Telecommunications Practice Cases

7/28/2019 Telecommunications Practice Cases

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TELECOMMUNICATIONSPRACTICEATTY.AQUINO

NATIONALTELECOMMUNICATIONSCOMMISSIONSCASES|1

GMCR,INC.ETAL.V.BELLTELECOMMUNICATIONS 1

GLOBETELECOMS,INC.V.NTC 12

SMARTV.NTC 27

AMBIL,JR.V.COMELEC 34

ASSOCIATIONOFPHILIPPINECOCONUTDESICCATORSV.PCA 41

SPOUSESMIRASOLV.COURTOFAPPEALS 48GMAV.ABS-CBN 57

GMCR,INC.ETAL.V.BELLTELECOMMUNICATIONS

FIRSTDIVISION

[G.R.No.126496.April30,1997]

GMCR, INC.; SMART COMMUNICATIONS, INC.;

INTERNATIONAL COMMUNICATIONS CORP.; ISLA

COMMUNICATIONS CO., INC.,petitioners, vs.BELL

TELECOMMUNICATION PHILIPPINES, INC.; THE

NATIONALTELECOMMUNICATIONSCOMMISSIONand

HON.SIMEONL.KINTANARinhisofficialcapacityas

Commissioner of the National

Telecommunications, respondents.

[G.R.No.126526.April30,1997]

COMMISSIONER SIMEON L. KINTANAR, NATIONAL

TELECOMMUNICATIONS COMMISSION,petitioner,

vs.BELL TELECOMMUNICATION PHILIPPINES,

INC.,respondent.

DECISION

HERMOSISIMA,JR.,J.:

Beforeusareconsolidatedpetitionsseekingthereviewand

reversal of the decision[1]of the respondent Court of

Appeals[2]declaring the National Telecommunications


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Commission (hereafter, NTC) to be a collegial body under

ExecutiveOrderNo.546 [3]andorderingtheNTCtoheretoforesit

and act en banc, i.e., with the concurrence of at least two

commissioners, for a valid dispensation of its quasi-judicial

functions.

Establishedbyevidencearethefollowingfacts:

On October 19, 1993, private respondent Bell

Telecommunication Philippines, Inc. (hereafter, BellTel) filed

with the NTC an Application for a Certificate of Public

Convenience and Necessity to Procure, Install, Operate and

Maintain Nationwide Integrated Telecommunications Services

andtoChargeRatesThereforandwithFurtherRequestforthe

IssuanceofProvisionalAuthority.Thisapplicationwasdocketed

as NTC Case No. 93-481.At the time of the f il ing of this

application, privaterespondentBellTelhad notbeengranted a

legislative franchise to engage in the business of

telecommunicationsservice.Since private respondent BellTel was, at that time, an

unenfranchised applicant, itwas excludedin the deliberations

for service area assignments for local exchange carrier

service[4].Thus, only petitioners GMCR, Inc., Smart

Communications, Inc., Isla Communications Co. , Inc. and

InternationalCommunicationsCorporation,amongothers,were

beneficiaries of formal awards of service area assignments in

AprilandMay,1994.

On March 25, 1994, Republic Act No. 7692 was enacted

granting private respondent BellTel a congressional franchise

which gave privaterespondentBellTelthe right,privilege andauthorityto

carryonthebusinessofprovidingtelecommunicationsservices

inandbetweenprovinces,cities,andmunicipalitiesinthe

Philippinesandforthispurpose,toestablish,operate,manage,

lease,maintainandpurchasetelecommunicationssystems,

includingmobile,cellularandwiredorwireless

telecommunicationssystems,fiberoptics,satellitetransmitand

receivesystems,andothertelecommunicationssystemsand

theirvalue-addedservicessuchas,butnotlimitedto,

transmissionofvoice,data,facsimile,controlsignals,audioand

video,informationservicebureau,andallothertelecommunicationssystemstechnologiesasareatpresent

availableorbemadeavailablethroughtechnicaladvancesor

innovationsinthefuture,orconstruct,acquire,leaseandoperate

ormanagetransmittingandreceivingstationsandswitching

stations,bothforlocalandinternationalservices,lines,cablesor

systems,asis,orareconvenientoressentialtoefficientlycarry

outthepurposesofthisfranchise. [5]

OnJuly12,1994,privaterespondentBellTelfiledwiththe

NTC a second Application[6]praying for the issuance of a

Certificate of Public Convenience and Necessity for theinstallation, operation and maintenance of a combined

nationwide local toll (domestic and international) and tandem

telephone exchanges and facilities using wire, wireless,

microwave radio, satellites and fiber optic cable with Public

CallingOffices(PCOs)andverysmallapertureantennas(VSATs)

under an integrated system.This second application was

docketed as NTC Case No. 94-229.In this second application,

BellTelproposedtoinstall2,600,000telephonelinesinten(10)

yearsusingthemostmodernandlateststate-of-the-artfacilities

and equipment and to provide a 100% digital local exchange

telephonenetwork.

Private respondent BellTel moved towithdraw its earlier

applicationdocketedasNTCCaseNo.93-481.InanOrderdated

July 11,1994,this earlierapplication wasordered withdrawn,

withoutprejudice.

ThesecondapplicationofprivaterespondentBellTelwhich

wasdocketedasNTCCaseNo.94-229wasassignedtoaHearing


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Officer for reception of private respondent BellTels

evidence.Written opposition and other pertinent pleadings

werefiledbypetitionersGMCR,Inc.,SmartCommunications,Inc.,

IslaCommunicationsCo.,Inc.andInternationalCommunications

Corporation as oppositors. Other oppositors to private

respondent BellTels application were Capitol Wireless, Inc.,

Eastern Misamis Oriental Telephone Cooperative, LibertyBroadcastingNetwork,Inc.,MidsayapCommunication,Northern

Telephone, PAPTELCO, Pil ipino Telephone Corporation,

PhilippineGlobalCommunications,Inc.,PhilippineLongDistance

Telephone Company, Philippine Telegraph and Telephone

Corporation,Radio Communicationsofthe Philippines, Inc.and

ExtelcomandTelecommunicationsOffice.

On December 20, 1994, private respondent BellTel

completed the presentation of its evidence-in-chief.In the

courseoftheproceedings,thewitnessesofBellTelwerecross-

examinedby the aforementioned oppositors.OnDecember 21,

1994,BellTelfileditsFormalOfferofEvidencetogetherwithallthe technical, financial and legal documents in support of its

application.Pursuanttoitsrules,theapplicationwasreferredto

the Common Carriers Authorization Department (CCAD) for

studyandrecommendation.

OnFebruary6,1995,theCCAD,throughEngr.MarleRabena,

submitted to Deputy Commissioner Fidelo Q. Dumlao, a

MemorandumdatedFebruary6,1995 [7]manifestinghisfindings

and recommending that based on technical documents

submitted,BellTelsproposalistechnicallyfeasible. [8]

Subsequently,Mr.RaulitoSuarez,thechiefoftheRatesandRegulatoryDivisionofCCAD,conductedafinancialevaluationof

theprojectproposalofprivaterespondentBellTel.OnMarch29,

1995,Mr.SuarezmadethefindingthatBellTelhasthefinancial

capabilitytosupportitsproposedprojectatleastfortheinitial

two(2)years.

Agreeing with the findings and recommendations of the

CCAD,NTCDeputyCommissionersFideloDumlaoandConsuelo

Perez adoptedthe sameand expressly signified their approval

thereto by making the following notation on the aforestated

MemorandumoftheCCADdatedFebruary6,1995:

Withthefindingoffinancialcapabilityandtechnicalfeasibility,theapplicationmeritsdue/favorableconsideration.[9]

Belowthis notation,DeputyCommissionersFidelo Dumlaoand

ConsueloPerezaffixedtheirsignaturesandthedate,4/6/95.

In view ofthesefavorablerecommendationsby theCCAD

and two members of the NTC, the Legal Department thereof

prepared a working draft[10]of the order granting provisional

authoritytoprivaterespondentBellTel.Thesaidworkingdraft

was initialed by Deputy CommissionersFideloQ. Dumlao and

Consuelo Perez but was not signed by Commissioner Simeon

Kintanar.

Whileordinarily,a decision that isconcurredin bytwoof

thethreememberscomposingaquasi-judicialbodyisentitledto

promulgation,petitioners claimthat pursuantto theprevailing

policyandthecorrespondingprocedureandpracticeintheNTC,

theexclusiveauthoritytosign,validateandpromulgateanyand

allorders,resolutionsanddecisionsoftheNTCislodgedinthe

Chairman,inthiscase,CommissionerSimeonKintanar,and,thus,

sinceonlyCommissioner SimeonKintanaris recognizedby the

NTCSecretariatasthesoleauthoritytosignanyandallorders,

resolutions and decisions of the NTC, only his vote counts;

Deputy Commissioners Dumlao and Perez have allegedly no

voting power and both their concurrence which actually

constitutes the majority is inutile without the assent of

CommissionerKintanar.

Anxious over the inaction oftheNTCin the matter of its

petition praying for the issuance of a provisional authority,


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privaterespondent BellTelfiled onMay 5,1995an UrgentEx-

Parte Motion toResolveApplication and forthe Issuance of a

Provisional Authority[11].Reference was explicitlymade to the

findings of the CCAD and recommendations of Deputy

Commissioners Dumlao and Perez that were all favorable to

private respondent BellTel. Mention was also made of the

aforementionedworkingdraftoftheordergrantingaprovisionalauthority to BellTel , which draft was made by the Legal

Department of the NTC and initialed by the said deputy

commissioners.

No action was taken by the NTC on the aforecited

motion.Thus,onMay12,1995,privaterespondentBellTelfiled

aSecondUrgentEx-ParteMotion [12]reiteratingitsearlierprayer.

Petitioners-oppositors f iled an Opposition[13]to the

aforestatedtwomotionsofprivaterespondentBellTel.

In an Order dated May 16, 1995, signed solely by

CommissionerSimeonKintanar,theNTC,insteadofresolvingthetwopendingmotionsofprivaterespondentBellTel,setthesaid

motions for a hearing on May 29, 1995.On May 29, 1995,

however, nohearingwas conducted asthe samewas reset on

June13,1995.

OnJune13,1995,thedayofthehearing,privaterespondent

BellTel filed aMotionto Promulgate(Amending theMotion to

Resolve)[14]In said motion, private respondent prayed for the

promulgation of the working draft of the order granting a

provisional authority to private respondent BellTel, on the

groundthatthesaidworking drafthad alreadybeensignedor

initialed by Deputy Commissioners Dumlao and Perez who,together,constitutea majorityout ofthe three commissioners

composing theNTC.Tosupport its prayer,private respondent

BellTel asserted that theNTCwas a collegialbody andthatas

such,twofavorablevotesoutofamaximumthreevotesbythe

membersof thecommission,are enoughto validlypromulgate

anNTCdecision.

On June 23, 1995, petitioners-oppositors filed their Joint

Opposition[15]totheaforecitedmotion.

OnJuly4,1995,theNTCdeniedthesaidmotioninanOrder

solelysignedbyCommissionerSimeonKintanar.

OnJuly17,1995,privaterespondentBellTelfiledwiththis

court a Petition for Certiorari, Mandamus and Prohibitionseekingthe nullification ofthe aforestatedOrder dated July 4,

1995denyingtheMotiontoPromulgate.

On July 26, 1995, we issued a Resolution referring said

petition to the respondent Court of Appeals for proper

determinationandresolutionpursuanttoSection9,par.1ofB.P.

Blg.129.

In the interim, the Solicitor General filed with the

respondent appellate court a Manifestation In Lieu of

Comment[16]inwhichtheSolicitorGeneraltookalegalposition

adverseto that oftheNTC.TheSolicitorGeneral,aftera closeexaminationof thelawscreatingtheNTC anditspredecessors

andastudiousanalysisofcertainDepartmentofTransportation

and Communications (DOTC) orders, NTC circulars, and

DepartmentofJustice(DOJ)legalopinionspertinenttotheissue

ofcollegialityoftheNTC,madethefollowingrecommendations:

WHEREFORE,theSolicitorGeneralrespectfullypraysthatthis

HonorableCourt:

(a)declarerespondentNationalTelecommunications

Commissionasacollegialbody;

(b)restrainrespondentCommissionerSimeonKintanarfrom

arrogatinguntohimselfalonethepowersofthesaidagency;

(c)orderNTC,actingasacollegialbody,toresolvepetitioner

BellTelecomsapplicationunderNTC-94-229;


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(d)declareNTCMemorandumCirculars1-1-93and3-1-93as

void;[and]

(e)upholdthelegalityofDOTCDepartmentOrder92-614. [17]

On September 23, 1996, respondent Court of Appeals

promulgatedthehereinassaileddecisionthedispositiveportionofwhichreadsasfollows:

INTHELIGHTOFALLTHEFOREGOING,judgmentishereby

renderedasfollows:

1.Petitioners petition for a writ of Certiorari and

Prohibition is hereby granted.Accordingly, NTC

Memorandum Circular No. 1-1-93,Annex J of the

Petition,MemorandumCircularNo.3-1-93,AnnexK

ofthePetition andtheOrderofKintanar,AnnexL of

thePetition,areherebySETASIDEforbeingcontrarytolaw.TheRespondentsandallthoseactingforand

in their behalfare hereby enjoinedand prohibited

fromimplementingorenforcingthesame;[and]

2.Petitioners petition for mandamus is

herebyGRANTEDin that the Respondent NTC,

composed of Kintanar and deputy commissioners

Perez andDumlao, areherebydirectedto meeten

banc and to consider and act on the draft

Order,Annex B of the Petition, within fifteen (15)

days from the finality of this Decision.Without

pronouncementastocosts.

SOORDERED.[18]

The herein assailed decision being unacceptable to

petitioner Simeon Kintanar and petitioners GMCR, Inc., Smart

Communications, Inc., Isla Communications Co. , Inc. and

InternationalCommunicationsCorporationasoppositorsinthe

application of private respondent BellTel for a provisional

authority,theyfiledwiththiscourtseparatepetitionsforreview.

Commissioner Kintanars petition, docketed as G.R. No.

126526,ascribestotherespondentappellatecourtthefollowing

assignmentoferrors:

1.TheCourtofAppeals,insettingasideNTCMC1-1-93andMC

3-1-93andtheOrderoftheCommissiondatedJuly4,1995,

madeacollateralattackonalawwhichwasnowherecalledfor

inthepleadingsofthepartiesnorisauthorizedbytheRulesof

Court.

2.TheCourtofAppealserredinassumingandimposingthatthe

Commissionisacollegialbodysimplybyreasonofthefactthat

otherbodieswhichwereaspinofffromthedefunctPublic

ServiceCommissionwerecreatedasacollegialbody.Thelaw

thatcreatedEO546erasedthecollegialcharacteroftheproceedingsbeforetheNTC.

3.TheCourtofAppealsdecisioncontainsseriouscontradiction;

worse,itconsideredevidencenotformallyofferedor

incorporatedintotherecordsofthecase;yetfailedtoconsider

evidencesubmittedbypetitioner-appellantnoronthe

prejudicialissueonnon-joinderofindispensableparties-

3.1CAerredinassumingthattheNTCiscollegialbythefact

thatChartersofotherregulatoryagenciesexpresslymadethem

collegialwhilethisexpressprovisionwasabsentinNTCscharter.

3.2CAcontradictsitselfbyholdingthatDOTCMC92-614

prevailsand[requires]collegiality.


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3.3ThedecisionsbyUndersecretaryLichaucosignedbyher

andher2deputiesareinnowayindicativeofcollegialityand

shouldnotbeconsideredashavinganypersuasiveeffectxxx.

3.4TheCourtofAppealserredinapplyingtheBoardof

CommunicationsRulesofPracticeandProcedures.

4.TheCourtofAppealserredwhenitgrantedmandamus,

directingandineffectcontrollingCommissionerKintanarand

deputyCommissionersDumlaoandPerez,tomeetenbancto

considerandactonadraftOrderonlywhichtheCourtitself

recognizednolongerhadtheapprovaloftwo(2)Commissioners

whileinthesametokentheCourtofAppealshadsetasideaduly

promulgatedOrderofJuly4,1995allegedlybecauseitdidnot

carrytheapprovalof2commissioners. [19]

On theother hand,petitioners-oppositors,in theirpetition

docketedas G.R.No. 126496,assail thedecisionof respondentappellatecourtonthefollowinggrounds:

1.The Court of Appeals erred in not dismissing the

instant Petition outright for its failure to implead

indispensableparties,inviolationofSection5,Rule

65andSec.3,Rule7oftheRevisedRulesofCourt;

2.The Court of Appeals seriously erred in taking

cognizance of and passing upon BellTels Petition,

whichonitsfaceisprematuresincetheOrderofJuly

4, 1996 assailed was not a final decision of the

Commission;

3.Evenassumingarguendo that theCourt ofAppeals

cantakecognizanceofthePetition,thedispositionin

Decisiontherein whichnullifies NTCMemorandum

Circulars 1-1-93 and 3-1-93 itself constitutes a

collateral attack on the said laws, the validity of

whichwereneverputinissuebyanyoftheparties,

contrary to the clear legal requirement that the

validity of laws can be attacked only in direct

proceedingsinstitutedforthatpurpose;

4.Itwas infactimproper for theCourt ofAppeals to

passonthevalidityofNTCCircularNo.1-1-93and

Memorandum Circular No. 3-1-93 since the same

wasabsolutelyunnecessaryfortheresolutionofthe

Petition;

5.Evenassuming that theCourt of Appeals correctly

definedtheprimeissuesasbeingthatofcollegiality,

nonetheless the Court of Appeals committed a

serious error of law in declaring the NTC as a

collegialbodydespitetheclearintentofE.O.No.546

and the provisions of DOTC MC 95-640, and the

obviousimplicationsofpendingbillsinCongresson

thereorganizationoftheNTC;

6.The Decision, in mandating that the NTCCommissioner and Deputy Commissioners sit to

considerthedraft-andonlythedraft-inrenderingits

Decision in BellTels application constitutes an

unwarranted, unauthorized and unlawful

interferenceinandcanalizationofthediscretionary

functions of the Commission as a quasi-judicial

entity;and

7.TheDecision condonesthe illegaland unethicalact

ofBellTelofsurreptitiouslysecuringadraftdecision,

and encourages and places premium on future

similarillegalacts-allin violation oftherulingandthe mandate of the Supreme Court in In Re

Jurado: Adm. Matter No. 90-5-383 (July 12,

1990).[20]


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OnDecember16,1996,privaterespondentBellTelfiledan

OmnibusMotion[21]prayingfor,amongothers,theconsolidation

ofG.R.Nos.126496and126526.

On December 18, 1996, respondent BellTel f iled its

Comment.[22]On the same day, the NTC and Commissioner

KintanarfiledaManifestation/Motion[23]echoingtheprayerfor

theconsolidationoftheG.R.Nos.126496and126526.

OnDecember19, 1996, theOffice ofthe Solicitor General

filedaManifestation/Motion [24]reiteratingthatitslegalstancein

thiscase is adverse to thatof the NTC and praying thatit be

excludedfromfilinganycommentinbehalfoftheNTC.

InaResolutiondatedFebruary5,1997,weresolved,among

others,toexcusetheSolicitorGeneralfromfilinganycomment

inbehalfoftheNTC,requiretheNTCtofileitsowncommentin

G.R. No. 126496 and to consolidate G.R. Nos. 126496 and

126526.

OnMarch6,1997,theNTCandCommissionerKintanarfiled

a Manifestation/Motion[25]praying that the latters petition in

G.R.No.126526beadoptedastheircommentintheconsolidated

cases.

Upon thejoinderof issuesin theseconsolidated cases,we

perceivethefundamentalissuetobethatofthecollegialityofthe

NTCasaquasi-judicialagency.

Wefindtheconsolidatedpetitionswantingofmerit.

First.We hereby declare that theNTCis a collegial body

requiring a majority vote out of the three members of thecommission in order to validly decide a case or any incident

therein.Corollarily, the vote alone of the chairman of the

commission,asinthiscase,thevoteofCommissionerKintanar,

absenttherequiredconcurringvotecomingfromtherestofthe

membership ofthe commission toat leastarriveat amajority

decision, is not sufficient to legally render an NTC order,

resolutionordecision.

Simply put, Commissioner Kintanar is not the National

TelecommunicationsCommission.Healone does not speak for

and in behalf of the NTC.The NTC actsthrough a three-man

body,and thethreemembers ofthe commissioneach hasone

vote to cast in every deliberation concerning a case or any

incident therein that is subject to the jurisdiction of the

NTC.WhenweconsiderthehistoricalmilieuinwhichtheNTC

evolvedintothequasi-judicialagencyitisnowunderExecutive

Order No. 146 which organized the NTC as a three-man

commission and expose the illegality of all memorandum

circulars negating the collegial nature of the NTC under

Executive Order No. 146, we are left with only one logical

conclusion:theNTCisacollegialbodyandwasacollegialbody

evenduringthetimewhenitwasactingasaone-manregime.

We thus quote with approval the encompassing legal

ruminationsoftherespondentCourtofAppealsindisposingof

theissueofthecollegialityoftheNTC:

Inresolvingtheissue,Werecallthat,onNovember17,1936,the

NationalAssemblypassedCommonwealthActNo.146which

createdthePublicServiceCommission(PSC).Whileproviding

thatthePSCshallconsistofaPublicServiceCommissioneranda

DeputyCommissioner,thelawmadeitclearthatthePSCwasnot

acollegialbodybystatingthattheDeputyCommissionercould

actonlyonmattersdelegatedtohimbythePublicService

Commissioner.AsamendedbyRA2677,thePublicService

Commissionwastransformedintoandemergedasacollegialbody,composedofonePublicServiceCommissionerandfive(5)

AssociateCommissioners.Theamendmentprovidedthat

contestedcasesandallcasesinvolvingthefixingofratesshallbe

decidedbytheCommissionenbanc.


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OnSeptember24,1972,thenPresidentFerdinandE.Marcos

signed,intolaw,PresidentialDecreeNo.1adoptingand

approvingtheIntegratedReorganizationPlanwhich,inturn,

createdtheBoardofCommunications(BOC)inplaceofthe

PSC.Thistime,thenewregulatoryboardwascomposedofthree

(3)officersexercisingquasi-judicialfunctions:

xxxTheBoardofCommunicationsshallbecomposedofafull

timeChairmanwhoshallbeofunquestionedintegrityand

recognizedprominenceinpreviouspublicand/orprivate

employment;twofull-timememberswhoshallbecompetenton

allaspectsofcommunications,preferablyoneofwhomshallbea

lawyerandtheotheraneconomistxxx

OnJanuary25,1978,theBOCpromulgateditsRulesof

ProcedureandPracticeinconnectionwithapplicationsand

proceedingsbeforeit.

OnJuly23,1979,PresidentMarcosissuedExecutiveOrderNo.

546,creatingtheMinistriesofPublicWorks,andof

TransportationandCommunications,mergedthedefunctBoard

ofCommunicationsandtheTelecommunicationsControlBureau

intoasingleentity,theNationalTelecommunications

Commission(NTC).ThesaidlawwasissuedbythenPresident

Marcosintheexerciseofhislegislativepowers.Sec.16ofE.O.

546providesthat--

xxxTheCommissionshallbecomposedofaCommissionerand

twoDeputyCommissioners,preferablyoneofwhomshallbea

lawyerandanotheraneconomist.xxx

TheaforementionedExecutiveOrdertookeffectonSeptember

24,1979xxx.However,theNTCdidnotpromulgateanyRules

ofProcedureandPractice.Consequently,thethenexistingRules

ofProcedureandPracticepromulgatedbytheBOCwasapplied

toproceedingsintheNTC.Inthemeantime,theDecisionsofthe

NTCweresignedbytheChairmanaloneoftheNTCwhich

renderedthetwo(2)deputyCommissionersnon-participative

inthetaskofdecision-making.ThispromptedthethenMinister

ofTransportationandCommunicationJoseP.Dans,Jr.toseek

thelegalopinionofthethenMinisterofJusticeRicardoC.Puno,

astowhethertheNTCwasacollegialbodyornot.OnJanuary11,1984,MinisterPunosentaletter-opinionxxxtotheeffect

thattheNTCwasnotacollegialbodybutasingleentityandthus

thethenpracticeofonlytheChairmanoftheNTCsigningthe

DecisionsoftheNTCwasauthorizedbylaw.xxx

Admittedly,theopinionoftheSecretaryofJusticeisentitledto

greatweightxxx.However,thesameisnotcontrollingor

conclusiveonthecourtsxxx.Wefindanddeclare,inthe

presentrecourse,thatthePunoOpinionisnot

correct.Admittedly,EO546doesnotspecificallystatethatthe

NTCwasacollegialbody.NeitherdoesitprovidethattheNTC

shouldmeetEnBancindecidingacaseorinexercisingits

adjudicatoryorquasi-judicialfunctions.Buttheabsenceofsuch

provisionsdoesnotmilitateagainstthecollegialnatureofthe

NTCunderthecontextofSection16ofEO546andunderthe

RulesofProcedureandPracticeappliedbytheNTCinits

proceedings.Under[Rule15]ofsaidRules,theBOC(nowthe

NTC)sitsEnBanc:

xxxIneverycaseheardbytheBoardenbanc,theorders,

rulings,decisionsandresolutionsdisposingofthemeritsofthe

matterwithinitsjurisdictionshallbereachedwiththe

concurrenceofatleasttworegularmembersafterdeliberationandconsultationandthereafterassignedtoamemberforthe

writingoftheopinion.Anymemberdissentingfromtheorder,

ruling,decisionorresolutionshallstateinwritingthereasonfor

hisdissent.


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Inallothercases,adulyassignedMembershallissueallorders,

rulings,decisionsandresolutionspertinenttothecaseassigned

tohim.Copyofthedecisiononthemeritofthecasesoassigned

shallbefurnishedtheChairmanoftheBoard.

xxx

Inscrutably,acasebeforetheBOCmaybeassignedtoandheard

byonlyamemberthereofwhoistaskedtoprepareand

promulgatehisDecisionthereon,orheard,EnBanc,bythefull

membershipoftheBOCinwhichcasetheconcurrenceofatleast

two(2)ofthemembershipoftheBOCisnecessaryforavalid

Decisionxxx.WhileitmaybetruethattheaforesaidRulesof

ProcedurewaspromulgatedbeforetheeffectivityofExecutive

OrderNo.546,however,theRulesofProcedureofBOCgoverned

therulesofpracticeandprocedurebeforetheNTCwhenitwas

establishedunderExecutiveOrderNo.546.Thiswas

enunciatedbytheSupremeCourtinthecaseofPhilippine

ConsumersFoundation,Inc.versusNational

TelecommunicationsCommission,131SCRA200whenit

declaredthat:

TheRulesofPracticeandProcedurepromulgatedonJanuary25,

1978bytheBoardofCommunications,theimmediate

predecessorofrespondentNTCxxxgoverntherulesofpractice

andprocedurebeforetheBOCthen,nowrespondentNTC.xxx

InthecaseofPhilippineLongDistanceTelephoneCompany

versusNationalTelecommunications,etal.,190SCRA717,the

SupremeCourtappliedandcitedRule15oftheRulesofProcedureandPracticeofBOCxxx.

Hence,underitsRulesofProcedureandPractice,the

RespondentNTC,asitspredecessor,theBOC,hadconsistently

beenandremainsacollegialbody.

RespondentsKintanarsandNTCsposethatRespondent

Kintanar,alone,isvestedwithauthoritytosignandpromulgatea

DecisionoftheNTCisantitheticaltothenatureofacommission

asenvisagedinExecutiveOrderNo.546.Itmustbebornein

mindthataCommissionisdefinedas:

[a]bodycomposedofseveralpersonsactingunderlawfulauthoritytoperformsomepublicservice.(CityofLouisville

MunicipalHousingCommissionversusPublicHousing

Administration,261SouthwesternReporter,2nd,page286).

ACommissionisalsodefinedasaboardorcommitteeofofficials

appointedandempoweredtoperformcertainactsorexercise

certainjurisdictionofapublicnatureorservicexxx(Black,Law

Dictionary,page246).Thereispersuasiveauthoritythata

commissionissynonymouswithboard(StateEx.Rel.Johnson

versusIndependentSchoolDistrictNo.810,WabashCounty,109

NorthwesternReporter2nd,page596).Indeed,ascanbeeasily

discernedfromthecontextofSection16ofExecutiveOrderNo.

546,theCommissioniscomposedofaCommissionerandtwo(2)

deputycommissionersxxxnotthecommissioner,alone,as

pontificatedbyKintanar.Theconjunctivewordandisnot

withoutanylegalsignificance.Itisnot,byanychance,a

surplusageinthelaw.Itmeansinadditionto(McCaullWebster

ElevatorCompanyversusAdams,167NorthwesternReporter,

330,page332).Thewordand,whetheritisusedtoconnect

words,phrasesorfullsentence[s],mustbeacceptedasbinding

togetherandasrelatingtooneanotherxxx.

Ininterpretingastatute,everypartthereofshouldbegiveneffectonthetheorythatitwasenactedasanintegratedlawand

notasacombinationofdissonantprovisions.Astheaphorism

goes,thatthethingmayratherhaveeffectthanbedestroyedxx

x.IfitwastheintentionofPresidentMarcostoconstitutemerely

asingleentity,aone-mangovernmentalbody,insteadofa

commissionorathree-mancollegialbody,hewouldnothave


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constitutedacommissionandwouldnothavespecifically

decreedthattheCommissioniscomposedof,notthe

commissioneralone,butofthecommissionerandthetwo(2)

deputycommissioners.Irrefragably,then,theNTCisa

commissioncomposednotonlyofKintanar,butPerezand

Dumlaoaswell,actingtogetherintheperformanceoftheir

adjudicatoryorquasi-judicialfunctions,conformablywiththeRulesofProcedureandPracticepromulgatedbytheBOCand

applicabletotheNTC.

ThebarefacedfactthatxxxofExecutiveOrder546usedthe

worddeputytodesignatethetwo(2)othermembersofthe

CommissiondoesnotmilitateagainstthecollegialityoftheNTC.

xxxThecollegialityoftheNTCcannotbedisparagedbythe

merenominaldesignationofthemembershipthereof.Indeed,

Weareconvincedthatsuchnominaldesignationsarewithout

functionalimplicationsandaredesignedmerelyforthepurpose

ofadministrativestructureorhierarchyofthepersonnelofthe

NTC.xxx

Inhindsight,evenSecretaryGarciawasinaccordwiththe

collegialityoftheNTCwhenhepromulgatedandissued

DepartmentOrderNo.92-614xxx.EventhenCommissioner

MarianoBenedictoopenlyexpressedhisvehementoppositionto

theDepartmentOrderofSecretaryGarciaandoptedtoseek

refugeintheopinionofthethenMinisterofJusticePunoxxx.It

wasonlywhenCommissionerBenedictoresignedand

RespondentKintanarwasdesignatedtoreplaceCommissioner

BenedictothatSecretaryGarciaflip-flapped[sic],andsuddenly

founditexpedienttorecallhisDepartmentOrderNo.92-614andauthorizeKintanartodecide,allbyhimself,allcasespending

withtheNTCinfrontalviolationoftheRulesofProcedureand

PracticebeforetheNTC,morespecificallyRule15thereofxxx.

xxx

TheRespondentscannotfindsolaceinHouseBillNo.10558to

buttresstheirargumentxxxbecauseundertheHouseBill,the

NTCistransformedintoacollegialbody.Indeed,Wefind

Respondentsposetenuous.For,itcanlikewisebeargued,with

justification,thatHouseBillNo.10558indeedconfirmsthe

existingcollegialnatureoftheNTCbysoexpresslyreaffirming

thesame.

xxx

Insum,then,WefindandsodeclarethatNTCCircularNo.1-1-93

xxxMemorandumCircularNo.3-1-93xxxandtheOrderof

KintanarxxxdeclaringtheNTCasasingleentityornon-

collegialentity,arecontrarytolawandthusnullandvoidand

shouldbe,astheyarehereby,setaside. [26]

Second.Petitioners take us to task with their vigorous

contention that respondent appellate courts act of nullifying

NTC Memorandum CircularNo. 1-1-93 issued by then

Commissioner Mariano Benedicto, Jr. and NTC Memorandum

CircularNo.3-1-93issuedalsobythenCommissionerBenedicto

onJanuary6,1993,wasacollateralattackagainsttheaforecited

circularsandanunnecessaryandabusiveexerciseofthecourts

powertonullifyadministrativeregulations.

It must be remembered bypetitioners, however, that

administrativeregulationsderivetheirvalidityfromthestatute

that they were, in the first place, intended to

implement.Memorandum Circulars 1-1-93 and 3-1-93 are on

theirfacenullandvoidabinitioforbeingunabashedlycontraryto law.They were nullified by respondent Court of Appeals

becausetheyareabsolutelyillegaland,assuch,arewithoutany

force and effect.The fact that implementation of these illegal

regulations has resulted in the institutionalization of the one-

manruleintheNTC,isnotandcanneverbearatificationofsuch

anillegal practice.Atthe least,theseillegalregulations arean


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erroneous interpretation ofE.O. No. 546and in thecontext of

andits predecessor laws.Atthe most,these illegalregulations

areattemptstovalidatetheone-manruleintheNTCasexecuted

bypersonswiththeselfishinterestofmaintainingtheirillusory

holdofpower.

Sincethequestionedmemorandumcircularsareinherently

andpatentlynullandvoidforbeingtotallyviolativeofthespiritandletterofE.O.No.546thatconstitutestheNTCasacollegial

body, no courtmay shirk from itsduty ofstriking down such

illegalregulations.

Third.InitscertiorariactionbeforetherespondentCourtof

Appeals,privaterespondentBellTelwasproceedingagainstthe

NTCandCommissionerKintanarfortheformersadherenceand

defenseofitsone-manruleasenforcedbythelatter.Thus,only

the NTC and Commissioner Kintanar may be considered as

indispensable parties. After all , it is they whom private

respondent BellTel seek to be chastised and corrected by the

court for having acted in grave abuse of their discretion

amountingtolackorexcessofjurisdiction.

Theoppositorsin NTCCaseNo.94-229 arenotabsolutely

necessaryforthefinaldeterminationoftheissueofgraveabuse

of discretion on the part of the NTC and of Commissioner

KintanarinhiscapacityaschairmanofNTCbecausethetaskof

defending them primarily lies in the Office of the Solicitor

General.Furthermore,werethecourttofindthatcertiorarilies

against the NTC and Commissioner Kintanar, the oppositors

causecouldnotbesignificantlyaffectedbysuchrulingbecause

theissueofgraveabuseofdiscretiongoesnotintothemeritsof

thecaseinwhichtheoppositorsareinterestedbutintotheissue

ofcollegialitythat requires, regardlessof themerits ofa case,

that thesamebedecided onthe basis ofa majorityvoteof at

leasttwomembersofthecommission.

Theissueinthiscaseis,itbearsrepeating,notthemeritsof

theapplication of privaterespondentBellTelfor a provisional

authority to operate what promises to be the most

technologicallyadvancedtelephoneserviceinthe country.This

courtisnotin anywayconcernedwithwhetherornotprivate

respondent BellTels projectproposal is technicallyfeasible or

financiallyviable, andthis court shouldnot, in fact,delve into

these matters which are patently outside of its review

jurisdiction.All that respondentCourt of AppealspasseduponwasthequestionofwhetherornottheNTCandCommissioner

Kintanarcommittedgraveabuseofdiscretion, andsowe must

review and ascertain the correctness of the findings of the

respondentappellatecourtonthisscore,andthisscorealone.

Thus, theclaim ofpetitioners that there is here a case of

non-joinderofindispensablepartiesinthepersonsofallofthe

oppositorsinNTCCaseNo.94-229,isuntenable.

Fourth.Petitioners, in apparentparanoia, argue thatwhat

therespondentappellatecourthasactuallyordered,wasthatthe

NTCsitandmeetenbancandforthwithgrantprivaterespondent

BellTels application for a provisional authority.Petitioners,

however, have obviously over-read the second part of the

dispositiveportionof theherein assaileddecisionrendered by

respondentCourtofAppeals.

There isno disputethatjurisprudence issettled asto the

propriety ofmandamusin causing a quasi-judicial agency to

exerciseitsdiscretioninacasealreadyripeforadjudicationand

long-awaitingtheproperdisposition.Astohowthisdiscretionis

to be exercised,however, isa realmoutside the office of the

special civil action of mandamus. It is elementary legal

knowledge, after all,thatmandamusdoes not l ie to control

discretion.

When the respondent Court of Appeals directed

CommissionersKintanar,DumlaoandPereztomeetenbancand

toconsiderand actontheworkingdraft oftheordergranting

provisionalauthoritytoBellTel,saidcourtwassimplyordering

the NTC to sit and meeten bancas a collegial body, and the


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subjectofthedeliberationofthethree-mancommissionwould

bethesaidworkingdraftwhichembodiesonecourseofaction

thatmaybetakenonprivaterespondentBellTelsapplicationfor

a provisional authority.The respondent Court of Appeals,

however, did not order the NTC to forthwith grant said

application.Thisisunderstandablesinceeverycommissionerof

thethree-manNTChasavoteeachtocastindisposingofprivaterespondent BellTels application and the respondent appellate

courtwouldnot pre-emptthe exercise bythe membersof the

commissionoftheirindividualdiscretioninprivaterespondent

BellTelscase.

Respondentappellatecourtintends,however,fortheNTCto

promptlyproceedwiththeconsiderationofprivaterespondent

BellTels application forprovisionalauthority,for thesame has

beenripefordecisionsinceDecember,1994.Withthemarked

propensityofCommissionerKintanartodelayactiononthesaid

application and his insistent arrogation of sole power to

promulgate any and all NTC decisions, respondent Court ofAppealsorder fortheNTC tositand meetenbancto consider

private respondent BellTels application for a provisional

authority,attainsdeepsignificance.

Fifth.Theaccusationofpetitionersthattheworkingdraftof

theordergranting provisionalauthorityto privaterespondent

BellTel, wasobtained by thelatterthrough illegal means, is a

seriouscharge.However,notasinglepieceofevidencehasbeen

profferedbypetitionerstoprovethischarge.

PrivaterespondentBellTelmakesnosecretofthesourceof

thesaid workingdraft.Inprivate respondent BellTelsUrgent

Ex-Parte Motion to Resolve Application and For Issuance of

ProvisionalAuthority, itis allegedthatsaidworking draftwas

preparedbyAtty.BasilioBolanteoftheLegalDepartmentofthe

NTC.[27]SaidworkingdraftwasinitialedbytheCCADHead,Engr.

Edgardo Cabarios and by Deputy Commissioners Dumlao and

Perez.[28]The working draft isattached to the recordsof NTC

CaseNo.94-229whichmaybeborrowedbyanypersonforany

statedpurpose. [29]

Significantly,nooneamongtheaforementionedpersonshas

renouncedtheworkingdraftordeclaredittobespurious.More

importantly,petitionershaveutterlyfailedtoofferproofofany

illegality in the preparation or procurement of said working

draft.

Themorecriticalpointthatmattersmost,however,isthat

we cannot be diverted from the principal issue in this case

concerningthecollegialityoftheNTC.Intheultimate,theissue

ofthe procurementof theworking draft ismoreaproposfor a

criminal or administrative investigation than in the instant

proceedingslargelyaddressedtotheresolutionofapurelylegal

question.

WHEREFORE, premises considered, the instant

consolidatedpetitionsareherebyDISMISSEDforlackofmerit.

Costsagainstpetitioners.

SOORDERED.

Bellosillo,Vitug,andKapunan,JJ.,concur.

Padilla (Chairman),nopart; inview ofinterests inGMRC,

Inc.

GLOBETELECOMS,INC.V.NTC

SECONDDIVISION

[G.R.No.143964.July26,2004]


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GLOBE TELECOM, INC.,petitioner, vs.THE NATIONAL

TELECOMMUNICATIONS COMMISSION,

COMMISSIONER JOSEPH A. SANTIAGO, DEPUTY

COMMISSIONERS AURELIO M. UMALI and NESTOR

DACANAY, and SMART COMMUNICATIONS, INC.

respondents.

DECISION

TINGA,J.:

Telecommunicationsservicesareaffectedbyahighdegree

ofpublicinterest.[1]Telephonecompanieshavehistoricallybeen

regulated as common carriers,[2]and indeed, the 1936 Public

Service Act has classified wire or wireless communications

systems as a public service, along with other common

carriers.[3]

Yetwiththeadventofrapidtechnologicalchangesaffecting

the telecommunications industry, there has been a marked

reevaluation of the traditional paradigm governing state

regulation over telecommunications. For example, the United

States FederalCommunications Commissionhas chosen notto

impose strict common regulations on incumbent cellular

providers, choosing instead to let go of the reinsand rely on

marketforcestogovernpricingandserviceterms. [4]

InthePhilippines,asimilarparadigmshiftcanbediscerned

withthepassageofthePublicTelecommunicationsActof1995

(PTA).Asnotedbyoneofthelawsprincipalauthors,Sen.John

Osmea,underpriorlaws,thegovernmentregulatedtheentryofpricingand operationof allpublic telecommunicationsentities.

The new lawproposed to dismantle gradually the barriers to

entry, replace government control on price and income with

market instruments, and shift the focus of governments

interventiontowardsensuringservicestandardsandprotection

ofcustomers. [5]Towardsthisgoal,ArticleII,Section8ofthePTA

sets forth the regulatory logic, mandating that a healthy

competitive environment shall be fostered, one in which

telecommunicationscarriersarefreetomakebusinessdecisions

and to interact with one another in providing

telecommunications services, with the end in view of

encouragingtheirfinancialviabilitywhilemaintainingaffordable

rates.[6]

Thestatuteitselfdefinestheroleofthegovernmenttopromote a fair, efficient and responsive market to stimulate

growth and development of the telecommunications facilities

andservices. [7]

The present petition dramatizes to a degree the clash of

philosophies between traditional notions of regulation and

theaucoranttrendtoderegulation.Appropriately,itinvolvesthe

most ubiquitousfeature ofthe mobilephone,ShortMessaging

Service (SMS)[8]or text messaging, which has been

transformedfromameretechnologicalfadintoavitalmeansof

communication.And propitiously, thecase allowsthe Court to

evaluate the role of the National TelecommunicationsCommission(NTC)inthisdayandage.

TheNTCisat theforefrontofthegovernmentresponseto

the avalanche of inventions and innovations in the dynamic

telecommunicationsfield.Everyregulatoryactionitundertakes

isofkeeninterestnotonlytoindustryanalystsandplayersbut

tothepublicatlarge.Theintensivescrutinyisunderstandable

given the high financial stakes involved and the inexorable

impactonconsumers.Anditsrulingsaretraditionallyaccorded

respect even by the courts, owing traditional deference to

administrative agencies equipped with special knowledge,

experience and capability to hear and determine promptlydisputesontechnicalmatters. [9]

Atthesametime,judicialreviewofactionsofadministrative

agencies is essential, as a check on theunique powers vested

unto these instrumentalities.[10]Review is available to reverse

thefindingsofthespecializedadministrativeagencyiftherecord


14/62



before the Court clearly precludes the agencys decision from

beingjustifiedbyafairestimateoftheworthofthetestimonyof

witnessesoritsinformedjudgmentonmatterswithinitsspecial

competence,orboth. [11]Reviewmayalsobewarrantedtoensure

that theNTC or similarly empowered agencies act within the

confinesof theirlegalmandateandconformtothedemandsof

dueprocessandequalprotection.[12]

AntecedentFacts

Globe andprivate respondentSmartCommunications,Inc.

(Smart) are both grantees of valid and subsisting legislative

franchises, [13]authorizing them, among others, to operate

aCellularMobileTelephoneSystem(CMTS), utilizing theGlobal

SystemforMobileCommunication(GSM)technology.[14]Among

theinherentservicessupportedbytheGSMnetworkistheShort

MessageServices(SMS),[15]also known colloquially as texting,which hasattainedimmensepopularity inthe Philippinesas a

modeofelectroniccommunication.

On 4 June 1999, Smart filed aComplaint[16]with public

respondent NTC, praying that NTC order the immediate

interconnection of Smarts and Globes GSM networks,

particularly their respective SMS or texting

services. TheComplaintarose from the inability of the two

leadingCMTSproviderstoeffectinterconnection.Smartalleged

that Globe,withevident badfaith andmalice, refusedto grant

SmartsrequestfortheinterconnectionofSMS. [17]

On7June1999,NTCissuedaShowCauseOrder,informing

Globe oftheComplaint,specifically the allegations therein that,

amongothersdespiteformalrequestmadebySmarttoGlobe

fortheinterconnectionoftheirrespectiveSMSortextmessaging

services, Globe, with evident bad faith, malice and to the

prejudiceofSmartandGlobeandthepublicingeneral,refused

to grant Smarts request for the interconnection of their

respective SMS or text messaging services, in violation of the

mandateofRepublicAct7925,ExecutiveOrderNo.39,andtheir

respectiveimplementingrulesandregulations. [18]

GlobefileditsAnswerwithMotiontoDismisson7June1999,

interposing groundsthat theComplaintwaspremature,Smarts

failure to comply with the conditions precedent required inSection 6 of NTC Memorandum Circular 9-7-93,[19]and its

omission of the mandatory Certification of Non-Forum

Shopping.[20]Smartrespondedthatithadalreadysubmittedthe

voluminousdocumentsaskedbyGlobeinconnectionwithother

interconnectionagreementsbetweenthe twocarriers, and that

with those voluminous documents the interconnection of the

SMSsystemscouldbeexpeditedbymerelyamendingtheparties

existingCMTS-to-CMTSinterconnectionagreements. [21]

On 19 July 1999, NTCissuedtheOrdernow subject ofthe

presentpetition.IntheOrder,afternotingthatbothSmartand

Globewereequallyblameworthyfortheirlackofcooperationin the submission of the documentation required for

interconnection and for having unduly maneuvered the

situation into the presentimpasse,[22]NTCheldthatsinceSMS

fallssquarely within thedefinitionof value-addedservice or

enhanced-servicegiveninNTCMemorandumCircularNo.8-

9-95 (MC No. 8-9-95) the implementation of SMS

interconnectionismandatorypursuanttoExecutiveOrder(E.O.)

No.59.[23]

TheNTCalsodeclaredthatbothSmartandGlobehavebeen

providingSMSwithoutauthorityfromit,inviolationofSection

420 (f) of MC No. 8-9-95 which requires PTEs intending to

provide value-added services (VAS) to secure prior approval

fromNTC through an administrative process. Yet, in view of

what itnotedas thepeculiarcircumstances ofthe case,NTC

refrained from issuing aShow Cause Order with a Cease and

Desist Order, and instead directed the parties to secure the


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requisite authority to provide SMS within thirty (30) days,

subject to the payment of finein the amount of two hundred

pesos (P200.00) from thedate ofviolationand foreveryday

duringwhichsuchviolationcontinues. [24]

GlobefiledwiththeCourtofAppealsaPetitionforCertiorari

and Prohibition[25] to nullify and set aside theOrderand to

prohibit NTC from taking any further action in the case. Itreiterateditspreviousargumentsthatthecomplaintshouldhave

beendismissedforfailuretocomplywithconditionsprecedent

andthenon-forumshoppingrule.ItalsoclaimedthatNTCacted

without jurisdiction in declaring that it had no authority to

renderSMS, pointing out that thematterwasnotraisedas an

issue before it at all. Finally, Globe allegedthat theOrderis a

patent nullity as it imposed an administrative penalty for an

offenseforwhichneither itnor Smartwas sufficientlycharged

norheardoninviolationoftheirrighttodueprocess. [26]

The Court of Appeals issued aTemporary Restraining

Orderon31August1999.

In itsMemorandum, Globe also called the attention of the

appellatecourttothe earlierdecisionofNTCpertainingto the

application of Isla Communications Co., Inc. (Islacom) to

provideSMS,allegedlyholdingthatSMSisaderegulatedspecial

featureofthetelephonenetworkandthereforedoesnotrequire

the prior approval of NTC.[27]Globe alleged that its departure

fromitsrulingin theIslacom case constitutesa denialofequal

protectionofthelaw.

On 22 November 1999, aDecision[28]was promulgated by

theFormer Special Fifth Division of the Court ofAppeals[29]affirmingintotothe NTCOrder.Interestingly, on the

same day Globe and Smart voluntarilyagreed to interconnect

their respective SMS systems, and the interconnection was

effectedatmidnightofthatday. [30]

Yet, on21 December1999, GlobefiledaMotionforPartial

Reconsideration,[31]seeking to reconsider only the portion of

theDecisionthat upheld NTCs finding that Globe lacked the

authoritytoprovideSMSanditsimpositionofafine.BothSmart

andNTCfiledtheirrespectivecomments,stressingthereinthat

Globe indeed lacked the authority to provide SMS.[32]Inreply,

Globe asserted that the more salient issue was whether NTCcomplied with its ownRules of Practice and Procedurebefore

making the finding of want of authority and imposing the

fine.Globealsoreiteratedthatithasbeenlegallyoperatingits

SMSsystemsince1994andthatSMSbeingaderegulatedspecial

featureof thetelephone networkit may operateSMS without

priorapprovalofNTC.

After the Court of Appeals denied theMotion for Partial

Reconsideration,[33]GlobeelevatedthecontroversytothisCourt.

Globe contends that theCourt ofAppeals erred inholding

that the NTC has the power under Section 17 of the Public

ServiceLaw [34]tosubjectGlobetoanadministrativesanctionanda fine withoutpriornotice andhearing inviolationof thedue

processrequirements;that specificallydue processwas denied

Globebecausethehearingsactuallyconducteddweltondifferent

issues;and,theappellatecourterredinholdingthatanypossible

violationofdueprocesscommittedbyNTCwascuredbythefact

thatNTCrefrainedfromissuingaShowCauseOrderwithaCease

and Desist Order, directing instead the parties to secure the

requisiteauthoritywithinthirtydays.Globealsocontendsthat

intreatingit differentlyfromothercarriersprovidingSMS the

CourtofAppealsdenieditequalprotectionofthelaw.

The case was called for oral argument on 22 March

2004.Significantly,Smarthasdeviatedfromitsoriginalposition.

It no longer prays that the Court affirm the

assailedDecisionandOrder, and the twin rulings therein that

SMSisVASandthatGlobewasrequiredtosecurepriorauthority

beforeofferingSMS.Instead,SmartnowarguesthatSMSisnot


16/62



VASandthatNTCmaynotlegallyrequireeitherSmartorGlobe

tosecure prior approvalbefore providing SMS. Smart hasalso

chosen not to make any submission on Globes claim of due

processviolations. [35]

Aspresentedduringtheoralarguments,thecentralissues

are: (1)whetherNTCmaylegallyrequireGlobeto secureNTC

approvalbeforeitcontinuesprovidingSMS;(2)whetherSMSisaVASunderthePTA,orspecialfeatureunderNTCMCNo.14-11-

97;and(3)whetherNTCactedwithdueprocessinlevyingthe

fine against Globe.[36]Another issue is also raised whether

Globeshouldhavefirstfiledamotionforreconsiderationbefore

theNTC,but this relativelyminor question canbe resolved in

brief.

NecessityofFilingMotionforReconsideration

Globedeliberatelydidnotfileamotionforreconsideration

withtheNTCbeforeelevatingthemattertotheCourtofAppeals

via a petition for certiorari. Generally, a motion for

reconsiderationis a prerequisite forthefilingof a petition for

certiorari.[37]Inoptingnottofilethemotionforreconsideration,

Globe asserted before the Court of Appeals that the case fell

withintheexceptionstothegeneralrule. [38]Theappellatecourt

in the questionedDecisioncited the purported procedural

defect,[39]yetchoseanywaytoruleonthemeritsaswell.

Globeselectionto elevatethecasedirectlytotheCourtof

Appeals,skippingthestandardmotionforreconsideration,isnota mortal mistake. According to Globe, theOrderis a patent

nullity, it being violative of due process; the motion for

reconsiderationwasa uselessor idle ceremony; and,theissue

raisedpurelyone oflaw.[40]Indeed,the circumstancesadverted

to are among the recognized exceptions to the general

rule.[41]Besides,theissuespresentedareofrelativeimportance

andnovelty[42]so much sothat it isjudicious for the Courtto

resolvethemonthemeritsinsteadofhidingbehindprocedural

fineries.

TheMerits

Now,ontothemeritsofthepetition.

Deregulationisthemantrainthisageofglobalization.Globe

invokesit insupport ofits claim that itneed notsecure prior

authorityfromNTCinordertooperateSMS.Theclaimhastobe

evaluated carefully. After all, deregulation is not a magic

incantationthatwardsoff thespectreof intrusive government

withthemereinvocationofitsname.Theprinciples,guidelines,

rulesandregulationsthatgovernaderegulatedsystemmustbe

firmly rooted in the law and regulations that institute or

implementthederegulationregime.[43]

Theimplementationmustlikewisebefairandevenhanded.

Globe hinges its claim of exemption from obtaining prior

approvalfromtheNTConNTCMemorandumCircularNo.14-11-

97(MCNo. 14-11-97).Globenotesthatin a 7October1998

ruling on theapplication of Islacom for theoperation of SMS,

NTCdeclaredthattheapplicablecircularforSMSisMCNo.14-

11-97.[44]Under this ruling, it is alleged, NTC effectively

denominatedSMSasaspecialfeaturewhichunderMCNo.14-

11-97isaderegulatedservicethatneedsnopriorauthorization

from NTC. Globe further contends that NTCs requiring it to

secure prior authorization violates the due process and equalprotection clauses, since earlier it had exempted thesimilarly

situated Islacom from securing NTC approval prior to its

operationofSMS. [45]

On the other hand, the assailed NTCDecisioninvokes the

NTCImplementingRulesofthePTA(MCNo.8-9-95)tojustifyits


17/62



claimthatGlobeandSmartneedtosecurepriorauthorityfrom

theNTCbeforeofferingSMS.

The statutory basis for the NTCs determination must be

thoroughlyexamined.Ourfirstlevelofinquiryshouldbeintothe

PTA.ItistheauthoritybehindMCNo.8-9-95.Itis alsothelaw

thatgoverns all publictelecommunications entities(PTEs) in

thePhilippines. [46]

PublicTelecommunicationsAct

The PTA has not strictly adoptedlaissez-faireas its

underlying philosophy to promote the telecommunications

industry.Infact,thelawimposesstricturesthatrestrainwithin

reasonhowPTEsconducttheirbusiness.Forexample,itrequires

thatany accesscharge/revenuesharingarrangementsbetween

all interconnecting carriers that are entered into have to besubmitted for approval to NTC.[47]Each telecommunication

category[48]established in the PTA is governed by detailed

regulations.Also,internationalcarriersandoperatorsofmobile

radioservicesarerequiredtoprovidelocalexchangeservicein

unservedorunderservedareas.[49]

Atthesametime,thegeneralthrustofthePTAis towards

modernizing the legal framework for the telecommunications

servicessector.Thetransmutationhasbecomenecessarydueto

the rapid changes as well within the telecommunications

industry.AsnotedbySenatorOsmeainhissponsorshipspeech:

[D]ramaticdevelopmentsduringthelast15yearsinthefieldof

semiconductors have drastically changed the

telecommunications sector worldwide as well as in the

Philippines. New technologies have fundamentally altered the

structure,the economics and thenatureof competitionin the

telecommunications business. Voice telephony is perhaps the

mostpopularfaceoftelecommunications,butitisnolongerthe

onlyone.Thereareotherfacessuchasdatacommunications,

electronic mail, voice mail, facsimile transmission, video

conferencing,mobileradioservices like trunkedradio,cellular

radio,andpersonalcommunicationsservices,radiopaging,and

so on. Because of the mind-boggling developments in

semiconductors,thetraditionalboundariesbetweencomputers,

telecommunications, and broadcasting are increasingly

becomingblurred. [50]

OneofthenovelintroductionsofthePTAistheconceptofa

value-addedservice(VAS).Section11ofthePTAgovernsthe

operations of a value-addedserviceprovider,which thelaw

defines as an entity which relying on the transmission,

switching andlocaldistribution facilitiesof thelocalexchange

and inter-exchange operators, and overseas carriers, offers

enhancedservicesbeyondthoseordinarilyprovidedforbysuch

carriers.[51]Section 11recognizesthatVASprovidersneed not

secureafranchise,providedthattheydonotputuptheirownnetwork.[52]However, a different rule is laid down for

telecommunicationsentitiessuchasGlobeandPLDT.Thesection

unequivocally requires NTC approval for the operation of a

value-addedservice.Itreads, viz:

Telecommunications entities may provide VAS, subject to the

additionalrequirementsthat:

a)prior approval of the Commission is

securedtoensurethatsuchVASofferings

are not cross-subsidized from theproceedsoftheirutilityoperations ;

b)otherprovidersofVASarenotdiscriminated

againstinratesnordeniedequitableaccessto

theirfacilities;and


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c)separatebooksofaccountsaremaintainedfor

theVAS.(Emphasissupplied) [53]

Oddly enough, neither the NTC nor the Courtof Appeals

cited theabove-quoted provision in their respective decisions,

which after all , is the statutory premise for the assailed

regulatoryaction.Thisfailureisbutamereindiciaofthepatternof ignorance or incompetence that sadly attends the actions

assailedinthispetition.

ItisclearthatthePTAhasleftopen-endedwhatservicesare

classified as value-added, prescribing instead a general

standard, set forth as a matter of principle and fundamental

policyby the legislature.[54]The validity ofthisstandardset by

Section11isnotputintoquestionbythepresentpetition,and

there isno needto inquireinto itspropriety.[55]The power to

enforcetheprovisionsofthePTA,includingtheimplementation

ofthestandardssettherein,isclearlyreposedwiththeNTC. [56]

ItcanalsobegleanedfromSection11thattherequirementthatPTEssecurepriorapprovalbeforeofferingVASistiedtoa

definitepurpose,i.e.,to ensure that such VASofferingsare

not cross-subsidized from the proceeds of their utility

operations . The reason is related to the fact that PTEs are

considered as public services,[57]and mandated to perform

certain public service functions. Section 11 should be seen in

relationtoE.O.109,whichmandatesthatinternationalgateway

operators shall be required to provide local exchange

service,[58]for the purpose of ensuring availability of reliable

and affordable telecommunications service in both urban and

ruralareasofthecountry.[59]

UnderE.O.No.109,localexchangeservicesaretobecross-subsidizedbyothertelecommunications

services within the same company until universal access is

achieved.[60]Section 10 of the PTA specifically aff irms the

requirementssetbyE.O.No.109.TherelevancetoVASisclear:

public policy maintains that the offer of VAS byPTEs cannot

interferewiththefundamentalprovisionbyPTEsoftheirother

publicservicerequirements.

More pertinently to the case at bar, the qualification

highlightsthefactthatthelegalrationaleforregulationofVASis

severelylimited.ThereisanimplicitrecognitionthatVASisnot

strictly a publicservice offering in theway that voice-to-voice

lines are, for example,but merely supplementary to the basicservice.Ultimately,theregulatoryattitudeoftheStatetowards

VAS offerings by PTEs is to treat its provisioning as a

businessdecisionsubjectto thediscretionof theofferor,

solongassuchservicesdonotinterferewithmandatorypublic

servicerequirementsimposedonPTEssuchasthoseunderE.O.

No.109.Thus,non-PTEsarenotsimilarlyrequiredtosecure

priorapprovalbeforeofferingVAS,astheyarenotburdened

by the public service requirements prescribed on

PTEs.[61]Dueregardmustbeaccordedtothisattitude,whichis

in consonance with the general philosophy of deregulation

expressedinthePTA.

ThePertinentNTCMemorandumCirculars

Next,weexaminetheregulatoryframeworkdevisedbyNTC

indealingwithVAS.

NTCreliedon Section420(f)of theImplementingRulesof

thePTA(ImplementingRules)asbasisforitsclaimthatprior

approvalmustbesecuredfromitbeforeGlobecanoperateSMS.

Section420oftheImplementingRules,containedinMCNo.8-9-95,statesinfull:

VALUEADDEDSERVICES(VAS)

(a) A non-PTEVASprovider shall notbe required to

secureafranchisefromCongress.


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(b) A non-PTE VAS provider can utilize its own

equipment capable only of routing, storing and

forwarding messages in whatever format for the

purpose of providing enhanced or augmented

telecommunicationsservices.Itshallnotputupits

own network. It shall use the transmission

network,tollorlocaldistribution,oftheauthorized

PTES.

(c)TheprovisionofVASshallnotinanywayaffectthe

crosssubsidytothelocalexchangenetworkbythe

international andnational toll services andCMTS

service.

(d)Entitiesintendingtoprovidevalueaddedservices

onlyshallsubmittothecommissionapplicationfor

registration for approval. The application form

shall include documents showing, among others,

systemconfiguration,modeofoperation,methodofchargingrates,leaseagreementwiththePTE,etc.

(e)Theapplicationforregistrationshallbeactedupon

by the Commission through an administrative

process within thirty (30) days from date of

application.

(f)PTEsintendingtoprovidevalueaddedservices

are required to secure prior approval by the

Commissionthroughanadministrativeprocess.

(g)VASprovidersshallcomplystrictlywiththeservice

performance and other standards prescribed

commission.(Emphasissupplied.)

InsteadofexpresslydefiningwhatVASis,theImplementing

Rules defineswhatenhancedservicesare,namely:a service

whichaddsafeatureorvaluenotordinarilyprovidedbyapublic

telecommunications entity such as format, media conversion,

encryption, enhanced security features, computer processing,

and thelike.[62]Given that thePTA definesVASas enhanced

services,thedefinitionprovidedintheImplementingRulesmay

likewise be applied to VAS. Still, the language of the

Implementing Rules is unnecessarily confusing. Much trouble

wouldhavebeensparedhadtheNTCconsistentlyusedtheterm

VASasitisusedinthePTA.

Thedefinitionof enhanced services inthe Implementing

Rules,whilemoredistinctthan that under thePTA,is stilltoo

sweeping.Ratherthanenumeratingwhatpossiblefeaturescould

be classified as VAS or enhanced services, the Implementing

Rulesinsteadfocusesonthecharacteristicsofthesefeatures.The

useof thephrasethe like,[63]and itsimplications ofanalogy,

presumesthatawholemyriadoftechnologiescaneventuallybesubsumedunderthedefinitionofenhancedservices.TheNTC

shouldnotbenecessarilyfaultedforsuchindistinctformulation

since it could not have known in 1995[64]what possible VAS

wouldbeavailableinthefuture.Thedefinitionlaiddowninthe

ImplementingRulesmayvalidlyserveasaguidefortheNTCto

determinewhatemergentofferingswouldfallunderVAS.

Still,owingtothegeneralnatureofthedefinitionlaiddown

intheImplementingRules,theexpectation arisesthattheNTC

would promulgate further issuances defining whetheror nota

specific feature newly available in the market is a VAS. Such

expectationisespeciallydemandediftheNTCistopenalizePTEswhofailtoobtainpriorapprovalinaccordancewithSection11

ofthePTA.Toourknowledge,theNTChasyettocomeoutwith

anadministrativeruleorregulationlistingwhichoftheofferings

inthemarkettodayfallunderVASorenhancedservices.


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Still, there isMC No.14-11-97, entitled Deregulating the

ProvisionofSpecialFeaturesintheTelephoneNetwork.Globe

invokesthiscircularasithadbeenpreviouslycitedbytheNTC

asapplicabletoSMS.

On 2 October 1998, Islacom wrote a letter to the

NTC,informingtheagency that itwill be offering thespecial

feature ofSMSforits CMTS,and citingthereinthatthenoticewasbeinggivenpursuanttoNTCMemorandumCircularNo.14-

11-97.[65]Inresponse,theNTCacknowledgedreceiptoftheletter

informingitofIslacomsofferingthespecialfeatureofSMS

foritsCMTS,andinstructedIslacomtoadheretotheprovisions

ofMCNo.14-11-97.[66]Theclearimplicationoftheletteristhat

NTCconsiderstheCircularasapplicabletoSMS.

An examinationof MCNo. 14-11-97further highlightsthe

state of regulatory confusion befalling the NTC. The relevant

portionsthereofarereproducedbelow:

SUBJECT:DEREGULATING THE PROVISION OF SPECIALFEATURESINTHETELEPHONENETWORK.

For the purpose of exempting specific telecommunications

servicefromrateortariffregulationsiftheservicehassufficient

competition to ensure fair and reasonable rates or tariffs,the

Commission hereby deregulates the provision of special

featuresinherenttotheTelephoneNetwork.

Section 1. For the purpose of this Circular,Special Feature

shallreferto a featureinherentto thetelephonenetwork

which may not be ordinarily provided by a TelephoneService Providersuch as call waiting, call forwarding ,

conferencecalling,speeddialing,callerID,maliciouscallID,call

transfer, charging information, call pick-up, call barring,

recordedannouncement,nodoubleconnect,warmline,wake-up

call,hotline,voicemail,andspecialfeaturesofferedtocustomers

with PABXssuchas directinwarddialingandnumber hunting,

andthelike;providedthatintheprovisionofthefeature,nolaw,

rule, regulation or international convention on

telecommunications is circumvented or violated.The

Commission shall periodically update the list of special

features in the Telephone Network which, including the

chargingofratestherefor,shallbederegulated .

Section2. A duly authorizedTelephone ServiceProvider shall

informtheCommissioninwriting ofthespecial features itcan

offer and the corresponding rates thirty (30) days prior to

launchdate.

xxx

Section 4. Authorized Telephone Service Providers shall

continuetochargetheirdulyapprovedratesforspecialservices

for3monthsfromtheeffectivityofthiscircular,afterwhichthey

maysettheirownrates.

xxx(Emphasissupplied)

JustlikeVASasdefinedunderthePTA,specialfeaturesare

also not ordinarily provided by the telephone company.

Considering that MC No. 14-11-97 was promulgated after the

passageof thePTA, itcan beassumedthatthe authorsof the

Circularwerewellawareoftheregulatoryschemeformedunder

the PTA. Moreover, MC No. 14-11-97 repeatedly invokes the

word deregulation, and it cannot be denied that the

liberalizationethoswasintroducedbythePTA.Yet,theneteffectofMCNo.14-11-97istoaddtothehazebecloudingtheNTCs

rationale for regulation. The introduction of a new concept,

specialfeature,whichisnotprovidedforinthePTAjustadds

tothe confusion,especiallyin lightof thesimilarities between

special features andVAS. Moreover, there isno requirement


21/62



thataPTEseekingtoofferspecialfeaturesmustsecureprior

approvalfromtheNTC.

Is SMS a VAS, enhanced service, or a special feature?

Apparently,eventheNTCisunsure.IthadtoldIslacomthatSMS

was a special feature, then subsequently held that it was a

VAS. However, the pertinent laws and regulations had not

changed from the time of the Islacom letter up to the daytheOrderwasissued.OnlythethinkingofNTCdid.

Moresignificantly, NTCnever required ISLACOM to apply

for prior approval in order to provide SMS, even after

theOrderto that effect was promulgated against Globe and

Smart. This fact was admitted by NTC during oral

arguments. [67]NTCs treatment of Islacom, apart from being

obviouslydiscriminatory,putsintoquestionwhetherornotNTC

trulybelieves that SMSis VAS. NTCis unable topointout any

subsequentruleorregulation,enactedafteritpromulgatedthe

adverse order against Globe and Smart, affirming the newly-

arriveddeterminationthatSMSisVAS.

Infact,asSmartadmittedduringtheoralarguments,while

it did comply with the NTCOrderrequiring it to secure prior

approval,itwasneverinformedbytheNTCofanyactiononits

request.[68]WhileNTCcountersthatit didissuea Certificateof

RegistrationtoSmart,authorizingthelatterasaproviderofSMS,

such Certificate of Registration was issued only on 13 March

2003, or nearly four (4) years after Smart had made its

request.[69]This inaction indicates a lack ofseriousnesson the

part oftheNTCtoimplementits ownrulings.Also,ittendsto

indicatethelackofbeliefor confusiononNTCspartastohow

SMSshould betreated.Giventheabstractset ofrulestheNTChaschosentoimplement,thisshouldcomeasnosurprise.Yetno

matter howcontent theNTC maybe with itsattitude ofsloth

towardsregulation,theeffectmayproveruinoustothesectorit

regulates.

Every party subject to administrative regulation

deserves an opportunity to know, through reasonable

regulations promulgated by the agency, of the objective

standards thathaveto bemet. Such rule isintegral todue

process,asitprotectssubstantiverights.Suchrulealsopromotes

harmonywithintheserviceorindustrysubjecttoregulation.It

provides indubitable opportunities to weed out the most

frivolousconflictswithminimumhassle, andcertain footing in

decidingmoresubstantiveclaims.If this results ina tenfoldin

administrativerulesandregulations,suchpriceisworthpaying

ifitalsoresultsinclarityandconsistencyintheoperativerules

ofthegame.Theadministrativeprocesswillbestbevindicated

byclarityinitsexercise. [70]

Inshort,thelegalbasisinvokedbyNTCinclaimingthatSMS

isVAShasnotbeendulyestablished.Thefaultfallssquarelyon

NTC.WiththedualclassificationofSMSasaspecialfeatureand

aVASandthevaryingrulespertinenttoeachclassification,NTC

hasunnecessarilycomplicatedtheregulatoryframeworktothe

detriment of the industry and the consumers. But does that

translate to a finding that the NTCOrdersubjecting Globe to

priorapprovalisvoid?Thereisafinelinebetweenprofessional

mediocrity and illegality. NTCs byzantine approach to SMS

regulation is certainly inefficient. Unfortunately for NTC, its

actions have also transgressed due process inmany ways,as

shownintheensuingelucidation.

PenalizedViaaQuasi-JudicialProcess,

GlobeandSmartareEntitledto

CorrespondingProtections

It is essential to understand that the assailedOrderwas

promulgated by NTC in the exercise of its quasi-judicial

functions. The case arose when Smart had filed the initial


22/62



complaint against Globe before NTC for interconnection of

SMS.[71]NTC issued aShow Cause Orderrequiring Globe to

answer Smarts charges. Hearings were conducted, and a

decisionmadeonthemerits,signedbythethreeCommissioners

oftheNTC,sittingasacollegialbody. [72]

Theinitialcontroversymayhaveinvolvedadifferentsubject

matter,interconnection,whichisnolongercontested.Itcannotbe denied though that the findings and penalty now assailed

before us was premised on the same exercise of

jurisdiction.Thus,itisnotrelevanttothiscasethattheprocess

forobtainingpriorapprovalunderthePTAanditsImplementing

Rules is administrative in nature. While this may be so, the

assailed NTCs determination and correspondingpenaltywere

renderedintheexerciseofquasi-judicialfunctions.Therefore,all

the requirements of due process attendant to the exercise of

quasi-judicialpowerapplytothepresentcase.Amongthemare

the seven cardinal primary rights in justiciable cases before

administrative tribunals, as enumerated inAng Tibayv.

CIR.[73]Theyaresynthesizedinasubsequentcase,asfollows:

Therearecardinalprimaryrightswhichmustberespectedeven

inproceedingsof this character.Thefirstoftheserightsis the

righttoahearing,whichincludestherightofthepartyinterested

or affected to present his own case and submit evidence in

supportthereof.Notonlymustthepartybegivenanopportunity

topresenthiscaseandtoadduceevidencetendingtoestablish

therightswhichhe assertsbutthe tribunal must consider the

evidence presented. While the duty to deliberate does not

imposetheobligationtodecideright,it does implya necessity

whichcannotbedisregarded,namely,thatofhavingsomethingtosupportitsdecision.Notonlymusttherebesomeevidenceto

support a finding or conclusion, but the evidence must be

substantial. The decision must be rendered on the evidence

presentedatthehearing,oratleastcontainedintherecordand

disclosedtothepartiesaffected. [74]

NTCviolated severalof these cardinal rightsdue Globein

thepromulgationoftheassailed Order.

First.The NTC Order is not supported by substantial

evidence.Neitherdoesitsufficientlyexplainthereasonsforthe

decisionrendered.

Our earlier discussion pertained to thelack of clear legal

basisforclassifyingSMSasVAS,owingtothefailureoftheNTC

toadoptclearrulesandregulationstothateffect.Muddledasthe

legalmilieugoverningSMSalreadyis,NTCsattempttoapplyits

confusingstandardsinthecaseofGlobeandSmartisevenmore

disconcerting. The very rationale adopted by the NTC in

itsOrderholding that SMS is VAS is short and shoddy.

Astoundingly,theCourtofAppealsaffirmedtherationalebereft

of intelligent inquiry, much less comment. Stated in full, the

relevantportionoftheNTCOrderreads:

xxxGettingdown[to]thenitty-gritty,GlobesSMSinvolvesthe

transmissionofdataoveritsCMTSwhichisGlobesbasicservice.SMSis notordinarily providedby a CMTS operatorlikeGlobe,

andsinceSMSenhancesGlobesCMTS,SMSfitsintoanicety

[sic]with thedefinition ofvalue-added-serviceor enhanced-

service under NTCMemorandumCircular [8]-9-95 (Rule 001,

Item[15]). [75]

The Court usually accords great respect to the technical

findingsofadministrativeagenciesinthefieldsoftheirexpertise,

even if they are infelicitously worded. However, the above-

quoted finding is nothing more than bare assertions,

unsupported by substantial evidence.[76]

TheOrderreveals thatnodeepinquirywasmadeas tothenatureofSMS orwhatits

provisioning entails. In fact, the Court is unable to find how

exactly does SMSfits into anicetywith NTCM.C.No.8-9-95,

which defines enhanced services as analogous to format,

media conversion, encryption, enhanced security features,

computerprocessing,andthelike. [77]TheNTCmerelynotesthat

T P A A


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SMS involves the transmission of data over [the] CMTS, a

phraseologythatevincesno causalrelationto thedefinition in

M.C.No.8-9-95.Neitherdid theNTCendeavor toexplainwhy

thetransmissionofdatanecessarilyclassifiesSMSasaVAS.

Infact,ifthetransmissionofdataover[the]CMTSistobe

reckoned as the determinative characteristic of SMS, it would

seem that this is already sufficiently covered by Globe andSmartsrespective legislative franchises.[78]Smartis authorized

underitslegislativefranchisetoestablishandoperateintegrated

telecommunications/computer/ electronic services for public

domestic and international communications,[79]while Globe is

empowered to establish and operate domestic

telecommunications,andstationsfortransmissionandreception

ofmessages bymeans ofelectricity, electromagneticwaves or

any kind of energy, force, variations or impulses, whether

conveyed by wires, radiated through space or transmitted

throughothermediaandforthehandlingofanyandalltypesof

telecommunicationsservices. [80]

The question of the proper legal classification of VAS is

uniquelytechnical,tiedasatistothescientificandtechnological

application of the service or feature. Owing to the dearth of

substantivetechnicalfindingsanddatafromtheNTConwhicha

judicial review may reasonably be premised, it is not

opportunely proper for the Court to make its own technical

evaluation of VAS, especially in relation to SMS. Judicial fact-

findingofthedenovokindisgenerallyabhorredandtheshiftof

decisionalresponsibilitytothejudiciaryisnotfavoredasagainst

the substantiated and specialized determination of

administrative agencies.[81]

With greaterreason should this bethe standard for the exercise of judicial review when the

administrativeagencyconcernedhasnotinthefirstplacecome

outwithatechnicalfindingbasedonevidence,asinthiscase.

Yetatthesametime,thisabsenceofsubstantialevidencein

supportofthefindingthatSMSisVASalreadyrendersreversible

thatportionoftheNTCOrder.

Moreover, theOrderdoes not explain why the NTC was

according the VAS offerings of Globe and Smart a different

regulatorytreatment from that ofIslacom. Indeed,to this day,

NTChasnotofferedanysensibleexplanationwhy Islacomwasaccorded to a less onerous regulatory requirement, nor have

theycompelledIslacomtosufferthesameburdensasGlobeand

Smart.

Whilestabilityinthelaw,particularlyinthebusinessfield,

isdesirable, there is no demand that theNTC slavishly follow

precedent. [82]However,wethinkitessential, forthesakeof

clarity and intellectual honesty, that if an administrative

agencydecidesinconsistentlywith previous action,that it

explainthoroughlywhyadifferentresultiswarranted,orif

needbe,whythepreviousstandardsshouldnolongerapply

orshould beoverturned.[83]Suchexplanation is warrantedin order to sufficiently establish a decision as having

rational basis.[84]Any inconsistent decision lacking

thorough, ratiocination insupport maybe struckdown as

beingarbitrary.Andanydecisionwithabsolutelynothingto

supportitisanullity .[85]

Second. Globe and Smart were denied opportunity to

presentevidenceontheissuesrelatingtothenatureofVASand

thepriorapproval.

Anotherdisturbingcircumstance attending this petition is

thatuntilthepromulgationoftheassailed OrderGlobeandSmartwere never informed of the fact that their operation of SMS

withoutpriorauthoritywasatallanissueforconsideration.Asa

result, neitherGlobeor Smart wasafforded an opportunityto

presentevidenceintheirbehalfonthatpoint.

TELECOMMUNICATIONS PRACTICE ATTY AQUINO


24/62



NTCasserts that since Globe and Smart were requiredto

submit their respective Certificates of Public Convenience and

Necessity and franchises, theparties weresufficiently notified

that theauthorityto operatesuch servicewas amatterwhich

NTC could look into. This is wrong-headed considering the

governinglawandregulations.ItisclearthatbeforeNTCcould

penalizeGlobeandSmartforunauthorizedprovisionofSMS,it

mustfirstestablishthatSMSisVAS.Sincetherewasnoexpress

rule orregulation onthatquestion,Globe andSmartwould be

well withinreasonif they submitted evidencetoestablishthat

SMSwasnotVAS.Unfortunately,nosuchopportunityaroseand

nosuchargumentswereraisedsimplybecauseGlobeandSmart

were notawarethatthequestionof theirauthorityto provide

SMSwasanissueatall.Neithercoulditbesaidthattherequisite

ofprior authoritywas indubitableundertheexistingrulesand

regulations. Considering the prior treatment towards Islacom,

Globe(andSmart,haditchosentodoso)hadeveryrighttorely

onNTCsdisposalofIslacomsinitiativeandtobelievethatprior

approvalwasnotnecessary.

Neither was the matter ever raised during the hearings

conducted by NTC on Smarts petition. This claim has been

repeatedlyinvoked byGlobe.Itis borneout bytherecords or

theabsencethereof.NTCcouldhaveeasilyrebuffedthisclaimby

pointing to a definitive record. Yet strikingly, NTC has not

asserted that thematterof Globes authoritywas raisedin any

pleading or proceeding. In fact, Globe in itsConsolidated

Replybefore this Court challenged NTC to produce the

transcriptsofthehearingsitconductedtoprovethattheissueof

Globes authority to provideSMS was putin issue.The Court

similarly ordered the NTC to produce such transcripts.[86]NTCfailedtoproduceany. [87]

The opportunity to adduce evidence is essential in the

administrative process, as decisions must be rendered on the

evidencepresented,eitherinthehearing,oratleastcontainedin

the record and disclosed to the parties affected.[88]The

requirement that agencies hold hearings in which parties

affected by theagencys actioncan be represented by counsel

may be viewed as an effort to regularize this struggle for

advantage within a legislative adversary framework.[89]It

necessarilyfollowsthatifnoevidenceisprocuredpertinenttoa

particular issue, any eventual resolution of that issue on

substantivegrounds despitetheabsence ofevidenceis flawed.

Moreover,ifthepartiesdidhaveevidencetocountertheruling

but were wrongfully denied the opportunity to offer the

evidence,theresultwouldbeembarrassingontheadjudicator.

Thus, the comical, though expected, result of a definitive

orderwhichistotallyunsupportedbyevidence.Tothisblatant

violationofdueprocess,thisCourtstandsathwart.

Third.The imposition of fine is void for violation of due

process

ThematterofwhetherNTCcouldhaveimposedthefineon

GlobeintheassailedOrderisnecessarilyrelatedtodueprocessconsiderations.Since this question would also call to fore the

relevantprovisionsofthePublicServiceAct,itdeservesitsown

extensivediscussion.

Globeclaimsthat theissue ofitsauthority tooperateSMS

services was never raised as an issue in theComplaintfiled

againstitbySmart.NordidNTCeverrequireGlobetojustifyits

authority to operate SMS servicesbeforethe issuance of

theOrderimposingthefine.

The Court of Appeals, in its assailed decision, upheld the

powerofNTCtoimposeafineandtomakeapronouncementon

Globes alleged lack of operational authority without need ofhearing, simply by citing the provision of the Public Service

Act[90]whichenumeratestheinstanceswhenNTCmayact motu

proprio.ThatisSection17,paragraph(a),whichreadsthus:

TELECOMMUNICATIONS PRACTICE ATTY AQUINO


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Sec. 17. Proceedings of [the National Telecommunications

Commission]without previous hearing. The Commission shall

have power, without previous hearing, subject to established

limitationsandexceptionsandsavingprovisionstothecontrary:

(a)Toinvestigate,uponitsowninitiative,oruponcomplaintin

writing, any matter concerning any public service as regards

mattersunder its jurisdiction; torequire anypublic serviceto

furnishsafe,adequate,andproperserviceasthepublicinterest

may require and warrant; to enforce compliance with any

standard,rule,regulation,orderorotherrequirementofthisAct

or of the Commission, and to prohibit or prevent any public

service as herein defined from operating without having first

secured a certificateof public convenience or public necessity

andconvenience,asthecasemaybe,andrequireexistingpublic

servicestopaythefeesprovidedforinthisActfortheissuance

ofthe propercertificate ofpublic convenienceor certificate of

publicnecessityandconvenience,asthecasemaybe,underthe

penalty, inthe discretionof theCommission,of therevocationandcancellationofanyacquiredrights.

Ontheotherhand,NTCitself,inthe Order,citesSection21

as thebasis forits imposition of fine on Globe.The provision

states:

Sec.21.Everypublicserviceviolatingorfailingtocomplywith

the terms and conditions of any certificate or any orders,

decisionsorregulationsoftheCommissionshallbesubjecttoa

fine ofnotexceedingtwohundredpesosperday foreveryday

during which such default or violation continues; and theCommission is hereby authorized and empowered to impose

suchfine,afterduenoticeandhearing .[Emphasissupplied.]

Sections 17 and 21 of the Public Service Act confer two

distinctpowersonNTC.UnderSection17,NTChasthepowerto

investigatea PTEcompliancewitha standard, rule, regulation,

order,orotherrequirementimposedby lawortheregulations

promulgatedbyNTC,aswellasrequirecomplianceifnecessary.

Bytheexplicitlanguageoftheprovision,NTCmayexercisethe

powe

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