Telecoms vs. NTC Billing Dispute
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CDMTelecoms vs. NTC Billing Dispute
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CDMSubject: Administrative Law
Topic: Doctrine of Primary Jurisdiction; Exhaustion of
Administrative Remedy
Title: SMART VS. NTC
Citation: G.R. No. 151908
Facts:
Pursuant to its rule-making and regulatory powers, the National
Telecommunications Commission (NTC) issued Memorandum Circular
No. 13-6-2000, promulgating rules and regulations on the billing of
telecommunications services. On August 30, 2000, the NTC issued a
Memorandum to all cellular mobile telephone service (CMTS) operators
which contained measures to minimize if not totally eliminate the
incidence of stealing of cellular phone units. This was followed by
another Memorandum dated October 6, 2000 addressed to all public
telecommunications entities, which reads:
This is to remind you that the validity of all prepaid cards sold on 07
October 2000 and beyond shall be valid for at least two (2) years from
date of first use pursuant to MC 13-6-2000.
In addition, all CMTS operators are reminded that all SIM packs used by
subscribers of prepaid cards sold on 07 October 2000 and beyond shall
be valid for at least two (2) years from date of first use. Also, the billing
unit shall be on a six (6) seconds pulse effective 07 October 2000. For
strict compliance.
On October 20, 2000, petitioners ISLACOM and PILTEL filed against the
NTC, Commissioner Joseph A. Santiago, Deputy Commissioner Aurelio
M. Umali and Deputy Commissioner Nestor C. Dacanay, an action for
declaration of nullity of NTC Memorandum Circular No. 13-6-2000 (the
Billing Circular) and the NTC Memorandum dated October 6, 2000, with
prayer for the issuance of a writ of preliminary injunction and
temporary restraining order at the Regional Trial Court of Quezon City,
Branch 77.
Petitioners Islacom and Piltel alleged, that the NTC has no jurisdiction to
regulate the sale of consumer goods such as the prepaid call cards since
such jurisdiction belongs to the Department of Trade and Industry
under the Consumer Act of the Philippines; that the Billing Circular is
oppressive, confiscatory and violative of the constitutional prohibition
against deprivation of property without due process of law; that the
Circular will result in the impairment of the viability of the prepaid
cellular service by unduly prolonging the validity and expiration of the
prepaid SIM and call cards; and that the requirements of identification
of prepaid card buyers and call balance announcement are
unreasonable. Hence, they prayed that the Billing Circular be declared
null and void ab initio. Globe Telecom and Smart filed a joint Motion for
Leave to Intervene which was granted by the trial court. On October 27,
2000, the trial court issued a temporary restraining order enjoining the
NTC from implementing Memorandum Circular No. 13-6-2000 and the
Memorandum dated October 6, 2000.
In the meantime, respondent NTC and its co-defendants filed a motion
to dismiss the case on the ground of petitioners' failure to exhaust
administrative remedies. Subsequently, the trial court denied the
defendant’s motion to dismiss. Defendants filed a motion for
reconsideration, which was denied in an Order dated February 1, 2001.
Respondent NTC thus filed a special civil action for certiorari and
prohibition with the Court of Appeals, which was granted and annulled
the injunction issued by the lower court.
Petitioners' motions for reconsideration were denied in a Resolution
dated January 10, 2002 for lack of merit. Hence, the instant petition for
review filed by Smart and Piltel.
Issues:
1. WON Respondent court erred in holding respondents failed to
exhaust administrative remedy.
2. WON NTC has Jurisdiction over the case.
3. WON the Billing Circular issued by NTC is unconstitutional.
Ruling:
1ST ISSSUE – Administrative agencies possess quasi-legislative or rule-
making powers and quasi- judicial or administrative adjudicatory
powers. Quasi-legislative or rule-making power is the power to make
rules and regulations which results in delegated legislation that is
within the confines of the granting statute and the doctrine of non-
delegability and separability of powers.
The rules and regulations should be within the scope of the statutory
authority granted by the legislature to the administrative agency. It is
required that the regulation be germane to the objects and purposes of
the law, and be not in contradiction to, but in conformity with, the
standards prescribed by law.17 They must conform to and be consistent
with the provisions of the enabling statute in order for such rule or
regulation to be valid. The administrative body exercises its quasi-
judicial power when it performs in a judicial manner an act which is
essentially of an executive or administrative nature, where the power to
act in such manner is incidental to or reasonably necessary for the
performance of the executive or administrative duty entrusted to it.
In questioning the validity or constitutionality of a rule or regulation
issued by an administrative agency, a party need not exhaust
administrative remedies before going to court. This principle applies
only where the act of the administrative agency concerned was
performed pursuant to its quasi-judicial function, and not when the
assailed act pertained to its rule-making or quasi-legislative power.
Even assuming that the principle of exhaustion of administrative
remedies apply in this case, the records reveal that petitioners
sufficiently complied with this requirement. Petitioners were able to
register their protests to the proposed billing guidelines. They
submitted their respective position papers setting forth their objections
and submitting proposed schemes for the billing circular. After the same
was issued, petitioners wrote successive letters dated July 3, 2000 and
July 5, 2000, asking for the suspension and reconsideration of the so-
called Billing Circular. This was taken by petitioners as a clear denial of
the requests contained in their previous letters, thus prompting them to
seek judicial relief.
2ND ISSSUE – In like manner, the doctrine of primary jurisdiction
applies only where the administrative agency exercises its quasi-judicial
or adjudicatory function. The objective of the doctrine of primary
jurisdiction is to guide a court in determining whether it should refrain
from exercising its jurisdiction until after an administrative agency has
determined some question or some aspect of some question arising in
the proceeding before the court.
However, where what is assailed is the validity or constitutionality of a
rule or regulation issued by the administrative agency in the
performance of its quasi-legislative function, the regular courts have
jurisdiction to pass upon the same. The determination of whether a
specific rule or set of rules issued by an administrative agency
contravenes the law or the constitution is within the jurisdiction of the
regular courts.
3RD ISSSUE – In the case at bar, the issuance by the NTC of
Memorandum Circular No. 13-6-2000 and its Memorandum dated
October 6, 2000 was pursuant to its quasi-legislative or rule-making
power. As such, petitioners were justified in invoking the judicial power
of the Regional Trial Court to assail the constitutionality and validity of
the said issuances. Hence, the Regional Trial Court has jurisdiction to
hear and decide the case. The Court of Appeals erred in setting aside the
orders of the trial court and in dismissing the case.
WHEREFORE, in view of the foregoing, the consolidated petitions are
GRANTED. The decision of the Court of Appeals are REVERSED and SET
ASIDE.
