G.R. No.

84818 December 18, 1989

PHILIPPINE COMMUNICATIONS SATELLITE CORPORATION, petitioner, vs.

JOSE LUIS A. ALCUAZ, as NTC Commissioner, and NATIONAL TELECOMMUNICATIONS COMMISSION,

FACTS:

The petition before us seeks to annul and set aside an Order issued by the respondent Jose Luis Alcuaz
of the NTC, which directs the provisional reduction of the rates which may be charged by petitioner for
certain specified lines of its services by 15% with the reservation to make further reductions later, for
being violative of the constitutional prohibition against undue delegation of legislative power and a
denial of procedural, as well as substantive, due process of law.

It is a fundamental principle flowing from the doctrine of separation of powers that Congress may not
delegate its legislative power to the two other branches of the government, subject to the exception
that local governments may over local affairs participate in its exercise.

By virtue of Republic Act No. 5514, PHILCOMSAT was granted a franchise. Under this franchise, it was
likewise granted the authority to "construct and operate such ground facilities as needed to deliver
telecommunications services from the communications satellite system and ground terminal or
terminals."

o Under Section 5 of Republic Act No. 5514, petitioner was exempt from the jurisdiction of the
then Public Service Commission, now respondent NTC.
o However, pursuant to Executive Order No. 196 issued on June 17, 1987, petitioner was placed
under the jurisdiction, control and regulation of respondent NTC, including all its facilities and
services and the fixing of rates.
o Implementing said Executive Order No. 196, respondents required petitioner to apply for the
requisite certificate of public convenience and necessity covering its facilities and the services it
renders, as well as the corresponding authority to charge rates therefor.

Petitioner filed with respondent NTC an application 4 for authority to continue operating and
maintaining the same facilities it has been continuously operating and maintaining since 1967, to
continue providing the international satellite communications services it has likewise been providing
since 1967, and to charge the current rates applied for in rendering such services.

Pending hearing, it also applied for a provisional authority so that it can continue to operate and
maintain the above mentioned facilities, provide the services and charge therefor the aforesaid rates
therein applied for.

On September 16, 1987, petitioner was granted a provisional authority to continue operating its existing
facilities, to render the services it was then offering, and to charge the rates it was then charging. This
authority was valid for six (6) months from the date of said order. 5 When said provisional authority
expired on March 17, 1988, it was extended for another six (6) months, or up to September 16, 1988.
The NTC order now in controversy had further extended the provisional authority of the petitioner for
another six (6) months, counted from September 16, 1988, but it directed the petitioner to charge
modified reduced rates through a reduction of fifteen percent (15%) on the present authorized rates.

PHILCOMSAT assails the following:

(1) The enabling act (Executive Order No. 546) of respondent NTC empowering it to fix rates for
public service communications does not provide the necessary standards constitutionally
required, hence there is an undue delegation of legislative power, particularly the adjudicatory
powers of NTC;
(2) Assuming arguendo that the rate-fixing power was properly and constitutionally conferred, the
same was exercised in an unconstitutional manner, hence it is ultra vires, in that (a) the
questioned order violates procedural due process for having been issued without prior notice
and hearing; and (b) the rate reduction it imposes is unjust, unreasonable and confiscatory, thus
constitutive of a violation of substantive due process.

ISSUE: won the reduction of rates was unconstitutional

RULING:

In case of a delegation of rate-fixing power, the only standard which the legislature is required to
prescribe for the guidance of the administrative authority is that the rate be reasonable and just.
However, it has been held that even in the absence of an express requirement as to reasonableness, this
standard may be implied.

respondent performed a function partaking of a quasi-judicial character, the valid exercise of which
demands previous notice and hearing.

The order in question which was issued by respondent Alcuaz no doubt contains all the attributes of a
quasi-judicial adjudication. Foremost is the fact that said order pertains exclusively to petitioner and to
no other.

No rationalization was offered nor were the attending contingencies, if any, discussed, which prompted
respondents to impose as much as a fifteen percent (15%) rate reduction. It is not far-fetched to assume
that petitioner could be in a better position to rationalize its rates vis-a-vis the viability of its business
requirements.

While respondents may fix a temporary rate pending final determination of the application of petitioner,
such rate-fixing order, temporary though it may be, is not exempt from the statutory procedural
requirements of notice and hearing, as well as the requirement of reasonableness. Assuming that such
power is vested in NTC, it may not exercise the same in an arbitrary and confiscatory manner.

It is thus clear that with regard to rate-fixing, respondent has no authority to make such order without
first giving petitioner a hearing, whether the order be temporary or permanent, and it is immaterial
whether the same is made upon a complaint, a summary investigation, or upon the commission's own
motion as in the present case.

An order of respondent NTC prescribing reduced rates, even for a temporary period, could be unjust,
unreasonable or even confiscatory, especially if the rates are unreasonably low, since the utility
permanently loses its just revenue during the prescribed period.

Hence, the inherent power and authority of the State, or its authorized agent, to regulate the rates
charged by public utilities should be subject always to the requirement that the rates so fixed shall be
reasonable and just.