Kuwait Airways, Corp. vs. Philippine Airlines, Inc.

GR 156087 May 8, 2009

FACTS:
Kuwait Airways (Kuwait) and Philippine Airlines (PAL) entered into a Commercial
Agreement. The agreement covered Kuwait Airways flight on the route Kuwait-Bangkok-Manila
and vice versa. It was stipulated that only 3rd and 4th freedom traffic rights will be exercised. No
5th freedom traffic rights will be exercised between Manila on the one hand and Bangkok on the
other.
Both airlines entered into agreement to assist each other to develop traffic on the route
and to reflect the high level of friendly relationships between the two airlines.
Furthermore, the agreement stipulated that Kuwait is obligated to share with PAL the
revenue earned from the uplift of passengers in their designated routes.
 Subsequently, delegations from the Philippines and Kuwait entered into a Confidential
Memorandum of Understanding (CMU). Among the members of the Philippine Panel were the
Civil Aeronautics Board (CAB) and government officials.
“The two delegations agreed that the unilateral operation and the exercise of 3rd and 4th
freedom traffic rights shall not be subject to any royalty payment or commercial agreements, as
from the date of signing of the CMU.”
In May 1995, PAL received a notice of termination of the Commercial Agreement
pursuant to the CMU. However, it was contended that the agreement could only be effectively
terminated in October 1995. PAL insisted that the provisions of the agreement shall continue to
be enforced until such date. in May 1995.
The Five Freedom Traffic Rights
1st Right to fly over a foreign country without landing.

2nd Right to land in a foreign country without embarking or disembarking passengers.

3rd Right to put down passengers, mail, and cargo taken on in the territory of the country
whose nationality the aircraft possesses.

4th Right to take on passengers, mail, and cargo destined for the territory of the country
whose nationality the aircraft possesses.

5th Right to take on passengers, mail, and cargo destined for the territory of another
agreeing nation and to put down the same coming from any such territory.
ISSUE: Whether or not the Civil Aeronautics Board (CAB) can compel PAL to terminate the
Commercial Agreement with Kuwait.

RULING:
No. Considering that it is the Philippine government that has the sole authority to
charter air policy and negotiate with foreign governments with respect to air traffic rights, the
government through the CAB has the indispensable authority to compel local air carriers to
comply with government determined policies, even at the expense of economic rights.
However, this is not a case where the CAB had duly exercised its regulatory authority
over a local airline in order to implement air policy. What happened was an officer of the CAB,
acting in behalf not of the Board but of the Philippine government, had committed to a foreign
nation the immediate abrogation of the Commercial Agreement.
The general rule is the CAB has the power to regulate the airline companies or air
transportation industry, but this case is an exception.
Albano vs. Reyes
175 SCRA 264 | Paras, J.
FACTS
• The Philippine Ports Authority (PPA) board directed the PPA management to prepare for the
public bidding of the development, management and operation of the Manila International
Container Terminal (MICT) at the Port of Manila. A Bidding Committee was formed by the DOTC
for the public bidding. After evaluation of several bids, the Bidding Committee recommended the
award of the contract to respondent International Container Terminal Services, Inc. (ICTSI).
Accordingly, Rainerio Reyes, then DOTC secretary, declared the ICTSI consortium as the winning
bidder.

• On May 18, 1988, the President of the Philippines approved the same with directives that PPA
shall still have the responsibility for planning, detailed engineering, construction, expansion,
rehabilitation and capital dredging of the port, as well as the determination of how the revenues
of the port system shall be allocated for future works; and the contractor shall not collect taxes
and duties except that in the case of wharfage or tonnage dues.
• Petitioner Albano, as taxpayer and Congressman, assailed the legality of the award and claimed
that since the MICT is a public utility, it needs a legislative franchise before it can legally operate
as a public utility.
ISSUE
• Whether a franchise is needed for the operation of the MICT?
RULING
• No. While the PPA has been tasked under E.O. No. 30 with the management and
operation of the MICT and to undertake the provision 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”. P.D. 857 expressly empowers
the PPA to provide services within Port Districts “whether on its own, by contract,
or otherwise”.

• Even if the MICT is considered a public utility, its operation would not necessarily
need a franchise from the legislature because the law has granted certain
administrative agencies the power to grant licenses for or to authorize the
operation of public utilities. Reading E.O. 30 and P.D. 857 together, it is clear 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.
 PLDT v NTC,
G.R. 88404,
October 18, 1990
III. Regulation of Public Utilities
a. Authority to Operate
 FACTS
Petitioner Philippine Long Distance Telephone Company (PLDT) assails,
by way of certiorari and Prohibition under Rule 65, two (2) Orders of
public respondent National Telecommunications Commission (NTC),
namely, the Order of 12 December 1988 granting private respondent
Express Telecommunications Co., Inc. (ETCI) provisional authority to
install, operate and maintain a Cellular Mobile Telephone System in
Metro-Manila (Phase A) in accordance with specified conditions, and the
Order, dated 8 May 1988, denying reconsideration. On 22 June 1958,
Rep. Act No. 2090, was enacted, otherwise known as "An Act Granting
Felix Alberto and Company, Incorporated, a Franchise to Establish Radio
Stations for Domestic and Transoceanic Telecommunications." Felix
Alberto & Co., Inc. (FACI) was the original corporate name, which was
changed to ETCI with the amendment of the Articles of Incorporation in
1964.
On 13 May 1987, alleging urgent public need, ETCI filed an application with public
respondent NTC (docketed as NTC Case No. 87-89) for the issuance of a Certificate of Public
Convenience and Necessity (CPCN) to construct, install, establish, operate and maintain a
Cellular Mobile Telephone System and an Alpha Numeric Paging System in Metro Manila and
in the Southern Luzon regions, with a prayer for provisional authority to operate Phase A of
its proposal within Metro Manila. PLDT filed an Opposition with a Motion to Dismiss, based
primarily on the following grounds: (1) ETCI is not capacitated or qualified under its
legislative franchise to operate a systemwide telephone or network of telephone service
such as the one proposed in its application; (2) ETCI lacks the facilities needed and
indispensable to the successful operation of the proposed cellular mobile telephone system;
(3) PLDT has itself a pending application with NTC, Case No. 86-86, to install and operate a
Cellular Mobile Telephone System for domestic and international service not only in Manila
but also in the provinces and that under the "prior operator" or "protection of investment"
doctrine, PLDT has the priority or preference in the operation of such service; and (4) the
provisional authority, if granted, will result in needless, uneconomical and harmful
duplication, among others. NTC overruled PLDT's Opposition and declared that Rep. Act No.
2090 (1958) should be liberally construed as to include among the services under said
franchise the operation of a cellular mobile telephone service.
On 12 December 1988, NTC issued the first challenged Order. Opining that "public interest,
convenience and necessity further demand a second cellular mobile telephone service
provider and finds PRIMA FACIE evidence showing applicant's legal, financial and technical
capabilities to provide a cellular mobile service using the AMPS system," NTC granted ETCI
provisional authority to install, operate and maintain a cellular mobile telephone system
initially in Metro Manila, Phase A only, subject to the terms and conditions set forth in the
same Order. One of the conditions prescribed (Condition No. 5) was that, within ninety (90)
days from date of the acceptance by ETCI of the terms and conditions of the provisional
authority, ETCI and PLDT "shall enter into an interconnection agreement for the provision of
adequate interconnection facilities between applicant's cellular mobile telephone switch and
the public switched telephone network and shall jointly submit such interconnection
agreement to the Commission for approval.” In a "Motion to Set Aside the Order" granting
provisional authority, PLDT alleged essentially that the interconnection ordered was in
violation of due process and that the grant of provisional authority was jurisdictionally and
procedurally infirm. On 8 May 1989, NTC denied reconsideration and set the date for
continuation of the hearings on the main proceedings. This is the second questioned Order.
 ISSUE/S
1.Whether or not the NTC is correct in granting the
ECTI provisional authority.

2.Whether or not PLDT can justifiably refuse to

interconnect.
 HELD
1. There can be no question that the NTC is the regulatory agency of the national government
with jurisdiction over all telecommunications entities. It is legally clothed with authority and given
ample discretion to grant a provisional permit or authority. In fact, NTC may, on its own initiative,
grant such relief even in the absence of a motion from an applicant.
Sec. 3. Provisional Relief. — Upon the filing of an application, complaint or petition or at any
stage thereafter, the Board may grant on motion of the pleaders or on its own initiative, the relief
prayed for, based on the pleading, together with the affidavits and supporting documents attached
thereto, without prejudice to a final decision after completion of the hearing which shall be called
within thirty (30) days from grant of authority asked for. (Rule 15, Rules of Practice and Procedure
Before the Board of Communications (now NTC).
What the NTC granted was such a provisional authority, with a definite expiry period of eighteen
(18) months unless sooner renewed, and which may be revoked, amended or revised by the NTC.
It is also limited to Metro Manila only. What is more, the main proceedings are clearly to continue
as stated in the NTC Order of 8 May 1989. The provisional authority was issued after due hearing,
reception of evidence and evaluation thereof, with the hearings attended by various oppositors,
including PLDT. It was granted only after a prima facie showing that ETCI has the necessary legal,
financial and technical capabilities and that public interest, convenience and necessity so
demanded.
2. PLDT cannot justifiably refuse to interconnect. Rep. Act No. 6849, or the Municipal Telephone Act of 1989,
approved on 8 February 1990, mandates interconnection providing as it does that "all domestic
telecommunications carriers or utilities ... shall be interconnected to the public switch telephone network."
Such regulation of the use and ownership of telecommunications systems is in the exercise of the plenary police
power of the State for the promotion of the general welfare. The 1987 Constitution recognizes the existence of
that power when it provides.
SEC. 6. The use of property bears a social function, and all economic agents shall contribute to the common
good. Individuals and private groups, including corporations, cooperatives, and similar collective
organizations, shall have the right to own, establish, and operate economic enterprises, subject to the duty of
the State to promote distributive justice and to intervene when the common good so demands (Article XII).
The interconnection which has been required of PLDT is a form of "intervention" with property rights dictated
by "the objective of government to promote the rapid expansion of telecommunications services in all areas of
the Philippines, ... to maximize the use of telecommunications facilities available, ... in recognition of the vital
role of communications in nation building ... and to ensure that all users of the public telecommunications
service have access to all other users of the service wherever they may be within the Philippines at an
acceptable standard of service and at reasonable cost" (DOTC Circular No. 90-248). Undoubtedly, the
encompassing objective is the common good. The NTC, as the regulatory agency of the State, merely exercised
its delegated authority to regulate the use of telecommunications networks when it decreed interconnection.
Ernesto Francisco, Jr. v. Toll Regulatory Board
GR Number 166910
FACTS
• President Marcos issued PD 1112 authorizing the establishment of toll facilities
on public improvements. It acknowledged the huge financial requirements and
the need to tap the resources of the private sector to implement the
government’s infrastructure programs. PD 1112 allowed the collection of toll fees
for the use of certain public improvements that would allow a reasonable rate of
return on investments. The same decree created the Toll Regulatory Board,
vesting it with the power to enter into contracts for the construction,
maintenance, and operation of tollways, grant authority to operate a toll facility,
issue the necessary Toll Operation Certificate (TOC) and fix initial toll rates, and
adjust it from time to time after due notice and hearing. PD 1113 was issued
granting the Philippine National Construction Corporation for a period of 30
years, a franchise to operate toll facilities in the North Luzon and South Luzon
Expressways. Subsequently, PD 1894 was issued further granting the PNCC a
franchise over the Metro Manila Expressway and the expanded delineated NLEX
and SLEX.
FACTS
• Then came the 1987 Constitution with its franchise provision. In 1993, the
Government Corporate Counsel held that the PNCC may enter into a joint
venture agreement with private entities without going into public bidding.
On February 1994, the DPWH together with other private entities executed
a MOU to open the door for entry of private capital in the Subic and Clark
extension projects. PNCC entered into a financial and technical JVAs with
entities for the toll operation of its franchised areas. Several Supplemental
Toll Operation Agreements (STOA) were entered for the South Metro
Manila Skyway, NLEX Expansion, and South Luzon Expressway Projects.

• Petitioners seek to nullify the various STOAs and assail the constitutionality
of Sections 3(a and d) of PD 1112 in relation to Section 8(b) of PD 1894.
Insofar as they vested the TRB the power to issue, modify, and promulgate
toll rate changes while given the ability to collect tolls.
ISSUE
• Whether or not the TRB may be empowered to grant authority to
operate the toll facility/system.
RULING
• The TRB was granted sufficient power to grant a qualified person or entity
with authority to operate the toll facility/system. By explicit provisions of
the PDs, the TRB was given power to grant administrative franchise for toll
facility projects. The limiting thrust of Article 11, Section 11 of the
Constitution on the grant of franchise or other forms of authorization to
operate public utilities may, in context, be stated as follows: (a) the grant
shall be made only in favor of qualified Filipino citizens or corporations; (b)
Congress can impair the obligation of franchises, as contracts; and (c) no
such authorization shall be exclusive or exceed fifty years. Under the 1987
Constitution, Congress has an explicit authority to grant a public utility
franchise. However, it may validly delegate its legislative authority, under
the power of subordinate legislation, to issue franchises of certain public
utilities to some administrative agencies.
NAPOCOR vs Court of Appeals, G.R No.
112702, September 26 1997
Facts
PHIVIDEC Industrial Authority (PIA) was created pursuant to Presidential Decree. No. 243 it was
tasked to promote, sustain and encourage the development of the economic and social growth of
certain areas located in the Province of Misamis Oriental namely Tagoloan and Villanueva. In order
to achieved such task, it allowed Ferrochrome Philippines, Inc. (FPI) and Metal Alloy Corporation
(MAC) to operate in such areas. PIA also granted private respondent, Cagayan Electric and power
Light Company (CEPALCO) to retail electric power to the FPI and MAC pursuant to an agreement
entered into by PIA and CEPALCO. However, CEPALCO was not able to match the power demand of
the said companies as a result the PIA applied for a direct sale and supply of power from National
Power Corporation (NAPOCOR) to supply the power needs of FPI and MAC. CEPALCO filed a petition
for a prohibition, mandamus, and injunction against the petitioner contending that CEPALCO right
under their agreement with PIA has been violated. The RTC rendered a decision infavor of the
private respondent. Despite the decision, FPI continued filing application for direct supply of
electricity from NAPOCOR which promted CEPALCO to file another petition for contempt against
them. The petitioner filed motion to dismiss the said petition contending, among other things, that
pursuant to their charter they had authority to determine an entity or franchise had the right to
supply power to the entity applying for direct connection and to sell electric power "in bulk" to
industrial enterprises. Hence, the case
Issue: whether NAPOCOR has jurisdiction to determine whether it may supply electric power directly
to the facilities of an industrial corporation in areas where there is an existing and operating electric
power franchisee

Ruling
NO, the Supreme Court ruled that the NPC has no authority to determine who, among two different
public utilities, has the right to supply electric power to an area but such authority is vested within
the Energy Regulatory Board (ERB) in pursuant to Executive Order No. 172 which states that the
Board shall have that he "power and function to issue Certificate of Public Convenience for the
operation of electric power utilities and services, . . . including the establishment and regulation of
areas of operation of particular operators of public power utilities and services, the fixing of
standards and specifications in all cases related to the issued Certificate of Public Convenience".
However due to the enactment of Republic Act 7638 such functions was transferred to the
Department of Energy to determine who among the CEPALCO and PIA should supply power to FPI
and MAC. In the given situation, since the authority to determine of who will have the authority to
operate in a certain area is given to the Department of Energy therefore NAPOCOR does not have
the said authority to make such decision.
 Divinagracia v. Consolidated Broadcasting System
G.R. No. 162272, April 7, 2009
FACTS:

Respondents Consolidated Broadcasting System, Inc. (CBS) and People’s

Broadcasting Service, Inc. (PBS) are radio networks both involved in the operation of
radio broadcasting services in the Philippines, they being the grantees of legislative
franchises. Following the enactment of these franchise laws, NTC issued Provisional
Authorities allowing them to install, operate and maintain various AM and FM
broadcast stations in various locations throughout the nation. Petitioner Santiago C.
Divinagracia, alleging that he was a stockholder of respondent companies, filed two
complaints with the NTC alleging that despite the provisions of the law mandating
the public offering of at least 30% of the common stocks of Respondents, both
entities had failed to make such offering. Petitioner prayed for the cancellation of all
the Provisional Authorities or CPCs of Respondents. The NTC dismissed both
complaints, positing that although it had full jurisdiction to revoke or cancel a
Provisional Authority or CPC for violations or infractions of the terms and
conditions, it refrained from exercising the same.
 Divinagracia v. Consolidated Broadcasting System
G.R. No. 162272, April 7, 2009

ISSUE:

Whether or not NTC has the power to cancel Provisional Authorities and
CPCs of entities which Congress has issued franchises to operate
 Divinagracia v. Consolidated Broadcasting System
G.R. No. 162272, April 7, 2009
RULING:

No. The Supreme Court enumerated the various functions of the NTC as
contained in the promulgated Executive Order No. 546, establishing among
others, NTC, to wit:

Section 15. Functions of the Commission.― The Commission shall exercise

the following functions:
a. Issue Certificate of Public Convenience for the operation of
communications utilities and services, radio communications systems, wire
or wireless telephone or telegraph systems, radio and television
broadcasting system and other similar public utilities;
 Divinagracia v. Consolidated Broadcasting System
G.R. No. 162272, April 7, 2009
RULING:

b. Establish, prescribe and regulate areas of operation of particular operators

of public service communications; and determine and prescribe charges or
rates pertinent to the operation of such public utility facilities and services
except in cases where charges or rates are established by international
bodies or associations of which the Philippines is a participating member or
by bodies recognized by the Philippine Government as the proper arbiter of
such charges or rates;
c. Grant permits for the use of radio frequencies for wireless telephone and
telegraph systems and radio communication systems including amateur radio
stations and radio and television broadcasting systems;
d. Sub-allocate series of frequencies of bands allocated by the International
Telecommunications Union to the specific services;
 Divinagracia v. Consolidated Broadcasting System
G.R. No. 162272, April 7, 2009
RULING:

e. Establish and prescribe rules, regulations, standards, specifications in all

cases related to the issued Certificate of Public Convenience and administer
and enforce the same;
f. Coordinate and cooperate with government agencies and other entities
concerned with any aspect involving communications with a view to
continuously improve the communications service in the country;
g. Promulgate such rules and regulations, as public safety and interest may
require, to encourage a larger and more effective use of communications,
radio and television broadcasting facilities, and to maintain effective
competition among private entities in these activities whenever the
Commission finds it reasonably feasible;
 Divinagracia v. Consolidated Broadcasting System
G.R. No. 162272, April 7, 2009
RULING:

h. Supervise and inspect the operation of radio stations and

telecommunications facilities;
i. Undertake the examination and licensing of radio operators;
j. Undertake, whenever necessary, the registration of radio transmitters and
transceivers; and
k. Perform such other functions as may be prescribed by law.
One can readily notice that even as the NTC is vested with the power to issue
CPCs to broadcast stations, it is not expressly vested with the power to
cancel such CPCs, or otherwise empowered to prevent broadcast stations
with duly issued franchises and CPCs from operating radio or television
stations.
 Divinagracia v. Consolidated Broadcasting System
G.R. No. 162272, April 7, 2009
RULING:

Petitioner relies on the power granted to the Public Service Commission to

revoke CPCs or CPCNs under Section 16(m) of the Public Service Act.
That argument has been irrefragably refuted by Section 14 of the Public
Service Act, and by jurisprudence, most especially RCPI v. NTC. As earlier
noted, at no time did radio companies fall under the jurisdiction of the Public
Service Commission as they were expressly excluded from its mandate under
Section 14. In addition, the Court ruled in RCPI that since radio companies,
including broadcast stations and telegraphic agencies, were never under the
jurisdiction of the Public Service Commission except as to rate-fixing, that
Commission’s authority to impose fines did not carry over to the NTC even
while the other regulatory agencies that emanated from the Commission did
retain the previous authority their predecessor had exercised. No provision
in the Public Service Act thus can be relied upon by the petitioner to claim
that the NTC has the authority to cancel CPCs or licenses.
G.R. No. 119528 March 26, 1997

PHILIPPINE AIRLINES, INC.

vs.
CIVIL AERONAUTICS BOARD and GRAND INTERNATIONAL AIRWAYS, INC.

FACTS:

Grand Air applied for a Certificate of Public Convenience and Necessity with the
Civil Aeronautics Board (CAB). The Chief Hearing Officer issued a notice of
hearing directing Grand Air to serve a copy of the application and notice to all
scheduled Philippine Domestic operators. Grand Air filed its compliance and
requested for a Temporary Operating Permit (TOP). PAL filed an opposition to the
application on the ground that the CAB had no jurisdiction to hear the application
until Grand Air first obtains a franchise to operate from Congress.
G.R. No. 119528 March 26, 1997

PHILIPPINE AIRLINES, INC.

vs.
CIVIL AERONAUTICS BOARD and GRAND INTERNATIONAL AIRWAYS, INC.

FACTS:

The Chief Hearing Officer denied the opposition and the CAB approved the
issuance of the TOP for a period of 3 months. The opposition for the TOP was
likewise denied. The CAB justified its assumption of jurisdiction over Grand Air’s
application on the basis of Republic Act 776 which gives it the specific power to
issue any TOP or Certificate of Public Convenience and Necessity.
G.R. No. 119528 March 26, 1997

PHILIPPINE AIRLINES, INC.

vs.
CIVIL AERONAUTICS BOARD and GRAND INTERNATIONAL AIRWAYS, INC.

ISSUE:

Can the CAB issue a Certificate of Public Convenience and Necessity or TOP even
though the prospective operator does not have a legislative franchise?
G.R. No. 119528 March 26, 1997

PHILIPPINE AIRLINES, INC.

vs.
CIVIL AERONAUTICS BOARD and GRAND INTERNATIONAL AIRWAYS, INC.

RULING:

Yes, as mentioned by the CAB, it is duly authorized to do so under Republic Act

776 and a legislative franchise is not necessary before it may do so, since
Congress has delegated the authority to authorize the operation of domestic air
transport services to the CAB, an administrative agency. The delegation of such
authority is not without limits since Congress had set specific standard and
limitations on how such authority should be exercised.
G.R. No. 119528 March 26, 1997

PHILIPPINE AIRLINES, INC.

vs.
CIVIL AERONAUTICS BOARD and GRAND INTERNATIONAL AIRWAYS, INC.

RULING:

Public convenience and necessity exists when the proposed facility will meet a
reasonable want of the public and supply a need which the existing facilities do
not adequately afford.

Thus, the Board should be allowed to continue hearing the application, since it
has jurisdiction over it provided that the applicant meets all the requirements of
the law.
 G.R. No. 84818 December 18, 1989

PHILIPPINE COMMUNICATIONS SATELLITE CORPORATION, petitioner, vs. JOSE LUIS A. ALCUAZ, as NTC
Commissioner, and NATIONAL TELECOMMUNICATIONS COMMISSION, respondents.

Facts: The petition before us seeks to annul and set aside an Order 1 issued by respondent Commissioner Jose Luis Alcuaz of the
National Telecommunications Commission

Herein petitioner is engaged in providing for services involving telecommunications. Charging rates for certain specified lines that
were reduced by order of herein respondent Jose AlcuazCommissioner of the National Telecommunications Commission. The rates
were ordered to be reduced by fifteen percent (15%) due to Executive Order No. 546 which granted the NTC the power to fix rates.
Said order was issued without prior notice and hearing.

Under Section 5 of Republic Act No. 5514, petitioner was exempt from the jurisdiction of the then Public Service Commission, now
respondent NTC. However, pursuant to Executive Order No. 196 issued on June 17, 1987, petitioner was placed under the
jurisdiction, control and regulation of respondent NTC
Issue: Whether or Not E.O. 546 is unconstitutional.

Held:Yes. Respondents admitted that the application of a policy like the fixing of rates as
exercised by administrative bodies is quasi-judicial rather than quasi-legislative. But
respondent’s contention that notice and hearing are not required since the assailed order
is merely incidental to the entire proceedings and temporary in nature is erroneous.
Section 16(c) of the Public Service Act, providing for the proceedings of the Commission,
upon notice and hearing, dictates that a Commission has power to fix rates, upon proper
notice and hearing, and, if not subject to the exceptions, limitations or saving provisions.
It is thus clear that with regard to rate-fixing, respondent has no authorityto make such
order without first giving petitioner a hearing, whether the order be temporary
or permanent, and it is immaterial whether the same is made upon a complaint, a
summary investigation, or upon the commission's own motion as in the present case.
WHEREFORE, the writ prayed for is GRANTED and the order of respondents is hereby SET
ASIDE.
 G.R. No. 141314 April 9, 2003
REPUBLIC OF THE PHILIPPINES, REPRESENTED BY ENERGY REGULATORY BOARD, petitioner,
vs.
MANILA ELECTRIC COMPANY, respondent.

Facts: MERALCO filed with petitioner ERB an application for the revision of its rate schedules to reflect an average increase in its
distribution charge. ERB granted a provisional increase subject to the condition that should the COA thru its audit report find
MERALCO is entitled to a lesser increase, all excess amounts collected from the latter’s customers shall either be refunded to them
or correspondingly credited in their favor. The COA report found that MERALCO is entitled to a lesser increase, thus ERB ordered
the refund or crediting of the excess amounts. On appeal, the CA set aside the ERB decision. MRs were denied.

Issue: Whether or not the regulation of ERB as to the adjustment of rates of MERALCO is valid.
Issue: Whether or not the regulation of ERB as to the adjustment of rates of MERALCO is valid.

Ruling: YES. 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.
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.
KMU LABOR CENTER v. GARCIA
239 SCRA 386
 Padua vs. Ranada G.R. No. 141949 October 14, 2002

Facts: In this case, the Toll Regulatory Board (TRB) issued Resolution No. 2001-89
authorizing provisional toll rate adjustments at the Metro Manila Skyway, effective January
1, 2002. It was thereafter published in newspapers of general circulation for three (3)
consecutive weeks. Petitioner Ceferino Padua, as a toll payer, then filed an "Urgent Motion
for a Temporary Restraining Order to Stop Arbitrary Toll Fee Increases due to Resolution
No. 2001-89 assailing its validity.
Issue: Whether or not Resolution No. 2001-89 is valid
Held: Yes. Clearly the TRB complied with the publication requirements and that, the TRB
may grant and issue ex-parte to any petitioner, without need of notice, publication or
hearing, provisional authority to collect, pending hearing and decision on the merits of the
petition, the increase in rates prayed for or such lesser amount as the TRB may in its
discretion provisionally grant. Also, the task of fixing said rates is within the province of the
TRB. The SC takes cognizance of the wealth of jurisprudence on the doctrine of primary
administrative jurisdiction and exhaustion of administrative remedies. In this era of
clogged court dockets, the need for specialized administrative boards or commissions with
the special knowledge, experience and capability to hear and determine promptly disputes
on technical matters or intricate questions of facts, subject to judicial review in case of
grave abuse of discretion, is indispensable. Between the power lodged in an
administrative body and a court, the unmistakable trend is to refer it to the former.”