G.R. No. 216021 - Verdadero y Galera vs. People

Case Digest (G.R. No. 216021)
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Facts:

Parties and controversy
Petitioner was Philippine Long Distance Telephone Company (PLDT).
Respondents were Eastern Telecommunications Philippines, Inc. (ETPI) and the National Telecommunications Commission (NTC).
The petition sought to set aside and annul two NTC issuances:

The NTC decision signed by former NTC Commissioner Jose Luis Alcuaz dated November 14, 1989; and
The NTC En Banc order dated July 16, 1990.

The petition was anchored on the claim that the NTC acted with grave abuse of discretion amounting to lack or excess of jurisdiction.

Eastern’s franchise basis and application for authority
On July 16, 1987, Eastern filed with the NTC an application docketed as NTC Case No. 8758 for a Certificate of Public Convenience and Necessity (CPCN) to construct, maintain, and operate an International Digital Gateway Facility (IDGF).
Eastern alleged that it was a domestic corporation and that it held the franchise under R.A. 5002.
Eastern’s franchise claim was based on authority “to land, construct, maintain and operate telecommunications systems by cable, or any other means now known to science or which in the future may be developed for the reception and transmission of messages to and between any point in the Philippines to point exterior thereto” (R.A. 5002).

NTC’s notice, hearing schedule, and opposition
On July 22, 1987, the NTC issued a notice of hearing requiring:

Publication of Eastern’s application; and
Submission of financial and technical requirements.

The NTC scheduled the initial hearing for May 31, 1988.
On June 23, 1988, PLDT filed an “Opposition to Main Application and to Prayer for Provisional Authority” dated June 20, 1988.
PLDT’s opposition relied on multiple grounds, including that:

PLDT already operated three (3) international gateway switching facilities and planned a new large-capacity international digital exchange by 1989, making ETPI’s proposed international digital gateway a “needless and wasteful duplication” and an improvident expenditure;
ETPI was allegedly an international data/record carrier without local telephone exchanges or its own telephone network in the Philippines;
ETPI’s proposed gateway was allegedly a device to exploit PLDT’s domestic network and expand business as a telephone correspondent;
The gateway would allegedly relegate ETPI’s record-carrier obligation, take an increasing share of revenue at PLDT’s expense, and undermine the viability of PLDT’s planned digital exchange;
PLDT’s international toll revenue would allegedly diminish due to PLDT’s investments; and
ETPI’s proposed gateway was allegedly contrary to international practice favoring single-ownership gateways.

On July 8, 1988, PLDT served Eastern with a Request for Admission and Interrogatories, and Eastern answered on August 9, 1988.
On August 31, 1988, the NTC issued an order defining issues for trial based on the respective formulations of issues by Eastern and PLDT.
At the scheduled hearing on September 14, 1988, PLDT filed a Motion to Dismiss challenging NTC jurisdiction on the theory that Eastern was disqualified by its franchise from acquiring the CPCN sought.
After debate, the NTC denied the Motion to Dismiss and the trial proceeded.

Hearings, submissions, and submission for final resolution
On various dates, Eastern and PLDT presented documentary and testimonial evidence.
Eastern and PLDT filed extensive memoranda supporting their respective positions.
On July 10, 1989, the NTC motu proprio ordered clarificatory questions to Eastern and PLDT.
After the clarifications, the case was considered submitted for final resolution per an order dated November 3, 1989.

Rendition, release, and subsequent NTC En Banc actions
On November 10, 1989, the NTC through Commissioner Jose Luis A. Alcuaz rendered a decision granting Eastern’s application.
The decision’s dispositive portion issued a CPCN to Eastern (ETPI) “to install, operate and maintain an International Digital Gateway Facility in Metro Manila,” subject to numerous conditions.
The decision conditions included, among others:

Filing acceptance within fifteen (15) days and submitting a schedule of activities and equipment within sixty (60) days after acceptance;
Establishing the proposed international digital gateway according to listed exhibits;
Within ninety (90) days from acceptance, Eastern and PLDT to enter into an interconnection agreement for adequate interconnection facilities between Eastern’s gateway switch and PLDT’s telephone network, including revenue sharing/account settlement and related technical and operational terms to be submitted to NTC for approval;
Completing installation including full interconnection with the Public Switched Telephone Network (PSTN) and commencing service within three hundred sixty (360) days from the decision, with notice to allow NTC ocular inspection and field test;
Filing within one hundred eighty (180) days a petition for approval of corresponding rates for Eastern’s international telephone service;
Allowing interconnection of the gateway with other authorized telecommunications networks desiring interconnection consistent with cost-efficient interconnection;
Submitting annual financial and operations reports and paying supervision and regulation fees on prescribed dates and deadlines under relevant law provisions;
Prohibiting suspension without NTC authority except in emergencies with written notice and explanation;
Allowing NTC technical staff to inspect facilities at any time; and
Prohibiting modification of approved technical specifications without prior NTC authority and requiring compliance with all existing laws and NTC rules and regulations.

Commissioner Alcuaz signed the decision on November 10, 1989.
The decision was released to the NTC Secretariat on November 14, 1989, and entered into the NTC docket on November 14, 1989.
Eastern was served the decision copy by Commissioner Alcuaz in his NTC office on November 14, 1989, and the next day Eastern submitted its “acceptance.”
On November 15, 1989, the NTC received a letter dated November 13, 1989 from the Office of the President to Commissioner Alcuaz, stating that President Aquino designated Undersecretary Josefina T. Lichauco as Acting Commissioner of the NTC after Alcuaz’s replacement.
On January 3, 1990, the NTC En Banc ordered its Board Secretary to formally release copies of the NTC decision dated November 14, 1989 to the parties.

Motions challenging the “Alcuaz decision” and NTC En Banc disposition
PLDT filed a “...(Subscriber-Only)

Issues:

Jurisdictional and grave-abuse inquiry
Whether the rendition of the NTC decision dated November 14, 1989 and the NTC En Banc order dated July 16, 1990 was attended by grave abuse of discretion amounting to lack of jurisdiction on the part of the NTC.
Whether PLDT established that the NTC acted without or in excess of jurisdiction in granting ETPI authority for the IGF and in ordering interconnection.

Franchise authority and nature of the IGF
Whether ETPI’s proposed International Digital Gateway Facility (IGF/IDGF) was within the scope of R.A. 5002 as a franchise to construct, maintain, and operate telecommunications systems by cable or other means for reception and transmission of “messages to points exterior,” and whether the proposed IGF was instead an equipment constituting an international telephone exchange forming part of a telephone system.
Whether Eastern’s franchise permitted operation of a facility inherently essential to a telephone system, notwithstanding Eastern’s alleged admission that it had not operated any telephone exchange or network in the Philippines.

Validity of compelled “interconnection”
Whether “interconnection” ordered by the NTC could be validly required between PLDT’s telephone system and Eastern’s proposed...(Subscriber-Only)

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