KMU LABOR CENTER V.

GARCIA
December 23, 1994 | J. Kapunan | Public Utilities | Tudtud
APPELLANT: KILUSANG MAYO UNO (KMU) LABOR CENTER
APPELLEE: HON. JESUS B. GARCIA, JR., the LAND TRANSPORTATION FRANCHISING AND
REGULATORY BOARD, and the PROVINCIAL BUS OPERATORS ASSOCIATION OF THE
PHILIPPINES

SUMMARY: DOTC and LTFRB allowed for a flexible fare scheme for bus operators. The scheme was proposed by
Provincial Bus Operators Association of the Philippines and the DOTC/LTFRB allowed the deregulation. Bus
operators could prescribe their own rates based on a range without need for prior notice and hearing. In addition, when
granting CPCs, there is now a disputable presumption of public need. All of this is questioned by KMU, but were
denied at the LTFRB. Court held delegation of agencys delegated powers was illegal, especially to economically
interested parties.

DOCTRINE: Rate fixing cannot be re-delegated, especially to economically interested parties. It cannot be left to
anyones whims, as it is a delicate process that balances just returns and the public interest. Authority given by the
LTFRB to the provincial bus operators to set a fare range over and above the existing fare is illegal and invalid as it
is tantamount to undue delegation of legislative authority. Potestas delegate non delegari potest (What has been
delegated cannot be delegated).

FACTS:
1. Then-secretary of DOTC Oscar Orbos issued Memo Circular 90-395 to then LTFRB Chairman Fernando
allowing provincial bus operators to charge passenger rates within a range of 15% above and 15% below the
LTFRB official rate for a period of one year. LTFRB Chair says this rate was unfeasible, and posed two
potential problems: (1) not meeting the requirements of notice and hearing under the Public Service Act, (2)
possible criticism based on the present situation given the recent earthquake.
2. Provincial Bus Operators Association of the Philippines still filed an application for a rate increase
(P0.085/km for non-aircon, P0.5/km for aircon), which became P0.065/km on the next day(as to non-aircon).
The Phil. Consumers Foundation opposed this application alleging that the proposed rates were exorbitant
and unreasonable.
3. Despite the LTFRBs earlier misgivings, nonetheless approved the fare rate increase.
4. Two years later, Secretary Prado of the DOTC issued DO 92- 587 on the regulation of the industry. It not
only maintained the rate-fixing scheme (in fact calling for deregulation), but it added that there would be a
presumption of need in the application for CPCs.
5. The bus association availed of the policy without notice and hearing. They then announced a fare increase of
20%, thus the KMU then filed a petition before the LTFRB opposing the adjustment of fares. This was
dismissed for lack of merit.

ISSUES/HELD :
1. WON the proposed rate-fixing scheme is valid? NO
2. WON the presumption of public need referred to in the memo circulars is valid? NO

COURTS RULING
1. NO. The proposed rate fixing scheme is unconstitutional. The authority delegated to the LTFRB may
not be delegated to the bus operators. Nowhere under the provisions of law are the regulatory bodies
authorized to delegate that power to a common carrier, transport operator, or other public service.
a. LTFRB is the existing regulatory body vested with the power of fixing rates of public services
(previously it was the defunct Public Service Commission).
b. Executive Order No. 202 authorized LTFRB to determine, prescribe, approve, and periodically
review and adjust reasonable fares relative to the operation of public land transportation.
c. Delegation of legislative power to an administrative agency is permitted to adapt to the increasing
complexity of modern life, and for 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
i. LTFRB may implement broad policies laid down in a statute by filling in the details
which Legislature may neither have time nor competence to provide.
d. Authority given by the LTFRB to the provincial bus operators to set a fare range over and above the
existing fare is illegal and invalid as it is tantamount to undue delegation of legislative authority.
Potestas delegate non delegari potest (What has been delegated cannot be delegated).
e. Power constitutes not only a right but a duty to be performed by the delegate through instrumentality
of his own judgment and not through the intervening mind of another. Further delegation would
constitute a negation of duty in violation of the trust reposed in the delegate mandated to discharge
it directly.
f. Worse, there is no notice and hearing, which is required under the law. All the more reason to have
the rate fixing scheme declared ultra vires.
2. NO. The presumption defeats the entire point of public convenience and hearing. Normally, a CPC,
under Sec. 16(a) of the Public Service Act, which requires applicants to 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. Clearly, the presumption of public need in the memo circular runs afoul
of this principle and renders the provision on notice and hearing nugatory.

DISPOSITION:
WHEREFORE, in view of the foregoing, the instant petition is hereby GRANTED. DOTC Order and LTFRB
Memorandum Circular declared CONTRARY TO LAW. TRO made Permanent.