G.R. No. 19829; November 28, 1922
MADRIGAL Y COMPAÑIA, ET AL., plaintiffs, vs. The Honorable MARIANO CUI, as Public Utility Commissioner, and THE BOARD constituted under section 30 of Act No. 2307, as amended, defendants.

FACTS

The plaintiffs are shipowners engaged in coastwise trade. On March 16, 1922, they entered into an agreement with the Attorney-General, approved by the Public Utility Commissioner, establishing temporary freight and passenger rates effective until October 31, 1922. The agreement was made to test the proposed rates, with the shipowners obligated to submit operating accounts by October 15, 1922, to show the results. Before the expiration date, the plaintiffs filed a notice of their intention to continue these rates indefinitely, along with sworn statements of their operating expenses. This was docketed as a new case (No. 2995) before the Commissioner. The Attorney-General objected and requested an order requiring the plaintiffs to revert to the lower 1912 rates. Over the plaintiffs’ objection that no hearing had been held to justify a reduction, the Commissioner issued an order on October 30, 1922, directing the plaintiffs to charge only the 1912 rates starting November 1, 1922. The plaintiffs appealed to the Board of Review, which denied the appeal. They then filed this petition for certiorari and injunction, arguing the order was issued without a proper hearing, was confiscatory, and would cause irreparable injury.

ISSUE

Whether the Public Utility Commissioner acted without or in excess of jurisdiction, or with grave abuse of discretion, in issuing the order of October 30, 1922, which reduced the plaintiffs’ rates without first conducting a hearing and receiving evidence on the necessity for such reduction.

RULING

Yes. The Supreme Court granted the writ of certiorari and declared the order of October 30, 1922, null and void. The Court held that under the applicable law (Act No. 2307, as amended), the Public Utility Commissioner had no authority to reduce an existing rate without first holding a hearing and receiving evidence to determine the propriety and necessity of the reduction. The plaintiffs’ filing of their notice and financial statements initiated a proceeding for the continuation of their existing rates. The Commissioner’s order, which effectively reduced those rates, was issued in response to the Attorney-General’s motion without any evidence being taken on whether the existing rates were unjust or unreasonable. This procedure violated the fundamental requirement of a hearing before rate reduction, which is essential to due process. The Court emphasized that the power to fix rates is legislative, but its exercise by an administrative body must be preceded by a proper investigation and hearing. The order was therefore issued in excess of jurisdiction. The preliminary injunction was made permanent, but without prejudice to the right of the Commissioner to conduct a proper hearing on the matter of the plaintiffs’ rates.