G.R. No. 100481, G.R. No. 103716-17, G.R. No. 107720 January 22, 1997
PHILIPPINE INTERISLAND SHIPPING ASSOCIATION, et al. vs. COURT OF APPEALS, et al.; HON. PETE NICOMEDES PRADO, et al. vs. COURT OF APPEALS, et al.; HON. JESUS B. GARCIA, JR., et al. vs. HON. NAPOLEON R. FLOJO, et al.

FACTS

These consolidated petitions arose from a dispute over pilotage fee rates. Executive Order No. 1088, issued by President Marcos in 1986, prescribed increased uniform rates for pilotage services. The Philippine Ports Authority (PPA), the regulatory body for pilotage under P.D. No. 857, refused to implement E.O. No. 1088, citing lack of consultation and potential disruption. Instead, the PPA issued its own Memorandum Circular No. 43-86 with lower rates. The United Harbor Pilots’ Association of the Philippines (UHPAP) sued for injunction to enforce E.O. No. 1088. While the case was pending, the PPA issued Administrative Order No. 02-88, which effectively deregulated pilotage fees by leaving the rate determination to mutual agreement between the pilot and the shipping line. The PPA then moved to dismiss the injunction case as moot. The trial court denied the motion and later held the PPA officials in contempt for disobeying its orders to maintain the status quo and implement E.O. No. 1088.

ISSUE

The primary issue is whether the PPA, as the administrative agency vested with regulatory power over pilotage, can validly disregard a presidential issuance (E.O. No. 1088) fixing pilotage rates and subsequently deregulate those rates through its own administrative order.

RULING

The Supreme Court ruled against the PPA and affirmed the decisions of the Court of Appeals and the trial court. The legal logic is anchored on the hierarchy of laws and the nature of the President’s power. Executive Order No. 1088, issued by the President in the exercise of his executive power, has the force and effect of law. The PPA’s power to “fix, prescribe, increase or decrease” rates under its charter is subordinate to this presidential directive. An administrative agency cannot nullify or contravene a valid executive order; it must implement it. The PPA’s argument that rate-fixing is a legislative function delegated to it does not hold, as the President, by virtue of his constitutional control over the executive branch, can direct the implementation of policy within that branch, including the setting of rates for services under its supervision. Therefore, A.O. No. 02-88, which sought to deregulate the rates fixed by E.O. No. 1088, was issued without authority and is void. The PPA was legally obligated to implement the rates in E.O. No. 1088. Consequently, the trial court acted within its jurisdiction in issuing injunctive relief and contempt orders to enforce compliance with the executive order.