Globe Telecom, Inc. and Innove Communications, Inc. vs. National Telecommunications Commission

Section 17 of Republic Act No. 7925 grants the National Telecommunications Commission a two-fold power to establish rates and tariffs and to exercise residual rate-regulation, but the exercise of that power must be supported by substantial evidence and comply with administrative due process; the NTC cannot reject telecommunications companies’ proposed rates without considering their evidence or without giving them an opportunity to seek reconsideration. The NTC may impose a default billing scheme and prohibit prefix-based implementation as part of its regulatory authority, but the specific orders imposing and enforcing them must satisfy these requirements.

Globe Telecom, Inc., Innove Communications, Inc., Smart Communications, Inc., Digitel Mobile Philippines, Inc., and Connectivity Unlimited Resource Enterprises, Inc. are cellular mobile telephone service providers and grantees of legislative franchises. The National Telecommunications Commission is the administrative body charged with regulating public telecommunications services under Republic Act No. 7925, the Public Telecommunications Policy Act of 1995, which shifted the industry toward deregulation and free competition while retaining the Commission’s rate-regulatory powers. The dispute concerns the extent of that regulatory power over CMTS rates and billing methods.

Globe Telecom, Inc. and Innove Communications, Inc., Smart Communications, Inc., Digitel Mobile Philippines, Inc., and Connectivity Unlimited Resource Enterprises, Inc. are CMTS providers and grantees of legislative franchises. On July 23, 2009, the National Telecommunications Commission issued Memorandum Circular No. 05-07-2009, the Guidelines on Unit of Billing of Mobile Voice Service, which prescribed a maximum unit of billing of six seconds per pulse for CMTS, whether postpaid or prepaid. The circular required CMTS providers to submit proposed rates based on the prescribed unit within thirty days and to adjust their networks within one hundred twenty days; it allowed subscribers to opt for one-minute-per-pulse or unlimited offerings if they actively and knowingly enrolled, and excluded international call service.

In light of the directive, Globe and Innove filed a Joint Application for authority to charge new rates; Smart filed an Application for Authority to Adopt a Revised Schedule of Rates for CMTS with prayer for provisional authority; Connectivity filed a similar application adopting Smart’s proposed rates; and Digitel filed a Motion for Authority to Amend Rates for CMTS Voice Service.

On December 5, 2009, the Commission issued Orders resolving the applications. It granted provisional authority to charge new rates, applying the six-second pulse billing regime only to CMTS-to-CMTS voice calls, making pulse billing the default mode, excluding international call service, and defining “prevailing rates” as those imposed prior to December 6, 2009 under the memorandum circular. The Orders provided that the flag-down rate for the first two pulses shall not exceed the prevailing rate, that the pulse rate for succeeding minutes shall not exceed the prevailing rate per minute divided by ten, and that interconnection charges shall conform. The pulse regime for intra-network calls was to take effect at 12:01 a.m. on December 6, 2009, and for inter-network calls at 12:01 a.m. on December 16, 2009. Subscribers could opt for one-minute-per-pulse or unlimited offerings if they actively and knowingly enrolled.

Globe and Innove published an advisory in The Philippine Star on December 6, 2009, stating that per-second charging for Globe-Globe/TM and TM-TM/Globe was available by dialing 232 plus the number for Globe subscribers and 803 plus the number for TM subscribers, with rates of P0.10 per second Monday to Saturday and P0.05 per second on Sunday, and minimum maintaining balances. Smart likewise published an advisory that it had implemented the per-pulse billing system effective December 6, 2009, using a six-second pulse charging system for domestic on-net calls, with a flag-down rate of P3 for the first two pulses and specified rates for succeeding pulses, and requiring prefixes for per-pulse calls. Subscribers could opt to be billed per minute or subscribe to unlimited or bucket-price offerings.

On December 9, 2009, the Commission issued individual Show Cause Orders directing the companies to explain why their Certificates of Public Convenience and Necessity should not be suspended, revoked, or canceled, based on monitoring that they had refused to implement the six-second pulse billing and continued the old billing system. On the same day, it issued individual Cease and Desist Orders directing them to cease using the previous billing system, to refund the difference through rebate or credit, and to preserve and submit call data records from December 6, 2009. Finding the orders punitive, the companies filed petitions before the Court of Appeals. The Court of Appeals found that the NTC had not considered the evidence submitted by the companies and had not based its orders on substantial evidence, and that the companies were not given time to seek reconsideration before the December 9 orders.

• Telecommunications Companies — Regulatory Authority: Globe and Innove, Smart, and Connectivity assailed the Court of Appeals’ finding that the Commission has authority to regulate and impose its own rates on CMTS providers even in the absence of ruinous competition, monopoly, cartel, or combination in restraint of free competition; they asserted that Section 17 of Republic Act No. 7925 directs the Commission to exempt telecommunications companies from rate and tariff regulation if there is sufficient competition.
• Telecommunications Companies — Default Billing as Rate-Fixing: They further questioned the declaration that the default six-second-per-pulse billing imposed by the Commission was proper, claiming this was tantamount to rate fixing, which may only be exercised under the special conditions enumerated in the statute.
• Telecommunications Companies — Prefix Prohibition: They assailed the prohibition against prefix dialing, arguing that the use of prefix numbers is a technical solution to create a distinct routing plan for the specific plan offering.
• Telecommunications Companies — Due Process: Globe and Innove claimed the subject orders should be declared void for violating constitutional and statutory due process; Digitel asserted it was not given the opportunity to controvert the information used by the Commission as basis for its Order; Smart and Connectivity claimed the Commission exceeded its authority and violated due process.
• National Telecommunications Commission — Due Process: The Commission asserted that the Court of Appeals erred in reversing and setting aside its December 5, 2009 Orders and December 9, 2009 Show Cause and Cease and Desist Orders for lack of due process, claiming that the companies were all afforded the opportunity to present evidence supporting their rate proposal and were given ample explanation why their proposals were denied.

• National Telecommunications Commission — Regulatory Authority: The Commission asserted that it has the power to regulate the rates of CMTS providers despite the absence of the conditions enumerated in Section 17 of Republic Act No. 7925 and that it is not mandated to exempt telecommunications companies from the rates and tariff regulations it imposes.
• National Telecommunications Commission — Franchise Approval: It argued that the legislative franchises of the telecommunications companies categorically state that the charges and rates offered to the public are subject to approval of the Commission.
• National Telecommunications Commission — Public Interest: It contended that its implementation of the six-second-per-pulse billing was a valid exercise of its authority to protect public interest, explaining that subscribers have a choice to be charged on a per six-second-per-pulse basis instead of a per minute basis.
• National Telecommunications Commission — Prefix Circumvention: It claimed that the use of prefixes by the telecommunications companies is a circumvention of the directive to implement the six-second-per-pulse billing scheme, because requiring subscribers to dial the prefix turns the mandated billing scheme into an option instead of the default billing method.
• Telecommunications Companies — Regulatory Authority: In response to the Commission’s petition, the telecommunications companies maintained that the Commission’s authority to regulate is discouraged by the same law it cites and that the assailed Orders are in excess of its powers since it was restricted to implementing rules and regulations only when there is ruinous competition, monopoly, cartel, or a combination thereof in restraint of free competition.

• NTC’s Authority to Impose Rates: Whether the National Telecommunications Commission has the authority to impose rates on the services offered by Cellular Mobile Telephone Service providers to the public.
• Validity of Six-Second-Per-Pulse Billing and Prefix Prohibition: Whether the imposition of the six-second-per-pulse billing scheme and the prohibition on using prefixes for the implementation of the scheme is valid.
• Validity of the December 5 and December 9, 2009 Orders: Whether the December 5, 2009 Order and December 9, 2009 Show Cause Orders and Cease and Desist Orders issued by the National Telecommunications Commission are valid.

• NTC’s Authority to Impose Rates: Yes. Section 17 of Republic Act No. 7925 grants the Commission a two-fold power: ordinary rate-setting and residual rate-regulation; its authority is not limited to cases of ruinous competition, monopoly, cartel, or combination in restraint of free competition, but rates must be fair, reasonable, economically viable, and provide a fair return.
• Validity of Six-Second-Per-Pulse Billing and Prefix Prohibition: Yes as to the Commission’s regulatory authority; the assailed implementation, however, is invalid. The Commission may impose a default six-second-per-pulse billing scheme and prohibit prefix-based implementation, but the December 5, 2009 Orders were not based on substantial evidence and did not consider the companies’ proposals.
• Validity of the December 5 and December 9, 2009 Orders: No. The December 5, 2009 Orders violated administrative due process and lacked substantial evidence, and the December 9, 2009 Show Cause and Cease and Desist Orders were issued without prior notice or hearing and effectively deprived the companies of the right to seek reconsideration.

• NTC’s Authority to Impose Rates: Section 17 of Republic Act No. 7925 gives the Commission a two-fold power. The first paragraph covers the Commission’s daily regulatory function when the free market is stable and unrestricted competition serves the public interest; the Commission may or may not establish a floor or ceiling depending on market and economic circumstances. The second paragraph grants residual powers when ruinous competition, monopoly, cartel, or combination in restraint of free competition creates distortions in the free market. In both instances, the authority is not unbridled. Three considerations must be established: the rates must be fair and reasonable; they must provide for the economic viability of telecommunications entities; and they must provide a fair return on investments considering the prevailing cost of capital. Telecommunications companies are in a better position to know the conditions for computing proper price levels and have access to the documents and knowledge needed to reach the required rate of profit. The Commission may not arbitrarily impose rates and tariffs without consulting and considering the different economic positions of each company, while also protecting customers from excessive prices. The argument that the Commission can regulate only when there is ruinous competition cannot lie because public utilities must be subject to government regulation to ensure they properly serve the people and to protect the public from monopoly. Deregulation did not give telecommunications companies full autonomy on rates and charges; they may propose rates, but the Commission ascertains whether such rates are fair and reasonable. If the parameters are met, there is no reason to step in; if the proposal is lacking, the Commission has the power to impose a more appropriate charge. Ultimately, while the Commission has authority to impose a new default baseline rate for voice calls, this cannot be done unilaterally, cannot deny an application without proper justification, and requires an extensive study of the current market considering both providers and consumers. No such analysis was established in this case.
• Validity of Six-Second-Per-Pulse Billing and Prefix Prohibition: In imposing the six-second-per-pulse regime, the Commission intended to bill mobile phone calls more accurately based on shorter pulses reflective of the real duration of the call, not to reduce the profit of telecommunications companies or interfere with the free market. Its objective was to refrain companies from charging mobile users excessively and instead charge them only for actual usage. However, notwithstanding the good intentions of the Commission, there was no showing that its new billing method was based on numbers that would strike a balance for both the telecommunications companies and its customers. In exercising its authority and imposing the default six-second-per-pulse regime, the Commission did not consider the evidence presented by the telecommunications companies in their respective proposals, and its explanation for rejecting the proposed rates was insufficient. The Court of Appeals observed that the NTC failed to substantially show why the CMTS rates it imposed were preferable to the rates proposed by the companies, did not cite substantial evidence showing how its computations translated to a finding that the applicants failed to support their submitted cost figures, and gave no justification for its disposition that the flag-down rate for the first two pulses shall in no case exceed P3.00 and that the total of the flag-down rate and the sum of eight remaining pulses for the first minute shall in no case exceed the prevailing rate. The Commission must base its imposition of rates on substantial evidence and anchor its decision on the applications of the telecommunications companies. It cannot arbitrarily impose rates it deems proper without explaining its findings and presenting why its imposed rates are more appropriate than those proposed by the applicants. The assailed Order did not state clearly the facts or law upon which its directive stood; it merely had a general statement that the applicants failed to justify or support their submitted cost figures and made no attempt to explain why the cost figures and proposed rates were not proper. It was also silent on the evidence presented by the telecommunications companies. Furthermore, the Commission confined itself to the findings of the Common Carrier Authorization Department on average cost per minute vis-à-vis average cost per six-second pulse, and the revenue of each method compared to the cost of the companies’ voice calls as seen in their 2008 annual reports. However, the report was neither presented in the proceedings regarding the proposed rates nor offered into evidence, so the telecommunications companies were not afforded the opportunity to examine and refute the statements made on the report on which the Commission based its assailed Orders. There being no sufficient reason to deny the proposals, the same must have been properly considered by the Commission. The Commission’s power to impose rules and regulations on the business operations of telecommunications companies must be done within reason. Its rule-making and regulatory powers do not give it unbridled permission to immediately impose rates without allowing the telecommunications companies an opportunity to air out their grievances or seek reconsideration. The basic and fundamental right to due process also prevails in administrative proceedings. While the Commission has authority to impose certain rates and regulations, including a default six-second-per-pulse billing scheme and the prohibition on using a prefix to implement such, it cannot reject the proposed rates of telecommunications companies on mere whim; it must justify why its regulations are more appropriate than the proposal. Although telecommunications companies are public utilities, they remain private entities operating a business catered to the public. As explained in Alcuaz, the power to regulate is not the power to destroy useful and harmless enterprises; any regulation that operates as an effective confiscation of private property or constitutes an arbitrary or unreasonable infringement of property rights is void. A commission has no power to fix rates which are unreasonable or to regulate them arbitrarily; rates must not be so low as to be confiscatory or too high as to be oppressive. What is a just and reasonable rate is not a question of formula but of sound business judgment based upon the evidence. In exercising regulatory powers, the Commission must impose rates that are just and fair to both customers and telephone operators, and the rates must be reasonable and sufficient to cover the cost of operating the business in accordance with data collected through hearing and consultation with participating telecommunications companies.
• Validity of the December 5 and December 9, 2009 Orders: The rights of participants in an administrative hearing were laid down in Ang Tibay vs. Court of Industrial Relations: the right to a hearing, including the right to present one’s case and submit evidence; the tribunal must consider the evidence presented; there must be something to support the decision; the evidence must be substantial; the decision must be rendered on the evidence presented at the hearing or contained in the record and disclosed to the parties; the tribunal must act on its own independent consideration of the law and facts; and the decision must be rendered so that the parties can know the issues involved and the reasons for the decision. Given these requirements, the telecommunications companies asserted that the Commission violated their right to be heard when it issued its December 5, 2009 Orders because, while they were asked to participate in hearings, the data they submitted were not considered. The Court agreed. On December 5, 2009, the Commission granted provisional authority to charge new rates, provided that their rates for mobile voice services shall be their prevailing rates prior to December 6, 2009, pursuant to Memorandum Circular No. 05-07-2009, and added restrictions on the flag-down rate and the total for the first minute. The assailed Order included a directive for immediate implementation. In Globe Telecom, Inc. vs. National Telecommunications Commission, the Court held that every party subject to administrative regulation deserves an opportunity to know, through reasonable regulations promulgated by the agency, of the objective standards that have to be met; such rule is integral to due process as it protects substantive rights. The Commission violated the right to due process of the telecommunications companies when it did not give them a chance to assail the contents of the December 5, 2009 Orders. By directing immediate implementation of the new rates as early as December 6, 2009, the Commission robbed the telecommunications companies of a chance to seek reconsideration of its Decision. Their right to due process was violated the moment the December 5, 2009 Orders were issued. Moreover, the Show Cause Orders and Cease and Desist Orders for alleged noncompliance were released a mere four days after the December 5, 2009 Orders. Rule 13, Section 2 of the 2006 Rules of Practice and Procedure Before the National Telecommunications Commission states that a party adversely affected by a decision, order, or resolution may within fifteen days from receipt of a copy thereof file a motion for reconsideration. Thus, the December 9, 2009 Show Cause Orders and Cease and Desist Orders effectively removed the telecommunications companies’ right to seek a reversal of the December 5, 2009 Orders. In addition, the Cease and Desist Orders were served on the parties without prior notice or hearing, another violation of due process. Under Rule 10, Section 4 of the 2006 Rules of Practice and Procedure, an entity may be subjected to disciplinary measure for violating a law, rule, or regulation only after notice and hearing. A show cause order must first be issued by the Commission, showing the particulars and matters which it is inquiring and giving the parties an opportunity to file an answer to explain why no judgment or action should be taken against them. The Commission’s Rules allow for a summary proceeding on the matter when applicable, but even the Commission did not avail of this when it issued its December 9, 2009 Orders. In this case, the telecommunications companies were not given proper notice and hearing; instead, the Commission issued Show Cause Orders and Cease and Desist Orders on the same date, displaying how it dispensed with such haste. In Montoya vs. Varilla, the Court ruled that due process, even in administrative proceedings, is essential to give the other party an opportunity to enlighten the quasi-judicial body of its grievances that may possibly sway its original decision. Even if administrative tribunals exercising quasi-judicial powers are not strictly bound by procedural requirements, they are still bound by law and equity to observe the fundamental requirements of due process. Notice to enable the other party to be heard and to present evidence is not a mere technicality or trivial matter; what is safeguarded is not lack of previous notice but the denial of the opportunity to be heard. In view of the foregoing, the December 5, 2009 and December 9, 2009 Orders of the Commission must be stricken down. Although the Commission retains its power to create rules and authority to impose regulations, these functions cannot be prioritized over the elements of due process constitutionally required for the protection of life or vested property rights, as well as of liberty, when its limitation or loss takes place in consequence of a judicial or quasi-judicial proceeding. Due process applies just as well in the administrative setting, albeit less stringent and often applied liberally. Basic procedural rights, such as the opportunity to explain one’s side or seek reconsideration, are so fundamental that they cannot be set aside to implement supposedly fair and reasonable rates.

• Two-Fold Rate-Regulatory Power under Section 17, Republic Act No. 7925 — The National Telecommunications Commission has an ordinary rate-setting power and a residual rate-regulation power. Under the ordinary power, it shall establish rates and tariffs that are fair and reasonable and that provide for the economic viability of telecommunications entities and a fair return on their investments considering the prevailing cost of capital. Under the residual power, it may regulate rates or tariffs when ruinous competition results or when a monopoly or a cartel or combination in restraint of free competition exists and the rates or tariffs are distorted or unable to function freely and the public is adversely affected; in such cases, it may establish a floor or ceiling. The Court applied this by holding that the NTC has authority to impose rates even absent the special conditions for residual regulation, but the exercise must comply with the three parameters and cannot be arbitrary.
• Administrative Due Process in Rate-Fixing — Even in administrative proceedings, fundamental due process requires the right to a hearing, the opportunity to present one’s case and submit evidence, consideration of the evidence presented, substantial evidence to support findings, a decision based on the evidence presented or contained in the record and disclosed to the parties, independent consideration of law and facts, and a reasoned decision. The Court applied this by invalidating the NTC’s December 5, 2009 Orders because the companies’ evidence was not considered and the orders were not based on substantial evidence, and by invalidating the December 9, 2009 Orders because they were issued without prior notice or hearing and deprived the companies of the opportunity to seek reconsideration.
• Rate-Fixing Must Be Just and Reasonable; Regulation Cannot Destroy — The power of the State to regulate public utilities is limited because the State is not the owner of the utility’s property; the power to regulate is not the power to destroy useful and harmless enterprises but to protect, foster, promote, preserve, and control with due regard for the public interest, then the utility and its patrons. Any regulation that operates as an effective confiscation of private property or constitutes an arbitrary or unreasonable infringement of property rights is void. A commission has no power to fix rates which are unreasonable or to regulate them arbitrarily; rates must not be so low as to be confiscatory or too high as to be oppressive. The Court applied this by requiring the NTC to base rates on evidence and sound business judgment and by striking down the assailed orders for lack of justification.
• Substantial Evidence Requirement — Administrative findings and rate impositions must be supported by substantial evidence. The Court applied this by finding that the NTC failed to explain why its imposed rates were preferable to the companies’ proposals, did not cite substantial evidence for its computations, and relied on a Common Carrier Authorization Department report that was neither presented in the proceedings nor offered into evidence, depriving the companies of the opportunity to examine and refute it.
• Notice and Hearing Before Disciplinary Action — Under the 2006 Rules of Practice and Procedure Before the National Telecommunications Commission, an entity may be subjected to disciplinary measure for violating a law, rule, or regulation only after notice and hearing. A show cause order must first be issued, showing the particulars and matters being inquired into and giving the parties an opportunity to file an answer. The Court applied this by invalidating the December 9, 2009 Cease and Desist Orders, which were served without prior notice or hearing.

• "The regulatory power of administrative bodies such as the National Telecommunications Commission does not give it unbridled permission to impose rates without giving telecommunications companies an opportunity to air out their grievances or seek reconsideration. The fundamental right to due process still prevails in administrative proceedings." — This opening passage states the core ratio: the NTC’s regulatory power is not unbridled and remains subject to administrative due process.
• "The Commission shall establish rates and tariffs which are fair and reasonable and which provide for the economic viability of telecommunications entities and a fair return on their investments considering the prevailing cost of capital in the domestic and international markets. The Commission shall exempt any specific telecommunications service from its rate or tariff regulations if the service has sufficient competition to ensure fair and reasonable rates or tariffs. The Commission shall, however, retain its residual powers to regulate rates or tariffs when ruinous competition results or when a monopoly or a cartel or combination in restraint of free competition exists and the rates or tariffs are distorted or unable to function freely and the public is adversely affected. In such cases, the Commission shall either establish a floor or a ceiling on the rates or tariffs." — This is the Court’s quotation of Section 17 of Republic Act No. 7925, which defines the NTC’s two-fold rate-regulatory power and the parameters for its exercise.
• "A commission has no power to fix rates which are unreasonable or to regulate them arbitrarily. This basic requirement of reasonableness comprehends such rates which must not be so low as to be confiscatory, or too high as to be oppressive." — Quoted from Alcuaz, this passage limits the NTC’s rate-fixing authority and supports the invalidation of the assailed orders for lack of a reasonable evidentiary basis.
• "Hence, even if administrative tribunals exercising quasi-judicial powers are not strictly bound by procedural requirements, they are still bound by law and equity to observe the fundamental requirements of due process. Notice to enable the other party to be heard and to present evidence is not a mere technicality or a trivial matter in any administrative or judicial proceedings. In the application of the principle of due process, what is sought to be safeguarded is not lack of previous notice but the denial of the opportunity to be heard." — Quoted from Montoya vs. Varilla, this passage is the Court’s canonical statement on administrative due process and the denial of the opportunity to be heard.

• Philippine Communications Satellite Corporation vs. Alcuaz, 259 Phil. 707 (1989) — The Court upheld the NTC’s rate-fixing power as a valid delegation of legislative power, limited by public safety, public interest, reasonable feasibility, and reasonable rates; it also supplied the rule that regulation cannot destroy public utilities and that rates must be just and reasonable, not confiscatory or oppressive.
• Globe Telecom, Inc. vs. National Telecommunications Commission, 479 Phil. 1 (2004) — Explained the paradigm shift toward deregulation under Republic Act No. 7925 while retaining regulation, and held that every party subject to administrative regulation deserves an opportunity to know, through reasonable regulations, the objective standards that have to be met, which is integral to due process.
• Ang Tibay vs. Court of Industrial Relations, 69 Phil. 635 (1940) — Laid down the cardinal primary rights in administrative proceedings, including the right to a hearing, consideration of evidence, substantial evidence, decision on the evidence presented, independent consideration, and a reasoned decision.
• Montoya vs. Varilla, 595 Phil. 507 (2008) — Held that administrative tribunals exercising quasi-judicial powers must observe the fundamental requirements of due process; notice and opportunity to be heard are not mere technicalities, and the concern is the denial of the opportunity to be heard.
• Philippine Long Distance Telephone Company vs. City of Davao, 447 Phil. 571 (2003) — Stated that healthy competition can exist only between equals and that the law seeks to break monopoly in the telecommunications industry by dismantling barriers to entry and protecting new entrants against dominant carriers.
• Garcia vs. Corona, 378 Phil. 848 (1999) — Cited in defining monopoly and oligopoly and the capacity of dominant companies to exclude actual or potential competitors by controlling market prices and resultant profits.
• The Central Bank of the Philippines vs. Cloribel, 150-A Phil. 86 (1972) — Cited for the principle that due process is constitutionally required for the protection of life or vested property rights, as well as liberty, when its limitation or loss takes place in consequence of a judicial or quasi-judicial proceeding.

• Section 17, Republic Act No. 7925 (Public Telecommunications Policy Act of 1995) — Grants the National Telecommunications Commission a two-fold rate-regulatory power: ordinary rate-setting and residual rate-regulation. Rates must be fair and reasonable, provide economic viability, and yield a fair return on investment; the Commission shall exempt a service if there is sufficient competition, but retains residual power when ruinous competition, monopoly, cartel, or combination in restraint of free competition exists. The Court applied this by holding that the NTC has authority but must comply with the three parameters and cannot impose rates arbitrarily.
• Section 20, Commonwealth Act No. 146 (Public Service Act, as amended) — Requires a public service to obtain approval and authorization before adopting, establishing, fixing, imposing, maintaining, collecting, or carrying into effect any rates or charges. The Commission shall approve only those that are just and reasonable and not unjustly discriminatory or unduly preferential, upon reasonable notice and opportunity to be heard, with the burden of proof on the public service proposing the rates. The Court cited this as part of the historical regulatory framework.
• Section 15, Executive Order No. 546 — Enumerates the functions of the National Telecommunications Commission, including establishing, prescribing, and regulating areas of operation and determining and prescribing charges or rates pertinent to the operation of public utility facilities and services. The Court cited this to confirm the Commission’s rate-fixing function.
• Article II, Section 8, Republic Act No. 7925 — Mandates that a healthy competitive environment shall be fostered, one in which telecommunications carriers are free to make business decisions and to interact with one another in providing telecommunications services, with the end in view of encouraging their financial viability while maintaining affordable rates. The Court cited this in explaining the deregulation policy but held it did not give telecommunications companies full autonomy over rates.
• Rule 13, Section 2, 2006 Rules of Practice and Procedure Before the National Telecommunications Commission — Provides that a party adversely affected by a decision, order, or resolution may, within fifteen days from receipt of a copy thereof, file a motion for reconsideration. The Court applied this by holding that the NTC’s immediate implementation of the December 5, 2009 Orders and its December 9, 2009 Orders effectively removed the companies’ right to seek reconsideration.
• Rule 10, Section 4, 2006 Rules of Practice and Procedure Before the National Telecommunications Commission — Provides that an entity may be subjected to disciplinary measure for violating a law, rule, or regulation only after notice and hearing. The Court applied this by invalidating the December 9, 2009 Cease and Desist Orders, which were issued without prior notice or hearing.

Justices Lazaro-Javier, Lopez, Lopez, and Rosario concurred.