Philippine Long Distance Telephone Company v. Public Service Commission

MAKALINTAL, J.:

In its decision dated August 31, 1970, this Court affirmed with modification the position of the Public Service Commission (now this Specialized Regulatory Boards or "SRB") on the interpretation and application of Section 40, paragraph (e), of the Public Service Act (146), as amended by Section 5 of Republic Act 3792. The said section as amended reads as follows: Section forty of the same Act, as amended by Commonwealth Act numbered Four Hundred Fifty-Four, is hereby further amended to read as follows: Section 40. The Commission is authorized and ordered to charge and collect from any public service or applicant, as the case may be, the following fees as reimbursement of its expenses in the authorization, supervision and/or regulation of public services.

(e) For annual reimbursement of the expenses incurred by the Commission in the supervision of other public services and/or in the regulation or fixing of their rates, twenty centavos for each one hundred pesos or fraction thereof, of the capital stock subscribed or paid, or if no shares have been issued, of the capital invested, or of the property and equipment, whichever is higher. As construed by the Public Service Commission, the foregoing provision lays down as basis for computing the amount of supervision and/or regulation fees payable by a public utility organized as a stock corporation either the capital stock or the property and equipment, whichever is higher; and if the public utility is an entity without shares of stock, the basis for computation is either the capital invested or the property and equipment, whichever is higher. The modification introduced by this Court in its decision of August 31, 1970 is that the property and equipment shall be net of depreciation.

In other words, as thus decided, the alternative basis added by the amendatory Act (3792), namely, the property and equipment, is made applicable to all public utilities, whether they have or have not issued shares of stock. Before this Court for resolution is the second motion for reconsideration and supplemental second motion for reconsideration filed by the petitioners Philippine Long Distance Telephone Company and Manila Electric Company. They contend that the amendment introduced by Section 5 of Republic Act 3792 did not change the basis for computing the supervision and/or regulation fees due from stock corporations; that such basis is still only the capital stock subscribed or paid and not such capital stock or the property and equipment, whichever is higher; that the amendment altered the basis only with respect to public utilities not organized as stock corporations, as to which it is now the capital invested or the property and equipment, whichever is higher.

In the decision which is now sought to be reconsidered this Court relied heavily on the theory that Section 5 of Republic Act 3792 is a tax measure intended to Fraise revenue and therefore the amounts collected as supervision and/or regulation fees thereunder need have no reasonable relation to the cost of such supervision and/or regulation.

Reference was made in the briefs for the petitioners to the "confiscatory and unreasonable" character of the fees, if considered as taxes and computed on the basis of "the property and equipment." Inasmuch as the case was tried before the Public Service Commission on the theory that such fees were purely regulatory in character, so that the parties have no adequate opportunity to submit evidence on their being confiscatory and unreasonable,"

this Court, by resolution of August 30, 1971, remanded the case to the Public Service Commission for reception of evidence on such alleged confiscatory and unreasonable character of the fees prescribed by Section 40(e) of the Public Service Act as amended, if interpreted so as to make the alternative basis of computation (property and equipment) applicable to public utilities organized as stock corporations. In October 1972 the Public Service Commission was abolished and its powers and functions were transferred to another entity called the Specialized Regulatory Boards (SRB). The petitioners and the SRB thereafter entered into a Stipulation of Facts, which they submitted to this Court on January 16, 1975.

Subsequently they filed their respective memoranda. In its memorandum the SRB repudiates the previous position of the Public Service Commission and in effect makes common cause with the petitioners, stating that Section 5 of Republic Act 3792 was not intended as a tax measure and that "it is not only material in this incident to rule on said issue but likewise in the public interest that the Honorable Court in passing upon this issue, make a categorical pronouncement that the same is a simple regulatory legislation." It is important to recall at this juncture, in view of the submission of the SRB on this point, that previous decisions of this Court construing the provision of Section 40 of the Public Service Act before its amendment by R.A. 3792 held that the fees being collected thereunder were not in the nature of taxes but were fees for purposes of the regulatory functions of the Public Service Commission.

Manila Electric Co. v. Public Service Commission, 4 SCRA 1200; Manila Electric Co. v. Auditor General, et al. , 40 O.G. No. 13, p. 2629. In this latter case this Court said: x x x x x x x x x Debe notarse que el articulo citado se refiere a 'derechos', los derechos que la Comision de Servicios Publicos esta autorizada a cobrar para resarcirse de los gastos en que ella o sus agentes incurren por el trabajo que supone el ejercicio por la misma de su poder de supervision y reglamentacion de las operaciones y actividades que en el referido articulo se enumeran; y debe notarse tambien que hace uso de dicho vocable 'derechos', por lo menos tres veces, indudablemente, con el fin de que no pueda haber dudas de que permite y quiere que la Comision cobre por supervision y reglamentacion no impuestos, sino derechos.

... We are of the opinion that neither the amendment introduced by Section 5 of Republic Act 3792 to Section 40(e) of the Public Service Act nor the automatic appropriation clause added to the last paragraph thereof altered the nature of the fees in question as held by this Court in those decisions. The stipulation of the parties bring out a number of significant facts.

At the rate of P0.20 for every P100.00 or fraction thereof of the gross value of the respective properties and equipment in service of the petitioners, the SRB has computed the fees which they would have paid every year from 1964 to 1974, inclusive, as follows: YEAR PROPERTY & EQUIPMENT IN SERVICE BILL 1964 P107,176,764.00 P 214,353.60 1965 172,345,729.00 344,691.60 1966 240,809,709.00 418,619.60 P 1967 268,357,379.00 536,714.80 L 1968 427,254,070.00 854,508.20 D 1969 523,076,219.00 1,046,152.60 T 1970 624,204,203.00 1,248,408.60 1971 1,100,768,321.00 2,201,536.80 1972 1,220,149,965.00 2,440,300.00 1973 1,451,945,532.00 2,903,891.20 1974 1,506,101,070.00 3,012,202.20 P15,284,379.20 1964 363,762,931.00 727,526.00 M 1965 413,462,327.00 826,924.80 E 1966 632,619,666.00 1,265,239.40 R 1967 709,020,839.00 1,418,041.80 A 1968 818,130,654.00 1,636,261.40 L 1969 990,687,198.00 1,981,374.40 C 1970 1,336,644,914.00 2,673,290.00 O 1971 2,119,221,085.00 4,238,442.20 1972 2,348,189,689.00 4,696,379.40 1973 2,840,609,818.00 5,681,219.80 1974 2,945,650,790.00 5,891,301.60