1 Telecoms Law | Atty. Alejandro M.

Gozon THE CITY GOVERNMENT OF QUEZON CITY, AND THE CITY TREASURER OF QUEZON CITY, DR. VICTOR B. ENRIGA v. BAYAN TELECOMMUNICATIONS, INC. |G.R. No. 162015 |March 6, 2006 FACTS: Respondent Bayan Telecommunications, Inc. (Bayantel) is a legislative franchise holder under Republic Act (RA) No. 32594 to establish and operate radio stations for domestic telecommunications, radiophone, broadcasting and telecasting. Of relevance to this controversy is the tax provision of RA No. 3259, Section 14 in which Bayantel is to pay real estate taxes, exclusive of the franchise. RA No. 7160, or the Local Government Code of 1991 was then passed and in Section 232 it grants local government units within the Metro Manila Area the power to levy tax on real properties. Other special laws are then on passed regarding the payment of taxes like RA No. 7633 which amended Bayantels original franchise, the enactment of City Ordinance No. SP-91, S-93, and RA No. 7925,6 or the Public Telecommunications Policy Act of the Philippines. Bayantel in firm belief of its exempt status did not pay the real property taxes assessed against it by the Quezon City government. Quezon City issued levies upon the properties. Bayantel then filed a petition for prohibition with an urgent application for a temporary restraining order (TRO) and/or writ of preliminary injunction. The lower court granted the petition. ISSUE: Whether the properties of Bayantel are exempt from taxes. RULING: The SC denied the petition. The lower court resolved the issue, based to the phrase exclusive of this franchise found in RA No. 7633. Properties exclusive of the franchise are either those directly used and those which are not so used. The inherent power of the government to tax only applies to those which are not so used. Therefore, those realties which are actually, directly and exclusively used in the operation of its franchise are exempted from any property tax. Bayantels franchise being national in character, the exemption thus granted under RA No. 3259 applies to all its real or personal properties found anywhere within the Philippine archipelago.

2 Telecoms Law | Atty. Alejandro M. Gozon PHILIPPINE LONG DISTANCE TELEPHONE COMPANY v. NTC AND CELLCOM, INC | G.R. No. 88404 |October 18, 1990 FACTS: ETCI filed an application with NTC 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 claims that 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 as they lack the facilities needed and indispensable to the successful operation of the proposed cellular mobile telephone system and that the provisional authority, if granted, will result in needless, uneconomical and harmful duplication, among others. The NTC ruled and declared RA No. 2090 should be liberally construed as to include the operation of a cellular mobile telephone service. The NTC ruled in favor of ETCI in their application of the CPCN. They granted ETCI provisional authority to install, operate and maintain a cellular mobile telephone system initially in Metro Manila, Phase A only, subject to the terms and conditions set forth in the same Order. One of the conditions prescribed was that, within 90 days from date of the acceptance by ETCI of the terms and conditions of the provisional authority, ETCI and PLDT shall enter into an interconnection agreement which is for approval by the Commission. PLDT refused interconnection, claiming that such order was in violation of due process and that the grant of provisional authority was jurisdictionally and procedurally infirm. ISSUE: Whether PLDT can refuse interconnection with ETCI, as ordered by the NTC. RULING: The SC held in favor of respondents. PLDT cannot justifiably refuse to interconnect. RA No. 6849, or the Municipal Telephone Act of 1989, provides that "all domestic telecommunications carriers or utilities shall be interconnected to the public switch telephone network. Such regulation of the use and ownership of telecommunications systems is in the exercise of the plenary police power of the State for the promotion of the general welfare. The NTC, as the regulatory agency of the State, merely exercised its delegated authority to regulate the use of telecommunications networks when it decreed interconnection. Public need, public interest, and the common good are factors which motivated the NTC in granting provisional authority to ETCI. Article II, Section 24 of the 1987 Constitution, recognizes the vital role of communication and information in nation building. It is likewise a State policy to provide the environment for the emergence of communications structures suitable to the balanced flow of information into, out of, and across the country.

3 Telecoms Law | Atty. Alejandro M. Gozon EASTERN TELECOMMUNICATIONS PHILIPPINES, INC. and TELECOMMUNICATIONS TECHNOLOGIES, INC v. INTERNATIONAL COMMUNICATION CORPORATION |G.R. No. 135992 | July 23, 2004 FACTS: Because of a need to minimize or eliminate situations wherein multiple operators provide local exchange service in a given area, the National Telecommunications Commission (NTC) was tasked to define the boundaries of local exchange areas and authorize only one franchised local exchange carrier to provide local exchange service within such areas. Then President Fidel V. Ramos issued Executive Order No. 109 which provides that all existing International Gateway Facility (IGF) operators are required to provide local exchange carrier services in unserved and underserved areas. NTC then passed Memorandum Circular No. 11-9-93 mandating existing IGF operators to file a petition for the issuance of Certificate of Public Convenience and Necessity (CPCN) to install, operate and maintain local exchange carrier services within two years. Several IGF operators took advantage of these laws and applied for CPCN to install, operate and maintain local exchange carrier services in certain areas. Petitioner Telecommunications Technologies Philippines, Inc. (TTPI), as an affiliate of petitioner Eastern Telecommunications Philippines, Inc. (ETPI), was granted by the NTC a Provisional Authority (PA) on 1996 to do such in Manila and Navotas. In 1997, respondent International Communication Corporation, now known as Bayan Telecommunications Corporation or Bayantel was also given a PA in Manila and Navotas. Petitioners filed for a temporary restraining order and preliminary injunction arguing that the NTC committed grave abuse of discretion in granting a provisional authority to respondent ICC to operate in areas already assigned to TTPI. The CA denied their appeal finding that ICC is legally and financially competent and its network plan technically feasible. ISSUE: Whether the NTC should not have granted a PA to respondent. RULING: The NTC is clothed with authority and given ample discretion to grant a provisional permit or authority like the CPCN in which whatever they see fit and within their competence. In granting ICC the PA to operate a local exchange carrier service in the Manila and Navotas areas, the NTC took into consideration ICCs financial and technical resources and found them to be adequate. The grant of this application is, therefore, a fitting recognition that should be accorded to any deserving applicant, such as herein applicant ICC whose remarkable performance in terms of public service as mandated by Executive Order 109 and RA No. 7925 has persuaded the NTC to affix the stamp of its approval.

4 Telecoms Law | Atty. Alejandro M. Gozon The Court will not interfere with these findings of the NTC, as these are matters that are addressed to its sound discretion, being the government agency entrusted with the regulation of activities coming under its special and technical forte. Moreover, the exercise of administrative discretion is a policy decision and a matter that can best be discharged by the government agency concerned, and not by the courts.

5 Telecoms Law | Atty. Alejandro M. Gozon GLOBE TELECOM, INC., , v. THE NATIONAL TELECOMMUNICATIONS COMMISSION, COMMISSIONER JOSEPH A. SANTIAGO, DEPUTY COMMISSIONERS AURELIO M. UMALI and NESTOR DACANAY, and SMART COMMUNICATIONS, INC. | G.R. No. 143964 | July 26, 2004 FACTS: Smart filed a complaint with NTC, praying that NTC order the immediate interconnection of Smarts and Globes GSM networks, particularly their respective SMS or texting services. Smart alleged that Globe, with evident bad faith and malice, refused to grant Smarts request for the interconnection of SMS. NTC issued an Order noting that both Smart and Globe were equally blameworthy for their lack of cooperation in the submission of the documentation required for interconnection and for having unduly maneuvered the situation into the present impasse". NTC held that since SMS falls squarely within the definition of value-added service or enhanced-service. The NTC also declared that both Smart and Globe have been providing SMS without authority from it, in violation of Section 420 (f) of MC No. 8-9-95 which requires PTEs intending to provide valueadded services (VAS) to secure prior approval from NTC through an administrative process. ISSUES: Whether NTC may legally require Globe to secure NTC approval before it continues providing SMS and whether SMS is a VAS under the PTA, or special feature under NTC MC No. 1411-97. RULING: The SC grants the petition. The Public Telecommunications Act (PTA) imposes limits on how PTEs conduct their business. It requires that any access charge sharing arrangements between all interconnecting carriers that are entered into have to be submitted for approval to NTC. The VAS was introduced by the PTA in which VAS providers need not secure a franchise, provided that they do not put up their own network. However, a different rule is laid down for telecommunications entities such as Globe and PLDT. The section unequivocally requires NTC approval for the operation of a value-added service. There is no legal basis under the PTA or the memorandum circulars promulgated by the NTC to denominate SMS as VAS, and any subsequent determination by the NTC on whether SMS is VAS should be made with proper regard for due process and in conformity with the PTA The Order is therefore effectively discriminatory and arbitrary as it is, was issued with grave abuse of discretion and it must be set aside. NTC may not legally require Globe to secure its approval for Globe to continue providing SMS. This does not imply though that NTC lacks authority to regulate SMS or to classify it as VAS. However, the move should be implemented properly, through unequivocal regulations applicable to all entities that are similarly situated, and in an even-handed manner.