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PLDT v. NTC

FACTS:

The case involved a petition filed by the Philippine Long Distance Telephone Company (PLDT) against the National Telecommunications Commission (NTC) challenging two orders issued by the NTC. The first order granted Express Telecommunications Co., Inc. (ETCI) provisional authority to operate a Cellular Mobile Telephone System in Metro Manila, subject to conditions. The second order denied PLDT's motion for reconsideration.

ETCI had filed an application with the NTC for a Certificate of Public Convenience and Necessity (CPCN) to establish a Cellular Mobile Telephone System and an Alpha Numeric Paging System in Metro Manila and Southern Luzon. PLDT opposed the application based on various grounds.

The NTC ruled in favor of ETCI, overruling PLDT's opposition. The NTC stated that ETCI's franchise included the operation of a cellular mobile telephone service. ETCI was required to submit further evidence of its capabilities. In December 1988, the NTC granted ETCI provisional authority to operate a cellular mobile telephone system in Metro Manila. PLDT filed a motion to set aside the order, alleging due process violations. The NTC denied the motion. PLDT sought to annul the NTC orders and stop ETCI's implementation of the provisional authority.

PLDT argued that the NTC acted without jurisdiction or with grave abuse of discretion in granting the provisional authority. They argued that the NTC effectively authorized a corporate entity without a franchise to operate a public utility and validated stock transactions of a public service enterprise in violation of the law.

ETCI argued that the provisional authority was properly granted after due hearing and evaluation of evidence, and that it demonstrated legal, financial, and technical capabilities. The case also involved a question about the coverage of ETCI's franchise, whether telephone services are included in its scope.

The NTC contended that a provisional authority is distinct from a CPCN and within their jurisdiction to grant. The case was set for oral argument, and the Court was tasked with determining whether the NTC acted without jurisdiction or with grave abuse of discretion in granting the provisional authority.

ETCI, under its franchise, sought to operate a Cellular Mobile Telephone System (CMTS). The NTC interpreted the franchise to include the operation of a CMTS based on definitions of "radiotelephony" provided by dictionaries and the International Telecommunications Union (ITU).

PLDT challenged the NTC order, arguing that ETPI's franchise was limited to radio stations and did not include telephone services like the proposed CMTS. They also claimed that ETPI's franchise had lapsed due to failure to construct the authorized radio system within the required timeframe.

The Court upheld the NTC's order, stating that the NTC's interpretation was based on its expertise and experience. The Court held that the NTC's construction could only be set aside on proof of gross abuse of discretion, fraud, or error of law, which were not present in this case. The Court also stated that determining compliance with franchise requirements and unused status were factual issues not proper for Certiorari. The Court upheld the NTC's order and dismissed PLDT's argument.

ISSUES:

  1. Whether or not the National Telecommunications Commission (NTC) has the power to authorize the sale of shares of stock of Eastern Telecommunications Philippines, Inc. (ETCI).

  2. Whether or not the franchise of ETCI had lapsed into non-existence.

  3. Whether or not the transfers of shares of stock in ETCI by its stockholders constitute a transfer of the franchise that requires Congressional approval.

  4. Whether the transfers of shares in Eastern Telecommunications Philippines, Inc. (ETCI) violated the provision of its franchise requiring Congressional authorization.

  5. Whether the National Telecommunications Commission (NTC) had jurisdiction to approve the transfers of shares.

  6. Whether the National Telecommunications Commission (NTC) has the authority to require interconnection between telecommunications networks.

  7. Whether the NTC violated the due process rights of Philippine Long Distance Telephone Company (PLDT) in ordering interconnection.

  8. The issue in this case is whether or not the National Telecommunications Commission (NTC) committed grave abuse of discretion in issuing its challenged orders.

RULING:

  1. The NTC has the power to authorize the sale of shares of stock in ETCI. The NTC is an administrative agency possessed of the necessary special knowledge, expertise, and experience in telecommunications matters. Its decision to approve the sale of shares of stock should be given great weight and respect, and it can only be set aside on grounds of abuse of discretion, fraud, or error of law. In this case, there is no proof of any of these grounds to warrant judicial intervention.

  2. The determination of whether or not ETCI's franchise had lapsed into non-existence is a question of fact beyond the jurisdiction of the Court. Factual issues are not proper subjects of a special civil action for Certiorari. Additionally, the franchise holder should be given an opportunity to be heard before any forfeiture can be declared.

  3. The transfer or sale of shares of stock in ETCI by its stockholders does not constitute a transfer of the franchise that requires Congressional approval. The provision in the franchise that prohibits the lease, transfer, or sale of the franchise without Congressional approval only applies to the corporation itself, not to the sale of shares of stock by its stockholders. The transfer of shares of stock is governed by the Public Service Act, and the approval of the NTC is required for the transfer of a substantial number of shares.

  4. The transfers of shares in ETCI did not violate the provision of its franchise requiring Congressional authorization. The provision applies to the transfer or sale of the corporation's franchise itself, not the shares of stock owned by stockholders. The franchise remains valid and unaffected by the transfer of shares.

  5. The NTC had jurisdiction to approve the transfers of shares. The NTC's approval was deemed to have been met when it authorized the issuance of provisional authority to ETCI. There was full disclosure before the NTC of the transfers, and ETCI even sought approval for the increase in its capital stock and stock transfers.

  6. The NTC has the authority to require interconnection between telecommunications networks. The objective of interconnection is to ensure that all users of the public telecommunications service have access to all other users of the service at an acceptable standard and reasonable cost. The NTC, as the regulatory agency of the State, has the delegated authority to regulate the use of telecommunications networks, including interconnection.

  7. The NTC did not violate the due process rights of PLDT in ordering interconnection. PLDT had the opportunity to be heard in the main proceedings and will continue to be heard in negotiations concerning the interconnection agreement. The specific terms and conditions of the interconnection agreement can be discussed and agreed upon by the parties themselves.

  8. The Supreme Court found no grave abuse of discretion, tantamount to lack of or excess of jurisdiction, on the part of the NTC in issuing its challenged orders. The petition was dismissed for lack of merit. The Temporary Restraining Order previously issued was lifted, and the bond issued as a condition for the issuance of said restraining order was declared forfeited in favor of the private respondent, Express Telecommunications Co., Inc. Costs were imposed against the petitioner.

PRINCIPLES:

  • The decision of the NTC should be given great weight and respect, and can only be set aside on grounds of abuse of discretion, fraud, or error of law.

  • Factual issues are not proper subjects of a special civil action for Certiorari.

  • The determination of whether a franchise has lapsed into non-existence or has been forfeited is a matter for a direct proceeding for quo warranto brought by the State.

  • A franchise is a property right that cannot be revoked or forfeited without due process of law.

  • The transfer of shares of stock in a corporation is governed by the Public Service Act, and the approval of the NTC is required for the transfer of a substantial number of shares.

  • Transfers of shares owned by stockholders only require NTC approval, not Congressional authorization.

  • The franchise of a corporation is owned by the corporation itself and can only be transferred or assigned with Congressional sanction.

  • A corporation has a separate and distinct legal personality from its stockholders.

  • The condition of every franchise is that it is subject to amendment, alteration, or repeal when the common good so requires.

  • The NTC has the power to regulate and require interconnection among telecommunication carriers for the promotion of the general welfare.

  • The importance and emphasis given to interconnection in the telecommunications industry.

  • The objective of interconnection is to ensure access to telecommunications services at an acceptable standard and reasonable cost.

  • The authority of the NTC to regulate the use of telecommunications networks, including interconnection.

  • The need for a modern and efficient telecommunications network for nation building, economic recovery, and development.

  • Public utility companies must prioritize public need, public interest, and the common good over their own interests.

  • The enhancement of the telecommunications infrastructure and the expansion of telecommunications services in all areas of the country is a step in the right direction and benefits the overall development of the country's telecommunications systems. (Para. 1)

  • Neither PLDT nor any other public utility has a constitutional right to a monopoly position. (Para. 2)

  • Franchises, certificates, or authorizations for telecommunications services shall not be exclusive in character and shall not last longer than fifty (50) years. (Para. 2)

  • The State has the power to regulate or prohibit monopolies if public interest demands it. (Para. 2)