Funa Vs.

Ermita
This is a petition for certiorari, prohibition and mandamus under Rule 65 with
prayer for the issuance of a temporary restraining order and/or writ of preliminary
injunction, to declare as unconstitutional the designation of respondent
Undersecretary Maria Elena H. Bautista as Officer-in-Charge (OIC) of the
Maritime Industry Authority (MARINA).
The Antecedents
On October 4, 2006, President Gloria Macapagal-Arroyo appointed respondent
Maria Elena H. Bautista (Bautista) as Undersecretary of the Department of
Transportation and Communications (DOTC), vice Agustin R. Bengzon. Bautista
was designated as Undersecretary for Maritime Transport of the department under
Special Order No. 2006-171 dated October 23, 2006.[1]
On September 1, 2008, following the resignation of then MARINA Administrator
Vicente T. Suazo, Jr., Bautista was designated as Officer-in-Charge (OIC), Office
of the Administrator, MARINA, in concurrent capacity as DOTC Undersecretary.[2]
On October 21, 2008, Dennis A. B. Funa in his capacity as taxpayer, concerned
citizen and lawyer, filed the instant petition challenging the constitutionality of
Bautistas appointment/designation, which is proscribed by the prohibition on the
President, Vice-President, the Members of the Cabinet, and their deputies and
assistants to hold any other office or employment.
On January 5, 2009, during the pendency of this petition, Bautista was appointed
Administrator of the MARINA vice Vicente T. Suazo, Jr.[3] and she assumed her
duties and responsibilities as such on February 2, 2009.[4]

The Case

Petitioner argues that Bautistas concurrent positions as DOTC Undersecretary and

MARINA OIC is in violation of Section 13, Article VII of the 1987 Constitution, as
interpreted and explained by this Court in Civil Liberties
Union v. Executive Secretary,[5] and reiterated in Public Interest Center, Inc. v. Elma.
[6]
He points out that while it was clarified in Civil Liberties Union that the
prohibition does not apply to those positions held in ex-officio capacities, the
position of MARINA Administrator is not ex-officio to the post of DOTC
Undersecretary, as can be gleaned from the provisions of its charter, Presidential
Decree (P.D.) No. 474,[7] as amended by Executive Order (EO) No. 125-A.
[8]
Moreover, the provisions on the DOTC in the Administrative Code of 1987,
specifically Sections 23 and 24, Chapter 6, Title XV, Book IV do not provide
any ex-officio role for the undersecretaries in any of the departments attached
agencies.The fact that Bautista was extended an appointment naming her as OIC of
MARINA shows that she does not occupy it in an ex-officio capacity since an exofficio position does not require any further warrant or appoint.[9]
Petitioner further contends that even if Bautistas appointment or designation as
OIC of MARINA was intended to be merely temporary, still, such designation
must not violate a standing constitutional prohibition, citing the rationale
in Achacoso v. Macaraig.[10] Section 13, Article VII of the 1987 Constitution does
not enumerate temporariness as one (1) of the exceptions thereto. And since a
temporary designation does not have a maximum duration, it can go on for months
or years. In effect, the temporary appointment/designation can effectively
circumvent the prohibition. Allowing undersecretaries or assistant secretaries to
occupy other government posts would open a Pandoras Box as to let them feast on
choice government positions. Thus, in case of vacancy where no permanent
appointment could as yet be made, the remedy would be to designate one (1) of the
two (2) Deputy Administrators as the Acting Administrator. Such would be the
logical course, the said officers being in a better position in terms of knowledge
and experience to run the agency in a temporary capacity. Should none of them
merit the Presidents confidence, then the practical remedy would be for
Undersecretary Bautista to first resign as Undersecretary in order to qualify her as
Administrator of MARINA. As to whether she in fact does not receive or has
waived any remuneration, the same does not matter because remuneration is not an

element in determining whether there has been a violation of Section 13, Article
VII of the 1987 Constitution.[11]
Petitioner likewise asserts the incompatibility between the posts of DOTC
Undersecretary and MARINA Administrator. The reason is that with respect to the
affairs in the maritime industry, the recommendations of the MARINA may be the
subject of counter or opposing recommendations from the Undersecretary for
Maritime Transport. In this case, the DOTC Undersecretary for Maritime Transport
and the OIC of MARINA have become one (1) and the same person. There is no
more checking and counter-checking of powers and functions, and therein lies the
danger to the maritime industry. There is no longer a person above the
Administrator of MARINA who will be reviewing the acts of said agency because
the person who should be overseeing MARINA, the Undersecretary for Maritime
Transport, has effectively been compromised.[12]
Finally, petitioner contends that there is a strong possibility in this case that the
challenge herein can be rendered moot through the expediency of simply revoking
the temporary appointment/designation. But since a similar violation can be
committed in the future, there exists a possibility of evading review, and hence
supervening events should not prevent the Court from deciding cases involving
grave violation of the 1987 Constitution, as this Court ruled in Public Interest
Center. Notwithstanding its mootness therefore, should it occur, there is a
compelling reason for this case to be decided: the issue raised being capable of
repetition, yet evading review.[13]
On the other hand, the respondents argue that the requisites of a judicial inquiry are
not present in this case. In fact, there no longer exists an actual controversy that
needs to be resolved in view of the appointment of respondent Bautista as
MARINA Administrator effective February 2, 2009 and the relinquishment of her
post as DOTC Undersecretary for Maritime Transport, which rendered the present
petition moot and academic. Petitioners prayer for a temporary restraining order or
writ of preliminary injunction is likewise moot and academic since, with this
supervening event, there is nothing left to enjoin.[14]
Respondents also raise the lack of legal standing of petitioner to bring this suit.
Clear from the standard set in Public Interest Center is the requirement that the

party suing as a taxpayer must prove that he has sufficient interest in preventing
illegal expenditure of public funds, and more particularly, his personal and
substantial interest in the case.Petitioner, however, has not alleged any personal or
substantial interest in this case. Neither has he claimed that public funds were
actually disbursed in connection with respondent Bautistas designation as
MARINA OIC. It is to be noted that respondent Bautista did not receive any salary
while she was MARINA OIC. As to the alleged transcendental importance of an
issue, this should not automatically confer legal standing on a party.[15]
Assuming for the sake of argument that the legal question raised herein needs to be
resolved, respondents submit that the petition should still be dismissed for being
unmeritorious considering that Bautistas concurrent designation as MARINA OIC
and DOTC Undersecretary was constitutional. There was no violation of Section
13, Article VII of the 1987 Constitution because respondent Bautista was merely
designated acting head of MARINA on September 1, 2008. She was designated
MARINA OIC, not appointed MARINA Administrator. With the resignation of
Vicente T. Suazo, Jr., the position of MARINA Administrator was left vacant, and
pending the appointment of permanent Administrator, respondent Bautista was
designated OIC in a temporary capacity for the purpose of preventing a hiatus in
the discharge of official functions. Her case thus falls under the recognized
exceptions to the rule against multiple offices, i.e., without additional
compensation (she did not receive any emolument as MARINA OIC) and as
required by the primary functions of the office. Besides, Bautista held the position
for four (4) months only, as in fact when she was appointed MARINA
Administrator on February 2, 2009, she relinquished her post as DOTC
Undersecretary for Maritime Transport, in acknowledgment of the proscription on
the holding of multiple offices.[16]
As to petitioners argument that the DOTC Undersecretary for Maritime Transport
and MARINA Administrator are incompatible offices, respondents cite the test laid
down in People v. Green,[17] which held that [T]he offices must subordinate, one
[over] the other, and they must, per se, have the right to interfere, one with the
other, before they are compatible at common law. Thus, respondents point out that
any recommendation by the MARINA Administrator concerning issues of policy
and administration go to the MARINA Board and not the Undersecretary for
Maritime Transport. The Undersecretary for Maritime Transport is, in turn, under

the direct supervision of the DOTC Secretary.Petitioners fear that there is no longer
a person above the Administrator of MARINA who will be reviewing the acts of
said agency (the Undersecretary for Maritime Transport) is, therefore, clearly
unfounded.[18]
In his Reply, petitioner contends that respondents argument on the incompatibility
of positions was made on the mere assumption that the positions of DOTC
Undersecretary for Maritime Transport and the administratorship of MARINA are
closely related and is governed by Section 7, paragraph 2, Article IX-B of the 1987
Constitution rather than by Section 13, Article VII. In other words, it was a mere
secondary argument. The fact remains that, incompatible or not, Section 13, Article
VII still does not allow the herein challenged designation.[19]
The sole issue to be resolved is whether or not the designation of respondent
Bautista as OIC of MARINA, concurrent with the position of DOTC
Undersecretary for Maritime Transport to which she had been appointed, violated
the constitutional proscription against dual or multiple offices for Cabinet
Members and their deputies and assistants.
Our Ruling
The petition is meritorious.
Requisites for Judicial Review
The courts power of judicial review, like almost all other powers conferred by the
Constitution, is subject to several limitations, namely: (1) there must be an actual
case or controversy calling for the exercise of judicial power; (2) the person
challenging the act must have standing to challenge; he must have a personal and
substantial interest in the case, such that he has sustained or will sustain, direct
injury as a result of its enforcement; (3) the question of constitutionality must be
raised at the earliest possible opportunity; and (4) the issue of constitutionality
must be the very lis mota of the case.[20] Respondents assert that the second
requisite is absent in this case.

Generally, a party will be allowed to litigate only when (1) he can show that he has
personally suffered some actual or threatened injury because of the allegedly
illegal conduct of the government; (2) the injury is fairly traceable to the
challenged action; and (3) the injury is likely to be redressed by a favorable action.
[21]
The question on standing is whether such parties have alleged such a personal
stake in the outcome of the controversy as to assure that concrete adverseness
which sharpens the presentation of issues upon which the court so largely depends
for illumination of difficult constitutional questions.[22]
In David v. Macapagal-Arroyo,[23] summarizing the rules culled from
jurisprudence, we held that taxpayers, voters, concerned citizens, and legislators
may be accorded standing to sue, provided that the following requirements are met:
(1) cases involve constitutional issues;
(2) for taxpayers, there must be a claim of illegal disbursement of public funds or
that the tax measure is unconstitutional;
(3) for voters, there must be a showing of obvious interest in the validity of the
election law in question;
(4) for concerned citizens, there must be a showing that the issues raised are of
transcendental importance which must be settled early; and
(5) for legislators, there must be a claim that the official action complained of
infringes upon their prerogatives as legislators. [EMPHASIS SUPPLIED.]

Petitioner having alleged a grave violation of the constitutional prohibition against

Members of the Cabinet, their deputies and assistants holding two (2) or more
positions in government, the fact that he filed this suit as a concerned citizen
sufficiently confers him with standing to sue for redress of such illegal act by
public officials.
The other objection raised by the respondent is that the resolution of this case had
been overtaken by events considering the effectivity of respondent Bautistas
appointment as MARINA Administrator effective February 2, 2009 and her
relinquishment of her former position as DOTC Undersecretary for Maritime
Transport.

A moot and academic case is one that ceases to present a justiciable controversy by
virtue of supervening events, so that a declaration thereon would be of no practical
use or value. Generally, courts decline jurisdiction over such case or dismiss it on
ground of mootness.[24] However, as we held in Public Interest Center, Inc. v. Elma,
[25]
supervening events, whether intended or accidental, cannot prevent the Court
from rendering a decision if there is a grave violation of the Constitution. Even in
cases where supervening events had made the cases moot, this Court did not
hesitate to resolve the legal or constitutional issues raised to formulate controlling
principles to guide the bench, bar, and public.[26]
As a rule, the writ of prohibition will not lie to enjoin acts already done. However,
as an exception to the rule on mootness, courts will decide a question otherwise
moot if it is capable of repetition yet evading review.[27] In the present case, the
mootness of the petition does not bar its resolution. The question of the
constitutionality of the Presidents appointment or designation of a Department
Undersecretary as officer-in-charge of an attached agency will arise in every such
appointment.[28]
Undersecretary
Bautistas
designation as MARINA OIC
falls
under the stricter prohibition
under Section 13, Article VII of
the 1987 Constitution.
Resolution of the present controversy hinges on the correct application of Section
13, Article VII of the 1987 Constitution, which provides:
SEC. 13. The President, Vice-President, the Members of the Cabinet,
and their deputies or assistants shall not, unless otherwise provided in this
Constitution, hold any other office or employment during their tenure. They
shall not, during said tenure, directly or indirectly practice any other profession,
participate in any business, or be financially interested in any contract with, or in
any franchise, or special privilege granted by the Government or any subdivision,
agency, or instrumentality thereof, including government-owned or controlled
corporations or their subsidiaries. They shall strictly avoid conflict of interest in
the conduct of their office.

On the other hand, Section 7, paragraph (2), Article IX-B reads:

SEC. 7. x x x
Unless otherwise allowed by law or the primary functions of his
position, no appointive official shall hold any other office or employment in the
Government or any subdivision, agency or instrumentality thereof, including
government-owned or controlled corporations or their subsidiaries.

In Civil Liberties Union, a constitutional challenge was brought before this Court
to nullify EO No. 284 issued by then President Corazon C. Aquino on July 25,
1987, which included Members of the Cabinet, undersecretaries and assistant
secretaries in its provisions limiting to two (2) the positions that appointive
officials of the Executive Department may hold in government and government
corporations. Interpreting the above provisions in the light of the history and times
and the conditions and circumstances under which the Constitution was framed,
this Court struck down as unconstitutional said executive issuance, saying that it
actually allows them to hold multiple offices or employment in direct
contravention of the express mandate of Section 13, Article VII of the 1987
Constitution prohibiting them from doing so, unless otherwise provided in
the 1987 Constitution itself.
Noting that the prohibition imposed on the President and his official family is allembracing, the disqualification was held to be absolute, as the holding of any other
office is not qualified by the phrase in the Government unlike in Section 13,
Article VI prohibiting Senators and Members of the House of Representatives
from holding any other office or employment in the Government; and when
compared with other officials and employees such as members of the armed forces
and civil service employees, we concluded thus:
These sweeping, all-embracing prohibitions imposed on the President and his
official family, which prohibitions are not similarly imposed on other public
officials or employees such as the Members of Congress, members of the civil
service in general and members of the armed forces, are proof of the intent of the
1987 Constitution to treat the President and his official family as a class by
itself and to impose upon said class stricter prohibitions.
Such intent of the 1986 Constitutional Commission to be stricter with the
President and his official family was also succinctly articulated by Commissioner
Vicente Foz after Commissioner Regalado Maambong noted during the floor

deliberations and debate that there was no symmetry between the Civil Service
prohibitions, originally found in the General Provisions and the anticipated report
on the Executive Department. Commissioner Foz Commented, We actually have
to be stricter with the President and the members of the Cabinet because they
exercise more powers and, therefore, more checks and restraints on them are
called for because there is more possibility of abuse in their case.
Thus, while all other appointive officials in the civil service are allowed
to hold other office or employment in the government during their tenure
when such is allowed by law or by the primary functions of their positions,
members of the Cabinet, their deputies and assistants may do so only when
expressly authorized by the Constitution itself. In other words, Section 7,
Article IX-B is meant to lay down the general rule applicable to all elective and
appointive public officials and employees, while Section 13, Article VII is meant
to be the exception applicable only to the President, the Vice-President,
Members of the Cabinet, their deputies and assistants.
xxxx
Since the evident purpose of the framers of the 1987 Constitution is to
impose a stricter prohibition on the President, Vice-President, members of the
Cabinet, their deputies and assistants with respect to holding multiple offices or
employment in the government during their tenure, the exception to this
prohibition must be read with equal severity. On its face, the language of Section
13, Article VII is prohibitory so that it must be understood as intended to be a
positive and unequivocal negation of the privilege of holding multiple
government offices or employment. Verily, wherever the language used in the
constitution is prohibitory, it is to be understood as intended to be a positive and
unequivocal negation. The phrase unless otherwise provided in this Constitution
must be given a literal interpretation to refer only to those particular instances
cited in the Constitution itself, to wit: the Vice-President being appointed as a
member of the Cabinet under Section 3, par. (2), Article VII; or acting as
President in those instances provided under Section 7, pars. (2) and (3), Article
VII; and, the Secretary of Justice being ex-officio member of the Judicial and Bar
Council by virtue of Section 8 (1), Article VIII.[29] [EMPHASIS SUPPLIED.]

Respondent Bautista being then the appointed Undersecretary of DOTC, she was
thus covered by the stricter prohibition under Section 13, Article VII and
consequently she cannot invoke the exception provided in Section 7, paragraph 2,
Article IX-B where holding another office is allowed by law or the primary
functions of the position. Neither was she designated OIC of MARINA in an exofficio capacity, which is the exception recognized in Civil Liberties Union.

The prohibition against holding dual or multiple offices or employment under

Section 13, Article VII of the 1987 Constitution was held inapplicable to posts
occupied by the Executive officials specified therein, without additional
compensation in an ex-officio capacity as provided by law and as required by the
primary functions of said office. The reason is that these posts do not comprise any
other office within the contemplation of the constitutional prohibition but are
properly an imposition of additional duties and functions on said officials. [30] Apart
from their bare assertion that respondent Bautista did not receive any compensation
when she was OIC of MARINA, respondents failed to demonstrate clearly that her
designation as such OIC was in an ex-officio capacity as required by the primary
functions of her office as DOTC Undersecretary for Maritime Transport.
MARINA was created by virtue of P.D. No. 474 issued by President Ferdinand E.
Marcos on June 1, 1974. It is mandated to undertake the following:
(a) Adopt and implement a practicable and coordinated Maritime Industry
Development Program which shall include, among others, the early
replacement of obsolescent and uneconomic vessels; modernization and
expansion of the Philippine merchant fleet, enhancement of domestic
capability for shipbuilding, repair and maintenance; and the development of
reservoir of trained manpower;
(b) Provide and help provide the necessary; (i) financial assistance to the industry
through public and private financing institutions and instrumentalities; (ii)
technological assistance; and (iii) in general, a favorable climate for
expansion of domestic and foreign investments in shipping enterprises; and
(c) Provide for the effective supervision, regulation and rationalization of the
organizational management, ownership and operations of all water transport
utilities, and other maritime enterprises.[31]

The management of MARINA is vested in the Maritime Administrator, who shall be

directly assisted by the Deputy Administrator for Planning and a Deputy
Administrator for Operations, who shall be appointed by the President for a term of
six (6) years. The law likewise prescribes the qualifications for the office, including
such adequate training and experience in economics, technology, finance, law,
management, public utility, or in other phases or aspects of the maritime industry,
and he or she is entitled to receive a fixed annual salary.[32] The Administrator shall
be directly responsible to the Maritime Industry Board, MARINAs governing body,

and shall have powers, functions and duties as provided in P.D. No. 474, which
provides, under Sections 11 and 12, for his or her general and specific functions,
respectively, as follows:
SEC. 11. General Powers and Functions of the Administrator. Subject to
the general supervision and control of the Board, the Administrators shall have the
following general powers, functions and duties;
a. To implement, enforce and apply the policies, programs, standards, guidelines,
procedures, decisions and rules and regulations issued, prescribed or
adopted by the Board pursuant to this Decree;
b. To undertake researches, studies, investigations and other activities and
projects, on his own initiative or upon instructions of the Board, and to
submit comprehensive reports and appropriate recommendations to the
Board for its information and action;
c. To undertake studies to determine present and future requirements for port
development including navigational aids, and improvement of waterways
and navigable waters in consultation with appropriate agencies;
d. To pursue continuing research and developmental programs on expansion and
modernization of the merchant fleet and supporting facilities taking into
consideration the needs of the domestic trade and the need of regional
economic cooperation schemes; and
e. To manage the affairs of the Authority subject to the provisions of this Decree
and applicable laws, orders, rules and regulations of other appropriate
government entities.
SEC. 12. Specific Powers and Functions of the Administrator. In addition
to his general powers and functions, the Administrator shall;
a. Issue Certificate of Philippine Registry for all vessels being used in Philippine
waters, including fishing vessels covered by Presidential Decree No. 43
except transient civilian vessels of foreign registry, vessels owned and/or
operated by the Armed Forces of the Philippines or by foreign governments
for military purposes, and bancas, sailboats and other watercraft which are not
motorized, of less than three gross tons;
b. Provide a system of assisting various officers, professionals, technicians,
skilled workers and seamen to be gainfully employed in shipping
enterprises, priority being given to domestic needs;
c. In collaboration and coordination with the Department of Labor, to look into,
and promote improvements in the working conditions and terms of
employment of the officers and crew of vessels of Philippine registry, and
of such officers and crew members who are Philippine citizens and

employed by foreign flag vessels, as well as of personnel of other shipping

enterprises, and to assist in the settlement of disputes between the
shipowners and ship operators and such officers and crew members and
between the owner or manager of other shipping enterprises and their
personnel;
d. To require any public water transport utility or Philippine flag vessels to
provide shipping services to any coastal areas in the country where such
services are necessary for the development of the area, to meet emergency
sealift requirements, or when public interest so requires;
e. Investigate by itself or with the assistance of other appropriate government
agencies or officials, or experts from the private sector, any matter within
its jurisdiction, except marine casualties or accidents which shall be
undertaken by the Philippine Coast Guard;
f. Impose, fix, collect and receive in accordance with the schedules approved by
the Board, from any shipping enterprise or other persons concerned, such
fees and other charges for the payment of its services;
g. Inspect, at least annually, the facilities of port and cargo operators and
recommend measures for adherence to prescribed standards of safety,
quality and operations;
h. Approve the sale, lease or transfer of management of vessels owned by
Philippine Nationals to foreign owned or controlled enterprises;
i. Prescribe and enforce rules and regulations for the prevention of marine
pollution in bays, harbors and other navigable waters of the Philippines, in
coordination with the government authorities concerned;
j. Establish and maintain, in coordination with the appropriate government offices
and agencies, a system of regularly and promptly producing, collating,
analyzing and disseminating traffic flows, port operations, marine
insurance services and other information on maritime matters;
k. Recommend such measures as may be necessary for the regulation of the
importation into and exportation from the Philippines of vessels, their
equipment and spare parts;
l. Implement the rules and regulations issued by the Board of Transportation;
m. Compile and codify all maritime laws, orders, rules and regulations, decisions
in leasing cases of courts and the Authoritys procedures and other
requirements relative to shipping and other shipping enterprises, make
them available to the public, and, whenever practicable to publish such
materials;
n. Delegate his powers in writing to either of the Deputy Administrators or any
other ranking officials of the Authority; Provided, That he informs the
Board of such delegation promptly; and

o. Perform such other duties as the Board may assign, and such acts as may be
necessary and proper to implement this Decree.

With the creation of the Ministry (now Department) of Transportation and

Communications by virtue of EO No. 546, MARINA was attached to the DOTC
for policy and program coordination on July 23, 1979. Its regulatory function was
likewise increased with the issuance of EO No. 1011 which abolished the Board of
Transportation and transferred the quasi-judicial functions pertaining to water
transportation to MARINA. On January 30, 1987, EO No. 125 (amended by EO
No. 125-A) was issued reorganizing the DOTC. The powers and functions of the
department and the agencies under its umbrella were defined, further increasing the
responsibility of MARINA to the industry.Republic Act No. 9295, otherwise
known as the The Domestic Shipping Development Act of 2004, [33] further
strengthened MARINAs regulatory powers and functions in the shipping sector.
Given the vast responsibilities and scope of administration of the Authority, we are
hardly persuaded by respondents submission that respondent Bautistas designation
as OIC of MARINA was merely an imposition of additional duties related to her
primary position as DOTC Undersecretary for Maritime Transport. It appears that
the DOTC Undersecretary for Maritime Transport is not even a member of the
Maritime Industry Board, which includes the DOTC Secretary as Chairman, the
MARINA Administrator as Vice-Chairman, and the following as members:
Executive Secretary (Office of the President), Philippine Ports Authority General
Manager, Department of National Defense Secretary, Development Bank of the
Philippines General Manager, and the Department of Trade and Industry Secretary.
[34]

Finally, the Court similarly finds respondents theory that being just a designation,
and temporary at that, respondent Bautista was never really appointed as OIC
Administrator of MARINA, untenable. In Binamira v. Garrucho, Jr.,[35] we
distinguished between the terms appointment and designation, as follows:
Appointment may be defined as the selection, by the authority vested with
the power, of an individual who is to exercise the functions of a given
office. When completed, usually with its confirmation, the appointment results in
security of tenure for the person chosen unless he is replaceable at pleasure
because of the nature of his office. Designation, on the other hand, connotes
merely the imposition by law of additional duties on an incumbent official, as
where, in the case before us, the Secretary of Tourism is designated Chairman of

the Board of Directors of the Philippine Tourism Authority, or where, under the
Constitution, three Justices of the Supreme Court are designated by the Chief
Justice to sit in the Electoral Tribunal of the Senate or the House of
Representatives. It is said that appointment is essentially executive while
designation is legislative in nature.
Designation may also be loosely defined as an appointment because it
likewise involves the naming of a particular person to a specified public
office. That is the common understanding of the term. However, where the person
is merely designated and not appointed, the implication is that he shall hold the
office only in a temporary capacity and may be replaced at will by the appointing
authority. In this sense, the designation is considered only an acting or temporary
appointment, which does not confer security of tenure on the person named.
[36]
[EMPHASIS SUPPLIED.]

Clearly, respondents reliance on the foregoing definitions is misplaced considering

that the above-cited case addressed the issue of whether petitioner therein acquired
valid title to the disputed position and so had the right to security of tenure. It must be
stressed though that while the designation was in the nature of an acting and
temporary capacity, the words hold the office were employed. Such holding of office
pertains to both appointment and designation because the appointee or
designate performs the duties and functions of the office. The 1987 Constitution in
prohibiting dual or multiple offices, as well as incompatible offices, refers to the
holding of the office, and not to the nature of the appointment or designation, words
which were not even found in Section 13, Article VII nor in Section 7, paragraph 2,
Article IX-B. To hold an office means to possess or occupy the same, or to be in
possession and administration,[37] which implies nothing less than the actual discharge
of the functions and duties of the office.
The disqualification laid down in Section 13, Article VII is aimed at preventing the
concentration of powers in the Executive Department officials, specifically the
President, Vice-President, Members of the Cabinet and their deputies and
assistants. Civil Liberties Union traced the history of the times and the conditions
under which the Constitution was framed, and construed the Constitution
consistent with the object sought to be accomplished by adoption of such
provision, and the evils sought to be avoided or remedied.We recalled the practice,
during the Marcos regime, of designating members of the Cabinet, their deputies
and assistants as members of the governing bodies or boards of various
government agencies and instrumentalities, including government-owned or

controlled corporations. This practice of holding multiple offices or positions in the

government led to abuses by unscrupulous public officials, who took advantage of
this scheme for purposes of self-enrichment. The blatant betrayal of public trust
evolved into one of the serious causes of discontent with the Marcos regime. It was
therefore quite inevitable and in consonance with the overwhelming sentiment of
the people that the 1986 Constitutional Commission would draft into the proposed
Constitution the provisions under consideration, which were envisioned to remedy,
if not correct, the evils that flow from the holding of multiple governmental offices
and employment.[38] Our declaration in that case cannot be more explicit:
But what is indeed significant is the fact that although Section 7, Article
IX-B already contains a blanket prohibition against the holding of multiple offices
or employment in the government subsuming both elective and appointive public
officials, the Constitutional Commission should see it fit to formulate another
provision, Sec. 13, Article VII, specifically prohibiting the President, VicePresident, members of the Cabinet, their deputies and assistants from holding any
other office or employment during their tenure, unless otherwise provided in the
Constitution itself.
Evidently, from this move as well as in the different phraseologies of the
constitutional provisions in question, the intent of the framers of the
Constitution was to impose a stricter prohibition on the President and his
official family in so far as holding other offices or employment in the
government or elsewhere is concerned.[39] [EMPHASIS SUPPLIED.]

Such laudable intent of the law will be defeated and rendered sterile if we are to
adopt the semantics of respondents. It would open the veritable floodgates of
circumvention of an important constitutional disqualification of officials in the
Executive Department and of limitations on the Presidents power of appointment in
the guise of temporary designations of Cabinet Members, undersecretaries and
assistant secretaries as officers-in-charge of government agencies, instrumentalities,
or government-owned or controlled corporations.
As to respondents contention that the concurrent positions of DOTC
Undersecretary for Maritime Transport and MARINA OIC Administrator are not
incompatible offices, we find no necessity for delving into this
matter. Incompatibility of offices is irrelevant in this case, unlike in the case of
PCGG Chairman Magdangal Elma in Public Interest Center, Inc. v. Elma.
[40]
Therein we held that Section 13, Article VII is not applicable to the PCGG

Chairman or to the Chief Presidential Legal Counsel, as he is not a cabinet

member, undersecretary or assistant secretary.[41]
WHEREFORE, the petition is GRANTED. The designation of respondent
Ma. Elena H. Bautista as Officer-in-Charge, Office of the Administrator,
Maritime Industry Authority, in a concurrent capacity with her position as DOTC
Undersecretary
for
Maritime
Transport,
is
hereby
declared UNCONSTITUTIONAL for being violative of Section 13, Article VII of
the 1987 Constitution and therefore, NULL and VOID.
No costs.
SO ORDERED.

KMU vs Garcia
Public utilities are privately owned and operated businesses whose service are essential to the
general public. They are enterprises which specially cater to the needs of the public and conduce to
their comfort and convenience. As such, public utility services are impressed with public interest and
concern. The same is true with respect to the business of common carrier which holds such a
peculiar relation to the public interest that there is superinduced upon it the right of public regulation
when private properties are affected with public interest, hence, they cease to be juris privati only.
When, therefore, one devotes his property to a use in which the public has an interest, he, in effect
grants to the public an interest in that use, and must submit to the control by the public for the
common good, to the extent of the interest he has thus created. 1
An abdication of the licensing and regulatory government agencies of their functions as the instant
petition seeks to show, is indeed lamentable. Not only is it an unsound administrative policy but it is
inimical to public trust and public interest as well.
The instant petition for certiorari assails the constitutionality and validity of certain memoranda,
circulars and/or orders of the Department of Transportation and Communications (DOTC) and the
Land Transportation Franchising and Regulatory Board LTFRB) 2 which, among others, (a) authorize
provincial bus and jeepney operators to increase or decrease the prescribed transportation fares without
application therefor with the LTFRB and without hearing and approval thereof by said agency in violation
of Sec. 16(c) of Commonwealth Act No. 146, as amended, otherwise known as the Public Service Act,
and in derogation of LTFRB's duty to fix and determine just and reasonable fares by delegating that
function to bus operators, and (b) establish a presumption of public need in favor of applicants for
certificates of public convenience (CPC) and place on the oppositor the burden of proving that there is no
need for the proposed service, in patent violation not only of Sec. 16(c) of CA 146, as amended, but also
of Sec. 20(a) of the same Act mandating that fares should be "just and reasonable." It is, likewise,
violative of the Rules of Court which places upon each party the burden to prove his own affirmative
allegations. 3 The offending provisions contained in the questioned issuances pointed out by petitioner,

have resulted in the introduction into our highways and thoroughfares thousands of old and smokebelching buses, many of which are right-hand driven, and have exposed our consumers to the burden of
spiraling costs of public transportation without hearing and due process.

The following memoranda, circulars and/or orders are sought to be nullified by the instant
petition, viz: (a) DOTC Memorandum Order 90-395, dated June 26, 1990 relative to the
implementation of a fare range scheme for provincial bus services in the country; (b) DOTC
Department Order No.
92-587, dated March 30, 1992, defining the policy framework on the regulation of transport services;
(c) DOTC Memorandum dated October 8, 1992, laying down rules and procedures to implement
Department Order No. 92-587; (d) LTFRB Memorandum Circular No. 92-009, providing
implementing guidelines on the DOTC Department Order No. 92-587; and (e) LTFRB Order dated
March 24, 1994 in Case No. 94-3112.
The relevant antecedents are as follows:
On June 26, 1990; then Secretary of DOTC, Oscar M. Orbos, issued Memorandum Circular No. 90395 to then LTFRB Chairman, Remedios A.S. Fernando allowing provincial bus operators to charge
passengers rates within a range of 15% above and 15% below the LTFRB official rate for a period of
one (1) year. The text of the memorandum order reads in full:
One of the policy reforms and measures that is in line with the thrusts and the
priorities set out in the Medium-Term Philippine Development Plan (MTPDP) 1987
1992) is the liberalization of regulations in the transport sector. Along this line, the
Government intends to move away gradually from regulatory policies and make
progress towards greater reliance on free market forces.
Based on several surveys and observations, bus companies are already charging
passenger rates above and below the official fare declared by LTFRB on many
provincial routes. It is in this context that some form of liberalization on public
transport fares is to be tested on a pilot basis.
In view thereof, the LTFRB is hereby directed to immediately publicize a fare range
scheme for all provincial bus routes in country (except those operating within Metro
Manila). Transport Operators shall be allowed to charge passengers within a range
of fifteen percent (15%) above and fifteen percent (15%) below the LTFRB official
rate for a period of one year.
Guidelines and procedures for the said scheme shall be prepared by LTFRB in
coordination with the DOTC Planning Service.
The implementation of the said fare range scheme shall start on 6 August 1990.
For compliance. (Emphasis ours.)
Finding the implementation of the fare range scheme "not legally feasible," Remedios A.S. Fernando
submitted the following memorandum to Oscar M. Orbos on July 24, 1990, to wit:

With reference to DOTC Memorandum Order No. 90-395 dated 26 June 1990 which
the LTFRB received on 19 July 1990, directing the Board "to immediately publicize a
fare range scheme for all provincial bus routes in the country (except those operating
within Metro Manila)" that will allow operators "to charge passengers within a range
of fifteen percent (15%) above and fifteen percent (15%) below the LTFRB official
rate for a period of one year" the undersigned is respectfully adverting the
Secretary's attention to the following for his consideration:
1. Section 16(c) of the Public Service Act prescribes the following for
the fixing and determination of rates (a) the rates to be approved
should be proposed by public service operators; (b) there should be a
publication and notice to concerned or affected parties in the territory
affected; (c) a public hearing should be held for the fixing of the rates;
hence, implementation of the proposed fare range scheme on August
6 without complying with the requirements of the Public Service Act
may not be legally feasible.
2. To allow bus operators in the country to charge fares fifteen (15%)
above the present LTFRB fares in the wake of the devastation, death
and suffering caused by the July 16 earthquake will not be socially
warranted and will be politically unsound; most likely public criticism
against the DOTC and the LTFRB will be triggered by the
untimely motu propio implementation of the proposal by the mere
expedient of publicizing the fare range scheme without calling a
public hearing, which scheme many as early as during the
Secretary's predecessor know through newspaper reports and
columnists' comments to be Asian Development Bank and World
Bank inspired.
3. More than inducing a reduction in bus fares by fifteen percent
(15%) the implementation of the proposal will instead trigger an
upward adjustment in bus fares by fifteen percent (15%) at a time
when hundreds of thousands of people in Central and Northern
Luzon, particularly in Central Pangasinan, La Union, Baguio City,
Nueva Ecija, and the Cagayan Valley are suffering from the
devastation and havoc caused by the recent earthquake.
4. In lieu of the said proposal, the DOTC with its agencies involved in
public transportation can consider measures and reforms in the
industry that will be socially uplifting, especially for the people in the
areas devastated by the recent earthquake.
In view of the foregoing considerations, the undersigned respectfully suggests that
the implementation of the proposed fare range scheme this year be further studied
and evaluated.
On December 5, 1990, private respondent Provincial Bus Operators Association of the Philippines,
Inc. (PBOAP) filed an application for fare rate increase. An across-the-board increase of eight and a
half centavos (P0.085) per kilometer for all types of provincial buses with a minimum-maximum fare

range of fifteen (15%) percent over and below the proposed basic per kilometer fare rate, with the
said minimum-maximum fare range applying only to ordinary, first class and premium class buses
and a fifty-centavo (P0.50) minimum per kilometer fare for aircon buses, was sought.
On December 6, 1990, private respondent PBOAP reduced its applied proposed fare to an acrossthe-board increase of six and a half (P0.065) centavos per kilometer for ordinary buses. The
decrease was due to the drop in the expected price of diesel.
The application was opposed by the Philippine Consumers Foundation, Inc. and Perla C. Bautista
alleging that the proposed rates were exorbitant and unreasonable and that the application
contained no allegation on the rate of return of the proposed increase in rates.
On December 14, 1990, public respondent LTFRB rendered a decision granting the fare rate
increase in accordance with the following schedule of fares on a straight computation method, viz:
AUTHORIZED FARES
LUZON
MIN. OF 5 KMS. SUCCEEDING KM.
REGULAR P1.50 P0.37
STUDENT P1.15 P0.28
VISAYAS/MINDANAO
REGULAR P1.60 P0.375
STUDENT P1.20 P0.285
FIRST CLASS (PER KM.)
LUZON P0.385
VISAYAS/
MINDANAO P0.395
PREMIERE CLASS (PER KM.)
LUZON P0.395
VISAYAS/
MINDANAO P0.405
AIRCON (PER KM.) P0.415. 4
On March 30, 1992, then Secretary of the Department of Transportation and Communications Pete
Nicomedes Prado issued Department Order No.
92-587 defining the policy framework on the regulation of transport services. The full text of the said
order is reproduced below in view of the importance of the provisions contained therein:
WHEREAS, Executive Order No. 125 as amended, designates the Department of
Transportation and Communications (DOTC) as the primary policy, planning,
regulating and implementing agency on transportation;

WHEREAS, to achieve the objective of a viable, efficient, and dependable

transportation system, the transportation regulatory agencies under or attached to
the DOTC have to harmonize their decisions and adopt a common philosophy and
direction;
WHEREAS, the government proposes to build on the successful liberalization
measures pursued over the last five years and bring the transport sector nearer to a
balanced longer term regulatory framework;
NOW, THEREFORE, pursuant to the powers granted by laws to the DOTC, the
following policies and principles in the economic regulation of land, air, and water
transportation services are hereby adopted:
1. Entry into and exit out of the industry. Following the Constitutional dictum against
monopoly, no franchise holder shall be permitted to maintain a monopoly on any
route. A minimum of two franchise holders shall be permitted to operate on any route.
The requirements to grant a certificate to operate, or certificate of public
convenience, shall be: proof of Filipino citizenship, financial capability, public need,
and sufficient insurance cover to protect the riding public.
In determining public need, the presumption of need for a service shall be deemed in
favor of the applicant. The burden of proving that there is no need for a proposed
service shall be with the oppositor(s).
In the interest of providing efficient public transport services, the use of the "prior
operator" and the "priority of filing" rules shall be discontinued. The route measured
capacity test or other similar tests of demand for vehicle/vessel fleet on any route
shall be used only as a guide in weighing the merits of each franchise application
and not as a limit to the services offered.
Where there are limitations in facilities, such as congested road space in urban
areas, or at airports and ports, the use of demand management measures in
conformity with market principles may be considered.
The right of an operator to leave the industry is recognized as a business decision,
subject only to the filing of appropriate notice and following a phase-out period, to
inform the public and to minimize disruption of services.
2. Rate and Fare Setting. Freight rates shall be freed gradually from government
controls. Passenger fares shall also be deregulated, except for the lowest class of
passenger service (normally third class passenger transport) for which the
government will fix indicative or reference fares. Operators of particular services may
fix their own fares within a range 15% above and below the indicative or reference
rate.
Where there is lack of effective competition for services, or on specific routes, or for
the transport of particular commodities, maximum mandatory freight rates or

passenger fares shall be set temporarily by the government pending actions to

increase the level of competition.
For unserved or single operator routes, the government shall contract such services
in the most advantageous terms to the public and the government, following public
bids for the services. The advisability of bidding out the services or using other kinds
of incentives on such routes shall be studied by the government.
3. Special Incentives and Financing for Fleet Acquisition. As a matter of policy, the
government shall not engage in special financing and incentive programs, including
direct subsidies for fleet acquisition and expansion. Only when the market situation
warrants government intervention shall programs of this type be considered. Existing
programs shall be phased out gradually.
The Land Transportation Franchising and Regulatory Board, the Civil Aeronautics
Board, the Maritime Industry Authority are hereby directed to submit to the Office of
the Secretary, within forty-five (45) days of this Order, the detailed rules and
procedures for the Implementation of the policies herein set forth. In the formulation
of such rules, the concerned agencies shall be guided by the most recent studies on
the subjects, such as the Provincial Road Passenger Transport Study, the Civil
Aviation Master Plan, the Presidential Task Force on the Inter-island Shipping
Industry, and the Inter-island Liner Shipping Rate Rationalization Study.
For the compliance of all concerned. (Emphasis ours)
On October 8, 1992, public respondent Secretary of the Department of Transportation and
Communications Jesus B. Garcia, Jr. issued a memorandum to the Acting Chairman of the LTFRB
suggesting swift action on the adoption of rules and procedures to implement above-quoted
Department Order No. 92-587 that laid down deregulation and other liberalization policies for the
transport sector. Attached to the said memorandum was a revised draft of the required rules and
procedures covering (i) Entry Into and Exit Out of the Industry and (ii) Rate and Fare Setting, with
comments and suggestions from the World Bank incorporated therein. Likewise, resplendent from
the said memorandum is the statement of the DOTC Secretary that the adoption of the rules and
procedures is a pre-requisite to the approval of the Economic Integration Loan from the World
Bank. 5
On February 17, 1993, the LTFRB issued Memorandum Circular
No. 92-009 promulgating the guidelines for the implementation of DOTC Department Order No. 92587. The Circular provides, among others, the following challenged portions:
xxx xxx xxx
IV. Policy Guidelines on the Issuance of Certificate of Public Convenience.
The issuance of a Certificate of Public Convenience is determined by public
need. The presumption of public need for a service shall be deemed in favor of the
applicant, while burden of proving that there is no need for the proposed service
shall be the oppositor'(s).

xxx xxx xxx

V. Rate and Fare Setting
The control in pricing shall be liberalized to introduce price competition
complementary with the quality of service, subject to prior notice and public hearing.
Fares shall not be provisionally authorized without public hearing.
A. On the General Structure of Rates
1. The existing authorized fare range system of plus or minus 15 per cent for
provincial buses and jeepneys shall be widened to 20% and -25% limit in 1994 with
the authorized fare to be replaced by an indicative or reference rate as the basis for
the expanded fare range.
2. Fare systems for aircon buses are liberalized to cover first class and premier
services.
xxx xxx xxx
(Emphasis ours).
Sometime in March, 1994, private respondent PBOAP, availing itself of the deregulation policy of the
DOTC allowing provincial bus operators to collect plus 20% and minus 25% of the prescribed fare
without first having filed a petition for the purpose and without the benefit of a public hearing,
announced a fare increase of twenty (20%) percent of the existing fares. Said increased fares were
to be made effective on March 16, 1994.
On March 16, 1994, petitioner KMU filed a petition before the LTFRB opposing the upward
adjustment of bus fares.
On March 24, 1994, the LTFRB issued one of the assailed orders dismissing the petition for lack of
merit. The dispositive portion reads:
PREMISES CONSIDERED, this Board after considering the arguments of the
parties, hereby DISMISSES FOR LACK OF MERIT the petition filed in the aboveentitled case. This petition in this case was resolved with dispatch at the request of
petitioner to enable it to immediately avail of the legal remedies or options it is
entitled under existing laws.
SO ORDERED. 6
Hence, the instant petition for certiorari with an urgent prayer for issuance of a temporary restraining
order.
The Court, on June 20, 1994, issued a temporary restraining order enjoining, prohibiting and
preventing respondents from implementing the bus fare rate increase as well as the questioned
orders and memorandum circulars. This meant that provincial bus fares were rolled back to the

levels duly authorized by the LTFRB prior to March 16, 1994. A moratorium was likewise enforced on
the issuance of franchises for the operation of buses, jeepneys, and taxicabs.
Petitioner KMU anchors its claim on two (2) grounds. First, the authority given by respondent LTFRB
to provincial bus operators to set a fare range of plus or minus fifteen (15%) percent, later increased
to plus twenty (20%) and minus twenty-five (-25%) percent, over and above the existing authorized
fare without having to file a petition for the purpose, is unconstitutional, invalid and illegal. Second,
the establishment of a presumption of public need in favor of an applicant for a proposed transport
service without having to prove public necessity, is illegal for being violative of the Public Service Act
and the Rules of Court.
In its Comment, private respondent PBOAP, while not actually touching upon the issues raised by
the petitioner, questions the wisdom and the manner by which the instant petition was filed. It asserts
that the petitioner has no legal standing to sue or has no real interest in the case at bench and in
obtaining the reliefs prayed for.
In their Comment filed by the Office of the Solicitor General, public respondents DOTC Secretary
Jesus B. Garcia, Jr. and the LTFRB asseverate that the petitioner does not have the standing to
maintain the instant suit. They further claim that it is within DOTC and LTFRB's authority to set a fare
range scheme and establish a presumption of public need in applications for certificates of public
convenience.
We find the instant petition impressed with merit.
At the outset, the threshold issue of locus standi must be struck. Petitioner KMU has the standing to
sue.
The requirement of locus standi inheres from the definition of judicial power. Section 1 of Article VIII
of the Constitution provides:
xxx xxx xxx
Judicial power includes the duty of the courts of justice to settle actual controversies
involving rights which are legally demandable and enforceable, and to determine
whether or not there has been a grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of any branch or instrumentality of the Government.
In Lamb v. Phipps, 7 we ruled that judicial power is the power to hear and decide causes pending
between parties who have the right to sue in the courts of law and equity. Corollary to this provision is the
principle of locus standi of a party litigant. One who is directly affected by and whose interest is immediate
and substantial in the controversy has the standing to sue. The rule therefore requires that a party must
show a personal stake in the outcome of the case or an injury to himself that can be redressed by a
favorable decision so as to warrant an invocation of the court's jurisdiction and to justify the exercise of
the court's remedial powers in his behalf. 8
In the case at bench, petitioner, whose members had suffered and continue to suffer grave and
irreparable injury and damage from the implementation of the questioned memoranda, circulars
and/or orders, has shown that it has a clear legal right that was violated and continues to be violated
with the enforcement of the challenged memoranda, circulars and/or orders. KMU members, who

avail of the use of buses, trains and jeepneys everyday, are directly affected by the burdensome cost
of arbitrary increase in passenger fares. They are part of the millions of commuters who comprise
the riding public. Certainly, their rights must be protected, not neglected nor ignored.
Assuming arguendo that petitioner is not possessed of the standing to sue, this court is ready to
brush aside this barren procedural infirmity and recognize the legal standing of the petitioner in view
of the transcendental importance of the issues raised. And this act of liberality is not without judicial
precedent. As early as the Emergency Powers Cases, this Court had exercised its discretion and
waived the requirement of proper party. In the recent case of Kilosbayan, Inc., et al. v. Teofisto
Guingona, Jr., et al., 9 we ruled in the same lines and enumerated some of the cases where the same
policy was adopted, viz:
. . . A party's standing before this Court is a procedural technicality which it may, in
the exercise of its discretion, set aside in view of the importance of the issues raised.
In the landmark Emergency Powers Cases, [G.R. No. L-2044 (Araneta v. Dinglasan);
G.R. No. L-2756 (Araneta
v. Angeles); G.R. No. L-3054 (Rodriguez v. Tesorero de Filipinas); G.R. No. L-3055
(Guerrero v. Commissioner of Customs); and G.R. No. L-3056 (Barredo v.
Commission on Elections), 84 Phil. 368 (1949)], this Court brushed aside this
technicality because "the transcendental importance to the public of these cases
demands that they be settled promptly and definitely, brushing aside, if we must,
technicalities of procedure. (Avelino vs. Cuenco, G.R. No. L-2621)." Insofar as
taxpayers' suits are concerned, this Court had declared that it "is not devoid of
discretion as to whether or not it should be entertained," (Tan v. Macapagal, 43
SCRA 677, 680 [1972]) or that it "enjoys an open discretion to entertain the same or
not." [Sanidad v. COMELEC, 73 SCRA 333 (1976)].
xxx xxx xxx
In line with the liberal policy of this Court on locus standi, ordinary taxpayers,
members of Congress, and even association of planters, and
non-profit civic organizations were allowed to initiate and prosecute actions before
this court to question the constitutionality or validity of laws, acts, decisions, rulings,
or orders of various government agencies or instrumentalities. Among such cases
were those assailing the constitutionality of (a) R.A. No. 3836 insofar as it allows
retirement gratuity and commutation of vacation and sick leave to Senators and
Representatives and to elective officials of both Houses of Congress (Philippine
Constitution Association, Inc. v. Gimenez, 15 SCRA 479 [1965]); (b) Executive Order
No. 284, issued by President Corazon C. Aquino on 25 July 1987, which allowed
members of the cabinet, their undersecretaries, and assistant secretaries to hold
other government offices or positions (Civil Liberties Union v. Executive Secretary,
194 SCRA 317 [1991]); (c) the automatic appropriation for debt service in the
General Appropriations Act (Guingona v. Carague, 196 SCRA 221 [1991]; (d) R.A.
No. 7056 on the holding of desynchronized elections (Osmea v. Commission on
Elections, 199 SCRA 750 [1991]); (e) P.D. No. 1869 (the charter of the Philippine
Amusement and Gaming Corporation) on the ground that it is contrary to morals,
public policy, and order (Basco v. Philippine Amusement and Gaming Corp., 197
SCRA 52 [1991]); and (f) R.A. No. 6975, establishing the Philippine National Police.
(Carpio v. Executive Secretary, 206 SCRA 290 [1992]).

Other cases where we have followed a liberal policy regarding locus standi include
those attacking the validity or legality of (a) an order allowing the importation of rice
in the light of the prohibition imposed by R.A. No. 3452 (Iloilo Palay and Corn
Planters Association, Inc. v. Feliciano, 13 SCRA 377 [1965]; (b) P.D. Nos. 991 and
1033 insofar as they proposed amendments to the Constitution and P.D. No. 1031
insofar as it directed the COMELEC to supervise, control, hold, and conduct the
referendum-plebiscite on 16 October 1976 (Sanidad v. Commission on
Elections, supra); (c) the bidding for the sale of the 3,179 square meters of land at
Roppongi, Minato-ku, Tokyo, Japan (Laurel v. Garcia, 187 SCRA 797 [1990]); (d) the
approval without hearing by the Board of Investments of the amended application of
the Bataan Petrochemical Corporation to transfer the site of its plant from Bataan to
Batangas and the validity of such transfer and the shift of feedstock from naphtha
only to naphtha and/or liquefied petroleum gas (Garcia v. Board of Investments, 177
SCRA 374 [1989]; Garcia v. Board of Investments, 191 SCRA 288 [1990]); (e) the
decisions, orders, rulings, and resolutions of the Executive Secretary, Secretary of
Finance, Commissioner of Internal Revenue, Commissioner of Customs, and the
Fiscal Incentives Review Board exempting the National Power Corporation from
indirect tax and duties (Maceda v. Macaraig, 197 SCRA 771 [1991]); (f) the orders of
the Energy Regulatory Board of 5 and 6 December 1990 on the ground that the
hearings conducted on the second provisional increase in oil prices did not allow the
petitioner substantial cross-examination; (Maceda v. Energy Regulatory Board, 199
SCRA 454 [1991]); (g) Executive Order No. 478 which levied a special duty of P0.95
per liter of imported oil products (Garcia v. Executive Secretary, 211 SCRA 219
[1992]); (h) resolutions of the Commission on Elections concerning the
apportionment, by district, of the number of elective members of Sanggunians (De
Guia vs. Commission on Elections, 208 SCRA 420 [1992]); and (i) memorandum
orders issued by a Mayor affecting the Chief of Police of Pasay City (Pasay Law and
Conscience Union, Inc. v. Cuneta, 101 SCRA 662 [1980]).
In the 1975 case of Aquino v. Commission on Elections (62 SCRA 275 [1975]), this
Court, despite its unequivocal ruling that the petitioners therein had no personality to
file the petition, resolved nevertheless to pass upon the issues raised because of the
far-reaching implications of the petition. We did no less in De Guia v. COMELEC
(Supra) where, although we declared that De Guia "does not appear to have locus
standi, a standing in law, a personal or substantial interest," we brushed aside the
procedural infirmity "considering the importance of the issue involved, concerning as
it does the political exercise of qualified voters affected by the apportionment, and
petitioner alleging abuse of discretion and violation of the Constitution by
respondent."
Now on the merits of the case.
On the fare range scheme.
Section 16(c) of the Public Service Act, as amended, reads:
Sec. 16. Proceedings of the Commission, upon notice and hearing. The
Commission shall have power, upon proper notice and hearing in accordance with

the rules and provisions of this Act, subject to the limitations and exceptions
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 hearing thereon 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 used principally or secondarily for the
promotion of a private business, the net profits of said private business shall be
considered in relation with the public service of such operator for the purpose of
fixing the rates. (Emphasis ours).
xxx xxx xxx
Under the foregoing provision, the Legislature delegated to the defunct Public Service
Commission the power of fixing the rates of public services. Respondent LTFRB, the existing
regulatory body today, is likewise vested with the same under Executive Order No. 202 dated
June 19, 1987. Section 5(c) of the said executive order authorizes LTFRB "to determine,
prescribe, approve and periodically review and adjust, reasonable fares, rates and other
related charges, relative to the operation of public land transportation services provided by
motorized vehicles."
Such delegation of legislative power to an administrative agency is permitted in order to adapt to the
increasing complexity of modern life. As subjects for governmental regulation multiply, so does the
difficulty of administering the laws. Hence, specialization even in legislation has become necessary.
Given the task of determining sensitive and delicate matters as
route-fixing and rate-making for the transport sector, the responsible regulatory body is entrusted
with the power of subordinate legislation. With this authority, an administrative body and in this case,
the LTFRB, may implement broad policies laid down in a statute by "filling in" the details which the
Legislature may neither have time or competence to provide. However, nowhere under the aforesaid
provisions of law are the regulatory bodies, the PSC and LTFRB alike, authorized to delegate that
power to a common carrier, a transport operator, or other public service.
In the case at bench, the authority given by the LTFRB to the provincial bus operators to set a fare
range over and above the authorized existing fare, is illegal and invalid as it is tantamount to an
undue delegation of legislative authority. Potestas delegata non delegari potest. What has been
delegated cannot be delegated. This doctrine is based on the ethical principle that such a delegated
power constitutes not only a right but a duty to be performed by the delegate through the
instrumentality of his own judgment and not through the intervening mind of another. 10 A further
delegation of such power would indeed constitute a negation of the duty in violation of the trust reposed in
the delegate mandated to discharge it directly. 11 The policy of allowing the provincial bus operators to
change and increase their fares at will would result not only to a chaotic situation but to an anarchic state
of affairs. This would leave the riding public at the mercy of transport operators who may increase fares
every hour, every day, every month or every year, whenever it pleases them or whenever they deem it

"necessary" to do so. In Panay Autobus Co. v. Philippine Railway Co., 12 where respondent Philippine
Railway Co. was granted by the Public Service Commission the authority to change its freight rates at will,
this Court categorically declared that:

In our opinion, the Public Service Commission was not authorized by law to delegate
to the Philippine Railway Co. the power of altering its freight rates whenever it should
find it necessary to do so in order to meet the competition of road trucks and
autobuses, or to change its freight rates at will, or to regard its present rates as
maximum rates, and to fix lower rates whenever in the opinion of the Philippine
Railway Co. it would be to its advantage to do so.
The mere recital of the language of the application of the Philippine Railway Co. is
enough to show that it is untenable. The Legislature has delegated to the Public
Service Commission the power of fixing the rates of public services, but it has not
authorized the Public Service Commission to delegate that power to a common
carrier or other public service. The rates of public services like the Philippine Railway
Co. have been approved or fixed by the Public Service Commission, and any change
in such rates must be authorized or approved by the Public Service Commission
after they have been shown to be just and reasonable. The public service may, of
course, propose new rates, as the Philippine Railway Co. did in case No. 31827, but
it cannot lawfully make said new rates effective without the approval of the Public
Service Commission, and the Public Service Commission itself cannot authorize a
public service to enforce new rates without the prior approval of said rates by the
commission. The commission must approve new rates when they are submitted to it,
if the evidence shows them to be just and reasonable, otherwise it must disapprove
them. Clearly, the commission cannot determine in advance whether or not the new
rates of the Philippine Railway Co. will be just and reasonable, because it does not
know what those rates will be.
In the present case the Philippine Railway Co. in effect asked for permission to
change its freight rates at will. It may change them every day or every hour,
whenever it deems it necessary to do so in order to meet competition or whenever in
its opinion it would be to its advantage. Such a procedure would create a most
unsatisfactory state of affairs and largely defeat the purposes of the public service
law. 13 (Emphasis ours).
One veritable consequence of the deregulation of transport fares is a compounded fare. If transport
operators will be authorized to impose and collect an additional amount equivalent to 20% over and
above the authorized fare over a period of time, this will unduly prejudice a commuter who will be
made to pay a fare that has been computed in a manner similar to those of compounded bank
interest rates.
Picture this situation. On December 14, 1990, the LTFRB authorized provincial bus operators to
collect a thirty-seven (P0.37) centavo per kilometer fare for ordinary buses. At the same time, they
were allowed to impose and collect a fare range of plus or minus 15% over the authorized rate. Thus
P0.37 centavo per kilometer authorized fare plus P0.05 centavos (which is 15% of P0.37 centavos)
is equivalent to P0.42 centavos, the allowed rate in 1990. Supposing the LTFRB grants another five
(P0.05) centavo increase per kilometer in 1994, then, the base or reference for computation would
have to be P0.47 centavos (which is P0.42 + P0.05 centavos). If bus operators will exercise their

authority to impose an additional 20% over and above the authorized fare, then the fare to be
collected shall amount to P0.56 (that is, P0.47 authorized LTFRB rate plus 20% of P0.47 which is
P0.29). In effect, commuters will be continuously subjected, not only to a double fare adjustment but
to a compounding fare as well. On their part, transport operators shall enjoy a bigger chunk of the
pie. Aside from fare increase applied for, they can still collect an additional amount by virtue of the
authorized fare range. Mathematically, the situation translates into the following:
Year** LTFRB authorized Fare Range Fare to be
rate*** collected per
kilometer
1990 P0.37 15% (P0.05) P0.42
1994 P0.42 + 0.05 = 0.47 20% (P0.09) P0.56
1998 P0.56 + 0.05 = 0.61 20% (P0.12) P0.73
2002 P0.73 + 0.05 = 0.78 20% (P0.16) P0.94
Moreover, rate making or rate fixing is not an easy task. It is a delicate and sensitive government
function that requires dexterity of judgment and sound discretion with the settled goal of arriving at a
just and reasonable rate acceptable to both the public utility and the public. Several factors, in fact,
have to be taken into consideration before a balance could be achieved. A rate should not be
confiscatory as would place an operator in a situation where he will continue to operate at a loss.
Hence, the rate should enable public utilities to generate revenues sufficient to cover operational
costs and provide reasonable return on the investments. On the other hand, a rate which is too high
becomes discriminatory. It is contrary to public interest. A rate, therefore, must be reasonable and
fair and must be affordable to the end user who will utilize the services.
Given the complexity of the nature of the function of rate-fixing and its far-reaching effects on millions
of commuters, government must not relinquish this important function in favor of those who would
benefit and profit from the industry. Neither should the requisite notice and hearing be done away
with. The people, represented by reputable oppositors, deserve to be given full opportunity to be
heard in their opposition to any fare increase.
The present administrative procedure, 14 to our mind, already mirrors an orderly and satisfactory
arrangement for all parties involved. To do away with such a procedure and allow just one party, an
interested party at that, to determine what the rate should be, will undermine the right of the other parties
to due process. The purpose of a hearing is precisely to determine what a just and reasonable rate
is. 15 Discarding such procedural and constitutional right is certainly inimical to our fundamental law and to
public interest.
On the presumption of public need.
A certificate of public convenience (CPC) is an authorization granted by the LTFRB for the operation
of land transportation services for public use as required by law. Pursuant to Section 16(a) of the
Public Service Act, as amended, the following requirements must be met before a CPC may be
granted, to wit: (i) the applicant must be a citizen of the Philippines, or a corporation or copartnership, association or joint-stock company constituted and organized under the laws of the
Philippines, at least 60 per centum of its stock or paid-up capital must belong entirely to citizens of
the Philippines; (ii) the applicant must be financially capable of undertaking the proposed service and
meeting the responsibilities incident to its operation; and (iii) the applicant must prove that the

operation of the public service proposed and the authorization to do business will promote the public
interest in a proper and suitable manner. It is understood that there must be proper notice and
hearing before the PSC can exercise its power to issue a CPC.
While adopting in toto the foregoing requisites for the issuance of a CPC, LTFRB Memorandum
Circular No. 92-009, Part IV, provides for yet incongruous and contradictory policy guideline on the
issuance of a CPC. The guidelines states:
The issuance of a Certificate of Public Convenience is determined by public
need. The presumption of public need for a service shall be deemed in favor of the
applicant, while the burden of proving that there is no need for the proposed service
shall be the oppositor's. (Emphasis ours).
The above-quoted provision is entirely incompatible and inconsistent with Section 16(c)(iii) of the
Public Service Act which requires that before a CPC will be issued, the applicant must prove by
proper notice and hearing that the operation of the public service proposed will promote public
interest in a proper and suitable manner. On the contrary, the policy guideline states that the
presumption of public need for a public service shall be deemed in favor of the applicant. In case of
conflict between a statute and an administrative order, the former must prevail.
By its terms, public convenience or necessity generally means something fitting or suited to the
public need. 16 As one of the basic requirements for the grant of a CPC, public convenience and necessity
exists when the proposed facility or service meets a reasonable want of the public and supply a need
which the existing facilities do not adequately supply. The existence or
non-existence of public convenience and necessity is therefore a question of fact that must be established
by evidence, real and/or testimonial; empirical data; statistics and such other means necessary, in a
public hearing conducted for that purpose. The object and purpose of such procedure, among other
things, is to look out for, and protect, the interests of both the public and the existing transport operators.
Verily, the power of a regulatory body to issue a CPC is founded on the condition that after full-dress
hearing and investigation, it shall find, as a fact, that the proposed operation is for the convenience
of the public. 17 Basic convenience is the primary consideration for which a CPC is issued, and that fact
alone must be consistently borne in mind. Also, existing operators in subject routes must be given an
opportunity to offer proof and oppose the application. Therefore, an applicant must, at all times, be
required to prove his capacity and capability to furnish the service which he has undertaken to
render. 18 And all this will be possible only if a public hearing were conducted for that purpose.
Otherwise stated, the establishment of public need in favor of an applicant reverses well-settled and
institutionalized judicial, quasi-judicial and administrative procedures. It allows the party who initiates
the proceedings to prove, by mere application, his affirmative allegations. Moreover, the offending
provisions of the LTFRB memorandum circular in question would in effect amend the Rules of Court
by adding another disputable presumption in the enumeration of 37 presumptions under Rule 131,
Section 5 of the Rules of Court. Such usurpation of this Court's authority cannot be countenanced as
only this Court is mandated by law to promulgate rules concerning pleading, practice and
procedure. 19
Deregulation, while it may be ideal in certain situations, may not be ideal at all in our country given
the present circumstances. Advocacy of liberalized franchising and regulatory process is tantamount

to an abdication by the government of its inherent right to exercise police power, that is, the right of
government to regulate public utilities for protection of the public and the utilities themselves.
While we recognize the authority of the DOTC and the LTFRB to issue administrative orders to
regulate the transport sector, we find that they committed grave abuse of discretion in issuing DOTC
Department Order
No. 92-587 defining the policy framework on the regulation of transport services and LTFRB
Memorandum Circular No. 92-009 promulgating the implementing guidelines on DOTC Department
Order No. 92-587, the said administrative issuances being amendatory and violative of the Public
Service Act and the Rules of Court. Consequently, we rule that the twenty (20%) per centum fare
increase imposed by respondent PBOAP on March 16, 1994 without the benefit of a petition and a
public hearing is null and void and of no force and effect. No grave abuse of discretion however was
committed in the issuance of DOTC Memorandum Order No. 90-395 and DOTC Memorandum
dated October 8, 1992, the same being merely internal communications between administrative
officers.
WHEREFORE, in view of the foregoing, the instant petition is hereby GRANTED and the challenged
administrative issuances and orders, namely: DOTC Department Order No. 92-587, LTFRB
Memorandum Circular
No. 92-009, and the order dated March 24, 1994 issued by respondent LTFRB are hereby
DECLARED contrary to law and invalid insofar as they affect provisions therein (a) delegating to
provincial bus and jeepney operators the authority to increase or decrease the duly prescribed
transportation fares; and (b) creating a presumption of public need for a service in favor of the
applicant for a certificate of public convenience and placing the burden of proving that there is no
need for the proposed service to the oppositor.
The Temporary Restraining Order issued on June 20, 1994 is hereby MADE PERMANENT insofar
as it enjoined the bus fare rate increase granted under the provisions of the aforementioned
administrative circulars, memoranda and/or orders declared invalid.
No pronouncement as to costs.
SO ORDERED.
G.R. No. L-24219

June 13, 1968

PHILIPPINE AIR LINES, INC., petitioner,

vs.
CIVIL AERONAUTICS BOARD, and FILIPINAS ORIENT AIRWAYS, INC., respondents.
Crispin D. Baizas, Edgardo Diaz de Rivera and Cenon S. Cervantes, Jr. for petitioner.
Office of the Solicitor General for respondent Civil Aeronautics Board.
Honorio Poblador and Ramon A. Pedrosa for respondent Filipinas Orient Airways, Inc.
CONCEPCION, C.J.:
Original petition for certiorari, to set aside and annul a resolution of the Civil Aeronautics Board
hereinafter referred to as CAB granting respondent Filipinas Orient Airways Inc. hereinafter

referred to as Fairways "provisional authority to operate scheduled and non-scheduled domestic

air services with the use of DC-3 aircrafts", subject to specified conditions.
Pursuant to Republic Act No. 4147, granting thereto "a franchise to establish, operate and maintain
transport services for the carriage of passengers, mail, industrial flights and cargo by air in and
between any and all points and places throughout the Philippines and other countries", on
September 16, 1964, Fairways filed with CAB the corresponding application for a "certificate of
public convenience and necessity", which was Docketed as economic proceedings (EP) No. 625,
and was objected to by herein petitioner, Philippine Air Lines, Inc., hereinafter referred to as PAL.
Subsequently, a CAB hearing officer began to receive evidence on said application. After several
hearings before said officer, or on December 14, 1964, Fairways filed an "urgent petition for
provisional authority to operate" under a detailed "program of implementation" attached to said
petition, and for the approval of its bond therefor, as well as the provisional approval of its "tariff
regulations and the conditions of carriage to be printed at the back of the passenger tickets." Despite
PAL's opposition thereto, in a resolution issued on January 5, 1965, CAB granted said urgent petition
of Fairways. The pertinent part of said resolution provides:
Filipinas Orient Airways, Inc., (FAIRWAYS) having presented to the Board evidence
showing prima facie its fitness, willingness and ability to operate the services applied for and
the public need for more air transportation service, and to encourage and develop
commercial air transportation, RESOLVED, to grant, as the Board hereby grants, the said
Filipinas Orient Airways, Inc., provisional authority to operate scheduled and non-scheduled
domestic air services with the use of DC-3 aircraft, subject to the following conditions;
1. The term of the provisional authority herein granted shall be until such time as the main
application for a certificate of public convenience and necessity is finally decided or for such
period as the Board may at any time determine;
xxx

xxx

xxx

A reconsideration of this resolution having been denied, PAL filed the present civil action alleging
that, in issuing said resolution, CAB had acted illegally and in excess of its jurisdiction or with grave
abuse of discretion, because:
(1) CAB is not empowered to grant any provisional authority to operate, prior to the
submission for decision of the main application for a certificate of public convenience and
necessity;
(2) CAB had no evidence before it that could have justified the granting of the provisional
authority complained of;
(3) PAL was denied due process when CAB granted said authority before the presentation of
its evidence on Fairway's main application; and
(4) In granting said provisional authority, the CAB had prejudged the merits of said
application.
The first ground is devoid of merit. Section 10-C(1) of Republic Act No. 776, reading:

(C) The Board shall have the following specific powers and duties:
(1) In accordance with the provisions of Chapter IV of this Act, to issue, deny, amend, revise,
alter, modify, cancel suspend or revoke, in whole or in part, upon petitioner complaint, or
upon its own initiative, any temporary operating permit or Certificate of Public Convenience
and Necessity; Provided, however, That in the case of foreign air carriers, the permit shall be
issued with the approval of the President of the Republic of the Philippines....
explicitly authorizes CAB to issue a "temporary operating permit," and nothing contained, either in
said section, or in Chapter IV of Republic Act No. 776, negates the power to issue said "permit",
before the completion of the applicant's evidence and that of the oppositor thereto on the main
petition. Indeed, the CAB's authority to grant a temporary permit "upon its own initiative," strongly
suggests the power to exercise said authority, even before the presentation of said evidence has
begun.
Moreover, we perceive no cogent reason to depart, in connection with the commercial air transport
service, from the policy of our public service law, which sanctions the issuance of temporary or
provisional permits or certificates of public convenience and necessity, before the submission of a
case for decision on the merits.1 The overriding considerations in both instances are the same,
namely, that the service be required by public convenience and necessity, and, that the applicant is
fit, as well as willing and able to render such service properly, in conformity with law and the
pertinent rules, regulations and requirements.2
As regards PAL's second contention, we have no more than PAL's assertion and conclusion
regarding the absence of substantial evidence in support of the finding, in the order complained of,
to the effect that Fairways' evidence had established " prima facie its fitness, willingness and ability
to operate the services applied for and the public need for more transportation service ...". Apart from
PAL's assertion being contradicted by the tenor of said order, there is the legal presumption that
official duty has been duly performed.
Such presumption is particularly strong as regards administrative agencies, like the CAB, vested
with powers said to be quasi-judicial in nature, in connection with the enforcement of laws affecting
particular fields of activity, the proper regulation and/or promotion of which requires a technical or
special training, aside from a good knowledge and grasp of the overall conditions, relevant to said
field, obtaining in the nation.3 The consequent policy and practice underlying our Administrative Law
is that courts of justice should respect the findings of fact of said administrative agencies, unless
there is absolutely no evidence in support thereof or such evidence is clearly, manifestly and patently
insubstantial.4 This, in turn, is but a recognition of the necessity of permitting the executive
department to adjust law enforcement to changing conditions, without being unduly hampered by the
rigidity and the delays often attending ordinary court proceedings or the enactment of new or
amendatory legislations. In the case at bar, petitioner has not satisfactorily shown that the
aforementioned findings of the CAB are lacking in the necessary evidentiary support.
Needless to say, the case of Ang Tibay vs. C.I.R.5 on which petitioner relies, is not in point. Said
case refers to the conditions essential to a valid decision on the merits, from the viewpoint of due
process, whereas, in the case at bar, we are concerned with an interlocutory order prior to the
rendition of said decision. In fact, interlocutory orders may sometimes be issued ex parte,
particularly, in administrative proceedings, without previous notice and hearing, consistently with due
process.6 Again, the constitutional provision to the effect that "no decision shall be rendered by any

court of record without expressing therein clearly and distinctly the facts and the law on which it is
based",7 applies, not to such interlocutory orders, but to the determination of the case on the merits. 8
Lastly, the provisional nature of the permit granted to Fairways refutes the assertion that it prejudges
the merits of Fairways' application and PAL's opposition thereto. As stated in the questioned order,
CAB's findings therein made reflect its view merely on the prima facie effect of the evidence so far
introduced and do not connote a pronouncement or an advanced expression of opinion on the merits
of the case.
WHEREFORE, the petition herein should be, as it is hereby, dismissed, and the writ prayed for,
denied, with costs against petitioner Philippine Air Lines, Inc. It is so ordered.