41-49 Argabioso.docx

PANAY AUTOBUS CO. v PHIL RAILWAY CO. Fixing of Rates, Wages, Prices | February 17, 1933 | Vickers, J. FACTS: On April 8, 1932, R. R. Hancock, vice-president and general manager of the Philippine Railway Co.(RESP), filed with the Public Service Commission a petition to be allowed to “alter the freight rates of the Philippine Railway Company on the Cebu and Panay Divisions whenever in our judgment we find it necessary in order to meet the competition of road trucks and auto busses” in line with their previous request to be allowed to “alter our passenger rates at will”. According to them(RESP), they need to be able to adjust and fix rates because freight, as well as passengers, is handled by road trucks and auto busses without regard to any regulation or law; they run up and down the highways and into station grounds bargaining for every piece of freight and every passenger. The changes are based primarily on the railway rates. The trucks simply go to a shipper and ask that what the railway charges, and then offer to haul the freight at a few centavos less per bulto or ton. Because their rates are fixed they are left with no chance to secure the freight and Railway Company is placed at a great disadvantage in not being able to bid for the business, and consequently loses out whenever the road autos can charge a slightly lower rate. On June 28, 1932 the Panay Autobus Company filed its opposition to the applications of the Philippine Railway Co. on the following grounds: o That the opponent company operates a bus service in the Island of Panay with the right and privilege to transport passengers and freight at schedule of rates fixed by this Honorable Commission; o That the petition for flexible rates could not be granted by this Honorable as it is against the fundamental principles of public utility regulation; o That the granting of a flexible rate will work ruinous competition with other common carriers in the field"; and On the same date asked for a rehearing on the ground that the decision was contrary to law and the fundamental principles of public utility regulation. ISSUE/S & RATIO: 1. WON Public Service Commission can delegate to the Phil Railway Co. the power of altering its freight rates – NO a. 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 because the legislature has not authorized such act. b. 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. Section 16 of the Public Service Commission prohibits any public service from exacting any unjustly discriminatory rate, 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 since respondent company can change the rates at will. c. 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

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: In 1990, DOTC Sec. Oscar Orbos issued Memo Circular to LTFRB Chair Remedios Fernando to allow provincial bus to change passenger rates w/in a fare range of 15% above or below the LTFRB official rate for a 1yr. period. This is in line with the liberalization of regulation in the transport sector which the government intends to implement and to make progress towards greater reliance on free market forces. Fernando respectfully called attention of DOTC Sec. that the Public Service Act requires publication and notice to concerned parties and public hearing. In Dec. 1990, Provincial Bus Operators Assoc. of the Phils. (PBOAP) filed an application for across the board fare rate increase, which was granted by LTFRB. In 1992, then DOTC Sec. Garcia issued a memo to LTFRB suggesting a swift action on adoption of procedures to implement the Department Order & to lay down deregulation policies. Pursuant to LTFRB Guideline, PBOAP, w/o benefit of public hearing announced a 20% fare rate increase. Petitioner Kilusang Mayo Uno (KMU) opposed the move and filed a petition before LTFRB w/c was denied. Hence the instant petition for certiorari w/ urgent prayer for a TRO, w/c was readily granted by the Supreme Court. ISSUE: Whether the authority granted by LTFB to provincial buses to set a fare range above existing authorized fare range is unconstitutional and invalid. HELD: The grant of power by LTFRB of its delegated authority is unconstitutional. The doctrine of Potestas delegate non delegari (what has been delegated cannot be delegated) is applicable because a delegated power constitutes not only a right but a duty to be performed by the delegate thru instrumentality of his own judgment. To delegate this power is a negation of the duty in violation of the trust reposed in the delegate mandated to discharge such duty. Also, to give provincial buses the power to charge their fare rates will result to a chaotic state of affairs ad this would leave the riding public at the mercy of transport operators who can increase their rates arbitrarily whenever it pleases or when they deem it necessary.

Ynchausti Steamship Co. v. Public Utility Commissioner ( 1922) – Johns, J. Plaintiff: Ynchausti Steamship Co. et al. Respondent: The Public Utility Commissioner and the Board of Appeals Concept: Fixing of Rates, Wages, Prices

Brief facts: Petitioners requested the Public Utility Commissioner to increase the freight rates above those allowed by Order No. 16 of the Board of Rate Regulation. The Commissioner denied its request based on the value of the original cost of the vessel and their costs of reproduction. Petitioners went to the SC to question the propriety of the basis of Commissioner’s decision, arguing that he should’ve used the present value of the vessels which factor the depreciation costs and the present conditions in order to fix the rate.

Doctrine: The present market value of the property is the ultimate practical basis for determining the value of the investment upon which to fix a rate which will produce a fair return.

FACTS: 1. Petitioners are members of the Philippine Shipowners’ Association and engaged in the operation of vessels in the Philippines. 2. By reason of a decrease in the volume of business handled by its members, it duly filed with the Public Utility Comissioner a declaration that on and after May 1, 1920, it would make a 10% increase in shipping rates above those allowed under Order No. 16 of the Board of Rate Regulation. The increase was allowed and became effective by an order of the Public Utility Commissioner. 3. On account of low wages, there was a general strike of the seamen and officers operating the vessels owned by the members of the association and it became necessary to increase the wages paid to them, thereby increasing the operation expenses. Hence, the 10% increase previously approved was insufficient to meet the increase of the operating expenses. 4. On June 21, the association filed an amended declaration with the Commissioner, praying for a further increase of 10% on freight rates over those established May 1, to the effect that from July 20, it would make a 15% increase on the freight rates fixed by Order No. 16. 5. The proposed 15% increase was suspended and a hearing was ordered. The Commissioner approved increases for some shipowners and denied to some on the basis of the operating accounts submitted by each owner. 6. Petitioner herein was among those whose request for increase was denied. o Evaluation of Commissioner on its account was based on the original cost of the vessel instead of its present value, and 5% per annum depreciation was allowed upon the original value as opposed to the cost of replacement. 7. Petitioner appealed to the Board of Appeal under Sec. 30 of the Public utility Act No. 2307. The Board affirmed the decision of the Comissioner. 8. Petitioners went to SC for review and argue that: o There is no evidence to reasonably support the decision o 5% depreciation is based on the original cost of the ship and not on the replacement o Allowance of 10% per annum on the investment is based on the original cost of the ship and not on its present value o That the average cost of repairs for the past 5 years shouldn’t be substituted for the actual cost of such repairs 9. Attorney-General agrees that it is error to base the reasonableness of the rates on the original cost. However, it appears that Commissioner only had 2 data upon which to base a rate: original cost and estimated cost. He couldn’t accept estimated costs because it was based on abnormal war prices and no evidence of the reasonable value was presented. Hence, he accepted the original cost. It should be presumed that he was of the opinion that the original cost represented the fair value of the property.

ISSUE: WON it was proper for the Commissioner to base the rates on the original cost of the property as opposed to its present value. (NO)

RATIO: The present market value of the property is the ultimate practical basis for determining the value of the investment upon which to fix a rate which will produce a fair return. -As the net earnings rule, there are 4 theories of ascertaining what constitutes a reasonable rate. Discussion of the following theories was based on “Pond on Public Utilities” and various American jurisprudence: 1. Original Cost- the value of the original cost of the property should only be considered for the purpose of determining its present value. 2. Cost of Reproduction-the test would lead to obviously incorrect results if the cost of reproduction is not diminished by the depreciation which has come from the age and use. (City of Knowxville vs Knoxville Water Co) 3. Outstanding Capitlization- capitalization of the earnings will not lead to correct results because it implies a continuance of earnings, and a continuance of earnings rests upon a franchise to operate. (National Waterworks Co. v. Kansas City) 4. Present Value- this is the ultimate practical basis for determining the value of the investment upon which to fix a rate while will produce a fair return. Valuation should be made contemporaneous with the fixing of the rate, There must be a fair return upon the reasonable value of the property at the time it is being used for the public (Willcox v. Consolidated Gas Co) Des Moines Water Co v. City of Des Moines: In order to determine the rate of return upon which the reasonable value of the property at the time it is being used by the public, it becomes necessary to ascertain what value that is o The value of the the property is to be determined as of the time when the inquiry is made regarding the rates. -A public utility should have a fair and reasonable return upon its property which is used by the public and under modern authorities, the rate is based upon the physical valuation of the property, because in effect the property is both used and consumed by the public. -When a public utility enters public service, it is no longer a free agent and it becomes subject to reasonable rules and regulations by the public once property becomes public utility, it amounts to an actual taking and appropriation. o Private property cannot be taken for public use without just compensation being assessed and tendered. o But, where the taking is not full, final, or complete, but is in the nature only of a continuous daily taking and appropriation, it must follow that there will be a fluctuation in the market value of the property during the period of the service, which as to the vessel, would change with the cost of labor and material necessary for its construction. o In fixing the rate, it wouldn’t be fair to the public to base it upon a peak cost, and for the same reason, it wouldn’t be fair to the owner of the property to place it upon a minimum cost. o A just rate must be founded upon conditions which are fair and reasonable both to the owner and the public. -The vessel here is deemed taken and condemned by the public at the time of the filing of the petition, and the rate should go up and down as the physical valuation of the vessel o

goes up and down, and the purpose of the hearing is to place a physical valuation upon the vessel and base a reasonable rate upon that valuation. -Hence, the original cost of the vessel is not the basis of the valuation and is not important, except in so far as it may enable to Commissioner to determine the present value of the vessel. -The original cost of the vessel Venus was P115k, while its estimate cost of reproduction was P409,446.03. The original cost of Vizcaya was P120k while its estimate cost of reproduction was P533, 318. 73. The differences of these figures are strong evidence of the existence of abnormal conditions (only 18 months after peace was declared after the World War). Hence, these values cannot be used to determine the rate which would be fixed because it would be unfair to both the public and the owner. -Although it may be true that petitioner wasn’t able to submit evidence to the Commissioner regarding the present value of the vessels under normal conditioners, such failure wouldn’t justify the act of the Commissioner of basing it on its original costs. This was a prejudicial and legal error. He should have required them to furnish further proof. -Having said that, the rate to be imposed based on the value of the property rests in the discretion of the Commissioner and the court isn’t in the position to interfere with such decision. DISPOSITIVE: Petition GRANTED. Order of the Commissioner reverse and case is remanded with directions to the Commissioner to require and take proof of the present value of the vessel. With that value, he must fix a reasonable return on the investment and also the depreciation percentage.

Vigan Electric Light Co.,Inc. v. Public Service Commission (1964) – Concepcion, J. Plaintiff: Vigan Electric Light Company, Inc. Respondent: The Public Service Commission Concept: Fixing of Rates, Wages, Prices

Brief Facts: The PSC issued an order which decreased the rates imposed by Vigan Electric upon the finding that it made a profit in excess of 12% of its invested capital. Said order was issued without prior notice and hearing. It claims that it issued the order pursuant to its delegated legislative authority therefore, such notice and hearing aren’t required. Vigan Electric questions its validity. Doctrine: A modification of such rates cannot be made, over Vigan Electric’s objection, without such notice and hearing, considering that the factual basis of the action taken by PSC is assailed. Said order, having been issued without previous notice and hearing, is violative of the due process clause and is therefore null and void.

FACTS: 1. On June 19, 1948, RA 316 was approved, granting Vigan Electric Light Company a franchise to construct, maintain, and operate an electric light heat and/or power plant for the purpose of generating and distributing light, heat, and/or power, for sale in the municipalities of Ilocos Sur.

2. Accordingly, it secured a certificate of public convenience from the Public Service Commission (PSC) to render light, heat, and/or power services in the said province on May 31, 1950. 3. On May 22, 1957, it entered into a contract for the purchase of electric power and energy from the National power Corporation for its resale. 4. 5 years later, PSC advised Vigan Electric of a conference to be held for the purpose of revising its authorized rates. Thereafter, Vigan Electric received a letter of PSC, informing it of an alleged letter-petition of “Congressman Floro Crisolog and 107 alleged residents of Vigan, Ilocos Sur” and asked it to comment on these charges. The said letter charged the ff: o That the sale of 2000 electric meters in the black market by Vigan Electric to Avegon Co. is anomalous and illegal. Said meters were imported from Japan by Vigan Electric in behalf of its consumers. Vigan Electric has commercialized these privileges which properly belong to the people. o That the electric meters in Vigan had been installed in bad faith and they registered excessive rates much more than the actual consumption. 5. Vigan Electric denied all of these allegations. 6. Afterwards, it received a communication from the General Auditing Office of PSC, notifying it that a Cesar Damole had been instructed to make an audit and examination of the books and other records of account of Vigan Electric under the provisions of Commonwealth Act 325 and in accordance with the request of the PSC. 7. PSC issued a subpoena duces tecum requiring Vigan Electric to produce, during a conference scheduled for April 10, 1962, certain books of account and financial statements. o Vigan Electric moved to quash the subpoena but wasn’t acted upon in the said conference. o The next conference was postponed to May 21, 1962 but was subsequently cancelled. The Motion to Quash was granted. 8. On May 17, PSC issued an ordered which contained the following findings: o From the audit report of the General Auditing Office, it was found that based on the total invested capital of Vigan Electric, it was entitled to the return of about P118, 132.55 and its net operating income of P53,692.34 which is the basis for the rates, represents 45.45% of its invested capital. o That in order to earn 12% per annum which is the allowable rate of return, it should have a computed revenue by rates of P182, 012.78. o Since it earned an actual revenue of P221, 529.17, it had an excess of revenue of P39, 516.39 which is 17.84% if the actual revenue and 33.45% of the invested capital. o In other words, the present rates of Vigan Electric may be reduced by 18%. Since its net operating profit is in excess of the allowable return of 12% on its invested capital, in consonance with Sec. 3 of RA 3043, the reduction of 18% of its current rates was ordered. o Minimum charge: P4.90/month for connection of 200 watts or less plus P0.01 per watt per month for connection in excess of 200 watts. 9. Vigan Electric instituted the present action for certiorari to annul the order on the grounds that since its inception on 1962, it was never able to give and never made a single dividend to its stockholders because from 1949-1961, it suffered a loss of P113, 351.521; that PSC had never furnished it a copy of the letter-petition; that it objected to the reduction of the rates without a hearing, alleging that its rates could be reduced only if proven by evidence validly adduced to be excessive; that the order had been issued without notice and hearing. 10. By way of defense, PSC alleged that the order was issued under its delegated legislative authority, the exercise of which doesn’t require previous notice and hearing. ISSUE:

WON the order of the PSC which reduced the rates of Vigan Electric by 18% and which was issued without conducting a hearing was valid. (NO) RATIO: PSC issued the said order under its delegated quasi-judicial authority hence, a previous notice and hearing are required for it to be valid. -Although the rule-making power and the power to fix rates (when such rules are meant to apply to all enterprises of a given throughout the Philippines) may partake of a legislative character, such isn’t the nature of the order complained of. -It applies only the Vigan Electric exclusively and is predicated upon a finding of fact that it is making a profit of more than 12% of its invested capital, which it denies. -Vigan Electric is entitled to cross-examine the maker of said report, and to introduce evidence to disprove the contents thereof and/or explain or complement the same, as well as to refute the conclusion drawn therefrom by PSC. -In making the finding of fact, PSC performed a function partaking of a quasi-judicial character, the valid exercise of which demands previous notice and hearing as required by Sections 16 (c) and 20 (a) of Commonwealth Act 146. Sec 16 (c): Commission may in its discretion, approve rates proposed by public services provisionally and without necessity of hearing; but it shall call a hearing thereon within 30 days thereafter, upon publication and notice. o Sec 20 (a): Commission shall approve only those that are just and reasonable… only upon reasonable notice to the public services and other parties concerned, giving them a reasonable opportunity to be heard. -A modification of such rates cannot be made, over Vigan Electric’s objection, without such notice and hearing, considering that the factual basis of the action taken by PSC is assailed. -Said order, having been issued without previous notice and hearing, is violative of the due process clause and is therefore null and void. o

Dispositive: Petition GRANTED. G.R. No. 84818 December 18, 1989 PHILIPPINE COMMUNICATIONS SATELLITE CORPORATION, petitioner, vs. JOSE LUIS A. ALCUAZ, as NTC Commissioner, and NATIONAL TELECOMMUNICATIONS COMMISSION, respondents. Facts: The petition before us seeks to annul and set aside an Order 1 issued by respondent Commissioner Jose Luis Alcuaz of the National Telecommunications Commission Herein petitioner is engaged in providing for services involving telecommunications. Charging rates for certain specified lines that were reduced by order of herein respondent Jose AlcuazCommissioner of the National Telecommunications Commission. The rates were ordered to be reduced by fifteen percent (15%) due to Executive Order No. 546 which granted the NTC the power to fix rates. Said order was issued without prior notice and hearing. Under Section 5 of Republic Act No. 5514, petitioner was exempt from the jurisdiction of the then Public Service Commission, now respondent NTC. However, pursuant to Executive Order No. 196 issued on June 17, 1987, petitioner was placed under the jurisdiction, control and regulation of respondent NTC

Issue: Whether or Not E.O. 546 is unconstitutional. Held: In Vigan Electric Light Co., Inc. vs. Public Service Commission the Supreme Court said that although the rule-making power and even the power to fix rates- when such rules and/or rates are meant to apply to all enterprises of a given kind throughout the Philippines-may partake of a legislative character. Respondent Alcuaz no doubt contains all the attributes of a quasi-judicial adjudication. Foremost is the fact that said order pertains exclusively to petitioner and to no other The respondent admits that the questioned order was issued pursuant to its quasi-judicial functions. It, however, insists that notice and hearing are not necessary since the assailed order is merely incidental to the entire proceedings and, therefore, temporary in nature but the supreme court said that While respondents may fix a temporary rate pending final determination of the application of petitioner, such rate-fixing order, temporary though it may be, is not exempt from the statutory procedural requirements of notice and hearing The Supreme Court Said that it is clear that with regard to rate-fixing, respondent has no authority to make such order without first giving petitioner a hearing, whether the order be temporary or permanent. In the Case at bar the NTC didn’t scheduled hearing nor it did give any notice to the petitioner

MIAA v. AIRSPAIN CORP FACTS: Petitioner Manila International Airport Authority (MIAA) is a government-owned and controlled corporation created on March 4, 1982, by Executive Order No. 778. It owns, operates, and manages the Ninoy Aquino International Airport (NAIA). Petitioners properties, facilities, and services are available for public use subject to such fees, charges, and rates as may be fixed in accordance with law. Herein respondents are the users, lessees and occupants of petitioners properties, facilities, and services. The schedule of aggregate dues collectible for the use of petitioners properties, facilities, and services are divided into: (1) aeronautical fees; (2) rentals; (3) business concessions; (4) other airport fees and charges; and (5) utilities petitioner issued Resolution No. 97-51[3] announcing an increase in the rentals of its terminal buildings, VIP lounge, other airport buildings and land, as well as check-in and concessions counters. Business concessions, particularly concessionaire privilege fees, were also increased petitioner issued Resolution No. 97-51[3] announcing an increase in the rentals of its terminal buildings, VIP lounge, other airport buildings and land, as well as check-in and concessions counters. Business concessions, particularly concessionaire privilege fees, were also increased ISSUE: petitioner MIAA validly raise without prior notice and public hearing the fees, charges, and rates subject of its Resolutions Nos. 98-30 and 99-11? HELD: under the original Charter of the MIAA, petitioner was given blanket authority to adjust its fees, charges, and rates. However, E.O. No. 903 limited such authority to a mere recommendatory power. Hence, petitioners Charter itself, as amended, directly vests the power to determine revision of fees, charges, and rates in the ministry head and even requires approval of the Cabinet.

its Charter established MIAA as an attached agency of the Ministry of Transportation and Communications (now Department of Transportation and Communications). Hence, the ministry head who has the power to determine the revision of fees, charges, and rates of the MIAA is now the DOTC Secretary. Clearly, petitioner has no authority to increase its fees, charges, or rates as the power to do so is vested solely in the DOTC Secretary, although petitioners prerogative to recommend possible increases thereon is of course recognized. GONZALO SY, doing business under the name and style of GONZALO SY TRADING, petitioner-appellant, vs. CENTRAL BANK OF THE PHILIPPINES, respondentappellee (1976; J. Martin; GR No. L-41480)

FACTS: Gonzalo Sy Trading (GST) is engaged in the business of importation of fresh fruits. On Sept. 28, 1968, it wrote to the Deputy Governor of the Central Bank (CB) requesting authority to import fresh fruits from Japan on “no-dollar” basis in the total amount of US$715,000.00.

The Executive Asst. to the Deputy Gov. denied the request, so GST sent another letter to the Monetary Board of the CB requesting for an authority to import on no Letter of Credit basis, or for the issuance of a Special Import Permit for the amount of US$715,000.00 to enable GST to import fresh fruits during the Christmas Season. (NOTE: In GST’s letter, it said that the purpose for the request was so that it could serve its customers better during the Christmas Season for the year 1968.)

The Monetary Board issued Resolution No. 2083 approving GST’s request, thus: The Board, by unanimous vote, authorized Gonzalo Sy Trading to import on a no- dollar basis, without letters of credit, fresh fruits from Japan valued at $35000.00, subject to the special time deposit of 100% which shall be held by the bank concerned for a period of 120 days as well as to the normal customs duties and taxes. It is understood that there shall be no commitment on the part of the Central Bank to provide foreign exchange to cover the said importation.

GST sent another latter to the then Chairman of the Monetary Board requesting that they be allowed to put up 20% time deposit for 120 days instead of 100%. Such request was denied.

GST then made its importations where Prudential Bank acted as the agent for the Central Bank in the issuance of the corresponding release certificates for the entry of goods. By the beginning of June, 1970, the total amount used out of the $350,000.00 Special Import Permit was already $314,142.51, leaving a balance of $35,857.49.

As early as Oct. 30, 1969, GST requested for an amendment such that they be allowed to import from other countries other than communist ones. This request was denied by the Deputy Governor stating that the authority granted to them was only for the Christmas Season of 1968, and does not extend to 1969.

Two days after or on Nov. 2, 1969, however, the Director of the Foreign Exchange Dept. sent a letter to Prudential Bank allowing the latter to continue issuing release certificates in favor of GST since the grant given to the latter had not yet been exhausted. This, however, was subject to the same terms and conditions provided for by the Central Bank.* (see Ratio)

Then, on April 17, 1970, the Assistant to the Governor informed Prudential Bank that the authority granted to GST under MB Resolution No. 2038 was intended only for the Christmas season of 1968 and does not extend through 1969.

On May 27, 1970, GST notified the Assistant that the Prudential Bank refused to issue them any release certificate for their importations due to his letter of April 17, 1970. On June 3, 1970, GST sent a follow-up letter to the Assistant reiterating "our request for a reconsideration on the matter and to allow us utilize the balance of our Permit in the amount of $35,857.49." In the same letter, GST advised that "we have shipments coming on June 4th and June 6th respectively which is within the balance of our permit."

On June 10, 1970, the Deputy Governor wrote GST that its request cannot be given due course, inviting attention to the basic letter of November 19, 1969, informing it that the Special Import Permit was intended only for the Christmas season of 1968 and does not extend through 1969.

Finally in the year 1970, the Collector of Customs issued warrants of seizure and detention against several importations of GST for being violative of Central Bank Circular 239 in relation to Section 2530 (f) of the Tariff and Customs Code.

On Sept. 21, 1970, GST instituted before the CFI of Manila a petition for mandamus with damages. Judge Alikpala dismissed the complaint for mandamus with damages and ordered the Collector of Customs to proceed with the seizure proceedings. From this adverse judgment, GST appealed to the CA, but the latter certified the case to the SC as involving only pure questions of law.

ISSUE: WON GST’s Special Import Permit had already expired when it made the importations which were seized by the Central Bank

RULING: YES, PETITION DENIED. Their permit was only for a limited period  Christmas Season of 1968 and it does not extend up to 1969 and 1970.



A license or a permit is not a contract between the sovereignty and the licensee, and it is not property in any constitutional sense, hence the non-impairment of contracts doctrine cannot apply.



A license is in the nature of a special privilege, of a permission or authority to do what is within its terms. It is not absolute, and a license granted by the State is always revocable. The absence of an expiry date does not make the license perpetual.



The Special Import Permit covers only the Christmas Season of 1968. In the application of GST, it made manifest that the reason for its application was so that it could cope with the demands of its buyers during the Christmas Season of 1968. In effect, it was GST itself which furnished the period for the permit, and should only subsist within such period. The omission of an expiry date in the Special Import Permit affords no legal basis for GST to conclude that the said permit is impressed with continuous validity, i.e., not merely limited to the Christmas season of 1968.



GST mistakenly asserts that the continuous validity of its Special Import Permit has already been passed upon by this Court in Commissioner of Customs v. Alikpala. What was raised in that case is the question of whether the Collector of Customs for the Port of Manila has observed the rediments of administrative due process in ordering the seizure and sale at public auction of GST's imported goods in particular that arrived in June, 1970, as well as the question of the legality of the Collector's order requiring only cash bond, surety bond not accepted, for the release of the goods. The Court made no ruling on the continuity of GST's Special Import Permit after the Christmas season of 1968.



The equitable principle of estoppel forbids GST from taking an inconsistent position now and claim that the permit extends beyond the period it itself asked for. Where conduct or representation has induced another to change its position in good faith or the same is such that reasonable man would rely thereon, the consequences of such conduct or representation cannot later on be disowned.



The doctrine of promissory estoppel was here invoked by GST pointing to the letter issued by the Director of Foreign Exchange.* (see Facts) On the contrary, while the letter advised the agent bank that it may continue issuing release certificates to cover petitioner-appellant's "no-dollar" importations of fresh fruits, it at the same time subjects the issuance of release certificates "to the same terms and conditions imposed by the Monetary board" on the Special Import Permit, one of which is the resolutory term of 1968.



The SC, held, however, that a promise cannot, by itself, be the basis of estoppel without any justifiable reliance or irreparable detriment to the promisee. The latter element is lacking in this case. The letter referred to specifically mentioned that it was subject to the existing terms imposed by the Monetary Board. Moreover, the Director could not have modified the Special Permit since it was not given the authority to do so, as in fact it was the Monetary Board who issued it and only the latter has the power to modify it.



Even assuming arguendo, however, that the aforementioned letter really tended to impress that further importations could be made, still the doctrine of estoppel cannot

apply, as it does not operate against the Government. The Government is never estopped by the errors of its agents (in this case, the Monetary Board). 

The authority of the CB to regulate "no-dollar" imports, owing to the influence and effect that the same may exert upon the stability of our peso and its international value, emanates from its broad powers to maintain our monetary stability and to preserve the international value of our currency as well as its corollary power to issue such rules and regulations for the effective discharge of its responsibilities and exercise of powers.

Evangelista v. Jarencio November 27, 1975 Martin, J.: Doctrine: Administrative may enforce subpoenas issued in the course of investigations, whether or not adjudication is involved, and whether or not probable cause is shown and even before the issuance of a complaint. It is not necessary, as in the case of a warrant, that a specific charge or complaint of violation of law be pending or that the order be made pursuant to one. It is enough that the investigation be for a lawfully authorized purpose. Facts: The President of the Philippines under Executive Order No. 4 of January 7, 1966 created the Presidential Agency on Reforms and Government Operations (PARGO). He charged the agency with the responsibility to investigate all activities involving or affecting immoral practices, graft and corruption, smuggling, lawlessness, subversion, and all other activities which are prejudicial to the government. The President vested in the Agency all the powers of an investigating committee including the power to summon witnesses by subpoena or subpoena duces tecum, administer oaths, take testimony or evidence relevant to the investigation. On June 7, 1968, pursuant to the powers vested in the Agency, petitioner Quirico Evangelista as Undersecretary of the agency, issued to respondent Fernando Manalastas, then Acting City Public Service Officer of Manila, a subpoena ad testificandum commanding him to be and appear as witness at the office of the PARGO. Instead of obeying the subpoena, Manalastas filed a Petition for prohibition and/or injunction with preliminary injunction and/or restraining order which was granted by the CFI of Manila, hence, this petition. Issue / Held: WON the Agency enjoys the authority to issue subpoenas in its conduct of fact-finding investigations. YES. Manalastas lost. Ratio: An administrative agency may be authorized to make investigations, not only in proceedings of a legislative or judicial nature, but also in proceedings whose sole purpose is to obtain information upon which future action of a legislative or judicial nature may be taken and may require the attendance of witnesses in proceedings of a purely investigatory nature.

The petitioner draws its subpoena power in EO No. 4 and the enabling law fixes no distinction when and in what function the subpoena power should be exercised. The Court finds no reason to depart from the established rule, ubi lex non distinguit nec nos distinguere debemos. Nor could the court find merit in the argument that the subpoena power granted by Section 580 of the Revised Administrative Code is restricted under the Rules of Court to abridge its application. The Rules of Court require that the subpoena may be issued only when a specific case is pending before a court for hearing or trial and that the hearing or trial must be in connection with the exercise of the court’s judicial or adjudicatory functions before a nonjudicial subpoena can be issued. However, a distinction must be made that an administrative subpoena differs in essence from a judicial subpoena. To an extent, the restrictions and qualifications referred to in Section 580 of the RAC could mean that the restraints against infringement of constitutional rights or when the subpoena is unreasonable or oppressive and when the relevancy of the books, documents or things does not appear. Administrative may enforce subpoenas issued in the course of investigations, whether or not adjudication is involved, and whether or not probable cause is shown and even before the issuance of a complaint. It is not necessary, as in the case of a warrant, that a specific charge or complaint of violation of law be pending or that the order be made pursuant to one. It is enough that the investigation be for a lawfully authorized purpose. The purpose of the subpoena is to discover evidence, not to prove a pending charge, but upon which to make one if the discovered evidence so justifies. The administrative agency has the power of inquisition which is not dependent upon a case or controversy in order to get evidence but can investigate merely on suspicion that the law is being violated or even just because it wants assurance that it is not. The subpoena meets the requirements for enforcement if the inquiry is: 1. Within the authority of the agency; 2. The demand is not too indefinite; and 3. The information is reasonably relevant. For the case at bar, the anomalous transaction in question fall within the authority of the Agency, and that the information sought to be elicited from Manalastas is reasonably relevant to the investigations. The court is not unmindful that the privilege against self-incrimination extends in administrative investigations. However, the court finds that in the present case, Manalastas is not facing any administrative charge. He is merely cited as a witness in connection with the fact-finding investigation of anomalies and irregularities in the City Government of Manila with the object of submitting the assembled facts to the President or to file the corresponding charges. Since, the only purpose of the investigation is to discover facts, any unnecessary extension of the privilege would thus be unwise. The respondents would also challenge the constitutionality of EO No. 4 collaterally. However, the constitutionality of executive orders cannot be collaterally impeached. Much more when the issue was not duly pleaded in the court below as to be acceptable for adjudication now. WHEREFORE, Order of respondent Judge is SET ASIDE. Fernando, J., Concurring:

United States c. Morton Salt Co., penned by Justice Jackson, “It is sufficient if the inquiry is within the authority of the agency, the demand is not too indefinite and the information sought is reasonably relevant.” Moreover, Justice Fernando states that “if he [Manalastas] could demonstrate a failure to abide by the constitutional mandate on search and seizure, he is not without a remedy.” Teehankee, J., Dissenting: While the subpoena commands Manalastas to appear as witness it is a fact shown by the very petition at bar that the respondent is in fact and for all intents and purposes subpoenaed as a respondent or one directly implicated with alleged bribery and graft in the said sworn statements. Therefore, respondent correctly invoked, Cabal vs. Kapunan, wherein the court through C.J. Concepcion held that therein petitioner rightfully refused to take the witness stand against the Presidential Committee investigating since such proceedings were in substance and effect a criminal one, and that his position is virtually that of an accused and he therefore had the right to remain silent and invoke the privilege against self-incrimination. Pascual, Jr. v. Board of Examiners, is also in point where the accused has the right to refuse not only to answer incriminatory questions, but also to take the witness stand.