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PHILCOMSAT v Alcuez (1989)

Facts:

Petitioner Philippine Communications Sattelite Corporation (PHILCOMSAT)

provides international satellite services for telecommunications. Its services allows the

operation of overseas telephone, fax, telegrams, television, etc. Its satellite circuits are

leased to Philippine telecommunications companies such as PLDT, Philippine Global

Communications, and others.

PHILCOMSAT operates under a legislative franchise granted to it by RA 5514.

Under this RA, PHILCOMSAT was originally not within the jurisdiction of the National

Telecommunications Commision (NTC.) However, it was subsequently placed under the

jurisdiction of the NTC by EO No. 196. With such jurisdiction, the NTC had control

and regulatory powers over PHILCOMSAT, including the power to fix the rates

charged by PHILCOMSAT for its telecommunications services. Respondent Alcuez

was the then Commissioner of NTC. After acquiring jurisdiction over PHILCOMSAT,

the NTC required PHILCOMSAT to apply for the requisite certificate of public

convenience. In compliance, PHILCOMSAT filed the application for its certificate of

public convenience to continue its telecommunications services and charge the present

rates for its services. NTC provisionally granted the application but it directed

PHILCOMSAT to reduce its rates by 15% of their present rates, subject to further

reductions as needed.

The order of the NTC requiring the 15% reduction was based on an initialevaluation by the Rates Regulation Division. The order was issued without giving

PHILCOMSAT any notice, nor was there a hearing held to allow PHILCOMSAT to

contest the results of the evaluation. (In short, no notice and hearing.)

PHILCOMSAT now assails the constitutionality of EO No. 546 which gives

the NTC the power to fix rates for public service communications.

Issues:

1. W/N EO No. 546 is constitutionalYes, it is constitutional.2.

W/N the order of the NTC requiring the 15% rate reduction is valid

NO, it isinvalid for violating procedural due process.

Held/Ratio:

1. PHILCOMSAT assails the constitutionality of EO 546 saying that the EOdoes not provide a standard which would guide NTC in fixing the rates of publicservice communications. Fundamental is the rule that delegation of legislative

power may be sustained only upon the ground that some standard for its

exercise is provided and that the legislature in making the delegation has

prescribed the manner of the exercise of the delegated power. In case of a

delegation of rate-fixing power, the only standard which the legislature isrequired to prescribe for the guidance of the administrative authority is thatthe rate be reasonable and just.NTC, in the exercise of its rate-fixing power, is

limited by the requirements of public safety, public interest, reasonable feasibilityand reasonable rates, which more than satisfy the requirements of a valid

delegation of legislative power.

2. PHILCOMSAT alleges that the order of the NTC requiring a 15%

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reduction of its rates is invalid for violating procedural due process. Remember,the order was issued without notice and hearing. The order was based merely on

an "initial evaluation," which is a unilateral evaluation. PHILCOMSAT contends

that it should have been given an opportunity in a hearing to present its side to

show that the rate reduction was confiscatory and that such reduction would causedeterioration of the public service that they provide. PHILCOMSAT argues that

the function involved in the rate fixing-power of NTC is adjudicatory and hencequasi-judicial, not quasi- legislative. This distinction is important because for the

exercise of quasi-judicial powers, notice and hearing are required . These are

not required in the exercise of quasi-legislative powers.

The power is considered adjudicatory, and therefore quasi-judicial, when

an order is directed at a particular entity, such as PHILCOMSAT in this case, as

opposed to the general public. The order of the NTC requiring the 15%

reduction question contains all the attributes of a quasi- judicial

adjudication. First, order pertains exclusively to PHILCOMSAT and to no

other. Further, it is premised on a finding of fact, that there should be reductionof some of the rates charged, based on an initial evaluation of PHILCOMSATsfinancial statements, without affording PHILCOMSAT the benefit of an

explanation as to what particular aspect or aspects of the financial statementswarranted a corresponding rate reduction.

Because the issuance of the order by the NTC was an exercise of quasi-

judicial power, notice and hearing was required for procedural due process.

Since there was no notice and hearing, the order is null and void for violating

procedural due process.

Furthermore, Section 16(c) of the Public Service Act dictates that aCommission (the NTC in this case) has the power to fix rates upon notice and

hearing.