Case Summary (G.R. No. 229677)
Factual Background
ICC received a PA on March 3, 1995 for service in Metro Manila subdivisions and Bicol. TTPI secured a PA on September 25, 1996 covering multiple provinces plus Manila, Caloocan, and Navotas. Before TTPI completed its rollout, ICC applied for and obtained (November 10, 1997) a PA for Manila and Navotas—areas already assigned to TTPI.
Procedural History
TTPI and ETPI petitioned the Court of Appeals (CA) for injunctive relief, alleging NTC abuse of discretion in awarding overlapping service areas. The CA dismissed the petition, finding ICC legally and financially competent and observing no equal protection violation. Petitioners sought certiorari relief before the Supreme Court, challenging the PA’s grant and seeking preliminary injunction.
Issues Presented
- Whether the CA erred in upholding NTC’s grant of PA to ICC in areas already assigned to TTPI.
- Whether TTPI was entitled to a preliminary injunction to restrain ICC’s operations in those areas.
Petitioners’ Arguments
• Granting overlapping service areas violated the DOTC-mandated Service Area Scheme (SAS).
• ICC failed to prove TTPI’s noncompliance with rollout obligations or area under-service as required by NTC MC No. 11-9-93.
• NTC’s reliance on ICC’s performance data lacked evidentiary support.
• ICC did not conduct prior area consultations or post the required escrow deposit (20%) and performance bond (10%).
• ICC lacked technical and financial capability.
• Allowing ICC’s entry would undermine TTPI’s cross-subsidization in less profitable areas.
Authority and Discretion of the NTC
Under the 1987 Constitution and Telecommunications Policy Act, the NTC exercises broad discretion to grant PAs and CPCNs, determine service areas, and evaluate applicants’ technical and financial fitness. Courts defer to NTC’s factual findings unless arbitrary or unsupported by substantial evidence.
Service Area Scheme vs. Competitive Policy
DOTC Circular No. 91-260’s “one operator per area” rule preceded EO 109 and RA 7925, which deliberately embraced healthy competition and omitted exclusivity. The shift to competition reflects evolving policy goals—universal access, market expansion, and service improvement.
Non-Exclusivity of Public Utility Franchises
Article XII, Section 11 of the 1987 Constitution prohibits exclusivity in public utility authorizations. Judicial precedents confirm that neither Congress nor NTC may confer exclusive rights, ensuring multiple providers can serve the same areas.
Prior Consultation and Technical Findings
NTC MC No. 11-9-93 calls for prior consultation to gauge impact on existing operators and industry viability. ICC’s application provided NTC adequate opportunity to assess area demand, ICC’s rollout performance under its prior PA, and its technical and financial capacity. The Commission’s findings merit deference.
Escrow Deposit and Performance Bond Requirement
Section 27 of NTC MC No. 11-9-93 mandates a 20% escrow deposit and 10% performance bond (capped at P500 million) per project. The court held that each service area constitutes a separate project, triggering these requirements. Although not a condition precedent to PA issua
Case Syllabus (G.R. No. 229677)
Background of Telecommunications Policy Development
- The Philippine telecommunications sector was once dominated by an oligarchy, prompting government action to liberalize and promote competition.
- In October 1990, the Department of Transportation and Communications (DOTC) formulated the National Telecommunications Development Plan (NTDP) 1991–2010 to guide industry growth over twenty years.
- On September 30, 1991, DOTC issued Department Circular No. 91-260 to rationalize local exchange areas by empowering the National Telecommunications Commission (NTC) to define service boundaries and authorize only one local exchange carrier per area.
- Executive Order No. 109 (July 12, 1993) required all existing International Gateway Facility (IGF) operators to provide local exchange services in unserved and underserved areas, promoting universal access.
- The NTC implemented EO No. 109 through Memorandum Circular No. 11-9-93 (September 17, 1993), mandating IGF operators to secure a Certificate of Public Convenience and Necessity (CPCN) within two years and to meet specific line‐installation targets.
- Republic Act No. 7925 (March 23, 1995), the Public Telecommunications Policy Act, reinforced these obligations, mandating international carriers to provide local exchange service within three years of authority grant; its Implementing Rules and Regulations were issued via NTC MC No. 8-9-95 (September 25, 1995).
Provisional Authorities Granted
- International Communication Corporation (ICC) received a Provisional Authority (PA) from the NTC on March 3, 1995, to install, operate, and maintain local exchange service in Quezon City, Malabon, Valenzuela, Metro Manila, and the entire Bicol region.
- Telecommunications Technologies Philippines, Inc. (TTPI), an affiliate of Eastern Telecommunications Philippines, Inc. (ETPI), was granted a PA on September 25, 1996, to operate local exchange service in the provinces of Batanes, Cagayan Valley, Isabela, Kalinga-Apayao, Nueva Vizcaya, Ifugao, Quirino, and in Manila, Caloocan, and Navotas, Metro Manila.
- On November 10, 1997, the NTC granted ICC a new PA to operate in Manila and Navotas—areas already covered by TTPI’s earlier PA.
Procedural History
- Petitioners filed a petition for review with the Court of Appeals (CA-G.R. SP No. 46047) and sought a temporary restraining order and writ of preliminary injunction, alleging grave abuse of discretion by the NTC.
- On April 30, 1998, the Court of Appeals dismissed the petition, finding no grave abuse of discretion and upholding ICC’s legal and financial competence as well as its technically feasible network plan.
- Petitioners elevated the case to the Supreme Court via a petit