Philcomsat v Alcuaz Regalado, J.

Petitioner: Phil. Communications Satellite Corp.

Respondent: Jose Alcuaz (NTC Commissioner), NTC
Concept: 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 546
The national economic viability of the entire network or
components
of
the
communications
systems
contemplated therein should be maintained at
reasonable rates.
Section 15(g), EO 546

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.
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: Andr