83. Kilusang Mayo Uno Labor Center v. Garcia Jr.

GR No. 115381 | Dec. 23, 1994 | Kapunan, J.

Alba | Fixing of Rates, Wages, and Prices

Case Summary: ​Petitioner Kilusang Mayo Uno (KMU) filed a petition for certiorari assailing the
constitutionality of certain memoranda, circulars and orders of DOTC and the LTFRB which, among
others, authorized provincial bus and jeepney operators to increase or decrease the prescribed
transportation fares without having to file a petition for the purpose.

Respondents DOTC and LTFRB questioned the locus standi of the petitioner while asserting their
authority to set a fare range scheme and establish a presumption of public need in applications for
certificates of public convenience.

Doctrine: The purpose of a hearing is to determine what a just and reasonable rate is. Discarding
such procedural and constitutional right is certainly inimical to our fundamental law and to public
interest.

Facts​:
1. Petition assails the constitutionality of certain memoranda, circulars, and orders of the DOTC
and LTFRB which:
a. Authorize provincial bus and jeepney operators to increase or decrease the prescribed
transportation fares without application with the LTFRB and without hearing and
approval (violates Sec. 16c Commonwealth Act 146)
b. Establish a presumption of public need in favor of applicants for certificates of public
convenience (violates Sec. 16c and 20a of CA 146 = fairs should be just and
reasonable)
2. Specifically, these are those which the petitioner seeks to be nullified:
a. DOTC Memorandum Order 90-395 (implementation of a fare range scheme for
provincial bus services in the country)
b. DOTC Dept. Order No. 92-587 (defined policy framework on the regulation of transport
services)
c. DOTC Memorandum (implementing rules of 92-587)
d. LTFRB Memorandum Circular No. 92-009 (guidelines for implementing 92-587)
e. LTFRB Order from March 24, 1994
3. June 26, 1990: DOTC Sec. Orbos issued Memorandum Circular No. 935 to LTFRB Chair
Fernando which ​allowed provincial bus operators to charge rates +/- 15% of the LTFRB
Official Rate​for a period of 1 year.
4. July 24, 1990: LTFRB Chair Fernando submitted a ​memorandum ​stating:
- Implementation of the proposed fare range scheme without complying with the
requirements of the Public Service Act may not be legally feasible.
- 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
- To allow bus operators in the country to charge fares 15% above the present fares in
the wake of the devastation caused by the July 16 earthquake will not be socially
warranted and will be politically unsound
 5. Dec. 5, 1990: Provincial Bus Operators Association of the Philippines (PBOAP) ​filed an
application for a fare rate increase​.
- Increase = P0.085 per km for all types of provincial buses with a fare range of 15% over
and below the proposed basic per km fare rate, and a P0.50 minimum per kilometer fare
for aircon buses.
- They later ​reduced ​the applied proposed fair to P0.065 per km for ordinary buses
- This was ​GRANTED by the LTFRB​on Dec. 14, 1990.
6. March 30, 1992: DOTC Sec. Prado issued ​DO 92-587 which defined the policy framework on
the regulation of transport services. It stated:
- 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 oppositors.
- Passenger fares shall be deregulated​, except for the lowest class of passenger
service 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.
7. Oct. 8, 1992: DOTC Sec. Garcia issued a memorandum to the Acting LTFRB Chairman
suggesting swift action on the adoption of rules and procedures to implement Department
Order No. 92-587.
8. Feb. 17, 1993: LTFRB issued ​Memorandum Circular No. 92-009 promulgating the guidelines
for the implementation of DOTC DO 92-587. It provided the following ​challenged portions​:
a. 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 oppositors.
b. The existing authorized fare range system of +/- 15% for provincial buses and jeepneys
shall be widened to +20%/-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.
9. March 1994: PBOAP availed of the deregulation policy and ​announced a 20% fair increase
without filing a petition for such purpose and without a public hearing. The increase was made
to be effective on the 16th.
10. March 16, 1994: KMU filed a ​petition before the LTFRB​opposing the adjustment of fares
- LTFRB DISMISSED THE PETITION FOR LACK OF MERIT

Issue/s:
1. Whether or not KMU has locus standi ​YES
2. Whether or not DOTC and LTFRB have authority to set a fare change​ YES
3. Whether or not the fare increase is violative of the Public Service Act ​YES
4. Whether or not the establishment of presumption of public needs in favor of an applicant is
violative of the Public Service Act and the Rules of Court​ YES

Holding:
ISSUE 1
1. KMU has locus standi derived from Art. 8, Sec. 1 of the Constitution.
2. KMU members avail of the use of buses everyday. They are part of the commuters who
comprise the riding public.
3. These members suffer and continue to suffer grave and irreparable injury and damage from
the implementation of the various aforementioned memoranda, circulars, and orders.

ISSUE 2
 1. The Public Service Act delegated to the defunct Public Service Commission the power to fix
the rates of public services.
2. LTFRB (existing regulatory board) is vested with the same power under ​EO 202 which
authorizes it to determine, prescribe, approve, review, and adjust fares and rates relative to
public land transportation services provided by motorized vehicles.
3. Such delegation is allowed to adapt with the increasing complexities of modern life.

ISSUE 3
1. However, delegating this power and duty to provincial bus operators is ​NOT PERMITTED​.
- It is tantamount to an undue delegation of legislative authority.
- Under the doctrine of potestas delegata non delegari potest, what has been delegated
cannot be delegated.
- This doctrine is based on the principle that a delegated power constitutes not just a
right, but a duty to be performed by the delegate through his own judgement.
- 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.
2. Given the complexity of the nature of the function of rate-fixing and its far-reaching effects, the
government must not relinquish this important function in favor of those who would benefit and
profit from the industry.
3. The requisite notice and hearing ​SHOULD NOT ​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.
4. The present procedure already mirrors an orderly and satisfactory arrangement for all parties
involved.
- To remove this procedure and allow an interested party to determine the rate
undermines the right of other parties to due process.
5. The purpose of a hearing is to determine what a just and reasonable rate is. Discarding such
procedural and constitutional right is certainly inimical to our fundamental law and to public
interest.
6. The PSA provides in Sec. 16(a): the applicant must prove the operation of the public service
proposed:
- It is understood that ​there must be proper notice and hearing before the (formerly)
PSC (now LTFRC) can issue a certificate of public convenience.

ISSUE 4
1. A certificate of public convenience is an authorization granted by the LTFRB for the operation
of land transportation services for public use as required by law.
2. To be granted one, Sec. 16a of the PSA requires that:
a. 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; (
b. The applicant must be financially capable of undertaking the proposed service and
meeting the responsibilities incident to its operation; and
c. 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.
3. Part IV of Memorandum Circular No. 92-009 provides that 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.
 - This is ​entirely incompatible and inconsistent ​with the PSA.
- The PSA requires that 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.
4. In case of conflict between a statute and an administrative order, ​the former must prevail.
5. The power to issue a CPC is founded on the condition that after hearing and investigation, the
regulatory board shall find, as a fact, that the proposed operation is for the convenience of
the public
- Basic convenience is the ​primary consideration​for issuance of a CPC
- An applicant must, at all times, be required to prove his capacity and capability to
furnish the service which he has undertaken to render.
- This will only be possible if a public hearing were conducted for the purpose
6. The establishment of public need in favor of an applicant reverses well-settled and
institutionalized procedures.
- It allows the party who initiates the proceedings to prove, by mere application, his
affirmative allegations..
7. Moreover the offending provisions of the LTFRB circular would in effect ​amend the Rules of
Court ​adding another disputable presumption. Only the SC may promulgate rules on pleading,
practice and procedure.
8. The LTFRB and DOTC committed grave abuse of discretion in issuing such memoranda and
orders.

Ruling: GRANTED. The administrative issuances and orders are declared unlawful and the
temporary restraining order (given June 20, 1994) is made permanent.