G.R. No. 196679 - Chiang vs. Philippine Long Distance Telephone Co.

The case involves petitioners—Robertson S. Chiang, Nikki S. Chiang, Maria Sy Be Ty Chiang, Ben C. Javellana, and Carmelita Tuason—and respondent Philippine Long Distance Telephone Company (PLDT).
The controversy arose from allegations that the petitioners, through their business Planet Internet, engaged in illegal toll bypass operations by routing international long distance calls using PLDT’s network facilities.
On September 7, 2001, a request from Rolando A. Alcantara, Division Head of PLDT’s Alternative Calling Pattern Detection Division, prompted a letter seeking police assistance in investigating alleged toll bypass operations carried out by Worldwide Web Corp., Message One Inc., and Planet Internet.

On September 26, 2001, the Regional Trial Court (RTC), Quezon City, issued search warrants—specifically Search Warrant Nos. Q-01-3857 and Q-01-3858—targeting Planet Internet and the petitioners for alleged violations of Presidential Decree (PD) No. 401 and theft under the Revised Penal Code (RPC).
RISOO personnel, accompanied by PLDT technical witnesses, served the search warrants at Planet Internet’s premises, located at Unit 2103, 21/F Orient Square Building, Pasig City; during the operation, various equipment was seized and two Planet Internet employees, Rene Lacson and Arnold Julio, were arrested.
The case was subsequently indorsed to the Department of Justice (DOJ), which recommended charges of theft and violation of PD No. 401, with separate proceedings initiated: inquest proceedings for Lacson and Julio and regular preliminary investigation for the petitioners.

PLDT alleged that Planet Internet committed illegal toll bypass operations by directing international calls to appear as local calls, thereby bypassing its International Gateway Facility (IGF) and depriving PLDT of correct metering and billing.
The test calls made by PLDT’s representatives revealed that while calls were shown as “completed” on the international test, no corresponding records were found in PLDT’s Call Detail Records, leading to an estimated monthly loss of P764,718.09 in access and hauling charges.
PLDT further claimed that the unauthorized installation and connection of telephone lines and equipment constituted a violation of PD No. 401.

Robertson Chiang contended that Planet Internet functioned as a legitimate Value-Added Service (VAS) and Internet-Related Service (IRS) provider, operating as an authorized reseller of IGF services from Eastern Telecommunications Philippines Incorporated and Capitol Wireless.
It was argued that the test calls which failed to pass through PLDT’s IGF did traverse the IGF of Eastern or Capwire, for which toll fees were duly paid.
Additionally, petitioners maintained that the crime of theft does not extend to toll bypass operations and that PLDT’s alleged financial injuries did not involve the appropriation of personal property, as required by the theft charge.

The Office of the City Prosecutor (OCP) of Pasig City initially dismissed the charges against the petitioners for insufficiency of evidence, which PLDT then challenged by filing a petition for review with the DOJ.
The DOJ, in its Resolutions dated November 5, 2007, and June 2, 2010, denied PLDT’s petitions and motions for reconsideration.
PLDT then elevated the matter by filing a petition for certiorari with the Court of Appeals (CA) alleging grave abuse of discretion on the part of the DOJ and contending that the CA’s prior decision in another related case presented issues of res judicata.

In its Decision dated January 31, 2011, the CA found probable cause against the petitioners for both theft and violation of PD No. 401 based on the alleged illegal toll bypass operations.
The CA ruled that:

The defense arguments concerning the legality of reselling IGF services were matters to be proven at trial.
The elements of theft (i.e., unauthorized taking with intent to gain) were sufficiently present, as evidenced by the test calls bypassing PLDT’s metering system.
The unauthorized connection to PLDT’s telephone lines, which enabled the toll bypass operation, also constituted a violation of PD No. 401.

PLDT’s further arguments before the CA asserted that the DOJ’s resolutions and the prior decisions suffered from grave abuse of discretion, alleging non-specific and generalized errors in the dismissal of their complaints; these arguments were ultimately rejected by the CA.

Whether there is probable cause to indict the petitioners for theft and violation of PD No. 401 based on the alleged illegal toll bypass operations.
Whether the evidence presented—particularly the outcome of the international test calls and the seizure of telecommunications equipment—establishes the necessary elements of the offenses charged.

Whether the operation of Planet Internet as an alleged reseller of IGF services renders the toll bypass operation legal or if the unauthorized connection to PLDT’s telephone lines constitutes an offense.
Whether the unauthorized installation of equipment and connections breaches PD No. 401 regardless of any existing reseller agreements.

Whether the CA can review and overturn the determinations of the DOJ and OCP Pasig regarding probable cause without delving into matters that necessitate a full trial.
Whether allegations of grave abuse of discretion by the DOJ in dismissing PLDT’s complaint are sufficient to merit judicial intervention at the preliminary investigation stage.

Whether the ruling in the earlier case involving Lacson and Julio precludes further litigation against the petitioners on similar grounds.
The scope and merit of petitioners’ defense arguments that toll bypass does not constitute theft and that their status as a VAS provider exempts them from requiring additional authorizations.