G.R. No. 91486 - Pinlac vs. Court of Appeals

Case Summary (G.R. No. 91486)

Procedural History and Motions Filed

Petitioner PCFI filed a petition on March 2, 1983, seeking annulment of the NTC’s November 22, 1982 decision approving PLDT’s revised SIP rates and the January 14, 1983 order related thereto. After extensive pleadings, comments, motions for reconsideration—including two motions by PLDT and joinders by the NTC—and multiple extensions for filing replies and comments, the Court issued a resolution on April 11, 1984 denying the first motion for reconsideration. Subsequent motions for second reconsideration by PLDT and joinders by NTC were considered before the final resolution.

Background on NTC’s Authority and Subscriber Investment Plan

On August 31, 1982, the Court set aside an NTC order for provisional approval of PLDT’s revised SIP pending hearings, emphasizing the due process requirement that affected parties be given opportunity to oppose the rates, especially concerning low- and middle-income consumers. Following hearings initiated in August 1982, where PLDT’s Vice-President Romeo Sisteban testified, various oppositors—including PCFI and local government units—filed written oppositions. Some oppositors later withdrew based on concessions by PLDT, and on November 22, 1982, NTC approved the revised SIP rates, finding them just, reasonable, and consistent with the fifty percent cost limit established under Presidential Decree No. 217.

Issue of Statutory Interpretation of NTC’s Rulemaking Powers

The pivotal legal question regarded the meaning of the phrase “pertinent rules and regulations may be promulgated” in Section 2 of P.D. No. 217 concerning whether the NTC is mandated to promulgate implementing rules before approving SIP schedules. The majority held that “may be promulgated” is permissive, not mandatory, based on the plain meaning of the words, which must be given their ordinary sense unless context dictates otherwise. Thus, the NTC’s authority to promulgate rules is discretionary and not a prerequisite to acting on PLDT’s application.

Existing Laws and Rules Adequate for NTC Jurisdiction

The Court emphasized that P.D. No. 217 did not repeal or amend the procedural powers granted under Section 16(c) of the Public Service Act (C.A. No. 146), which authorizes the NTC to approve rates provisionally without a hearing but requires that a hearing follow within thirty days. The existing administrative rules, including the 1978 Rules of Practice and Procedure promulgated by the Board of Communications (NTC’s predecessor), adequately govern the exercise of NTC’s quasi-judicial functions. These rules require notices, allow for written oppositions, cross-examinations, and provisional relief, satisfying due process without necessitating additional rulemaking.

Policy Considerations on Subscriber Investment and Telephone Service

The Court recognized the economic and social policies underlying P.D. No. 217 and its amendment by P.D. No. 1874, including encouraging broader public ownership of utilities, minimizing reliance on foreign borrowing, and ensuring financing arrangements support the expansion of telephone services at reasonable costs. The SIP aims to balance investor returns with affordable telephone access, with limits on subscriber self-financing not exceeding fifty percent of costs, and provisions for payment in installments to ease burdens on subscribers.

Reasonableness of the Revised SIP Rates

The approved revised SIP schedule, which varies by category (new installation, transfers, metropolitan vs. provincial areas, business vs. residential phones), was deemed reasonable by the Court. It considered PLDT’s consistent profitability, quarterly dividend payments to subscribers, and ongoing investments to upgrade and expand services amid rising costs and foreign exchange depreciation. The Court underscored that subscriber investments are not donations but shareholdings, guaranteeing eventual recovery of costs plus dividends.

Majority Holding and Final Resolution

The Court reversed the previous majority decision that ruled the NTC must promulgate rules before approving SIP rates. It held such mandatory interpretation as unwarranted, setting aside the petition and dismissing PCFI’s challenge to the NTC’s approval of PLDT's SIP. The remedy was that NTC’s approval was lawful even without new rule promulgation, given the adequate and existing statutory and administrative frameworks.

Separate Concurring Opinion (Justice Gutierrez, Jr.)

Justice Gutierrez concurred in the outcome and analysis regarding the NTC’s powers and sufficiency of existing rules but expressed concern over PLDT’s inefficient telephone service despite rate increases. He emphasized that consumers deserve improvements commensurate with increased fees and that the NTC has a duty not only to approve rates but also to supervise the attainment of efficient telephone services at reasonable costs.

Dissenting Opinion (Justice Abad Santos)

Justice Abad Santos dissented, maintaining that the NTC is obligated to promulgate rules and regulations before approving SIP schedules, citing the spirit and underlying purpose of P.D. No. 217. He argued that the subscriber investment scheme was a novel concept at the time and that existing Public Service Act provisions conflicted with the new decree's intent. He contended that failure to promulgate clear rules caused confusion, potentially compromising the government’s policy to ensure wide access to telephone service and financial viability of PLDT. Further, he criticized the SIP as an unreasonable burden on consumers, especially in light of PLDT’s profits and substandard service.

Dissenting Opinion (Justice Relova)

Justice Relova agreed with the 1983 decision denying reconsideration and opposed the second motion for reconsideration filed by PLDT. She underscored that at the time of filing before P.D. No. 1874’s amendment, the NTC had yet to promulgate the necessary rules, which underpinned the legal validity of the challenged approval. She emphas

Case Syllabus (G.R. No. 91486)

Facts and Procedural History

On March 2, 1983, the petitioner Philippine Consumers Foundation, Inc. (PCFI) filed a petition asking the Court to annul and set aside the National Telecommunications Commission’s (NTC) decision dated November 22, 1982, and its subsequent order dated January 14, 1983.
The petition, oppositions, comments, and memoranda were filed by all parties including the petitioner, private respondent Philippine Long Distance Telephone Company (PLDT), and the Solicitor General representing the NTC.
On November 25, 1983, the Court promulgated a decision annulling and setting aside the NTC decision and order, based on the petitions filed. This ruling was not unanimous: nine members concurred, three took no part, and one reserved vote.
Respondent PLDT filed motions for reconsideration and supplemental motions, which the NTC also adopted.
The Court admitted these motions and required comments and replies from the petitioner. Several motions for extension and motions to strike parts of petitioner’s comments were filed by PLDT.
On April 3, 1984, the Court denied the first motion for reconsideration; however, this denial was not explicitly final.
PLDT filed a second motion for reconsideration which was granted permission to be filed, together with comments and replies thereto.
The Court eventually granted the motion to reconsider and set aside the annulment ruling, dismissing the petition with no costs on August 18, 1984.

Issues

Whether the NTC is mandated or merely permitted to promulgate rules and regulations under Section 2 of Presidential Decree (P.D.) No. 217 before it may approve a Subscriber Investment Plan (SIP) of PLDT.
Whether the existing laws and rules under the Public Service Act, as amended, and the rules promulgated by the Public Service Commission and Board of Communications, suffice in regulating the SIP.
Whether the NTC's approval of PLDT’s SIP was made with due process and in accordance with law.
Whether the decision of November 25, 1983 that annulled the NTC’s order was correct and final.

Legal Context and Statutory Interpretation

Section 2 of P.D. No. 217 provides that the Department of Public Works, Transportation and Communications (through its Board of Communications or appropriate agency) “shall see to it” that policies declared in the decree are immediately implemented and “may promulgate” pertinent rules and regulations.
The Court highlighted the distinction in language between "shall" (mandatory) and "may" (permissive or discretionary), underscoring that “may be promulgated” does not compel NTC to promulgate rules before acting.
The Court emphasized the canon of statutory interpretation that words must be given their ordinary meaning unless the law exhibits contrary intent.
Section 16(c) of the Public Service Act (C.A. No. 146), allows the NTC to provisionally approve rates without a hearing but requires a hearing within 30 days thereafter, underscoring existing sufficient authority without need for new SIP-specific rules.
The 1978 rules promulgated by the Board of Communications (now NTC) govern proceedings and allow procedural flexibility; these, coupled with the Public Service Law, have sufficed in similar past cases.
P.D. No. 1874, issued July 21, 1983, amended Section 2 of P.D. No. 217 and expressly authorized the provisional approval of subscriber investments without hearing, confirming existing powers conferred on NTC.

Due Process and Proceeding Before the NTC

The petitioner and other oppositors to the revised SIP were given full due process in the hearings conducted by NTC starting August 4, 1982, including the right to file oppositions, appear through counsel, cross-examine witnesses, and file memoranda.
Some opposition groups withdrew their opposition based on concessi