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GLOBE v. NTC

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GLOBE v.

ERC

FACTS: On 4 June 1999, Smart filed a Complaint with public respondent National Telecommunications
Commission praying that NTC order the immediate interconnection of Smarts and Globes GSM networks.
Smart alleged that Globe, with evident bad faith and malice, refused to grant Smarts request for the
interconnection of SMS.

Globe filed its Answer with Motion to Dismiss on 7 June 1999, interposing grounds that the Complaint
was premature, Smarts failure to comply with the condition’s precedent required in Section 6 of NTC
Memorandum Circular 9-7-93,19 and its omission of the mandatory Certification of Non-Forum Shopping.

On 19 July 1999, NTC issued the Order now subject of the present petition.

According to NTC 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 (VAS) service or enhanced-
service given in NTC Memorandum Circular No. 8-9-95 (MC No. 8-9-95) their implementation of
SMS interconnection is mandatory. The NTC also declared that both Smart and Globe have been
providing SMS without authority from it.

Globe filed with the Court of Appeals a petition for Certiorari and Prohibition to nullify and set aside the
Order and to prohibit NTC from taking any further action in the case.

Globe reiterated its previous arguments that the complaint should have been dismissed for failure to
comply with conditions precedent and the non-forum shopping rule. They claimed that NTC acted without
jurisdiction in declaring that it had no authority to render SMS, pointing out that the matter was not raised
as an issue before it at all.

They alleged that the Order is a patent nullity as it imposed an administrative penalty for an offense for
which neither it nor Smart was sufficiently charged nor heard on in violation of their right to due process.

The CA issued a Temporary Restraining Order (TRO) on 31 Aug 1999. In its Memorandum, Globe called
the attention of the CA in an earlier NTC decision regarding Islacom, holding that SMS is a deregulated
special feature and does not require the prior approval of the NTC.

ISSUE: Whether NTC may legally require Globe to secure NTC approval before it continues providing
SMS.

RULING: No. The Supreme Court held that The 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.

This should not be interpreted, however, as removing SMS from the ambit of jurisdiction and review by
the NTC. The NTC will continue to exercise, by way of its broad grant, jurisdiction over Globe and Smart’s
SMS offerings, including questions of rates and customer complaints. Yet caution must be had. Much
complication could have been avoided had the NTC adopted a proactive position, promulgating the
necessary rules and regulations to cope up with the advent of the technologies it superintends.  With the
persistent advent of new offerings in the telecommunications industry, the NTC’s role will become more
crucial than at any time before.

Furthermore, every party subject to administrative regulation deserves an opportunity to know, through
reasonable regulations promulgated by the agency, of the objective standards that have to be met, a rule
integral to due process, as it protects substantive rights.

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