FACTS:

The instant petition challenges the constitutionality and validity of certain memoranda, circulars, and orders issued by the Department of Transportation and Communications (DOTC) and the Land Transportation Franchising and Regulatory Board (LTFRB). These issuances allow provincial bus and jeepney operators to adjust transportation fares without approval from the LTFRB. The petitioner argues that this delegation of authority is detrimental to public trust and interest, resulting in the introduction of old and smoke-belching buses and increased transportation costs. The specific issuances being questioned are DOTC Memorandum Order No. 90-395, DOTC Department Order No. 92-587, DOTC Memorandum dated October 8, 1992, LTFRB Memorandum Circular No. 92-009, and LTFRB Order dated March 24, 1994.

On December 5, 1990, the Provincial Bus Operators Association of the Philippines, Inc. (PBOAP) filed an application for a fare rate increase. They initially requested an across-the-board increase of 8.5 centavos per kilometer for all provincial buses, with a fare range of 15% above and below the proposed basic per kilometer fare rate. They later reduced their proposal to 6.5 centavos per kilometer for ordinary buses due to a decrease in expected diesel prices.

Opposing the application, the Philippine Consumers Foundation, Inc. and Perla C. Bautista argued that the proposed rates were excessive and lacked information on the rate of return. Nevertheless, on December 14, 1990, the LTFRB granted the fare rate increase.

In March 1992, the Department of Transportation and Communications issued Department Order No. 92-587, which provided a policy framework for the regulation of transport services. On October 8, 1992, the Secretary of the DOTC issued a memorandum to the Acting Chairman of the LTFRB regarding the adoption of rules and procedures for the implementation of deregulation and liberalization policies in the transport sector.

The LTFRB then issued Memorandum Circular No. 92-009 on February 17, 1993, which outlined guidelines for the implementation of the Department Order. This circular included provisions on the issuance of Certificates of Public Convenience (CPC) and the setting of fares and rates. It stated that a CPC would be granted based on public need, with a presumption of public need in favor of the applicant. It also proposed liberalizing pricing control to introduce price competition, subject to prior notice and public hearing.

In March 1994, the PBOAP announced a 20% fare increase under the deregulation policy, without filing a petition or conducting a public hearing. The KMU filed a petition opposing the fare increase, but the LTFRB dismissed the petition on March 24, 1994.

Consequently, the KMU filed a petition for certiorari with the Supreme Court, seeking to nullify the dismissal order and challenging the validity of the deregulation rules and procedures. The Supreme Court issued a temporary restraining order, halting the fare increase and the implementation of the questioned orders and circulars.

In the case, the KMU challenges the authority granted to provincial bus operators by the LTFRB to set a fare range without filing a petition, claiming it is unconstitutional and illegal. The PBOAP questions the manner in which the petition was filed and disputes the legal standing of the KMU to sue. The DOTC Secretary and the LTFRB argue that the KMU lacks standing to maintain the suit and defend the authority given to set a fare range and establish a presumption of public need.

The court finds the petition meritorious and addresses the issue of locus standi, concluding that the KMU has standing to sue as judicial power includes the duty to settle actual controversies involving legally demandable rights and determine grave abuse of discretion by any government branch or instrumentality.

ISSUES:

1. Whether the authority given by the LTFRB to provincial bus operators to set a fare range without filing a petition is unconstitutional.

2. Whether the establishment of a presumption of public need in favor of an applicant for a proposed transport service without proving public necessity is illegal.

3. Whether the respondents have locus standi to file the petition.

4. Whether the fare range scheme implemented by LTFRB is valid.

5. Whether the authority given by the LTFRB to provincial bus operators to set a fare range over and above the authorized existing fare is a valid delegation of legislative authority.

6. Whether the delegation of power to set fares to provincial bus operators would result in a chaotic and anarchic state of affairs.

7. Whether the LTFRB has the authority to fix and authorize fare rates for public utility vehicles.

8. Whether ignoring or bypassing the proper notice and hearing procedure in fixing fare rates violates due process.

9. Whether the provisions of DOTC Department Order No. 92-587 and LTFRB Memorandum Circular No. 92-009 violate the Public Service Act and the Rules of Court.

10. Whether the burden of proving the absence of public need for a proposed service should be placed on the oppositor.

RULING:

1. The Supreme Court found the petition meritorious and held that KMU has the standing to sue. The Court stated that KMU members, who are directly affected by the burdensome cost of arbitrary increase in passenger fares, have clear legal rights that were violated with the enforcement of the challenged memoranda, circulars, and/or orders. The Court also recognized the important issues raised in the case and exercised its discretion to waive the requirement of proper party.

2. The Court deems it necessary to address the issues raised despite the lack of locus standi of the petitioners given the far-reaching implications and importance of the issues involved.

3. The power to fix rates for public services is delegated by the Legislature to the regulatory body, in this case the Public Service Commission and now the LTFRB. The fare range scheme implemented by LTFRB, which determines, prescribes, approves, and periodically reviews and adjusts fares, rates, and other related charges for public land transportation services, is within its authority.

4. The authority given by the LTFRB to provincial bus operators to set a fare range over and above the authorized existing fare is an illegal and invalid delegation of legislative authority. The doctrine of potestas delegata non delegari potest (what has been delegated cannot be delegated) holds that a delegated power constitutes a duty to be performed by the delegate through their own judgment and not through the mind of another. Allowing the provincial bus operators to change and increase their fares at will would result in a chaotic and anarchic state of affairs, leaving the riding public at the mercy of transport operators.

5. The delegation of power to provincial bus operators to set fares would result in a chaotic and anarchic state of affairs. This would leave the riding public at the mercy of transport operators who may increase fares whenever they please, resulting in a continuously changing and unpredictable fare system. Additionally, the imposition of an additional 20% over and above the authorized fare would compound the fare for commuters and unduly prejudice them.

6. The LTFRB has the authority to fix and authorize fare rates for public utility vehicles. Rate-making is a delicate and sensitive government function that requires the exercise of judgment and discretion to arrive at a just and reasonable rate that is acceptable to both the public utility and the public. The goal is to set a rate that is not confiscatory, enabling public utilities to cover operational costs and provide a reasonable return on investment, while also being affordable to the end users.

7. Ignoring or bypassing the proper notice and hearing procedure in fixing fare rates would violate due process. The people, represented by reputable oppositors, deserve the opportunity to be heard and present their opposition to any fare increase. The purpose of a hearing is to determine what a just and reasonable rate is, and depriving parties of this procedural and constitutional right is contrary to the fundamental law and public interest.

8. The Supreme Court ruled that the provisions of DOTC Department Order No. 92-587 and LTFRB Memorandum Circular No. 92-009 are contrary to law and invalid insofar as they delegate the authority to provincial bus and jeepney operators to increase or decrease duly prescribed transportation fares. The Court found that these administrative issuances are amendatory and violative of the Public Service Act and the Rules of Court. Consequently, the fare increase imposed by the respondent Philippine Bus Operators Association (PBOAP) without the benefit of a petition and a public hearing is declared null and void.

9. The Court held that placing the burden of proving the absence of public need for a proposed service on the oppositor is contrary to established judicial, quasi-judicial, and administrative procedures. Therefore, the provision in LTFRB Memorandum Circular No. 92-009 creating a presumption of public need for a service in favor of the applicant for a certificate of public convenience is also declared invalid.

PRINCIPLES:

• Locus standi is the requirement that a party to a case must have a personal stake in the outcome of the case or an injury that can be redressed by a favorable decision in order to have the standing to sue.

• Judicial power includes the duty of courts to settle actual controversies involving legally demandable and enforceable rights and to determine whether there has been a grave abuse of discretion. This power necessitates the principle of locus standi of a party litigant.

• The Supreme Court has the discretion to set aside the requirement of locus standi in view of the importance of the issues raised in a case.

• Taxpayers, members of Congress, and non-profit civic organizations are allowed to question the constitutionality or validity of laws, acts, decisions, rulings, or orders of government agencies or instrumentalities even if they do not have direct personal stake or injury in the case.

• The Court follows a liberal policy regarding locus standi in cases where the validity or legality of government acts or actions are being questioned, especially if a substantial interest is at stake.

• Legislative power may be delegated to administrative agencies in order to effectively regulate subjects of increasing complexity in modern life.

• The power of the regulatory body, such as LTFRB, to fix rates for public services is derived from legislative delegation and can include the implementation of fare range schemes.

• Potestas delegata non delegari potest - what has been delegated cannot be delegated.

• Administrative bodies, such as the LTFRB, may implement broad policies laid down in a statute by "filling in" the details which the Legislature may neither have time nor competence to provide.

• Delegation of power to set fares to transport operators would result in a chaotic and anarchic state of affairs, leaving the riding public at the mercy of operators and causing prejudice to commuters.

• Rate-making is a delicate and sensitive government function that requires judgment and discretion to arrive at a just and reasonable rate acceptable to both the public utility and the public.

• A rate should not be confiscatory and must enable public utilities to cover operational costs and provide a reasonable return on investment, while also being affordable to end users.

• The proper notice and hearing procedure in fixing fare rates is necessary to ensure due process and allow all parties involved to present their case and opposition.

• Ignoring or bypassing the proper notice and hearing procedure in fixing fare rates violates due process and is contrary to the fundamental law and public interest.

• The Supreme Court has the authority to declare administrative issuances contrary to law and invalid if they violate statutory provisions and the Rules of Court.

• The burden of proving the absence of public need for a proposed service should not be placed on the oppositor. The applicant has the burden of proving the affirmative allegations in the proceedings.