PHICOMSAT V. ALCUAZ G.R. No. 84818 December 18, 1989
FACTS:
By virtue of Republic Act No. 5514, PHILCOMSAT was granted "a franchise to establish, construct, maintain and operate in the Philippines, at such places as the grantee may select, station or stations and associated equipment and facilities for international satellite communications." 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."
PHILCOMSAT provides satellite services to companies like Globe and PLDT.
Pursuant to the said franchise, petitioner, since 1967, has established its earth stations and antennas to provide direct satellite communication. Since 1968, the petitioner has been leasing its satellite circuits to different telephone, cable, and radio companies.
Executive Order No. 196 placed the petitioner under the jurisdiction, control, and regulation of respondent NTC, including all its facilities and services and the fixing of rates.
Petitioner filed with respondent NTC an application 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 the 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.
PHILCOMSAT was granted one-year 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.
The NTC order had extended the provisional authority of the petitioner for another six (6) months, but it directed the petitioner to charge modified reduced rates through a reduction of fifteen percent (15%) on the present authorized rates.
PHILCOMSAT now sues NTC and commissioner Alcuaz assailING the said directive and holds that the enabling act (EO 546) of the NTC, empowering it to fix rates for public service communications, does not provide the necessary standards which were constitutionally required, hence, there is an undue delegation of legislative power, particularly the adjudicatory powers of NTC.
PHILCOMSAT asserts that nowhere in the provisions of EO 546, providing for the creation of NTC and granting its rate-fixing powers, nor of EO 196, placing PHILCOMSAT under the jurisdiction of NTC, can it be inferred that NTC is guided by any standard in the exercise of its rate-fixing and adjudicatory powers.
PHILCOMSAT subsequently clarified its said submission to mean that the order mandating a reduction of certain rates is undue delegation not of legislative but of quasi-judicial power to NTC, the exercise of which allegedly requires an express conferment by the legislative body.
ISSUE:
WON the questioned order violates procedural due process for having been issued motu proprio without prior notice and hearing and the rate reduction it imposes is unjust, unreasonable and confiscatory
HELD:
YES. The application of a policy like the fixing of rates as exercised by administrative bodies is quasi-judicial rather than quasi-legislative: that where the function of the administrative agency is legislative, notice and hearing are not required, but where an order applies to a named person, as in the instant case, the function involved is adjudicatory.
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 the petitioner and to no other. Further, it is premised on a finding of fact, although patently superficial, that there is merit in a reduction of some of the rates charged- based on an initial evaluation of petitioner's financial statements-without affording petitioner the benefit of an explanation as to what particular aspect or aspects of the financial statements warranted a corresponding rate reduction. 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. The rates it charges result from an exhaustive and detailed study it conducts of the multi-faceted intricacies attendant to a public service undertaking of such nature and magnitude. We are, therefore, inclined to lend greater credence to petitioner's ratiocination that an immediate reduction in its rates would adversely affect its operations and the quality of its service to the public considering the maintenance requirements, the projects it still has to undertake and the financial outlay involved. Notably, petitioner was not even afforded the opportunity to cross-examine the inspector who issued the report on which respondent NTC based its questioned order.
While respondents may fix a temporary rate pending final determination of the application of the 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. Categorizing such an order as temporary in nature does not perforce entail the applicability of a different rule of statutory procedure that would otherwise be applied to any other order on the same matter unless otherwise provided by the applicable law. In the case at bar, the applicable statutory provision is Section 16(c) of the Public Service Act which provides:
Section 16. Proceedings of the Commission, upon notice and hearing the Commission shall have power, upon proper notice and hearing in accordance with the rules and provisions of this Act, subject to the limitations and exceptions mentioned and saving provisions to the contrary:
xxx xxx xxx
(c) To fix and determine individual or joint rates, ... which shall be imposed, observed and followed thereafter by any public service; ...
There is no reason to assume that the aforesaid provision does not apply to respondent NTC, there being no limiting, excepting, or saving provisions to the contrary in Executive Orders Nos. 546 and 196.
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. That such a hearing is required is evident in respondents' order of September 16, 1987 in NTC Case No. 87-94 which granted PHILCOMSAT a provisional authority "to continue operating its existing facilities, to render the services it presently offers, and to charge the rates as reduced by them "under the condition that "(s)ubject to hearing and the final consideration of the merit of this application, the Commission may modify, revise or amend the rates ..." 12
While it may be true that for purposes of rate-fixing respondents may have other sources of information or data, still, since a hearing is essential, respondent NTC should act solely on the basis of the evidence before it and not on knowledge or information otherwise acquired by it but which is not offered in evidence or, even if so adduced, petitioner was given no opportunity to controvert.
Again, the order requires the new reduced rates to be made effective on a specified date. It becomes a final legislative act as to the period during which it has to remain in force pending the final determination of the case. 13 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. In fact, such order is in effect final insofar as the revenue during the period covered by the order is concerned. Upon a showing, therefore, that the order requiring a reduced rate is confiscatory, and will unduly deprive petitioner of a reasonable return upon its property, a declaration of its nullity becomes inductible, which brings us to the issue on substantive due process.