Smart Communications vs. NTC [G.R. No. 151908. August 12, 2003]; also Globe Telecom vs. CA [G.R. No. 152063]
First Division, Ynares-Santiago (J): 3 concurring, 1 took no part
Facts: On 16 June 2000, pursuant to its rule-making and regulatory powers, the National Telecommunications Commission (NTC) issued Memorandum Circular 13-6-2000, promulgating rules and regulations on the billing of telecommunications services. The Memorandum Circular provided that it shall take effect 15 days after its publication in a newspaper of general circulation and three certified true copies thereof furnished the UP Law Center. It was published in the newspaper, The Philippine Star, on 22 June 2000. Meanwhile, the provisions of the Memorandum Circular pertaining to the sale and use of prepaid cards and the unit of billing for cellular mobile telephone service took effect 90 days from the effectivity of the Memorandum Circular. On 30 August 2000, the NTC issued a Memorandum to all cellular mobile telephone service (CMTS) operators which contained measures to minimize if not totally eliminate the incidence of stealing of cellular phone units. This was followed by another Memorandum dated 6 October 2000 addressed to all public telecommunications entities reminding them that the validity of all prepaid cards and SIM packs sold and used by subscribers of prepaid cards, respectively, sold on 7 October 2000 and beyond shall be valid for at least 2 years from the date of first use.
On 20 October 2000, Isla Communications Co., Inc. and Pilipino Telephone Corporation filed against the National Telecommunications Commission, Commissioner Joseph A. Santiago, Deputy Commissioner Aurelio M. Umali and Deputy Commissioner Nestor C. Dacanay, an action for declaration of nullity of NTC Memorandum Circular 13-6-2000 (the Billing Circular) and the NTC Memorandum dated 6 October 2000, with prayer for the issuance of a writ of preliminary injunction and temporary restraining order. Soon thereafter, Globe Telecom, Inc and Smart Communications, Inc. filed a joint Motion for Leave to Intervene and to Admit Complaint-in-Intervention. This was granted by the trial court. On 27 October 2000, the trial court issued a TRO. Subsequently after hearing, the trial court issued on 20 November 2000 an Order granting the issuance of a writ of preliminary injunction and thus enjoining the NTC, et. al. from implementing the challenged memoranda. The plaintiffs and intervenors are, however, required to file a bond of P500,000.00. NTC et. al. filed a motion for reconsideration, which was denied in an Order dated 1 February 2001.
NTC filed a special civil action for certiorari and prohibition with the Court of Appeals (CA-GR SP 64274). On 9 October 2001, a decision was rendered, granting the petition for certiorari and prohibition, setting aside and annulling the writ of preliminary issued by the lower court, and dismissing the telecommunication companies’ complaint and complaint-in-intervention without prejudice to the referral of their grievances and disputes on the assailed issuances of the NTC with the said agency. The companies’ motions for reconsideration were denied in a Resolution dated 10 January 2002 for lack of merit. The petitioners and the intervenors filed their respective petitions for review with the Supreme Court. The two petitions were consolidated in a Resolution dated 17 February 2003. On 24 March 2003, the petitions were given due course and the parties were required to submit their respective memoranda.
The Supreme Court granted the consolidated petitions; reversed and set aside the decision of the Court of Appeals dated 9 October 2001 and its Resolution dated 10 January 2002; reinstated the order dated 20 November 2000 of the Regional Trial Court of Quezon City, Branch 77; and remanded the case to the court a quo for continuation of the proceedings.
1. Pertinent provisions of Memorandum Circular 13-6-2000
Among the pertinent provisions of Memorandum Circular 13-6-2000 are : “(1) The billing statements shall be received by the subscriber of the telephone service not later than 30 days from the end of each billing cycle. In case the statement is received beyond this period, the subscriber shall have a specified grace period within which to pay the bill and the public telecommunications entity (PTEs) shall not be allowed to disconnect the service within the grace period. (2) There shall be no charge for calls that are diverted to a voice mailbox, voice prompt, recorded message or similar facility excluding the customer’s own equipment. (3) PTEs shall verify the identification and address of each purchaser of prepaid SIM cards. Prepaid call cards and SIM cards shall be valid for at least 2 years from the date of first use. Holders of prepaid SIM cards shall be given 45 days from the date the prepaid SIM card is fully consumed but not beyond 2 years and 45 days from date of first use to replenish the SIM card, otherwise the SIM card shall be rendered invalid. The validity of an invalid SIM card, however, shall be installed upon request of the customer at no additional charge except the presentation of a valid prepaid call card. (4) Subscribers shall be updated of the remaining value of their cards before the start of every call using the cards. (5) The unit of billing for the cellular mobile telephone service whether postpaid or prepaid shall be reduced from 1 minute per pulse to 6 seconds per pulse. The authorized rates per minute shall thus be divided by 10.”
2. Directions of NTC Memorandum of 30 August 2000 to CMTS operators
The Memorandum of 30 August 2000 directed CMTS operators to (a) strictly comply with Section B(1) of MC 13-6-2000 requiring the presentation and verification of the identity and addresses of prepaid SIM card customers; (b) require all your respective prepaid SIM cards dealers to comply with Section B(1) of MC 13-6-2000; (c) deny acceptance to your respective networks prepaid and/or postpaid customers using stolen cellphone units or cellphone units registered to somebody other than the applicant when properly informed of all information relative to the stolen cellphone units; (d) share all necessary information of stolen cellphone units to all other CMTS operators in order to prevent the use of stolen cellphone units; and (e) require all your existing prepaid SIM card customers to register and present valid identification cards.
3. Powers of admininstrative agencies
Administrative agencies possess quasi-legislative or rule-making powers and quasi-judicial or administrative adjudicatory powers.
4. Quasi-legislative or rule-making power
Quasi-legislative or rule-making power is the power to make rules and regulations which results in delegated legislation that is within the confines of the granting statute and the doctrine of non-delegability and separability of powers.
5. Requisites for the validity of rules of regulations promulgated by administrative agencies
The rules and regulations that administrative agencies promulgate, which are the product of a delegated legislative power to create new and additional legal provisions that have the effect of law, should be within the scope of the statutory authority granted by the legislature to the administrative agency. It is required that the regulation be germane to the objects and purposes of the law, and be not in contradiction to, but in conformity with, the standards prescribed by law. They must conform to and be consistent with the provisions of the enabling statute in order for such rule or regulation to be valid.
6. Statute prevails over an administrative order in case of conflict
Constitutional and statutory provisions control with respect to what rules and regulations may be promulgated by an administrative body, as well as with respect to what fields are subject to regulation by it. It may not make rules and regulations which are inconsistent with the provisions of the Constitution or a statute, particularly the statute it is administering or which created it, or which are in derogation of, or defeat, the purpose of a statute. In case of conflict between a statute and an administrative order, the former must prevail.
7. Quasi-judicial or administrative adjudicatory power
Quasi-judicial or administrative adjudicatory power is the power to hear and determine questions of fact to which the legislative policy is to apply and to decide in accordance with the standards laid down by the law itself in enforcing and administering the same law. The administrative body exercises its quasi-judicial power when it performs in a judicial manner an act which is essentially of an executive or administrative nature, where the power to act in such manner is incidental to or reasonably necessary for the performance of the executive or administrative duty entrusted to it. In carrying out their quasi-judicial functions, the administrative officers or bodies are required to investigate facts or ascertain the existence of facts, hold hearings, weigh evidence, and draw conclusions from them as basis for their official action and exercise of discretion in a judicial nature.
8. When exhaustion of administrative remedies is applicable
In questioning the validity or constitutionality of a rule or regulation issued by an administrative agency, a party need not exhaust administrative remedies before going to court. This principle applies only where the act of the administrative agency concerned was performed pursuant to its quasi-judicial function, and not when the assailed act pertained to its rule-making or quasi-legislative power. (See case of Association of Philippine Coconut Dessicators v. Philippine Coconut Authority).
9. Even if exhaustion of administrative remedies not applicable, petitioners have complied with requirements
Even assuming arguendo that the principle of exhaustion of administrative remedies apply in this case, the records reveal that petitioners sufficiently complied with this requirement. Even during the drafting and deliberation stages leading to the issuance of Memorandum Circular 13-6-2000, petitioners were able to register their protests to the proposed billing guidelines. They submitted their respective position papers setting forth their objections and submitting proposed schemes for the billing circular. After the same was issued, petitioners wrote successive letters dated 3 and 5 July 2000 asking for the suspension and reconsideration of the so-called Billing Circular. These letters were not acted upon until 6 October 2000, when NTC issued the second assailed Memorandum implementing certain provisions of the Billing Circular. This was taken by petitioners as a clear denial of the requests contained in their previous letters, thus prompting them to seek judicial relief.
10. Application of doctrine of primary jurisdiction; Objective of doctrine
The doctrine of primary jurisdiction applies only where the administrative agency exercises its quasi-judicial or adjudicatory function. Thus, in cases involving specialized disputes, the practice has been to refer the same to an administrative agency of special competence pursuant to the doctrine of primary jurisdiction. The courts will not determine a controversy involving a question which is within the jurisdiction of the administrative tribunal prior to the resolution of that question by the administrative tribunal, where the question demands the exercise of sound administrative discretion requiring the special knowledge, experience and services of the administrative tribunal to determine technical and intricate matters of fact, and a uniformity of ruling is essential to comply with the premises of the regulatory statute administered. The objective of the doctrine of primary jurisdiction is to guide a court in determining whether it should refrain from exercising its jurisdiction until after an administrative agency has determined some question or some aspect of some question arising in the proceeding before the court. It applies where the claim is originally cognizable in the courts and comes into play whenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, has been placed within the special competence of an administrative body; in such case, the judicial process is suspended pending referral of such issues to the administrative body for its view.
11. Judicial Power; Courts have jurisdiction over constitutionality of rule or regulations issued in performance of quasi-legislative functions
The Constitution vests the power of judicial review or the power to declare a law, treaty, international or executive agreement, presidential decree, order, instruction, ordinance, or regulation in the courts, including the regional trial courts. This is within the scope of judicial power, which includes the authority of the courts to determine in an appropriate action the validity of the acts of the political departments. Judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are legally demandable and enforceable, and to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government.
12. Issues raised not technical, within competence of a Judge in the Regional Trial Court
Whether the Circular contravened Civil Code provisions on sales and violated the constitutional prohibition against the deprivation of property without due process of law are within the competence of the trial judge. Contrary to the finding of the Court of Appeals, the issues raised in the complaint do not entail highly technical matters. Rather, what is required of the judge who will resolve this issue is a basic familiarity with the workings of the cellular telephone service, including prepaid SIM and call cards – and this is judicially known to be within the knowledge of a good percentage of our population – and expertise in fundamental principles of civil law and the Constitution.
