Araneta v. Dinglasan GR No. L-2044 Aug.

26, 1949 1st Emergency Power Cases

Araneta is being charged under violation of EO 62 which regulates rentals for houses and lots for residential buildings. Dinglasan is the judge hearing the case. Araneta appealed seeking to prohibit Dinglasan and the Fiscal from proceeding with the case. He averred that EO 62 was issued by virtue of CA No. 671. 3 other cases were consolidated with this one. L-3055 which is an appeal by Ma. Guerrero, a shoe exporter, against EO 192 which controls exports in the Philippines; he is seeking to have permit. L-3054 is filed by Rodriguez to prohibit the treasury from disbursing funds [from 49-50] pursuant to EO 225. L3056 is filed by Barredo is attacking EO 226 w/c is appropriating funds to hold the national elections. CA 671 is otherwise known as AN ACT DECLARING A STATE OF TOTAL EMERGENCY AS A RESULT OF WAR INVOLVING THE PHILIPPINES AND AUTHORIZING THE PRESIDENT TO PROMULGATE RULES AND REGULATIONS TO MEET SUCH EMERGENCY or simply the Emergency Powers Act. All the petitioners aver that CA 671 ceased to have any force and effect hence all E0s passed pursuant to it had likewise ceased. ISSUE: Whether or not CA 671 has ceased.

HELD: CA 671 became inoperative ex proprio vigore when Congress met in regular session on May 25, 1946, and that Executive Orders Nos. 62, 192, 225 and 226 were issued without authority of law. In setting the first regular session of Congress instead of the first special session which preceded it as the point of expiration of the Act, the SC is giving effect to the purpose and intention of the National Assembly. In a special session, the Congress may "consider general legislation or only such subjects as he (President) may designate." Such acts were to be good only up to the corresponding dates of adjournment of the following sessions of the Legislature, "unless sooner amended or repealed by the National Assembly." Even if war continues to rage on, new legislation must be made and approved in order to continue the EPAs, otherwise it is lifted upon reconvening or upon early repeal.

Rubi v. Provl Board of Mindoro GR L-14078 Mar. 7, 1919 Delegation of Powers

Rubi and various other Manguianes in the province of Mindoro were ordered by the provincial governor of Mindoro to remove their residence from their native habitat and to established themselves on a reservation at Tigbao in the province of Mindoro and to remain 1

there, or be punished by imprisonment if they escaped. Manguianes had been ordered to live in a reservation made to that end and for purposes of cultivation under certain plans. The Manguianes are a Non-Christian tribe with a very low culture. These reservations, as appears from the resolution of the Provincial Board, extends over an area of 800 hectares of land, which is approximately 2000 acres, on which about 300 Manguianes are confined. One of the Manguianes, Dabalos, escaped from the reservation and was taken in hand by the provincial sheriff and placed in prison at Calapan, solely because he escaped from the reservation. An application for habeas corpus was made on behalf of Rubi and other Manguianes of the province, alleging that by virtue of the resolution of the provincial board of Mindoro creating the reservation, they had been illegally deprived of their liberty. In this case the validity of section 2145 of the Administrative Code, reading: "With the prior approval of the Department Head, the provincial governor of any province in which non-Christian inhabitants are found is authorized, when such a course is deemed necessary in the interest of law and order, to direct such inhabitants to take up their habitation on sites on unoccupied public lands to be selected by him and approved by the provincial board, was challenged. ISSUE: Whether or not the said law is constitutional. HELD: By a vote of five to four, the Supreme Court sustained the constitutionality of this section of the

Administrative Code. Among other things, it was held that the term "non-Christian" should not be given a literal meaning or a religious signification, but that it was intended to relate to degrees of civilization. The term "non-Christian" it was said, refers not to religious belief, but in a way to geographical area, and more directly to natives of the Philippine Islands of a low grade of civilization. On the other hand, none of the provisions of the Philippine Organic Law could have had the effect of denying to the Government of the Philippine Islands, acting through its Legislature, the right to exercise that most essential, insistent, and illimitable of powers, the sovereign police power, in the promotion of the general welfare and the public interest. when to advance the public welfare, the law was found to be a legitimate exertion of the police power, And it is unnecessary to add that the prompt registration of titles to land in the Philippines constitutes an advancement of the public interests, for, besides promoting peace and good order among landowners in particular and the people in general, it helps increase the industries of the country, and makes for the development of the natural resources, with the consequent progress of the general prosperity. And these ends are pursued in a special manner by the State through the exercise of its police power. The Supreme Court held that the resolution of the provincial board of Mindoro was neither discriminatory nor class legislation, and stated among other things: ". . . one cannot hold that the liberty of the citizen is unduly interfered with when the degree 2

of civilization of the Manguianes is considered. They are restrained for their own good and the general good of the Philippines. Nor can one say that due process of law has not been followed. To go back to our definition of due process of law and equal protection of the laws, there exists a law; the law seems to be reasonable; it is enforced according to the regular methods of procedure prescribed; and it applies alike to all of a class."

The complaint alleges that the municipality of Binangonan is now exercising governmental authority over the barrios named, to the exclusion of the municipality of Cardona; that such authority is exercised by the municipality of Binangonan by reason of Executive Order No. 66, series of 1914, issued by the Governor-General of the Philippine Islands on the 1st day of July, 1914, which reads as follows: Pursuant to the provisions of section one of Act Numbered seventeen hundred and forty-eight, the boundary line between the municipalities of Binangonan and Cardona, in the Province of Rizal, is hereby defined and fixed as follows, viz: On the mainland, beginning on the north at the intersection of the Morong River and the existing Binangonan boundary, thence in a southerly and westerly direction to Mapulanglupa (otherwise called Santol), where a partially destroyed monument now exists; thence in a direct southeasterly line to the summit of Mountain Tutulo; and thence to the Laguna de Bay; thus embracing within the limits of the municipality of Binangonan the barrios or sitios of Tatala, Balatik, Nambug, Tutulo, Mahabang Parang, Nagsulo, Sampad, and Bonot. On the Island of Talim, that portion of the island embraced within points known as Kaymaralina and Virgen-Bato, on the eastern coast and extending to the summits of the range of hills geographically dividing the land, is 3

G.R. No. L-10202

March 29, 1916

THE GOVERNMENT OF THE PHILIPPINE ISLANDS Ex Rel. THE MUNICIPALITY OF CARDONA, plaintiff, vs. THE MUNICIPALITY OF BINANGONAN, ET AL., defendants. Modesto Reyes and Eliseo Ymzon for plaintiff. Office of the Solicitor-General Corpus and Roberto Moreno for defendants. MORELAND, J.: This is an action by the municipality of Cardona to prohibit perpetually the municipality of Binangonan from exercising municipal authority over the barrios of Tatala, Balatik, Nambug, Tutulo, Mahabang Parang, Nagsulo, and Bonot.

hereby confirmed as being embraced within the jurisdiction of the municipality of Cardona; and the remainder of the island, including the small off-lying islands of Bunga, Olahipan, and Malake, as being embrace within the jurisdiction of the municipality of Binangonan. Action will at once be taken to survey the boundary line herein fixed and to establish monuments demarcating same. The plaintiff further alleges that the executive order referred to and above quoted and the Act under which it was issued are "unconstitutional" in that said Act confers on the Governor-General legislative authority; and that the Governor-General in promulgating said order usurped legislative functions. Plaintiff also claims that the order is void because it does not contain a statement that the change in the division line between the said municipalities was required by the public good; and that it does not appear in said order itself that there was a present urgency requiring the promulgation of such an order. The defendant municipality demurrer to the complaint on the ground that it did not state facts sufficient to constitute a cause of action. The question before us is that presented by the demurrer. We do not think that plaintiff's objections are well founded. No reason has been given why the Act is unconstitutional and no argument or citation of authorities has been presented on that subject. Every Act of the legislature is presumed to be constituted until the contrary is clearly shown; and no showing of

unconstitutionality having been made in this case, the objection to the order of the Governor-General based on that ground must be overruled. The other two objections are frivolous. Although it be admitted, for the sake of argument, that the Governor-General ought not to make such an order unless the public good requires it, that fact need not be stated in the order. The same may be said with regard to its urgency. The Governor-General having full authority to promulgate such an order this court will assume, if it should act on the matter at all, that there was public necessity therefor and that the matter was of such urgency as properly to evoke action by the Chief Executive. The demurrer to the complaint is sustained and unless an amendment thereof is made within five days from the service of a copy of this order eliminating the objections stated in this decision, the action will be dismissed on the merits. So ordered. Torres, Trent and Araullo, JJ., concur. Johnson, J., concurs in the result. G.R. No. 47800. December 2, 1940 MAXIMO CALALANG, petitioner, vs. A. D. WILLIAMS, ET AL., respondents.Maximo Calalang in his own behalf. The case of Calalang vs Williams is known for the elegant exposition of the definition of social justice. In this case, Justice Laurel defined social justice as neither communism, nor despotism, nor atomism, nor anarchy but humanization of laws and equalization of social and economic forces by the State so that justice

in its rational and objectively secular conception may at least be approximated. As I browse through the entire case, I found out that there is more to this case than the definition of social justice. In fact, another important issue raised here is whether there was a valid delegation of power by the National Assembly to the Director of Public Works. Let us begin with the facts of the case. Facts: In pursuance of Commonwealth Act 548 which mandates the the Director of Public Works, with the approval of the Secretary of Public Works and Communications, shall promulgate the necessary rules and regulations to regulate and control the use of and traffic on such roads and streets to promote safe transit upon, and avoid obstructions on, roads and streets designated as national roads, the Director of Public Works adopted the resolution of the National Traffic Commission, prohibiting the passing of animal drawn vehicles in certain streets in Manila. Petitioner questioned this as it constitutes an undue delegation of legislative power. Issues: Whether or not there is a undue delegation of legislative power? Ruling: There is no undue deleagation of legislative power. Commonwealth Act 548 does not confer legislative powers to the Director of Public Works. The authority conferred upon them and under which they promulgated the rules and regulations now

complained of is not to determine what public policy demands but merely to carry out the legislative policy laid down by the National Assembly in said Act, to wit, to promote safe transit upon and avoid obstructions on, roads and streets designated as national roads by acts of the National Assembly or by executive orders of the President of the Philippines and to close them temporarily to any or all classes of traffic whenever the condition of the road or the traffic makes such action necessary or advisable in the public convenience and interest. The delegated power, if at all, therefore, is not the determination of what the law shall be, but merely the ascertainment of the facts and circumstances upon which the application of said law is to be predicated. To promulgate rules and regulations on the use of national roads and to determine when and how long a national road should be closed to traffic, in view of the condition of the road or the traffic thereon and the requirements of public convenience and interest, is an administrative function which cannot be directly discharged by the National Assembly. It must depend on the discretion of some other government official to whom is confided the duty of determining whether the proper occasion exists for executing the law. But it cannot be said that the exercise of such discretion is the making of the law.

G.R. No. L-4043

May 26, 1952 5

CENON S. CERVANTES, petitioner, vs. THE AUDITOR GENERAL, respondent. Cenon Cervantes in his own behalf. Office of the Solicitor General Pompeyo Diaz and Solicitor Felix V. Makasiar for respondent. REYES, J.: This is a petition to review a decision of the Auditor General denying petitioner's claim for quarters allowance as manager of the National Abaca and Other Fibers Corporation, otherwise known as the NAFCO. It appears that petitioner was in 1949 the manager of the NAFCO with a salary of P15,000 a year. By a resolution of the Board of Directors of this corporation approved on January 19 of that year, he was granted quarters allowance of not exceeding P400 a month effective the first of that month. Submitted the Control Committee of the Government Enterprises Council for approval, the said resolution was on August 3, 1949, disapproved by the said Committee on strenght of the recommendation of the NAFCO auditor, concurred in by the Auditor General, (1) that quarters allowance constituted additional compensation prohibited by the charter of the NAFCO, which fixes the salary of the general manager thereof at the sum not to exceed P15,000 a year, and (2) that the precarious financial condition of the corporation did not warrant the granting of such allowance. On March 16, 1949, the petitioner asked the Control Committee to reconsider its action and approve his claim for allowance for January to June 15, 1949,

amounting to P1,650. The claim was again referred by the Control Committee to the auditor General for comment. The latter, in turn referred it to the NAFCO auditor, who reaffirmed his previous recommendation and emphasized that the fact that the corporation's finances had not improved. In view of this, the auditor General also reiterated his previous opinion against the granting of the petitioner's claim and so informed both the Control Committee and the petitioner. But as the petitioner insisted on his claim the Auditor General Informed him on June 19, 1950, of his refusal to modify his decision. Hence this petition for review. The NAFCO was created by the Commonwealth Act No. 332, approved on June 18, 1939, with a capital stock of P20,000,000, 51 per cent of which was to be able to be subscribed by the National Government and the remainder to be offered to provincial, municipal, and the city governments and to the general public. The management the corporation was vested in a board of directors of not more than 5 members appointed by the president of the Philippines with the consent of the Commission on Appointments. But the corporation was made subject to the provisions of the corporation law in so far as they were compatible with the provisions of its charter and the purposes of which it was created and was to enjoy the general powers mentioned in the corporation law in addition to those granted in its charter. The members of the board were to receive each a per diem of not to exceed P30 for each day of meeting actually attended, except the chairman of the board, who was to be at the same time the general manager of the corporation and to receive a salary not to exceed P15,000 per annum.

On October 4, 1946, Republic Act No. 51 was approved authorizing the President of the Philippines, among other things, to effect such reforms and changes in government owned and controlled corporations for the purpose of promoting simplicity, economy and efficiency in their operation Pursuant to this authority, the President on October 4, 1947, promulgated Executive Order No. 93 creating the Government Enterprises Council to be composed of the President of the Philippines as chairman, the Secretary of Commerce and Industry as vice-chairman, the chairman of the board of directors and managing heads of all such corporations as ex-officio members, and such additional members as the President might appoint from time to time with the consent of the Commission on Appointments. The council was to advise the President in the excercise of his power of supervision and control over these corporations and to formulate and adopt such policy and measures as might be necessary to coordinate their functions and activities. The Executive Order also provided that the council was to have a Control Committee composed of the Secretary of Commerce and Industry as chairman, a member to be designated by the President from among the members of the council as vice-chairman and the secretary as ex-officio member, and with the power, among others (1) To supervise, for and under the direction of the President, all the corporations owned or controlled by the Government for the purpose of insuring efficiency and economy in their operations; (2) To pass upon the program of activities and the yearly budget of expenditures approved by

the respective Boards of Directors of the said corporations; and (3) To carry out the policies and measures formulated by the Government Enterprises Council with the approval of the President. (Sec. 3, Executive Order No. 93.) With its controlling stock owned by the Government and the power of appointing its directors vested in the President of the Philippines, there can be no question that the NAFCO is Government controlled corporation subject to the provisions of Republic Act No. 51 and the executive order (No. 93) promulgated in accordance therewith. Consequently, it was also subject to the powers of the Control Committee created in said executive order, among which is the power of supervision for the purpose of insuring efficiency and economy in the operations of the corporation and also the power to pass upon the program of activities and the yearly budget of expenditures approved by the board of directors. It can hardly be questioned that under these powers the Control Committee had the right to pass upon, and consequently to approve or disapprove, the resolution of the NAFCO board of directors granting quarters allowance to the petitioners as such allowance necessarily constitute an item of expenditure in the corporation's budget. That the Control Committee had good grounds for disapproving the resolution is also clear, for, as pointed out by the Auditor General and the NAFCO auditor, the granting of the allowance amounted to an illegal increase of petitioner's salary beyond the limit fixed in the corporate charter and was furthermore not justified by the precarious financial condition of the corporation. 7

It is argued, however, that Executive Order No. 93 is null and void, not only because it is based on a law that is unconstitutional as an illegal delegation of legislature power to executive, but also because it was promulgated beyond the period of one year limited in said law. The second ground ignores the rule that in the computation of the time for doing an act, the first day is excluded and the last day included (Section 13 Rev. Ad. Code.) As the act was approved on October 4, 1946, and the President was given a period of one year within which to promulgate his executive order and that the order was in fact promulgated on October 4, 1947, it is obvious that under the above rule the said executive order was promulgated within the period given. As to the first ground, the rule is that so long as the Legislature "lays down a policy and a standard is established by the statute" there is no undue delegation. (11 Am. Jur. 957). Republic Act No. 51 in authorizing the President of the Philippines, among others, to make reforms and changes in governmentcontrolled corporations, lays down a standard and policy that the purpose shall be to meet the exigencies attendant upon the establishment of the free and independent government of the Philippines and to promote simplicity, economy and efficiency in their operations. The standard was set and the policy fixed. The President had to carry the mandate. This he did by promulgating the executive order in question which, tested by the rule above cited, does not constitute an undue delegation of legislative power.

It is also contended that the quarters allowance is not compensation and so the granting of it to the petitioner by the NAFCO board of directors does not contravene the provisions of the NAFCO charter that the salary of the chairman of said board who is also to be general manager shall not exceed P15,000 per anum. But regardless of whether quarters allowance should be considered as compensation or not, the resolution of the board of the directors authorizing payment thereof to the petitioner cannot be given effect since it was disapproved by the Control Committee in the exercise of powers granted to it by Executive Order No. 93. And in any event, petitioner's contention that quarters allowance is not compensation, a proposition on which American authorities appear divided, cannot be insisted on behalf of officers and employees working for the Government of the Philippines and its Instrumentalities, including, naturally, governmentcontrolled corporations. This is so because Executive Order No. 332 of 1941, which prohibits the payment of additional compensation to those working for the Government and its Instrumentalities, including government-controlled corporations, was in 1945 amended by Executive Order No. 77 by expressly exempting from the prohibition the payment of quarters allowance "in favor of local government officials and employees entitled to this under existing law." The amendment is a clear indication that quarters allowance was meant to be included in the term "additional compensation", for otherwise the amendment would not have expressly excepted it from the prohibition. This being so, we hold that, for the purpose of the executive order just mentioned, quarters allowance is considered additional compensation and, therefore, prohibited. 8

In view of the foregoing, the petition for review is dismissed, with costs. Paras, C.J., Feria, Pablo, Bengzon, Tuason, Montemayor and Bautista Angelo, JJ., concur.

G.R. No. L-23825: Pelaez vs Auditor General Sufficient Standard Test and Completeness Test

From Sept 04 to Oct 29, 1964, the President (Marcos) issued executive orders creating 33 municipalities this is purportedly in pursuant to Sec 68 of the Revised Administrative Code which provides that the President of the Philippines may by executive order define the boundary, or boundaries, of any province, subprovince, municipality, [township] municipal district or other political subdivision, and increase or diminish the territory comprised therein, may divide any province into one or more subprovincesThe VP Emmanuel Pelaez and a taxpayer filed a special civil action to prohibit the auditor general from disbursing funds to be appropriated for the said municipalities. Pelaez claims that the EOs are unconstitutional. He said that Sec 68 of the RAC has been impliedly repealed by Sec 3 of RA 2370 which provides that barrios may "not be created or their boundaries altered nor their names changed" except by Act of Congress or of the corresponding provincial board "upon petition of a

majority of the voters in the areas affected" and the "recommendation of the council of the municipality or municipalities in which the proposed barrio is situated." Pelaez argues, accordingly: "If the President, under this new law, cannot even create a barrio, can he create a municipality which is composed of several barrios, since barrios are units of municipalities?" The Auditor General countered that only barrios are barred from being created by the President. Municipalities are exempt from the bar and that t a municipality can be created without creating barrios. Existing barrios can just be placed into the new municipality. This theory overlooks, however, the main import of Pelaez argument, which is that the statutory denial of the presidential authority to create a new barrio implies a negation of the bigger power to create municipalities, each of which consists of several barrios. ISSUE: Whether or not Congress has delegated the power to create barrios to the President by virtue of Sec 68 of the RAC. HELD: Although Congress may delegate to another branch of the government the power to fill in the details in the execution, enforcement or administration of a law, it is essential, to forestall a violation of the principle of separation of powers, that said law: (a) be complete in itself it must set forth therein the policy to be executed, carried out or implemented by the delegate and (b) fix a standard the limits of which are sufficiently determinate or determinable to 9

which the delegate must conform in the performance of his functions. Indeed, without a statutory declaration of policy, the delegate would, in effect, make or formulate such policy, which is the essence of every law; and, without the aforementioned standard, there would be no means to determine, with reasonable certainty, whether the delegate has acted within or beyond the scope of his authority. In the case at bar, the power to create municipalities is eminently legislative in character not administrative.

The Pangasinan Transportation Company operates an autobus service in the Province of Pangasinan and other provinces. The Manila Railroad Company operates the Benguet Auto Line from Baguio by way of the Kennon Road to Sison. The railroad now desires to extend its auto line from Sison to Binalonan via Pozorrubio in the Province of Pangasinan. If this be permitted it will be a competitor of the busses of the Pangasinan Transportation Company. The basic inquiry in this as in other public service commission cases is whether or not it clearly appears that there was no evidence before the commission to support reasonably its order. Our mature judgment is that the findings of fact made by the commission do not meet this test. In one class of cases it has oft been emphasized, and properly, that the convenience of the public must be taken into account and is a prime criterion. In another class of cases it has as appropriately been emphasized that the investments made by public service operators must be protected rather than destroyed. Here we have the two principles meeting in collision. It is our desire at once to afford all reasonable facilities to the public and afford all reasonable safeguards for capital invested in the transportation business. On the one hand it is shown that there are a few passengers whose convenience would be better served if the Manila Railroad Company was permitted to extend its buss service from Sison to Binalonan. However, their convenience is more fancied than real, for the busses of Pangasinan Transportation company and the Manila Railroad Company meet at Sison and if there is any difference in the hour of meeting this 10

G.R. No. 41471

September 15, 1934

PANGASINAN TRANSPORTATION COMPANY, petitioner-appellant, vs. MANILA RAILROAD COMPANY, respondentappellee. C. de G. Alvear for appellant. Jose C. Abreu for appellee. MALCOLM, J.: The petitioner and appellant in this case complains that the Public Service Commission erred in granting to the Manila Railroad Company a certificate of public convenience to invade the regular route adequately and efficiently served by the Pangasinan Transportation Company.

could readily be arranged. On the other side, it is disclosed that while busses of the Pangasinan Transportation Company have a capacity for thirty-two pay passengers, they are only carrying an average load of six passengers on these tripe. It has further been established that from June, 1932, to May, 1933, the Pangasinan Transportation Company lost P2,733.29 on this line alone. Under these conditions, can it be said that public necessity is more compelling than what amounts to ruinous competition? The true effect of granting the petition of the Manila Railroad Company would be to force the Pangasinan Transportation Company out of the Sison-PozorrubioBinalonan territory. Moreover, if the railroad company could extend its auto line Binalonan, it requires no vast amount of imagination to visualize the company extending its line to the next municipality and so on indefinitely, to the great disadvantage of other operators and with the result that they would be deprived of substantial revenue. With all due respect to the Public Service Commission which we are the first to uphold when its decisions can be justified, we are unable to put the stamp of our approval on the principle it has invoked and sanctioned in this case. Agreeable to the foregoing, the assigned errors will be sustained, and the decision set aside, with the costs of both instances to be paid by the respondent and appellee. Street, Villa-Real, Hull, Vickers, Butte, Goddard and Diaz, J., concur.

Separate Opinions IMPERIAL, J., dissenting: The majority opinion for the first time abandons the uniform and well established doctrine in this jurisdiction that this court shall in no case substitute its discretion for the sound discretion of the Public Service Commission as recognized by law, and that the judgment rendered by it shall not be altered nor reversed unless the conclusions therein are not reasonably supported by the evidence (sec. 35, Act No. 3108, as amended by Act No. 3316). The facts of the case are those contained in the majority opinion; but in addition thereto it must be stated that the extension of service applied for, is supported by the testimony of the superintendent of the Benguet Auto Line and also by written petitions signed by more than one hundred (100) residents of Binalonan, most of them merchants; and by a resolution of the municipal council of Binalonan praying that the present service of the appellee be extended from Sison to Binalonan. There can be no doubt that the requested extension of service will redound to the benefit of the public concerned, inasmuch as the proposed trips will save the passengers from the annoyance of having to change cars at the station in Sison and to unload and load their baggage and freight. This is shown by the petitions of numerous persons and the resolution of the municipal council of Binalonan, and no evidence was presented by the appellant which would weaken the evidentiary force of said petitions and resolution. By reason thereof it clearly follows that in this respect 11

the judgment appealed from is reasonably and sufficiently supported by the evidence. In the instant case the doctrine above referred to finds special application inasmuch as no new service is contemplated, but merely an extension of the present line maintained by the Manila Railroad Company is requested. In the case of Raymundo Transportation Co. vs. Perez (56 Phil., 274), this court said: While it is the duty of the government as far as possible to protect public utility operators against unfair and unjustified competition, it is nevertheless obvious that public convenience must have the first consideration. In the case of Mindanao Bus Compan

This is an original action for certiorari to annul an order of respondent Public Service Commission. Upon the filing of the petition and the submission and approval of the corresponding bond, we issued a writ of injunction restraining said respondent from enforcing the order complained of Republic Act No. 316, approved on June 19, 1948, granted petitioner Vigan Electric Light Company, Inc., a franchise to construct, maintain and operate an electric light, heat and/or power plant for the purpose of generating and distributing light, heat and/or power, for sale within the limits of several municipalities of the province of Ilocos Sur. Accordingly, petitioner secured from respondent on May 31, 1950, a certificate of public convenience to render electric light, heat and/or power services in said municipalities and to charge its customers and/or consumers the following rates: FLAT RATE 1 20 watt bulb per month ........................................................ .... 1 25 watt bulb per month ........................................................ .... 1 40 watt bulb per month ........................................................ .... 1 50 watt bulb per month ........................................................ .... 1 60 watt bulb per P2.3 0 3.00

G.R. No. L-19850

January 30, 1964

VIGAN ELECTRIC LIGHT COMPANY, INC., petitioner, vs. THE PUBLIC SERVICE COMMISSION, respondent. Raymundo A. Armovit for petitioner. Federico S. Arlos and P. H. del Pilar for respondent. CONCEPCION, J.:

4.50

5.50 6.50 12

month ........................................................ .... 1 75 watt bulb per month ........................................................ .... 1 80 watt bulb per month ........................................................ .... 1 100 watt bulb per month ........................................................ .... 1 150 watt bulb per month ........................................................ .... 1 200 watt bulb per month ........................................................ .... METER RATE For the first 15 For the first 15 Kw. hrs. ............................................................ For the next 35 Kw. hrs. ............................................................ For the next 50 Kw. hrs. ............................................................ For all over 100 Kw. hrs. ............................................................ P0.4 0 .30 .25 .20 7.50

Minimum Charge: P6.00 per month for connection of 200 watts or less; plus P0.01 per watt per month for connection in excess of 200 watts. TEMPORARY RATE P0.01 per watt per night.

8.00

9.00 13.0 0 17.0 0

On May 22, 1957, petitioner, acting with respondent's approval, entered into a contract for the purchase of electric power and energy from the National Power Corporation, for resale, in the course of the business of said petitioner, to its customers, to whom, in fact, petitioner resold said electric power and energy, in accordance with the above schedule of rates. About five (5) years later, or on January 16, 1962, respondent advised petitioner of a conference to be held on February 12, 1962 for the purpose of revising its authorized rates. Soon thereafter, petitioner received a letter of respondent informing the former of an alleged letter-petition of "Congressman Floro Crisologo and 107 alleged residents of Vigan Ilocos Sur", charging the following: We also denounce the sale of TWO THOUSAND (2,000) ELECTRIC METERS in blackmarket by the Vigan Electric Light Company to Avegon Co., as anomalous and illegal. Said electric meters were imported from Japan by the Vigan Electric Light Company in behalf of the consumers of electric current from said electric company. The Vigan Electric Light Company has commercialized

13

these privilege which property belong to the people. We also report that the electric meters in Vigan used by the consumers had been installed in bad faith and they register excessive rates much more than the actual consumption.1wph1.t and directing the petitioner to comment on these charges. In reply to said communications, petitioner's counsel wrote to respondent, on February 1, 1962, a letter asking that the conference scheduled for February 12 be postponed to March 12, and another letter stating inter alia: In connection therewith, please be informed that my client, the Vigan Electric Light Co., Inc., has not had any dealing with the Avegon Co., Inc., relative to the 2,000 electric meter mentioned in the petition. Attached hereto as Annex "1" and made an integral part thereof is a certification to that effect by Avegon Co., Inc. Furthermore, as counsel for Vigan Electric Light Co., Inc., I wish to inform this Honorable Commission that the charge that said company installed the electric meters in bad faith and that said meters registered excessive rates could have no valid basis because all of these meters have been inspected checked, tested and sealed by your office. On March 15, 1962, petitioner received a communication form the General Auditing Office notifying him that one Mr. Cesar A. Damole had "been

instructed to make an audit and examination of the books and other records of account" of said petitioner, "under the provisions of Commonwealth Act No. 325 and in accordance with the request of the Public Service Commission contained in its letter dated March 12, 1962", and directing petitioner to cooperate with said Mr. Damole "for the successful accomplishment of his work". Subsequently, respondent issued a subpoena duces tecum requiring petitioner to produce before the former, during a conference scheduled for April 10, 1962, certain books of account and financial statements specified in said process. On the date last mentioned petitioner moved to quash the subpoena duces tecum. The motion was not acted upon in said conference of April 10, 1962. However, it was then decided that the next conference be held on April 30, 1962, which was later postponed to May 21, 1962. When petitioner's representatives appeared before respondent, on the date last mentioned, they were advised by the latter that the scheduled conference had been cancelled, that the petition to quash the subpoena duces tecum had been granted, and that, on May 17, 1962, respondent had issued an order, from which we quote: We now have the audit report of the General Auditing Office dated May 4, 1962, covering the operation of the Vigan Electric Light Co., Inc. in Vigan, Bantay and Cagayan, Ilocos Sur, for the period from January 1 to December 31, 1961. We find from the report that the total invested capital of the utility as of December 31, 1961, entitled to return amounted to P118,132.55, and its net operating income for rate purposes of P53,692.34 represents 45.45% of its invested capital; that in order to earn 12% per annum, 14

the utility should have a computed revenue by rates of P182,012.78; and that since it realized an actual revenue by rates of P221,529.17, it had an excess revenue by rates of P39,516.39, which is 17.84% of the actual revenue by rates and 33.45% of the invested capital. In other words, the present rates of the Vigan Electric Light Co., Inc. may be reduced by 17.84%, or in round figure, by 18%. Upon consideration of the foregoing, and finding that the Vigan Electric Light Co., Inc. is making a net operating profit in excess of the allowable return of 12% on its invested capital, we believe that it is in the public interest and in consonance with Section 3 of Republic Act No. 3043 that reduction of its rates to the extent of its excess revenue be put into effect immediately. WHEREFORE, Vigan Electric Light Co., Inc. is hereby ordered to reduce the present meter rates for its electric service effective upon the billing for the month of June, 1962, to wit: METER RATE 24-HOUR SERVICE For the first 15 kwh per month at P0.328 per kwh For the next 35 kwh per month at P0.246 per kwh For the next 50 kwh per month at P0.205 per kwh

For all over 100 kwh per month at P0.164 per kwh Minimum Charge: P4.90 per month for connection of 200 was or less plus P0.01 per watt per month for connection in excess of 200 watts. TEMPORARY LIGHTING P0.01 per watt per night. Minimum Charge: P1.00 Billings to customers shall be made to the nearest multiple of five centavos. The above rates may be revised, modified or altered at anytime for any just cause and/or in the public service. Soon later, or on June 25, 1962, petitioner herein instituted the present action for certiorari to annul said order of May 17, 1962, upon the ground that, since its Corporate inception in 1948, petitioner it "never was able to give and never made a single dividend declaration in favor of its stockholders" because its operation from 1949 to 1961 had resulted in an aggregate loss of P113,351.523; that in the conference above mentioned petitioner had called the attention of respondent to the fact that the latter had not furnished the former a "copy of the alleged letter-petition of Congressman Crisologo and others"; that respondent then expressed the view that there was no necessity of serving copy of said letter to petitioner, because respondent was merely holding informal conferences to ascertain whether petitioner would consent to the reduction of its rates; that petitioner objected to said reduction without a hearing, alleging that its rates 15

could be reduced only if proven by evidence validly adduced to be excessive; that petitioner offered to introduce evidence to show the reasonableness of its aforementioned rates, and even the fairness of its increase; that petitioner was then assured that it would be furnished a copy of the aforementioned letter-petition and that a hearing would be held, if a reduction of its rates could not be agreed upon; that petitioner had not even been served a copy of the auditor's report upon which the order complained of is based; that such order had been issued without notice and hearing; and that, accordingly, petitioner had been denied due process. In its answer respondent admitted some allegations of the complaint and denied other allegations thereof, particularly the conclusions drawn by petitioner. Likewise, respondent alleged that it granted petitioner's motion to quash the aforementioned subpoena duces tecum because the documents therein referred to had already been audited and examined by the General Auditing Office, the report on which was on file with said respondent; that the latter had directed that petitioner be served a copy of said report; and that, although this has not, as yet, been actually done, petitioner could have seen and examined said report had it really wanted to do so. By way of special defenses, respondent, moreover, alleged that the disputed order had been issued under its delegated legislative authority, the exercise of which does not require previous notice and hearing; and that petitioner had not sought a reconsideration of said order, and had, accordingly, failed to exhaust all administrative remedies.

In support of its first special defense respondent maintains that rate-fixing is a legislative function; that legislative or rule-making powers may constitutionally be exercised without previous notice of hearing; and that the decision in Ang Tibay vs. Court of Industrial Relations (69 Phil., 635) in which we held that such notice and hearing are essential to the validity of a decision of the Public Service Commission is not in point because, unlike the order complained of which respondent claims to be legislative in nature the Ang Tibay case referred to a proceeding involving the exercise of judicial functions. At the outset, it should be noted, however, that, consistently with the principle of separation of powers, which underlies our constitutional system, legislative powers may not be delegated except to local governments, and only to matters purely of local concern (Rubi vs. Provincia Board, 39 Phil., 660; U.S. vs. Heinszen, 206 U.S. 370). However, Congress may delegate to administrative agencies of the government the power to supply the details in the execution or enforcement of a policy laid down by a which is complete in itself (Calalang vs. Williams, 70 Phil. 726; Pangasinan Trans. Co. vs. Public Service Commission, 70 Phil., 221; People vs. Rosenthal, 68 Phil., 328; People vs. Vera, 65 Phil., 56; Cruz vs. Youngberg, 56 Phil. 234; Alegre vs. Collector of Customs, 53 Phil., 394; U.S. vs. Ang Tang Ho 43 Phil., 1; Schechter vs. U.S., 295 U.S., 495 Mulford vs. Smith, 307 U.S., 38; Bowles vs. Willingham, 321 U.S., 503). Such law is not deemed complete unless it lays down a standard or pattern sufficiently fixed or determinate, or, at least, determinable without requiring another legislation, to guide the administrative body concerned in the performance of its duty to implement or enforce 16

said Policy (People vs. Lim Ho, L-12091, January 28, 1960; Araneta vs. Gatmaitan, L-8895, April 30, 1957; Cervantes vs. Auditor General, L-4043, May 26, 1952; Philippine Association of Colleges vs. Secretary of Education, 51 Off. Gaz., 6230; People vs. Arnault, 48 Off. Gaz., 4805; Antamok Gold Fields vs. Court of Industrial Relations, 68 Phil., 340; U.S. vs. Barrias, 11 Phil., 327; Yakus vs. White, 321 U.S., 414; Ammann vs. Mallonce, 332 U.S., 245; U.S. vs. Rock Royal Corp. 307 U.S., 533; Mutual Film Corp. vs. Industrial Commission, 276 U.S., 230). Otherwise, there would be no reasonable means to ascertain whether or not said body has acted within the scope of its authority, and, as a consequence, the power of legislation would eventually be exercised by a branch of the Government other than that in which it is lodged by the Constitution, in violation, not only of the allocation of powers therein made, but, also, of the principle of separation of powers. Hence, Congress his not delegated, and cannot delegate legislative powers to the Public Service Commission. Moreover, although the rule-making power and even the power to fix rates when such rules and/or rates are meant to apply to all enterprises of a given kind throughout the Philippines may partake of a legislative character, such is not the nature of the order complained of. Indeed, the same applies exclusively to petitioner herein. What is more, it is predicated upon the finding of fact based upon a report submitted by the General Auditing Office that petitioner is making a profit of more than 12% of its invested capital, which is denied by petitioner. Obviously, the latter is entitled to cross-examine the maker of said report, and to introduce evidence to disprove the contents thereof and/or explain or

complement the same, as well as to refute the conclusion drawn therefrom by the respondent. In other words, in making said finding of fact, respondent performed a functionpartaking of a quasijudicial character the valid exercise of which demands previous notice and hearing. Indeed, sections 16(c) and 20 (a) of Commonwealth Act No. 146, explicitly require notice Indeed hearing. The pertinent parts thereof provide: SEC. 16. The Commission shall have the power, upon proper notice and hearing in accordance with the rules and provision of this Act, subject to the limitations and exception mentioned and saving provisions to the contrary: xxx xxx xxx

(c) To fix and determine individual or joint rates, tolls charges, classifications, or schedules thereof, as well as commutation, mileage kilometrage, and other special rates which shall be imposed, observed, and followed thereafter by any public service: Provided, That the Commission may in its discretion approve rates proposed by public services provisionally and without necessity of any hearing; but it shall call a hearingthereof within thirty days thereafter, upon publication and notice to the concerns operating in the territory affected: Provided, further, That in case the public service equipment of an operator is use principally or secondarily for the promotion of a private business the net profits of said private business shall be considered in relation with the 17

public service of such operator for the purpose of fixing the rates. SEC. 20. Acts requiring the approval of the Commission. Subject to established limitations and exception and saving provisions to the contrary, it shall be unlawful for any public service or for the owner, lessee or operator thereof, without the approval and authorization of the Commission previously had (a) To adopt, establish, fix, impose, maintain, collect or carry into effect any individual or joint rates, commutation mileage or other special rate, toll, fare, charge, classification or itinerary. The Commission shall approve only those that are just and reasonable and not any that are unjustly discriminatory or unduly preferential, only upon reasonable notice to the public services and other parties concerned, giving them reasonable opportunity to be heard, ... . (Emphasis supplied.) Since compliance with law must be presumed, it should be assumed that petitioner's current rates were fixed by respondent after proper notice and hearing. Hence, modification of such rates cannot be made, over petitioner's objection, without such notice and hearing, particularly considering that the factual basis of the action taken by respondent is assailed by petitioner. The rule applicable is set forth in the American Jurisprudence the following language: Whether notice and a hearing in proceedings before a public service commission are

necessary depends chiefly upon statutory or constitutional provisions applicable to such proceedings, which make notice and hearing, prerequisite to action by the commission, and upon the nature and object of such proceedings, that is, whether the proceedings, are, on the one hand, legislative and rulemaking in character, or are, on the other hand, determinative and judicial or quasi-judicial, affecting the rights an property of private or specific persons. As a general rule, a public utility must be afforded some opportunity to be heard as to the propriety and reasonableness of rates fixed for its services by a public service commission.(43 Am. Jur. 716; Emphasis supplied.) Wherefore, we hold that the determination of the issue involved in the order complained of partakes of the nature of a quasi-judicial function and that having been issued without previous notice and hearing said order is clearly violative of the due process clause, and, hence, null and void, so that a motion for reconsideration thereof is not an absolute prerequisite to the institution of the present action for certiorari (Ayson vs. Republic. 50 Off. Gaz., 5810). For this reason considering that said order was being made effective on June 1, 1962, or almost immediately after its issuance (on May 17, 1962), we find that petitioner was justified in commencing this proceedings without first filing said motion (Guerrero vs. Carbonell, L-7180, March 15, 1955). WHEREFORE, the writ prayed for is granted and the preliminary injunction issued by this Court hereby made permanent. It is so ordered. 18

Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Reyes, J.B.L., Paredes, Dizon, Regala and Makalintal, JJ., concur. Barrera, J., took no part.

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