Chester Cabalza recommends his visitors to please read the original & full text of the case cited. Xie xie!
G.R. No. 143964 July 26, 2004
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.
Telecommunications services are affected by a high degree of public interest. Telephone companies have historically been regulated as common carriers, and indeed, the 1936 Public Service Act has classified wire or wireless communications systems as a "public service," along with other common carriers. The present petition dramatizes to a degree the clash of philosophies between traditional notions of regulation and the au corant trend to deregulation. Appropriately, it involves the most ubiquitous feature of the mobile phone, Short Messaging Service ("SMS") or "text messaging," which has been transformed from a mere technological fad into a vital means of communication.
Facts:
Globe and private respondent Smart Communications, Inc. 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.
On 4 June 1999, Smart filed a Complaint with NTC to interconnect Smart's and Globe's 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 Smart's request for the interconnection of SMS. But 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.
Globe filed with the Court of Appeals a Petition for Certiorari and Prohibition to nullify and set aside the Order and to prohibit NTC from taking any further action in the case. It reiterated its previous arguments that the complaint should have been dismissed for failure to comply with conditions precedent and the non-forum shopping rule. It also 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. Finally, Globe alleged that the Order is a patent nullity as it imposed an administrative penalty for an offense for which neither it nor Smart was sufficiently charged nor heard on in violation of their right to due process.
After the Court of Appeals denied the Motion for Partial Reconsideration, Globe elevated the controversy to the Supreme Court.
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;
3. Whether NTC acted with due process in levying the fine against Globe; and
4. Whether Globe should have first filed a motion for reconsideration before the NTC, but this relatively minor question can be resolved in brief.
Held:
Necessity of Filing Motion for Reconsideration
Globe deliberately did not file a motion for reconsideration with the NTC before elevating the matter to the Court of Appeals via a petition for certiorari. Generally, a motion for reconsideration is a prerequisite for the filing of a petition for certiorari.
In opting not to file the motion for reconsideration, Globe asserted before the Court of Appeals that the case fell within the exceptions to the general rule. The appellate court in the questioned Decision cited the purported procedural defect, yet chose anyway to rule on the merits as well.
Globe's election to elevate the case directly to the Court of Appeals, skipping the standard motion for reconsideration, is not a mortal mistake. According to Globe, the Order is a patent nullity, it being violative of due process; the motion for reconsideration was a useless or idle ceremony; and, the issue raised purely one of law. Indeed, the circumstances adverted to are among the recognized exceptions to the general rule.
The Merits
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 NTC's 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.
The statutory basis for the NTC's determination must be thoroughly examined. Our first level of inquiry should be into the PTA. It is the authority behind MC No. 8-9-95. It is also the law that governs all public telecommunications entities ("PTEs") in the Philippines.
Public Telecommunications Act
The PTA has not strictly adopted laissez-faire as its underlying philosophy to promote the telecommunications industry. In fact, the law imposes strictures that restrain within reason how PTEs conduct their business. For example, it requires that any access charge/revenue sharing arrangements between all interconnecting carriers that are entered into have to be submitted for approval to NTC. At the same time, the general thrust of the PTA is towards modernizing the legal framework for the telecommunications services sector. The transmutation has become necessary due to the rapid changes as well within the telecommunications industry.
One of the novel introductions of the PTA is the concept of a "value-added service" ("VAS"). Section 11 of the PTA governs the operations of a "value-added service provider," which the law defines as "an entity which relying on the transmission, switching and local distribution facilities of the local exchange and inter-exchange operators, and overseas carriers, offers enhanced services beyond those ordinarily provided for by such carriers." Section 11 recognizes that VAS providers need not secure a franchise, provided that they do not put up their own network. However, a different rule is laid down for telecommunications entities such as Globe and PLDT.
The Pertinent NTC Memorandum Circulars
The NTC relied on Section 420(f) of the Implementing Rules of the PTA ("Implementing Rules") as basis for its claim that prior approval must be secured from it before Globe can operate SMS. Section 420 of the Implementing Rules, contained in MC No. 8-9-95.
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. With the dual classification of SMS as a special feature and a VAS and the varying rules pertinent to each classification, NTC has unnecessarily complicated the regulatory framework to the detriment of the industry and the consumers. But does that translate to a finding that the NTC Order subjecting Globe to prior approval is void? There is a fine line between professional mediocrity and illegality. NTC's byzantine approach to SMS regulation is certainly inefficient. Unfortunately for NTC, its actions have also transgressed due process in many ways, as shown in the ensuing elucidation.
Case Digest by CBCabalza 2010
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