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SC: Notice and Hearing are Required for LRT/MRT Fare Increase

March 31, 2023

Any increase in the fares for the Light Rail Transit (LRT) Lines 1 and 2 and the Metro Rail Transit (MRT) Line 3 require prior notice and hearing to be valid.

Thus, ruled the Supreme Court En Banc in a Decision penned by Justice Jhosep Y. Lopez dismissing the various petitions challenging Department of Transportation and Communication (DOTC) Department Order 2014-014 (D.O. 2014-014), which mandated the application of the “user-pays” principle and adopted a uniform base fare for LRT Lines 1 and 2 and MRT Line 3 of PHP11.00, plus PHP1.00 per kilometer of distance travelled.

On August 5, 2010, the Office of the President directed the Light Railway Transit Authority (LRTA) to conduct a comparative study on the operating costs of the LRT and the MRT vis-à-vis public utility buses. This was followed by several other studies which resulted in the execution by the Finance Secretary, the Budget and Management Secretary, the Socio-Economic Planning Secretary, and the DOTC Secretary of a Memorandum for the President regarding the LRT fare adjustment.

On January 11, 2011, the LRTA Board provisionally approved the fare adjustment of PHP11.00 boarding fare plus PHP1.00/km, with the corresponding fare matrices, subject to a public consultation to be held on February 4 and 5, 2011. The Notice of Public Consultation was published in the Philippine Daily Inquirer on January 20, 2011, and in The Manila Bulletin on January 27, 2011.

Following the public consultation, the LRTA Board approved the fare adjustment, with the 20% student discount, which was concurred in by the Land Transportation Franchise Review Board (LTFRB) on April 20, 2011. However, on May 9, 2011, the LRTA Board and the DOTC (renamed as Department of Transportation or DOTr in 2015) deferred the implementation of the fare increase.

On June 26, 2013, the LRTA Board approved anew the fare increase as previously approved in 2011 but withdrew the 20% student discount. The 1st step fare adjustment was scheduled to be implemented on August 1, 2013, with the 2nd step implementation to be decided after the public consultation to be held on December 12, 2013. On December 19, 2013, the LTFRB concurred in the fare increase.

On December 18, 2014, the DOTC issued D.O. 2014-014, or “Light Rail Transit (LRT) Lines 1 & 2 and Metro Rail Transit (MRT) Line 3 Fare Adjustment,” which took effect on January 4, 2015. D.O. 2014-014 effectively increased the total fare per ride for the three rail systems as follows: for LRT-1, from PHP12.00 to PHP20.00, it increased to PHP15.00 to PHP30.00; for LRT-2, from PHP12.00 to PHP15.00, it increased to PHP15.00 to PHP25.00; and for MRT-3, from PHP10.00 to PHP15.00, it increased to PHP13.00 to PHP28.00.

The fare increase prompted the filing of the petitions for certiorari and/or prohibition before the Supreme Court, assailing D.O. 2014-014 as violative of due process for being issued without due notice and hearing. The Petitions additionally argue that the DOTC lacks the power to implement a fare increase for the LRT and the MRT, as such power has been transferred to the LTFRB, and that D.O. 2014-014 was arbitrary, alleging that the 50 to 87% fare increase was without basis.

In dismissing the petitions, the Supreme Court ruled that prior notice and hearing are required in the fixing of rates by administrative agencies.

The Court clarified that while under the 1964 case of Vigan Electric Light Company v. Public Service Commission, no notice and hearing are required in the administrative agencies’ exercise of quasi-legislative functions, this rule does not apply when there is a law that expressly requires notice and hearing.

In the case of fixing rates, while this is considered a quasi-legislative function, the Administrative Code of 1987 expressly requires that there be prior notice and hearing in rate-fixing, with the notice to be published at least two weeks before the hearing. Hence, such requirements must be complied with for any increase in LRT and MRT fares to be valid.

The Court also found that the DOTC substantially complied with the notice and hearing requirements for D.O. 2014-014. The agency published a Notice of Public Consultation on January 20 and 27, 2011 in two newspapers. On February 4 and 5, 2011, the public consultations were held. In 2013, the DOTC published anew a notice for the public consultation scheduled on December 12, 2013.

While the fare increase took effect only on December 20, 2014, the Court held that the previous public consultations substantially serve the purpose of the hearing requirement under the law, as the proposed fare structure was retained and the original basis and purpose for the proposed hike remained the same.

On the issue of whether the DOTC and the LTRA have the power to increase LRT and MRT fares, the Court held that it is well-established in jurisprudence that the rate-fixing power of administrative agencies is a valid delegation of legislative power in response to the growing complexity of society, the multiplication of government regulation subjects, and the increased difficulty of administering laws.

The Court added that such delegated power, however, must comply with the following condition to be valid: Congress must clearly state: (1) the policy to be executed and (2) sufficient guidelines or limitations on the boundaries of the delegate’s authority.

In the case of the DOTC, the Court found that the agency’s power to fix rates has been validly delegated by Congress in the Administrative Code of 1987, which clearly provides that the DOTC shall have the power to determine, fix, or prescribe charges or rates pertinent to postal services and to the operation of public air and land transportation utility and services.

The same law also limits the DOTC’s rate-fixing power under its declared policy and mandate of viability, efficiency, speed, safety, dependability, and reliability, held the Court.

The Court added that the DOTC’s validly delegated rate-fixing power applies to the MRT-3, LRT-1, and LRT-2, which are considered public land transportation utility facilities and services.

As to the LRT, however, the Court ruled that the DOTC’s power is limited by the LRTA’s authority to implement a fare increase over LRT-1 and LRT-2 as provided under Executive Order No. 603 (E.O. 603), the latter’s charter.

The Court held that E.O. 603 clearly vests the LRTA with authority to determine the fares for the light rail system, subject only to consultation with the defunct Board of Transportation, the functions and powers of which are now exercised by the LTFRB.

In the case of D.O. 2014-014, the Court found that the LTFRB duly concurred in the fare increase.

The Court also ruled that the LTFRB has no authority to implement and/or adjudicate fare increases for the rail transit system.

The Court added that the power of the LTFRB is limited to regulating the operation of public and land transportation services provided by motorized vehicles, specifically by: (a) prescribing and regulating the routes of service, capacities, and zones or areas of operation; and (b) issuing, amending, revising, suspending, or canceling Certificates of Public Convenience or permits.

Such power of the LTFRB, the Court ruled, thus, cannot extend to the LRT and MRT given that: (a) the routes of service of the LRT and the MRT are already pre-determined by the respective layouts of their rail systems, and (b) the operations of the LRT and the MRT do not require a Certificate of Public Convenience or a permit, since they are owned and operated, respectively, by an instrumentality of the national government.

The Court also ruled that the requirement that all rates must be reasonable and just was complied with by D.O. 2014-014, which was a result of a thorough and independent evaluation made by the DOTC and the LRTA following the prescribed procedure in implementing the fare increase. Without a clear showing that the DOTC or the LTRA acted arbitrarily, their findings regarding the fare increase under D.O. 2014-014 must be respected, said the Court.

Finally, the Court clarified that the result of the pending arbitration request filed by the Light Rail Manila Corporation (LRMC) with the International Chamber of Commerce on May 6, 2022 against the DOTr and the LRTA will have no effect on the Court’s ruling on the present petitions. The arbitration request does not deal with the fare increase under D.O. 2014-014; rather, it involves the petition for fare increase in 2016, 2018, and 2022 made by LRMC, which were all denied by the government, explained the Court.

The Supreme Court Public Information Office will upload a copy of the Decision to the Supreme Court website as soon as it receives an official copy from the Office of the Clerk of Court En Banc.

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Statement of Commitment to Data Privacy and Security

The Supreme Court of the Philippines respects your privacy and your data privacy rights, as well as employs reasonable measures to protect your personal data in accordance with Republic Act No. 10173 or the Data Privacy Act of 2012 (DPA), its Implementing Rules and Regulations, and the various issuances of the National Privacy Commission (NPC) (collectively, the Data Privacy Regulations).

Brief Service Description and Its General Purpose

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The collected information shall be stored in the Supreme Court website database. The Public Information Office (PIO) directly administers and maintains the database and the Supreme Court website. Only the PIO website administrators and authorized personnel shall be granted access to the database of the Supreme Court website. Sharing of any information that are contained in the said database with unauthorized persons is strictly prohibited.

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This Privacy Notice was last updated on February 20, 2024.

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The Supreme Court Under
the 1987 Constitution

As in the 1935 and 1973 Constitutions, the 1987 Constitution provides that “[t]he judicial power shall be vested in one Supreme Court and in such lower courts as may be established by law.” (Art. VII, Sec. 1). The exercise of judicial power is shared by the Supreme Court with all lower courts, but it is only the Supreme Court’s decisions that are vested with precedential value or doctrinal authority, as its interpretations of the Constitution and the laws are final and beyond review by any other branch of government.

Unlike the 1935 and 1973 Constitutions, however, the 1987 Constitution defines the concept of judicial power. Under paragraph 2 of Section 1, Article VIII, “judicial power” includes not only the “duty of the courts of justice to settle actual controversies involving rights which are legally demandable and enforceable” but also “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.” This latter provision dilutes the effectivity of the “political question” doctrine which places specific questions best submitted to the political wisdom of the people beyond the review of the courts.

Building on previous experiences under former Constitutions, the 1987 Constitution provides for specific safeguards to ensure the independence of the Judiciary. These are found in the following provisions:

    • The grant to the Judiciary of fiscal autonomy. “Appropriations for the Judiciary may not be reduced by the legislature below the amount appropriated for the previous year, and, after approval, shall be automatically and regularly released.” (Art. VIII, Sec. 3).
    • The grant to the Chief Justice of authority to augment any item in the general appropriation law for the Judiciary from savings in other items of said appropriation as authorized by law. (Art. VI, Sec. 25[5])
    • The removal from Congress of the power to deprive the Supreme Court of its jurisdiction over cases enumerated in Section 5 of Article VIII.
    • The grant to the Court of the power to appoint all officials and employees of the Judiciary in accordance with the Civil Service Law (Art. VIII, Sec. 5 [6])
    • The removal from the Commission of Appointments of the power to confirm appointments of justices and judges (Art. VIII, Sec. 8)
    • The removal from Congress of the power to reduce the compensation or salaries of the Justices and judges during their continuance in office. (Art. VIII, Sec. 10)
    • The prohibition against the removal of judges through legislative reorganization by providing that “(n)o law shall be passed reorganizing the Judiciary when it undermines the security of tenure of its members. (Art. VIII, Sec. 2)
    • The grant of sole authority to the Supreme Court to order the temporary detail of judges. (Art. VIII, Sec. 5[3])
    • The grant of sole authority to the Supreme Court to promulgate rules of procedure for the courts. (Art. VIII, Sec. 5[5])
    • The prohibition against designating members of the Judiciary to any agency performing quasi-judicial or administrative function. (Art. VIII, Sec. 12)
    • The grant of administrative supervision over the lower courts and its personnel in the Supreme Court. (Art. VIII, Sec. 6)

The Supreme Court under the present Constitution is composed of a Chief Justice and 14 Associate Justices. The members of the Court are appointed by the President from a list, prepared by the Judicial and Bar Council, of at least three nominees for every vacancy. This new process is intended to “de-politicize” the courts of justice, ensure the choice of competent judges, and fill existing vacancies without undue delay.


The Supreme Court Under
the Revolutionary Government

Shortly after assuming office as the seventh President of the Republic of the Philippines after the successful People Power Revolution, then President Corazon C. Aquino declared the existence of a revolutionary government under Proclamation No. 1 dated February 25, 1986. Among the more significant portions of this Proclamation was an instruction for “all appointive officials to submit their courtesy resignations beginning with the members of the Supreme Court.” The call was unprecedented, considering the separation of powers that the previous Constitutions had always ordained, but understandable considering the revolutionary nature of the post-People Power government. Heeding the call, the members of the Judiciary—from the Supreme Court to the Municipal Circuit Courts—placed their offices at the disposal of the President and submitted their resignations. President Corazon C, Aquino proceeded to reorganize the entire Court, appointing all 15 members.

On March 25, 1986, President Corazon Aquino, through Proclamation No. 3, also abolished the 1973 Constitution and put in place a Provisional “Freedom” Constitution. Under Article I, Section 2 of the Freedom Constitution, the provisions of the 1973 Constitution on the judiciary were adopted insofar as they were not inconsistent with Proclamation No. 3.

Article V of Proclamation No. 3 provided for the convening of a Constitutional Commission composed of 50 appointive members to draft a new constitution; this would be implemented by Proclamation No. 9. Under the leadership of retired SC Justice Cecilia Muñoz Palma as its President, the Constitutional Commission of 1986 submitted its output of to the people for ratification.

By a vote of 76.30%, the Filipino people then ratified the Constitution submitted to them in a national plebiscite on February 2, 1987.

President Aquino, other civilian officials, and members of the Armed Forces of the Philippines, upon the announcement of the ratification of the 1987 Constitution, swore allegiance to the new charter on February 11, 1987 thereby putting an end to the revolutionary government.


The Supreme Court Under
the 1973 Constitution

The declaration of Martial Law through Proclamation No. 1081 by former President Ferdinand E, Marcos in 1972 brought about the transition from the 1935 Constitution to the 1973 Constitution. This transition had implications on the Court’s composition and functions.

This period also brought in many legal issues of transcendental importance and consequence. Among these were the legality of the ratification of a new Constitution, the assumption of the totality of government authority by President Marcos, and the power to review the factual basis for a declaration of Martial Law by the Chief Executive, among others. Also writ large during this period was the relationship between the Court and the Chief Executive who, under Amendment No. 6 to the 1973 Constitution, had assumed legislative powers even while an elected legislative body continued to function.

The 1973 Constitution increased the number of the members of the Supreme Court from 11 to 15, with a Chief Justice and 14 Associate Justices. The Justices of the Court were appointed by the President alone, without the consent, approval, or recommendation of any other body or officials.


The Supreme Court of
the Second Republic

Following liberation from the Japanese occupation at the end of the Second World War and the Philippines’ subsequent independence from the United States, Republic Act No. 296 or the Judiciary Act of 1948 was enacted. This law grouped together the cases over which the Supreme Court could exercise exclusive jurisdiction for review on appeal, certiorari, or writ of error.


The Supreme Court During
the Commonwealth

Following the ratification of the 1935 Philippine Constitution in a plebiscite, the principle of separation of powers was adopted, not by express and specific provision to that effect, but by actual division of powers of the government—executive, legislative, and judicial—in different articles of the 1935 Constitution.

As in the United States, the judicial power was vested by the 1935 Constitution “in one Supreme Court and in such inferior courts as may be established by law.” It devolved on the Judiciary to determine whether the acts of the other two departments were in harmony with the fundamental law.

The Court during the Commonwealth was composed of “a Chief Justice and ten Associate Justices, and may sit en banc or in two divisions, unless otherwise provided by law.”


The Establishment of
the Supreme Court of the Philippines

On June 11, 1901, the Second Philippine Commission passed Act No. 136 entitled “An Act Providing for the Organization of Courts in the Philippine Islands” formally establishing the Supreme Court of the Philippine Islands and creating Courts of First Instance and Justices of the Peace Courts throughout the land. The judicial organization established by the Act was conceived by the American lawyers in the Philippine Commission, with its basic structures patterned after similar organizations in the United States.

The Supreme Court created under the Act was composed of a Chief Justice and six Judges. Five members of the Court could form a quorum, and the concurrence of at least four members was necessary to pronounce a judgment.

Act No. 136 abolished the Audiencia established under General Order No. 20 and declared that the Supreme Court created by the Act be substituted in its place. This effectively severed any nexus between the present Supreme Court and the Audiencia.

The Anglo-American legal system under which the Supreme Court of the Philippine Islands was expected to operate was entirely different from the old Spanish system that Filipinos were familiar with. Adjustments had to be made; hence, the decisions of the Supreme Court during its early years reflected a blend of both the Anglo-American and Spanish systems. The jurisprudence was a gentle transition from the old order to the new.


The Judicial System During
the American Occupation

After Spain’s defeat in the Spanish-American War in the late 1890s, The subsequent occupation by the Americans of the Philippine Islands paved the way for considerable changes in the control, disposition, and governance of the Islands.

The judicial system established during the regime of the military government functioned as an instrument of the executive—not of the judiciary—as an independent and separate branch of government. Secretary of State John Hay, on May 12, 1899, proposed a plan for a colonial government of the Philippine Islands which would give Filipinos the largest measure of self-government. The plan contemplated an independent judiciary manned by judges chosen from qualified locals and Americans.

On May 29, 1899, General Elwell Stephen Otis, Military Governor for the Philippines, issued General Order No. 20, reestablishing the Audiencia Teritorial de Manila which was to apply Spanish laws and jurisprudence recognized by the American military governor as continuing in force.

The Audiencia was composed of a presiding officer and eight members organized into two divisions: the sala de lo civil or the civil branch, and the sala de lo criminal or the criminal branch.

It was General Otis himself who personally selected the first appointees to the Audiencia. Cayetano L. Arellano was appointed President (equivalent to Chief Justice) of the Court, with Manuel Araullo as president of the sala de lo civil and Raymundo Melliza as president of the salo de lo criminal. Gregorio Araneta and Lt. Col. E.H. Crowder were appointed associate justices of the civil branch while Ambrosio Rianzares, Julio Llorente, Major R.W. Young, and Captain W.E. Brikhimer were designated associate justices of the criminal branch. Thus, the reestablished Audiencia became the first agency of the new insular government where Filipinos were appointed side by side with Americans.


The Judicial System Under
the Spanish Regime

During the early Spanish occupation, King Philip II established the Real Audiencia de Manila which was given not only judicial but legislative, executive, advisory, and administrative functions as well. Composed of the incumbent governor general as the presidente (presiding officer), four oidores (equivalent to associate justices), an asesor (legal adviser), an alguacil mayor (chief constable), among other officials, the Real Audiencia de Manila was both a trial and appellate court. It had exclusive original, concurrent original, and exclusive appellate jurisdictions.

Initially, the Audiencia was given a non-judicial role in the colonial administration, to deal with unforeseen problems within the territory that arose from time to time—it was given the power to supervise certain phases of ecclesiastical affairs as well as regulatory functions, such as fixing of prices at which merchants could sell their commodities. Likewise, the Audiencia had executive functions, like the allotment of lands to the settlers of newly established pueblos. However, by 1861, the Audiencia had ceased to perform these executive and administrative functions and had been restricted to the administration of justice.

When the Audiencia Territorial de Cebu was established in 1886, the name of the Real Audiencia de Manila was changed to Audiencia Territorial de Manila.


The Judicial System of the
Pre-Colonization Filipinos

When the Spanish colonizers first arrived in the Philippine archipelago, they found the indigenous Filipinos without any written laws. The laws enforced were mainly derived from customs, usages, and tradition. These laws were believed to be God-given and were orally transmitted from generation to generation.

A remarkable feature of these customs and traditions was that they were found to be very similar to one another notwithstanding that they were observed in widely dispersed islands of the archipelago. There were no judges and lawyers who were trained formally in the law, although there were elders who devoted time to the study of the customs, usages, and traditions of their tribes to qualify them as consultants or advisers on these matters.

The unit of government of the indigenous Filipinos was the barangay, which was a family-based community of 30 to 100 families, occupying a pook (“locality” or “area”) headed by a chieftain called datu who exercised all functions of government—executive, legislative, and judicial—a barangay was not only a political but a social and an economic organization. In the exercise of his judicial authority, the datu acted as a judge (hukom) in settling disputes and deciding cases in his barangay.

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