Case Summary (G.R. No. 88404)
NTC’s Jurisdiction and Provisional Authority
Under Rule 15 of NTC practice rules, the Commission may grant provisional relief on its own initiative or on motion, pending full hearings. The provisional authority issued to ETCI was time-limited (eighteen months), non-exclusive, and subject to revocation or modification. It enabled ETCI to commence operations in Phase A upon prima facie showing of legal, financial, and technical capacity and public convenience, without constituting a final CPCN.
Scope of ETCI’s Legislative Franchise
Republic Act No. 2090 granted ETCI the right to build and operate radio stations for wireless message transmission (radiotelegraphy and radiotelephony). NTC, as administrative expert, interpreted “radiotelephony” to encompass cellular mobile telephone service—communications via radiowaves without connecting wires. That construction, entitled to deference, fell within the liberal-construction doctrine for public franchises and was not shown to be grossly erroneous or abusive.
Status and Validity of ETCI’s Franchise
PLDT urged that ETCI’s franchise lapsed for failure to construct facilities within two and ten-year statutory periods and was void under PD 36 for non-use. The Supreme Court held that these factual disputes—whether construction and use requirements were met—were improper in a certiorari action and that franchises are not self-forfeiting without due process. Forfeiture or cancellation of a franchise must be pursued via quo warranto by the State.
Stock Transfers and Transfer Restrictions
PLDT contended that ETCI’s 1987 capital increase and share transfers violated Section 10 of RA 2090 (prohibiting transfer of the franchise without Congressional approval). The Court distinguished between the franchise owned by the corporation (requiring legislative sanction for transfer) and corporate shares owned by stockholders (requiring NTC approval under Public Service Act sec. 20(h)). ETCI disclosed its ownership changes and secured NTC review in the provisional-authority proceedings, satisfying the statutory requirement for share transfers.
Mandatory Interconnection Requirement
One condition of the provisional authority required ETCI and PLDT to enter an interconnection agreement for adequate facilities between ETCI’s cellular switch and PLDT’s public network. PLDT objected, claiming lack of due process and compulsion to open private property to a competitor. The Court held that under RA 6849, DOTC/NTC circulars, and the State’s police power, interconnection is mandated to promote universal access, efficient network utilization, and public convenience. Regulations and revenue-sharing rules ensure non-discriminatory treatment and just compensation.
Constitutional and Public-Interest Considerations
Under the 1987 Constitution, property has a social f
...continue readingCase Syllabus (G.R. No. 88404)
Procedural History
- PLDT filed a petition for certiorari and prohibition under Rule 65 to annul two NTC orders: (1) the 12 December 1988 grant of provisional authority to ETCI to install and operate a Cellular Mobile Telephone System (CMTS) in Metro Manila (Phase A) and (2) the 8 May 1989 denial of reconsideration.
- PLDT’s petition was initially dismissed for non-compliance with SC Circular No. 1-88, later reinstated upon proof of compliance.
- On 27 February 1990, the Supreme Court issued a Temporary Restraining Order (TRO) enjoining NTC and ETCI from implementing the December 1988 order; PLDT posted a ₱5 million bond.
- ETCI moved to lift the TRO; the Court denied the motion on 6 March 1990 but allowed ETCI’s inaugural ceremony to proceed.
- Case set for oral argument on 21 August 1990, with issues limited to franchise coverage, share transfers, and interconnection principles.
Facts
- On 22 June 1958, Republic Act No. 2090 granted Felix Alberto & Co., Inc. (FACI), later renamed ETCI, a 50-year franchise to establish radio stations for domestic and transoceanic telecommunications.
- On 13 May 1987, ETCI applied to NTC (NTC Case No. 87-39) for a Certificate of Public Convenience and Necessity to construct and operate a CMTS and an alphanumeric paging system in Metro Manila and Southern Luzon, seeking provisional Phase A authority.
- PLDT opposed on grounds that ETCI: (a) lacked legislative franchise authority for a telephone network; (b) lacked necessary facilities; (c) was subordinate under the “prior operator” doctrine; and (d) would cause harmful duplication.
- On 12 November 1987, NTC overruled PLDT’s opposition, declaring RA 2090 “liberally construed” to include CMTS and requiring ETCI to prove legal, financial, and technical capability.
- In October 1988, NTC reaffirmed that ETCI’s franchise encompassed CMTS.
- On 12 December 1988, NTC granted ETCI provisional authority for Metro Manila Phase A under specified conditions, notably requiring an interconnection agreement with PLDT within 90 days (Condition No. 5).
- On 8 May 1989, NTC denied PLDT’s motion for reconsideration and set the main proceedings to continue.
Issues
- Did NTC act without jurisdiction or commit grave abuse of discretion in granting ETCI provisional authority?
- What is the scope and status of ETCI’s legislative franchise under RA 2090?
- Did the share transfers in ETCI violate franchise transfer provisions and Section 20(h) of the Public Service Act?
- Was the interconnection requirement a valid exercise of regulatory power or a denial of due process?
Held
- The petition is dismissed for lack of merit; NTC did