G.R. No. L-32068, L-32083, L-32155, L-32374, L-32402, L-32464. October 4, 1971.
Republic of the Philippines, et al., petitioners, vs. Hon. Enrique Medina, et al., and Manila Electric Company, respondents.

FACTS

On May 7, 1970, Manila Electric Company (MERALCO) filed an application with the Public Service Commission (PSC) for approval of revised rate schedules with increased charges. MERALCO justified the increase by citing the floating exchange rate, which allegedly escalated its operating expenses and the peso cost of servicing foreign debts, causing monthly net losses. The application included a motion for immediate provisional approval, which the PSC granted on May 20, 1970, subject to refund if later found unmeritorious. Various oppositors, including the Republic of the Philippines, the City of Manila, and private individuals, filed petitions for certiorari and prohibition to annul this provisional order.
Simultaneously, oppositors contested the main application, arguing MERALCO’s sound financial condition could sustain operations without rate hikes, and that the proposed increase was excessive and burdensome to the public. The PSC directed the Auditor General to examine MERALCO’s books. Due to time constraints, the audit report was submitted on June 24, 1970, but it was limited, acknowledging an inability to conduct a detailed rate audit or verify property valuations thoroughly. After hearings, the PSC promulgated a decision on June 30, 1970, finding the proposed rates, with minor adjustments, reasonable and justified.

ISSUE

Whether the Public Service Commission committed grave abuse of discretion in approving MERALCO’s rate increase.

RULING

The Supreme Court affirmed the PSC decision, finding no grave abuse of discretion. The Court held that while the audit report was expedited and not exhaustive, it did not invalidate the PSC’s proceedings. The PSC is not strictly bound by technical rules of evidence and may rely on its own expertise in evaluating utility rate applications. The Court emphasized that the essence of due process in administrative proceedings is the opportunity to be heard, which was afforded to all parties through extensive hearings where evidence was presented and cross-examination conducted.
The Court rejected the oppositors’ argument for a remand to apply new rate-fixing formulas proposed by government economic bodies. It reasoned that such formulas were still experimental and untested, and a remand would cause undue delay, potentially harming MERALCO’s ability to secure necessary foreign financing and maintain service. Furthermore, suspending the approved rates would revert to the earlier provisional rates, which were less favorable to consumers. The Court preserved the right of oppositors to initiate new proceedings before the PSC to advocate for alternative rate methodologies and reserved MERALCO’s right to seek adjustments for rate flexibility based on currency fluctuations. No costs were awarded.