Case Summary (G.R. No. 201944)
Petitioner(s)
BCC: Incorporated with BCDA, FBDC and Smart Communications, Inc. in 1997; its articles and shareholder agreement state it will own, construct, operate and maintain communications infrastructure in BGC and provide related services, including value‑added services (VAS), with certain exclusivity provisions in its agreements. PLDT: Acquired shares in SCI and FBDC by 2002, owning 75% of BCC through acquisition.
Respondent(s)
NTC: Issued Memorandum Circular No. 05‑05‑2002 and later administrative orders (October 28, 2008 and October 26, 2010) directing compliance with the circular and ordering petitioners to cease and desist from acts preventing Innove from implementing authorized telecommunications services in BGC. Innove: A telecommunications entity that secured NTC authorization and sought enforcement of its authorizations and of MC No. 05‑05‑02. FBDC: Developer and party to the MOA granting infrastructure rights.
Key Dates
- October 16, 1997: Incorporation of BCC and execution of Shareholders’ Agreement.
- 2002: PLDT acquired majority interest in BCC-related entities; May 13, 2002: NTC issued MC No. 05‑05‑2002.
- September–October 2007–2008: Innove sought to install facilities; disputes arose; Innove filed Complaint before NTC (NTC Case No. 2008‑236).
- October 28, 2008 & October 26, 2010: NTC orders challenged.
- August 16, 2011 and May 18, 2012: Court of Appeals decisions denying certiorari and motion for reconsideration.
- Supreme Court disposition as recited in the prompt.
Applicable Law and Authorities
- 1987 Constitution (Article XII, Section 11) — prohibition on exclusive operation of public utilities.
- Republic Act No. 7925 (Public Telecommunications Policy Act of 1995) and its IRR.
- Executive Order No. 546 (creation and functions of the NTC).
- NTC Memorandum Circular No. 05‑05‑2002.
- NTC Rules (2006) governing practice and provisional remedies (cease and desist orders).
- Relevant jurisprudence cited in the proceedings (e.g., prior decisions addressing NTC authority and exclusivity).
Facts
BCC was formed pursuant to a shareholders’ agreement and MOA granting it the right to install, own and maintain communications infrastructure in BGC and to provide related services, including VAS, with contractual provisions purporting to confer exclusivity in infrastructure and service provision. PLDT later acquired a 75% interest in entities connected to BCC. NTC issued MC No. 05‑05‑2002 declaring certain IT hub areas, including BGC, open to duly enfranchised public telecommunications entities (PTEs) for high‑speed networks and connectivity. Innove sought to install facilities in BGC and, in the course of doing so, replaced or connected to building conduit capacity previously associated with BCC. Innove petitioned the NTC to enforce MC No. 05‑05‑02 and obtain protection from alleged interference by BCC and PLDT.
Procedural History
Innove filed NTC Case No. 2008‑236 seeking enforcement of its authorizations and the NTC circular. NTC issued a cease‑and‑desist order (Oct. 28, 2008) directing petitioners to comply with MC No. 05‑05‑02 and to desist from acts preventing Innove from implementing authorized services; a subsequent NTC order denied reconsideration (Oct. 26, 2010). Petitioners filed civil actions in RTCs (specific performance, injunction and declaration of unconstitutionality of the NTC circular). Petitioners challenged the NTC orders via certiorari before the Court of Appeals, which denied relief (Aug. 16, 2011) and denied reconsideration (May 18, 2012). The Supreme Court review followed.
Issues Presented
- Whether the Court of Appeals correctly held that the NTC had jurisdiction over BCC. 2. Whether the CA correctly affirmed NTC orders directing compliance with MC No. 05‑05‑02 and ordering petitioners to cease acts preventing Innove from implementing services in BGC. 3. Whether petitioners were deprived of due process by alleged prejudgment based on an NTC letter to the DOJ. 4. Whether petitioners committed forum shopping by instituting parallel civil suits.
NTC Jurisdiction over BCC — Legal Basis and Court’s Reasoning
The Court sustained the CA’s conclusion that NTC may exercise jurisdiction over BCC to the extent that BCC’s activities fall within the NTC’s statutory and executive functions. The court relied on:
- BCC’s own corporate documents and shareholder agreement admitting it would provide VAS and communications infrastructure; such admissions place at least some of its activities within regulatory scope.
- EO No. 546 (Sec. 15) enumerating NTC functions, including issuance and enforcement of authorizations, prescribing areas of operation, establishing rules and standards related to CPCNs and supervising telecommunications facilities.
- RA 7925 (Sec. 5) assigning NTC responsibilities to ensure quality, interconnection, fair market conduct, protection against misuse of monopoly powers, and other regulatory functions.
- NTC Rules (2006) which permit complaints against holders of authorizations and persons operating services or possessing equipment with or without authority; the focus is on violations of NTC rules, authorizations, orders and decisions. The Court concluded NTC jurisdiction is not strictly limited to formally enfranchised PTEs but extends to persons whose activities affect enforcement of authorizations granted to PTEs, compliance with NTC rules, and public interest in telecommunications competition and access.
Validity and Enforcement of NTC MC No. 05‑05‑02 and the Cease‑and‑Desist Orders
The Court found MC No. 05‑05‑02 to be a valid exercise of NTC authority consistent with RA 7925 and EO 546. The circular declares BGC a free zone where duly enfranchised PTEs may provide high‑speed networks; the NTC’s issuance of cease‑and‑desist relief enforces compliance with that policy and protects authorized PTEs’ rights. The Court emphasized:
- Innove held provisional NTC authorization to operate local exchange services; the NTC is empowered to ensure authorized PTEs can implement their authorizations and to require interconnection and non‑discriminatory access pursuant to RA 7925 and its IRR.
- The NTC did not decide the constitutionality of the shareholder agreements or MOA but enforced the circular and Innove’s authorizations; by enforcing the circular the NTC effectively confirmed BGC as a free zone, rendering incompatible exclusivity provisions unenforceable against duly authorized PTEs.
- Facilities essential to the provision of telecommunication services are integral to the public utility function; exclusivity over essential facilities and over public utility operation is proscribed by the Constitution (Art. XII, Sec. 11). Therefore, contractual exclusivity in infrastructure and services that interferes with PTE authorizations conflicts with constitutional and statutory policy and may be set aside by NTC enforcement actions.
Contractual Exclusivity, Constitutional Supremacy and Private Agreements
The Court reiterated that contractual stipulations that are contrary to law, public policy, or the Constitution are void. The Constitution forbids exclusive operation of public utilities; BCC/PLDT contractual arrangements purporting to grant exclusive rights to infrastructure and services in BGC were therefore unenforceable to the extent they conflict with constitutional and statutory mandates (RA 7925). The Court applied the doctrine that positive law and constitutional norms are deemed written into private contracts and may limit or nullify contractual exclusivities that impede the enforcement of PTE authorizations.
Cease‑and‑Desist as Provisional Relief and Requirement of Injunctive Equities
The Court found the NTC’s issuance of a cease‑and‑desist order proper under the NTC Rules (Sec. 4) as a provisional remedy to preserve public service and welfare pending final determination. Applying principles analogous to preliminary injunction analysis, the Court concluded:
- Innove had a clear and unmistakable right to implement NTC‑granted authorizations; petitioners’ actions enforcing exclusivity threatened that right; the invasion was material and substantial; and there was u
Case Syllabus (G.R. No. 201944)
Case Title, Citation and Panel
- Case caption as extracted from the source: FIRST DIVISION [ G.R. No. 201944, April 19, 2023 ] BONIFACIO COMMUNICATIONS CORPORATION AND PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, PETITIONERS , VS. NATIONAL TELECOMMUNICATIONS COMMISSION, INNOVE COMMUNICATIONS, INC., AND FORT BONIFACIO DEVELOPMENT CORPORATION, RESPONDENTS.
- Supreme Court decision date: April 19, 2023.
- G.R. No.: 201944.
- Opinion penned by Justice Hernando, J.; concurrence by Chief Justice Gesmundo (Chairperson), and Justices Zalameda, Rosario, and Marquez.
Nature of Petition and Relief Sought
- Petition for Review on Certiorari under Rule 45 of the Rules of Court.
- Petitioners (Bonifacio Communications Corporation [BCC] and Philippine Long Distance Telephone Company [PLDT]) sought review of:
- August 16, 2011 Decision of the Court of Appeals (CA) in CA-G.R. SP No. 117535 denying their Petition for Certiorari and Prohibition under Rule 65; and
- May 18, 2012 Resolution of the Court of Appeals denying petitioners’ motion for reconsideration.
- Subject of challenge: two Orders by the National Telecommunications Commission (NTC) dated October 28, 2008 and October 26, 2010 directing compliance with NTC Memorandum Circular No. 05-05-2002 (NTC MC No. 05-05-02) and issuing/affirming a cease-and-desist directive as to acts preventing Innove from implementing and providing telecommunications services in Bonifacio Global City (BGC).
Factual Background
- Incorporation and agreements:
- BCC was incorporated on 16 October 1997 by Bases Conversion and Development Authority (BCDA), Fort Bonifacio Development Corporation (FBDC), and Smart Communications, Inc. (SCI).
- A Shareholders’ Agreement granted BCC “the exclusive right to install, construct, own and maintain all the necessary Communication Infrastructure” and to provide related services, including Value-Added Services (VAS), within Bonifacio Global City (BGC).
- A Memorandum of Agreement (MOA) between FBDC and BCC reiterated the foregoing provisions.
- Ownership changes:
- By 2002 PLDT owned the shares of SCI and FBDC, amounting to 75% of BCC’s total shares.
- Regulatory development:
- On 13 May 2002, NTC issued Memorandum Circular No. 05-05-2002 (Rules and Regulations on the Provisions of High Speed Networks and Connectivity to IT Hub Areas), declaring BGC as one of the free zones where any duly enfranchised public telecommunications entity (PTE) shall be allowed to provide high-speed networks and connectivity.
- Alleged interference and complaint:
- In September 2007 Innove Communications, Inc. (Innove) was contracted to provide landline, data services and internet connectivity to the Net 1, 2, and 3 Buildings (e-Square) in BGC.
- Innove’s contractor allegedly disconnected BCC’s conduit from a Net 3 building stub-out, replaced it with Innove conduit, and ran Innove fiber into the building after obtaining the building owner’s permission.
- BCC discovered Innove’s acts and sent a demand letter dated 1 September 2008; Innove was informed of the Shareholders’ Agreement and MOA.
- On 12 September 2008 Innove filed NTC Case No. 2008-236, praying for: affirmation of NTC MC No. 05-05-02; issuance of a cease-and-desist order prohibiting BCC, PLDT and FBDC from removing Innove’s facilities or frustrating Innove’s obligations; permanent issuance of such order after hearing; and removal of devices/installations intercepting vacant cable entrance facilities.
Parties and Positions
- Petitioners:
- Bonifacio Communications Corporation (BCC): owner/operator of communications infrastructure in BGC; incorporated to own/construct/operate communications infrastructure and to provide related services, including VAS; claimed contractual exclusivity rights under Shareholders’ Agreement and MOA.
- Philippine Long Distance Telephone Company (PLDT): held 75% of BCC shares (after acquiring SCI’s and FBDC’s shares); asserted entitlement to exclusivity per acquisition conditions recited in pleadings.
- Respondents:
- National Telecommunications Commission (NTC): regulatory agency that issued NTC MC No. 05-05-02 and later the subject Orders directing compliance and cease-and-desist.
- Innove Communications, Inc. (Innove): complainant before NTC, duly authorized PTE seeking enforcement of its authorizations and protection against alleged interference.
- Fort Bonifacio Development Corporation (FBDC): owner-party to MOA and shareholder with role in the agreements establishing BCC’s rights in the area.
- Other entities referenced:
- BCDA and Smart Communications, Inc. (SCI): original incorporators of BCC.
- Globe Telecom, Inc. (Globe): parent company of Innove; involved in communications with NTC seeking clarifications.
Procedural History
- Administrative proceedings and NTC actions:
- Innove filed Complaint before NTC (NTC Case No. 2008-236) on 12 September 2008.
- NTC issued Order dated 28 October 2008 (first assailed Order) directing respondents to strictly comply with NTC MC No. 05-05-02 and to CEASE and DESIST from acts preventing Innove from implementing/providing telecommunications service in BGC pursuant to authorizations granted by NTC.
- NTC denied petitioners’ Joint Motion for Reconsideration in an Order dated 26 October 2010 (second assailed Order).
- Parallel civil and criminal actions:
- On 17 October 2008 BCC filed a civil suit (RTC Taguig) for specific performance, contractual interference, injunction and damages against FBDC, Globe and Innove.
- On 17 October 2008 PLDT filed a civil case (RTC Quezon City) for declaration of unconstitutionality/nullity of NTC MC No. 05-05-02 and injunction; Prayed for TRO which was denied by RTC-QC on grounds that NTC had primary jurisdiction.
- BCC filed a criminal complaint with Taguig City Prosecutor for malicious mischief, theft, and violation of P.D. 401.
- RTC-Taguig issued a Resolution dated 30 March 2012 dismissing BCC’s case; BCC filed a Motion for Reconsideration denied by a Resolution dated 27 April 2015; BCC filed and later withdrew its Notice of Appeal.
- Court of Appeals:
- CA, in Decision dated 16 August 2011 (CA-G.R. SP No. 117535), denied Petition for Certiorari and Prohibition under Rule 65 filed by petitioners, affirming NTC Orders.
- CA denied petitioners’ Motion for Reconsideration in Resolution dated 18 May 2012.
- Supreme Court:
- Petition for Review on Certiorari filed under Rule 45; Supreme Court issued decision dated 19 April 2023 denying petition and affirming CA and NTC rulings.
Issues Presented to the Supreme Court
- Whether the Court of Appeals correctly held that the NTC has jurisdiction over petitioner BCC.
- Whether the CA correctly affirmed the assailed NTC Orders directing petitioners to comply with NTC MC No. 05-05-02 and to cease and desist from acts preventing Innove from implementing/providing telecommunications services in BGC pursuant to NTC authorizations.
- Whether petitioners were deprived of due process because the NTC allegedly prejudged the case based on a March 14, 2008 NTC letter to the DOJ.
- Whether petitioners committed forum shopping when they filed cases before the trial courts while administrative proceedings were pending before the NTC and the CA.
Rulings/Disposition
- Final disposition: Petition denied for lack of merit; CA Decision dated 16 August 2011 and CA Resolution dated 18 May 2012 affirmed.
- The Supreme Court held:
- NTC has jurisdiction over BCC insofar as BCC’s activities fall within the NTC’s scope and affect enforcement/administration of authorizations granted to PTEs, including enforcement of NTC rules and regulations, and maintaining competition in the telecommunications industry.
- The assailed NTC Orders were valid exercises of NTC authority to enforce NTC MC No. 05-05-02 and to protect Innove’s rights under its authorizations by issuing a cease-and-desist order.
- Petitioners were not deprived of due process by alleged prejudgment; mere assertions of bias based on the NTC’s letter to DOJ were insufficient absent clear and convincing evidence.
- Petitioners committed forum shopping; RTC-Taguig’s resolutions were final and adjudicated matters that produced res judicata effect, and petitioners’ subsequent actions constituted forum shopping and warranted dismissal.
Supreme Court’s Analysis — NTC Jurisdiction Over BCC
- Foundational statutory/regulatory sources consulted:
- Executive Order No. 546 (EO 546) — creation of and functions vested in the NTC (Sec. 15 enumerating powers such as issuing CPCNs, establishing areas of operation, prescribing rules/regulations/standards, supervising/inspecting operations, maintaining competition).
- Republic Act No. 7925 (RA 7925) — Public Telecommunications Policy Act; Section 5 sets responsibilities of NTC as principal administrator (including facilitating entry of service providers, ensuring quality, mandating fair interconnection, fostering fair market conduct, protecting consumer welfare, and protecting consumers against misuse of monopoly powers).
- 2006 Revised Rules of Practice and Procedure of the NTC (NTC Rules) — Section 1 (how a complaint befor