FIRST
DIVISION
ASSOCIATION OF INTERNATIONAL G.R. No. 157484
SHIPPING LINES, INC.,
in its own behalf and Present:
in representation of its members,
Petitioner, PUNO, C.J., Chairperson,
CARPIO,
AZCUNA, and
- versus - LEONARDO-DE CASTRO, JJ.
PHILIPPINE PORTS AUTHORITY,
Promulgated:
Respondent. March 6, 2008
x-----------------------------------------------------------------------------------------x
D E C I S I O N
CARPIO, J.:
The Case
Before the Court is a petition for
review[1] of the
The Facts
Created by virtue of Presidential
Decree No. 857 (PD 857),[4] the Philippine Ports Authority (PPA)
is a government corporation specially charged with the financing, management,
and operations of public ports throughout the
On
Statement of Policy on Pilotage – It is hereby declared and recognized that pilotage service plays a vital and complementary role in the efficient operations of the port and the responsibility to undertake the same is inherently vested in the Authority though it may authorize the discharge of such responsibility to the Pilotage Association. As such, it shall be incumbent upon the Authority to effectively regulate, supervise and control, in the public interest, pilotage, the conduct of pilots and the fees for their services. (Emphasis supplied)
Section 23 of the
same administrative order states that:
Government Share – Pilotage Service is one of the port services which is
inherently vested in the Authority which, by its Charter, it may render on its
own or authorize a Pilots’ Association or firm to undertake the service. When it is rendered by the latter, the
government shall, in consideration of the grant of such privilege and/or the
use of port facilities be entitled to a
government share out of the gross income realized or receivable from the rendition
of purely pilotage service. Said share shall be determined and
implemented simultaneously with the rationalization of pilotage
rates, and shall be remitted by the Association not later than the tenth (10th)
day of each month.
In 1995, the PPA issued Administrative
Order No. 15-95 (AO 15-95), modifying the above provision in AO 03-85. Section 5.3 of AO 15-95 reads:
PPA revenue – In consideration
of the privilege to render pilotage services and to
use port facilities, all Harbor Pilots/Pilots’ Associations shall remit to the
Authority, through the Port Management Office (PMO), a government share of not
less than ten (10%) percent of their gross income derived from purely pilotage service.
The 10% government share for billings which have already been
realized/collected shall be remitted to the PMO not later than the tenth (10th)
day of the succeeding month.
The above remittance scheme shall be without prejudice to PPA’s right to subsequently impose, if warranted, a direct collection system (on a per vessel basis) in any pilotage district. (Emphasis supplied)
AO 15-95 proved to be inadequate since
there were still late remittances and failure to remit on the part of some
pilots associations of the 10% government share.[9]
Hence, to prevent the accumulation of accounts receivable accruing from
the 10% government share,[10] the PPA issued on 24 July 2000
Administrative Order No. 09-2000 (AO 09-2000), mandating the direct collection
from the shipowners of the 10% government share.
Section 5.3 of PPA Administrative Order No. 15-95 is hereby amended to read as follows:
5.3 PPA Revenue – In consideration of the privilege to render pilotage service and to use port facilities, all Harbor Pilots/Pilots’ Associations shall remit to the Authority, through the Port Management Office (PMO), a government share of not less than ten (10%) percent of their gross income derived from purely pilotage service.
5.3.1 The ten (10%) percent government share from regular pilotage services rendered shall be assessed and directly collected by PPA from shipping companies/agents on a per vessel basis in accordance with the prescribed pilotage rates specified under Section 5.1 of PPA Administrative Order No. 15-95. Said 10% government share, together with payments for vessel charges, shall be collected by PPA before issuance of the vessel Department Clearance.
5.3.2 For income derived by the Pilots’ Associations or its members from other related special pilotage services, the Pilots’ Associations shall be billed by the PPA and shall pay the 10% government share within fifteen (15) days from receipt of PPA billing. Late payments shall be subject to interest and penalties prescribed under PPA Administrative Order Nos. 08-82 and 01-91.
5.3.3
For purposes of counterchecking the pilots’ gross income and payments made per
vessel, the Pilots’ Association shall furnish PPA with copies of their billings
immediately after they are issued to the shipping companies/agents.[11]
The PPA cited as authority for the
issuance of AO 09-2000 Sections 2(f), 6-a(viii), b(xv) and 20 of PD 857, as
amended by LOI No. 1005-A,[12]
which provide, thus:
SEC. 2. Declaration of Policies and Objectives – It is hereby declared to be the policy of the State to implement an integrated program for the planning, development, financing, and operation of Ports or Port Districts for the entire country in accordance with the following objectives:
x x x x
f) To ensure that all income and revenues accruing out of dues, rates, and charges for the use of facilities and services provided by the Authority are properly collected and accounted for by the Authority, that all such income and revenues will be adequate to defray the cost of providing the facilities and services (inclusive of operating and maintenance cost, administration and overhead) of the Port Districts, and to ensure that a reasonable return on the assets employed shall be realized.
SEC. 6. Corporate Powers and Duties --
a) The corporate duties of the Authority shall be:
x x x x
(viii) To control, regulate, and supervise pilotage and the conduct of pilots in any Port District.
x x x x
b) The corporate powers of the Authority shall be as follows:
x x x x
(xv) To do all such other things and to transact all such business directly or indirectly necessary, incidental or conducive to the attainment of the purposes of the Authority.
SEC. 20. Rates and Charges--
a) The Authority may impose, fix, prescribe, increase or decrease such rates, charges or fees for the use of port premises, works, appliances or equipment belonging to the Authority and port facilities provided, and for services rendered by the Authority or by any private organization within a Port District.
x x x x
Petitioner and its respective members
opposed the implementation of AO 09-2000.
The PPA agreed to suspend temporarily the implementation of the direct
collection system. However, petitioner subsequently received a letter from PPA
informing petitioner of the implementation of AO 09-2000 starting
Therefore, on
On the same date, the trial court
issued a temporary restraining order and extended it in an Order dated
On
In an Order dated
After a thorough consideration of the arguments of the parties through their respective lawyers, this Court is convinced that there appears sufficient reasons to justify the issuance of a writ of preliminary injunction. From the pleadings filed by petitioners and intervenors, this Court finds that grave and irreparable injury will be suffered by petitioners and intervenors should a preliminary injunction not issue.
x x x x
ACCORDINGLY,
the application of the petitioners and the intervenors
for the issuance of a writ of preliminary injunction is GRANTED, and respondent
Philippine Ports Authority and its agents and/or representatives are hereby
restrained and enjoined from implementing and enforcing the last paragraph of
Section 5.3 of Administrative Order No. 15-95 and Administrative Order No.
09-2000. This is conditioned upon the
filing by the petitioners and the intervenors of
separate bonds in the amount of P100,000.00 which bond shall be approved
by this Court. The injunctive bonds
which petitioners and intervenors in the amount of P100,000.00
which each will post shall be executed in favor of the Philippine Ports
Authority and all damages that the latter may suffer by reason of the injunction
if the Court should finally decide that they (petitioners and intervenors) are not entitled thereto.
SO
ORDERED.[15]
The PPA filed a motion for
reconsideration, which the trial court denied in an Order dated
The PPA filed a petition for certiorari
with the Court of Appeals, arguing that the trial court abused its discretion
in issuing a writ of preliminary injunction without stating clearly and
distinctly the facts and law on which the order was based. The PPA claimed that the assailed rules and
regulations implementing the direct collection system are valid. Moreover, the enforcement of the questioned
administrative orders was already fait
accompli as the collection system had already been implemented as early as
The Court of Appeals disposed of the
case as follows:
WHEREFORE, the instant petition is given due course. The Order of the court a quo dated
March 16, 2001 granting the writ of preliminary injunction is hereby DISSOLVED and SET ASIDE. This includes the
Order dated
SO
ORDERED.[16]
Petitioner filed a motion for
reconsideration, which the Court of Appeals denied in a Resolution dated
Hence, this petition.
The Ruling of the Court of Appeals
The Court of Appeals set aside the
trial court’s issuance of a writ of preliminary injunction, holding that
petitioner failed to establish its right to injunction. The Court of Appeals ruled that it was just
and proper for the PPA to issue AO 15-95 and AO 09-2000 as these were devised
to address the problem of the PPA in collecting the 10% government share from
the different pilots associations. The
Court of Appeals added that the PPA may issue such administrative regulations
as may be necessary to meet changing circumstances surrounding the collection
of the 10% government share.
The Issues
In its Memorandum,[18] petitioner basically challenges the
validity of the assailed administrative orders for (1) being ultra vires;
(2) violating the principle of autonomy of contract; and (3) amounting to
deprivation of property without due process.
Considering that these issues are
essentially questions of law, the Court deems it proper and necessary not only
to determine the validity of the issuance of the writ of preliminary injunction
but more importantly the legality of the assailed administrative orders in
order to finally and completely dispose of the instant case.
The Ruling of this Court
The
petition has no merit.
On the
validity of Section 5.3 of AO 15-95
and AO 09-2000
There is no dispute that the PPA has
the power to provide pilotage services. The PPA, however, may authorize pilots
associations to provide pilotage services, which is
what the PPA precisely did. The PPA
contracted out the provision of pilotage services to
various pilots associations. In
consideration of the privilege to render pilotage
services and to use port facilities, the different pilots associations are
required to remit to the PPA a
government share of at least 10% of the pilots’ (members of the
associations) gross income derived
from purely pilotage service.
Before the introduction of the direct
collection system, the different pilots associations used to remit the 10%
government share to the PPA. With the
issuance of AO 09-2000, specifically
under Section 5.3.1, “[t]he ten (10%) percent government share from regular pilotage services rendered shall be assessed and directly
collected by the PPA from shipping companies/agents on a per vessel
basis.” The shipowners
are obliged to withhold this amount from the fees payable to the pilots for
their general services, and remit the withheld amount to the PPA. In other words, the shipowners
will withhold the 10% government share from the fees they have to pay the pilots,
which amount will then be collected by the PPA.
Is the PPA empowered to appoint the shipowners
as its withholding agent to collect the 10% government share?
The Court holds that the PPA has
sufficient authority to constitute the shipowners as
withholding agent for the 10% government share.
Under its charter, the PPA has the authority to impose, fix, prescribe,
increase or decrease such rates, charges or fees for the use of port
facilities, and for services rendered by the PPA or by any private
organization.[19] This power necessarily includes the authority to issue rules and
regulations on the manner of collection of the 10% government share. The power to impose or fix rates or charges
is definitely much broader than enforcing a different manner of collection of
the 10% government share.
Moreover, in Section 6(b)(xv) of PD
857, the PPA has the power to do things and to transact business directly or
indirectly necessary, incidental or conducive to the attainment of the purposes
of the PPA. One of the PPA’s objectives is the proper collection and accounting of
all income and revenues accruing out of dues, rates, and charges for the use of
facilities and services provided by the PPA and the realization of a reasonable
return on the PPA’s assets. Since the assailed administrative orders were
issued to prevent the accumulation of accounts receivable accruing from the 10%
government share, the assailed administrative orders are clearly within the PPA’s power to do things necessary to the attainment of PPA’s objectives. A
restrictive and unreasonable interpretation of the PPA’s
charter would render the PPA powerless in introducing reforms on the manner of
collecting the government share.
Further, being the government
corporation in charged of the operation and maintenance of Philippine ports,
including the provision of pilotage services, the PPA
has the power to devise effective ways and means to properly collect and
recover the government share. As the
Court of Appeals held, an administrative body’s (such as the PPA) power to
issue regulations is not, once exercised, deemed exhausted. On the contrary, this power may be exercised
as often as it becomes necessary to adjust the regulation to the changing
circumstances surrounding the subject thereof or the problem sought to be
solved or alleviated by the rule.[20]
The PPA admits encountering difficulties in collecting the 10%
government share from the pilots associations, prompting the PPA to implement
the direct collection system. The direct
collection system, which is essentially the withholding at source of the
government share for remittance to the PPA, is certainly more efficient than
the old collection system.
The Court rejects petitioner’s
contention that the direct collection system is unreasonable. The direct
collection system has a reasonable relationship[21]
to PPA’s
objective of ensuring the effective collection and accounting of all income and
revenues accruing out of dues, rates, and charges for the use of facilities and
services provided by the PPA, whether on its own or by contract. Nothing shows that the direct collection
system produces burdensome and inequitable results since the shipowners will simply withhold the 10% government share
and remit the same together with the regular vessel charges. Significantly, the
direct collection system aims to simplify and integrate the collection of the
10% government share with the regular vessel fees and charges. Likewise, the
10% government share is easily ascertainable as it shall be in accordance with
the prescribed pilotage rates specified under Section
5.1 of AO 15-95.[22]
There is also no merit in petitioner’s
argument that the direct collection system violates the principle of autonomy
of contract.[23] Petitioner insists that since it is not a party to the contract between
the PPA and the pilots associations, petitioner can not be required to withhold
and remit the 10% government share to the PPA.
It must be emphasized that there is no new party in the contract between
the PPA and the pilots associations regarding the provision of pilotage services and the payment of the government
share. The Court agrees with the PPA
that the only difference between the old and new collection system is the
manner of collection. Whether under the
old or new system of collecting the 10% government share, the pilots, who are
members of the various pilots associations, are the ones legally liable for the
payment of the 10% government share. The PPA merely appointed the shipowners as its withholding agent for the 10% government
share. No new fees or charges were
imposed upon the shipowners. What the shipowners
will remit to the PPA is actually a portion of the fees they used to pay the
pilots under the old collection system.
Petitioner also points out that it is
not objecting to the payment of the pilotage
fees. Petitioner is even willing to pay
to the PPA the full pilotage fees if the PPA chose to
render pilotage services itself and not through
petitioner’s contractors or the pilots associations.
Under Section 6(a)(v) of PD 857, one of the corporate duties of the PPA is to provide services (whether on its own, by contract, or otherwise) within the Port Districts and the approaches thereof. Paragraph (b)(vi) of the same section empowers the PPA to make or enter into contracts of any kind or nature to enable it to discharge its functions under PD 857.[24] Clearly, petitioner cannot validly complain and refuse to comply with the direct collection system simply because the PPA chose to contract out the provision of pilotage services to different pilots associations.
Petitioner likewise argues that since
the 10% government share is based on the actual gross income of the pilots,
this amount is demandable only after the pilots have become entitled to the pilotage fees, and that is when they have performed the
service. Since the pilots are not
entitled to the pilotage fees until after completion
of the service, it follows that the PPA is not yet entitled to the 10%
government share.
Based on Section 5.2 of AO 15-95, the
term “gross income” shall be understood to mean as total gross billings
(whether already realized or still to be collected) assessed the shipping
agents/vessel owners for the conduct of regular and other related special pilotage services.
However, it is clear from the words of AO 09-2000 that its purpose is
“to revise the guidelines by requiring shipping lines/agents to pay directly to
PPA the 10% government share from pilotage service actually rendered (excluding overtime)
by Harbor Pilots/Harbor Pilots’ Associations.” Thus, the withholding of the 10%
government share applies only for pilotage services
actually rendered.
On petitioner’s assertion that the
assailed administrative orders amount to deprivation of property without due
process, suffice it to state that this Court will not rule on constitutional
issues if the case can be disposed of on some other grounds. Thus, even if all
the requisites for judicial review of a constitutional matter are present in a
case, this Court will not pass upon a constitutional question unless it is the
lis mota of the
case.[25]
Anyway, petitioner failed to substantiate its claim of deprivation of
property without due process. Nothing
shows how petitioner was deprived of its
property or which property was taken from petitioner. To repeat, there is no new or additional fee
or charges which petitioner has to pay.
Even before the introduction of the direct collection system, petitioner
used to pay the 10% government share as part of the fees it pays the
pilots.
On the propriety of the issuance
of a writ of preliminary injunction
Petitioner argues that the shipowners will suffer “grave and irreparable injury”
because of the non-issuance of departure clearances to vessels for non-payment
of the 10% government share. Petitioner
maintains that “the vessels that call to the Philippine ports have a tight
schedule to follow in order to meet their commitments here and abroad. x x x The penalty of non-issuance of vessel’s
departure clearance to the shipowners and ship agents
would certainly wreak havoc to their operations.”
Aside from petitioner’s bare allegation
of the “grave and irreparable injury” it will suffer, there is nothing in the
records which shows the existence of petitioner’s clear and unmistakable right
that must be protected, and an urgent and paramount necessity for the writ to
prevent serious damage.[26]
Therefore, as the Court of Appeals ruled, petitioner is not entitled to
the injunction writ.
Moreover, this Court views the
non-issuance of a vessel’s departure clearance for non-payment of the 10%
government share as an essential part of a procedure, contrary to petitioner’s
claim that it is a harsh penalty. The
withholding of the 10% government share for remittance to the PPA for actual pilotage services rendered is a reasonable condition for
the issuance of the vessel’s departure clearance. It is not an additional fee or charge for
which the shipowners are liable.
It is also worthy to note that, as the
PPA claims, except for the pilotage district of
Manila (
WHEREFORE,
the Court DENIES the petition. The
Court AFFIRMS the
SO
ORDERED.
ANTONIO T. CARPIO
Associate Justice
WE CONCUR:
REYNATO S. PUNO
Chief
Justice
Chairperson
RENATO C. CORONA ADOLFO S. AZCUNA
Associate Justice
Associate Justice
TERESITA J. LEONARDO-DE CASTRO
Associate Justice
CERTIFICATION
Pursuant to Section 13, Article VIII of the
Constitution, I certify that the conclusions in the above Decision had been
reached in consultation before the case was assigned to the writer of the
opinion of the Court’s Division.
REYNATO S. PUNO
Chief Justice
[1] Under Rule 45 of the Rules of Court.
[2] Rollo, pp. 37-47. Penned by Associate Justice Eugenio S. Labitoria with Associate Justices Teodoro P. Regino and Juan Q. Enriquez, Jr. concurring.
[3]
[4] Dated
[5] From the PPA website, http://www.ppa.com.ph/.
[6] Sec. 6(a)(ii) of PD 857.
[7] Sec. 6(a)(viii) of PD 857.
[8] Sec. 6(b)(ix) of PD 857.
[9] Rollo, p. 133.
[10]
[11]
[12]
[13] Raffled to Branch 36 and docketed as Civil Case No. 01-100248.
[14] Rollo, pp. 93-95. Penned by Judge Wilfredo D. Reyes.
[15]
[16]
[17]
[18]
[19] Section 20(a) of PD 857.
[20] Carlo
L. Cruz, Philippine Administrative Law, 69, 2003 Edition.
[21] See
Hector De
[22] The following guidelines are hereby issued for the compliance of all concerned:
5.1 Pilotage Rates – The applicable rates for regular pilotage services rendered to vessels are as follows:
5.1.1 Foreign Vessels -
RATES IN US$
OR ITS PESO
EQUIVALENT
less than 500 GRT US$ 30.00
500 GRT and up to 2,500 GRT 43.33
2,500 GRT and up to 5,000 GRT 71.33
5,000 GRT and up to 10,000 GRT 133.67
10,000 GRT and up to 15,000 GRT 181.67
15,000 GRT and up to 20,000 GRT 247.00
20,000 GRT and up to 30,000 GRT 300.00
30,000 GRT and up to 40,000 GRT 416.67
40,000 GRT and up to 60,000 GRT 483.33
60,000 GRT and up to 80,000 GRT 550.00
80,000 GRT and up to 100,000 GRT 616.67
100,000 GRT and up to 120,000 GRT 666.67
120,000 GRT and up to 130,000 GRT 716.67
130,000 GRT and up to 140,000 GRT 766.67
over 140,000 GRT - $0.05 or its peso equivalent
for every excess tonnage
[23] Embodied in Article 1311 of the Civil Code which provides:
Contracts take effect only between the parties, their assigns and heirs, except in case where the rights and obligations arising from the contract are not transmissible by their nature, or by stipulation or by provision of law. The heir is not liable beyond the value of the property he received from the decedent.
If a contract should contain some stipulation in favor of a third person, he may demand its fulfillment provided he communicated his acceptance to the obligor before its revocation. A mere incidental benefit or interest of a person is not sufficient. The contracting parties must have clearly and deliberately conferred a favor upon a third person.
[24] See Philippine Ports Authority v. CA, 323 Phil. 260, 293-294 (1996).
[25] Lalican v. Vergara, 342 Phil. 485, 498 (1997).
[26] See Philippine National Bank v. RJ Ventures Realty and Development Corporation, G.R. No. 164548, 27 September 2006, 503 SCRA 639.
[27] Rollo, p. 75.