Meralco v. PSC, 11 SCRA 317 (1986)

Meralco v. PSC, 11 SCRA 317 (1986) 

FACTS:

• Manila Electric Company (Meralco) filed several applications with the Public Service Commission (PSC), for:

a.    for revision and reduction of its rates for commercial and other nonresidential customers for general lighting, heating and/or power purposes;  and
b.     for revision and reduction of its residential meter rate.

•  These applications were approved by the PSC in a decision rendered on 24 September 1955.
• On 9 June 1954, upon petition of Dr. Pedro Gil, the Commission requested the Auditor General to cause an audit and examination of Meralco's books of accounts.
• The General Auditing Office (GAO) examined and audited the books. It presented a report which was submitted to the Commission on 28 May 1956.
• The PSC, thru Commissioner Feliciano Ocampo, reset the hearing of the cases for June 22, 1956 "for the purpose of considering such further revision of applicant's rates as may be found reasonable." On the said date, the parties appeared and Atty. Venancio L. de Peralta, Technical Assistant and Chief of the Finance and Rate Division of the PSC, who was duly authorized to receive the evidence of the parties, announced that the hearing was an "informal hearing", and its purpose was to hear any remarks or statements of the parties and to define the issues "so that at the hearing we know exactly what are disputed at this informal hearing".
• Dr. Pedro Gil submitted the 3 cases on the report of the GAO and sent to the Commission, in which he asked the Commission, inter alia, to allow the Meralco "a rate of return of only 8% on its invested capital." The Solicitor General submitted the case on the same report and letter of Dr. Gil and on a letter-report addressed by the Deputy Auditor General to the Commission. Other parties made common cause with Dr. Gil.
• Meralco filed its answer to the GAO's report, specifying its objection, and prayed that the cases be reset for hearing to enable the parties to present their proofs. Without having (1) first reset the said 3 cases for hearing; (2) Without having given the Meralco an opportunity, as requested by it, to cross-examine the officers of the GAO who prepared the report, on which report the Commission based its decision; and (3) Without having given the Meralco an opportunity, as requested by it, to present evidence in support of its answer to refute the facts alleged in said report and controverted by Meralco,  the PSC handed down a decision, granting the petition for the reduction of rates.
• The motion for reconsideration and to set aside decision filed on by Meralco was denied by the Commission on a 2 to 1 vote. Meralco filed the petition for review with preliminary injunction before the Supreme Court.

 
ISSUE: 
Whether or not the informal hearing serves the purpose of “proper notice and hearing” in administrative cases. 
 
RULING:
No.
The record shows that no hearing was held. On 22 June 1956, parties appeared before "Attorney Vivencio L. Peralta, Technical Assistant, and Chief, Finance and Rate Division, Public Service Commission, who was duly authorized to receive the evidence of the parties", and the record shows that the hearing held before the said Commissioner was merely an informal hearing because, using his own words, "I said at the beginning that this is only preliminary because I want that the parties could come to some kind of understanding." Meralco has not been given its day in court. The decision of 27 December 1957 was not promulgated "upon proper notice and hearing", as required by law, and that therefore it can not serve as a legal basis for requiring the Meralco to put in effect the reductions ordered in the decision. It is the cardinal right of a party in trials and administrative proceedings to be heard, which includes the right of the party interested or affected to present his own case and submit evidence in support thereof and to have such evidence presented considered by the tribunal. Even if the Commission is not bound by the rules of judicial proceedings, it must how its head to the constitutional mandate that no person shall be deprived of right without due process of law, which binds not only the government of the Republic, but also each and everyone of its branches, agencies, etc. 
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WHEREFORE, We set aside the decision of the respondent Public Service Commission of December 27, 1957 and the order of March 3, 1958, and remand the records of the above entitled cases to the Commission for further proceedings, and to render judgment accordingly. No costs.