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.
Same; Same; Same; Same; Administrative Law;
218 SUPREME COURT REPORTS Powers of NTC pursuant to EO’s 546 and 196.—
ANNOTATED Pursuant to Executive Orders Nos. 546 and 196,
respondent NTC is empowered, among others, to
Philippine Communications Satellite
determine and prescribe rates pertinent to the
Corporation vs. Alcuaz
operation of public service communications which
* necessarily include the power to promulgate rules and
G.R. No. 84818. December 18, 1989. regulations in connection therewith. And, under
Section 15(g) of Executive Order No. 546, respondent
PHILIPPINE COMMUNICATIONS NTC should be guided by the requirements of public
SATELLITE CORPORATION, petitioner, vs. safety, public interest and reasonable feasibility of
JOSE LUIS A. ALCUAZ, as NTC Commissioner, maintaining effective competition of private entities in
and NATIONAL TELECOMMUNICATIONS communications and broadcasting facilities. Likewise,
COMMISSION, respondents. in Section 6(d) thereof, which provides for the creation
of the Ministry of Transportation and
Constitutional Law; Legislative Power, Delegation Communications with control and supervision over
of; Absence of a fixed standard delegation of power respondent NTC, it is specifically provided that the
becomes unconstitutional; Requisites of valid national economic viability of the entire network or
delegation of rate fixing power.—Fundamental is the components of the communications systems
rule that delegation of legislative power may be contemplated therein should be maintained at
sustained only upon the ground that some standard reasonable rates. We need not go into an in-depth
for its exercise is provided and that the legislature in analysis of the pertinent provisions of the law in order
making the delegation has prescribed the manner of to conclude that respondent NTC, in the exercise of its
the exercise of the delegated power. Therefore, when rate-fixing power,
the administrative agency concerned, respondent NTC
in this case, establishes a rate, its act must both be _______________
non-confiscatory and must have been established in
the manner prescribed by the legislature; otherwise, * EN BANC.
in the absence of a fixed standard, the delegation of
power becomes unconstitutional. In case of a
delegation of rate-fixing power, the only standard 219
 Same; Same; Same; Same; Same; Due Process;
VOL. 180, DECEMBER 18, 1989 219 Temporary rate fixing order is not exempt from the
procedural requirements of notice and hearing.—
Philippine Communications Satellite Corporation vs. While respondents may fix a temporary rate pending
Alcuaz
final determination of the application of petitioner,
such rate-fixing order, temporary though it may be, is
is limited by the requirements of public safety, public not exempt from the statutory procedural
interest, reasonable feasibility and reasonable rates, requirements of notice and hearing, as well as the
which conjointly more than satisfy the requirements requirement of reasonableness. Assuming that such
of a valid delegation of legislative power. power is vested in NTC, it may not exercise the same
Same; Same; Same; Same; Same; Classification of in an arbitrary and confiscatory manner. Categorizing
rate-fixing power of administrative bodies as to when such an order as temporary in nature does not
quasi-judicial or legislative.—In Vigan Electric Light perforce entail the applicability of a different rule of
Co., Inc. vs. Public Service Commission, we made a statutory procedure than would otherwise be applied
categorical classification as to when the rate-fixing to any other order on the same matter unless
power of administrative bodies is quasi-judicial and otherwise provided by the applicable law.
when it is legislative, thus: “Moreover, although the Same; Same; Same; Same; Same; Same;
rule-making power and even the power to fix rates— Temporary rate fixing order becomes final legislative
when such rules and/or rates are meant to apply to all act as to the period during which it has to remain in
enterprises of a given kind throughout the Philippines force pending the final determination of the case.—
—may partake of a legislative character, such is not Again, the order requires the new reduced rates to be
the nature of the order complained of. Indeed, the made effective on a specified date. It becomes a final
same applies exclusively to petitioner herein. What is legislative act as to the period during which it has to
more, it is predicated upon the finding of fact—based remain in force pending the final determination of the
upon a report submitted by the General Auditing
Office—that petitioner is making a profit of more than 220
12% of its invested capital, which is denied by
petitioner. Obviously, the latter is entitled to cross-
examine the maker of said, report, and to introduce
evidence to disprove the contents thereof and/ or 220 SUPREME COURT REPORTS ANNOTATED
explain or complement the same, as well as to refute
Philippine Communications Satellite Corporation vs.
the conclusion drawn therefrom by the respondent. In Alcuaz
other words, in making said finding of fact,
respondent performed a function partaking of a
quasijudicial character, the valid exercise of which case. An order of respondent NTC prescribing reduced
demands previous notice and hearing.” rates, even for a temporary period, could be unjust,
unreasonable or even confiscatory, especially if the
rates are unreasonably low, since the utility exercise of discretion, good sense, and a fair,
permanently loses its just revenue during the enlightened and independent judgment. In
prescribed period. In fact, such order is in effect final determining whether a rate is confiscatory, it is
insofar as the revenue during the period covered by essential also to consider the given situation,
the order is concerned. Upon a showing, therefore, requirements and opportunities of the utility. A
that the order requiring a reduced rate is confiscatory method often employed in determining
and will unduly deprive petitioner of a reasonable reasonableness is the fair return upon the value of the
return upon its property, a declaration of its nullity property to the public utility. Competition is also a
becomes indubitable, which brings us to the issue on very important factor in determining the
substantive due process. reasonableness of rates since a carrier is allowed to
Same; Same; Same; Same; Same; Same; Public make such rates as are necessary to meet competition.
Utilities; Nature and scope of the power of the State to
GUTIERREZ, JR., J., Concurring Opinion:
regulate the conduct and business of public utilities.—
The rule is that the power of the State to regulate the
Constitutional Law; Administrative Law;
conduct and business of public utilities is limited by
Administrative agencies,
the consideration that it is not the owner of the
property of the utility, or clothed with the general
221
power of management incident to ownership, since the
private right of ownership to such property remains
and is not to be destroyed by the regulatory power.
The power to regulate is not the power to destroy VOL. 180, DECEMBER 18, 1989 221
useful and harmless enterprises, but is the power to
protect, foster, promote, preserve, and control with Philippine Communications Satellite Corporation vs.
due regard for the interests, first and foremost, of the Alcuaz
public, then of the utility and of its patrons. Any
regulation, therefore, which operates as an effective in the exercise of quasi-legislative powers should be
confiscation of private property or constitutes an given guidelines as to when notices and hearings are
arbitrary or unreasonable infringement of property essential, as much more than Congress.—Congress
rights is void, because it is repugnant to the never passes truly important legislation without
constitutional guaranties of due process and equal holding public hearings. Yet, administrative officials
protection of the laws. who are not directly attuned to the public pulse see no
Same; Same; Same; Same; Same; Same; Method need for hearings. They issue rules and circulars with
of determining reasonableness of the rate fixed.—What far reaching effects on our economy and our nation’s
is a just and reasonable rate is not a question of future on the assumption that the head of an agency
formula but of sound business judgment based upon knows best what is good for the people. I believe that
the evidence; it is a question of fact calling for the in the exercise of quasilegislative powers,
administrative agencies, much, much more than
Congress, should hold hearings and should be given _______________
guidelines as to when notices and hearings are
1 Annex A, Petition; Rollo, 37.
essential even in quasi-legislation.
Same; Same; Same; Legislative officials, 222
distinguished from administrative officials.—Senators
and Congressmen are directly elected by the people.
222 SUPREME COURT REPORTS
Administrative officials are not. If the members of an
ANNOTATED
administrative body are, as is so often the case,
appointed not on the basis of competence and Philippine Communications Satellite
qualifications but out of political or personal Corporation vs. Alcuaz
considerations, it is not only the sense of personal
responsibility to the electorate affected by legislation tion of the rates which may be charged by
which is missing. The expertise and experience petitioner for certain specified lines of its
needed for the issuance of sound rules and regulations services by fifteen percent (15%) with the
would also be sorely lacking. reservation to make further reductions later, for
being violative of the constitutional prohibition
PETITION to review the order of the National against undue delegation of legislative power
Bureau of Telecommunications Commission. and a denial of procedural, as well as
substantive, due process of law.
The facts are stated in the opinion of the Court. The antecedental facts as summarized by
     Rilloraza, Africa, De Ocampo & Africa for 2
petitioner are not in dispute. By virtue of
petitioner. Republic Act No. 5514, PHILCOMSAT was
     Victor de la Serna for respondent Alcuaz. granted “a franchise to establish, construct,
maintain and operate in the Philippines, at such
REGALADO, J.:
places as the grantee may select, station or
This case is posed as one of first impression in stations and associated equipment and facilities
the sense that it involves the public utility for international satellite communications.”
services of the petitioner Philippine Under this franchise, it was likewise granted the
Communications Satellite Corporation authority to “construct and operate such ground
(PHILCOMSAT, for short) which is the only one facilities as needed to deliver
rendering such services in the Philippines. telecommunications services from the
The petition before us seeks to annul and set communications satellite system and ground
terminal or terminals.”
1
aside an Order issued by respondent
Commissioner Jose Luis Alcuaz of the National Pursuant to said franchise, petitioner puts on
Telecommunications Commission (hereafter, record that it undertook the following activities
NTC), dated September 2, 1988, which directs and established the following installations:
the provisional reduc-
 In 1967, PHILCOMSAT established its 2 Eollo, 6-11,137-139,148-150.
1.
provisional earth station in Pinugay,
223
Rizal.
2. In 1968, earth station standard “A”
antenna (Pinugay I) was established. VOL. 180, DECEMBER 18, 1989 223
Pinugay I provided direct satellite Philippine Communications Satellite
communication links with the Pacific Corporation vs. Alcuaz
Ocean Region (the United States,
Australia, Canada, Hawaii, Guam,
6. In 1989, petitioner completed the
Korea, Thailand, China [PROC], New
installation of a third standard “A” earth
Zealand and Brunei) thru the Pacific
station (Pinugay IV) to take over the
Ocean INTELSAT satellite. 3
links in Pinugay I due to obsolescence.
3. In 1971, a second earth station standard
“A” antenna (Pinugay II) was By designation of the Republic of the
established. Pinugay II provided links Philippines, the petitioner is also the sole
with the Indian Ocean Region (major signatory for the Philippines in the Agreement
cities in Europe, Middle East, Africa, and and the Operating Agreement relating to the
other Asia Pacific countries operating International Telecommunications Satellite
within the region) thru the Indian Ocean Organization (IN-TELSAT) of 115 member
INTELSAT satellite. nations, as well as in the Convention and the
4. In 1983, a third earth station standard Operating Agreement of the International
“B” antenna (Pinugay III) was Maritime Satellite Organization (INMARSAT) of
established to temporarily assume the 53 member nations, which two global
functions of Pinugay I and then Pinugay commercial telecommunications satellite
II while they were being refurbished. corporations were collectively established by
Pinugay III now serves as spare or various states in line with the principles set
reserved antenna for possible forth in Resolution 1721 (XVI) of the General
contingencies. Assembly of the United Nations.
5. In 1983, PHILCOMSAT constructed and Since 1968, the petitioner has been leasing its
installed a standard “B” antenna at satellite circuits to:
Clark Air Field, Pampanga as a
television receive-only earth station 1. Philippine Long Distance Telephone
which provides the U.S. Military bases Company;
with a 24-hour television service. 2. Philippine Global Communications, Inc.;
3. Eastern Telecommunications Phils., Inc.;
_______________
 4. Globe Mackay Cable and Radio Corp.
ITT; and therefor.
5. Capitol Wireless, Inc. Consequently, under date of September 9,
1987, petitioner
4
filed with respondent NTC an
or their predecessors-in-interest. The satellite application for authority to continue operating
services thus provided by petitioner enable said and maintaining the same facilities it has been
international carriers to serve the public with continuously operating and maintaining since
indispensable communication services, such as 1967, to continue providing the international
overseas telephone, telex, facsimile, telegrams, satellite communications services it has likewise
high speed data, live television in full color, and been providing since 1967, and to charge the
television standard conversion from European to current rates applied for in rendering such
American or vice versa. services. Pending hearing, it also applied for a
Under Section 5 of Republic Act No. 5514, provisional authority so that it can continue to
petitioner was exempt from the jurisdiction of operate and maintain the above mentioned
the then Public Service Commission, now facilities, provide the services and charge
respondent NTC. However, pursuant to therefor the aforesaid rates therein applied for.
Executive Order No. 196 issued on June 17, On September 16,1987, petitioner was
1987, petitioner was placed under the granted a provisional authority to continue
jurisdiction, control and regulation of respondent operating its existing facilities, to render the
NTC, including all its facilities and services and services it was then offering, and to charge the
the fixing of rates. Implementing said Executive rates it was then charging. This authority was
Order No. 196, respondents required petitioner valid 5for six (6) months from the date of said
to apply for the requisite certificate of public order. When said provisional authority expired
convenience and necessity covering its facilities on March 17, 1988, it was extended for another
and the services it renders, as well as the six (6) months, or up to September 16,1988.
corresponding authority to charge rates 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
3 Ibid., 149. petitioner to charge modified reduced rates
through a reduction of fifteen percent (15%) on
224
the present authorized rates. Respondent
Commissioner ordered said reduction on the
224 SUPREME COURT REPORTS following ground:
ANNOTATED
“The Commission in its on-going review of present
Philippine Communications Satellite service rates takes note that after an initial
Corporation vs. Alcuaz
evaluation by the Rates Regulation Division of the procedural due process for having been issued
Common Carriers Authorization Department of the without prior notice and hearing; and (b) the
financial statements of applicant, there is merit in a rate reduction it imposes is unjust, unreasonable
REDUCTION in some of applicant’s rates, subject to and confiscatory, thus constitutive of a violation
further reductions, should the Commission finds (sic) of substantive due process.
in its further evaluation that more reduction should I. Petitioner asseverates that nowhere in the
be effected either on the basis of a provisional provisions of Executive Order No. 546, providing
authorization
6
or in the final consideration of the for the creation of respondent NTC and granting
case.” its rate-fixing powers, nor of Executive Order
No. 196, placing petitioner under the jurisdiction
PHILCOMSAT assails the above-quoted order of respondent NTC, can it be inferred that
for the following reasons: respondent NTC is guided by any standard in
the exercise of its rate-fixing and adjudicatory
_______________ powers. While petitioner in its petition-in-chief
raised the issue of undue delegation of
4 Annex C, Petition; Rollo, 48.
legislative power, it subsequently clarified its
5 Annex B, id., ibid., 41.
said submission to mean that the order
6 Rollo, 37.
mandating a reduction of certain rates is undue
225 delegation not of legislative but of quasi-judicial
power to respondent NTC, the exercise of which
allegedly requires an express conferment by the
VOL. 180, DECEMBER 18, 1989 225 legislative body.
Philippine Communications Satellite Whichever way it is presented, petitioner is in
Corporation vs. Alcuaz effect questioning the constitutionality of
Executive Orders Nos. 546 and 196 on the
1. The enabling act (Executive Order No. 546) of ground that the same do not fix a standard for
respondent NTC empowering it to fix rates for the exercise of the power therein conferred.
public service communications does not provide We hold otherwise.
the necessary standards constitutionally Fundamental is the rule that delegation of
required, hence there is an undue delegation of legislative power may be sustained only upon
legislative power, particularly the adjudicatory the ground that some standard for its exercise is
powers of NTC; provided and that the legislature in making the
2. Assuming arguendo that the rate-fixing delegation has prescribed the manner of the
power was properly and constitutionally exercise of the delegated power. Therefore, when
conferred, the same was exercised in an the administrative agency concerned,
unconstitutional manner, hence it is ultra vires, respondent NTC in this case, establishes a rate,
in that (a) the questioned order violates its act must both be non-confiscatory and must
have been established in the manner prescribed facilities. Likewise, in Section 6(d) thereof,
by the legislature; otherwise, in the absence of a which provides for the creation of the Ministry of
fixed standard, the delegation of power becomes Transportation and Communications with
unconstitutional. In case of a delegation of rate- control and supervision over respondent NTC, it
fixing power, the is specifically provided that the national
economic viability of the entire network or
226
components of the communications systems
contemplated therein should be maintained at
226 SUPREME COURT REPORTS reasonable rates. We need not go into an in-
ANNOTATED depth analysis of the pertinent provisions of the
law in order to conclude that respondent NTC, in
Philippine Communications Satellite
the exercise of its rate-fixing power, is limited by
Corporation vs. Alcuaz
the requirements of public safety, public
interest, reasonable feasibility and reasonable
only standard which the legislature is required rates, which conjointly more than satisfy the
to prescribe for the guidance of the requirements of a valid delegation of legislative
administrative authority is that the rate be power.
reasonable and just. However, it has been held II. On another tack, petitioner submits that
that even in the absence of an express the questioned order violates procedural due
requirement as 7to reasonableness, this standard process because it was issued motu proprio,
may be implied. without notice to petitioner and without the
It becomes important then to ascertain the benefit of a hearing. Petitioner laments that said
nature of the power delegated to respondent order was based merely on an “initial
NTC and the manner required by the statute for evaluation,” which is a unilateral evaluation, but
the lawful exercise thereof. had petitioner been given an opportunity to
Pursuant to Executive Orders Nos. 546 and present its side before the order in question was
196, respondent NTC is empowered, among issued, the confiscatory nature of the rate
others, to determine and prescribe rates reduction and the consequent deterioration of
pertinent to the operation of public service the public service could have been shown and
communications which necessarily include the demonstrated to respon-
power to promulgate rules and regulations in
connection therewith. And, under Section 15(g)
_______________
of Executive Order No. 546, respondent NTC
should be guided by the requirements of public 7 42 Am. Jur. 357-358.
safety, public interest and reasonable feasibility
of maintaining effective competition of private 227
entities in communications and broadcasting
 VOL. 180, DECEMBER 18, 1989 227 “Moreover, although the rule-making power and even
the power to fix rates—when such rules and/or rates
Philippine Communications Satellite
are meant to apply to all enterprises of a given kind
Corporation vs. Alcuaz
throughout the Philippines—may partake of a
legislative character, such is not the nature of the
dents. Petitioner argues that the function order complained of. Indeed, the same applies
involved in the rate fixing-power of NTC is exclusively to petitioner herein. What is more, it is
adjudicatory and hence quasi-judicial, not quasi- predicated upon the finding of fact—based upon a
legislative; thus, notice and hearing are report submitted by the General Auditing Office—
necessary and the absence thereof results in a that petitioner is making a profit of more than 12% of
violation of due process. its invested capital, which is denied by petitioner.
Respondents admit that the application of a Obviously, the latter is entitled to cross-examine the
policy like the fixing of rates as exercised by maker of said report, and to introduce evidence to
administrative bodies is quasijudicial rather disprove the contents thereof and/or explain or
than quasi-legislative: that where the function of complement the same, as well as to refute the
the administrative agency is legislative, notice conclusion drawn therefrom by the respondent. In
and hearing are not required, but where an other words, in making said finding of fact,
order applies to a named person, as in the respondent performed a function partaking of a quasi-
instant case, 8
the function involved is judicial character, the valid exercise of which
adjudicatory. Nonetheless, they insist that demands
under the facts obtaining the order in question
need not be preceded by a hearing, not because it
_______________
was issued pursuant to respondent NTC’s
legislative function but because the assailed 8 Memorandum for Private Respondents, 9-10; Rollo, 181-182.
order is merely interlocutory, it being an 9 10 SCRA 46 (1964).
incident in the ongoing proceedings on
petitioner’s application for a certificate of public 228
convenience; and that petitioner is not the only
primary source of data or information since 228 SUPREME COURT REPORTS ANNOTATED
respondent is currently engaged in a continuing
Philippine Communications Satellite Corporation vs.
review of the rates charged. Alcuaz
We find merit in petitioner’s contention.
In Vigan Electric 9Light Co., Inc. vs. Public previous notice and hearing.”
Service Commission, we made a categorical
classification as to when the ratefixing power of This rule was further explained in the
administrative bodies is quasi-judicial and when subsequent case of The Central Bank of the
10
it is legislative, thus: Philippines vs. Cloribel, et al. to wit:
“It is also clear from the authorities that where the based on an initial evaluation of petitioner’s
function of the administrative body is legislative, financial statements—without affording
notice of hearing is not required by due process of law petitioner the benefit of an explanation as to
(See Oppenheimer, Administrative Law, 2 Md. L.R. what particular aspect or aspects of the financial
185, 204, supra, where it is said: ‘If the nature of the statements warranted a corresponding rate
administrative agency is essentially legislative, the reduction. No rationalization was offered nor
requirements of notice and hearing are not necessary. were the attending contingencies, if any,
The validity of a rule of future action which affects a discussed, which
group, if vested rights of liberty or property are not
involved, is not determined according to the same _______________
rules which apply in the case of the direct application
of a policy to a specific individual’) x x x It is said in 73 10 44 SCRA 307 (1972).
C.J.S. Public Administrative Bodies and Procedure, 11 Citing Albert vs. Public Service Commission, 120 A. 2d.
sec. 130, pages 452 and 453: ‘Aside from statute, the 346,350-351.
necessity of notice and hearing in an administrative
229
proceeding depends on the character of the proceeding
and the circumstances involved. In so far as
generalization is possible in view of the great variety VOL. 180, DECEMBER 18, 1989 229
of administrative proceedings, it may be stated as a
Philippine Communications Satellite
general rule that notice and hearing are not essential
Corporation vs. Alcuaz
to the validity of administrative action where the
administrative body acts in the exercise of executive,
administrative, or legislative functions; but where a prompted respondents to impose as much as a
public administrative body acts in a judicial or quasi- fifteen percent (15%) rate reduction. It is not far-
judicial matter, and its acts are particular and fetched to assume that petitioner could be in a
immediate rather than general and prospective, the better position to rationalize its rates vis-a-vis
person whose rights or property may be affected by the viability of its business requirements. The
the action is entitled to notice and hearing.”
11
rates it charges result from an exhaustive and
detailed study it conducts of the multi-faceted
The order in question which was issued by intricacies attendant to a public service
respondent Alcuaz no doubt contains all the undertaking of such nature and magnitude. We
attributes of a quasi-judicial adjudication. are, therefore, inclined to lend greater credence
Foremost is the fact that said order pertains to petitioner’s ratiocination that an immediate
exclusively to petitioner and to no other. reduction in its rates would adversely affect its
Further, it is premised on a finding of fact, operations and the quality of its service to the
although patently superficial, that there is merit public considering the maintenance
in a reduction of some of the rates charged— requirements, the projects it still has to
undertake and the financial outlay involved. 230
Notably, petitioner was not even afforded the
opportunity to cross-examine the inspector who
230 SUPREME COURT REPORTS
issued the report on which respondent NTC
ANNOTATED
based its questioned order.
At any rate, there remains the categorical Philippine Communications Satellite
admission made by respondent NTC that the Corporation vs. Alcuaz
questioned order was issued pursuant to its
quasi-judicial functions. It, however, insists that xxx
notice and hearing are not necessary since the (c) To fix and determine individual or joint rates, x
assailed order is merely incidental to the entire x x which shall be imposed, observed and followed
proceedings and, therefore, temporary in nature. thereafter by any public service; x x x.”
This postulate is bereft of merit.
While respondents may fix a temporary rate There is no reason to assume that the aforesaid
pending final determination of the application of provision does not apply to respondent NTC,
petitioner, such rate-fixing order, temporary there being no limiting, excepting, or saving
though it may be, is not exempt from the provisions to the contrary in Executive Orders
statutory procedural requirements of notice and Nos. 546 and 196.
hearing, as well as the requirement of It is thus clear that with regard to rate-fixing,
reasonableness. Assuming that such power is respondent has no authority to make such order
vested in NTC, it may not exercise the same in without first giving petitioner a hearing,
an arbitrary and confiscatory manner. whether the order be temporary or permanent,
Categorizing such an order as temporary in and it is immaterial whether the same is made
nature does not perforce entail the applicability upon a complaint, a summary investigation, or
of a different rule of statutory procedure than upon the commission’s own motion as in the
would otherwise be applied to any other order on present case. That such a hearing is required is
the same matter unless otherwise provided by evident in respondents’ order of September 16,
the applicable law. In the case at bar, the 1987 in NTC Case No. 87-94 which granted
applicable statutory provision is Section 16(c) of PHILCOMSAT a provisional authority “to
the Public Service Act which provides: continue operating its existing facilities, to
render the services it presently offers, and to
“Section 16. Proceedings of the Commission, upon charge the rates as reduced by them” under the
notice and hearing.—The Commission shall have condition that “(s)ubject to hearing and the final
power, upon proper notice and hearing in accordance consideration of the merit of this application, the
with the rules and provisions of this Act, subject to Commission12 may modify, revise or amend the
the limitations and exceptions mentioned and saving rates x x x.”
provisions to the contrary:
 While it may be true that for purposes of rate- the order requiring a reduced rate is
fixing respondents may have other sources of confiscatory, and will unduly deprive petitioner
information or data, still, since a hearing is of a reasonable return upon its property, a
essential, respondent NTC should act solely on declaration of its nullity becomes inductible,
the basis of the evidence before it and not on which brings us to the issue on substantive due
knowledge or information otherwise acquired by process.
it but which is not offered in evidence or, even if III. Petitioner contends that the rate
so adduced, petitioner was given no opportunity reduction is confiscatory in that its
to controvert. implementation would virtually result in a
Again, the order requires the new reduced cessation of its operations and eventual closure
rates to be made effective on a specified date. It of business. On the other hand, respondents
becomes a final legislative act as to the period assert that since petitioner is operating its
during which it has to remain in force
13
pending communications satellite facilities through a
the final determination of the case. An order of legislative franchise, as such grantee it has no
respondent NTC prescribing reduced rates, even vested right therein. What it has is merely a
for a temporary period, could be unjust, privilege or license which may be revoked at will
unreasonable or even confiscatory, especially if by the State at any time without necessarily
the rates are unreasonably low, since the utility violating any vested property right of herein
permanently loses its just petitioner. While petitioner concedes this thesis
of respondent, it counters that the withdrawal of
_______________ such privilege should nevertheless be neither
whimsical nor arbitrary, but it must be fair and
12 Rollo, 44. reasonable.
13 William A. Predergast, et. al. vs. New York Tel. Co., 67 There is no question that petitioner is a mere
L. Ed. 853, 858. grantee of a legislative franchise which is subject
to amendment, alteration, or repeal by Congress
231 14
when the common good so requires.
Apparently, therefore, such grant cannot be
VOL. 180, DECEMBER 18, 1989 231 unilaterally revoked absent a showing that the
Philippine Communications Satellite
termination of the operation of said utility is
Corporation vs. Alcuaz
required by the common good.
The rule is that the power of the State to
regulate the conduct and business of public
revenue during the prescribed period. In fact, utilities is limited by the consideration that it is
such order is in effect final insofar as the not the owner of the property of the utility, or
revenue during the period covered by the order clothed with the general power of management
is concerned. Upon a showing, therefore, that incident to ownership, since the private right of
ownership to such property remains and is not to What is a just and reasonable rate is not a
be destroyed by the regulatory power. The power question of formula but of sound 17 business
to regulate is not the power to destroy useful and judgment based upon the evidence; it is a
harmless enterprises, but is the power to question of fact calling for the exercise of
protect, foster, promote, preserve, and control discretion, good sense, and a18 fair, enlightened
with due regard for the interest, first and and independent judgment. In determining
foremost, of the public, then of the utility and of whether a rate is confiscatory, it is essential also
its patrons. Any regulation, therefore, which to consider the given situation, requirements
operates as an effective confiscation of private and opportunities of the utility. A method often
property or constitutes an arbitrary or employed in determining reasonableness is the
unreasonable infringement of property rights is fair return upon the value of the property to the
void, because it is repugnant to the public utility. Competition is also a very
important factor in determining the
_______________ reasonableness of rates since a carrier is allowed
to make such 19
rates as are necessary to meet
14 Sec. 11, Art. XII, 1987 Constitution. competition.
A cursory perusal of the assailed order
232
reveals that the rate reduction is solely and
primarily based on the initial evaluation made
232 SUPREME COURT REPORTS on the financial statements of petitioner,
ANNOTATED contrary to respondent NTC’s allegation that it
Philippine Communications Satellite has several other sources of information without,
Corporation vs. Alcuaz however, divulging such sources. Furthermore,
it did not as much as make an attempt to
elaborate on how it arrived at the prescribed
constitutional guaranties of due process and
15 rates. It just perfunctorily declared that based
equal protection of the laws.
on the financial statements, there is merit for a
Hence, the inherent power and authority of
rate reduction without any elucidation on what
the State, or its authorized agent, to regulate the
implications and conclusions were necessarily
rates charged by public utilities should be
inferred by it from said statements. Nor did it
subject always to the requirement that the rates
deign to explain how the data reflected in the
so fixed shall be reasonable and just. A
financial
commission has no power to fix rates which are
unreasonable or to regulate them arbitrarily.
_______________
This basic requirement of reasonableness
comprehends such rates which must not be so 15 73 C.J.S 1005.
low as to be16
confiscatory, or too high as to be 16 Op. cit., 1010.
oppressive.
 17 State Public Utilities Commission ex. rel. City of technology could result in a deterioration or total
Springfield vs. Springfield Gas & Electric Co., 125 N.E. 891. failure of the service of satellite communications.
18 73 C.J.S. 1010. At present, petitioner is engaged in several
19 Manila Railroad Co. vs. A.L.Ammen Transportation Co. projects aimed at refurbishing, rehabilitating,
Inc., 48 Phil. 900 (1926). and renewing its machinery and equipment in
order to keep up with the continuing changes of
233
the times and to maintain its facilities at a
competitive level with the technological
VOL. 180, DECEMBER 18, 1989 233 advances abroad. These projected undertakings
were formulated on the premise that rates are
Philippine Communications Satellite
maintained at their present or at reasonable
Corporation vs. Alcuaz
levels. Hence, an undue reduction thereof may
practically lead to a cessation of its business.
statements influenced its decision to impose a While we concede the primacy of the public
rate reduction. interest in an adequate and efficient service, the
On the other hand, petitioner may likely same is not necessarily to be equated with
suffer a severe drawback, with the consequent reduced rates. Reasonableness in the rates
detriment to the public service, should the order assumes that the same is fair to both the public
of respondent NTC turn out to be unreasonable utility and the consumer.
and improvident. The business in which Consequently, we hold that the challenged
petitioner is engaged is unique in that its order, particularly on the issue of rates provided
machinery and equipment have always to be therein, being violative of the due process clause
taken in relation to the equipment on the other is void and should be nullified. Respondents
end of the transmission arrangement. Any lack, should now proceed, as they should heretofore
aging, acquisition, rehabilitation, or have done, with the hearing and determination
refurbishment of machinery and equipment of petitioner’s pending application for a
necessarily entails a major adjustment or certificate of public convenience and necessity
innovation on the business of petitioner. As and in which proceeding the subject of rates
pointed out by petitioner, any change in the involved in the present controversy, as well as
sending end abroad has to be matched with the other matters involved in said application, may
corresponding change in the receiving end in the be duly adjudicated with reasonable dispatch
Philippines. Conversely, any change in the and with due observance of our pronouncements
receiving end abroad has to be matched with the herein.
corresponding change in the sending end in the
Philippines. An inability on the part of petitioner 234
to meet the variegations demanded by
234 SUPREME COURT REPORTS
 ANNOTATED on the basis of competence and qualifications but
Philippine Communications Satellite out of political or personal considerations, it is
Corporation vs. Alcuaz not only the sense of personal responsibility to
the electorate affected by legislation which is
missing. The expertise and experience needed
WHEREFORE, the writ prayed for is GRANTED for the issuance of sound rules and regulations
and the order of respondents, dated September would also be sorely lacking.
2, 1988, in NTC Case No. 87-94 is hereby SET Congress never passes truly important
ASIDE. The temporary restraining order issued legislation without holding public hearings. Yet,
under our resolution of September 13, 1988, as administrative officials who are not directly
specifically directed against the aforesaid order attuned to the public pulse see no need for
of respondents on the matter of existing rates on hearings. They issue rules and circulars with far
petitioner’s present authorized services, is reaching effects on our economy and our nation’s
hereby made permanent. future on the assumption that the head of an
SO ORDERED. agency knows best what is good for the people. I
believe that in the exercise of quasi-legislative
          Fernan, (C.J.), Narvasa, Melencio-
powers, administrative agencies, much, much
Herrera, Cruz, Paras, Feliciano, Gancayco,
more than Congress, should hold hearings and
Bidin, Sarmiento, Cortés, Griño-Aquino and
should be given guidelines as to when notices
Medialdea, JJ., concur.
and
          Gutierrez, Jr.,J., Please see concurring
opinion. 235
     Padilla, J., No part in the deliberations.

GUTIERREZ, JR., J., Concurring Opinion: VOL. 180, DECEMBER 18, 1989 235
Fecundo vs. Berjamen
I concur in the ponencia of Justice Regalado and
join him in the erudite and thorough discussion
of the respondent’s authority. However, I have hearings are essential even in quasi-legislation.
reservations about our continuing to abide by Writ granted. Order set aside.
the dictum that in the exercise of quasi-
Note.—The three day notice required by the
legislative power, notice and hearing are not
rules is intended not for the benefit of the
required. I believe that this doctrine is ripe for
movant but to avoid surprise upon the adverse
re-examination.
party and to give the latter time to study and
Senators and Congressmen are directly
meet the arguments of the motion (E & G
elected by the people. Administrative officials
Mercantile, Inc. vs. IAC [now Court of Appeals],
are not. If the members of an administrative
142 SCRA 385).
body are, as is so often the case, appointed not
 ——o0o——

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