Republic vs.
Manila Electric Same; Same; Same; The power to fix rates is a legislative function;
Company
G.R. No. 141314. November 15, 2002. *
REPUBLIC OF THE PHILIPPINES, REPRESENTED BY ENERGY
REGULATORY BOARD, petitioner, vs. MANILA ELECTRIC
COMPANY, respondent.
SARMIENTO, SENATOR AQUILINO PIMENTEL, JR. and
COMMISSIONER BARTOLOME FERNANDEZ, JR., Board of
Consultants, and Lawyer GENARO LUALHATI,
petitioners, vs. MANILA ELECTRIC COMPANY (MERALCO),
respondent.
Constitutional Law; Taxation; Public Utilities; When private property
is used for a public purpose and is affected with public interest, it ceases to
be juris privati only and becomes subject to regulation.—The regulation of
rates to be charged by public utilities is founded upon the police powers of
the State and statutes prescribing rules for the control and regulation of
public utilities are a valid exercise thereof. When private property is used for
a public purpose and is affected with public interest, it ceases to be juris
privati only and becomes subject to regulation. The regulation is to promote
the common good. Submission to regulation may be withdrawn by the owner
by discontinuing use; but as long as use of the property is continued, the
same is subject to public regulation.
Same; Same; Same; The rates prescribed by the State must be one that
yields a fair return on the public utility upon the value of the property
performing the service and one that is reasonable to the public for the
services rendered.—In regulating rates charged by public utilities, the State
protects the public against arbitrary and excessive rates while maintaining the
efficiency and quality of services rendered. However, the power to regulate
rates does not give the State the right to prescribe rates which are so low as to
deprive the public utility of a reasonable return on investment. Thus, the rates
prescribed by the State must be one that yields a fair return on the public
utility upon the value of the property performing the service and one that is
reasonable to the public for the services rendered. The fixing of just and
reasonable rates involves a balancing of the investor and the consumer
interests.
Determination of whether the rates so fixed are reasonable and just is a
purely judicial question and is subject to the review of the courts.—While the
power to fix rates is a legislative function, whether exercised by the
legislature itself or delegated through an administrative agency, a
determination of whether the rates so fixed are reasonable and just is a purely
judicial question and is subject to the review of the courts.
Same; Same; Same; What is a just and reasonable rate is a question of
fact calling for the exercise of discretion, good sense, and a fair, enlightened
and independent judgment.—In the fixing of rates, the only standard which
the legislature is required to prescribe for the guidance of the administrative
authority is that the rate be reasonable and just. It has been held that even in
the absence of an express requirement as to reasonableness, this standard
may be implied. What is a just and reasonable rate is a question of fact
calling for the exercise of discretion, good sense, and a fair, enlightened and
independent judgment. The requirement of reasonableness comprehends such
rates which must not be so low as to be confiscatory, or too high as to be
oppressive. In determining whether a rate is confiscatory, it is essential also
to consider the given situation, requirements and opportunities of the utility.
Same; Same; Same; Major factors in determining the just and reasonable
rates to be charged by a public utility.—In determining the just and reasonable rates
to be charged by a public utility, three major factors are considered by the regulating
agency: a) rate of return; b) rate base and c) the return itself or the computed revenue
to be earned by the public utility based on the rate of return and rate base. The rate of
return is a judgment percentage which, if multiplied with the rate base, provides a
fair return on the public utility for the use of its property for service to the public.
The rate of return of a public utility is not prescribed by statute but by administrative
and judicial pronouncements. This Court has consistently adopted a 12% rate of
return for public utilities. The rate base, on the other hand, is an evaluation of the
property devoted by the utility to the public service or the value of invested capital or
property which the utility is entitled to a return.
Same; Same; Same; Other factors to consider for purposes of rate
regulation.—Aside from the financial condition of the public utility, there are
other critical factors to consider for purposes of rate regulation. Among
others, they are: particular reasons involved for the request of the rate
increase, the quality of services rendered by the public utility, the existence
of competition, the element of risk or hazard involved in the investment, the
capacity of consumers, etc. Rate regulation is the art of reaching a result that
is good for the public utility and is best for the public.
1
 Same; Same; Same; Factual findings of administrative bodies on
technical matters within their area of expertise should be accorded not only
respect but even finality if they are supported by substantial evidence even if
not overwhelming or preponderant.—Settled jurisprudence holds that factual
findings of administrative bodies on technical matters within their area of
expertise should be accorded not only respect but even finality if they are
supported by substantial evidence even if not overwhelming or preponderant.
In one case, we cautioned that courts should “refrain from substituting their
discretion on the weight of the evidence for the discretion of the Public
Service Commission on questions of fact and will only reverse or modify
such orders of the Public Service Commission when it really appears that the
evidence is insufficient to support their conclusions.”
Same; Same; Same; The function of the court, in exercising its power
of judicial review, is to determine whether under the facts and
circumstances, the final order entered by the administrative agency is
unlawful or unreasonable.—In the cases at bar, findings and conclusions of
the ERB on the rate that can be charged by MERALCO to the public should
be respected. The function of the court, in exercising its power of judicial
review, is to determine whether under the facts and circumstances, the final
order entered by the administrative agency is unlawful or unreasonable.
Thus, to the extent that the administrative agency has not been arbitrary or
capricious in the exercise of its power, the time-honored principle is that
courts should not interfere. The principle of separation of powers dictates that
courts should hesitate to review the acts of administrative officers except in
clear cases of grave abuse of discretion.
Same; Same; Same; ERB correctly ruled that income tax should not be
included in the computation of operating expenses of a public utility.—The
ERB correctly ruled that income tax should not be included in the
computation of operating expenses of a public utility. Income tax paid by a
public utility is inconsistent with the nature of operating expenses. In general,
operating expenses are those which are reasonably incurred in connection
with business operations to yield revenue or income. They are items of
expenses which contribute or are attributable to the production of income or
revenue. As correctly put by the ERB, operating expenses “should be a
requisite of or necessary in the operation of a utility, recurring, and that it
redounds to the service or benefit of customers.”
Same; Same; Same; By its nature, income tax payments of a public
utility are not expenses which contribute to or are incurred in connection
with the production of profit of a public utility.—Income tax, it should be
stressed, is imposed on an individual or entity as a form of excise tax or a tax
on the privilege of earning income. In exchange for the protection extended
by the State to the taxpayer, the government collects taxes as a source of
revenue to finance its activities. Clearly, by its nature, income tax payments
of a public utility are not expenses which contribute to or are incurred in
connection with the production of profit of a public utility. Income tax should
be borne by the taxpayer alone as they are payments made in exchange for
benefits received by the taxpayer from the State.
PETITION for review on certiorari of a decision of the Court of
Appeals.
The facts are stated in the opinion of the Court.
     The Solicitor General for the Republic.
     Ceferino Padua Law Office for Lawyers Against Monopoly and
Poverty (LAMP).
     Quiason, Makalintal, Barot, Torres & Ibarra for MERALCO.
PUNO, J.:
In third world countries like the Philippines, equal justice will have a
synthetic ring unless the economic rights of the people, especially the
poor, are protected with the same resoluteness as their right to liberty.
The cases at bar are of utmost significance for they concern the right of
our people to electricity and to be reasonably charged for their
consumption. In configuring the contours of this economic right to a
basic necessity of life, the Court shall define the limits of the power of
respondent MERALCO, a giant public utility and a monopoly, to
charge our people for their electric consumption. The question is:
should public interest prevail over private profits?
The facts are brief and undisputed. On December 23, 1993,
MERALCO filed with the ERB an application for the revision of its
rate schedules. The application reflected an average increase of 21
centavos per kilowatthour (kwh) in its distribution charge. The
application also included a prayer for provisional approval of the
increase pursuant to Section 16(c) of the Public Service Act and
Section 8 of Executive Order No. 172.
2
 On January 28, 1994, the ERB issued an Order granting a
provisional Increase of P0.184 per kwh, subject to the following
condition:
“In the event, however, that the Board finds, after hearing and submission by
the Commission on Audit of an audit report on the books and records of the
applicant that the latter is entitled to a lesser increase in rates, all excess
amounts collected from the applicant’s customers as a result of this Order
shall either be refunded to them or correspondingly credited in their favor for
application to electric bills, covering future consumptions.”
1
In the same Order, the ERB requested the Commission on Audit
(COA) to conduct an “audit and examination of the books and other
records of account of the applicant for such period of time, which in no
case shall be less than 12 consecutive months, as it may deem
appropriate” and to submit a copy thereof to the ERB immediately
upon completion. 2 Petitioners are now before the Court seeking a reversal of the
On February 11, 1997, the COA submitted its Audit Report SAO
No. 95-07 (the “COA Report”) which contained, among others, the
recommendation not to include income taxes paid by MERALCO as
part of its operating expenses for purposes of rate determination and
the use of the net average investment method for the computation of
the proportionate value of the properties used by MERALCO during
the test year for the determination of the rate base. 3
Subsequently, the ERB rendered its decision adopting the above
recommendations and authorized MERALCO to implement a rate
adjustment in the average amount of P0.017 per kwh, effective with
respect to MERALCO’s billing cycles beginning February 1994. The
ERB further ordered that “the provisional relief in the amount of
P0.184 per kilowatthour granted under the Board’s Order dated
January 28, 1994 is hereby superseded and modified and the excess
average amount of P0.167 per kilowatthour starting with
[MERALCO’s] billing cycles beginning February 1994 until its billing
cycles beginning February 1998, be refunded to [MERALCO’s]
customers or correspondingly credited in their favor for future
consumption.” 4 public against arbitrary and excessive rates while maintaining the
The ERB held that income tax should not be treated as operating
expense as this should be “borne by the stockholders who are
recipients of the income or profits realized from the operation of their
business” hence, should not be passed on to the consumers. 5
Further, in applying the net average investment method, the ERB
adopted the recommendation of COA that in computing the rate base,
only the proportionate value of the property should be included,
determined in accordance with the number of months the same was
actually used in service during the test year.6
On appeal, the Court of Appeals set aside the ERB decision insofar
as it directed the reduction of the MERALCO rates by an average of
10.167 per kwh and the refund of such amount to MERALCO’s
customers beginning February 1994 and until its billing cycle
beginning February 1998.  Separate Motions for Reconsideration filed
7
by the petitioners were denied by the Court of Appeals. 8
decision of the Court of Appeals by arguing primarily that the Court of
Appeals erred: a) in ruling that income tax paid by MERALCO should
be treated as part of its operating expenses and thus considered in
determining the amount of increase in rates imposed by MERALCO
and b) in rejecting the net average investment method used by the
COA and the ERB and instead adopted the average investment method
used by MERALCO.
We grant the petition.
The regulation of rates to be charged by public utilities is founded
upon the police powers of the State and statutes prescribing rules for
the control and regulation of public utilities are a valid exercise
thereof. When private property is used for a public purpose and is
affected with public interest, it ceases to be juris privati only and
becomes subject to regulation. The regulation is to promote the
common good. Submission to regulation may be withdrawn by the
owner by discontinuing use; but as long as use of the property is
continued, the same is subject to public regulation. 9
In regulating rates charged by public utilities, the State protects the
efficiency and quality of services rendered. However, the power to
regulate rates does not give the State the right to prescribe rates which
are so low as to deprive the public utility of a reasonable return on
3
investment. Thus, the rates prescribed by the State must be one that
yields a fair return on the public utility upon the value of the property
performing the service and one that is reasonable to the public for the
services rendered.  The fixing of just and reasonable rates involves a
10
balancing of the investor and the consumer interests. 11
In his famous dissenting opinion in the 1923 case of Southwestern
Bell Tel. Co. v. Public Service Commission,  Mr. Justice Brandeis
12
wrote:
“The thing devoted by the investor to the public use is not specific property,
tangible and intangible, but capital embarked in an enterprise. Upon the
capital so invested, the Federal Constitution guarantees to the utility the
opportunity to earn a fair return . . . The Constitution does not guarantee to
the utility the opportunity to earn a return on the value of all items of
property used by the utility, or of any of them.
....
The investor agrees, by embarking capital in a utility, that its charges
to the public shall be reasonable. His company is the substitute for the
State in the performance of the public service, thus becoming a public
servant. The compensation which the Constitution guarantees an
opportunity to earn is the reasonable cost of conducting the business.”
While the power to fix rates is a legislative function, whether
exercised by the legislature itself or delegated through an
administrative agency, a determination of whether the rates so fixed
are reasonable and just is a purely judicial question and is subject to
the review of the courts. 13
_______________
 IV A.F. Agbayani, Commentaries and Jurisprudence on the Commercial Laws of
10
the Philippines 500 (1993).
 Federal Power Commission v. Hope Natural Gas Co., 320 U.S. 591.
11
 262 U.S. 290-91, 43 S.Ct. 544, 547 (1923).
12
 IV A. F. Agbayani, Commentaries and Jurisprudence on the Commercial Laws of
13
the Philippines 500 (1993), citing Ynchausti SS Co. v. Public Utility Commission, 42 Phil.
624 and Manila Electric Co. v. De Vera, et al., 66 Phil. 161.
The ERB was created under Executive Order No. 172 to regulate,
among others, the distribution of energy resources and to fix rates to be
charged by public utilities involved in the distribution of electricity. In
the fixing of rates, the only standard which the legislature is required
to prescribe for the guidance of the administrative authority is that the
rate be reasonable and just. It has been held that even in the absence of
an express requirement as to reasonableness, this standard may be
implied.  What is a just and reasonable rate is a question of fact calling
14
for the exercise of discretion, good sense, and a fair, enlightened and
independent judgment. The requirement of reasonableness
comprehends such rates which must not be so low as to be
confiscatory, or too high as to be oppressive. In determining whether a
rate is confiscatory, it is essential also to consider the given situation,
requirements and opportunities of the utility. 15
Settled jurisprudence holds that factual findings of administrative
bodies on technical matters within their area of expertise should be
accorded not only respect but even finality if they are supported by
substantial evidence even if not overwhelming or preponderant.  In 16
one case,  we cautioned that courts should “refrain from substituting
17
their discretion on the weight of the evidence for the discretion of the
Public Service Commission on questions of fact and will only reverse
or modify such orders of the Public Service Commission when it really
appears that the evidence is insufficient to support their conclusions.” 18
In the cases at bar, findings and conclusions of the ERB on the rate
that can be charged by MERALCO to the public should be
respected.  The function of the court, in exercising its power of judicial
19
review, is to determine whether under the facts and circumstances, the
final order entered by the administrative agency is unlawful or
unreasonable.  Thus, to the extent that the administrative agency has
20
not been arbitrary or capricious in the exercise of its power, the time-
honored principle is that courts should not interfere. The principle of
separation of powers dictates that courts should hesitate to review the
acts of administrative officers except in clear cases of grave abuse of
discretion. 21
In determining the just and reasonable rates to be charged by a
public utility, three major factors are considered by the regulating
agency: a) rate of return; b) rate base and c) the return itself or the
computed revenue to be earned by the public utility based on the rate
of return and rate base.  The rate of return is a judgment percentage
22
which, if multiplied with the rate base, provides a fair return on the
4
public utility for the use of its property for service to the public.  The
23
rate of return of a public utility is not prescribed by statute but by
administrative and judicial pronouncements. This Court has
consistently adopted a 12% rate of return for public utilities.  The rate
24
base, on the other hand, is an evaluation of the property devoted by the
utility to the public service or the value of invested capital or property
which the utility is entitled to a return.
25
In the cases at bar, the resolution of the issues involved hinges on the
determination of the kind and the amount of operating expenses that
should be allowed to a public utility to generate a fair return and the
proper valuation of the rate base or the value of the property entitled to
a return.
I income tax should be Meralco’s alone and should not be shifted to the
Income Tax as Operating Expense
Cannot be Allowed For
Rate-Determination Purposes
In determining whether or not a rate yields a fair return to the utility,
the operating expenses of the utility must be considered. The return
allowed to a public utility in accordance with the prescribed rate must
be sufficient to provide for the payment of such reasonable operating
expenses incurred by the public utility in the provision of its services
to the public. Thus, the public utility is allowed a return on capital over
and above operating expenses. However, only such expenses and in
such amounts as are reasonable for the efficient operation of the utility
should be allowed for determination of the rates to be charged by a
public utility.
The ERB correctly ruled that income tax should not be included in
the computation of operating expenses of a public utility. Income tax
paid by a public utility is inconsistent with the nature of operating
expenses. In general, operating expenses are those which are
reasonably incurred in connection with business operations to yield
revenue or income. They are items of expenses which contribute or are
attributable to the production of income or revenue. As correctly put
by the ERB, operating expenses “should be a requisite of or necessary
in the operation of a utility, recurring, and that it redounds to the
service or benefit of customers.” 26
Income tax, it should be stressed, is imposed on an individual or
entity as a form of excise tax or a tax on the privilege of earning
income.  In exchange for the protection extended by the State to the
27
taxpayer, the government collects taxes as a source of revenue to
finance its activities. Clearly, by its nature, income tax payments of a
public utility are not expenses which contribute to or are incurred in
connection with the production of profit of a public utility. Income tax
should be borne by the taxpayer alone as they are payments made in
exchange for benefits received by the taxpayer from the State. No
benefit is derived by the customers of a public utility for the taxes paid
by such entity and no direct contribution is made by the payment of
income tax to the operation of a public utility for purposes of
generating revenue or profit. Accordingly, the burden of paying
consumers by including the same in the computation of its operating
expenses.
The principle behind the inclusion of operating expenses in the
determination of a just and reasonable rate is to allow the public utility
to recoup the reasonable amount of expenses it has incurred in
connection with the services it provides. It does not give the public
utility the license to indiscriminately charge any and all types of
expenses incurred without regard to the nature thereof, i.e., whether or
not the expense is attributable to the production of services by the
public utility. To charge consumers for expenses incurred by a public
utility which are not related to the service or benefit derived by the
customers from the public utility is unjustified and inequitable.
While the public utility is entitled to a reasonable return on the fair
value of the property being used for the service of the public, no less
than the Federal Supreme Court of the United States emphasized:
“[t]he public cannot properly be subjected to unreasonable rates in
order simply that stockholders may earn dividends... If a corporation
cannot maintain such a [facility] and earn dividends for stockholders, it
is a misfortune for it and them which the Constitution does not require
to be remedied by imposing unjust burdens on the public. 28
We are not impressed by the reliance by MERALCO on some
American case law allowing the treatment of income tax paid by a
public utility as operating expense for rate-making purposes. Suffice to
5
state that with regard to rate determination, the government is not
hidebound to apply any particular method or formula.  The question of
29
what constitutes a reasonable return for the public utility is necessarily
determined and controlled by its peculiar environmental milieu. Aside
from the financial condition of the public utility, there are other critical
factors to consider for purposes of rate regulation. Among others, they
are: particular reasons involved for the request of the rate increase, the
quality of services rendered by the public utility, the existence of
competition, the element of risk or hazard involved in the investment,
the capacity of consumers, etc.  Rate regulation is the art of reaching a
30
result that is good for the public utility and is best for the public.
For these reasons, the Court cannot give in to the importunings of
MERALCO that we blindly apply the rulings of American courts on
the treatment of income tax as operating expenses in rate regulation
cases. An approach allowing the indiscriminate inclusion of income
tax payments as operating expenses may create an undesirable
precedent and serve as a blanket authority for public utilities to charge
their income tax payments to operating expenses and unjustly shift the
tax burden to the customer. To be sure, public utility taxation in the
United States is going through the eye of criticism. Some
commentators are of the view that by allowing the public utility to
collect its income tax payment from its customers, a form of “sales
tax” is, in effect, imposed on the public for consumption of public
utility services. By charging their income tax payments to their
customers, public utilities virtually become “tax collectors” rather than
taxpayers.  In the cases at bar, MERALCO has not justified why its
31
income tax should be treated as an operating expense to enable it to
derive a fair return for its services.
It is also noteworthy that under American laws, public utilities are
taxed differently from other types of corporations and thus carry a
heavier tax burden. Moreover, different types of taxes, charges, tolls or
fees are assessed on a public utility depending on the state or locality
where it operates. At a federal level, public utilities are subject to
corporate income taxes and Social Security taxes—in the same manner
as other business corporations. At the state and local levels, public
utilities are subject to a wide variety of taxes, not all of which are
imposed on each state. Thus, it is not unusual to find different taxes or
combinations of taxes applicable to respective utility industries within
a particular state.  A significant aspect of state and local taxation of
32
public utilities in the United States is that they have been singled out
for special taxation, i.e., they are required to pay one or more taxes that
are not levied upon other industries. In contrast, in this jurisdiction,
public utilities are subject to the same tax treatment as any other
corporation and local taxes paid by it to various local government units
are substantially the same. The reason for this is that the power to tax
resides in our legislature which may prescribe the limits of both
national and local taxation, unlike in the federal system of the United
States where state legislature may prescribe taxes to be levied in their
respective jurisdictions.
MERALCO likewise cites decisions of the ERB  allowing the
33
application of a tax recovery clause for the imposition of an additional
charge on consumers for taxes paid by the public utility. A close look
at these decisions will show they are inappropos. In the said cases, the
ERB approved the adoption of a formula which will allow the public
utility to recover from its customers taxes already paid by it. However,
in the cases at bar, the income tax component added to the operating
expenses of a public utility is based on an estimate or approximate
figure of income tax to be paid by the public utility. It is this estimated
amount of income tax to be paid by MERALCO which is included in
the amount of operating expenses and used as basis in determining the
reasonable rate to be charged to the customers. Accordingly, the
varying factual circumstances in the said cases prohibit a square
application of the rule under the previous ERB decisions.
II
Use of “Net Average Investment
Method” is Not Unreasonable
In the determination of the rate base, property used in the operation of
the public utility must be subject to appraisal and evaluation to
determine the fair value thereof entitled to a fair return. With respect to
those properties which have not been used by the public utility for the
entire duration of the test year, i.e., the year subject to audit
examination for rate-making purposes, a valuation method must be
adopted to determine the proportionate value of the property.
6
Petitioners maintain that the net average investment method (also
known as “actual number of months use method”) recommended by
COA and adopted by the ERB should be used, while MERALCO
argues that the average investment method (also known as the
“trending method”) to determine the proportionate value of properties
should be applied.
Under the “net average investment method,” properties and
equipment used in the operation of a public utility are entitled to a
return only on the actual number of months they are in service during
the period.  In contrast, the “average investment method” computes the
34
proportionate value of the property by adding the value of the property
at the beginning and at the end of the test year with the resulting sum
divided by two. 35
The ERB did not abuse its discretion when it applied the net
average investment method. The reasonableness of net average
investment method is borne by the records of the case. In its report, the
COA explained that the computation of the proportionate value of the
property and equipment in accordance with the actual number of
months such property or equipment is in service for purposes of
determining the rate base is favored, as against the trending method
employed by MERALCO, “to reflect the real status of the
property.”  By using the net average investment method, the ERB and
36
the COA considered for determination of the rate base the value of
properties and equipment used by MERALCO in proportion to the
period that the same were actually used during the period in question.
This treatment is consistent with the settled rule in rate regulation that
the determination of the rate base of a public utility entitled to a return
must be based on properties and equipment actually being used or are
useful to the operations of the public utility.
37
MERALCO does not seriously contest this treatment of actual
usage of property but opposes the method of computation or valuation
thereof adopted by the ERB and the COA on the ground that the net
average investment method “assumes an ideal situation where a utility,
like MERALCO, is able to record in its books within any given month
the value of all the properties actually placed in service during that
month.”  MERALCO contends that immediate recordal in its books of
38
the property or equipment is not possible as MERALCO’s franchise
covers a wide area and that due to the volume of properties and
equipment put into service and the amount of paper work required to
be accomplished for recording in the books of the company, “it takes
three to six months (often longer) before an asset placed in service is
recorded in the books” of MERALCO.  Hence, MERALCO adopted
39
the “average investment method” or the “trending method” which
computes the average value of the property at the beginning and at the
end of the test year to compensate for the irregular recording in its
books.
MERALCO’s stance is belied by the COA Report which states that
the “verification of the records, as confirmed by the Management
Staff, disclosed that properties are recorded in the books as these are
actually placed in service.”  Moreover, while the case was pending
40
trial before the ERB, the ERB conducted an ocular inspection to
examine the assets in service, records and books of accounts of
MERALCO to ascertain the physical existence, ownership, valuation
and usefulness of the assets contained in the COA Report.  Thus, 41
MERALCO’s contention that the date of recordal in the books does
not reflect the date when the asset is placed in service is baseless.
Further, computing the proportionate value of assets used in service
in accordance with the actual number of months the same is used
during the test year is a more accurate method of determining the value
of the properties of a public utility entitled to a return. If, as
determined by COA, the date of recordal in the books of MERALCO
reflects the actual date the equipment or property is used in service,
there is no reason for the ERB to adopt the trending method applied by
MERALCO if a more precise method is available for determining the
proportionate value of the assets placed in service.
If we were to sustain the application of the “trending method,” the
public utility may easily manipulate the valuation of its property
entitled to a return (rate base) by simply including a highly capitalized
asset in the computation of the rate base even if the same was used for
a limited period of time during the test year. With the inexactness of
the trending method and the possibility that the valuation of certain
properties may be subject to the control of and abuse by the public
utility, the Court finds no reasonable basis to overturn the
recommendation of COA and the decision of the ERB.
7
 MERALCO further insists that the Court should sustain the
“trending method” in view of previous decisions by the Public Service
Commission and of this Court which “upheld” the use of this method.
By refusing to adopt the trending method, MERALCO argues that the
ERB violated the rule on stare decisis.
Again, we are not impressed. It is a settled rule that the goal of rate-
making is to arrive at a just and reasonable rate for both the public
utility and the public which avails of the former’s products and
services.  However, what is a just and reasonable rate cannot be fixed
42
by any immutable method or formula. Hence, it has been held that no
public utility has a vested right to any particular method of
valuation.  Accordingly, with respect to a determination of the proper
43
method to be used in the valuation of property and equipment used by
a public utility for rate-making purposes, the administrative agency is
not bound to apply any one particular formula or method simply
because the same method has been previously used and applied. In
fact, nowhere in the previous decisions cited by MERALCO which
applied the trending method did the Court rule that the same should be
the only method to be applied in all instances.
At any rate, MERALCO has not adequately shown that the rates
prescribed by the ERB are unjust or confiscatory as to deprive its
stockholders a reasonable return on investment. In the early case
of Ynchausti S.S. Co. v. Public Utility Commissioner, this Court held:
“[t]here is a legal presumption that the rates fixed by an administrative
agency are reasonable, and it must be conceded that the fixing of rates
by the Government, through its authorized agents, involves the
exercise of reasonable discretion and, unless there is an abuse of that
discretion, the courts will not interfere.”  Thus, the burden is upon the
44
oppositor, MERALCO, to prove that the rates fixed by the ERB are
unreasonable or otherwise confiscatory as to merit the reversal of the
ERB. In the instant cases, MERALCO was unable to discharge this
burden.
WHEREFORE, in view of the foregoing, the instant petitions are
GRANTED and the decision of the Court of Appeals in C.A. G.R. SP
No. 46888 is REVERSED. Respondent MERALCO is authorized to
adopt a rate adjustment in the amount of P0.017 per kilowatthour,
effective with respect to MERALCO’s billing cycles beginning
February 1994. Further, in accordance with the decision of the ERB
dated February 16, 1998, the excess average amount of P0.167 per
kilowatthour starting with the applicant’s billing cycles beginning
February 1998 is ordered to be refunded to MERALCO’s customers or
correspondingly credited in their favor for future consumption.
SO ORDERED.
     Panganiban, Sandoval-Gutierrez, Corona and Carpio-
Morales, JJ., concur.
Petition granted, assailed decision reversed.
Note.—The proper basis for the computation of the supervision and
regulation fee under Section 40 (e) of the Public Service Act as
amended is the capital stock subscribed or paid and not alternatively,
the property and equipment. (National Telecommunications
Commission vs. Court of Appeals, 311 SCRA 508 [1999])
G.R. No. 83551. July 11, 1989. *
RODOLFO B. ALBANO, petitioner, vs. HON. RAINERIO O.
REYES, PHILIPPINE PORTS AUTHORITY, INTERNATIONAL
CONTAINER TERMINAL SERVICES, INC., E. RA-ZON, INC.,
ANSCOR CONTAINER CORPORATION, and SEALAND
SERVICES. LTD., respondents.
Public Service Act; Public Utilities; Franchise; A legislative franchise
is not necessary for the operation of the Manila International Container Port
(MICP); Reasons; Case at bar.—A review of the applicable provisions of
law indicates that a franchise specially granted by Congress is not necessary
for the operation of the Manila International Container Port (MICP) by
private entity, a contract entered into by the PPA and such entity constituting
substantial compliance with the law.
Same; Same; Same; Under E.O. No. 30 and P.D. No. 857, the PPA
may contract with the International Container Terminal Services Inc. for the
management, operation and development of the MICP.—Thus, while the
PPA has been tasked, under E.O. No. 30, with the management and operation
of the Manila International Port Complex and to undertake the providing of
cargo handling and port related services thereat, the law provides that such
shall be “in accordance with P.D. 857 and other applicable laws and
regulations.” On the other hand, P.D. No. 857 expressly empowers the PPA
8
to provide services within Port Districts “whether on its own, by contract, or
otherwise” [Sec. 6(a) (v)]. Therefore, under the terms of E.O. No. 30 and
P.D. No. 857, the PPA may contract with the International Container
Terminal Services, Inc. (ICTSI) for the management, operation and
development of the MICP.
Same; Same; Same; The law granted certain administrative agencies
the power to grant licenses for the operation of public utilities; Theory that
MICP is a “wharf” or a “dock”, not necessarily calls for a franchise from
Legislative Branch.—Even if the MICP be considered a public utility, or a
public service on the theory that it is a “wharf” or a “dock” as contemplated
under the Public Service Act, its operation would not necessarily call for a
franchise from the Legislative Branch.
Franchises issued by Congress are not required before each and every
public utility may operate. Thus, the law has granted certain administrative
agencies the power to grant licenses for or to authorize the operation of
certain public utilities. (See E.O. Nos. 172 and 202)
Same; Same; Same; The lawmaker has empowered the PPA to
undertake by itself the operation of MICP or to authorize its operation by
another by contract or other means.—As stated earlier, E.O. No. 30 has
tasked the PPA with the operation and management of the MICP, in
accordance with P.D. 857 and other applicable laws and regulations.
However, P.D. 857 itself authorizes the PPA to perform the service by itself,
by contracting it out, or through other means. Reading E.O. No. 30 and P.D.
No. 857 together, the inescapable conclusion is that the lawmaker has
empowered the PPA to undertake by itself the operation and management of
the MICP or to authorize its operation and management by another by
contract or other means, at its option. The latter power having been delegated
to the PPA, a franchise from Congress to authorize an entity other than the
PPA to operate and manage the MICP becomes unnecessary.
Same; Same; Same; Constitutional Law; he award of the MICP
contract approved by the Chief Executive of the Philippines is
constitutional; Legal presumption of validity and regularity of official
function.—The contract between the PPA and ICTSI, coupled with the
President’s written approval, constitute the necessary authorization for
ICTSI’s operation and management of the MICP. The award of the MICT
contract approved by no less than the President of the Philippines herself
enjoys the legal presumption of validity and regularity of official action. In
the case at bar, there is no evidence which clearly shows the constitutional
infirmity of the questioned act of government.
Same; Same; Same; Same; Petitioner has sufficient standing to
institute an action where public right is sought to be enforced.—That
petitioner herein is suing as a citizen and taxpayer and as a Member of the
House of Representatives, sufficiently clothes him with the standing to
institute the instant suit questioning the validity of the assailed contract.
While the expenditure of public funds may not be involved under the
contract, public interest is definitely involved considering the important role
of the MICP in the economic development of the country and the magnitude
of the financial consideration involved. Consequently, the disclosure
provision in the Constitution would constitute sufficient authority for
upholding petitioner’s standing. [Cf. Tañada v. Tuvera, G.R. No. 63915,
April 24, 1985, 136 SCRA 27, citing Severino v. Governor General, 16 Phil.
366 (1910), where the Court considered the petitioners with sufficient
standing to institute an action where a public right is sought to be enforced.]
Same; Same; Same; Same; Public Bidding; The PPA is the agency in
the best position to evaluate the feasibility of the projections of the
bidders; The Court nor Congress has the technical expertise to look into this
matter.—The determination of whether or not the winning bidder is qualified
to undertake the contracted service should be left to the sound judgment of
the PPA. The PPA, having been tasked with the formulation of a plan for the
development of port facilities and its implementation [Sec. 6(a) (i)], is the
agency in the best position to evaluate the feasibility of the projections of the
bidders and to decide which bid is compatible with the development plan.
Neither the Court, nor Congress, has the time and the technical expertise to
look into this matter.
GUTIERREZ, JR., J., Concurring Opinion:
Public Utilities; Franchise; Public Biddings; The determination of
whether or not the winning bidder is qualified to undertake the contracted
service should be left to PPA.—I concur in the Court’s decision that the
determination of whether or not the winning bidder is qualified to undertake
the contracted service should be left to the sound judgment of the Philippine
Ports Authority (PPA). I agree that the PPA is the agency which can best
evaluate the comparative qualifications of the various bidding contractors
and that in making such evaluation it has the technical expertise which
neither this Court nor Congress possesses.
Same; Same; Same; Same; Pleadings; PPA should show greater
consistency in its submissions to the Supreme Court.—I was surprised during
the oral arguments of the present petition to hear the counsel for PPA submit
9
diametrically different statements regarding the capabilities and worth of E.
Razon, Inc., as an arrastre operator. It now turns out that the Manila
International Container Terminal will depend a great deal on the expertise,
reliability and competence of E. Razon, Inc., for its successful operations.
The time difference between the two petitions is insubstantial. After going
over the pleadings of the present petition, I am now convinced that it is the
submissions of PPA in this case and not its contentions in G.R. No. 75197
which are accurate and meritorious. There is the distinct possibility that we
may because of assertions made therein which are contradictory to the
submissions in the instant petition. No such doubts would exist if the
Government is more consistent in its pleadings on such important factual
matters as those raised in these two petitions.
PETITION to review the decision of the Secretary of Department of
Transportation and Communication.
The facts are stated in the opinion of the Court.
     Vicente Abad Santos for petitioner.
     Bautista, Picazo, Buyco & Tan for private respondents.
PARAS, J.:
This is a Petition for Prohibition with prayer for Preliminary Injunction
or Restraining Order seeking to restrain the respondents Philippine
Ports Authority (PPA) and the Secretary of the Department of
Transportation and Communications Rainerio O. Reyes from awarding
to the International Container Terminal Services, Inc. (ICTSI) the
contract for the development, management and operation of the Manila
International Container Terminal (MICT).
On April 20, 1987, the PPA Board adopted its Resolution No. 850
directing PPA management to prepare the Invitation to Bid and all
relevant bidding documents and technical requirements necessary for
the public bidding of the development, management and operation of
the MICT at the Port of Manila, and authorizing the Board Chairman,
Secretary Rainerio O. Reyes, to oversee the preparation of the
technical and the documentation requirements for the MICT leasing as
well as to implement this project.
Accordingly, respondent Secretary Reyes, by DOTC Special Order
87-346, created a seven (7) man “Special MICT Bidding Committee”
charged with evaluating all bid proposals, recommending to the Board
the best bid, and preparing the corresponding contract between the
PPA and the winning bidder or contractor. The Bidding Committee
consisted of three (3) PPA representatives, two (2) Department of
Transportation and Communications (DOTC) representatives, one (1)
Department of Trade and Industry (DTI) representative and one (1)
private sector representative. The PPA management prepared the terms
of reference, bid documents and draft contract which materials were
approved by the PPA Board.
The PPA published the Invitation to Bid several times in a
newspaper of general circulation which publication included the
reservation by the PPA of “the right to reject any or all bids and to
waive any informality in the bids or to accept such bids which may be
considered most advantageous to the government.”
Seven (7) consortia of companies actually submitted bids, which
bids were opened on July 17, 1987 at the PPA Head Office. After
evaluation of the several bids, the Bidding Committee recommended
the award of the contract to develop, manage and operate the MICT to
respondent International Container Terminal Services, Inc. (ICTSI) as
having offered the best Technical and Financial Proposal.
Accordingly, respondent Secretary declared the ICTSI consortium as
the winning bidder.
Before the corresponding MICT contract could be signed, two
successive cases were filed against the respondents which assailed the
legality or regularity of the MICT bidding. The first was Special Civil
Action 55489 for “Prohibition with Preliminary Injunction” filed with
the RTC of Pasig by Basilio H. Alo, an alleged “concerned taxpayer”,
and, the second was Civil Case 88-43616 for “Prohibition with Prayer
for Temporary Restraining Order (TRO)” filed with the RTC of
Manila by C.F. Sharp Co., Inc., a member of the nine (9) firm con-
sortium—“Manila Container Terminals, Inc.” which had actively
participated in the MICT Bidding.
Restraining Orders were issued in Civil Case 88-43616 but these
were subsequently lifted by this Court in Resolutions dated March 17,
1988 (in G.R. No. 82218 captioned “Hon. Rainerio O. Reyes etc., et al.
10
vs. Hon. Doroteo N. Caneba, etc., et al.) and April 14, 1988 (in G.R. the provision of cargo handling and port related services thereat, in
No. 81947 captioned “Hon. Rainerio O. Reyes etc., et al. vs. Court of accordance with P.D. 857 and other applicable laws and regulations.
Appeals, et al.”) Section 6 of Presidential Decree No. 857 (the Revised Charter of the
On May 18, 1988, the President of the Philippines approved the Philippine Ports Authority) states:
proposed MICT Contract, with directives that “the responsibility for
planning, detailed engineering, construction, expansion, rehabilitation 1. a)The corporate duties of the Authority shall be:
and capital dredging of the port, as well as the determination of how
the revenues of the port system shall be allocated for future port works, x      x      x
shall remain with the PPA; and the contractor shall not collect taxes (ii) To supervise, control, regulate, construct, maintain, operate, and
and duties except that in the case of wharfage or tonnage dues and provide such facilities or services as are necessary in the ports vested in, or
harbor and berthing fees, payment to the Government may be made belonging to the Authority.
through the contractor who shall issue provisional receipts and turn x      x      x
over the payments to the Government which will issue the official (v) To provide services (whether on its own, by contract, or otherwise)
receipts.” (Annex “I”). within the Port Districts and the approaches thereof, including but not limited
The next day, the PPA and the ICTSI perfected the MICT Contract to—
(Annex “3”) incorporating therein by “clarificatory guidelines” the —berthing, towing, mooring,
aforementioned presidential directives. (Annex “4”). moving, slipping, or docking of
Meanwhile, the petitioner, Rodolfo A. Albano filed the present
any vessel;
petition as citizen and taxpayer and as a member of the House of
Representatives, assailing the award of the MICT contract to the ICTSI —loading or discharging any
by the PPA. The petitioner claims that since the MICT is a public vessel;
utility, it needs a legislative franchise before it can legally operate as a —sorting, weighing,
public utility, pursuant to Article 12, Section 11 of the 1987 measuring, storing,
Constitution. warehousing, or otherwise
The petition is devoid of merit. handling goods.
A review of the applicable provisions of law indicates that a x      x      x
franchise specially granted by Congress is not necessary for the
operation of the Manila International Container Port (MICP) by a 1. b)The corporate powers of the Authority shall be as follows:
private entity, a contract entered into by the PPA and such entity
constituting substantial compliance with the law. x      x      x
1. Executive Order No. 30, dated July 16, 1986, provides: (vi) To make or enter into contracts of any kind or nature to enable it to
WHEREFORE, I, CORAZON C. AQUINO, President of the Republic of the discharge its functions under this Decree.
Philippines, by virtue of the powers vested in me by the Constitution and the x      x      x
law, do hereby order the immediate recall of the franchise granted to the [Emphasis supplied.]
Manila International Port Terminals, Inc. (MIPTI) and authorize the Thus, while the PPA has been tasked, under E.O. No. 30, with the
Philippine Ports Authority (PPA) to take over, manage and operate the
management and operation of the Manila International Port Complex
Manila International Port Complex at North Harbor, Manila and undertake
and to undertake the providing of cargo handling and port related
11
services thereat, the law provides that such shall be “in accordance
with P.D. 857 and other applicable laws and regulations.” On the other
hand, P.D. No. 857 expressly empowers the PPA to provide services
within Port Districts “whether on its own, by contract, or otherwise”
[Sec. 6(a) (v)]. Therefore, under the terms of E.O. No. 30 and P.D. No.
857, the PPA may contract with the International Container Terminal
Services, Inc. (ICTSI) for the management, operation and development
of the MICP.
1. 2.Even if the MICP be considered a public utility,  or a
1
_______________
1
 A “public utility” is a business or service engaged in regularly supplying the public
with some commodity or service of public consequence such as electricity, gas, water,
transportation, telephone or telegraph service. Apart from statutes which define the public
utilities public service  on the theory that it is a “wharf” or a “dock”  as
2 3
contemplated under the Public Service Act, its operation would not
necessarily call for a franchise from the Legislative Branch. Franchises
issued by Congress are not required before each and every public
utility may operate. Thus, the law has granted certain administrative
agencies the power to grant licenses for or to authorize the operation of
certain public utilities. (See E.O. Nos. 172 and 202)
That the Constitution provides in Art. XII, Sec. 11 that the issuance of
a franchise, certificate or other form of authorization for the operation
of a public utility shall be subject to amendment, alteration or repeal
by Congress does not neces-
_______________
that are within the purview of such statutes, it would be difficult to construct a
definition of a public utility which would fit every conceivable case. As its name
indicates, however, the term public utility implies a public use and service to the public.
(Am. Jur. 2d V. 64, p. 549).
2
 The Public Service Act (C.A. No. 146, as amended) provides that the term public
service “includes every person that now or hereafter may own, operate, manage, or
control in the Philippines, for hire or compensation, with general or limited clientele,
whether permanent, occasional or accidental, and done for general business purposes, any
common carrier, railroad, street railway, traction railway, sub-way motor vehicle, either
for freight or passenger, or both with or without fixed route and whatever may be its
classification, freight or carrier service of any class, express service, steamboat, or
steamship line, pontines, ferries, and water craft, engaged in the transportation of
passengers and freight or both, shipyard, marine railway, refrigeration plant, canal,
irrigation system, gas, electric light, heat and power, water supply and power, petroleum,
sewerage system, wire or wireless communications system, wire or wireless broadcasting
stations and other similar public services. . .” [Sec. 13 (b).].
3
 Under P.D. 857 the term dock “includes locks, cuts entrances, graving docks,
inclined planes, slipways, quays, and other works and things appertaining to any dock”,
while wharf “means a continuous structure built parallel to along the margin of the sea or
alongside riverbanks, canals, or waterways where vessels may lie alongside to receive or
discharge cargo, embark or disembark passengers, or lie at rest.” [Sec. 3(j) and (o).].
272
272
sarily imply, as petitioner posits, that only Congress has the power to
grant such authorization. Our statute books are replete with laws
granting specified agencies in the Executive Branch the power to issue
such authorization for certain classes of public utilities. 4
As stated earlier, E.O. No. 30 has tasked the PPA with the
operation and management of the MICP, in accordance with P.D. 857
and other applicable laws and regulations. However, P.D. 857 itself
authorizes the PPA to perform the service by itself, by contracting it
out, or through other means. Reading E.O. No. 30 and P.D. No. 857
together, the inescapable conclusion is that the lawmaker has
empowered the PPA to undertake by itself the operation and
management of the MICP or to authorize its operation and
management by another by contract or other means, at its option. The
latter power having been delegated to the PPA, a franchise from
Congress to authorize an entity other than the PPA to operate and
manage the MICP becomes unnecessary.
In the instant case, the PPA, in the exercise of the option granted it
by P.D. No. 857, chose to contract out the operation and management
of the MICP to a private corporation. This is clearly within its power
to do. Thus, PPA’s acts of privatizing the MICT and awarding the
MICT contract to ICTSI are wholly within the jurisdiction of the PPA
under its Charter which
_______________
4
 Examples of such agencies are:
12
 1. 1.The Land Transportation Franchising and Regulatory Board created under
E.O. No. 202, which is empowered to “issue, amend, revise, suspend or cancel
Certificates of Public Convenience or permits authorizing the operation of
public land transportation services provided by motorized vehicles, and to
prescribe the appropriate terms and conditions therefor.” [Sec. 5(b).].
2. 2.The Board of Energy, reconstituted into the Energy Regulatory Board created
under E.O. No. 172, is empowered to license refineries and regulate their
capacities and to issue certificates of public convenience for the operation of
electric power utilities and services, except electric cooperatives [Sec. 9 (d)
and (e), P.D. No. 1206.].
empowers the PPA to “supervise, control, regulate, construct,
maintain, operate and provide such facilities or services as are
necessary in the ports vested in, or belonging to the PPA.” (Section
6(a) ii, P.D. 857)
The contract between the PPA and ICTSI, coupled with the
President’s written approval, constitute the necessary authorization for
ICTSI’s operation and management of the MICP. The award of the
MICT contract approved by no less than the President of the
Philippines herself enjoys the legal presumption of validity and
regularity of official action. In the case at bar, there is no evidence
which clearly shows the constitutional infirmity of the questioned act
of government.
For these reasons the contention that the contract between the PPA
and ICTSI is illegal in the absence of a franchise from Congress
appears bereft of any legal basis.
1. 3.On the peripheral issues raised by the party, the following
observations may be made:
1. A.That petitioner herein is suing as a citizen and taxpayer and
as a Member of the House of Representatives, sufficiently
clothes him with the standing to institute the instant suit
questioning the validity of the assailed contract. While the
expenditure of public funds may not be involved under the
contract, public interest is definitely involved considering the
important role of the MICP in the economic development of
the country and the magnitude of the financial consideration
involved. Consequently, the disclosure provision in the
Constitution  would constitute sufficient authority for
5
upholding petitioner’s standing. [Cf. Tañada v. Tuvera, G.R.
No. 63915, April 24, 1985, 136 SCRA 27, citing Severino v.
Governor General, 16 Phil. 366 (1910), where the Court
considered the petitioners with sufficient standing to institute
an action where a public right is sought to be enforced.]
2. B.That certain committees in the Senate and the House of
Representatives have, in their respective reports, and the latter
_______________
5
 Art. II, Sec. 28. Subject to reasonable conditions prescribed by law, the State adopts
and implements a policy of full disclosure of all its transactions involving public interest.
in a resolution as well, declared their opinion that a franchise from
Congress is necessary for the operation of the MICP by a private
individual or entity, does not necessarily create a conflict between the
Executive and the Legislative Branches needing the intervention of the
Judicial Branch. The court is not faced with a situation where the
Executive Branch has contravened an enactment of Congress. As
discussed earlier, neither is the Court confronted with a case of one
branch usurping a power pertaining to another.
1. C.Petitioner’s contention that what was bid out, i.e., the
development, management and operation of the MICP, was
not what was subsequently contracted, considering the
conditions imposed by the President in her letter of approval,
thus rendering the bids and projections immaterial and the
procedure taken ineffectual, is not supported by the
established facts. The conditions imposed by the President did
not materially alter the substance of the contract, but merely
dealt on the details of its implementation.
2. D.The determination of whether or not the winning bidder is
qualified to undertake the contracted service should be left to
the sound judgment of the PPA. The PPA, having been tasked
13
 with the formulation of a plan for the development of port
facilities and its implementation [Sec. 6(a) (i)], is the agency
in the best position to evaluate the feasibility of the
projections of the bidders and to decide which bid is
compatible with the development plan. Neither the Court, nor
Congress, has the time and the technical expertise to look into
this matter.
Thus, the Court in Manuel v. Villena (G.R. No. L-28218, February 27,
1971, 37 SCRA 745] stated:
[C]ourts, as a rule, refuse to interfere with proceedings undertaken by
administrative bodies or officials in the exercise of administrative functions.
This is so because such bodies are generally better equipped technically to
decide administrative questions and that non-legal factors, such as
government policy on the matter, are usually involved in the decisions. [at p.
750.]
In conclusion, it is evident that petitioner has failed to show a clear
case of grave abuse of discretion amounting to lack or excess of
jurisdiction as to warrant the issuance of the writ of prohibition.
WHEREFORE, the petition is hereby DISMISSED.
SO ORDERED.
     Fernan (C.J.), Narvasa, Melencio-Herrera, Cruz, Gancayco,  competence of E. Razon, Inc., for its successful operations. The time
Bidin,  Cortés, Griño-Aquino, Medialdea and Regalado, JJ., concur.
     Gutierrez, Jr.  J., I concur with a short separate opinion.
     Feliciano, J., In the result.
     Padilla, J., No part in the deliberations.
     Sarmiento, J., No part. One of the respondents was my client.
GUTIERREZ, JR., J., Concurring Opinion
I concur in the Court’s decision that the determination of whether or
not the winning bidder is qualified to undertake the contracted service
should be left to the sound judgment of the Philippine Ports Authority
(PPA). I agree that the PPA is the agency which can best evaluate the
comparative qualifications of the various bidding contractors and that
in making such evaluation it has the technical expertise which neither
this Court nor Congress possesses.
However, I would feel more comfortable in the thought that the
above rulings are not only grounded on firm legal foundations but are
also factually accurate if the PPA shows greater consistency in its
submissions to this Court.
I recall that in E. Razon, Inc. v. Philippine Ports Authority (151
SCRA 233 [1977]), this Court decided the case in favor of the PPA
because, among others, of its submissions that: (1) the petitioner
therein committed violations as to outside stevedoring services,
inadequate equipment, delayed submission of reports, and non-
compliance with certain port regulations; (2) respondent Marina Port
Services and not the petitioner was better qualified to handle arrastre
services; (3) the petitioner being controlled by Alfredo Romualdez
could not enter into a management contract with PPA and any such
contract would be null and void; and (4) even if the petitioner may not
have shared in the illegal intention behind the transfer of majority
shares, it shared in the benefits of the violation of law.
I was surprised during the oral arguments of the present petition to
hear the counsel for PPA submit diametrically different statements
regarding the capabilities and worth of E. Razon, Inc., as an arrastre
operator. It now turns out that the Manila International Container
Terminal will depend a great deal on the expertise, reliability and
difference between the two petitions is insubstantial. After going over
the pleadings of the present petition, I am now convinced that it is the
submissions of PPA in this case and not its contentions in G.R. No.
75197 which are accurate and meritorious. There is the distinct
possibility that we may have been unfair in the earlier petition because
of assertions made therein which are contradictory to the submissions
in the instant petition. No such doubts would exist if the Government
is more consistent in its pleadings on such important factual matters as
those raised in these two petitions.
Petition dismissed.
Notes.—Petitioners and oppositors to PLDT application were
accorded due process by NTC (Phil. Consumers Foundation vs.
NTC, 131 SCRA 200).
The national policy is that if power franchise holder can adequately
supply requirements of industrial consumer at rates than the latter can
14
obtain from NPC direct connection with NPC is not favored. (NPC vs.
Cañares, 140 SCRA 329)

——o0o——

15