Regulations: Fixing of Rates and Regulation of Profession

1. Profession
Corona v. UHPAP 283 SCRA 31
Corona v. United Harbor Pilots Association of the Philippines
GR No. 111953
December 12, 1997
Specific constitutional provision/s cited: A. 3, §1, Due Process Clause

FACTS: The Philippine Ports Authority [PPA] was created through PD 505, as amended by PD857 to “control, regulate, and
supervise pilots and the pilotage profession.”

After hearing from „relevant government agencies‟, pursuant to said charter, PPA General Manager Rogelio A. Dayan issued
Administrative Order 04-92 [PPA-AO 04-92] and corresponding Memorandum Order in 1992, stating that “all existing regular
appointments which have been previously issued... shall remain valid up to 31 December 1992 only” and that “all appointments to
harbor pilot positions in all pilotage districts shall, henceforth, be only for a term of one year from date of effectivity subject to yearly
renewal or cancellation by the Authority after conduct of a rigid evaluation of performance” to regulate and improve pilot services by
instilling discipline and give better protection to port users.
PPA-AO 04-92 replaces PPA-AO 03-85 which succinctly provides that, “aspiring pilots must have a license and train as
probationary pilots, and only upon satisfactory performance, are given permanent and regular appointments by the PPA itself and to
exercise harbor pilotage until they reach the age of 70.
Upon learning of PPA-AO 04-92 only after publication in the newspaper, the United Harbor Pilots Association of the
Philippines:(a) questioned said PPA-AO twice before the DOTC, which Secretary Garcia said twice that only the PPA Board of
Directors [as governing body] has exclusive jurisdiction to review, recall or annul PPA-AOs,(b) appealed to the Office of
the President, which first issued a restraining order to the PA on the implementation of the PPA-AO, and after PPA‟s answer, then
dismissed the appeal/petition and lifted said order, stating, through Assistant Executive Secretary for Legal Affairs Renato C. Corona,
that the PPA-AO (i) merely implements PPA Charter, (ii) issuance is an act of PPA, not of its General Manager, (iii) merely regulates,
not forbids practice of the profession, recognizing that such exercise is property right, and (iv) sufficiently complied with the
requirement in the PD to consult only with „relevant Government Agencies‟, and(d) finally finding affirmative relief with Manila
RTC Br. 6. Court, which ruled that (i)said PPA-AO is null and void (ii) PPA acted in excess of jurisdiction with grave abuse of
discretion, and (iii) imposed a permanent restraining order on PPA on its implementation. Assistant Executive Secretary Corona thus
filed petition for review [of the Manila RTC Decision] to the Supreme Court.

ISSUE:
1. WON PPA-AO 04-92 is violative of the procedural due process of UHPAP members.
2. WON PPA-AO 04-92 is violative of the substantive due process of UHPAP members.

RATIO:
To constitute deprivation of due process of law, there must be (a) a deprivation, and (b) such deprivation is done without
proper observance of due process
1. NO. Notice and hearing is not required in the performance of an administrative body’s function of executive or legislative
functions, such as issuing rules and regulations, but only in the performance of quasi-judicial functions. Also PPA sufficiently
complied with the PPA Charter requirement that “only „relevant government agencies are consulted with, which does not include the
UHPAP. Procedural due process refers to the method or manner by which the law is enforced. The opportunity to be heard is the very
essence of due process. Due process is also satisfied when an opportunity to seek reconsideration of the action or ruling complained of
is granted, which was availed by UHPAP four times.
2. YES. Substantive due process is when the law itself, not merely the procedures by which the law would be enforced, is
fair, reasonable, and just. Said PPA-AO unduly restricts their righto enjoy their profession before compulsory retirement by facing
an annual cancellation [both veteran and neophyte Harbor Pilots] of their license dependent on a “rigid evaluation
of performance.” Pilotage as a profession has taken on the nature of a property right.
Any alteration of property right must be strictly made in accordance with the constitutional mandate of due process of law. Pilotage
may only be practiced by duly licensed individuals. A license is a right or permission granted by some competent authority to carry on
a business or do an act which, without such license, would be illegal. Pilotage license requires passing 5 examinations, each followed
by actual training. License is granted in the form of an appointment. Said PPA- AO does not add anything new or substantial a
mere surplus age, thus unnecessary, since PPA-AO 03-85 already provides for a comprehensive order on regulating harbor pilots,
matters merely duplicated in PPA-AO 04-92.UHPAP also insinuated that the General Manager issued PPA-AO 04-92 with animosity
to the UHPAP, however, the General Manager is presumed to have acted in accordance with law and the best of professional services.
Such animosity, as evidenced by the number of cases filed, cannot be considered the primordial reason for the issuance of said PPA-
AO. Petition denied. PPA-AO struck down as violative of substantive due process

[G.R. No. 111953. December 12, 1997]

HON. RENATO C. CORONA, in his capacity as Assistant Secretary for Legal Affairs, HON. JESUS B. GARCIA, in his
capacity as Acting Secretary, Department of Transportation and Communications, and ROGELIO A. DAYAN, in his
capacity as General Manager of Philippine Ports Authority, petitioners, vs. UNITED HARBOR PILOTS
ASSOCIATION OF THE PHILIPPINES and MANILA PILOTS ASSOCIATION, respondents.
In issuing Administrative Order No. 04-92 (PPA-AO No. 04-92), limiting the term of appointment of harbor pilots to one year
subject to yearly renewal or cancellation, did the Philippine Ports Authority (PPA) violate respondents right to exercise their
profession and their right to due process of law?
The PPA was created on July 11, 1974, by virtue of Presidential Decree No. 505. On December 23, 1975, Presidential Decree
No. 857 was issued revising the PPAs charter. Pursuant to its power of control, regulation, and supervision of pilots and the pilotage
profession, [1] the PPA promulgated PPA-AO-03-85 [2] on March 21, 1985, which embodied the Rules and Regulations Governing
Pilotage Services, the Conduct of Pilots and Pilotage Fees in Philippine Ports. These rules mandate, inter alia, that aspiring pilots must
be holders of pilot licenses [3]and must train as probationary pilots in outports for three months and in the Port of Manila for four
months. It is only after they have achieved satisfactory performance [4] that they are given permanent and regular appointments by the
PPA itself [5] to exercise harbor pilotage until they reach the age of 70, unless sooner removed by reason of mental or physical
unfitness by the PPA General Manager. [6] Harbor pilots in every harbor district are further required to organize themselves into pilot
associations which would make available such equipment as may be required by the PPA for effective pilotage services. In view of
this mandate, pilot associations invested in floating, communications, and office equipment. In fact, every new pilot appointed by the
PPA automatically becomes a member of a pilot association and is required to pay a proportionate equivalent equity or capital before
being allowed to assume his duties, as reimbursement to the association concerned of the amount it paid to his predecessor.
Subsequently, then PPA General Manager Rogelio A. Dayan issued PPA-AO No. 04-92 [7] on July 15, 1992, whose avowed
policy was to instill effective discipline and thereby afford better protection to the port users through the improvement of pilotage
services. This was implemented by providing therein that all existing regular appointments which have been previously issued either
by the Bureau of Customs or the PPA shall remain valid up to 31 December 1992 only and that all appointments to harbor pilot
positions in all pilotage districts shall, henceforth, be only for a term of one (1) year from date of effectivity subject to yearly renewal
or cancellation by the Authority after conduct of a rigid evaluation of performance.
On August 12, 1992, respondents United Harbor Pilots Association and the Manila Pilots Association, through Capt. Alberto C.
Compas, questioned PPA-AO No. 04-92 before the Department of Transportation and Communication, but they were informed by
then DOTC Secretary Jesus B. Garcia that the matter of reviewing, recalling or annulling PPAs administrative issuances lies
exclusively with its Board of Directors as its governing body.
Meanwhile, on August 31, 1992, the PPA issued Memorandum Order No. 08-92 [8] which laid down the criteria or factors to be
considered in the reappointment of harbor pilots, viz.: (1) Qualifying Factors: [9] safety record and physical/mental medical exam
report and (2) Criteria for Evaluation: [10] promptness in servicing vessels, compliance with PPA Pilotage Guidelines, number of years
as a harbor pilot, average GRT of vessels serviced as pilot, awards/commendations as harbor pilot, and age.
Respondents reiterated their request for the suspension of the implementation of PPA-AO No. 04-92, but Secretary Garcia
insisted on his position that the matter was within the jurisdiction of the Board of Directors of the PPA. Compas appealed this ruling to
the Office of the President (OP), reiterating his arguments before the DOTC.
On December 23, 1992, the OP issued an order directing the PPA to hold in abeyance the implementation of PPA-AO No. 04-
92. In its answer, the PPA countered that said administrative order was issued in the exercise of its administrative control and
supervision over harbor pilots under Section 6-a (viii), Article IV of P. D. No. 857, as amended, and it, along with its implementing
guidelines, was intended to restore order in the ports and to improve the quality of port services.
On March 17, 1993, the OP, through then Assistant Executive Secretary for Legal Affairs Renato C. Corona, dismissed the
appeal/petition and lifted the restraining order issued earlier. [11] He concluded that PPA-AO No. 04-92 applied to all harbor pilots and,
for all intents and purposes, was not the act of Dayan, but of the PPA, which was merely implementing Section 6 of P.D. No. 857,
mandating it to control, regulate and supervise pilotage and conduct of pilots in any port district.
On the alleged unconstitutionality and illegality of PPA-AO No. 04-92 and its implementing memoranda and circulars, Secretary
Corona opined that:

The exercise of ones profession falls within the constitutional guarantee against wrongful deprivation of, or interference with, property
rights without due process. In the limited context of this case, PPA-AO 04-92 does not constitute a wrongful interference with, let
alone a wrongful deprivation of, the property rights of those affected thereby. As may be noted, the issuance aims no more than to
improve pilotage services by limiting the appointment to harbor pilot positions to one year, subject to renewal or cancellation after a
rigid evaluation of the appointees performance.

PPA-AO 04-92 does not forbid, but merely regulates, the exercise by harbor pilots of their profession in PPAs jurisdictional area.
(Emphasis supplied)

Finally, as regards the alleged absence of ample prior consultation before the issuance of the administrative order, Secretary
Corona cited Section 26 of P.D. No. 857, which merely requires the PPA to consult with relevant Government agencies. Since the
PPA Board of Directors is composed of the Secretaries of the DOTC, the Department of Public Works and Highways, the Department
of Finance, and the Department of Environment and Natural Resources, as well as the Director-General of the National Economic
Development Agency, the Administrator of the Maritime Industry Authority (MARINA), and the private sector representative who,
due to his knowledge and expertise, was appointed by the President to the Board, he concluded that the law has been sufficiently
complied with by the PPA in issuing the assailed administrative order.
Consequently, respondents filed a petition for certiorari, prohibition and injunction with prayer for the issuance of a temporary
restraining order and damages, before Branch 6 of the Regional Trial Court of Manila, which was docketed as Civil Case No. 93-
65673. On September 6, 1993, the trial court rendered the following judgment: [12]

WHEREFORE, for all the foregoing, this Court hereby rules that:

1. Respondents (herein petitioners) have acted in excess of jurisdiction and with grave abuse of discretion and in a
capricious, whimsical and arbitrary manner in promulgating PPA Administrative Order 04-92 including all its
implementing Memoranda, Circulars and Orders;

2. PPA Administrative Order 04-92 and its implementing Circulars and Orders are declared null and void;

3. The respondents are permanently enjoined from implementing PPA Administrative Order 04-92 and its implementing Memoranda,
Circulars and Orders.
No costs.

SO ORDERED.

The court a quo pointed out that the Bureau of Customs, the precursor of the PPA, recognized pilotage as a profession and,
therefore, a property right under Callanta v. Carnation Philippines, Inc. [13] Thus, abbreviating the term within which that privilege may
be exercised would be an interference with the property rights of the harbor pilots. Consequently, any withdrawal or alteration of such
property right must be strictly made in accordance with the constitutional mandate of due process of law. This was apparently not
followed by the PPA when it did not conduct public hearings prior to the issuance of PPA-AO No. 04-92; respondents allegedly
learned about it only after its publication in the newspapers. From this decision, petitioners elevated their case to this Court
on certiorari.
After carefully examining the records and deliberating on the arguments of the parties, the Court is convinced that PPA-AO No.
04-92 was issued in stark disregard of respondents right against deprivation of property without due process of law. Consequently, the
instant petition must be denied.
Section 1 of the Bill of Rights lays down what is known as the due process clause of the Constitution, viz.:
SECTION 1. No person shall be deprived of life, liberty, or property without due process of law, x x x.
In order to fall within the aegis of this provision, two conditions must concur, namely, that there is a deprivation and that such
deprivation is done without proper observance of due process. When one speaks of due process of law, however, a distinction must be
made between matters of procedure and matters of substance. In essence, procedural due process refers to the method or manner by
which the law is enforced, while substantive due process requires that the law itself, not merely the procedures by which the law
would be enforced, is fair, reasonable, and just. [14] PPA-AO No. 04-92 must be examined in light of this distinction.
Respondents argue that due process was not observed in the adoption of PPA-AO No. 04-92 allegedly because no hearing was
conducted whereby relevant government agencies and the pilots themselves could ventilate their views. They are obviously referring
to the procedural aspect of the enactment. Fortunately, the Court has maintained a clear position in this regard, a stance it has stressed
in the recent case of Lumiqued v. Hon. Exevea, [15] where it declared that (a)s long as a party was given the opportunity to defend his
interests in due course, he cannot be said to have been denied due process of law, for this opportunity to be heard is the very essence
of due process. Moreover, this constitutional mandate is deemed satisfied if a person is granted an opportunity to seek reconsideration
of the action or ruling complained of.
In the case at bar, respondents questioned PPA-AO No. 04-92 no less than four times [16] before the matter was finally elevated to
this Tribunal. Their arguments on this score, however, fail to persuade. While respondents emphasize that the Philippine Coast Guard,
which issues the licenses of pilots after administering the pilots examinations, was not consulted, [17] the facts show that the MARINA,
which took over the licensing function of the Philippine Coast Guard, was duly represented in the Board of Directors of the
PPA. Thus, petitioners correctly argued that, there being no matters of naval defense involved in the issuance of the administrative
order, the Philippine Coast Guard need not be consulted. [18]
Neither does the fact that the pilots themselves were not consulted in any way taint the validity of the administrative order. As a
general rule, notice and hearing, as the fundamental requirements of procedural due process, are essential only when an administrative
body exercises its quasi-judicial function. In the performance of its executive or legislative functions, such as issuing rules and
regulations, an administrative body need not comply with the requirements of notice and hearing.[19]
Upon the other hand, it is also contended that the sole and exclusive right to the exercise of harbor pilotage by pilots is a settled
issue. Respondents aver that said right has become vested and can only be withdrawn or shortened by observing the constitutional
mandate of due process of law. Their argument has thus shifted from the procedural to one of substance. It is here where PPA-AO No.
04-92 fails to meet the condition set by the organic law.
There is no dispute that pilotage as a profession has taken on the nature of a property right. Even petitioner Corona recognized
this when he stated in his March 17, 1993, decision that (t)he exercise of ones profession falls within the constitutional guarantee
against wrongful deprivation of, or interference with, property rights without due process. [20] He merely expressed the opinion that
(i)n the limited context of this case, PPA-AO 04-92 does not constitute a wrongful interference with, let alone a wrongful deprivation
of, the property rights of those affected thereby, and that PPA-AO 04-92 does not forbid, but merely regulates, the exercise by harbor
pilots of their profession. As will be presently demonstrated, such supposition is gravely erroneous and tends to perpetuate an
administrative order which is not only unreasonable but also superfluous.
Pilotage, just like other professions, may be practiced only by duly licensed individuals. Licensure is the granting of license
especially to practice a profession. It is also the system of granting licenses (as for professional practice) in accordance with
established standards. [21] A license is a right or permission granted by some competent authority to carry on a business or do an act
which, without such license, would be illegal. [22]
Before harbor pilots can earn a license to practice their profession, they literally have to pass through the proverbial eye of a
needle by taking, not one but five examinations, each followed by actual training and practice. Thus, the court a quo observed:

Petitioners (herein respondents) contend, and the respondents (herein petitioners) do not deny, that here (sic) in this jurisdiction,
before a person can be a harbor pilot, he must pass five (5) government professional examinations, namely, (1) For Third Mate and
after which he must work, train and practice on board a vessel for at least a year; (2) For Second Mate and after which he must work,
train and practice for at least a year; (3) For Chief Mate and after which he must work, train and practice for at least a year; (4) For a
Master Mariner and after which he must work as Captain of vessels for at least two (2) years to qualify for an examination to be a
pilot; and finally, of course, that given for pilots.

Their license is granted in the form of an appointment which allows them to engage in pilotage until they retire at the age 70
years. This is a vested right. Under the terms of PPA-AO No. 04-92, (a)ll existing regular appointments which have been previously
issued by the Bureau of Customs or the PPA shall remain valid up to 31 December 1992 only, and (a)ll appointments to harbor pilot
positions in all pilotage districts shall, henceforth, be only for a term of one (1) year from date of effectivity subject to renewal or
cancellation by the Authority after conduct of a rigid evaluation of performance.
It is readily apparent that PPA-AO No. 04-92 unduly restricts the right of harbor pilots to enjoy their profession before their
compulsory retirement. In the past, they enjoyed a measure of security knowing that after passing five examinations and undergoing
years of on-the-job training, they would have a license which they could use until their retirement, unless sooner revoked by the PPA
for mental or physical unfitness. Under the new issuance, they have to contend with an annual cancellation of their license which can
be temporary or permanent depending on the outcome of their performance evaluation. Veteran pilots and neophytes alike are
suddenly confronted with one-year terms which ipso facto expire at the end of that period.Renewal of their license is now dependent
on a rigid evaluation of performance which is conducted only after the license has already been cancelled. Hence, the use of the term
renewal. It is this pre-evaluation cancellation which primarily makes PPA-AO No. 04-92 unreasonable and constitutionally infirm. In
a real sense, it is a deprivation of property without due process of law.
The Court notes that PPA-AO No. 04-92 and PPA-MO No. 08-92 are already covered by PPA-AO No. 03-85, which is still
operational. Respondents are correct in pointing out that PPA-AO No. 04-92 is a surplusage [23] and, therefore, an unnecessary
enactment. PPA-AO 03-85 is a comprehensive order setting forth the Rules and Regulations Governing Pilotage Services, the Conduct
of Pilots and Pilotage Fees in Philippine Ports. It provides, inter alia, for the qualification, appointment, performance evaluation,
disciplining and removal of harbor pilots - matters which are duplicated in PPA-AO No. 04-92 and its implementing memorandum
order. Since it adds nothing new or substantial, PPA-AO No. 04-92 must be struck down.
Finally, respondents insinuation that then PPA General Manager Dayan was responsible for the issuance of the questioned
administrative order may have some factual basis; after all, power and authority were vested in his office to propose rules and
regulations. The trial courts finding of animosity between him and private respondents might likewise have a grain of truth.Yet the
number of cases filed in court between private respondents and Dayan, including cases which have reached this Court, cannot
certainly be considered the primordial reason for the issuance of PPA-AO No. 04-92. In the absence of proof to the contrary, Dayan
should be presumed to have acted in accordance with law and the best of professional motives. In any event, his actions are certainly
always subject to scrutiny by higher administrative authorities.
WHEREFORE, the instant petition is hereby DISMISSED and the assailed decision of the court a quo dated September 6,
1993, in Civil Case No. 93-65673 is AFFIRMED. No pronouncement as to costs.
SO ORDERED.
Narvasa, C.J., Regalado, Davide, Jr., Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, Francisco, and Panganiban, JJ.,
concur.
Martinez, J., no part.