RADIO COMMUNICATIONS OF THE PHILIPPINES, PHILIPPINE TELEGRAPH & TELEPHONE CORPORATION AND CLAVECILLA RADIO SYSTEM, PETITIONERS, VS. NATIONAL TELECOMMUNICATIONS COMMISSION AND PH…

Radio Communications of the Philippines versus National Telecommunications Commission

The Case

This is a petition for certiorari and prohibition, with a prayer for a preliminary injunction and a restraining order, brought by Radio Communications of the Philippines, the Philippine Telegraph and Telephone Corporation, and Clavecilla Radio System against the National Telecommunications Commission and the Philippine Long Distance Telephone Company. The petitioners ask the Supreme Court to annul a provisional order of the Commission approving proposed rates for digital transmission service facilities, and to stop the Commission from taking cognizance of the underlying application. The case matters because it draws the boundary between a rate case, which the Commission may approve provisionally and without prior hearing, and a franchise case, which it may not; and because it tells the Bar candidate exactly how much notice and hearing the law requires before provisional rates may take effect.

Procedural History

The private respondent filed its application for approval of rates for digital transmission service facilities with the National Telecommunications Commission. The Commission issued an order provisionally approving the proposed rates and currency adjustment provision, and directed that the case be set for hearing within the thirty-day period allowed by law. A notice of hearing was later issued, but the petitioners, except the Philippine Telegraph and Telephone Corporation, were not listed among the affected parties. At the hearing, the petitioners appeared, moved for time to oppose the application, and then brought this original action in the Supreme Court. The Second Division of the Court required the respondents to comment, issued a temporary restraining order, and transferred the case to the Court En Banc, which accepted it. The Court later treated the comment as the answer, gave the petition due course, and required the parties to file their memoranda. The petition was then resolved on the merits.

Facts

On the fourth of January, 1984, the Philippine Long Distance Telephone Company filed with the National Telecommunications Commission an application for approval of rates for digital transmission service facilities. On the twenty-fifth of January, 1984, the Commission issued an order provisionally approving the proposed rates and a currency adjustment provision, finding prima facie that the rates were just and reasonable and that the more modern facilities should be made available to interested users. The order fixed a currency adjustment of one percent for every ten-centavo increase or decrease of the peso to the dollar, using as starting basis fourteen pesos to one United States dollar. It expressly reserved the power to revoke, revise, or amend the provisional authority, required the applicant to refund or credit any excess, and directed that the case be set for hearing within the thirty-day period allowed by law.

On the second of February, 1984, the Commission issued a notice of hearing setting the application for hearing on the twenty-second of February, 1984. The petitioners, except the Philippine Telegraph and Telephone Corporation, were not included in the list of affected parties. At the hearing, the Philippine Telegraph and Telephone Corporation appeared, and the other petitioners learned of the matter through it and likewise appeared, moving for time within which to file an opposition or reply. The petitioners claimed that neither the Commission nor the private respondent had informed them of the existence of the provisional authority.

The petitioners then came to the Supreme Court. They argued that the application was not truly a rate application but an application for authority to engage in services outside the private respondent's franchises, and that the Commission had gravely abused its discretion in granting provisional authority without prior notice and hearing. The private respondent answered that its franchise authorized it to operate not only telephone systems but also transmission service facilities, and that the petitioners themselves, except Clavecilla, had been actual users of its lines or channels for data transmission.

Issues

• Whether or not the National Telecommunications Commission gravely abused its discretion amounting to excess or lack of jurisdiction in issuing a provisional authority in favor of the private respondent without prior notice and hearing.
• Whether or not the Commission gravely abused its discretion in assuming jurisdiction over the application, on the theory that it sought authority for new services not covered by the private respondent's franchise and certificate of public convenience and necessity.

Applicable Provisions

Section 16(c) of the Public Service Act, Commonwealth Act Number 146, provides:

Sec. 16(c). To fix and determine individual and joint rates, tolls, charges, classifications, or schedules thereof, as well as commutation, mileage, kilometrage, and other special rates which shall be imposed, observed and followed thereafter by any public service; Provided, That the Commission may, in its discretion, approve rates proposed by public services provisionally and without necessity of any hearing; but it shall call a hearing thereon within thirty days, thereafter, upon publication and notice to the concerns operating in the territory affected: Provided, further That in case the public service equipment of an operator is used principally or secondarily for the promotion of a private business shall be considered in relation with the public service of such operator for the purpose of fixing the rates.

This is the very source of the power the petitioners say was abused, and it is the provision on which the entire case turns.

Ruling

On the first issue, the Court held that there was no grave abuse of discretion. The Commission found, and the Court accepted, that the application was in truth an application for approval of rates for digital transmission service facilities, which the Commission may approve provisionally and without the necessity of any notice and hearing under Section 16(c). The Court stressed that the Public Service Act makes no distinction between initial and revised rates, and that provisional rates are by their nature temporary and subject to adjustment once the definitive rates are approved after final hearing. On the required notice, the Court held that personal notice to all affected parties is impossible because not all of them are known to the Commission; that the notice of hearing was published; that one petitioner received it and informed the others; and that the petitioners in fact opposed the application in time, so that any lack of notice was cured. The Court added that the provisional character of the authority, together with the full hearing to follow on the primary application, are the safeguards against its abuse.

On the second issue, the Court held that the Commission did not grant the private respondent any authority to engage in a new communication service. It merely approved provisionally a revision of the then authorized schedule of rates for the lease, to end-users, of digital full period leased lines or channels for data transmission which the company had acquired, installed, and maintained in serviceable condition. That relief was well within the Commission's power to grant. The Court also noted that a public utility is entitled to a just compensation and a fair return upon the value of its property while it is being used in public service, and that the maximum rate fixed in a franchise is always subject to revision and regulation by the Commission.

Doctrine

First, under Section 16(c) of the Public Service Act, the National Telecommunications Commission may, in its discretion, approve rates proposed by a public service provisionally and without necessity of any hearing, provided it calls a hearing within thirty days thereafter, upon publication and notice to the concerns operating in the territory affected. Second, the law makes no distinction between initial and revised rates; provisional rates are temporary and may be adjusted to conform to the definitive rates approved after final hearing. Third, personal notice to every affected party is not indispensable where the notice is published, the parties in fact appear and oppose in time, and the lack of notice is thereby cured; substantial compliance suffices. Fourth, a provisional approval of rates is not an authority to engage in a new service outside the franchise, and the maximum rate fixed in a franchise remains subject to revision by the Commission. Finally, findings of administrative agencies with acquired expertise are accorded respect, even finality, when supported by substantial evidence, and courts do not interfere with administrative action prior to its completion or finality.

Disposition

The petition was dismissed for lack of merit, the assailed order of the National Telecommunications Commission was affirmed, and the temporary restraining order issued on the twenty-first of March, 1984 was set aside.

Remember This

Memorize the rule that the Commission may approve proposed rates provisionally and without hearing, so long as it calls a hearing within thirty days thereafter upon publication and notice. Examiners use this case to test the rate case exception to notice and hearing, and to distinguish a provisional rate approval from a grant of new franchise authority.