G.R. No. 116356




Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 116356 June 29, 1998 EASTERN SHIPPING LINES, INC., petitioner, vs. COURT OF APPEALS and DAVAO PILOTS ASSOCIATION, respondents. PANGANIBAN, J.: In Philippine Interisland Shipping Association of the Philippines vs. Court of Appeals, 1 the Court, en banc, ruled that Executive Order 1088 2 was not unconstitutional. We adhere to said ruling in this case. The Case This is a petition or certiorari under Rule 45, assailing the Decision 3 of the Court of Appeals 4 in CA-GR CV No. 34487 promulgated on July 18, 1994, the dispositive portion of which reads: WHEREFORE, finding no reversible error in the decision appealed from, the same is hereby AFFIRMED in toto. With costs against defendant-appellant. The Decision affirmed by Respondent Court disposed as follows: WHEREFORE, judgment is rendered directing the defendant: 1. To pay plaintiff the sum of P602,710.04 with legal rate of interest commencing from the filing of the complaint representing unpaid pilotage fees; 2. To pay attorney's fees in the sum of P50,000.00; 3. And costs. SO ORDERED. Hence, this appeal. 5 The Facts As found by the trial court, these are the undisputed facts: On September 25, 1989, plaintiff [herein private respondent] elevated a complaint against defendant [herein petitioner] for sum of money and attorney's fees alleging that plaintiff had rendered pilotage services to defendant between January 14, 1987 to July 22, 1989 with total unpaid fees of P703,290.18. Despite repeated demands, defendant failed to pay and prays that the latter be directed to pay P703,290.18 with legal rate of interest from the filing of the complaint; attorney's fees equivalent to 25% of the principal obligation and such other relief. On November 18, 1989 defendant answered vigorously disputing the claims of plaintiff. It assailed the constitutionality of the Executive Order 1088 upon which plaintiff bases its claims; alleged that there is a pending case before the Court of Appeals elevated by the United Harbor Pilots Association of the Philippines of which plaintiff is a member[;] whereas defendant is a member of the Chamber of Maritime Industries of the Philippine[s] which is an Intervenor in CA-G.R. SP No. 18072; that there therefore is lis pendens by Section 1 (e), Rule 16 of the Rules; that the subject of the complaint falls within the scope and authority of the Philippine Ports Authority by virtue of PD No. 857 dated December 23, 1975; that Executive Order No. 1088 is an unwarranted repeal or modification of the Philippine Ports Authority Charter; that the fees charged by plaintiff are arbitrary and confiscatory; and the basis of the Executive Order 1088 is offensive, sourced from Amendment No. 6 of the 1973 Constitution and rendered inoperative by the Freedom Constitution of March 25, 1986 and the present Constitution; and that the only agency vested by law to prescribe such rates, charges or fees for services rendered by any private organization like the plaintiff within a Port District is governed by Section 20 of PD 857. As regular patron of plaintiff, defendant has never been remiss in paying plaintiff's claim for pilotage fees and the present complaint under the foregoing circumstances is without legal foundation. Defendant prays that plaintiff be advised to await the final outcome of the identical issues already elevated to and pending before the Court of Appeals as CA-G.R. SP No. 18072. Defendant prays for an award of damages, attorney's fees, litigation expense and costs. At the Pre-Trial Conference, the only issue raised by plaintiff is whether the defendant is liable to the plaintiff for the money claims alleged in the complaint. The defendant on the other hand raised the following issues: 1. Whether or not Executive Order 1088 is constitutional; 2. Whether or not Executive Order 1088 is illegal; 3. Whether or not the plaintiff may motu proprio and independently of the Public Estates Authority enforce Executive Order 1088 and collect the pilotage fees prescribed thereunder; 4. Assuming Executive Order 1088 is constitutional, valid and self-executory, whether or not the defendant is liable; and if so, to what extent and for what particular items; and 5. Whether or not the plaintiff is liable under the counterclaims (p. 102, Expediente). On September 5, 1990, plaintiff presented witness Capt. Felix N. Galope, in the course of which testimony identified among others EXHIBITS "B" to "E-2" and "J" to "1-2" consisting of documents related to the collection of the unpaid pilotage fees; basis for such computations; Statement of Accounts; demand letter and official recipients of payment made. On September 6, 1990, Simplicio Barao, plaintiff's Billing Clerk testified among others on the records of plaintiff's Captain's Certificate/Pilotage Chits and Bills/Statements of Accounts on the claims against defendant (EXHIBITS "G" to "H-48-A") and the details of the outstanding accounts in favor of plaintiff. The records show defendant raised no objection thereto and by virtue of which all of plaintiff's documentary exhibits were admitted. (Order dated January 14, 1991, p. 277 Expediente). On March 14, 1991, defendant presented Celso Occidental, employee of defendant shipping company, in the course of which testimony submitted EXHIBITS "1" to "1-D" which is plaintiff's Billing Rate, both old and new with a payment of P79,585.64; and "2" to "2-G" representing plane ticket paid for by defendant for transportation expenses of its counsel and cost of stenographic transcripts. Defendant's last witness, Capt. Jose Dubouzet, Jr. and a Harbor Pilot was briefly presented. 6 After due trial, the trial court rendered its ruling, viz.: Plaintiff's evidence as to the unpaid pilotage services due from defendant duly supported by voluminous documentary exhibits has not been refuted nor rebutted by defendant. On the contrary, when plaintiff's documentary exhibits were formally offered, defendant did not raise any objection thereby leaving the documents unchallenged and undisputed. Upon the other hand, while the records show that defendant raised no less than five (5) issues the evidence fails to show any proof to sustain defendant's posture. On the contrary, neither of defendant's two witnesses appear to have even grazed the outer peripheries of what could have been interesting issues with far-reaching consequences if resolved. 7 The factual antecedents of the controversy are simple. Petitioner insists on paying pilotage fees prescribed under PPA circulars. Because EO 1088 sets a higher rate, petitioner now assails its constitutionality. Public Respondent's Ruling As stated earlier, Respondent Court of Appeals affirmed the trial court's decision. Respondent Court pointed out that petitioner, during the pre-trial, limited the issues to whether: (1) EO C88 is unconstitutional; (2) EO 1088 is illegal; (3) private respondent itself may enforce and collect fees under EO 1088; and (4) petitioner is liable and, if EO 1088 is legal, to what extent. It then affirmed the factual findings and conclusion of the trial court that petitioner "fail[ed] to show any proof" to support its position. Parenthetically, Respondent Court also noted two other cases decided by the Court of Appeals, upholding the constitutionality of EO 1088. 8 The Issue In sum, petitioner raises this main issue: whether Executive Order 1088 is unconstitutional. 9 The Court's Ruling The petition is unmeritorious. EO 1088 Is Valid Petitioner contends that EO 1088 10 is unconstitutional, because (1) its interpretation and application are left to private respondent, a private person, 11 and (2) it constitutes an undue delegation of powers. Petitioner insists that it should pay pilotage fees in accordance with and on the basis of the memorandum circulars issued by the PPA, the administrative body vested under PD 857 12 with the power to regulate and prescribe pilotage fees. In assailing the constitutionality of EO 1088, the petitioner repeatedly asks: "Is the private respondent vested with power to interpret Executive Order No. 1088?" 13 The Court is not persuaded. The pertinent provisions of EO 1088 read: Sec. 1. The following shall be the rate of pilotage fees or charges based on tonnage for services rendered to both foreign and coastwise vessels: For Foreign Vessels Rate in US$ &/or its Peso Equivalent Less than 500GT $ 30.00 500GT to 2,500GT 43.33 2,500GT to 5,000GT 71.33 5,000GT to 10,000GT 133.67 10,000GT to 15,000GT 181.67 15,000GT to 20,000GT 247.00 20,000GT to 30,000GT 300.00 30,000GT to 40,000GT 416.67 40,000GT to 60,000GT 483.33 60,000GT to 80,000GT 550.00 80,000GT to 100,000GT 616.67 100,000GT to 120,000GT 666.67 120,000GT to 130,000GT 716.67 130,000GT to 140,000GT 766.67 Over 140,000 gross tonnage $0.05 or its peso equivalent every excess tonnage. Rate for docking and undocking anchorage, conduction and shifting other related special services is equal to 100%. Pilotage services shall be compulsory in government and private wharves or piers. For Coastwise Vessels Regular 100 and under 500 gross tons P 41.70 500 and under 600 gross tons 55.60 600 and under 1,000 gross tons 69.60 1,000 and under 3,000 gross tons 139.20 3,000 and under 5,000 gross tons 300.00 5,000 and over gross tons Sec. 2. With respect to foreign vessels, payment of pilotage services shall be made in dollars or in pesos at the prevailing exchange rate. Sec. 3. All orders, letters of instructions, rules, regulations and other issuances inconsistent with this Executive Order are hereby repealed or amended accordingly. Sec. 4. This Executive Order shall take effect immediately. In Philippine Interisland Shipping Association of the Philippines vs. Court of Appeals, 14 the Supreme Court, through Mr. Justice Vicente V. Mendoza, upheld the validity and constitutionality of Executive Order 1088 in no uncertain terms. We aptly iterate our pronouncement in said case, viz.: It is not an answer to say that E.O. No. 1088 should not be considered a statute because that would imply the withdrawal of power from the PPA. What determines whether an act is a law or an administrative issuance is not its form but its nature. Here as we have already said, the power to fix the rates of charges for services, including pilotage service, has always been regarded as legislative in character. x x x x x x x x x It is worthy to note that E.O. NO. 1088 provides for adjusted pilotage service rates without withdrawing the power of the PPA to impose, prescribe, increase or decrease rates, charges or fees. The reason is because E.O. No. 1088 is not meant simply to fix new pilotage rates. Its legislative purpose is the "rationalization of pilotage service charges, through the imposition of uniform and adjusted rates for foreign and coastwise vessels in all Philippine ports. x x x x x x x x x We conclude that E.O. No. 1088 is a valid statute and that the PPA is duty bound to comply with its provisions. The PPA may increase the rates but it may not decrease them below those mandated by E.O. No. 1088. . . . . 15 We see no reason to depart from this ruling. The Court's holding clearly debunks petitioner's insistence on paying its pilotage fees based on memorandum circulars issued by the PPA. 16 Because the PPA circulars are inconsistent with EO 1088, they are void and ineffective. "Administrative or executive acts, orders and regulations shall be valid only when they are not contrary to the laws or the Constitution." 17 As stated by this Court in Land Bank of the Philippines vs. Court of Appeals, 18 "[t]he conclusive effect of administrative construction is not absolute. Action of an administrative agency may be disturbed or set aside by the judicial department if there is an error of law, a grave abuse of power or lack of jurisdiction, or grave abuse of discretion clearly conflicting with either the letter or spirit of the law." 19 It is axiomatic that an administrative agency, like the PPA, has no discretion whether to implement the law or not. Its duty is to enforce it. Unarguably, therefore, if there is any conflict between the PPA circular and a law, such as EO 1088, the latter prevails. 20 Based on the foregoing, petitioner has no legal basis to refuse payment of pilotage fees to private respondent, as computed according to the rates set by EO 1088. Private respondent cannot be faulted for relying on the clear and unmistakable provisions of EO 1088. In fact, EO 1088 leaves no room for interpretation, thereby unmistakably showing the duplicity of petitioner's query: "Is the private respondent vested with power to interpret Executive Order No. 10882?" WHEREFORE, the petition is hereby DENIED and the assailed Decision of the Court of Appeals is AFFIRMED. Costs against petitioner. SO ORDERED. Davide, Jr., Bellosillo, Vitug and Quisumbing, JJ., concur. Footnotes 1 266 SCRA 489, January 22, 1997. 2 Entitled "Providing For Uniform And Modified Rates For Pilotage Services Rendered To Foreign And Coastwise Vessels In All Private Or Public Philippine Ports" and enacted on February 3, 1986. 3 Rollo, pp. 40-50. 4 Special Fourth Division, composed of JJ. Artemon D. Luna, ponente; Asaali S. Isnani, acting chairman; and Ruben T. Reyes, concurring. 5 The case was deemed submitted for resolution on March 6, 1997, when the Court received the private respondent's Explanation dated February 17, 1997. 6 Decision of the Regional Trial Court, pp. 1-4; CA rollo, pp. 65-68. 7 Ibid., p. 4; CA rollo, p. 68. 8 Decision of the Court of Appeals, pp. 5-6; rollo, pp. 11-12. 9 See Petition, pp. 1 and 12 and Petitioner's Memorandum, pp. 2-3; rollo, pp. 23, 34, and 80-81. 10 Providing for uniform and modified rates for pilotage services rendered to foreign and coastwise vessels in all private or public Philippine ports. 11 Petitioner's Memorandum, pp. 18-19; rollo, pp. 96-97. 12 Otherwise known as the Revised Charter of the Philippine Ports Authority, created under Presidential Decree No. 505 dated July 11, 1974. 13 Petitioner's Memorandum, p. 20; rollo, p. 98. 14 Supra, see p. 510. 15 Ibid., pp. 507, 510. 16 Petitioner's Memorandum, p. 21; rollo, p. 99. 17 Art. 7, Civil Code of the Philippines. 18 249 SCRA 149, October 6, 1995, per Francisco, J. 19 Ibid., pp. 157-158; citing Peralta vs. Civil Service Commission, 212 SCRA 425, 432, (1992). 20 Ibid., p. 158. 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