Case Title Philippines Communications Satellite Corp. v.

Alcuaz
G.R. no. G.R. No. 84818
Main Topic Section 1 - Due Process of Law
Other Related Topic
Date: Dec. 18, 1989

DOCTRINES

 Constitutional Law; Legislative Power, Delegation of; Absence of a fixed

standard delegation of power becomes unconstitutional; Requisites of valid
delegation of rate fixing power.—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. 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, 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
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.

 Administrative Law; Powers of NTC pursuant to EO’s 546 and 196.—

Pursuant to Executive Orders Nos. 546 and 196, respondent NTC is empowered, among
others, to determine and prescribe rates pertinent to the operation of public service
communications which necessarily include the 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 safety, public interest
and reasonable feasibility of maintaining effective competition of private entities in
communications and broadcasting facilities. We need not go into an in-depth analysis of
the pertinent provisions of the law in order to conclude that respondent NTC, in the
exercise of its rate fixing power, is limited by the requirements of public safety, public
interest, reasonable feasibility and reasonable rates, which conjointly more than satisfy
the requirements of a valid delegation of legislative power.

 Classification of rate fixing power of administrative bodies as to when

quasi-judicial or legislative.—In Vigan Electric Light Co., Inc. vs. Public Service
Commission, we made a categorical classification as to when the rate fixing power of
administrative bodies is quasi-judicial and when it is legislative, thus: “Moreover,
although the rulemaking power and even the power to fix rates—when such rules and/or
rates are meant to apply to all enterprises of a given kind throughout the Philippines—
may partake of a legislative character, such is not the nature of the order complained of.
Indeed, the same applies exclusively to petitioner herein. What is more, it is predicated
upon the finding of fact—based upon a report submitted by the General Auditing
 Office—that petitioner is making a profit of more than 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 explain or
complement the same, as well as to refute the conclusion drawn therefrom by the
respondent. In other words, in making said finding of fact, respondent performed a
function partaking of a quasi-judicial character, the valid exercise of which demands
previous notice and hearing.”

 Due Process; Temporary rate fixing order is not exempt from the procedural
requirements of notice and hearing.— 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. Categorizing such an order as temporary in nature does not perforce entail the
applicability of a different rule of statutory procedure than would otherwise be applied to
any other order on the same matter unless otherwise provided by the applicable law.

 Constitutional Law; Administrative Law; Administrative agencies, in the

exercise of quasi-legislative powers should be given guidelines as to when
notices and hearings are essential, as much more than Congress.—Congress
never passes truly important legislation without holding public hearings. Yet,
administrative officials who are not directly attuned to the public pulse see no need for
hearings. They issue rules and circulars with far reaching effects on our economy and our
nation’s future on the assumption that the head of an agency knows best what is good for
the people. I believe that in the exercise of quasi-legislative powers, administrative
agencies, much, much more than Congress, should hold hearings and should be given
guidelines as to when notices and hearings are essential even in quasi-legislation.

FACTS:

BRIEF:
 SINO nag-aaway?
o Petitioner: PHILCOMSAT versus Respondent: Alcuaz(Commission of NPC)
 BAKIT sila nagaaway?
o Si ALCUAZ kasi ang kupal irerenew nya daw yung license to operate ni
PHILCOMSAT at dapat daw magbabasa sila ng 15%.
o Si PHILCOMSAT naman pumalag. Sabi niya wala naman kayo karapatan
mag impose ng rate. Kung meroon man (smart ass, haha), you are
committing a FOUL kasi hindi ninyo kami binigyan ng kaukulang paghahanda
at oportunidad upang ipagtanggol ang aming sarili at an aming patakaran.
FOUL: SEC DUE PROCESS VIOLATION DAW!!!
  ANU nangyari?
o HELD: may merit daw yung contention ng Petitioner. NPC violated the
procedural and substantive due process. Kasi daw the order being quasi-
judicial not quasi-legislative dapat my procedure to defend themselves and
because the order was confiscatory (malulugi sila eh) and it was unjust hence
it is violative of the substantive due process.
o CONCURRING: Dapat daw pati quasi-legislative my procedural due process
din. Yung congress nga may public hearing pag magpass ng important
legislation. Bakit yung mga inaappoint na misan hindi naman qualified and
inappoint lang because of political or personal consideration walang hearing
pag quasi-legislative orders.

LEGAL DICTIONARY:
 A quasi-legislative capacity is that in which a public administrative agency or body acts
when it makes rules and regulations. When an administrative agency exercises its rule-
making authority, it is said to act in a quasi-legislative manner.
 A Quasi-judicial capacity are action taken and discretion exercised by public
administrative agencies or bodies that are obliged to investigate or ascertain facts and
draw conclusions from them as the foundation for official actions.

DETAILS:
 By virtue of Republic Act No. 5514, the Philippine Communications Satellite
Corporation (PHILCOMSAT) was 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” in the Philippines.
PHILCOMSAT provides satellite services to companies like Globe Mackay (now
Globe) and PLDT.

 Under Section 5 of the same law, PHILCOMSAT was exempt from the jurisdiction,
control and regulation of the Public Service Commission later known as the National
Telecommunications Commission (NTC). However, Executive Order No. 196 was
later promulgated and the same has placed PHILCOMSAT under the jurisdiction of
the NTC. Consequently, PHILCOMSAT has to acquire permit to operate from the
NTC in order to continue operating its existing satellites. NTC gave the necessary
permit but it however directed PHILCOMSAT to reduce its current rates by 15% as a
condition to renew their license. NTC based its power to fix the rates on EO 546.
Moreover, their imposition of the rate was based on the evaluation made by their
expert.

 PHILCOMSAT now sues NTC and its commissioner (Jose Luis Alcuaz) assailed 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.

 Furthermore, PHILCOMSAT assailed that the order was issued motu proprio, without
notice to petitioner and without the benefit of a hearing. Petitioner, laments that said
order was based merely on an “initial evaluation” which is a unilateral evaluation, but
had petitioner been given an opportunity to present its side before the order in question
was issued, the confiscatory nature of the rate and reduction of the consequent
deterioration of public service could been shown and demonstrated to the respondent.

 Petitioner argues that the function involved in the rate fixing-power of NTC is
adjudicatory and hence quasi-judicial, not quasi-legislative; thus, notice and hearing are
necessary and the absence thereof results in a violation of due process. Respondent
admitted to this, but they insisted that 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 order is merely interlocutory, it being an incident in the ongoing
proceedings on petitioner’s application for renewal of license.

ISSUE:

 Whether or Not there is undue delegation of power. NO

 Whether or Not NPC denied PHILCOMSAT procedural and substantive due process of
Law. YES!
HELD:
 NO. There is no undue delegation. The power of the NTC to fix rates is limited by the
requirements of public safety, public interest, reasonable feasibility and reasonable
rates, which conjointly more than satisfy the requirements of a valid delegation of
legislative power. 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.

 Therefore, when the administrative agency concerned, 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, 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 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.

 YES. PHILCOMSAT was denied of procedural and substantive due process of Law.
Primarily because the order was quasi-judicial and not quasi-legislative.

 In Central Bank of the Philippines vs. Cloribel, et al. it was stated “It is also clear from
the authorities that where the function of the administrative body is legislative, notice of
hearing is not required by due process of law.

 In Vigan Electriv Light Co., Inc. vs. Public Service Commission, the court made a
categorical classification as to when the rate fixing power of administrative bodies is
quasi-judicial and when it is legislative. According the ruling in the case when such rules
and/or rates are meant to apply to all enterprises of a given kind throughout the
Philippines it may partake a legislative character. In the case of PHILCOMSAT, NPC
rate fixing was based on a report regarding the operation of the petitioner. In making said
finding, respondent NPC performed a function partaking of a quasi-judicial character, for
the rate fixing applies exclusively to petitioner therein, the valid exercise of which
demands previous notice and hearing.

 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.

 The power to regulate is not the power to destroy useful and harmless enterprises, but is
the power to protect, foster, promote, preserve, and control with due regard for the
interest, first and foremost, of the public, then of the utility and of its patron. Any
regulation, private property or constitute an arbitrary or unreasonable infringement
of property rights is void, because it is repugnant to the constitutional guaranties of
due process and equal protection of the laws.

GUTIERREZ, JR., J., Concurring Opinion

 I concur… However, I have reservation about our continuing to abide by the dictum that in the
exercise of quasi-legislative power, notice and hearing are not required. I believe this doctrine is
ripe for re-examination… I believe that in the exercise of quasi-legislative powers, administrative
agencies, much, much more than Congress, should hold hearings and should be given guidelines
to when notices and hearings are essential even in quasi-legislation.

 POINT NYA: Ang mambabatas binoboto. Ang Administrative officials are appointed. So often
due to political and personal consideration and not on competence. Tapos nagiisue sila ng
rugulations and circulars with FAR REACHING EFFECTS on our economy and our nation’s
future. Pero, walang hearings and guidelines.