THE PROVINCIAL BUS OPERATORS ASSOCIATION OF THE PHILIPPINES (PBOAP), THE SOUTHERN LUZON BUS

OPERATORS ASSOCIATION, INC. (SO-LUBOA), THE INTER CITY BUS OPERATORS ASSOCIATION (INTERBOA),
and THE CITY OF SAN JOSE DEL MONTE BUS OPERATORS ASSOCIATION (CSJDMBOA) vs DOLE
G.R. No. 202275. July 17, 2018.

CASE; Special Civil Actions in the SC Certiorari and Prohibition

Ponente: J Leonen

FACTS
 Action for certiorari and prohibition assailing the constitutionality of:
1. DOLE Dept Order 118-12, Rules and Regulations Governing the Employment and Working
Conditions of Drivers and Conductors in the Public Utility Bus Transport Industry
2. Implementing guidelines pursuant to DO 118-12 including the National Wages and Productivity
Commissions’ Guidelines No 1 S 2012
3. Land Transportation Franchising and Regulatory Board (LTFRB) Memorandum Circular No. 2012-
001, the subject of which is the Labor Standards Compliance Certificate
 Provincial Bus Operators Association of the Philippines, Southern Luzon Bus Operators Association,
Inc., Inter City Bus Operators Association, and City of San Jose Del Monte Bus Operators Association
argue that DO 20 118-12, MC 2012-001 violate the constitutional rights of public utility bus operators
to due process of law, equal protection of the laws, and nonimpairment of obligation of contracts.
 LTFRB issued Memorandum Circular No. 2012-0011 on January 4, 2012, requiring “all Public Utility
Bus (PUB) operators. to secure Labor Standards Compliance Certificates, failing to do so will lead to
the revocation of their existing certificates of public convenience or denial of an application for a
new certificate.
 Contents of LTFRB MC 2012-001:
 covers all Public Utility Bus (PUB) Operators and is being issued to ensure road safety
through linking of labor standards compliance with franchise regulation
 based on a DOLE rapid survey of bus drivers/conductors and operators on the working
conditions and compensation schemes in the bus transport sector
 surveys indicate that the risk[-]taking behavior of drivers is associated with the lack of
proper training on motor skills, safety and on traffic rules and regulations; poor health due
to long work hours and exposure to health hazards and; lack of income security under a
purely commission-based compensation scheme.
 o ensure compliance with the established standards for employment and the Board’s
policies on the promotion of road safety, all Public Utility Bus (PUB) operators are required
to secure Labor Standards Compliance Certificates from DOLE
 The compensation scheme set or approved by the DOLE shall cover the PUB drivers and
conductors and shall adopt a part-fixed-part-performance[-]based compensation system.
 The fixed component shall at no time be lower than the applicable minimum wage in the
region. The performance[-]based component shall be based on the net income of the
operator or bus company and on employee safety records such as that in regard to
involvement in road accidents, commission of traffic violations, and observance of the
elementary courtesies of the road
 All PUB drivers and conductors shall be entitled to other mandatory compensation such as
but not limited to overtime, night shift differential, rest day, holiday, birthday, and service
incentive leave pays.
 All PUB drivers and conductors shall likewise be entitled to retirement benefits and to all
mandatory social security benefits such as membership in the SSS, Philhealth and Pag-Ibig as
specified by law
  The right of the drivers and conductors to organize themselves to advance their interests
and welfare shall be encouraged.
 Five (5) days later or on January 9, 2012, the DOLE issued Department Order No. 118-12, elaborating
on the part-fixed-part- performance-based compensation system referred to in the LTFRB
Memorandum Circular No. 2012- 001
 July 4, 2012, petitioners filed before this Court a Petition with Urgent Request for Immediate
Issuance of a Temporary Restraining Order and/or a Writ of Preliminary Injunction,4 impleading the
DOLE and the LTFRB as respondents.
 They pray that this Court enjoin the implementation of Department Order No. 118-12 and
Memorandum Circular No. 2012-001 for being violative of their right to due process, equal
protection, and nonimpairment of obligation of contracts.
 July 11, 2012 Resolution- SC deferred the issuance of a  status quo ante order and, instead, required
the DOLE and the LTFRB to comment on the Petition
 Petitioners contend that the payment of part-fixed-partperformance-based wage allegedly impair
petitioners’ obligations under their existing collective bargaining agreements where they agreed with
their bus drivers and conductors on a commission or boundary basis.
 Petitioners contend that revocation of their franchises for non-compliance with the DO deprive them
of the capital they invested in their businesses in violation of their right to due process of law.
 Petitioners add that the initial implementation of Department Order No. 118-12 within Metro Manila
allegedly creates an arbitrary distinction between bus operators operating in Metro Manila and
those operating outside of Metro Manila, in violation of petitioners’ right to equal protection of the
laws.
 Respondents argue that petitioners have no legal standing to file the present Petition considering
that DO and MC are directed against bus operators, not against associations of bus operators such as
petitioners.
 Respondents also cited that petitioners violated the doctrine of hierarchy courts in directly filing
their Petition before the SC
 Respondents argue that DO and MC do not violate public utility bus operators’ rights to non-
impairment of obligation of contracts, due process of law, and equal protection of the laws
 Respondents argue that the DO and MC are issued to promote the welfare of the drivers and
conductors, certificates of public convenience are not property and are always subject to
amendment, alteration or even repeal, and the DO is applicable to all public utility bus operators in
the country

ISSUES
 WON bus operator associations have legal standing to sue
 WON case falls under any of the exceptions to the doctrine of hierarchy of courts
 WON DOLE DO 118-12 and LTFRB MC 2012-001 deprive public utility bus operators of their right to
due process of law
 WON DOLE DO 118-12 and LTFRB MC 2012-001 impair public utility bus operators’ right to non-
impairment of obligation of contracts
 WON DOLE DO 118-12 and LTFRB MC 2012-001 deny public utility bus operators of their right to
equal protection of the laws

SC Ruling
SC dismisses that petition and held that they fail to respect the doctrine of hierarchy of courts by directly
invoking this Court’s jurisdiction without any special reason. They fail to present an actual controversy ripe
for adjudication and do not even have the requisite standing to file this case. Even if this Court proceeds on
the merits, petitioners fail to show the unconstitutionality of the DOLE Department Order No. 118-12 and the
LTFRB Memorandum Circular No. 2012-001.
SC Discussion
Discussion on Doctrines regarding jurisdiction
 SC’s power of judicial review is anchored on Article VIII, Section 1 of the 1987 Constitution. The
Constitution grants the SC and lower courts the power to declare executive and legislative acts void if
they are violative of the Constitution.
 Administrative actions reviewable by the SC may either be quasi-legislative or quasi-judicial.
 Quasi-legislative or rulemaking power is the power of an administrative agency to make rules and
regulations that have the force and effect of law so long as they are issued “within the confines of
the granting statute.
 The enabling law must be complete, with sufficient standards to guide the administrative agency in
exercising its rulemaking power
 Administrative rules and regulations must be “germane to the objects and purposes of the law, and
be not in contradiction to, but in conformity with, the standards prescribed by law.”
 Quasi-judicial or administrative adjudicatory power is “the power to hear and determine questions of
fact to which the legislative policy is to apply and to decide in accordance with the standards laid
down by the law itself in enforcing and administering the same law
 Determining whether the act under review is quasi-legislative or quasi-judicial is necessary in
determining when judicial remedies may properly be availed of. in cases involving quasi-judicial acts,
Congress may require certain quasi-judicial agencies to first take of the case before resorting to
judicial remedies
 Doctrine of exhaustion of administrative remedies is usually contrasted with the doctrine of
primary jurisdiction. These both concepts aim to maximize the special technical knowledge of
administrative agencies
 The doctrine of primary administrative jurisdiction requires courts to not resolve or “determine a
controversy involving a question which is within the jurisdiction of an administrative tribunal.” The
issue is jurisdictional and the court, when confronted with a case under the jurisdiction of an
administrative agency, has no option but to dismiss it.
 The doctrine of exhaustion of administrative remedies requires parties to exhaust all the remedies
in the administrative machinery before resorting to judicial remedies. It presupposes that the court
and the administrative agency have concurrent jurisdiction to take cognizance of a matter. However,
in deference to the special and technical expertise of the administrative agency, courts must yield to
the administrative agency by suspending the proceedings. As such, parties must exhaust all the
remedies within the administrative machinery before resort to courts is allowed.
 Case at bar does not require application of either doctrine. DO and MC were issued within the quasi-
legislative powers of the both DOLE and LTFRB

Doctrine of Hierarchy of Courts

 The doctrine of hierarchy of courts requires that recourse must first be obtained from lower courts
sharing concurrent jurisdiction with a higher court. This is to ensure that SC remains a court of last
resort so as to “satisfactorily perform the functions assigned to it by the fundamental charter and
immemorial tradition.”
 The doctrine has the purpose to ensure that every level of the judiciary performs its designated
roles in an effective and efficient manner.”
 The rule on hierarchy of courts may be relaxed when “dictated by public welfare and the
advancement of public policy, or demanded by the broader interest of justice, or the orders
complained of were found to be patent nullities, or the appeal was considered as clearly an
inappropriate remedy.”
 SC held that petitioners failed to respect the hierarchy of courts when they directly filed in the SC
alleging that the far-reaching consequences and wide coverage of the DO and MC requires the
 attention of the SC. SC held that petitioners could have filed with the CA whose writs are also
nationwide in scope

Issues on Standing
 SC held that the issues raised are not justiciable. There is no actual case or controversy. As a rule,
“the constitutionality of a statute will be passed on only if, and to the extent that, it is directly and
necessarily involved in a justiciable controversy and is essential to the protection of the rights of the
parties concerned.”
 A controversy is said to be justiciable if: (1) there is an actual case or controversy involving legal
rights that are capable of judicial determination; (2), the parties raising the issue must have standing
or locus standi to raise the constitutional issue; (3) the constitutionality must be raised at the earliest
opportunity; and (4) resolving the constitutionality must be essential to the disposition of the case
 The petitioners’ allegations that the part-fixed-part performance-based payment scheme is “unfit to
the nature of operation of public transport system or business” were unsupported by facts. The
“time-immemorial” implementation of the boundary system does not mean that it is the only
payment scheme appropriate for the public transport industry
 SC also held that the petitioners do not possess legal standing or locus standi. To have legal standing
parties must show a personal and substantial interest in the case such that [they have] sustained or
will sustain direct injury as a result of the governmental act that is being challenged.”
 There must be a clear and convincing demonstration that the representation of the association is
more efficient for the petitioners to bring. The petitioning associations failed to establish who their
members are and if these members allowed them to sue on their behalf. Although they claim that
they are composed of public utility bus operators who will be directly injured by the DO and MC,
they did not present any proof (board resolutions of their members, etc) that their members
authorized them to act on their behalf.
 Some petitioning associations have revoked certificates of incorporation for failing to submit
required general information to SEC

Issue on Due Process Clause

 The due process clause, the equal protection clause, and the takings clause of the Constitution serve
as protections from the government’s taking of property. The non-impairment clause may likewise
be invoked if the property taken is in the nature of a contract.
 All these constitutional limits are subject to the fundamental powers of the State, specifically, police
power. As such, the burden of proving that the taking is unlawful rests on the party invoking the
constitutional right.
 The due process clause as requiring both procedural and substantive elements
 Procedural due process “concerns itself with government action adhering to the established process
when it makes an intrusion into the private sphere.”
 Procedural due process implies the right of the person affected thereby to be present before the
tribunal which pronounces judgment upon the question of life, liberty, and property in its most
comprehensive sense; to be heard, by testimony or otherwise, and to have the right of
controverting, by proof, every material fact which bears on the question of the right in the matter
involved
 Substantive due process requires that laws be grounded on reason139 and be free from
arbitrariness. The government must have “sufficient justification for depriving a person of life,
liberty, or property
 Essentially, substantive due process is satisfied if the deprivation is done in the exercise of the police
power of the State.
  Police power is called the “the most essential, insistent and illimitable” of the powers of the State
since it is the authority enact legislation that may interfere with personal liberty or property in order
to promote the general welfare
 Laws requiring the payment of minimum wage, security of tenure, and traffic safety have been
declared not violative of due process for being valid police power legislations. The test or standard is
whether the law is reasonable. The interests of the State to promote the general welfare, on the one
hand, and the right to property, on the other, must be balanced
 The DO and MC were issued in the exercise of quasilegislative powers of the DOLE and the LTFRB,
respectively. As such, notice and hearing are not required for their validity. Hence they were not in
violation of the due process, either procedural or substantive.

Issue on non-impairment Clause

 The non-impairment clause serves as a check on the legislature “to act only through generally
applicable laws prescribing rules of conduct that operate prospectively.”
 With the non-impairment clause, legislature cannot enact “retroactive laws, selective laws, and
laws not supported by a public purpose.
 There is an impairment when, either by statute or any administrative rule issued in the exercise of
the agency’s quasi-legislative power, the terms of the contracts are changed either in the time or
mode of the performance of the obligation. here is likewise impairment when new conditions are
imposed or existing conditions are dispensed with
 Not all contracts, however, are protected under the nonimpairment clause. Contracts whose subject
matters are so related to the public welfare are subject to the police power of the State and,
therefore, some of its terms may be changed or the whole contract even set aside without offending
the Constitution;
 Contracts which relate to rights not considered property, such as a franchise or permit, are also not
protected by the non-impairment clause. The reason is that the public right or franchise is always
subject to amendment or repeal by the State, the grant being a mere privilege.
Issue on Equal Protection Clause
 The clause does not prevent the legislature from enacting laws making valid classifications.
Classification is “the grouping of persons or things similar to each other in certain particulars and
different from all others in these same particulars.
 To be valid, the classification must be: (1) based on “substantial distinctions which make real
differences”; (2) it must be “germane to the purposes of the law”; (3) it must “not be limited to
existing conditions only”; and (4) it must apply to each member of the class