SMART VS. NTC; G.R. No.

151908 PARTIES: SMART & PILTEL petitioners, GLOBE & ISLACOM petitioners, NATIONAL TELECOMMUNICATIONS COMMISSION (NTC) respondent. PONENTE: YNARES SANTIAGO! J.: "ACTS: Pursuant to its rule-making and regulatory powers, the National Telecommunications Commission (NTC) issued Memorandum Circular No. 1 -!-"###, promulgating rules and regulations on the $illing o% telecommunications ser&ices. 'n (ugust #, "###, the NTC issued a Memorandum to all cellular mo$ile telephone ser&ice (CMT)) operators which contained measures to minimi*e i% not totally eliminate the incidence o% stealing o% cellular phone units. This was %ollowed $y another Memorandum dated 'cto$er !, "### addressed to all pu$lic telecommunications entities, which reads+ This is to remind you that the &alidity o% all prepaid cards sold on #, 'cto$er "### and $eyond shall $e &alid %or at least two (") years %rom date o% %irst use pursuant to MC 1 -!-"###. -n addition, all CMT) operators are reminded that all )-M packs used $y su$scri$ers o% prepaid cards sold on #, 'cto$er "### and $eyond shall $e &alid %or at least two (") years %rom date o% %irst use. (lso, the $illing unit shall $e on a si. (!) seconds pulse e%%ecti&e #, 'cto$er "###. /or strict compliance. 'n 'cto$er "#, "###, petitioners -)0(C'M and P-0T10 %iled against the NTC, Commissioner 2oseph (. )antiago, 3eputy Commissioner (urelio M. 4mali and 3eputy Commissioner Nestor C. 3acanay, an action %or declaration o% nullity o% NTC Memorandum Circular No. 1 -!-"### (the 5illing Circular) and the NTC Memorandum dated 'cto$er !, "###, with prayer %or the issuance o% a writ o% preliminary in6unction and temporary restraining order at the 7egional Trial Court o% 8ue*on City, 5ranch ,,. Petitioners -slacom and Piltel alleged, that the NTC has no 6urisdiction to regulate the sale o% consumer goods such as the prepaid call cards since such 6urisdiction $elongs to the 3epartment o% Trade and -ndustry under the Consumer (ct o% the Philippines9 that the 5illing Circular is oppressi&e, con%iscatory and &iolati&e o% the constitutional prohi$ition against depri&ation o% property without due process o% law9 that the Circular will result in the impairment o% the &ia$ility o% the prepaid cellular ser&ice $y unduly prolonging the &alidity and e.piration o% the prepaid )-M and call cards9 and that the re:uirements o% identi%ication o% prepaid card $uyers and call $alance announcement are unreasona$le. ;ence, they prayed that the 5illing Circular $e declared null and &oid ab initio. <lo$e Telecom and )mart %iled a 6oint Motion %or 0ea&e to -nter&ene which was granted $y the trial court. 'n 'cto$er ",, "###, the trial court issued a temporary restraining order en6oining the NTC %rom implementing Memorandum Circular No. 1 -!-"### and the Memorandum dated 'cto$er !, "###. -n the meantime, respondent NTC and its co-de%endants %iled a motion to dismiss the case on the ground o% petitioners= %ailure to e.haust administrati&e remedies. )u$se:uently, the trial court denied the de%endant>s motion to dismiss. 3e%endants %iled a motion %or reconsideration, which was denied in an 'rder dated /e$ruary 1, "##1. 7espondent NTC thus %iled a special ci&il action %or certiorari and prohi$ition with the Court o% (ppeals, which was granted and annulled the in6unction issued $y the lower court. Petitioners= motions %or reconsideration were denied in a 7esolution dated 2anuary 1#, "##" %or lack o% merit. ;ence, the instant petition %or re&iew %iled $y )mart and Piltel. ISSUES: ?'N 7espondent court erred in holding respondents %ailed to e.haust administrati&e remedy. ?'N NTC has 2urisdiction o&er the case. ?'N the 5illing Circular issued $y NTC is unconstitutional.

RULE: 1ST ISSSUE (dministrati&e agencies possess :uasi-legislati&e or rule-making powers and :uasi6udicial or administrati&e ad6udicatory powers. 8uasi-legislati&e or rule-making power is the power to make rules and regulations which results in delegated legislation that is within the con%ines o% the granting statute and the doctrine o% non-delega$ility and separa$ility o% powers. The rules and regulations should $e within the scope o% the statutory authority granted $y the legislature to the administrati&e agency. -t is re:uired that the regulation $e germane to the o$6ects and purposes o% the law, and $e not in contradiction to, $ut in con%ormity with, the standards prescri$ed $y law.1, They must con%orm to and $e consistent with the pro&isions o% the ena$ling statute in order %or such rule or regulation to $e &alid. The administrati&e $ody e.ercises its :uasi-6udicial power when it per%orms in a 6udicial manner an act which is essentially o% an e.ecuti&e or administrati&e nature, where the power to act in such manner is incidental to or reasona$ly necessary %or the per%ormance o% the e.ecuti&e or administrati&e duty entrusted to it. -n :uestioning the &alidity or constitutionality o% a rule or regulation issued $y an administrati&e agency, a party need not e.haust administrati&e remedies $e%ore going to court. This principle applies only where the act o% the administrati&e agency concerned was per%ormed pursuant to its :uasi-6udicial %unction, and not when the assailed act pertained to its rule-making or :uasi-legislati&e power. 1&en assuming that the principle o% e.haustion o% administrati&e remedies apply in this case, the records re&eal that petitioners su%%iciently complied with this re:uirement. Petitioners were a$le to register their protests to the proposed $illing guidelines. They su$mitted their respecti&e position papers setting %orth their o$6ections and su$mitting proposed schemes %or the $illing circular. (%ter the same was issued, petitioners wrote successi&e letters dated 2uly , "### and 2uly @, "###, asking %or the suspension and reconsideration o% the so-called 5illing Circular. This was taken $y petitioners as a clear denial o% the re:uests contained in their pre&ious letters, thus prompting them to seek 6udicial relie%. #N$ ISSSUE -n like manner, the doctrine o% primary 6urisdiction applies only where the administrati&e agency e.ercises its :uasi-6udicial or ad6udicatory %unction. The o$6ecti&e o% the doctrine o% primary 6urisdiction is to guide a court in determining whether it should re%rain %rom e.ercising its 6urisdiction until a%ter an administrati&e agency has determined some :uestion or some aspect o% some :uestion arising in the proceeding $e%ore the court. ;owe&er, where what is assailed is the &alidity or constitutionality o% a rule or regulation issued $y the administrati&e agency in the per%ormance o% its :uasi-legislati&e %unction, the regular courts ha&e 6urisdiction to pass upon the same. The determination o% whether a speci%ic rule or set o% rules issued $y an administrati&e agency contra&enes the law or the constitution is within the 6urisdiction o% the regular courts. %R$ ISSSUE -n the case at $ar, the issuance $y the NTC o% Memorandum Circular No. 1 -!-"### and its Memorandum dated 'cto$er !, "### was pursuant to its :uasi-legislati&e or rule-making power. (s such, petitioners were 6usti%ied in in&oking the 6udicial power o% the 7egional Trial Court to assail the constitutionality and &alidity o% the said issuances. ;ence, the 7egional Trial Court has 6urisdiction to hear and decide the case. The Court o% (ppeals erred in setting aside the orders o% the trial court and in dismissing the case. &'ERE"ORE, in &iew o% the %oregoing, the consolidated petitions are <7(NT13. The decision o% the Court o% (ppeals are 71A17)13 and )1T ()-31. Davide, Jr., C.J., Vitug, and Carpio, JJ., concur. Azcuna, J., took no part PRINCIPLE INVOLVE$: 3octrine o% (dministrati&e 1.haustion.