KILUSANG MAYO UNO LABOR CENTER Vs GARCIA

KILUSANG MAYO UNO LABOR CENTER, petitioner,
vs.
HON. JESUS B. GARCIA, JR., the LAND TRANSPORTATION FRANCHISING AND
REGULATORY BOARD, and the PROVINCIAL BUS OPERATORS ASSOCIATION OF THE
PHILIPPINES, respondents.
FACTS
then Secretary of DOTC, Oscar M. Orbos, issued Memorandum Circular No. 90-395 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
Finding the implementation of the fare range scheme "not legally feasible," Remedios A.S.
Fernando submitted the following memorandum to Oscar M. Orbos
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
The application was opposed by the Philippine Consumers Foundation, Inc. and Perla C.
Bautista alleging that the proposed rates were exorbitant and unreasonable
respondent LTFRB rendered a decision granting the fare rate increase
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
On February 17, 1993, the LTFRB issued Memorandum Circular

No. 92-009 promulgating the guidelines for the implementation of DOTC Department
Order No. 92-587. The Circular provides, among others, the following challenged portions:
the proposed service shall be the oppositor'(s).
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.
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
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.
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.
ISSUES
WON the fare range scheme was constitutional- NO
WON there is a public need to for fare change- NO
HELD
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.
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
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:
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
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.
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.
In effect, commuters will be continuously subjected, not only to a double fare adjustment but to
a compounding fare as well
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
; (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
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
. 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.
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.
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.

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KILUSANG MAYO UNO LABOR CENTER Vs GARCIA

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KILUSANG MAYO UNO LABOR CENTER, petitioner,

the undersigned respectfully suggests that the implementation of the proposed

On December 5, 1990, private respondent Provincial Bus Operators Association of the

On February 17, 1993, the LTFRB issued Memorandum Circular

the proposed service shall be the oppositor'(s).

A. On the General Structure of Rates

WON the fare range scheme was constitutional- NO

WON there is a public need to for fare change- NO

We find the instant petition impressed with merit.

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

xxx xxx xxx

On the presumption of public need.

The issuance of a Certificate of Public Convenience is determined by public

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