Telecomms DIGEST

8/10/2019 Telecomms DIGEST

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Carence Janelle C. Navidad Telecomms Law2012-0690 October 13, 2013

G.R. No. 143964. July 26, 2004Globe Telecom, Inc., vs. National Telecommunications Commission

Tinga, J.:

Facts:

Globe and Smart Communications, Inc. (Smart) are both grantees of valid andsubsisting legislative franchises, authorizing them, among others, to operate a CellularMobile Telephone System (CMTS), utilizing theGlobal System for MobileCommunication (GSM) technology.[14]Among the inherent services supported by theGSM network is the Short Message Services (SMS).

Smart filed a Complaint with NTC, praying that NTC order the immediateinterconnection of Smarts and Globes GSM networks. Smart alleged that Globe, with

evident bad faith and malice, refused to grant Smarts request for the interconnection ofSMS.

NTC issued a Show Cause Order. Globe filed its Answer with Motion to Dismiss,interposing grounds that the Complaint was premature. Smart responded that it hadalready submitted the voluminous documents asked by Globe.

NTC, afterwards, issued an Order noting that both Smart and Globe were equallyblameworthy for their lack of cooperation in the submission of the documentationrequired for interconnection and for having unduly maneuvered the situation into thepresent impasse, NTC held that SMS falls squarely within the definition of value-addedservice or enhanced-service.

The NTC also declared that both Smart and Globe have been providing SMSwithout authority from it.

Globe filed with the Court of Appeals a Petition for Certiorari and Prohibition tonullify and set aside the Order and to prohibit NTC from taking any further action in thecase.

Issues:

1) Whether NTC may legally require Globe to secure NTC approval before it continues

providing SMS2) Whether SMS is a VAS under the PTA, or special feature under NTC MC No. 14-11-97;3) Whether NTC acted with due process in levying the fine against Globe.

Held:
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1. There is no legal basis under the PTA or the memorandum circularspromulgated by the NTC to denominate SMS as VAS, and any subsequentdetermination by the NTC on whether SMS is VAS should be made with proper regardfor due process and in conformity with the PTA.

2. One of the novel introductions of the PTA is the concept of a value-added

service (VAS).Section 11 recognizes that VAS providers need not secure afranchise, provided that they do not put up their own network. However, a different ruleis laid down for telecommunications entities such as Globe and PLDT. The sectionunequivocally requires NTC approval for the operation of a value-added service.

It is clear that the PTA has left open-ended what services are classified as value-added, prescribing instead a general standard, set forth as a matter of principle andfundamental policy by the legislature.

The PTA defines VAS as enhanced services. The definition of enhancedservices in the Implementing Rules, while more distinct than that under the PTA, is stilltoo sweeping.

Still, owing to the general nature of the definition laid down in the ImplementingRules, the expectation arises that the NTC would promulgate further issuances definingwhether or not a specific feature newly available in the market is a VAS.

Just like VAS as defined under the PTA, special features are also not ordinarilyprovided by the telephone company. Moreover, there is no requirement that a PTEseeking to offer special features must secure prior approval from the NTC.

Is SMS a VAS, enhanced service, or a special feature? Apparently, even theNTC is unsure. It had told Islacom that SMS was a special feature, then subsequentlyheld that it was a VAS. NTC never required ISLACOM to apply for prior approval in

order to provide SMS. NTCs treatment of Islacom, apart from being obviouslydiscriminatory, puts into question whether or not NTC truly believes that SMS is VAS.

Every party subject to administrative regulation deserves an opportunity to know,through reasonable regulations promulgated by the agency, of the objective standardsthat have to be met.

The legal basis invoked by NTC in claiming that SMS is VAS has not been dulyestablished. The fault falls squarely on NTC. NTC has unnecessarily complicated theregulatory framework to the detriment of the industry and the consumers.

3. NTC also violated several of these cardinal rights due Globe in the promulgationof the assailed Order.

First. The NTC Order is not supported by substantial evidence. Neither does itsufficiently explain the reasons for the decision rendered.

The question of the proper legal classification of VAS is uniquely technical, tied asat is to the scientific and technological application of the service or feature. Owing tothe dearth of substantive technical findings and data from the NTC on which a judicialreview may reasonably be premised, it is not opportunely proper for the Court to makeits own technical evaluation of VAS, especially in relation to SMS. Judicial fact-finding


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of the de novokind is generally abhorred and the shift of decisional responsibility to thejudiciary is not favored as against the substantiated and specialized determination ofadministrative agencies.

With greater reason should this be the standard for the

exercise of judicial review when the administrative agency concerned has not in the firstplace come out with a technical finding based on evidence, as in this case.

Yet at the same time, this absence of substantial evidence in support of the findingthat SMS is VAS already renders reversible that portion of the NTC Order.

Moreover, the Orderdoes not explain why the NTC was according the VASofferings of Globe and Smart a different regulatory treatment from that of Islacom.Indeed, to this day, NTC has not offered any sensible explanation why Islacom wasaccorded to a less onerous regulatory requirement, nor have they compelled Islacom tosuffer the same burdens as Globe and Smart.

Second. Globe and Smart were denied opportunity to present evidence on theissues relating to the nature of VAS and the prior approval.

Another disturbing circumstance attending this petition is that until the promulgationof the assailed Order Globe and Smart were never informed of the fact that theiroperation of SMS without prior authority was at all an issue for consideration. As aresult, neither Globe or Smart was afforded an opportunity to present evidence in theirbehalf on that point.

It is clear that before NTC could penalize Globe and Smart for unauthorizedprovision of SMS, it must first establish that SMS is VAS. Neither was the matter everraised during the hearings conducted by NTC on Smarts petition.

The opportunity to adduce evidence is essential in the administrative process, asdecisions must be rendered on the evidence presented, either in the hearing, or at least

contained in the record and disclosed to the parties affected.Third.The imposition of fine is void for violation of due process. The Court is

convinced that prior to the promulgation of the assailed OrderGlobe was never notifiedthat its authority to operate SMS was put in issue. There is an established procedurewithin NTC that provides for the steps that should be undertaken before an entity suchas Globe could be subjected to a disciplinary measure. Further, the complaint shouldstate, whenever practicable, the provisions of law or regulation violated, and the acts oromissions complained of as constituting the offense.

The Order effectively discriminatory and arbitrary as it is, was issued with graveabuse of discretion and it must be set aside. This does not imply though that NTC lacks

authority to regulate SMS or to classify it as VAS. However, the move should beimplemented properly, through unequivocal regulations applicable to all entities that aresimilarly situated, and in an even-handed manner.

Concurrently, the Court realizes that the PTA is not intended to constrain theindustry within a cumbersome regulatory regime.

The petition is GRANTED.


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G.R. No. 135992. July 23, 2004Eastern Telecommunications Philippines, Inc. vs. International CommunicationCorporation

Austria-Martinez, J.:

Facts:

The Department of Transportation and Communication (DOTC) issued onSeptember 30, 1991, Department Circular No. 91-260, with the purpose of minimizing oreliminating situations wherein multiple operators provide local exchange service in agiven area. Pursuant thereto, the National Telecommunications Commission (NTC)was tasked to define the boundaries of local exchange areas and authorize only onefranchised local exchange carrier to provide local exchange service within such areas.

On July 12, 1993, then President Fidel V. Ramos issued Executive Order No. 109entitled Local Exchange Carrier Service. Section 2 thereof provides that all existing

International Gateway Facility (IGF) operators

[2]

are required to provide local exchangecarrier services in unserved and underserved areas, including Metro Manila, therebypromoting universal access to basic telecommunications service.

The NTC promulgated Memorandum Circular No. 11-9-93 which mandates existingIGF operators to file a petition for the issuance of Certificate of Public Convenience andNecessity (CPCN) to install, operate and maintain local exchange carrier services withintwo years from effectivity thereof. With regard to local exchange service, Section 10thereof mandates an international carrier to comply with its obligation to provide localexchange service in unserved or underserved areas within three years from the grant ofauthority as required by existing regulations.

Several IGF operators applied for CPCN to install, operate and maintain localexchange carrier services in certain areas. Respondent International CommunicationCorporation, now known as Bayan Telecommunications Corporation or Bayantel,applied for and was given by the NTC a Provisional Authority (PA) on March 3, 1995, toinstall, operate and provide local exchange service in Quezon City, Malabon andValenzuela, Metro Manila, and the entire Bicol region. Meanwhile, petitionerTelecommunications Technologies Philippines, Inc. (TTPI), as an affiliate of petitionerEastern Telecommunications Philippines, Inc. (ETPI), was granted by the NTC a PA onSeptember 25, 1996, to install, operate and maintain a local exchange service in theProvinces of Batanes, Cagayan Valley, Isabela, Kalinga-Apayao, Nueva Vizcaya,Ifugao, Quirino, the cities of Manila and Caloocan, and the Municipality of Navotas,

Metro Manila.It appears, however, that before TTPI was able to fully accomplish its rollout

obligation, ICC applied for and was given a PA by the NTC on November 10, 1997, toinstall, operate and maintain a local exchange service in Manila and Navotas,

[6]two

areas which were already covered by TTPI.

Aggrieved, petitioners filed a petition for review with the Court of Appeals.
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Issues:

Whether or not the Honorable Court of Appeals committed a serious error of law inupholding the Order of the NTC granting a PA to Respondent to operate LEC servicesin Manila and Navotas which are areas already assigned to petitioner TTPI under a prior

and subsisting PA.

Held:

After a review of the records of this case, the Court finds no grave abuse of discretioncommitted by the Court of Appeals in sustaining the NTCs grant of provisional authorityto ICC.

The power of the NTC to grant a provisional authority has long been settled. As theregulatory agency of the national government with jurisdiction over alltelecommunications entities, it is clothed with authority and given ample discretion togrant a provisional permit or authority.

[11]It also has the authority to issue Certificates of

Public Convenience and Necessity (CPCN).The NTC took into consideration ICCs financial and technical resources and found

them to be adequate. The NTC also noted ICCs performance in complying with itsrollout obligations.

`E.O. No. 109 and R.A. No. 7925 adopted a policy of healthy competition among thelocal exchange carrier service providers.

The need to formulate new policies is dictated by evolving goals and demands intelecommunications services. Thus, E.O. No. 109 acknowledges that there is a needto promulgate new policy directives to meet the targets of Government through theNational Telecommunications Development Plan (NTDP) of the Department of

Transportation and Communications (DOTC). Likewise, one of the national policies andobjectives of R.A. No. 7925 is to foster the improvement and expansion oftelecommunications services in the country through a healthy competitive environment.

Supreme Court held that Section 23 of EO 109 does not categorically state that theissuance of a PA is exclusive to any telecommunications company. Neither Congressnor the NTC can grant an exclusive franchise, certificate, or anyother form ofauthorization to operate a public utility. In Repub l ic v. Express Telecommun icat ionsCo., the Court held that the Constitution is quite emphatic that the operation of a publicutility shall not be exclusive. Obviously, the need for a healthy competitiveenvironment in telecommunications is sufficient impetus for the NTC to consider all

those applicants, who are willing to offer competition, develop the market and providethe environment necessary for greater public service.

In addition, Section 6 of R.A. No. 7925 specifically limits the DOTC from exercisingany power that will tend to influence or effect a review or a modification of the NTCsquasi-judicial functions, to wit:
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The power of the NTC in granting or denying a provisional authority to operate alocal exchange carrier service is a quasi-judicial function, a sphere in which the DOTCcannot intrude upon.

In this case, prior consultation was substantially complied with and its purposeaccomplished, when ICC filed its application and the NTC was given the opportunity to

assess ICCs viability to render local exchange service in the Manila and Navotas areas,and its impact on the telecommunications industry.

It is also true that NTC MC No. 8-9-95 allows a duly enfranchised entity to maintaina local exchange network if it is shown that an existing authorized local exchangeoperator fails to satisfy the demand for local exchange service.

[22]In this case, the NTC

noted the increasing rate in the demand for local lines within the Manila and Navotasareas, and in order for these areas to catch up with its neighboring cities, installation oflines must be sped up.

ICCs technical and financial capabilities, as well as the growth rate in the numberof lines in particular areas, are matters within NTCs competence and should be

accorded respect. The NTC is given wide latitude in the evaluation of evidence and inthe exercise of its adjudicative functions, and this includes the authority to take judicialnotice of facts within its special competence.[24]

From these services, TTPI has other sources of revenue from which it may cross-subsidize its local exchange operations.

ICCs project for local exchange service in the Manila and Navotas areas isseparate and distinct from its projects in other areas; hence, the NTC should havedirected ICC to submit such requirements. Evidently, the escrow deposit is required toensure that there is available money on hand to defray ICCs expenditures for itsproject, while the performance bond will answer for the faithful compliance and

performance of ICCs rollout obligation and to compensate the government for anydamages incurred in case of ICCs default.

Furthermore, it is well to stress that petitioner TTPI cannot claim any exclusive rightto render telecommunications service in areas which the NTC considers to be in need ofadditional providers.

More than anything else, public service should be the primordial objective of localexchange operators. The entry of another provider in areas covered by TTPI shouldpose as a challenge for it to improve its quality of service. Ultimately, it will be the publicthat will benefit.

Petition is Partially Granted.
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G.R. No. 162015, March 6, 2006The City Government of Quezon City vs. Bayan Telecommunications, Inc.

Garcia, J.:

Facts:

Respondent Bayan Telecommunications, Inc.(Bayantel) is a legislative franchiseholder under Republic Act (Rep. Act) No. 3259 to establish and operate radio stationsfor domestic telecommunications, radiophone, broadcasting and telecasting.

On January 1, 1992, "Local Government Code of 1991" (LGC), took effect.Section 232 of the Code grants local government units within the Metro Manila Area thepower to levy tax on real properties. On July 20, 1992, Congress enacted Rep. Act No.7633, amending Bayantels original franchise.

Within Quezon City, Bayantel owned several real properties on which itmaintained various telecommunications facilities. In 1993, the government of QuezonCity, enacted the Quezon City Revenue Code (QCRC),5imposing, a real property taxon all real properties in Quezon City, and the withdrawal of exemption from real propertytax. With the Citys Revenue Code, new tax declarations for Bayantels real propertiesinQuezon City were issued by the City Assessor and were received by Bayantel.

On January 7, 1999, Bayantel wrote the office of the City Assessor seeking theexclusion of its real properties in the city from the roll of taxable real properties. With itsrequest having been denied, Bayantel interposed an appeal with the Local Board of

Assessment Appeals (LBAA). On account thereof, the Quezon City Treasurer sent out

notices of delinquency.

Issues:

Whether or not Bayantelsreal properties in Quezon City are exempt from real propertytaxes under its legislative franchise; and

Held:

Bayantels franchise being national in character, the "exemption" thus granted underSection 14 of Rep. Act No. 3259 applies to all its real or personal properties found

anywhere within the Philippine archipelago.

The realty tax exemption heretofore enjoyed by Bayantel under its original franchise, butsubsequently withdrawn by force of Section 234 of the LGC, has been restored bySection 14 of Rep. Act No. 7633.
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While the system of local government taxation has changed with the onset of the 1987Constitution, the power of local government units to tax is still limited. As the Courtstressed in Mactan, "the power to tax is [still] primarily vested in the Congress."

Fr. Joaquin Bernas stated that: what it does is to confer municipal corporations a

general power to levy taxes and otherwise create sources of revenue. The power of thelegislative authority relative to the fiscal powers of local governments has been reducedto the authority to impose limitations on municipal powers.

In net effect, the controversy presently before the Court involves, at bottom, a clashbetween the inherent taxing power of the legislature, which necessarily includes thepower to exempt, and the local governments delegated power to tax under the aegis ofthe 1987 Constitution.

There can really be no dispute that the power of the Quezon City Government to tax islimited by Section 232 of the LGC which expressly provides that "a province or city or

municipality within the Metropolitan Manila Area may levy an annual ad valorem tax onreal property such as land, building, machinery, and other improvement not hereinafterspecifically exempted." Under this law, the Legislature highlighted its power to thereafterexempt certain realties from the taxing power of local government units.

Indeed, the grant of taxing powers to local government units under the Constitution andthe LGC does not affect the power of Congress to grant exemptions to certain persons,pursuant to a declared national policy.

Perfectly aware that the LGC has already withdrawn Bayantels former exemption fromrealty taxes, Congress opted to pass Rep. Act No. 7633 using, under Section 11

thereof, exactly the same defining phrase "exclusive of this franchise" which was thebasis for Bayantels exemption from realty taxes prior to the LGC.

The Court views this subsequent piece of legislation as an express and real intention onthe part of Congress to once again remove from the LGCs delegated taxing power, allof the franchisees (Bayantels) properties that are actually, directly and exclusively usedin the pursuit of its franchise.

WHEREFORE, the petition is DENIED.


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G.R. No. 88404 October 18, 1990Philippine Long Distance Telephone Co. vs. The National TelecommunicationsCommission

Melencio-Herrera, J.:

Facts:

On 22 June 1958, Rep. Act No. 2090, was enacted, otherwise known as "An ActGranting Felix Alberto and Company, Incorporated, a Franchise to Establish RadioStations for Domestic and Transoceanic Telecommunications."

On 13 May 1987, alleging urgent public need, ETCI filed an application with publicrespondent NTC (docketed as NTC Case No. 87-89) for the issuance of a Certificate ofPublic Convenience and Necessity (CPCN) to construct, install, establish, operate andmaintain a Cellular Mobile Telephone System and an Alpha Numeric Paging System in

Metro Manila and in the Southern Luzon regions.

PLDT filed an Opposition with a Motion to Dismiss.

In an Order, dated 12 November 1987, NTC overruled PLDT's Opposition and declaredthat Rep. Act No. 2090 (1958) should be liberally construed as to include among theservices under said franchise the operation of a cellular mobile telephone service.

On 12 December 1988, NTC granted ETCI provisional authority to install, operate andmaintain a cellular mobile telephone system initially in Metro Manila, Phase A only,subject to the terms and conditions set forth in the same Order. One of the conditions

prescribed (Condition No. 5) was that, within ninety (90) days from date of theacceptance by ETCI of the terms and conditions of the provisional authority, ETCI andPLDT "shall enter into an interconnection agreement for the provision of adequateinterconnection facilities between applicant's cellular mobile telephone switch and thepublic switched telephone network and shall jointly submit such interconnectionagreement to the Commission for approval."

Issues:

1. Whether the provisional authority was properly granted.2. Whether ETCIs franchise includes operation of cellular mobile telephone system.

3. Whether PLDT can refuse interconnection with ETCI.

Held:

1. What the NTC granted was such a provisional authority, with a definite expiryperiod of eighteen (18) months unless sooner renewed, and which may be revoked,amended or revised by the NTC. It is also limited to Metro Manila only.


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The provisional authority was issued after due hearing, reception of evidence andevaluation thereof, with the hearings attended by various oppositors, including PLDT. Itwas granted only after aprima facieshowing that ETCI has the necessary legal,financial and technical capabilities and that public interest, convenience and necessityso demanded.

2. Rep. Act No. 2090 grants ETCI (formerly FACI) "the right and privilege ofconstructing, installing, establishing and operating in the entire Philippines radio stationsfor reception and transmission of messageson radio stations in the foreign anddomestic public fixed point-to-point and public base, aeronautical and landmobilestations, ... with the corresponding relay stations for the reception and transmission ofwireless messages on radiotelegraphy and/or radiotelephony...." In NTCsOrder of 12November 1987, the NTC construed the technical term "radiotelephony" liberally as toinclude the operation of a cellular mobile telephone system.

The foregoing is the construction given by an administrative agency possessed of the

necessary special knowledge, expertise and experience and deserves great weight andrespect.

3. PLDT cannot justifiably refuse to interconnect. Rep. Act No. 6849 mandatesinterconnection providing as it does that "all domestic telecommunications carriers orutilities ... shall be interconnected to the public switch telephone network." The 1987Constitution recognizes the existence of that power.

The interconnection which has been required of PLDT is a form of "intervention" withproperty rights dictated by "the objective of government to promote the rapid expansionof telecommunications services in all areas of the Philippines, ... to maximize the use of

telecommunications facilities available, ... in recognition of the vital role ofcommunications in nation building ... and to ensure that all users of the publictelecommunications service have access to all other users of the service wherever theymay be within the Philippines at an acceptable standard of service and at reasonablecost"

The NTC order to interconnect allows the parties themselves to discuss and agree uponthe specific terms and conditions of the interconnection agreement instead of the NTCitself laying down the standards of interconnection which it can very well impose.

The interconnection sought by ETCI is by no means a "parasitic dependence" on PLDT.

The ETCI system can operate on its own even without interconnection, but it will belimited to its own subscribers. What interconnection seeks to accomplish is to enablethe system to reach out to the greatest number of people possible in line withgovernmental policies laid down. Cellular phones can access PLDT units and vice versain as wide an area as attainable. With the broader reach, public interest andconvenience will be better served.


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The decisive considerations are public need, public interest, and the common good.Those were the overriding factors which motivated NTC in granting provisional authorityto ETCI.

Petition is DISMISSED for lack of merit.

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