Philcomsat v Alcuaz – Regalado, J.Petitioner: Phil. Communications Satellite Corp.Respondent: Jose Alcuaz (NTC Commissioner), NTCConcept: Inherent Limitations: Delegation of Taxation Power

Brief Facts: Philcomsat is engaged in providing for services involving telecommunications. By order of Jose Alcuaz (Commissioner of the National Telecommunications Commission), charging rates for certain specified lines were ordered to be reduced by fifteen percent (15%). Basis for this was Executive Order No. 546 which granted the NTC the power to fix rates.

Doctrine: 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. 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.

FACTS:1. Philcomsat provides satellite services to

companies like Globe and PLDT.2. RA 5514 grants Philcomsat the authority to

construct and operate facilities to deliver telecommunications services from the communications satellite system and ground terminals in the Philippines.

3. Under Section 5 of RA 5514, Philcomsat was exempt from the jurisdiction, control and regulation of the Public Service Commission later known as the National Telecommunications Commission (NTC).

4. However, EO 196 was promulgated and placed Philcomsat under the jurisdiction of the NTC.

5. Philcomsat has to acquire permit to operate from the NTC in order to continue operating its existing satellites.

6. NTC gave the necessary permit but it directed Philcomsat to reduce its current rates by 15%.

7. NTC ordered said reduction on the ground that in its on-going review of present service rates and the financial statements of Philcomsat, the NTC took note there is merit in a reduction in some of Philcomsat's rates, subject to further reductions should the NTC find in it that more reduction should be effected.

8. NTC based its power to fix the rates on EO 546.9. Philcomsat sued NTC.

Philcomsat: EO 546 (Empowering NTC to fix rates for public service communications) does not provide the necessary standards which were constitutionally required.

o Hence, there is an undue delegation of legislative power.

o Neither EO 546 nor EO 196 shows that NTC is guided by any standard in the exercise of its rate-fixing and adjudicatory powers.

Hence the petition to annul the said NTC Order.

ISSUES:1. WON there was a valid delegation of legislative power in granting NTC authority to fix rates. (YES)

RATIO:1. YES. Pursuant to Executive Orders 546 and 196, NTC is empowered to determine and prescribe rates pertinent to operation of public service communications.

NTC in the exercise of rate-fixing power is limited by the requirements of public safety, public interest, reasonable finality and reasonable rates, which conjointly more than satisfy the requirements of a valid delegation of legislative power.

The 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.

o When the administrative agency establishes a rate, its act must both be non-confiscatory and must have been established in the manner prescribed by the legislature

o 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.

o Even in the absence of an express requirement, this standard of reasonableness may be implied.

o In the case at bar, the fixed rate is found to be of merit and reasonable.

In Vigan Electric Light Co., Inc. vs. Public Service Commission, SC said that rule-making 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.

DISPOSITIVE: Petition GRANTED. NTC Order is SET ASIDE (since it was violative of the Due Process Clause – A Different Issue)

NOTES:Executive Order No. 546 was issued by Pres. Marcos during Martial Law (so it was of legislative nature)

Executive Order No. 546 (July 23, 1979)“Creating a Ministry of Public Works and a Ministry of Transportation and Communications”

Sec. 6(d), EO 546The national economic viability of the entire network or components of the communications systems contemplated therein should be maintained at reasonable rates.

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Section 15(g), EO 546NTC 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.

Executive Order No. 196 (June 17, 1987)“Vesting the jurisdiction, control and regulation over the Philippine Communications Satellite Corporation with the National Telecommunications Commission”

Digested by: André

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