Documente Academic
Documente Profesional
Documente Cultură
*
G.R. No. 143964. July 26, 2004.
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* SECOND DIVISION.
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cety‰ with NTC M.C. No. 8-9-95, which defines „enhanced services‰
as analogous to „format, media conversion, encryption, enhanced
security features, computer processing, and the like.‰ The NTC
merely notes that SMS involves the „transmission of data over [the]
CMTS,‰ a phraseology that evinces no causal relation to the
definition in M.C. No. 8-9-95. Neither did the NTC endeavor to
explain why the „transmission of data‰ necessarily classifies SMS
as a VAS.
Same; Same; Same; Same; Same; Same; Same; Judicial fact-
finding of the de novo kind is generally abhorred and the shift of
decisional responsibility to the judiciary is not favored as against the
substantiated and specialized determination of administrative
agencies.·The question of the proper legal classification of VAS is
uniquely technical, tied as at is to the scientific and technological
application of the service or feature. Owing to the dearth of
substantive technical findings and data from the NTC on which a
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-finding of the de novo
kind is generally abhorred and the shift of decisional responsibility
to the judiciary is not favored as against the substantiated and
specialized determination of administrative agencies. With greater
reason should this be the standard for the exercise of judicial review
when the administrative agency concerned has not in the first place
come out with a technical finding based on evidence, as in this case.
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necessity of prior notice and hearing. Yet the agency contends that
the sanction was justified by arguing that when it took cognizance
of SmartÊs complaint for interconnection, „it may very well look into
the issue of whether the parties had the requisite authority to
operate such services.‰ As a result, both parties were sufficiently
notified that this was a matter that NTC could look into in the
course of the proceedings. The parties subsequently attended at
least five hearings presided by NTC. That particular argument of
the NTC has been previously disposed of. But it is essential to
emphasize the need for a hearing before a fine may be imposed, as
it is clearly a punitive measure undertaken by an administrative
agency in the exercise of its quasi-judicial functions. Inherently,
notice and hearing are indispensable for the valid exercise by an
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TINGA, J.:
Telecommunications 1
services are affected by a high degree
of public interest. Telephone companies
2
have historically
been regulated as common carriers, and indeed, the 1936
Public Service Act has classified wire or wireless
communications systems 3
as a „public service,‰ along with
other common carriers.
Yet with the advent of rapid technological changes
affecting the telecommunications industry, there has been a
marked revaluation of the traditional paradigm governing
state regulation over telecommunications. For example, the
United States Federal Communications Commission has
chosen not to impose strict common regulations on
incumbent cellular providers, choosing instead to let
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11
special competence, or both. Review may also be
warranted to ensure that the NTC or similarly empowered
agencies act within the confines of their legal mandate and
conform to 12
the demands of due process and equal
protection.
Antecedent Facts
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9 See e.g., China Banking Corp. v. Court of Appeals, 337 Phil. 223, 235;
270 SCRA 503 (1997).
10 „Administrative agencies threaten this system of safeguards [of
separation of powers within government] by combining powers in ways
that threaten to short-circuit the checks relied upon by Madison. x x x
Because agency decision-making is not highly visible and is not directly
subject to the electoral check, there is a danger that the redistributive
authority of agencies will be exercised in favor of a limited group of
organized interests with a special stake in an agencyÊs policies.‰ S.
Breyer & R. Stewart, Administrative Law and Regulatory Policy 105
(1979). Co-author Stephen Breyer, who currently sits in the United
States Supreme Court, is recognized as one of the preeminent experts in
Administrative Law in the United States.
11 Universal Camera Corp. v. NLRB, 340 U.S. 474 (1951).
12 „Judicial review of the decision of an administrative official is of
course subject to certain guideposts laid down in many decided cases.
Thus, for instance, findings of fact in such decision should not be
disturbed if supported by substantial evidence; but review is justified
when there has been a denial of due process, or mistake of law, or fraud,
collusion or arbitrary action in the administrative proceeding.‰ Atlas
Development and Acceptance Corp. v. Hon. Gozon, et al., 127 Phil. 271,
279; 20 SCRA 886, 892-893 (1967).
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Commission
13
chises, authorizing them, among others, to operate a
Cellular Mobile Telephone System („CMTS‰), utilizing the
Global System
14
for Mobile Communication („GSM‰)
technology. Among the inherent services supported by 15
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. 16
On 4 June 1999, Smart filed a Complaint with public
respondent NTC, praying that NTC order the immediate
interconnection of SmartÊs and GlobeÊs 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 17
to
grant SmartÊs request for the interconnection of SMS.
On 7 June 1999, NTC issued a Show Cause Order,
informing Globe of the Complaint, specifically the
allegations therein that, „among others . . . despite formal
request made by Smart to Globe for the interconnection of
their respective SMS or text messaging services, Globe,
with evident bad faith, malice and to the prejudice of Smart
and Globe and the public in general, refused to grant
SmartÊs request for the interconnection of their respective
SMS or text messaging services, in violation of the
mandate of Republic Act 7925, Executive Order No. 39, 18
and
their respective implementing rules and regulations.‰
Globe filed its Answer with Motion to Dismiss on 7 June
1999, interposing grounds that the Complaint was
premature, SmartÊs failure to comply with the conditions
precedent required
19
in Section 6 of NTC Memorandum
Circular 9-7-93, and its omission of the
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20
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, and
that with those voluminous documents the interconnection
of the SMS systems could be expedited by merely amending
the partiesÊ21 existing CMTS-to-CMTS interconnection
agreements.
On 19 July 1999, NTC issued the Order now subject of
the present petition. In the Order, after noting that 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 22
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 interconnection23 is mandatory
pursuant to Executive Order (E.O.) No. 59.
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21 Id., at p. 83.
22 Id., at p. 86. Particularly, Smart was faulted for its failure to
resubmit the „voluminous‰ documents winch it had already previously
submitted to Globe in relation to previous interconnections, considering
that all Smart would have to do would be to reproduce said documents.
On the other hand, Globe was faulted for insisting on the submission of
these voluminous documents, and yet in the same breath, claiming that
the SMS service is not a value-added-service and thus not covered by the
mandatory interconnection requirement. Id., at pp. 84-85.
23 Section 5 of E.O. No. 59 provides: „Interconnection shall be
mandatory with regard to connecting other telecommunications services
such as but not limited to value-added services of radio paging, trunking
radio, store and forward systems of facsimile or messaging (voice or
data), packet switching and circuit data switching (including the
conveyance of messages which have been or are to be transmitted or
received at such points of connection), information and other services as
the NTC may determine to be in the interest of the public and in the
attainment of the objective of a universally accessible, fully integrated
nationwide telecommunications network.‰
127
The 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. Yet, in view of what it noted as the „peculiar
circumstances‰ of the case, NTC refrained from issuing a
Show Cause Order with a Cease and Desist Order, and
instead directed the parties to secure the requisite
authority to provide SMS within thirty (30) days, subject to
the payment of fine in the amount of two hundred pesos
(P200.00) „from the date of violation 24and for every day
during which such violation continues.‰
Globe filed with the Court
25
of Appeals a Petition for
Certiorari and Prohibition to nullify and set aside the
Order and to prohibit NTC from taking any further action
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24 Rollo, p. 87.
25 Docketed as CA-G.R. SP No. 54262.
26 Rollo, p. 40.
27 Id., at p. 43.
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31
Partial Reconsideration, seeking to reconsider only the
portion of the Decision that upheld NTCÊs finding that
Globe lacked the authority to provide SMS and its
imposition of a fine. Both Smart and NTC filed their
respective comments, stressing therein 32that Globe indeed
lacked the authority to provide SMS. In reply, Globe
asserted that the more salient issue was whether NTC
complied with its own „Rules of Practice and Procedure‰
before making the finding of want of authority and
imposing the fine. Globe also reiterated that it has been
legally operating its SMS system since 1994 and that SMS
being a deregulated special feature of the telephone
network it may operate SMS without prior approval of
NTC.
After the Court
33
of Appeals denied the Motion for Partial
Reconsideration, Globe elevated the controversy to this
Court.
Globe contends that the Court of Appeals erred in
holding that the NTC has 34 the power under Section 17 of
the Public Service Law to subject Globe to an
administrative sanction and a fine
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28 Rollo, p. 67.
29 Justice A. Tuquero penned the decision, which was concurred in by
Justices B.L. Salas and E.J. S. Asuncion.
30 Ibid.
31 Rollo, p. 89.
32 Smart, on the other hand, filed an application with the NTC on 22
July 1999, seeking authorization to operate SMS services. NTC Records,
pp. 8-12.
33 In a Resolution dated 29 July 2000.
34 Commonwealth Act No. 146, as amended. The provisions of the
Public Service Act, as amended, govern the National Telecommunications
Commission. As explained in Radio Communications of the Philippines,
Inc. v. National Telecommunications Commission, G.R. No. L-68729, 29
May 1987, 150 SCRA 455; „Pursuant to Presidential Decree No. 1 dated
September 23, 1972, reorganizing the executive branch of the National
Government, the Public Service Commission was abolished and its
functions were transferred to three specialized regulatory boards, as
follows: the Board of Transportation, the Board of Communications and
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the Board
129
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The Merits
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46 See Rep. Act No. 7925 (1994), art. I, sec. 2. Article I, Section 3 of the PTA
defines a public telecommunications entity as „any person, firm, partnership or
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53
(Emphasis supplied)
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54 See Edu v. Ericta, 146 Phil. 469, 485; 35 SCRA 481, 497 (1970);
Agustin v. Edu, G.R. No. L-49112 February 2, 1979, 88 SCRA 195; Free
Telephone Workers Union vs. MOLE; G.R. No. L-58184, 30 October 1981,
108 SCRA 757, 768; De La Liana v. Alba, G.R. No. 57883,12 March 1982,
112 SCRA 292, 335; „A standard thus defines legislative policy, marks its
limits, maps out its boundaries and specifies the public agency to apply
it. It indicates the circumstances under which the legislative command is
to be effected. It is the criterion by which legislative purpose may be
carried out. Thereafter, the executive or administrative office designated
may in pursuance of the above guidelines promulgate supplemental rules
and regulations.‰ Edu v. Ericta, Id.
55 An eminent member of this Court enunciated the following test for
valid delegation: „Although Congress may delegate to another branch of
the Government the power to fill details in the execution, enforcement or
administration of a law, it is essential, to forestall a violation of the
principle of separation of powers, that said law: (a) be complete in itself·
it must set forth therein the policy to be executed, carried out or
implemented by the delegate·and (b) to fix a standard·the limits of
which are sufficiently determinate or determinable·to which the
delegate must conform in the performance of his functions. Indeed,
without a statutory declaration of policy, which is the essence of every
law, and, without the aforementioned standard, there would be no means
to determine, with reasonable certainty, whether the delegate has acted
within or beyond the scope of his authority.‰ J. Puno, concurring and
dissenting, Defensor-Santiago v. Commission on Elections, 336 Phil. 848,
912; 270 SCRA 106, 169 (1997) citing Pelaez v. Auditor General, 15 SCRA
569 (1965).
56 Section 5 of Rep. Act No. 7925 reads:
135
purpose, i.e., „to ensure that such VAS offerings are not
cross-subsidized from the proceeds of their utility
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57 Supra note 3.
58 Local exchange service „refers to a telecommunications service,
primarily but not limited to voice-to-voice service, within a contiguous
geographic area furnished to individual.‰ See Sec. 1(c), E.O. 109 (1992).
59 Termed under E.O. 109 as „universal access.‰
60 Section 4, E.O. 109.
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62
like.‰ Given that the PTA defines VAS as „enhanced
services,‰ the definition provided in the Implementing
Rules may likewise be applied to VAS. Still, the language of
the Implementing Rules is unnecessarily confusing. Much
trouble would have been spared had the NTC consistently
used the term „VAS‰ as it is used in the PTA.
The definition of „enhanced services‰ in the
Implementing Rules, while more distinct than that under
the PTA, is still too sweeping. Rather than enumerating
what possible features could be classified as VAS or
enhanced services, the Implementing Rules instead focuses
on the characteristics
63
of these features. The use of the
phrase „the like,‰ and its implications of analogy,
presumes that a whole myriad of technologies can
eventually be subsumed under the definition of „enhanced
services.‰ The NTC should not be necessarily faulted for
such indistinct
64
formulation since it could not have known
in 1995 what possible VAS would be available in the
future. The definition laid down in the Implementing Rules
may validly serve as a guide for the NTC to determine
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65
suant to NTC Memorandum Circular No. 14-11-97. In
response, the NTC acknowledged receipt of the letter
„informing‰ it of IslacomÊs‰ offering the special feature‰ of
SMS for its CMTS, and instructed 66
Islacom to „adhere to the
provisions of MC No. 14-11-97.‰ The clear implication of
the letter is that NTC considers the Circular as applicable
to SMS.
An examination of MC No. 14-11-97 further highlights
the state of regulatory confusion befalling the NTC. The
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65 Rollo, p. 267.
66 Ibid.
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Commission
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77
security features, computer processing, and the like.‰ The
NTC merely notes that SMS involves the „transmission of
data over [the] CMTS,‰ a phraseology that evinces no
causal relation to the definition in M.C. No. 8-9-95. Neither
did the NTC endeavor to explain why the „transmission of
data‰ necessarily classifies SMS as a VAS.
In fact, if „the transmission of data over [the] CMTS‰ is
to be reckoned as the determinative characteristic of SMS,
it would seem that this is already sufficiently covered
78
by
Globe and SmartÊs respective legislative franchises. Smart
is authorized under its legislative franchise to establish
and operate integrated
telecommunications/computer/electronic services79
for public
domestic and international communications, while Globe
is empowered to establish and operate domestic
telecommunications, and stations for transmission and
reception of messages by means of electricity,
electromagnetic waves or any kind of energy, force,
variations or impulses, whether conveyed by wires,
radiated through space or transmitted through other media
and for the handling of 80
any and all types of
telecommunications services.
The question of the proper legal classification of VAS is
uniquely technical, tied as at is to the scientific and
technological application of the service or feature. Owing to
the dearth of substantive technical findings and data from
the NTC on which a 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-finding of the de novo kind is
generally abhorred and the shift of decisional responsibility
to the judiciary is not favored as against the substantiated
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and special-
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144
81
ized determination of administrative agencies. With
greater reason should this be the standard for the exercise
of judicial review when the administrative agency
concerned has not in the first place come out with a
technical finding based on evidence, as in this case.
Yet at the same time, this absence of substantial
evidence in support of the finding that SMS is VAS already
renders reversible that portion of the NTC Order.
Moreover, the Order does not explain why the NTC was
according the VAS offerings of Globe and Smart a different
regulatory treatment from that of Islacom. Indeed, to this
day, NTC has not offered any sensible explanation why
Islacom was accorded to a less onerous regulatory
requirement, nor have they compelled Islacom to suffer the
same burdens as Globe and Smart.
While stability in the law, particularly in the business
field, is desirable, there 82is no demand that the NTC
slavishly follow precedent. However, we think it essential,
for the sake of clarity and intellectual honesty, that if an
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v. U.S., 537 F.2d 1160 (4th Cir. 1976), cited in Breyer & Stewart, supra
note 10, at p. 352.
85 Edwards v. McCoy, 22 Phil. 598; Ang Tibay v. Court of Industrial
Relations, 69 Phil. 635, 642; Bataan Shipyard Co. v. Presidential
Commission on Good Government, G.R. No. L-75885, 27 May 1987, 150
SCRA 181, 217.
146
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Interestingly, while the affidavit attests to the entries of the docket book
with respect to the said NTC Adm. Case, as well as the contents of the
records previously submitted to this Court, no mention whatsoever is
made therein of any transcript to any hearing conducted by NTC on the
matter.
88 Air Manila, Inc. v. Balatbat, L-29064, 29 April 1971, 38 SCRA 489,
493; citing Garcia v. Executive Secretary, 6 SCRA 1 (1962); Ang Tibay v.
Court of Industrial Relations, 69 Phil. 635.
89 S. Breyer & R. Stewart, supra note 10, at p. 105.
147
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90 Rollo, p. 21.
148
Sec. 21. Every public service violating or failing to comply with the
terms and conditions of any certificate or any orders, decisions or
regulations of the Commission shall be subject to a fine of not
exceeding two hundred pesos per day for every day during which
such default or violation continues; and the Commission is hereby
authorized and empowered to impose such fine, after due notice and
hearing. [Emphasis supplied.]
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94
NTC.
That particular argument of the NTC has been
previously disposed of. But it is essential to emphasize the
need for a hearing before a fine may be imposed, as it is
clearly a punitive measure undertaken by an
administrative agency in the exercise of its quasi-judicial
functions. Inherently, notice and hearing are indispensable
for the valid exercise by an administrative agency of its
quasi-judicial functions. As the95
Court held in Central Bank
of the Phils. v. Hon. Cloribel:
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94 Ibid.
95 150-A Phil. 86, 102; 44 SCRA 307, 316 (1972).
96 Ibid.
150
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151
Conclusion
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