PANAY AUTOBUS CO. v PHIL RAILWAY CO.

o On the same date asked for a rehearing on the ground that the decision
Fixing of Rates, Wages, Prices | February 17, 1933 | Vickers, J.
Nature of Case: Petition for review on certiorari
Digest maker: Niq Polido
SUMMARY: Phil Railway Co. filed a petition with the Public Service Commission to
allow it to set lower rates than what is prescribed whenever it deems it necessary in
order for it to be able to compete with the passenger and freight rates of buses and
trucks in Panay. The commission granted the petition. Panay Autobus Co. opposed the
decision arguing that it is contrary to law. SC reversed the grant and ruled that the
Commission has no authority to delegate to Phil Railways the power to set its own
rules.
DOCTRINE: An administrative agency cannot delegate its power to set rates unless it
is specifically provided in a law. When the administrative agency is given the power to
set rates, a company may only propose rates and such proposal is still subject to the
approval of said agency. There are cases (as in vessels) when the company set rates
when the law is silent on the matter (the law only gives the administrative agency the
authority ot set max rates). However legislature still has not authorized the Public
Service Commission to delegate the power to fix rates to common carriers or other
public services.
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 RULING: Decision in question as grants the application of the Philippine Railway Co. in case No.
shipper and ask that what the railway charges, and then offer to haul the freight 31724 to reduce its rates at will to meet competition is reversed, with the costs in favor of the
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
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.
appellant.