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Digest: Energy Regulatory Board v. Court of Appeals (357 SCRA 30, 2001)

Hierarchy of Evidentiary Rules
Digest: Energy Regulatory Board v. Court of Appeals (357 SCRA 30, 2001)
G.R. No. 113079 - April 20, 2001


Petitioner Pilipinas Shell Petroleum Corporation (Shell) is engaged in the business of importing crude oil, refining the same and selling various petroleum products through a network of service stations throughout the country.

Private respondent Petroleum Distributors and Service Corporation (PDSC) owns and operates a Caltex service station at the corner of the MIA and Domestic Roads in Pasay City.

On June 30,1983, Shell filed with the quondam Bureau of Energy Utilization (BEU) an application for authority to relocate its Shell Service Station at Tambo, ParaƱaque, Metro Manila, to Imelda Marcos Avenue of the same municipality.

PDSC filed an opposition to the application.

BEU dismissed the application on jurisdictional grounds and for lack of "full title" of the lessor over the proposed site.  However, on May 7, 1984, the BEU reinstated the same application and thereafter conducted a hearing thereon.

          BEU rendered a decision denying Shell's application 

          Executive Order No. 172 was issued creating the Energy Regulatory Board (ERB) and transferring to it the regulatory and adjudicatory functions of the BEU.

          EA rendered a decision denying the appeal of Shell and affirming the BEU decision. Shell moved for reconsideration and prayed for a new hearing or the remand of the case for further proceedings. In a supplement to said motion, Shell submitted a new feasibility study to justify its application.

          the ERB rendered a Decision allowing Shell to establish the service station 

          PDSC filed a motion for reconsideration of the foregoing Decision. Denied

          Aggrieved, PDSC elevated to the Court of Appeals.




Ruling: The interpretation of an administrative government agency like the ERB, which is tasked to implement a statute, is accorded great respect and ordinarily controls the construction of the courts.8 A long line of cases establish the basic rule that the courts will not interfere in matters which are addressed to the sound discretion of government agencies entrusted with the regulation of activities coming under the special technical knowledge and training of such agencies.9 More explicitly -

Generally, the interpretation of an administrative government agency, which is tasked to implement a statute, is accorded great respect and ordinarily controls the construction of the courts.10 The reason behind this rule was explained in Nestle Philippines, Inc. vs. Court of Appeals,11 in this wise:

'The rationale for this rule relates not only to the emergence of the multifarious needs of a modern or modernizing society and the establishment of diverse administrative agencies for addressing and satisfying those needs; it also relates to the accumulation of experience and growth of specialized capabilities by the administrative agency charged with implementing a particular statute. In Asturias Sugar Central, Inc. v. Commissioner of Customs, 12 the Court stressed that executive officials are presumed to have familiarized themselves with all the considerations pertinent to the meaning and purpose of the law, and to have formed an independent, conscientious and competent expert opinion thereon. The courts give much weight to the government agency or officials charged with the implementation of the law, their competence, expertness, experience and informed judgment, and the fact that they frequently are drafters of the law they interpret."


As a general rule, contemporaneous construction is resorted to for certainty and predictability in the laws,13 especially those involving specific terms having technical meanings.

However, courts will not hesitate to set aside such executive interpretation when it is clearly erroneous, or when there is no ambiguity in the rule,14 or when the language or words used are clear and plain or readily understandable to any ordinary reader.15

Stated differently, when an administrative agency renders an opinion or issues a statement of policy, it merely interprets a pre-existing law and the administrative interpretation is at best advisory for it is the courts that finally determine what the law means.16 Thus, an action by an administrative agency may be set aside by the judicial department if there is an error of law, abuse of power, lack of jurisdiction or grave abuse of discretion clearly conflicting with the letter and spirit of the law.17

However, there is no cogent reason to depart from the general rule because the findings of the ERB conform to, rather than conflict with, the governing statutes and controlling case law on the matter.



Time and again this Court has ruled that in reviewing administrative decisions, the findings of fact made therein must be respected as long as they are supported by substantial evidence, even if not overwhelming or preponderant; that it is not for the reviewing court to weigh the conflicting evidence, determine the credibility of the witnesses or otherwise substitute its own judgment for that of the administrative agency on the sufficiency of evidence; that the administrative decision in matters within the executive jurisdiction can only be set aside on proof of grave abuse of discretion, fraud or error of law.26 Petitioner ERB is in a better position to resolve petitioner Shell's application, being primarily the agency possessing the necessary expertise on the matter. The power to determine whether the building of a gasoline retail outlet in a trading area would benefit public interest and the oil industry lies with the ERB not the appellate courts.

In the hierarchy of evidentiary values, proof beyond reasonable doubt is at the highest level, followed by clear and convincing evidence, preponderance of evidence and substantial evidence, in that order. A litany of cases has consistently held that substantial evidence is all that is needed to support an administrative finding of fact.It means such relevant evidence as a reasonable mind might accept to support a conclusion.

Suffice it to state in this regard that the factual landscape, measured within the context of such an evidentiary matrix, is strewn with well-nigh overwhelming proof of the necessity to build such a gasoline retail outlet in the vicinity subject of the application.

In denying Shell's application, the Court of Appeals next pointed to the alleged 'staleness' of Shell's feasibility study because it was submitted in evidence about two (2) years after it was prepared in early 1988.

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