TELECOMMUNICATION LAW / ATTY.

ALEJANDRO GOZON
BEHTTINA KIM M.

BARRIOS,

GLOBE TELECOM, INC. vs. THE NATIONAL TELECOMMUNICATIONS COMMISSION,

COMMISSIONER JOSEPH A. SANTIAGO, et. al.
G.R. No. 143964. July 26, 2004
FACTS:
Globe Telecom and Smart Communications, Inc. (Smart) are both grantees of valid and
subsisting legislative franchises, authorizing them, among others, to operate a Cellular Mobile
Telephone System (CMTS), utilizing the Global System for Mobile Communication (GSM)
technology. Among the inherent services supported by the GSM network is the Short Message
Services (SMS), also known colloquially as texting, which has attained immense popularity in
the Philippines as a mode of electronic communication. Smart filed a Complaint with public
respondent NTC, praying that NTC order the immediate interconnection of Smarts and Globes
GSM networks, particularly their respective SMS or texting services. The Complaint arose from
the inability of the two leading CMTS providers to effect interconnection. Smart alleged that
Globe, with evident bad faith and malice, refused to grant Smarts request for the interconnection
of SMS.
NTC issued a Show Cause Order, informing Globe of the Complaint. Globe filed its
answer with a motion to dismiss to the grounds that the Complaint was premature, failure of
Smart to comply with the conditions precedent required in Section 6 of NTC Memorandum
Circular 9-7-93, and its omission of the mandatory Certification of Non-Forum Shopping. Smart
responded that it had already submitted the voluminous documents asked by Globe in connection
with other interconnection agreements between the two carriers.
NTC issued the Order now subject of the present petition. In the Order, 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 and NTC also declared that both Smart and Globe have been providing SMS
without authority from it, in violation of Section 420 (f) of MC No. 8-9-95 which requires PTEs
intending to provide value-added services (VAS) to secure prior approval from NTC through an
administrative process. When Globe filed a petition for Certiorari and prohibition to set aside the
order of NTC, CA issued a temporary Restraining Order. However, after the lapse of the TRO,
CA affirmed in toto the order of the CA
ISSUES:
1) whether NTC may legally require Globe to secure NTC approval before it continues
providing SMS
2) whether SMS is a VAS under the PTA, or special feature under NTC MC No. 14-11-97;

HELD:
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TELECOMMUNICATION LAW / ATTY. ALEJANDRO GOZON

BEHTTINA KIM M.

BARRIOS,

1. NO. Globe hinges its claim of exemption from obtaining prior approval from the NTC
on NTC Memorandum Circular No. 14-11-97 (MC No. 14-11-97). Globe notes that in a 7
October 1998 ruling on the application of Islacom for the operation of SMS, NTC declared that
the applicable circular for SMS is MC No. 14-11-97. Under this ruling, it is alleged, NTC
effectively denominated SMS as a special feature which under MC No. 14-11-97 is a deregulated
service that needs no prior authorization from NTC. Globe further contends that NTCs requiring
it to secure prior authorization violates the due process and equal protection clauses, since earlier
it had exempted the similarly situated Islacom from securing NTC approval prior to its operation
of SMS.
This should not be interpreted, however, as removing SMS from the ambit of jurisdiction
and review by the NTC. The NTC will continue to exercise, by way of its broad grant,
jurisdiction over Globe and Smarts SMS offerings, including questions of rates and customer
complaints. Yet caution must be had. Much complication could have been avoided had the NTC
adopted a proactive position, promulgating the necessary rules and regulations to cope up with
the advent of the technologies it superintends
2. NO. PTA has left open-ended what services are classified as value-added, prescribing
instead a general standard, set forth as a matter of principle and fundamental policy by the
legislature. 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 Court realizes that the PTA is not intended to constrain the industry within a cumbersome
regulatory regime. The policy as pre-ordained by legislative fiat renders the traditionally
regimented business in an elementary free state to make business decisions, avowing that it is
under this atmosphere that the industry would prosper. It is disappointing at least if the
deregulation thrust of the law is skirted deliberately. But it is ignominious if the spirit is defeated
through a crazy quilt of vague, overlapping rules that are implemented haphazardly.

PHILIPPINE LONG DISTANCE TELEPHONE CO. [PLDT],vs. THE NATIONAL

TELECOMMUNICATIONS COMMISSION AND CELLCOM, INC., (EXPRESS
TELECOMMUNICATIONS CO., INC. [ETCI]), respondents
G.R. No. 88404 October 18, 1990
FACTS:
Petitioner PLDT assailed by way of petition for certiorari, 2 orders of the Respondent
NTC granting private respondent Express Telecommunications Co., Inc. (ETCI) provisional
authority to install, operate and maintain a Cellular Mobile Telephone System in Metro-Manila.
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TELECOMMUNICATION LAW / ATTY. ALEJANDRO GOZON

BEHTTINA KIM M.

BARRIOS,

PLDT filed an Opposition with a Motion to Dismiss, based primarily on the following
grounds: (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 No. 86-86, to install and operate a Cellular Mobile Telephone System for domestic
and international 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. NTC overruled PLDT's Opposition and
declared that Rep. Act No. 2090 (1958) should be liberally construed as to include among the
services under said franchise the operation of a cellular mobile telephone service.
NTC issued the first challenged Order. Opining that public interest, convenience and
necessity further demand a second cellular mobile telephone service provider and finds PRIMA
FACIE evidence showing applicants 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.
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 denied
reconsideration and set the date for continuation of the hearings on the main proceedings. This is
the second questioned Order.
ISSUE: Whether NTC acted without jurisdiction or with grave abuse of discretion amounting to
lack or excess of jurisdiction in granting provisional authority to ETC
HELD: NO. There was no grave abuse of discretion, tantamount to lack of or excess of
jurisdiction, on the part of the National Telecommunications Commission.
There can be no question that the NTC is the regulatory agency of the national
government with jurisdiction over all telecommunications entities. It is legally clothed with
authority and given ample discretion to grant a provisional permit or authority. In fact, NTC may,
on its own initiative, grant such relief even in the absence of a motion from an applicant. The
provisional authority was issued after due hearing, reception of evidence and evaluation thereof,
with the hearings attended by various oppositors, including PLDT. It was granted only after a
prima facie showing that ETCI has the necessary legal, financial and technical capabilities and
that public interest, convenience and necessity so demanded.
The final outcome of the application rests within the exclusive prerogative of the NTC.
Whether or not a CPCN would eventually issue would depend on the evidence to be presented
during the hearings still to be conducted, and only after a full evaluation of the proof thus
presented.
The decisive consideration are public need, public interest, and the common good. Those
were the overriding factors which motivated NTC in granting provisional authority to ETCI.
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TELECOMMUNICATION LAW / ATTY. ALEJANDRO GOZON

BEHTTINA KIM M.

BARRIOS,

Article II, Section 24 of the 1987 Constitution, recognizes the vital role of communication and
information in nation building. It is likewise a State policy to provide the environment for the
emergence of communications structures suitable to the balanced flow of information into, out
of, and across the country (Article XVI, Section 10, Ibid.). A modern and dependable
communications network rendering efficient and reasonably priced services is also indispensable
for accelerated economic recovery and development. To these public and national interests,
public utility companies must bow and yield.

THE CITY GOVERNMENT OF QUEZON CITY, AND THE CITY TREASURER OF

QUEZON CITY, DR. VICTOR B. ENRIGA, Petitioners, vs. BAYAN
TELECOMMUNICATIONS, INC
G.R. No. 162015 March 6, 2006

FACTS:

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TELECOMMUNICATION LAW / ATTY. ALEJANDRO GOZON

BEHTTINA KIM M.

BARRIOS,

Respondent Bayan Telecommunications, Inc. (Bayantel) is a legislative franchise holder

under Republic Act (Rep. Act) No. 32594 to establish and operate radio stations for domestic
telecommunications, radiophone, broadcasting and telecasting.
The basis of the controversy is Rep. Act No. 3259, embodied in Section 14 thereof, which
provides that the grantee shall be liable to pay the same taxes on its real estate, buildings and
personal property, exclusive of the franchise, as other persons or corporations are now or
hereafter may be required by law to pay. (b) The grantee shall further pay to the Treasurer of the
Philippines each year, within ten days after the audit and approval of the accounts as prescribed
in this Act, one and one-half per centum of all gross receipts from the business transacted under
this franchise by the said grantee. In 1992, R.A. 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. Barely few months
after the LGC took effect, Congress enacted R.A. No. 7633, amending Bayantels original
franchise. The Section 11 of the amendatory contained the following tax provision: 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, xxx.
Bayantel owned several real properties on which it maintained various
telecommunications facilities. 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 but this request
was denied. Bayantel interposed an appeal with the Local Board of Assessment Appeals
(LBAA). On its firm belief of its exempt status, Bayantel did not pay the real property taxes
assessed against it by the Quezon City government.

ISSUE: Whether Bayantels real properties in Quezon City are exempt from real property taxes
under its legislative franchise
HELD: YES. 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. 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 more decisive question turns on whether Congress actually did exempt Bayantels
properties at all by virtue of Section 11 of Rep. Act No. 7633.Admittedly, Rep. Act No. 7633 was
enacted subsequent to the LGC. Perfectly aware that the LGC has already withdrawn Bayantels
former exemption from realty taxes, Congress opted to pass Rep. Act No. 7633 using, under
Section 11 thereof, exactly the same defining phrase "exclusive of this franchise" which was the
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TELECOMMUNICATION LAW / ATTY. ALEJANDRO GOZON

BEHTTINA KIM M.

BARRIOS,

basis for Bayantels exemption from realty taxes prior to the LGC. In plain language, Section 11
of Rep. Act No. 7633 states that "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." The Court
views this subsequent piece of legislation as an express and real intention on the part of Congress
to once again remove from the LGCs delegated taxing power, all of the franchisees (Bayantels)
properties that are actually, directly and exclusively used in the pursuit of its franchise

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