Case Summary (G.R. No. 260434)
Background and Regulatory Framework
Pursuant to directives from former President Rodrigo Duterte to accelerate the entry of a new major telecommunications player, the Department of Information and Communications Technology (DICT) issued guidelines requiring applicants for New Major Player (NMP) status to possess certain qualifications, including a valid congressional franchise, financial independence from dominant telecom groups, and a substantial committed investment secured by performance bonds. The NTC was tasked to promulgate the Terms of Reference (TOR) through a memorandum circular to administer the selection and assignment of radio frequencies. The subject Circular provided detailed requirements and a timeline for a public, open, and competitive bidding process to identify the NMP.
Petition and Nature of the Challenge by NOW Telecom
NOW Telecom filed a Complaint with application for injunctive relief to stop implementation of certain Circular provisions it deemed excessive, confiscatory, and violative of due process. Among the challenged provisions were: (1) a requirement to post a Participation Security amounting to PHP 700 million; (2) mandatory Performance Security of 10% of remaining capital and operational expenditures; (3) a non-refundable appeal fee of PHP 10 million; and (4) the scheduling of submission of Business and Roll-out Plans after the NMP designation, allegedly circumventing bid variation prohibitions. NOW Telecom further contended that the allocation of radio frequencies under the Circular violated its vested rights as a franchise holder.
Rulings of the Regional Trial Court and Court of Appeals
The RTC denied NOW Telecom’s application for temporary restraining order and writ of preliminary injunction, finding it had no vested right over specific radio frequencies and had not met financial qualifications essential to participate in the selection. The Court of Appeals affirmed the RTC’s ruling, underscoring that NOW Telecom was only a prospective bidder and did not hold an actual or existing right concerning the frequencies to sustain injury. The CA recognized that under RA No. 8975, lower courts are prohibited from issuing injunctions restraining government bidding or contract awarding, except in cases of extreme urgency involving constitutional issues.
Core Issue and Arguments on Injunctive Relief
The question is whether the denial of NOW Telecom’s prayer for injunctive relief was proper. NOW Telecom argued its legislative franchise conferred a demandable right to sufficient radio frequencies and claimed the NTC unreasonably withheld frequencies, frustrating congressional intent. It asserted RA No. 8975 was inapplicable and claimed discrimination by the NTC. The NTC, through the Office of the Solicitor General, contended that RA No. 8975 barred injunctive relief by lower courts against such government projects, that NOW Telecom failed to meet legal requisites for injunction, and that its franchise does not guarantee a right over any particular frequency.
Mootness of the Injunctive Relief Due to Subsequent Events
During the pendency of the case, the Mindanao Islamic Telephone Company (MISLATEL) was selected as the NMP and issued a Certificate of Public Convenience and Necessity. Since the selection and frequency assignment had been completed, the Court ruled that NOW Telecom’s request for injunction was moot and academic. The injunction sought to prevent an act already performed, which is proscribed by settled jurisprudence. Thus, injunctive relief could no longer preserve the status quo.
Prohibition Against Injunctive Relief Under RA No. 8975
Section 3 of RA No. 8975 expressly prohibits courts, except the Supreme Court, from issuing temporary restraining orders or preliminary injunctions to interfere with the bidding, awarding, or implementation of national government projects, which includes infrastructure and related activities. Telecommunications falls within the definition of national government infrastructure as confirmed by prior administrative orders and RA No. 11659’s designation of telecommunications as critical infrastructure. The selection process for the NMP, including frequency assignment, constitutes a national government project subject to the injunction ban. Consequently, the lower courts correctly refrained from issuing injunctive relief against the NTC’s Circular.
Failure to Establish Requisites for Issuance of Writ of Preliminary Injunction
Independent of RA No. 8975’s prohibition, NOW Telecom did not satisfy the four essential requisites for a preliminary injunction: (1) a clear and unmistakable right in esse to be protected, (2) a material or substantial invasion of such right, (3) urgency to prevent irreparable injury, and (4) lack of adequate legal remedy. NOW Telecom’s legislative franchise did not entitle it to specific radio frequencies, which are state-owned finite resources and the use thereof is a privilege subject to regulatory authority of the NTC. Jurisprudence affirms that frequency assignments are privileges rather than vested rights, revocable upon due process.
Regulatory Authority of the NTC and NOW Telecom’s Compliance Deficiencies
The NTC’s mandate under existing laws such as RA No. 7925 is to allocate frequencies through administrative processes to qualified providers based on regulations like the subject Circular. NOW Telecom admitted lacking the requisite consortium and financial qualificat
...continue readingCase Syllabus (G.R. No. 260434)
Nature of the Case and Procedural History
- This case involves a Petition for Review on Certiorari filed by NOW Telecom Company, Inc. (NOW Telecom) against the National Telecommunications Commission (NTC).
- NOW Telecom assailed the judgment and resolution of the Court of Appeals (CA), which affirmed the Regional Trial Court’s (RTC) denial of NOW Telecom’s application for a writ of preliminary injunction (WPI).
- The injunction was sought to restrain the implementation of certain provisions of NTC Memorandum Circular (M.C.) No. 09-09-2018 entitled, “Rules and Regulations on the Selection Process for a New Major Player in the Philippine Telecommunications Market” (subject Circular).
- The CA's decision and resolution denied the petition, affirming that NOW Telecom failed to show legal right, grave injury, and that the issuance of a WPI was prohibited under Republic Act No. 8975.
- The case also examined whether lower courts can enjoin government action involving national government projects in telecommunications.
Background and Relevant Administrative Orders
- In January 2018, the Department of Information and Communications Technology issued Memorandum Order No. 001, 2018, establishing policy guidelines for admitting a new major player (NMP) in the Philippine telecommunications market, as directed by then-President Rodrigo Duterte.
- The policy required NMP applicants to possess a valid congressional franchise, have no affiliation with dominant telco groups (Globe/PLDT), secure foreign JV commitments if applicable, commit to the highest five-year investment, and post performance bonds.
- The NTC was directed to issue implementing rules and regulations, culminating in the issuance of the subject NTC Circular on September 20, 2018.
- Former President Duterte issued Administrative Order No. 11 creating an Oversight Committee to assist the NTC in formulating and overseeing the selection process.
- The selection of the NMP was designed to be through a public, open, and competitive bidding process.
- The timetable for the implementation was published, with the Circular effective October 6, 2018, and bidding events scheduled through November 7, 2018.
NOW Telecom’s Legal Challenge
- On October 8, 2018, NOW Telecom filed a Complaint before the RTC with application for ex parte TRO, 20-day TRO, and/or WPI against the NTC.
- NOW Telecom challenged specific provisions of the subject Circular, contending they were void:
- Section 6.2(j): Participation Security of PHP 700,000,000.00 (0.5% of minimum capital and operational expenditure).
- Section 11: Performance Security of 10% of remaining capital and operational expenditure.
- Section 8: Non-refundable filing fee of PHP 10,000,000.00 for appeal to the NTC En Banc.
- Section 10.1: Mandated submission of Business and Roll-out plans after NMP determination, allegedly circumventing prohibitions on bid variation.
- Section 3: Provisions on radio frequency assignments, which NOW Telecom claimed violated its vested right as franchise holder.
- NOW Telecom argued it possessed a clear legal right derived from its legislative and administrative franchise, and that the NTC’s provisions were vague, oppressive, and confiscatory.
- NOW Telecom also contended th