions from the World Bank
services. The advisability policies herein set forth. incorporated therein. Likewise,
of bidding out the In the formulation of such resplendent from the said memorandum
services or using other rules, the concerned is the statement of the DOTC Secretary
kinds of incentives on agencies shall be guided that the adoption of the rules and
such routes shall be by the most recent procedures is a pre-requisite to the
studied by the studies on the subjects, approval of the Economic Integration
government. such as the Provincial Loan from the World Bank.5
Road Passenger
3. Special Incentives and Transport Study, the Civil On February 17, 1993, the LTFRB
Financing for Fleet Aviation Master Plan, the issued Memorandum Circular
Acquisition. As a matter Presidential Task Force No. 92-009 promulgating the guidelines
of policy, the government on the Inter-island for the implementation of DOTC
shall not engage in Shipping Industry, and Department Order No. 92-587. The
Circular provides, among others, the authorized without public increase of twenty (20%) percent of the
following challenged portions: hearing. existing fares. Said increased fares were
to be made effective on March 16, 1994.
xxx xxx xxx A. On the General
Structure of Rates On March 16, 1994, petitioner KMU filed
IV. Policy Guidelines on a petition before the LTFRB opposing
the Issuance of 1. The existing the upward adjustment of bus fares.
Certificate of Public authorized fare range
Convenience. system of plus or minus On March 24, 1994, the LTFRB issued
15 per cent for provincial one of the assailed orders dismissing the
The issuance of a buses and jeepneys shall petition for lack of merit. The dispositive
Certificate of Public be widened to 20% and - portion reads:
Convenience is 25% limit in 1994 with the
determined by public authorized fare to be PREMISES
need. The presumption of replaced by an indicative CONSIDERED, this
public need for a service or reference rate as the Board after considering
shall be deemed in favor basis for the expanded the arguments of the
of the applicant, while fare range. parties, hereby
burden of proving that DISMISSES FOR LACK
there is no need for the 2. Fare systems for OF MERIT the petition
proposed service shall be aircon buses are filed in the above-entitled
the oppositor'(s). liberalized to cover first case. This petition in this
class and premier case was resolved with
xxx xxx xxx services. dispatch at the request of
petitioner to enable it to
V. Rate and Fare Setting xxx xxx xxx immediately avail of the
legal remedies or options
(Emphasis ours). it is entitled under
The control in pricing
existing laws.
shall be liberalized to
introduce price Sometime in March, 1994, private
competition respondent PBOAP, availing itself of the SO ORDERED.6
complementary with the deregulation policy of the DOTC allowing
quality of service, subject provincial bus operators to collect plus Hence, the instant petition
to prior notice and public 20% and minus 25% of the prescribed for certiorari with an urgent prayer for
hearing. Fares shall not fare without first having filed a petition for issuance of a temporary restraining
be provisionally the purpose and without the benefit of a order.
public hearing, announced a fare
The Court, on June 20, 1994, issued a the case at bench and in obtaining the there has been a grave
temporary restraining order enjoining, reliefs prayed for. abuse of discretion
prohibiting and preventing respondents amounting to lack or
from implementing the bus fare rate In their Comment filed by the Office of excess of jurisdiction on
increase as well as the questioned the Solicitor General, public respondents the part of any branch or
orders and memorandum circulars. This DOTC Secretary Jesus B. Garcia, Jr. instrumentality of the
meant that provincial bus fares were and the LTFRB asseverate that the Government.
rolled back to the levels duly authorized petitioner does not have the standing to
by the LTFRB prior to March 16, 1994. A maintain the instant suit. They further In Lamb v. Phipps,7 we ruled that judicial
moratorium was likewise enforced on the claim that it is within DOTC and LTFRB's power is the power to hear and decide
issuance of franchises for the operation authority to set a fare range scheme and causes pending between parties who
of buses, jeepneys, and taxicabs. establish a presumption of public need in have the right to sue in the courts of law
applications for certificates of public and equity. Corollary to this provision is
Petitioner KMU anchors its claim on two convenience. the principle of locus standi of a party
(2) grounds. First, the authority given by litigant. One who is directly affected by
respondent LTFRB to provincial bus We find the instant petition impressed and whose interest is immediate and
operators to set a fare range of plus or with merit. substantial in the controversy has the
minus fifteen (15%) percent, later standing to sue. The rule therefore
increased to plus twenty (20%) and At the outset, the threshold issue requires that a party must show a
minus twenty-five (-25%) percent, over of locus standi must be struck. Petitioner personal stake in the outcome of the
and above the existing authorized fare KMU has the standing to sue. case or an injury to himself that can be
without having to file a petition for the redressed by a favorable decision so as
purpose, is unconstitutional, invalid and to warrant an invocation of the court's
The requirement of locus standi inheres
illegal. Second, the establishment of a jurisdiction and to justify the exercise of
from the definition of judicial power.
presumption of public need in favor of an the court's remedial powers in his
Section 1 of Article VIII of the
applicant for a proposed transport behalf.8
Constitution provides:
service without having to prove public
necessity, is illegal for being violative of In the case at bench, petitioner, whose
the Public Service Act and the Rules of xxx xxx xxx
members had suffered and continue to
Court. suffer grave and irreparable injury and
Judicial power includes damage from the implementation of the
In its Comment, private respondent the duty of the courts of questioned memoranda, circulars and/or
PBOAP, while not actually touching upon justice to settle actual orders, has shown that it has a clear
the issues raised by the petitioner, controversies involving legal right that was violated and
questions the wisdom and the manner by rights which are legally continues to be violated with the
which the instant petition was filed. It demandable and enforcement of the challenged
asserts that the petitioner has no legal enforceable, and to memoranda, circulars and/or orders.
standing to sue or has no real interest in determine whether or not KMU members, who avail of the use of
buses, trains and jeepneys everyday, are v. Angeles); G.R. No. L- In line with the liberal
directly affected by the burdensome cost 3054 (Rodriguez v. policy of this Court
of arbitrary increase in passenger fares. Tesorero de Filipinas); on locus standi, ordinary
They are part of the millions of G.R. No. L-3055 taxpayers, members of
commuters who comprise the riding (Guerrero v. Congress, and even
public. Certainly, their rights must be Commissioner of association of planters,
protected, not neglected nor ignored. Customs); and G.R. No. and
L-3056 (Barredo v. non-profit civic
Assuming arguendo that petitioner is not Commission on organizations were
possessed of the standing to sue, this Elections), 84 Phil. 368 allowed to initiate and
court is ready to brush aside this barren (1949)], this Court prosecute actions before
procedural infirmity and recognize the brushed aside this this court to question the
legal standing of the petitioner in view of technicality because "the constitutionality or validity
the transcendental importance of the transcendental of laws, acts, decisions,
issues raised. And this act of liberality is importance to the public rulings, or orders of
not without judicial precedent. As early of these cases demands various government
as the Emergency Powers Cases, this that they be settled agencies or
Court had exercised its discretion and promptly and definitely, instrumentalities. Among
waived the requirement of proper party. brushing aside, if we such cases were those
In the recent case of Kilosbayan, Inc., et must, technicalities of assailing the
al. v. Teofisto Guingona, Jr., et al.,9 we procedure. (Avelino vs. constitutionality of (a)
ruled in the same lines and enumerated Cuenco, G.R. No. L- R.A. No. 3836 insofar as
some of the cases where the same 2621)." Insofar as it allows retirement
policy was adopted, viz: taxpayers' suits are gratuity and commutation
concerned, this Court of vacation and sick
. . . A party's standing had declared that it "is leave to Senators and
before this Court is a not devoid of discretion Representatives and to
procedural technicality as to whether or not it elective officials of both
which it may, in the should be entertained," Houses of Congress
exercise of its discretion, (Tan v. Macapagal, 43 (Philippine Constitution
set aside in view of the SCRA 677, 680 [1972]) Association, Inc. v.
importance of the issues or that it "enjoys an open Gimenez, 15 SCRA 479
raised. In the discretion to entertain the [1965]); (b) Executive
landmark Emergency same or not." [Sanidad v. Order No. 284, issued by
Powers Cases, [G.R. No. COMELEC, 73 SCRA President Corazon C.
L-2044 (Araneta v. 333 (1976)]. Aquino on 25 July 1987,
Dinglasan); G.R. No. L- which allowed members
2756 (Araneta xxx xxx xxx of the cabinet, their
undersecretaries, and standi include those transfer and the shift of
assistant secretaries to attacking the validity or feedstock from naphtha
hold other government legality of (a) an order only to naphtha and/or
offices or positions (Civil allowing the importation liquefied petroleum gas
Liberties Union v. of rice in the light of the (Garcia v. Board of
Executive Secretary, 194 prohibition imposed by Investments, 177 SCRA
SCRA 317 [1991]); (c) R.A. No. 3452 (Iloilo 374 [1989]; Garcia v.
the automatic Palay and Corn Planters Board of Investments,
appropriation for debt Association, Inc. v. 191 SCRA 288 [1990]);
service in the General Feliciano, 13 SCRA 377 (e) the decisions, orders,
Appropriations Act [1965]; (b) P.D. Nos. 991 rulings, and resolutions of
(Guingona v. Carague, and 1033 insofar as they the Executive Secretary,
196 SCRA 221 [1991]; proposed amendments to Secretary of Finance,
(d) R.A. No. 7056 on the the Constitution and P.D. Commissioner of Internal
holding of No. 1031 insofar as it Revenue, Commissioner
desynchronized elections directed the COMELEC of Customs, and the
(Osmeña v. Commission to supervise, control, Fiscal Incentives Review
on Elections, 199 SCRA hold, and conduct the Board exempting the
750 [1991]); (e) P.D. No. referendum-plebiscite on National Power
1869 (the charter of the 16 October 1976 Corporation from indirect
Philippine Amusement (Sanidad v. Commission tax and duties (Maceda
and Gaming Corporation) on Elections, supra); (c) v. Macaraig, 197 SCRA
on the ground that it is the bidding for the sale of 771 [1991]); (f) the orders
contrary to morals, public the 3,179 square meters of the Energy Regulatory
policy, and order (Basco of land at Roppongi, Board of 5 and 6
v. Philippine Amusement Minato-ku, Tokyo, Japan December 1990 on the
and Gaming Corp., 197 (Laurel v. Garcia, 187 ground that the hearings
SCRA 52 [1991]); and (f) SCRA 797 [1990]); (d) conducted on the second
R.A. No. 6975, the approval without provisional increase in oil
establishing the hearing by the Board of prices did not allow the
Philippine National Investments of the petitioner substantial
Police. (Carpio v. amended application of cross-examination;
Executive Secretary, 206 the Bataan (Maceda v. Energy
SCRA 290 [1992]). Petrochemical Regulatory Board, 199
Corporation to transfer SCRA 454 [1991]); (g)
Other cases where we the site of its plant from Executive Order No. 478
have followed a liberal Bataan to Batangas and which levied a special
policy regarding locus the validity of such duty of P0.95 per liter of
imported oil products COMELEC subject to the limitations
(Garcia v. Executive (Supra) where, although and exceptions
Secretary, 211 SCRA we declared that De Guia mentioned and saving
219 [1992]); (h) "does not appear to provisions to the
resolutions of the have locus standi, a contrary:
Commission on Elections standing in law, a
concerning the personal or substantial xxx xxx xxx
apportionment, by interest," we brushed
district, of the number of aside the procedural (c) To fix and determine
elective members of infirmity "considering the individual or joint rates,
Sanggunians (De Guia importance of the issue tolls, charges,
vs. Commission on involved, concerning as it classifications, or
Elections, 208 SCRA 420 does the political schedules thereof, as
[1992]); and (i) exercise of qualified well as commutation,
memorandum orders voters affected by the mileage kilometrage, and
issued by a Mayor apportionment, and other special rates which
affecting the Chief of petitioner alleging abuse shall be imposed,
Police of Pasay City of discretion and violation observed, and followed
(Pasay Law and of the Constitution by thereafter by any public
Conscience Union, Inc. v. respondent." service: Provided, That
Cuneta, 101 SCRA 662 the Commission may, in
[1980]). Now on the merits of the its discretion, approve
case. rates proposed by public
In the 1975 case services provisionally and
of Aquino v. Commission On the fare range without necessity of any
on Elections (62 SCRA scheme. hearing; but it shall call a
275 [1975]), this Court, hearing thereon within
despite its unequivocal Section 16(c) of the Public Service Act, thirty days thereafter,
ruling that the petitioners as amended, reads: upon publication and
therein had no notice to the concerns
personality to file the operating in the territory
Sec. 16. Proceedings of
petition, resolved affected: Provided,
the Commission, upon
nevertheless to pass further, That in case the
notice and hearing. —
upon the issues raised public service equipment
The Commission shall
because of the far- of an operator is used
have power, upon proper
reaching implications of principally or secondarily
notice and hearing in
the petition. We did no for the promotion of a
accordance with the rules
less in De Guia v. private business, the net
and provisions of this Act,
profits of said private the task of determining sensitive and directly.11 The policy of allowing the
business shall be delicate matters as provincial bus operators to change and
considered in relation route-fixing and rate-making for the increase their fares at will would result
with the public service of transport sector, the responsible not only to a chaotic situation but to an
such operator for the regulatory body is entrusted with the anarchic state of affairs. This would
purpose of fixing the power of subordinate legislation. With leave the riding public at the mercy of
rates. (Emphasis ours). this authority, an administrative body and transport operators who may increase
in this case, the LTFRB, may implement fares every hour, every day, every month
xxx xxx xxx broad policies laid down in a statute by or every year, whenever it pleases them
"filling in" the details which the or whenever they deem it "necessary" to
Under the foregoing provision, Legislature may neither have time or do so. In Panay Autobus Co. v.
the Legislature delegated to the competence to provide. However, Philippine Railway Co.,12 where
defunct Public Service nowhere under the aforesaid provisions respondent Philippine Railway Co. was
Commission the power of fixing of law are the regulatory bodies, the PSC granted by the Public Service
the rates of public services. and LTFRB alike, authorized to delegate Commission the authority to change its
Respondent LTFRB, the existing that power to a common carrier, a freight rates at will, this Court
regulatory body today, is likewise transport operator, or other public categorically declared that:
vested with the same under service.
Executive Order No. 202 dated In our opinion, the Public
June 19, 1987. Section 5(c) of In the case at bench, the authority given Service Commission was
the said executive order by the LTFRB to the provincial bus not authorized by law to
authorizes LTFRB "to determine, operators to set a fare range over and delegate to the Philippine
prescribe, approve and above the authorized existing fare, is Railway Co. the power of
periodically review and adjust, illegal and invalid as it is tantamount to altering its freight rates
reasonable fares, rates and other an undue delegation of legislative whenever it should find it
related charges, relative to the authority. Potestas delegata non delegari necessary to do so in
operation of public land potest. What has been delegated cannot order to meet the
transportation services provided be delegated. This doctrine is based on competition of road
by motorized vehicles." the ethical principle that such a trucks and autobuses, or
delegated power constitutes not only a to change its freight rates
Such delegation of legislative power to right but a duty to be performed by the at will, or to regard its
an administrative agency is permitted in delegate through the instrumentality of present rates as
order to adapt to the increasing his own judgment and not through the maximum rates, and to
complexity of modern life. As subjects for intervening mind of another.10 A further fix lower rates whenever
governmental regulation multiply, so delegation of such power would indeed in the opinion of the
does the difficulty of administering the constitute a negation of the duty in Philippine Railway Co. it
laws. Hence, specialization even in violation of the trust reposed in the would be to its advantage
legislation has become necessary. Given delegate mandated to discharge it to do so.
The mere recital of the Commission itself cannot defeat the purposes of
language of the authorize a public service the public service
application of the to enforce new rates law.13(Emphasis ours).
Philippine Railway Co. is without the prior approval
enough to show that it is of said rates by the One veritable consequence of the
untenable. The commission. The deregulation of transport fares is
Legislature has commission must a compounded fare. If transport
delegated to the Public approve new rates when operators will be authorized to impose
Service Commission the they are submitted to it, if and collect an additional amount
power of fixing the rates the evidence shows them equivalent to 20% over and above the
of public services, but it to be just and authorized fare over a period of time, this
has not authorized the reasonable, otherwise it will unduly prejudice a commuter who will
Public Service must disapprove them. be made to pay a fare that has been
Commission to delegate Clearly, the commission computed in a manner similar to those of
that power to a common cannot determine in compounded bank interest rates.
carrier or other public advance whether or not
service. The rates of the new rates of the Picture this situation. On December 14,
public services like the Philippine Railway Co. 1990, the LTFRB authorized provincial
Philippine Railway Co. will be just and bus operators to collect a thirty-seven
have been approved or reasonable, because it (P0.37) centavo per kilometer fare for
fixed by the Public does not know what ordinary buses. At the same time, they
Service Commission, and those rates will be. were allowed to impose and collect a
any change in such rates fare range of plus or minus 15% over the
must be authorized or In the present case the authorized rate. Thus P0.37 centavo per
approved by the Public Philippine Railway Co. in kilometer authorized fare plus P0.05
Service Commission after effect asked for centavos (which is 15% of P0.37
they have been shown to permission to change its centavos) is equivalent to P0.42
be just and reasonable. freight rates at will. It may centavos, the allowed rate in 1990.
The public service may, change them every day Supposing the LTFRB grants another
of course, propose new or every hour, whenever five (P0.05) centavo increase per
rates, as the Philippine it deems it necessary to kilometer in 1994, then, the base or
Railway Co. did in case do so in order to meet reference for computation would have to
No. 31827, but it cannot competition or whenever be P0.47 centavos (which is P0.42 +
lawfully make said new in its opinion it would be P0.05 centavos). If bus operators will
rates effective without the to its advantage. Such a exercise their authority to impose an
approval of the Public procedure would create a additional 20% over and above the
Service Commission, and most unsatisfactory state authorized fare, then the fare to be
the Public Service of affairs and largely collected shall amount to P0.56 (that is,
P0.47 authorized LTFRB rate plus 20% in a situation where he will continue to is certainly inimical to our fundamental
of P0.47 which is P0.29). In effect, operate at a loss. Hence, the rate should law and to public interest.
commuters will be continuously enable public utilities to generate
subjected, not only to a double fare revenues sufficient to cover operational On the presumption of public
adjustment but to a compounding fare as costs and provide reasonable return on need.
well. On their part, transport operators the investments. On the other hand, a
shall enjoy a bigger chunk of the pie. rate which is too high becomes A certificate of public convenience (CPC)
Aside from fare increase applied for, they discriminatory. It is contrary to public is an authorization granted by the LTFRB
can still collect an additional amount by interest. A rate, therefore, must be for the operation of land transportation
virtue of the authorized fare range. reasonable and fair and must services for public use as required by
Mathematically, the situation translates be affordable to the end user who will law. Pursuant to Section 16(a) of the
into the following: utilize the services. Public Service Act, as amended, the
following requirements must be met
Year** LTFRB authorized Given the complexity of the nature of the before a CPC may be granted, to wit: (i)
Fare Range Fare to be function of rate-fixing and its far-reaching the applicant must be a citizen of the
rate*** collected per effects on millions of commuters, Philippines, or a corporation or co-
kilometer government must not relinquish this partnership, association or joint-stock
important function in favor of those who company constituted and organized
1990 P0.37 15% (P0.05) would benefit and profit from the under the laws of the Philippines, at least
P0.42 industry. Neither should the requisite 60 per centum of its stock or paid-up
1994 P0.42 + 0.05 = 0.47 notice and hearing be done away with. capital must belong entirely to citizens of
20% (P0.09) P0.56 The people, represented by reputable the Philippines; (ii) the applicant must be
1998 P0.56 + 0.05 = 0.61 oppositors, deserve to be given full financially capable of undertaking the
20% (P0.12) P0.73 opportunity to be heard in their proposed service and meeting the
2002 P0.73 + 0.05 = 0.78 opposition to any fare increase. responsibilities incident to its operation;
20% (P0.16) P0.94 and (iii) the applicant must prove that the
The present administrative operation of the public service proposed
Moreover, rate making or rate fixing is procedure, 14 to our mind, already mirrors and the authorization to do business will
not an easy task. It is a delicate and an orderly and satisfactory arrangement promote the public interest in a proper
sensitive government function that for all parties involved. To do away with and suitable manner. It is understood
requires dexterity of judgment and sound such a procedure and allow just one that there must be proper notice and
discretion with the settled goal of arriving party, an interested party at that, to hearing before the PSC can exercise its
at a just and reasonable rate acceptable determine what the rate should be, will power to issue a CPC.
to both the public utility and the public. undermine the right of the other parties
Several factors, in fact, have to be taken to due process. The purpose of a While adopting in toto the foregoing
into consideration before a balance could hearing is precisely to determine what a requisites for the issuance of a CPC,
be achieved. A rate should not be just and reasonable rate is.15 Discarding LTFRB Memorandum Circular No. 92-
confiscatory as would place an operator such procedural and constitutional right 009, Part IV, provides for yet
incongruous and contradictory policy one of the basic requirements for the Otherwise stated, the establishment of
guideline on the issuance of a CPC. The grant of a CPC, public convenience and public need in favor of an applicant
guidelines states: necessity exists when the proposed reverses well-settled and institutionalized
facility or service meets a reasonable judicial, quasi-judicial and administrative
The issuance of a want of the public and supply a need procedures. It allows the party who
Certificate of Public which the existing facilities do not initiates the proceedings to prove, by
Convenience is adequately supply. The existence or mere application, his affirmative
determined by public non-existence of public convenience and allegations. Moreover, the offending
need. The presumption of necessity is therefore a question of fact provisions of the LTFRB memorandum
public need for a service that must be established by evidence, circular in question would in effect
shall be deemed in favor real and/or testimonial; empirical data; amend the Rules of Court by adding
of the applicant, while the statistics and such other means another disputable presumption in the
burden of proving that necessary, in a public hearing conducted enumeration of 37 presumptions under
there is no need for the for that purpose. The object and purpose Rule 131, Section 5 of the Rules of
proposed service shall be of such procedure, among other things, Court. Such usurpation of this Court's
the is to look out for, and protect, the authority cannot be countenanced as
oppositor's. (Emphasis interests of both the public and the only this Court is mandated by law to
ours). existing transport operators. promulgate rules concerning pleading,
practice and procedure. 19
The above-quoted provision is entirely Verily, the power of a regulatory body to
incompatible and inconsistent with issue a CPC is founded on the condition Deregulation, while it may be ideal in
Section 16(c)(iii) of the Public Service that after full-dress hearing and certain situations, may not be ideal at all
Act which requires that before a CPC will investigation, it shall find, as a fact, that in our country given the present
be issued, the applicant must prove by the proposed operation is for the circumstances. Advocacy of liberalized
proper notice and hearing that the convenience of the public.17 Basic franchising and regulatory process is
operation of the public service proposed convenience is the primary consideration tantamount to an abdication by the
will promote public interest in a proper for which a CPC is issued, and that fact government of its inherent right to
and suitable manner. On the contrary, alone must be consistently borne in exercise police power, that is, the right of
the policy guideline states that the mind. Also, existing operators in subject government to regulate public utilities for
presumption of public need for a public routes must be given an opportunity to protection of the public and the utilities
service shall be deemed in favor of the offer proof and oppose the application. themselves.
applicant. In case of conflict between a Therefore, an applicant must, at all
statute and an administrative order, the times, be required to prove his capacity While we recognize the authority of the
former must prevail. and capability to furnish the service DOTC and the LTFRB to issue
which he has undertaken to administrative orders to regulate the
By its terms, public convenience or render. 18 And all this will be possible only transport sector, we find that they
necessity generally means something if a public hearing were conducted for committed grave abuse of discretion in
fitting or suited to the public need.16 As that purpose. issuing DOTC Department Order
No. 92-587 defining the policy framework a certificate of public convenience and
on the regulation of transport services placing the burden of proving that there
and LTFRB Memorandum Circular No. is no need for the proposed service to
92-009 promulgating the implementing the oppositor.
guidelines on DOTC Department Order
No. 92-587, the said administrative The Temporary Restraining Order issued
issuances being amendatory and on June 20, 1994 is hereby MADE
violative of the Public Service Act and PERMANENT insofar as it enjoined the
the Rules of Court. Consequently, we bus fare rate increase granted under the
rule that the twenty (20%) per provisions of the aforementioned
centum fare increase imposed by administrative circulars, memoranda
respondent PBOAP on March 16, 1994 and/or orders declared invalid.
without the benefit of a petition and a
public hearing is null and void and of no No pronouncement as to costs.
force and effect. No grave abuse of
discretion however was committed in the
SO ORDERED.
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

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