Telecom Law: Case

Digests
In Partial Fulfillment of the Requirements in Telecom Law
(1st Semester, 2014-1015)

Arellano University School of Law

Taft Avenue Corner Menlo St. Pasay City, Philippines

Submitted to:
Atty. Alejandro M. Gozon

Submitted by:
Arcangel, Diorella Micah DG.
2014-0410
November 23, 2014

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Globe Telecom, Inc., v.

The National Telecommunications Commission
G.R. No. 143964, July 26, 2004;
J. Tinga

Facts:
Globe Telecom Inc., and private respondent, Smart Communications, Inc. are
both grantees of valid and subsisting legislative franchises, authorizing them to operate
a Cellular Mobile Telephone System. On 4 June 1999, Smart filed a Complaint with
public respondent NTC, praying that NTC order the immediate interconnection of
Smarts and Globes GSM networks.
Smart alleged that Globe, with evident bad faith and malice, refused to grant
Smarts request for the interconnection of SMS. Globe filed its Answer with Motion to
Dismiss on 7 June 1999, interposing grounds that the Complaint was premature,
Smarts failure to comply with the conditions precedent required in Section 6 of NTC
Memorandum Circular 9-7-93,19 and its omission of the mandatory Certification of NonForum Shopping.
On 19 July 1999, NTC issued the Order now subject of the present petition. Both
Smart and Globe were equally blameworthy for their lack of cooperation in the
submission of the documentation required for interconnection and for having unduly
maneuvered the situation into the present impasse. NTC held that since SMS falls
squarely within the definition of value-added service or enhanced-service given in NTC
Memorandum Circular No. 8-9-95 (MC No. 8-9-95) the implementation of SMS
interconnection is mandatory. The NTC also declared that both Smart and Globe have
been providing SMS without authority from it.
Globe filed with the Court of Appeals a Petition for Certiorari and Prohibition25 to
nullify and set aside the Order and to prohibit NTC from taking any further action in the
case. Globe reiterated its previous arguments that the complaint should have been
dismissed for failure to comply with conditions precedent and the non-forum shopping
rule, claimed that NTC acted without jurisdiction in declaring that it had no authority to
render SMS, pointing out that the matter was not raised as an issue before it at all. It
alleged that the Order is a patent nullity as it imposed an administrative penalty for an

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offense for which neither it nor Smart was sufficiently charged nor heard on in violation
of their right to due process.
The CA issued a TRO on 31 Aug 1999. In its Memorandum, Globe called the
attention of the CA in an earlier NTC decision regarding Islacom, holding that SMS is a
deregulated special feature and does not require the prior approval of the NTC. Globe
that its departure from its ruling in the Islacom case constitutes a denial of equal
protection of the law. On 22 Nov 1999, the CA affirmed in toto the NTC Order.
On 21 December 1999, Globe filed a Motion for Partial Reconsideration, seeking
to reconsider only the portion of the Decision that upheld NTCs finding that Globe
lacked the authority to provide SMS and its imposition of a fine. After the Court of
Appeals denied the Motion, Globe elevated the controversy to this Court.
Issue No. 1.
Whether or not the NTC may legally require Globe to secure NTC approval
before it continues providing SMS
Held:
In the first issue on whether the NTC may require Globe to secure the NTC
approval, the petition is granted. The Decision of the Court of Appeals dated 22
November 1999, as well as its Resolution dated 29 July 2000, and the assailed Order of
the NTC dated 19 July 1999 are hereby set aside.

Issue No. 2.
Whether or not the SMS is a VAS under the PTA, or special feature under NTC
MC No. 14-11-97.
Held:
As to the second contention, the assailed NTC Decision invokes the NTC
Implementing Rules of the PTA (MC No. 8-9-95) to justify its claim that Globe and Smart
need to secure prior authority from the NTC before offering SMS, that he statutory basis
for the NTCs determination must be thoroughly examined and next, the regulatory
framework devised by NTC in dealing with VAS should be examined. In short, the legal
basis invoked by NTC in claiming that SMS is VAS has not been duly established. The
fault falls squarely on NTC.

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Issue No. 3.
Whether or not the NTC acted with due process in levying the fine against Globe.
Held:
Lastly, on the question on whether the NTC acted with due process in levying the
fine against Globe, the Court ruled that, NTC violated several of these cardinal rights
due Globe in the promulgation of the assailed Order. The NTC Order is not supported
by substantial evidence. Neither does it sufficiently explain the reasons for the decision
rendered. Globe and Smart were denied opportunity to present evidence on the issues
relating to the nature of VAS and the prior approval. Another disturbing circumstance
attending this petition is that until the promulgation of the assailed Order Globe and
Smart were never informed of the fact that their operation of SMS without prior authority
was at all an issue for consideration. The imposition of fine is void for violation of due
process. The matter of whether NTC could have imposed the fine on Globe in the
assailed Order is necessarily related to due process considerations
There is no legal basis under the PTA or the memorandum circulars promulgated
by the NTC to denominate SMS as VAS, and any subsequent determination by the NTC
on whether SMS is VAS should be made with proper regard for due process and in
conformity with the PTA; the assailed Order violates due process for failure to
sufficiently explain the reason for the decision rendered, for being unsupported by
substantial evidence, and for imputing violation to, and issuing a corresponding fine on,
Globe despite the absence of due notice and hearing which would have afforded Globe
the right to present evidence on its behalf.

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Philippine Long Distance Telephone Co. v.

The National Telecommunications Commission
G.R. No. 88404, October 18, 1990
J. Melencio-Herrera
Facts:
Philippine Long Distance Telephone Company, herein petitioner, assails by way
of certiorari and Prohibition under Rule 65, two Orders of public respondent National
Telecommunications
Commissions,
granting
private
respondent
Express
Telecommunications Co., Inc. provisional authority to install, operate and maintain a
Cellular Mobile Telephone System in Metro-Manila.
On 22 June 1958, RA 2090, was enacted (An Act Granting Felix Alberto and
Company, Incorporated, a Franchise to Establish Radio Stations for Domestic and
Transoceanic Telecommunications). Felix Alberto & Co., Inc. (FACI) was the original
corporate name, which was changed to ETCI with the amendment of the Articles of
Incorporation in 1964.
On 13 May 1987, alleging urgent public need, ETCI filed an application with NTC
(NTC Case 87-89) for the issuance of a Certificate of Public Convenience and
Necessity (CPCN) to construct, install, establish, operate and maintain a Cellular Mobile
Telephone System and an Alpha Numeric Paging System in Metro Manila and in the
Southern Luzon regions, with a prayer for provisional authority to operate Phase A of its
proposal within Metro Manila.

PLDT filed an Opposition with a Motion to Dismiss, based primarily on the

grounds that;
(1) ETCI is not capacitated or qualified under its legislative franchise to
operate a system wide telephone or network of telephone service such as the
one proposed in its application;
(2) ETCI lacks the facilities needed and indispensable to the successful
operation of the proposed cellular mobile telephone system;
(3) PLDT has itself a pending application with NTC (Case 86-86) to install
and operate a Cellular Mobile Telephone System for domestic and international
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service not only in Manila but also in the provinces and that under the prior
operator or protection of investment doctrine, PLDT has the priority or
preference in the operation of such service; and
(4) The provisional authority, if granted, will result in needless,
uneconomical and harmful duplication, among others.
In an Order, dated 12 November 1987, NTC overruled PLDTs Opposition and
declared that RA 2090 should be liberally construed as to include among the services
under said franchise the operation of a cellular mobile telephone service. After
evaluating the reconsideration sought by PLDT, the NTC, in October 1988, maintained
its ruling that liberally construed, and that ETCIs franchise carries with it the privilege to
operate and maintain a cellular mobile telephone service.
On 12 December 1988, NTC issued an order opining that public interest,
convenience and necessity further demand a second cellular mobile telephone service
provider and finds prima facie evidence showing ETCIs legal, financial and technical
capabilities to provide a cellular mobile service using the AMPS system, NTC granted
ETCI provisional authority to install, operate and maintain 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 was that, within ninety days
from date of the acceptance by ETCI of the terms and conditions of the provisional
authority, ETCI and PLDT shall enter into an interconnection agreement for the
provision of adequate interconnection facilities between applicants cellular mobile
telephone switch and the public switched telephone network and shall jointly submit
such interconnection agreement to the Commission for approval.
In a Motion to Set Aside the Order granting provisional authority, PLDT alleged
essentially that the interconnection ordered was in violation of due process and that the
grant of provisional authority was jurisdictionally and procedurally infirm.
On 8 May 1989, NTC issued an order denying reconsideration and set the date
for continuation of the hearings on the main proceedings. PLDT challenged the NTC
orders of 12 December 1988 and 8 May 1989 before the Supreme Court. On 15 June
1989, the Supreme Court dismissed the petition for its failure to comply fully with the
requirements of Circular 188. Upon satisfactory showing, however, that there was such
compliance, the Court reconsidered the order and reinstated the petition.
On 27 February 1990, the Court issued a Temporary Restraining Order, upon
PLDTs urgent manifestation, enjoining NTC to Cease and Desist from all or any of its
on-going proceedings and ETCI from continuing any and all acts intended or related to
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or which will amount to the implementation/execution of its provisional authority. PLDT

was required by the Court to post a bond of P5 million. PLDT complied.
The Supreme Court dismissed the petition for lack of merit and lifted the
Temporary Restraining Order issued. The bond issued as a condition for the issuance of
said restraining Order is declared forfeited in favor of Express Telecommunications Co.,
Inc.; with cost against PLDT.
Issue No. 1
Whether or not the provisional authority was properly granted.
Held:
In the first issue, the provisional authority granted by the NTC (which is the
regulatory agency of the National Government over all telecommunications entities) has
a definite expiry period of 18 months unless sooner renewed; may be revoked,
amended or revised by the NTC; covers one of four phases; limited to Metro Manila
only; and does not authorize the installation and operation of an alphanumeric paging
system. It was further issued after due hearing, with PLDT attending and granted after a
prima facie showing that ETCI had the necessary legal, financial and technical
capabilities; and that public interest, convenience and necessity so demanded.
Provisional authority would be meaningless if the grantee were not allowed to operate,
as its lifetime is limited and may be revoked by the NTC at any time in accordance with
law.
Issue No. 2.
Whether or not the ETCIs franchise includes operation of cellular mobile
telephone system (CMTS).
Held:
As to the second contention, the NTC construed the technical term
radiotelephony liberally as to include the operation of a cellular mobile telephone
system. The construction given by an administrative agency possessed of the
necessary special knowledge, expertise and experience and deserves great weight and
respect. It can only be set aside by judicial intervention on proof of gross abuse of
discretion, fraud or error of law.

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Issue No. 3.
Whether or not the PLDT can refuse interconnection with ETCI.
Held:
Lastly, the Court ruled in the third question that the NTC merely exercised its
delegated authority to regulate the use of telecommunication networks when it decreed
interconnection. PLDT cannot refuse interconnection as such is mandated under RA
6949 or the Municipal Telephone Act of 1989. What interconnection seeks to accomplish
is to enable the system to reach out to the greatest number of people possible in line
with governmental policies. With the broader reach, public interest and convenience will
be better served. Public need, public interest, and the common good are the decisive, if
not the ultimate, considerations. To these public and national interests, public utility
companies must yield.
The NTC order does not deprive PLDT due process as it allows the parties
themselves to discuss and agree upon the specific terms and conditions of the
interconnection agreement instead of the NTC itself laying down the standards of
interconnection which it can very well impose.

The City Government of Quezon City v.

Bayan Telecommunications, Inc.,
G.R. No. 162015, March 6, 2006
J. Garcia

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Facts:
Respondent Bayan Telecommunications, Inc. (Bayantel) is a legislative franchise
holder under Republic Act (Rep. Act) No. 3259 to establish and operate radio stations
for domestic telecommunications, radiophone, broadcasting and telecasting.
On January 1, 1992, Rep. Act No. 7160, otherwise known as the "Local
Government Code of 1991" (LGC), took effect. Section 232 of the Code grants local
government units within the Metro Manila Area the power to levy tax on real properties.
On July 20, 1992, barely few months after the LGC took effect, Congress
enacted Rep. Act No. 7633, amending Bayantels original franchise. The amendatory
law (Rep. Act No. 7633) contained the following tax provision:
SEC. 11. The grantee, its successors or assigns shall be liable to pay the
same taxes on their real estate, buildings and personal property, exclusive of this
franchise, as other persons or corporations are now or hereafter may be required
by law to pay. In addition thereto, the grantee, its successors or assigns shall pay
a franchise tax equivalent to three percent (3%) of all gross receipts of the
telephone or other telecommunications businesses transacted under this
franchise by the grantee, its successors or assigns and the said percentage shall
be in lieu of all taxes on this franchise or earnings thereof. Provided, That the
grantee, its successors or assigns shall continue to be liable for income taxes
payable under Title II of the National Internal Revenue Code.
It is undisputed that within the territorial boundary of Quezon City, Bayantel
owned several real properties on which it maintained various telecommunications
facilities.
In 1993, the government of Quezon City, pursuant to the taxing power vested on
local government units by Section 5, Article X of the 1987 Constitution, in relation to
Section 232 of the LGC, enacted City Ordinance No. SP-91, S-93, otherwise known as
the Quezon City Revenue Code (QCRC), imposing, under Section 5 thereof, a real
property tax on all real properties in Quezon City, and, reiterating in its Section 6, the
withdrawal of exemption from real property tax under Section 234 of the LGC.
On March 16, 1995, Rep. Act No. 7925, otherwise known as the "Public
Telecommunications Policy Act of the Philippines," envisaged to level the playing field
among telecommunications companies, took effect.
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On January 7, 1999, Bayantel wrote the office of the City Assessor seeking the
exclusion of its real properties in the city from the roll of taxable real properties. With its
request having been denied, Bayantel interposed an appeal with the Local Board of
Assessment Appeals (LBAA). And, evidently on its firm belief of its exempt status,
Bayantel did not pay the real property taxes assessed against it by the Quezon City
government.
On account thereof, the Quezon City Treasurer sent out notices of delinquency
for the total amount of P43,878,208.18, followed by the issuance of several warrants of
levy against Bayantels properties preparatory to their sale at a public auction set on
July 30, 2002.
Threatened with the imminent loss of its properties, Bayantel immediately
withdrew its appeal with the LBAA and instead filed with the RTC of Quezon City a
petition for prohibition with an urgent application for a temporary restraining order (TRO)
and/or writ of preliminary injunction. The trial court ruled in favor of respondent.
Issue No. 1.
Whether or not Bayantels real properties in Quezon City are exempt from real
property taxes under its legislative franchise; and
Held:
The power to tax is primarily vested in the Congress; however, in our jurisdiction,
it may be exercised by local legislative bodies, no longer merely be virtue of a valid
delegation as before, but pursuant to direct authority conferred by Section 5, Article X of
the Constitution. Under the latter, the exercise of the power may be subject to such
guidelines and limitations as the Congress may provide which, however, must be
consistent with the basic policy of local autonomy.
Clearly then, while a new slant on the subject of local taxation now prevails in the
sense that the former doctrine of local government units delegated power to tax had
been effectively modified with Article X, Section 5 of the 1987 Constitution now in
place, .the basic doctrine on local taxation remains essentially the same. For as the
Court stressed in Mactan, "the power to tax is primarily vested in the Congress."
Indeed, the grant of taxing powers to local government units under the
Constitution and the LGC does not affect the power of Congress to grant exemptions to
certain persons, pursuant to a declared national policy. The legal effect of the
constitutional grant to local governments simply means that in interpreting statutory
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provisions on municipal taxing powers, doubts must be resolved in favor of municipal

corporations.
Issue No. 2
Whether or not Bayantel is required to exhaust administrative remedies before
seeking judicial relief with the trial court.
Held:
Petitions for prohibition are governed by the provision of Rule 65 of the Rules of
Court. With the reality that Bayantels real properties were already levied upon on
account of its nonpayment of real estate taxes thereon, the Court agrees with Bayantel
that an appeal to the LBAA is not a speedy and adequate remedy within the context of
the aforequoted Section 2 of Rule 65. This is not to mention of the auction sale of said
properties already scheduled on July 30, 2002.
Moreover, one of the recognized exceptions to the exhaustion- of-administrative
remedies rule is when, as here, only legal issues are to be resolved. In fact, the Court,
cognizant of the nature of the questions presently involved, gave due course to the
instant petition.
Although as a rule, administrative remedies must first be exhausted before resort
to judicial action can prosper, there is a well-settled exception in cases where the
controversy does not involve questions of fact but only of law.

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