ADMINISTRATIVE LAW: POWERS OF ADMINISTRATIVE AGENCIES

Topic: Fact-finding, Investigative, Licensing, and Rate-Fixing Powers

Administrative agencies are empowered by law to perform specific duties and functions that fall under the executive branch of the government. They derive their authority from enabling statutes or executive orders that create them. One of their key functions is to implement and enforce laws through rulemaking, adjudication, and exercising various quasi-legislative and quasi-judicial powers. Under these, administrative agencies possess certain specialized powers, including fact-finding, investigative, licensing, and rate-fixing powers.

1. Fact-Finding Power

Definition: The fact-finding power of an administrative agency refers to its authority to gather and ascertain facts necessary to resolve issues or disputes. This power is integral to the agency’s quasi-judicial or investigative functions, where the agency gathers facts to inform decisions or recommendations.

Scope and Application:

Fact-finding may occur in the context of adjudicative proceedings, regulatory enforcement, or investigations.
It involves the collection of evidence, testimonies, documents, and other factual materials necessary for the agency to make informed decisions.
Administrative agencies can compel the attendance of witnesses and the production of evidence through the issuance of subpoenas.

Judicial Review:

Factual findings of administrative agencies, when supported by substantial evidence, are generally accorded respect by courts. They are often upheld on the principle that agencies are presumed to have expertise on technical matters within their jurisdiction.
Substantial evidence rule: Courts will not re-examine factual findings unless there is a clear showing of arbitrariness, capriciousness, or grave abuse of discretion. The factual determination of administrative bodies will be accepted if supported by such evidence that a reasonable mind might accept as adequate to support a conclusion.

Case Law: In Ang Tibay v. CIR (1940), the Supreme Court emphasized that fact-finding in administrative cases must comply with procedural due process, including the right to a fair hearing, the right to be informed, and the opportunity to present one's case.

2. Investigative Power

Definition: Investigative powers grant administrative agencies the ability to conduct investigations on matters within their jurisdiction to ensure compliance with laws and regulations, or to determine violations.

Scope and Application:

Administrative agencies can conduct inquiries and investigations motu proprio (on their own initiative) or upon complaints from the public or other agencies.
They have the authority to gather evidence, summon witnesses, and examine relevant documents.
Investigations may be non-adjudicatory (gathering information) or adjudicatory (focused on resolving a particular case).

Examples of Investigative Agencies:

The Office of the Ombudsman has investigative powers over government officials and employees suspected of corrupt practices.
The Securities and Exchange Commission (SEC) has the power to investigate violations of corporate and securities laws.
The Energy Regulatory Commission (ERC) can investigate practices in the energy sector that might violate laws or regulations.

Judicial Review: Investigations typically lead to administrative actions or findings, but these are subject to judicial review. The courts may intervene if due process has been violated during the investigative process, such as arbitrary detentions or abusive summons.

Due Process Concerns: The investigative power of administrative agencies must always be exercised in a manner that respects the rights of individuals, particularly in adherence to the principle of due process. While investigations do not typically require the same level of procedural rigor as adjudications, basic fairness should be maintained.

3. Licensing Power

Definition: The licensing power refers to the authority of administrative agencies to grant, deny, renew, suspend, or revoke licenses, permits, and other forms of regulatory approval necessary for the conduct of certain activities or businesses.

Scope and Application:

Licensing is an important regulatory mechanism used by agencies to ensure that individuals or entities meet certain standards before engaging in a regulated activity.
The power includes setting qualifications, evaluating compliance with standards, and imposing conditions on licensees.
Licensing is discretionary, but the discretion must not be abused or exercised arbitrarily.

Procedural Requirements:

Administrative agencies are often required to conduct hearings or evaluations before issuing or denying licenses.
Applicants must be given the opportunity to comply with legal requirements and present evidence if their license is in jeopardy of being revoked.
The Administrative Code of 1987 governs the procedure for issuance, denial, or revocation of licenses.

Judicial Review:

Courts can review licensing decisions to ensure there is no abuse of discretion, and that licenses are granted or revoked in accordance with law and procedure.
Due Process: Licensing decisions must adhere to due process. A party whose license is denied or revoked must be given notice and the opportunity to be heard.

Case Law: In Solid Homes, Inc. v. Lasala (1996), the Supreme Court reiterated the principle that administrative bodies exercising licensing powers must observe substantive and procedural due process in revoking licenses.

4. Rate-Fixing Power

Definition: The rate-fixing power refers to the authority of certain administrative agencies to determine and prescribe the rates or fees charged by public utilities or other regulated industries.

Scope and Application:

This power is often exercised by agencies to regulate prices and prevent abuses in industries where competition is limited or nonexistent (e.g., public utilities like electricity, water, telecommunications, etc.).
Administrative agencies, such as the Energy Regulatory Commission (ERC), the Metropolitan Waterworks and Sewerage System (MWSS), or the Land Transportation Franchising and Regulatory Board (LTFRB), ensure that rates charged to consumers are reasonable, just, and equitable.

Standards for Rate-Fixing:

The rates must be based on reasonable returns for the public utility while ensuring that consumers are not charged excessive fees.
Rate-fixing generally requires a cost-benefit analysis or revenue requirements study to balance the interests of both the utility and the public.
A rate must not be confiscatory (too low) nor excessively burdensome (too high).

Procedure:

Public hearings are typically required before rate increases can be approved. Stakeholders, including consumers, are given the opportunity to present evidence or opposition.
In rate-fixing, agencies are also required to publish their decisions and findings to provide transparency and give affected parties the chance to appeal.

Judicial Review:

Rate-fixing decisions can be challenged in court on the grounds of being confiscatory, unreasonable, or lacking in due process. Courts, however, typically afford agencies a wide latitude in rate-fixing decisions due to the technical nature of such determinations.
Substantial evidence: As in fact-finding, the courts apply the substantial evidence rule in reviewing the rate-fixing decisions of administrative bodies.

Case Law: In Philippine Airlines, Inc. v. Civil Aeronautics Board (1992), the Supreme Court affirmed the rate-fixing power of the Civil Aeronautics Board, provided that it adheres to procedural and substantive due process.

Conclusion

Administrative agencies play a crucial role in governance through their fact-finding, investigative, licensing, and rate-fixing powers. These powers enable agencies to regulate, enforce laws, and ensure compliance within specific industries or areas of public interest. However, their exercise is not unfettered. These powers must be conducted in adherence to the principles of due process, fairness, and substantial evidence, and are always subject to judicial review to ensure that the agencies do not overreach or abuse their authority. Courts typically grant a certain level of deference to administrative bodies, recognizing their technical expertise, but will intervene in cases where legal standards are not met.