G.R. No. L-41745 August 28, 1985
MUNICIPALITY OF DAET, represented by the Municipal Vice-Mayor Hon. ELEODORO BICIERRO, petitioner, vs. HIDALGO ENTERPRISES, INC., and the CHAIRMAN, BOARD OF POWER AND WATERWORKS, respondents.

FACTS

Hidalgo Enterprises, Inc., a private operator of an electrical system in several municipalities in Camarines Norte, filed an application with the Board of Power and Waterworks for a 70% across-the-board rate increase. The Board initially granted a provisional 65% increase, which was later restrained by the Supreme Court upon the Municipality of Daet’s application. A full hearing ensued where Hidalgo presented its financial evidence in Quezon City, while the Municipality of Daet presented its opposition through depositions taken before a local judge. During the proceedings, the Municipality filed a motion for the appointment of commissioners to conduct an inventory of Hidalgo’s equipment to determine its depreciated value for rate base computation. It also consistently highlighted the pending audit by the Government Auditing Office (GAO). Despite these pending matters, the Board rendered its decision on September 1, 1975, authorizing a 55% rate increase with certain consumer concessions.

ISSUE

Whether the Board of Power and Waterworks committed grave abuse of discretion amounting to a denial of due process by rendering its decision without first resolving the Municipality’s motion for an inventory and without awaiting the GAO audit report.

RULING

The Supreme Court ruled that there was no denial of due process. The Court emphasized that while administrative bodies like the Board are not bound by strict courtroom procedures, they must observe fundamental due process. The records demonstrated that the Municipality of Daet was afforded ample opportunity to be heard, having submitted extensive evidence, including depositions from eight witnesses and numerous documents. The Board’s decision explicitly considered and weighed this evidence, showing a reasoned evaluation. On the substantive claim, the Court held that a GAO audit, while beneficial, is not a mandatory prerequisite under Commonwealth Act No. 325. The law provides that the Auditor General shall assign auditors “to assist” the Commission, a phrasing construed as advisory, not obligatory. The Board was therefore within its discretion to base its decision on Hidalgo’s own financial appraisal, which it found fair and reasonable, especially as it employed the accepted “present cost or market value” formula for rate-setting. The pendency of the motion for an inventory did not invalidate the proceeding, as the Board possessed the authority to determine the necessity of such an ancillary step. The petition was denied.