Title
GMA Network, Inc. vs. National Telecommunications Commission
Case
G.R. No. 181789
Decision Date
Feb 3, 2016
GMA Network challenged NTC's denial of a cease-and-desist order against cable companies' alleged monopolistic mergers. SC ruled NTC erred but denied GMA's request, citing insufficient evidence and premature motion.
cable companies
monopolies
combinations of trade

Case Summary (G.R. No. 181789)

Factual Background

The petitioner alleged that a series of corporate transactions effected by interests associated with Lopez, Inc., ABS-CBN Broadcasting Corporation, PLDT, and their affiliates resulted in prohibited monopolies and combinations in the commercial mass media. The corporate relationships alleged were that Sky Vision Corporation wholly owned Skycable, that Sky Vision and Telemondial Holdings, Inc. established PCC, and that Home Cable was a wholly owned subsidiary of Unilink Communications Corporation, operating in Metro Manila and certain provinces. The petitioner asserted that a Master Consolidation Agreement executed July 18, 2001 by the Benpres Group and the PLDT Group to consolidate ownership under Beyond Cable Holdings, Inc. led to consolidation and common control of the cable companies without the requisite approvals.

Proceedings before the NTC

On April 23, 2003 the petitioner filed a complaint with the NTC alleging unlawful mergers, consolidations, acquisitions, and functional convergence among the cable companies and praying among other reliefs for a permanent cease and desist order and orders to preserve signal quality. The petitioner later filed a motion for the issuance of a cease and desist order on September 22, 2003 and submitted a manifestation and several urgent motions alleging further steps toward consolidation. The NTC denied the motion for a cease and desist order by order dated November 8, 2004, reasoning that resolution of the motion would necessarily resolve the main case without the presentation of evidence, and denied the motion for reconsideration by order dated October 13, 2005.

Court of Appeals Decision

The petitioner filed a petition for certiorari before the Court of Appeals. The CA dismissed the petition and found no grave abuse of discretion on the part of the NTC in denying the motion for a cease and desist order. The CA held that the issuance of such an order rested within the discretion of the NTC, that the petitioner’s prayer for a cease and desist order involved issues that required the presentation of evidence, and that the CA would not decide the constitutional and legal merits of the alleged mergers because the NTC was the proper body to act on the factual allegations concerning market conditions and commercial control. The CA denied the petitioner’s motion for reconsideration by resolution dated February 18, 2008.

Issues Presented

The central issue before the Supreme Court was whether the NTC gravely abused its discretion in denying the petitioner’s motion for the issuance of a cease and desist order. Subsidiary issues were whether the CA erred in its reasoning for upholding the NTC decision; whether the nature of the petitioner’s prayer rendered it subject to the requisites of injunctive relief; and whether the petitioner had shown a clear and unmistakable right under Section 20(g) of the Public Service Act to warrant provisional relief.

Petitioner’s Contentions

The petitioner argued that the NTC abandoned its duty to issue a cease and desist order despite overwhelming and unrefuted evidence that Skycable, PCC, and Home Cable had consolidated operations under the Master Consolidation Agreement without prior approval of the NTC and Congress. The petitioner maintained that the NTC should have issued the order to prevent continuing violations of the Constitution, statutes, Home Cable’s certificate of authority, and established jurisprudence, and to prevent the main action from becoming moot or academic.

Private Respondents’ Contentions

Skycable and PCC urged that the petitioner improperly sought merits determinations and factual findings without trial, that no merger had in fact taken place because Beyond Cable had not assumed operational control, and that Section 20(g) expressly allowed negotiation or completion of transactions prior to NTC approval. They also contended that no franchise was relinquished and that competition remained. Home Cable echoed these defenses and further challenged the petition on procedural grounds, contending that the petition lacked mandatory attachments and signatures; the Supreme Court found those procedural objections without merit because the requisite signature page, verification, certificate of non-forum shopping, and secretary’s certificate were present in the record.

Supreme Court’s Analysis of the NTC’s Discretion

The Court found that the Court of Appeals committed grave abuse of discretion by relying on an incorrect consideration — namely, that the resolution of the motion for a cease and desist order would necessarily resolve the main case — in affirming the NTC denial. The Supreme Court nevertheless concurred with the result of denial but on correct legal grounds. The Court emphasized that the NTC has authority under Section 3, Part VI of the NTC Rules of Procedure and Practices to grant provisional reliefs upon complaint or at any subsequent stage, and that the NTC may determine the propriety of a cease and desist order as a provisional relief on the basis of pleadings and supporting affidavits, without prejudice to a final decision after hearing.

Nature of the Cease and Desist Order and Standard for Relief

The Court examined the character of the requested relief. Relying on Garcia v. Mojica, the Court observed that a cease and desist order is similar to a status quo order and not identical to a temporary restraining order or preliminary injunction, since a status quo order preserves the last uncontested state of things. The Court also noted precedents where status quo orders functioned as preliminary injunctions and therefore were judged by the requisites applicable to a writ of preliminary injunction. Because the petitioner’s prayer sought to enjoin respondents from continuing implementation of operational mergers and from effectuating further mergers without NTC approval, the Court treated the petition as seeking a preliminary injunction and applied the fourfold test for such relief: (one) existence of a clear and unmistakable right to be protected; (two) direct threat to that right by the act sought to be enjoined; (three) material and substantial invasion of the right; and (four) urgent and paramount necessity to prevent serious and irreparable damage.

Application of Section 20(g) of the Public Service Act

The Court analyzed Section 20(g) of the Public Service Act, which makes unlawful the sale, mortgage, encumbrance, lease, merger, or consolidation of property, franchises, privileges, or rights of a public service without prior approval of the Commission, but

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