The National Telecommunications Commission (NTC) cannot arbitrarily impose rates, like those for mobile cellular telephone services, without giving the affected companies their right to air their side or seek reconsideration.
The Supreme Court (SC) said: “The regulatory power of administrative bodies such as the NTC does not give it unbridled permission to impose rates without giving telecommunications companies an opportunity to air out their grievances or seek reconsideration. The fundamental right to due process still prevails in administrative proceedings.”
The SC decision, written by Senior Associate Justice Marvic M.V.F. Leonen, nullified the NTC orders that imposed new billing scheme for consumers’ use of mobile cellular phones and cited the service providers for violations.
A summary of the decision issued by the SC’s Public Information Office (SC-PIO) said that in 2009, the NTC imposed a six-second-per-pulse billing scheme for voice calls which required telecommunications companies to charge mobile phone users only for actual usage.
Prior to the 2009 order, the companies charged cellular telephone users by the minute, such that even a fraction of a minute was automatically charged as one minute.
For defying its directive, the NTC issued Show Cause Orders against the telecommunication companies -- Globe Telecom, Inc. and Innove Communications, Inc.; Smart Communications, Inc.; Connectivity Unlimited Resource Enterprises, Inc.; and Digitel Mobile Philippines, Inc.
It also issued Cease and Desist Orders to stop the companies from charging their subscribers using the old billing system.
The companies challenged the orders before the Court of Appeals (CA). They told the CA that the NTC exceeded its authority to regulate rates when it imposed the new billing scheme in violation of their right to due process.
On Feb. 18, 2010, the CA stopped the NTC temporarily from implementing its 2009 orders. Later, on May 25, 2010, the CA issued a writ of preliminary injunction in favor of Globe, Innove, and Smart.
The CA enjoined the NTC from enforcing its Dec. 5 and 9 orders pending resolution of the telecommunications companies’ petitions.
On Dec. 28, 2010, the CA handed down its decision on the petitions. The CA ruled that the NTC violated the rights of the telecommunications companies when it imposed the fixed rates in its Dec. 5, 2009 order.
Also, the CA said that the NTC violated the administrative due process of the companies when the commission did not give them time to file their motion for reconsideration of the Dec. 5, 2009 order and instead issued the show cause order on Dec. 9, 2009.
When the motions for reconsideration were denied by the CA on Jan. 12, 2012, the issue was elevated to the SC by all parties in the case.
In resolving the issue, the SC said:
“The Commission (NTC) violated the right to due process of the telecommunications companies when it did not give them a chance to assail the contents of the Dec. 5, 2009 Orders. By directing immediate implementation of the new rates as early as Dec. 6, 2009, the Commission robbed the telecommunications companies a chance to seek a reconsideration of its Decision.
“Clearly, their right to due process was violated the moment the Dec. 5, 2009 Orders was issued. Moreover, the Show Cause Orders and Cease and Desist Orders for alleged noncompliance were released a mere four days after the Dec. 5, 2009 Orders.
“As correctly pointed out by the Court of Appeals, Rule 13, Section 2 of the 2006 Rules of Practice and Procedure Before the National Telecommunications Commission (2006 Rules of Practice and Procedure) states that ‘[a] party adversely affected by a decision, order or resolution may within fifteen (15) days from receipt of a copy thereof, file a motion for reconsideration.’
“Thus, the Dec. 9, 2009 Show Cause Orders and Cease and Desist Orders effectively removed the telecommunications companies' right to seek a reversal of the Dec. 5, 2009 Orders.
“In addition, the Cease and Desist Orders were served on the parties without prior notice or hearing. This was another violation of its right to due process.
“Under Rule I0, Section 4 of the 2006 Rules of Practice and Procedure, an entity may be subjected to disciplinary measure for violating a law, rule, or regulation only after notice and hearing. A show cause order must first be issued by the Commission, showing the particulars and matters which it is inquiring and give the parties an opportunity to file an answer to ‘explain why no judgment or action’ should be taken against them.
“The Commission's Rules allows for a summary proceeding on the matter when applicable. However, even the Commission did not avail of this when it issued its Dec. 9, 2009 Orders.
“In this case, the telecommunications companies were not given proper notice and hearing. Instead, the Commission issued Show Cause Orders and Cease and Desist Orders on the same date, displaying how it was dispensed with such haste.
“Due process applies just as well in the administrative setting, albeit less stringent and often applied liberally. Basic procedural rights, such as the opportunity to explain one's side or seek reconsideration, are so fundamental that they cannot be set aside to implement supposedly fair and reasonable rates.
“As a final remark, we recognize that during the pendency of this case, numerous developments in the telecommunications industry may have rendered the six-second-per-pulse regulation less attractive to both the regulatory commission and the consumers they seek to protect.
“Due to the intensifying competition between telecommunications giants, promotions on mobile calls and short messaging services, such as unlimited calls and texts, render the pulse billing system nearly obsolete.
“Moreover, the downward trend of mobile service fees in neighboring nations has also resulted in a consistent decline of mobile service fees in our country.
“At present, voice service interconnection fees are at a rate of P0.50 per minute as stipulated by Memorandum Circular No. 05-07-2018 issued by the National Telecommunications Commission.
“Indeed, the Commission, in collaboration with telecommunications providers, reduced the cost of telecommunications services for the benefit of the public.
“Nonetheless, the process must always adhere to the principles of due process and fairness.
“Accordingly, the Dec. 28, 2010 Decision and Jan. 19, 2012 Resolution of the Court of Appeals in CA-G.R. SP Nos. 111947, 111970, 112006, and 112198 are upheld.
“The Dec. 5, 2009 Orders and Dec. 9, 2009 Show Cause Orders and Cease and Desist Orders issued by the National Telecommunications Commission in NTC Case Nos…. are reversed and set aside.”