G.R. No. L-27412 - Bureau of Telecommunications vs. Public Service Commission

The Philippine Long Distance Telephone Company (PLDT) initiated a complaint before the Public Service Commission (PSC) alleging that the Bureau of Telecommunications (the Bureau) was operating its telephone services—both local and long distance—without submitting its schedule of rates for PSC approval.
The complaint further asserted that the Bureau was charging rates for long distance service that were significantly lower than those authorized for the PLDT.
In its decision rendered on November 29, 1965, the PSC ordered the Bureau to submit its rates for approval and enjoined it from enforcing any rates not previously authorized, pending proper PSC review.
Following the PSC’s decision, the Bureau filed a petition for review with a request to stay the execution of the PSC order, and temporary relief was granted during the pendency of the review.

The Bureau of Telecommunications is a government entity created to discharge a specific public service function—namely, the oversight and implementation of telephone communications—rather than to operate as a profit-seeking business.
The Philippine Long Distance Telephone Company is a public utility corporation, operating under a legislative franchise, which provides telephone services as a commercial enterprise.
The Public Service Commission, under the Public Service Act and its subsequent amendments (Republic Act No. 2677), is vested with jurisdiction over public services that are typically operated for general business purposes.

PLDT contended that the Bureau’s failure to submit its schedule of rates rendered its operations unauthorized under the Commission’s regulatory framework, and that its lower rate structure was detrimental to the regulated competitive environment established by the PSC.
The Bureau, in turn, argued that its operation was not driven by a profit motive but was instead a governmental function intended to meet the telecommunication needs of the public.
The Bureau maintained that any income derived from its operations was incidental and secondary to its primary governmental function, and that its activities did not constitute a “business” as defined by law.

The term “public service” as used in the Public Service Act, as amended by Republic Act No. 2677, includes those activities carried on for general business purposes—that is, for profit or livelihood.
Prevailing jurisprudence, as illustrated in cases such as Caro vs. Rilloraza and Collector of Internal Revenue vs. Manila Lodge, distinguishes between business enterprises (aimed at earning a profit or livelihood) and governmental functions performed for the public benefit.
The debate focused on whether the Bureau’s operations, given its public mandate and funding through congressional appropriations, should be subjected to the rate-setting and regulatory authority of the PSC.

Whether the Bureau of Telecommunications qualifies as a “public service” under the Public Service Act, considering its nature and governmental mandate.
Whether the Bureau’s operation of telephone services constitutes a business enterprise engaged in activities for profit or livelihood, or merely a public service function.
Whether it is proper for the PSC to exercise jurisdiction over the Bureau’s activities given its status as a government entity performing functions incidental to its governmental responsibilities.