G.R. No.
88404 October 18, 1990
PHILIPPINE LONG DISTANCE TELEPHONE CO. [PLDT], petitioner,
vs.
THE NATIONAL TELECOMMUNICATIONS COMMISSION AND CELLCOM, INC.,
(EXPRESS TELECOMMUNICATIONS CO., INC. [ETCI]), respondents.
Alampan & Manhit Law Offices for petitioner.
Gozon, Fernandez, Defensor & Parel for private respondent.
FACTS:
Petitioner Philippine Long Distance Telephone Company (PLDT) assails, by way of
certiorari and Prohibition under Rule 65, two (2) Orders of public respondent National
Telecommunications Commission (NTC), namely, the Order of 12 December 1988
granting private respondent Express Telecommunications Co., Inc. (ETCI) provisional
authority to install, operate and maintain a Cellular Mobile Telephone System in Metro-
Manila (Phase A) in accordance with specified conditions, and the Order, dated 8 May
1988, denying reconsideration.
On 22 June 1958, Rep. Act No. 2090, was enacted, otherwise known as "An Act
Granting Felix Alberto and Company, Incorporated, a Franchise to Establish Radio
Stations for Domestic and Transoceanic Telecommunications." Felix Alberto & Co., Inc.
(FACI) was the original corporate name, which was changed to ETCI with the
amendment of the Articles of Incorporation in 1964. Much later, "CELLCOM, Inc." was
the name sought to be adopted before the Securities and Exchange Commission, but
this was withdrawn and abandoned.
On 13 May 1987, alleging urgent public need, ETCI filed an application with public
respondent NTC (docketed as NTC Case No. 87-89) for the issuance of a Certificate of
Public Convenience and Necessity (CPCN) to construct, install, establish, operate and
maintain a Cellular Mobile Telephone System and an Alpha Numeric Paging System in
Metro Manila and in the Southern Luzon regions, with a prayer for provisional authority
to operate Phase A of its proposal within Metro Manila.
PLDT filed an Opposition with a Motion to Dismiss, based primarily on the following
grounds: (1) ETCI is not capacitated or qualified under its legislative franchise to
operate a systemwide telephone or network of telephone service such as the one
proposed in its application; (2) ETCI lacks the facilities needed and indispensable to the
successful operation of the proposed cellular mobile telephone system; (3) PLDT has
itself a pending application with NTC, Case No. 86-86, to install and operate a Cellular
Mobile Telephone System for domestic and international service not only in Manila but
also in the provinces and that under the "prior operator" or "protection of investment"
doctrine, PLDT has the priority or preference in the operation of such service; and (4)
the provisional authority, if granted, will result in needless, uneconomical and harmful
duplication, among others.
In an Order, dated 12 November 1987, NTC overruled PLDT's Opposition and declared
that Rep. Act No. 2090 (1958) should be liberally construed as to include among the
services under said franchise the operation of a cellular mobile telephone service.
ISSUE:
1. Whether, respondent NTC's subject order effectively licensed and/or
authorized a corporate entity without any franchise to operate a public
utility, legislative or otherwise, to establish and operate a
telecommunications system.
2. Whether, the same order validated stock transactions of a public
service enterprise contrary to and/or in direct violation of Section 20(h) of
the Public Service Act.
3. Whether, respondent NTC adjudicated in the same order a controverted
matter that was not heard at all in the proceedings under which it was
promulgated.
RULING (HELD):
We find no grave abuse of discretion on the part of NTC, upon the following
considerations:
1. NTC Jurisdiction
There can be no question that the NTC is the regulatory agency of the national
government with jurisdiction over all telecommunications entities. It is legally clothed
with authority and given ample discretion to grant a provisional permit or authority. In
fact, NTC may, on its own initiative, grant such relief even in the absence of a motion
from an applicant.
Sec. 3. Provisional Relief. — Upon the filing of an application, complaint or
petition or at any stage thereafter, the Board may grant on motion of the
pleaders or on its own initiative, the relief prayed for, based on the
pleading, together with the affidavits and supporting documents attached
thereto, without prejudice to a final decision after completion of the hearing
which shall be called within thirty (30) days from grant of authority asked
for. (Rule 15, Rules of Practice and Procedure Before the Board of
Communications (now NTC).
What the NTC granted was such a provisional authority, with a definite expiry period of
eighteen (18) months unless sooner renewed, and which may be revoked, amended or
revised by the NTC. It is also limited to Metro Manila only. What is more, the main
proceedings are clearly to continue as stated in the NTC Order of 8 May 1989.
The provisional authority was issued after due hearing, reception of evidence and
evaluation thereof, with the hearings attended by various oppositors, including PLDT. It
was granted only after a prima facie showing that ETCI has the necessary legal,
financial and technical capabilities and that public interest, convenience and necessity
so demanded.
PLDT argues, however, that a provisional authority is nothing short of a Certificate of
Public Convenience and Necessity (CPCN) and that it is merely a "distinction without a
difference." That is not so. Basic differences do exist, which need not be elaborated on.
What should be borne in mind is that provisional authority would be meaningless if the
grantee were not allowed to operate. Moreover, it is clear from the very Order of 12
December 1988 itself that its scope is limited only to the first phase, out of four, of the
proposed nationwide telephone system. The installation and operation of an alpha
numeric paging system was not authorized. The provisional authority is not exclusive.
Its lifetime is limited and may be revoked by the NTC at any time in accordance with
law. The initial expenditure of P130M more or less, is rendered necessary even under a
provisional authority to enable ETCI to prove its capability. And as pointed out by the
Solicitor General, on behalf of the NTC, if what had been granted were a CPCN, it
would constitute a final order or award reviewable only by ordinary appeal to the Court
of Appeals pursuant to Section 9(3) of BP Blg. 129, and not by certiorari before this
Court.
The final outcome of the application rests within the exclusive prerogative of the NTC.
Whether or not a CPCN would eventually issue would depend on the evidence to be
presented during the hearings still to be conducted, and only after a full evaluation of
the proof thus presented.
2. The Coverage of ETCI's Franchise
Rep. Act No. 2090 grants ETCI (formerly FACI) "the right and privilege of constructing,
installing, establishing and operating in the entire Philippines radio stations for reception
and transmission of messages on radio stations in the foreign and domestic public fixed
point-to-point and public base, aeronautical and land mobile stations, ... with the
corresponding relay stations for the reception and transmission of wireless messages
on radiotelegraphy and/or radiotelephony ...." PLDT maintains that the scope of the
franchise is limited to "radio stations" and excludes telephone services such as the
establishment of the proposed Cellular Mobile Telephone System (CMTS). However, in
its Order of 12 November 1987, the NTC construed the technical term "radiotelephony"
liberally as to include the operation of a cellular mobile telephone system. It said:
In resolving the said issue, the Commission takes into consideration the
different definitions of the term "radiotelephony." As defined by the New
International Webster Dictionary the term "radiotelephony" is defined as a
telephone carried on by aid of radiowaves without connecting wires. The
International Telecommunications Union (ITU) defines a "radiotelephone
call" as a "telephone call, originating in or intended on all or part of its
route over the radio communications channels of the mobile service or of
the mobile satellite service." From the above definitions, while under
Republic Act 2090 a system-wide telephone or network of telephone
service by means of connecting wires may not have been contemplated, it
can be construed liberally that the operation of a cellular mobile telephone
service which carries messages, either voice or record, with the aid of
radiowaves or a part of its route carried over radio communication
channels, is one included among the services under said franchise for
which a certificate of public convenience and necessity may be applied
for.
The foregoing is the construction given by an administrative agency possessed of the
necessary special knowledge, expertise and experience and deserves great weight and
respect (Asturias Sugar Central, Inc. v. Commissioner of Customs, et al., L-19337,
September 30, 1969, 29 SCRA 617). It can only be set aside on proof of gross abuse of
discretion, fraud, or error of law (Tupas Local Chapter No. 979 v. NLRC, et al., L-60532-
33, November 5, 1985, 139 SCRA 478). We discern none of those considerations
sufficient to warrant judicial intervention.
3. The Status of ETCI Franchise
PLDT alleges that the ETCI franchise had lapsed into nonexistence for failure of the
franchise holder to begin and complete construction of the radio system authorized
under the franchise as explicitly required in Section 4 of its franchise, Rep. Act No.
2090. 1 PLDT also invokes Pres. Decree No. 36, enacted on 2 November 1972, which
legislates the mandatory cancellation or invalidation of all franchises for the operation of
communications services, which have not been availed of or used by the party or
parties in whose name they were issued.
However, whether or not ETCI, and before it FACI, in contravention of its franchise,
started the first of its radio telecommunication stations within (2) years from the grant of
its franchise and completed the construction within ten (10) years from said date; and
whether or not its franchise had remained unused from the time of its issuance, are
questions of fact beyond the province of this Court, besides the well-settled procedural
consideration that factual issues are not subjects of a special civil action for certiorari
(Central Bank of the Philippines vs. Court of Appeals, G.R. No. 41859, 8 March 1989,
171 SCRA 49; Ygay vs. Escareal, G.R. No. 44189, 8 February 1985, 135 SCRA 78;
Filipino Merchant's Insurance Co., Inc. vs. Intermediate Appellate Court, G.R. No.
71640, 27 June 1988, 162 SCRA 669). Moreover, neither Section 4, Rep. Act No. 2090
nor Pres. Decree No. 36 should be construed as self-executing in working a forfeiture.
Franchise holders should be given an opportunity to be heard, particularly so, where, as
in this case, ETCI does not admit any breach, in consonance with the rudiments of fair
play. Thus, the factual situation of this case differs from that in Angeles Ry Co. vs. City
of Los Angeles (92 Pacific Reporter 490) cited by PLDT, where the grantee therein
admitted its failure to complete the conditions of its franchise and yet insisted on a
decree of forfeiture.
More importantly, PLDT's allegation partakes of a Collateral attack on a franchise Rep.
Act No. 2090), which is not allowed. A franchise is a property right and cannot be
revoked or forfeited without due process of law. The determination of the right to the
exercise of a franchise, or whether the right to enjoy such privilege has been forfeited by
non-user, is more properly the subject of the prerogative writ of quo warranto, the right
to assert which, as a rule, belongs to the State "upon complaint or otherwise" (Sections
1, 2 and 3, Rule 66, Rules of Court), 2 the reason being that the abuse of a franchise is
a public wrong and not a private injury. A forfeiture of a franchise will have to be
declared in a direct proceeding for the purpose brought by the State because a
franchise is granted by law and its unlawful exercise is primarily a concern of
Government.
A ... franchise is ... granted by law, and its ... unlawful exercise is the
concern primarily of the Government. Hence, the latter as a rule is the
party called upon to bring the action for such ... unlawful exercise of
franchise. (IV-B V. FRANCISCO, 298 [1963 ed.], citing Cruz vs. Ramos,
84 Phil. 226).
RATIO DECIDENDI:
WHEREFORE, finding NO grave abuse of discretion, tantamount to lack of or excess of
jurisdiction, on the part of the National Telecommunications Commission in issuing its
challenged Orders of 12 December 1988 and 8 May 1989 in NTC Case No. 87-39, this
Petition is DISMISSED for lack of merit. The Temporary Restraining Order heretofore
issued is LIFTED. The bond issued as a condition for the issuance of said restraining
Order is declared forfeited in favor of private respondent Express Telecommunications
Co., Inc. Costs against petitioner.
