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Smart, globe, piltel vs NTC Philsa vs Sec Labor Lastimoso vs asayo Ang tibay v CIR Globe v NTC Ombudsman

v Reyes Paper industries vs deputy

p2 p11 p21 p24 p 29 P51 p53

FIRST DIVISION

[G.R. No. 151908. August 12, 2003]

SMART COMMUNICATIONS, INC. (SMART) and PILIPINO TELEPHONE CORPORATION (PILTEL), petitioners, vs. NATIONAL TELECOMMUNICATIONS COMMISSION (NTC), respondent.

[G.R. No. 152063. August 12, 2003]

GLOBE TELECOM, INC. (GLOBE) and ISLA COMMUNICATIONS CO., INC. (ISLACOM), petitioners, vs. COURT OF APPEALS (The Former 6thDivision) and the NATIONAL TELECOMMUNICATIONS COMMISSION, respondents. DECISION
YNARES-SANTIAGO, J.:

Pursuant to its rule-making and regulatory powers, the National Telecommunications Commission (NTC) issued on June 16, 2000 Memorandum Circular No. 13-6-2000, promulgating rules and regulations on the billing of telecommunications services. Among its pertinent provisions are the following: (1) The billing statements shall be received by the subscriber of the telephone service not later than 30 days from the end of each billing cycle. In case the statement is received beyond this period, the subscriber shall have a specified grace period within which to pay the bill and the public telecommunications entity (PTEs) shall not be allowed to disconnect the service within the grace period. (2) There shall be no charge for calls that are diverted to a voice mailbox, voice prompt, recorded message or similar facility excluding the customers own equipment.

(3) PTEs shall verify the identification and address of each purchaser of prepaid SIM cards. Prepaid call cards and SIM cards shall be valid for at least 2 years from the date of first use. Holders of prepaid SIM cards shall be given 45 days from the date the prepaid SIM card is fully consumed but not beyond 2 years and 45 days from date of first use to replenish the SIM card, otherwise the SIM card shall be rendered invalid. The validity of an invalid SIM card, however, shall be installed upon request of the customer at no additional charge except the presentation of a valid prepaid call card. (4) Subscribers shall be updated of the remaining value of their cards before the start of every call using the cards. (5) The unit of billing for the cellular mobile telephone service whether postpaid or prepaid shall be reduced from 1 minute per pulse to 6 seconds per pulse. The authorized rates per minute shall thus be divided by 10.
[1]

The Memorandum Circular provided that it shall take effect 15 days after its publication in a newspaper of general circulation and three certified true copies thereof furnished the UP Law Center. It was published in the newspaper, The Philippine Star, on June 22, 2000. Meanwhile, the provisions of the Memorandum Circular pertaining to the sale and use of prepaid cards and the unit of billing for cellular mobile telephone service took effect 90 days from the effectivity of the Memorandum Circular.
[2]

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. The Memorandum directed CMTS operators to:
a. strictly comply with Section B(1) of MC 13-6-2000 requiring the presentation and verification of the identity and addresses of prepaid SIM card customers; b. require all your respective prepaid SIM cards dealers to comply with Section B(1) of MC 13-6-2000; c. deny acceptance to your respective networks prepaid and/or postpaid customers using stolen cellphone units or cellphone units registered to somebody other than the applicant when properly informed of all information relative to the stolen cellphone units; d. share all necessary information of stolen cellphone units to all other CMTS operators in order to prevent the use of stolen cellphone units; and e. require all your existing prepaid SIM card customers to register and present valid identification cards.[3]

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.
[4]

On October 20, 2000, petitioners Isla Communications Co., Inc. and Pilipino Telephone Corporation filed against the National Telecommunications Commission, 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. The complaint was docketed as Civil Case No. Q-00-42221 at the Regional Trial Court of Quezon City, Branch 77.
[5]

Petitioners Islacom and Piltel alleged, inter alia, 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. Soon thereafter, petitioners Globe Telecom, Inc and Smart Communications, Inc. filed a joint Motion for Leave to Intervene and to Admit Complaint-in-Intervention. This was granted by the trial court.
[6]

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.
[7]

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, after hearing petitioners application for preliminary injunction as well as respondents motion to dismiss, the trial court issued on November 20, 2000 an Order, the dispositive portion of which reads: WHEREFORE, premises considered, the defendants motion to dismiss is hereby denied for lack of merit. The plaintiffs application for the issuance of a writ of preliminary injunction is hereby granted. Accordingly, the defendants are hereby enjoined from implementing NTC Memorandum Circular 13-6-2000 and the NTC Memorandum, dated October 6, 2000, pending the issuance and finality of the decision in this case. The plaintiffs and intervenors are, however, required to file a bond in the sum of FIVE HUNDRED THOUSAND PESOS (P500,000.00), Philippine currency. SO ORDERED.
[8]

Defendants filed a motion for reconsideration, which was denied in an Order dated February 1, 2001.
[9]

Respondent NTC thus filed a special civil action for certiorari and prohibition with the Court of Appeals, which was docketed as CA-G.R. SP. No. 64274. On October 9, 2001, a decision was rendered, the decretal portion of which reads: WHEREFORE, premises considered, the instant petition for certiorari and prohibition is GRANTED, in that, the order of the court a quo denying the petitioners motion to dismiss as well as the order of the courta quo granting the private respondents prayer for a writ of preliminary injunction, and the writ of preliminary injunction issued thereby, are hereby ANNULLED and SET ASIDE. The private respondents complaint and complaint-in-intervention below are hereby DISMISSED, without prejudice to the referral of the private respondents grievances and disputes on the assailed issuances of the NTC with the said agency. SO ORDERED.
[10]

Petitioners motions for reconsideration were denied in a Resolution dated January 10, 2002 for lack of merit.
[11]

Hence, the instant petition for review filed by Smart and Piltel, which was docketed as G.R. No. 151908, anchored on the following grounds:
A. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE NATIONAL TELECOMMUNICATIONS COMMISSION (NTC) AND NOT THE REGULAR COURTS HAS JURISDICTION OVER THE CASE.

B. THE HONORABLE COURT OF APPEALS ALSO GRAVELY ERRED IN HOLDING THAT THE PRIVATE RESPONDENTS FAILED TO EXHAUST AN AVAILABLE ADMINISTRATIVE REMEDY. C. THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE BILLING CIRCULAR ISSUED BY THE RESPONDENT NTC IS UNCONSTITUTIONAL AND CONTRARY TO LAW AND PUBLIC POLICY. D. THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE PRIVATE RESPONDENTS FAILED TO SHOW THEIR CLEAR POSITIVE RIGHT TO WARRANT THE ISSUANCE OF A WRIT OF PRELIMINARY INJUNCTION.[12]

Likewise, Globe and Islacom filed a petition for review, docketed as G.R. No. 152063, assigning the following errors:
1. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED BECAUSE THE DOCTRINES OF PRIMARY JURISDICTION AND EXHAUSTION OF ADMINISTRATIVE REMEDIES DO NOT APPLY SINCE THE INSTANT CASE IS FOR LEGAL NULLIFICATION (BECAUSE OF LEGAL INFIRMITIES AND VIOLATIONS OF LAW) OF A PURELY ADMINISTRATIVE REGULATION PROMULGATED BY AN AGENCY IN THE EXERCISE OF ITS RULE MAKING POWERS AND INVOLVES ONLY QUESTIONS OF LAW. 2. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED BECAUSE THE DOCTRINE ON EXHAUSTION OF ADMINISTRATIVE REMEDIES DOES NOT APPLY WHEN THE QUESTIONS RAISED ARE PURELY LEGAL QUESTIONS. 3. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED BECAUSE THE DOCTRINE OF EXHAUSTION OF ADMINISTRATIVE REMEDIES DOES NOT APPLY WHERE THE ADMINISTRATIVE ACTION IS COMPLETE AND EFFECTIVE, WHEN THERE IS NO OTHER REMEDY, AND THE PETITIONER STANDS TO SUFFER GRAVE AND IRREPARABLE INJURY. 4. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED BECAUSE PETITIONERS IN FACT EXHAUSTED ALL ADMINISTRATIVE REMEDIES AVAILABLE TO THEM. 5. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED IN ISSUING ITS QUESTIONED RULINGS IN THIS CASE BECAUSE GLOBE AND ISLA HAVE A CLEAR RIGHT TO AN INJUNCTION.[13]

The two petitions were consolidated in a Resolution dated February 17, 2003.
[14]

On March 24, 2003, the petitions were given due course and the parties were required to submit their respective memoranda.
[15]

We find merit in the petitions.

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.
[16]

The rules and regulations that administrative agencies promulgate, which are the product of a delegated legislative power to create new and additional legal provisions that have the effect of law, 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. They must conform to and be consistent with the provisions of the enabling statute in order for such rule or regulation to be valid. Constitutional and statutory provisions control with respect to what rules and regulations may be promulgated by an administrative body, as well as with respect to what fields are subject to regulation by it. It may not make rules and regulations which are inconsistent with the provisions of the Constitution or a statute, particularly the statute it is administering or which created it, or which are in derogation of, or defeat, the purpose of a statute. In case of conflict between a statute and an administrative order, the former must prevail.
[17] [18]

Not to be confused with the quasi-legislative or rule-making power of an administrative agency is its quasi-judicial or administrative adjudicatory power. This is the power to hear and determine questions of fact to which the legislative policy is to apply and to decide in accordance with the standards laid down by the law itself in enforcing and administering the same law. 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 carrying out their quasi-judicial functions, the administrative officers or bodies are required to investigate facts or ascertain the existence of facts, hold hearings, weigh evidence, and draw conclusions from them as basis for their official action and exercise of discretion in a judicial nature.
[19]

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 quasijudicial function, and not when the assailed act pertained to its rule-making or

quasi-legislative power. In Association of Philippine Coconut Dessicators v. Philippine Coconut Authority, it was held:
[20]

The rule of requiring exhaustion of administrative remedies before a party may seek judicial review, so strenuously urged by the Solicitor General on behalf of respondent, has obviously no application here. The resolution in question was issued by the PCA in the exercise of its rule- making or legislative power. However, only judicial review of decisions of administrative agencies made in the exercise of their quasi-judicial function is subject to the exhaustion doctrine. Even assuming arguendo that the principle of exhaustion of administrative remedies apply in this case, the records reveal that petitioners sufficiently complied with this requirement. Even during the drafting and deliberation stages leading to the issuance of Memorandum Circular No. 13-6-2000, 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. These letters were not acted upon until October 6, 2000, when respondent NTC issued the second assailed Memorandum implementing certain provisions of the 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.
[21] [22] [23]

In like manner, the doctrine of primary jurisdiction applies only where the administrative agency exercises its quasi-judicial or adjudicatory function. Thus, in cases involving specialized disputes, the practice has been to refer the same to an administrative agency of special competence pursuant to the doctrine of primary jurisdiction. The courts will not determine a controversy involving a question which is within the jurisdiction of the administrative tribunal prior to the resolution of that question by the administrative tribunal, where the question demands the exercise of sound administrative discretion requiring the special knowledge, experience and services of the administrative tribunal to determine technical and intricate matters of fact, and a uniformity of ruling is essential to comply with the premises of the regulatory statute administered. 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. It applies where the claim is originally cognizable in the courts and comes into play whenever enforcement of the claim requires

the resolution of issues which, under a regulatory scheme, has been placed within the special competence of an administrative body; in such case, the judicial process is suspended pending referral of such issues to the administrative body for its view.
[24]

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. Indeed, the Constitution vests the power of judicial review or the power to declare a law, treaty, international or executive agreement, presidential decree, order, instruction, ordinance, or regulation in the courts, including the regional trial courts. This is within the scope of judicial power, which includes the authority of the courts to determine in an appropriate action the validity of the acts of the political departments. Judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are legally demandable and enforceable, and to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government.
[25] [26] [27]

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. In Drilon v. Lim, it was held:
[28]

We stress at the outset that the lower court had jurisdiction to consider the constitutionality of Section 187, this authority being embraced in the general definition of the judicial power to determine what are the valid and binding laws by the criterion of their conformity to the fundamental law. Specifically, B.P. 129 vests in the regional trial courts jurisdiction over all civil cases in which the subject of the litigation is incapable of pecuniary estimation, even as the accused in a criminal action has the right to question in his defense the constitutionality of a law he is charged with violating and of the proceedings taken against him, particularly as they contravene the Bill of Rights. Moreover, Article X, Section 5(2), of the Constitution vests in the Supreme Court appellate jurisdiction over final judgments and orders of lower courts in all cases in which the constitutionality or validity of any treaty, international or executive agreement, law, presidential decree, proclamation, order, instruction, ordinance, or regulation is in question.
[29]

In their complaint before the Regional Trial Court, petitioners averred that the Circular contravened Civil Code provisions on sales and violated the constitutional prohibition against the deprivation of property without due process of law. These are within the competence of the trial judge. Contrary to the finding of the Court of Appeals, the issues raised in the complaint do not entail highly technical matters. Rather, what is required of the judge who will resolve this issue is a basic familiarity with the workings of the cellular telephone service, including prepaid SIM and call cards and this is judicially known to be within the knowledge of a good percentage of our population and expertise in fundamental principles of civil law and the Constitution. Hence, the Regional Trial Court has jurisdiction to hear and decide Civil Case No. Q-00-42221. 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 in CA-G.R. SP No. 64274 dated October 9, 2001 and its Resolution dated January 10, 2002 are REVERSED and SET ASIDE. The Order dated November 20, 2000 of the Regional Trial Court of Quezon City, Branch 77, in Civil Case No. Q-00-42221 is REINSTATED. This case is REMANDED to the court a quo for continuation of the proceedings. SO ORDERED. Davide, Jr., C.J., (Chairman), Vitug, and Carpio, JJ., concur. Azcuna, J., took no part.

[G.R. No. 103144. April 4, 2001]

PHILSA INTERNATIONAL PLACEMENT and SERVICES CORPORATION, petitioner, vs. THE HON. SECRETARY OF LABOR AND EMPLOYMENT, VIVENCIO DE MESA, RODRIGO MIKIN and CEDRIC LEYSON, respondents. DECISION
GONZAGA-REYES, J.:

This is a petition for certiorari from the Order dated November 25, 1991 issued by public respondent Secretary of Labor and Employment. The November 25, 1991 Order affirmed en toto the August 29, 1988 Order of the Philippine Overseas Employment Administration (hereinafter the POEA) which found petitioner liable for three (3) counts of illegal exaction, two (2) counts of contract substitution and one count of withholding or unlawful deduction from salaries of workers in POEA Case No. (L) 85-05-0370. Petitioner Philsa International Placement and Services Corporation (hereinafter referred to as Philsa) is a domestic corporation engaged in the recruitment of workers for overseas employment. Sometime in January 1985, private respondents, who were recruited by petitioner for employment in Saudi Arabia, were required to pay placement fees in the amount of P5,000.00 for private respondent Rodrigo L. Mikin and P6,500.00 each for private respondents Vivencio A. de Mesa and Cedric P. Leyson[1]. After the execution of their respective work contracts, private respondents left for Saudi Arabia on January 29, 1985. They then began work for Al-Hejailan Consultants A/E, the foreign principal of petitioner. While in Saudi Arabia, private respondents were allegedly made to sign a second contract on February 4, 1985 which changed some of the provisions of their original contract resulting in the reduction of some of their benefits and privileges[2]. On April 1, 1985, their foreign employer allegedly forced them to sign a third contract which increased their work hours from 48 hours to 60 hours a week without any corresponding increase in their basic monthly salary. When they refused to sign this third contract, the services of private respondents were terminated by AlHejailan and they were repatriated to the Philippines[3]. Upon their arrival in the Philippines, private respondents demanded from petitioner Philsa the return of their placement fees and for the payment of their salaries for the unexpired portion of their contract. When petitioner refused, they filed a case before the POEA against petitioner Philsa and its foreign principal, Al-Hejailan., with the following causes of action:
1. Illegal dismissal; 2. Payment of salary differentials; 3. Illegal deduction/withholding of salaries; 4. Illegal exactions/refund of placement fees; and

5. Contract substitution.[4]

The case was docketed as POEA Case No. (L) 85-05-0370. Under the rules of the POEA dated May 21, 1985, complaints involving employer-employee relations arising out of or by virtue of any law or contract involving Filipino workers for overseas employment, including money claims, are adjudicated by the Workers Assistance and Adjudication Office (hereinafter the WAAO) thru the POEA Hearing Officers[5]. On the other hand, complaints involving recruitment violations warranting suspension or cancellation of the license of recruiting agencies are cognizable by the POEA thru its Licensing and Recruitment Office (hereinafter the LRO).[6] In cases where a complaint partakes of the nature of both an employer-employee relationship case and a recruitment regulation case, the POEA Hearing Officer shall act as representative of both the WAAO and the LRO and both cases shall be heard simultaneously. In such cases, the Hearing Officer shall submit two separate recommendations for the two aspects of the case.[7] In the case at bench, the first two causes of action were in the nature of money claims arising from the employer-employee relations and were properly cognizable by the WAAO. The last two causes of action were in the nature of recruitment violations and may be investigated by the LRO. The third cause of action, illegal deduction/withholding of salary, is both a money claim and a violation of recruitment regulations and is thus under the investigatory jurisdiction of both the WAAO and the LRO. Several hearings were conducted before the POEA Hearing Officer on the two aspects of private respondents complaint. During these hearings, private respondents supported their complaint with the presentation of both documentary and testimonial evidence. When it was its turn to present its evidence, petitioner failed to do so and consequently, private respondents filed a motion to decide the case on the basis of the evidence on record.[8] On the aspects of the case involving money claims arising from the employer-employee relations and illegal dismissal, the POEA rendered a decision dated August 31, 1988[9], the dispositive portion of which reads:

CONFORMABLY TO THE FOREGOING, judgment is hereby rendered ordering respondent PHILSA INTERNATIONAL PLACEMENT AND SERVICE CORPORATION to pay complainants, jointly and severally with its principal AlHejailan, the following amounts, to wit: 1. TWO THOUSAND TWO HUNDRED TWENTY FIVE SAUDI RIYALS (SR2,225.00) to each complainant, representing the refund of their unpaid separation pay; 2. ONE THOUSAND SAUDI RIYALS (SR1,000.00) for V.A. de Mesa alone, representing the salary deduction from his March salary;

3. TWO THOUSAND SAUDI RIYALS (SR2,000.00) each for R.I. Mikin and C.A.P. Leyson only, representing their differential pay for the months of February and March, 1985; and 4. Five percent (5%) of the total awards as and by way of attorneys fees. All payments of the abovestated awards shall be made in Philippine Currency equivalent to the prevailing exchange rate according to the Central Bank at the time of payment. All other claims of complainants as well as the counterclaims of respondent are dismissed for lack of merit. SO ORDERED.[10]
Under the Rules and Regulations of the POEA, the decision of the POEA-Adjudication Office on matters involving money claims arising from the employer-employee relationship of overseas Filipino workers may be appealed to the National Labor Relations Commission (hereinafter the NLRC)[11]. Thus, as both felt aggrieved by the said POEA Decision, petitioner and private respondents filed separate appeals from the August 31, 1988 POEA Decision to the NLRC. In a decision dated July 26, 1989[12], the NLRC modified the appealed decision of the POEA Adjudication Office by deleting the award of salary deductions and differentials. These awards to private respondents were deleted by the NLRC considering that these were not raised in the complaint filed by private respondents. The NLRC likewise stated that there was nothing in the text of the decision which would justify the award. Private respondents filed a Motion for Reconsideration but the same was denied by the NLRC in a Resolution dated October 25, 1989. Private respondents then elevated the July 26, 1989 decision of the NLRC to the Supreme Court in a petition for review for certiorari where it was docketed as G.R. No. 89089. However, in a Resolution dated October 25, 1989, the petition was dismissed outright for insufficiency in form and substance, having failed to comply with the Rules of Court and Circular No. 1-88 requiring submission of a certified true copy of the questioned resolution dated August 23, 1989.[13] Almost simultaneous with the promulgation of the August 31, 1988 decision of the POEA on private respondents money claims, the POEA issued a separate Order dated August 29, 1988[14] resolving the recruitment violations aspect of private respondents complaint. In this Order, the POEA found petitioner guilty of illegal exaction, contract substitution, and unlawful deduction. The dispositive portion of this August 29, 1988 POEA Order reads:

WHEREFORE, premises considered, this Office finds herein respondent PHILSA International Placement and Services Corporation liable for three (3) counts of illegal

exaction, two (2) counts of contract substitution and one count of withholding or unlawful deduction from salaries of workers. Accordingly, respondent is hereby ordered to refund the placement fees in the amount of P2,500.00 to Rodrigo L. Mikin, P4,000.00, each, to Vivencio A. de Mesa and Cedric A.P. Leyson plus restitution of the salaries withheld in the amount of SR1,000.00 to Vivencio A. de Mesa. Moreover, respondents license is hereby suspended for eight (8) months to take effect immediately and to remain as such until full refund and restitution of the above-stated amounts have been effected or in lieu thereof, it is fined the amount of SIXTY THOUSAND (P60,000.00) PESOS plus restitution, SO ORDERED.
In line with this August 29, 1988 Order, petitioner deposited the check equivalent to the claims of private respondents and paid the corresponding fine under protest. From the said Order, petitioner filed a Motion for Reconsideration which was subsequently denied in an Order dated October 10, 1989. Under the POEA Rules and Regulations, the decision of the POEA thru the LRO suspending or canceling a license or authority to act as a recruitment agency may be appealed to the Ministry (now Department) of Labor and Employment.[15] Accordingly, after the denial of its motion for reconsideration, petitioner appealed the August 21, 1988 Order to the Secretary of Labor and Employment. However, in an Order dated September 13, 1991[16], public respondent Secretary of Labor and Employment affirmed en toto the assailed Order. Petitioner filed a Motion for Reconsideration but this was likewise denied in an Order dated November 25, 1991. Hence, the instant Petition for Certiorari where petitioner raises the following grounds for the reversal of the questioned Orders:
I.

THE PUBLIC RESPONDENT HAS ACTED WITHOUT OR IN EXCESS OF JURISDICTION OR WITH GRAVE ABUSE OF DISCRETION IN HOLDING PETITIONER GUILTY OF ILLEGAL EXACTIONS. THE FINDING IS NOT SUPPORTED BY EVIDENCE. AND IN ANY EVENT, THE LAW ON WHICH THE CONVICTION IS BASED IS VOID.
II.

THE PUBLIC RESPONDENT HAS ACTED WITHOUT OR IN EXCESS OF JURISDICTION OR WITH GRAVE ABUSE OF DISCRETION IN PENALIZING PETITIONER WITH CONTRACT SUBSTITUTION. IN THE PREMISES, THE CONTRACT SUBSTITUTION IS VALID AS IT IMPROVED

THE TERMS AND CONDITIONS OF PRIVATE RESPONDENTS EMPLOYMENT.


III.

THE PUBLIC RESPONDENT HAS ACTED WITHOUT OR IN EXCESS OF JURISDICTION, OR WITH GRAVE ABUSE OF DISCRETION IN HOLDING PETITIONER LIABLE FOR ILLEGAL DEDUCTIONS/WITHHOLDING OF SALARIES. FOR THE SUPREME COURT ITSELF HAS ALREADY ABSOLVED PETITIONER FROM THIS CHARGE.
With respect to the first ground, petitioner would want us to overturn the findings of the POEA, subsequently affirmed by the Secretary of the Department of Labor and Employment, that it is guilty of illegal exaction committed by collecting placement fees in excess of the amounts allowed by law. This issue, however, is a question of fact which cannot be raised in a petition for certiorari under Rule 65.[17] As we have previously held:

It should be noted, in the first place, that the instant petition is a special civil action for certiorari under Rule 65 of the Revised Rules of Court. An extraordinary remedy, its use is available only and restrictively in truly exceptional cases wherein the action of an inferior court, board or officer performing judicial or quasi-judicial acts is challenged for being wholly void on grounds of jurisdiction. The sole office of the writ of certiorari is the correction of errors of jurisdiction including the commission of grave abuse of discretion amounting to lack or excess of jurisdiction. It does not include correction of public respondent NLRC's evaluation of the evidence and factual findings based thereon, which are generally accorded not only great respect but even finality.[18]
The question of whether or not petitioner charged private respondents placement fees in excess of that allowed by law is clearly a question of fact which is for public respondent POEA, as a trier of facts, to determine. As stated above, the settled rule is that the factual findings of quasi-judicial agencies like the POEA, which have acquired expertise because their jurisdiction is confined to specific matters, are generally accorded not only respect, but at times even finality if such findings are supported by substantial evidence.[19] On this point, we have carefully examined the records of the case and it is clear that the ruling of public respondent POEA that petitioner is guilty of illegal exaction is supported by substantial evidence. Aside from the testimonial evidence offered by private respondents, they also presented documentary evidence consisting of receipts issued by a duly authorized representative of petitioner which show the payment of amounts in excess of those allowed by the POEA. In contrast, petitioner did not present any evidence whatsoever to rebut the claims of private respondents despite the many opportunities for them to do so.

Petitioner insists, however, that it cannot be held liable for illegal exaction as POEA Memorandum Circular No. II, Series of 1983, which enumerated the allowable fees which may be collected from applicants, is void for lack of publication. There is merit in the argument. In Taada vs. Tuvera[20], the Court held, as follows:

We hold therefore that all statutes, including those of local application and private laws, shall be published as a condition for their effectivity, which shall begin fifteen days after publication unless a different effectivity date is fixed by the legislature. Covered by this rule are presidential decrees and executive orders promulgated by the President in the exercise of legislative powers whenever the same are validly delegated by the legislature or, at present, directly conferred by the Constitution. Administrative rules and regulations must also be published if their purpose is to enforce or implement existing law pursuant to a valid delegation. Interpretative regulations and those merely internal in nature, that is, regulating only the personnel of the administrative agency and the public, need not be published. Neither is publication required of the so-called letter of instructions issued by the administrative superiors concerning the rules or guidelines to be followed by their subordinates in the performance of their duties.
Applying this doctrine, we have previously declared as having no force and effect the following administrative issuances: a) Rules and Regulations issued by the Joint Ministry of Health-Ministry of Labor and Employment Accreditation Committee regarding the accreditation of hospitals, medical clinics and laboratories[21]; b) Letter of Instruction No. 416 ordering the suspension of payments due and payable by distressed copper mining companies to the national government[22]; c) Memorandum Circulars issued by the POEA regulating the recruitment of domestic helpers to Hong Kong[23]; d) Administrative Order No. SOCPEC 89-08-01 issued by the Philippine International Trading Corporation regulating applications for importation from the Peoples Republic of China[24]; and e) Corporate Compensation Circular No. 10 issued by the Department of Budget and Management discontinuing the payment of other allowances and fringe benefits to government officials and employees[25]. In all these cited cases, the administrative issuances questioned therein were uniformly struck down as they were not published or filed with the National Administrative Register as required by the Administrative Code of 1987[26]. POEA Memorandum Circular No. 2, Series of 1983 must likewise be declared ineffective as the same was never published or filed with the National Administrative Register. POEA Memorandum Order No. 2, Series of 1983 provides for the applicable schedule of placement and documentation fees for private employment agencies or authority holders. Under the said Order, the maximum amount which may be collected from prospective Filipino overseas workers is P2,500.00. The said circular was apparently issued in compliance with the provisions of Article 32 of the Labor Code which provides, as follows:

Article 32. Fees to be paid by workers. Any person applying with a private feecharging employment agency for employment assistance shall not be charged any fee until he has obtained employment through its efforts or has actually commenced employment. Such fee shall be always covered with the approved receipt clearly showing the amount paid. The Secretary of Labor shall promulgate a schedule of allowable fees. (italics supplied)
It is thus clear that the administrative circular under consideration is one of those issuances which should be published for its effectivity, since its purpose is to enforce and implement an existing law pursuant to a valid delegation[27]. Considering that POEA Administrative Circular No. 2, Series of 1983 has not as yet been published or filed with the National Administrative Register, the same is ineffective and may not be enforced. The Office of the Solicitor General argues however that the imposition of administrative sanctions on petitioner was based not on the questioned administrative circular but on Article 32 and Article 34 (a)[28]of the Labor Code. The argument is not meritorious. The said articles of the Labor Code were never cited, much less discussed, in the body of the questioned Orders of the POEA and Secretary of Labor and Employment. In fact, the said Orders were consistent in mentioning that petitioners violation of Administrative Circular No. 2, Series of 1983 was the basis for the imposition of administrative sanctions against petitioner. Furthermore, even assuming that petitioner was held liable under the said provisions of the Labor Code, Articles 32 and 34 (a) of the Labor Code presupposes the promulgation of a valid schedule of fees by the Department of Labor and Employment. Considering that, as previously discussed, Administrative Circular No. 2, Series of 1983 embodying such a schedule of fees never took effect, there is thus no basis for the imposition of the administrative sanctions against petitioner. Moreover, under Book VI, Chapter II, Section 3 of the Administrative Code of 1987, (r)ules in force on the date of the effectivity of this Code which are not filed within three (3) months from that date shall not thereafter be the basis of any sanction against any party or persons. Considering that POEA Administrative Circular No. 2 was never filed with the National Administrative Register, the same cannot be used as basis for the imposition of administrative sanctions against petitioner. The Office of the Solicitor General likewise argues that the questioned administrative circular is not among those requiring publication contemplated by Taada vs. Tuvera as it is addressed only to a specific group of persons and not to the general public. Again, there is no merit in this argument. The fact that the said circular is addressed only to a specified group, namely private employment agencies or authority holders, does not take it away from the ambit of our ruling in Taada vs. Tuvera. In the case of Phil. Association of Service Exporters vs. Torres[29], the administrative circulars questioned therein were addressed to an even smaller group, namely Philippine and Hong Kong agencies engaged in the recruitment of workers for Hong Kong, and still the Court ruled therein that, for lack of proper publication, the said circulars may not be enforced or implemented. Our pronouncement in Taada vs. Tuvera is clear and categorical. Administrative rules and regulations must be published if their purpose is to enforce or implement existing law pursuant to

a valid delegation. The only exceptions are interpretative regulations, those merely internal in nature, or those so-called letters of instructions issued by administrative superiors concerning the rules and guidelines to be followed by their subordinates in the performance of their duties. Administrative Circular No. 2, Series of 1983 has not been shown to fall under any of these exceptions. In this regard, the Solicitor Generals reliance on the case of Yaokasin vs. Commissioner of Customs[30] is misplaced. In the said case, the validity of certain Customs Memorandum Orders were upheld despite their lack of publication as they were addressed to a particular class of persons, the customs collectors, who were also the subordinates of the Commissioner of the Bureau of Customs. As such, the said Memorandum Orders clearly fall under one of the exceptions to the publication requirement, namely those dealing with instructions from an administrative superior to a subordinate regarding the performance of their duties, a circumstance which does not obtain in the case at bench. With respect to the second ground, petitioner would want us to review the findings of fact of the POEA regarding the two counts of alleged contract substitution. Again, this is a question of fact which may not be disturbed if the same is supported by substantial evidence. A reading of the August 29, 1988 Order of the POEA shows that, indeed, the ruling that petitioner is guilty of two (2) counts of prohibited contract substitution is supported by substantial evidence. Thus:

2. As admitted by respondent, there was definitely a contract of substitution in the first count. The first contract was duly approved by the Administration and, therefore, the parties are bound by the terms and condition thereof until its expiration. The mere intention of respondents to increase the number of hours of work, even if there was a corresponding increase in wage is clear violation of the contract as approved by the Administration, and notwithstanding the same, the amendment is evidently contrary to law, morals, good customs and public policy and hence, must be shunned (Art. 1306, Civil Code of the Philippines, Book III, Title I, Chapter 1, Article 83, Labor Code of the Philippines, as amended). Moreover, it would appear that the proposed salary increase corresponding to the increase in number of work bonus may just have been a ploy as complainant were (sic) thereafter not paid at the increased rate. As to contract substitution in the second part, a third contract was emphatically intended by respondent to be signed by complainants which, however, was not consummated due to the adamant refusal of complainants to sign thereon. Mere intention of the respondent to commit contract substitution for a second time should not be left unpunished. It is the duty of this Office to repress such acts by teaching agencies a lesson to avoid repetition of the same violation.[31]
With respect to the third ground, petitioner argues that the public respondent committed grave abuse of discretion in holding petitioner liable for illegal deductions/withholding of salaries considering that the Supreme Court itself has already absolved petitioner from this charge. Petitioner premises its argument on the fact that the July 26, 1989 Decision of the NLRC absolving it from private respondent de Mesas claim for salary deduction has already attained

finality by reason of the dismissal of private respondents petition for certiorari of the said NLRC decision by the Supreme Court. Petitioner is correct in stating that the July 26, 1989 Decision of the NLRC has attained finality by reason of the dismissal of the petition for certiorari assailing the same. However, the said NLRC Decision dealt only with the money claims of private respondents arising from employer-employee relations and illegal dismissal and as such, it is only for the payment of the said money claims that petitioner is absolved. The administrative sanctions, which are distinct and separate from the money claims of private respondents, may still be properly imposed by the POEA. In fact, in the August 31, 1988 Decision of the POEA dealing with the money claims of private respondents, the POEA Adjudication Office precisely declared that respondents liability for said money claims is without prejudice to and independent of its liabilities for the recruitment violations aspect of the case which is the subject of a separate Order.[32] The NLRC Decision absolving petitioner from paying private respondent de Mesas claim for salary deduction based its ruling on a finding that the said money claim was not raised in the complaint[33]. While there may be questions regarding such finding of the NLRC, the finality of the said NLRC Decision prevents us from modifying or reviewing the same. But the fact that the claim for salary deduction was not raised by private respondents in their complaint will not bar the POEA from holding petitioner liable for illegal deduction or withholding of salaries as a ground for the suspension or cancellation of petitioners license. Under the POEA Rules and Regulations, the POEA, on its own initiative, may conduct the necessary proceeding for the suspension or cancellation of the license of any private placement agency on any of the grounds mentioned therein.[34] As such, even without a written complaint from an aggrieved party, the POEA can initiate proceedings against an erring private placement agency and, if the result of its investigation so warrants, impose the corresponding administrative sanction thereof. Moreover, the POEA, in an investigation of an employer-employee relationship case, may still hold a respondent liable for administrative sanctions if, in the course of its investigation, violations of recruitment regulations are uncovered. [35] It is thus clear that even if recruitment violations were not included in a complaint for money claims initiated by a private complainant, the POEA, under its rules, may still take cognizance of the same and impose administrative sanctions if the evidence so warrants. As such, the fact that petitioner has been absolved by final judgment for the payment of the money claim to private respondent de Mesa does not mean that it is likewise absolved from the administrative sanctions which may be imposed as a result of the unlawful deduction or withholding of private respondents salary. The POEA thus committed no grave abuse of discretion in finding petitioner administratively liable of one count of unlawful deduction/withholding of salary. To summarize, petitioner should be absolved from the three (3) counts of illegal exaction as POEA Administrative Circular No. 2, Series of 1983 could not be the basis of administrative sanctions against petitioner for lack of publication. However, we affirm the ruling of the POEA and the Secretary of Labor and Employment that petitioner should be held administratively liable for two (2) counts of contract substitution and one (1) count of withholding or unlawful deduction of salary.

Under the applicable schedule of penalties imposed by the POEA, the penalty for each count of contract substitution is suspension of license for two (2) months or a fine of P10,000.00 while the penalty for withholding or unlawful deduction of salaries is suspension of license for two (2) months or fine equal to the salary withheld but not less than P10,000.00 plus restitution of the amount in both instances[36]. Applying the said schedule on the instant case, the license of petitioner should be suspended for six (6) months or, in lieu thereof, it should be ordered to pay fine in the amount of P30,000.00. Petitioner should likewise pay the amount of SR1,000.00 to private respondent Vivencio A. de Mesa as restitution for the amount withheld from his salary. WHEREFORE, premises considered, the September 13, 1991 and November 25, 1991 Orders of public respondent Secretary of Labor and Employment are hereby MODIFIED. As modified, the license of private respondent Philsa International Placement and Services Corporation is hereby suspended for six (6) months or, in lieu thereof, it is hereby ordered to pay the amount of P30,000.00 as fine. Petitioner is likewise ordered to pay the amount of SR1,000.00 to private respondent Vivencio A. de Mesa. All other monetary awards are deleted. SO ORDERED. Melo (Chairman), Vitug, Panganiban, and Sandoval-Gutierrez, JJ., concur.

G.R. No. 154243

December 22, 2007

DEPUTY DIRECTOR GENERAL ROBERTO LASTIMOSO, ACTING CHIEF PHILIPPINE NATIONAL POLICE (PNP), DIRECTORATE FOR PERSONNEL AND RECORDS MANAGEMENT (DPRM), INSPECTOR GENERAL, P/CHIEF SUPT. RAMSEY OCAMPO and P/SUPT. ELMER REJANO, petitioners, vs. P/SENIOR INSPECTOR JOSE J. ASAYO, respondent. RESOLUTION AUSTRIA-MARTINEZ, J.: Before the Court is respondents Motion for Reconsideration of the Decision promulgated on March 6, 2007. In said Decision, the Court granted the petition, holding that the Philippine National Police (PNP) Chief had jurisdiction to take cognizance of the civilian complaint against respondent and that the latter was accorded due process during the summary hearing. Respondent argues that the decision should be reconsidered for the following reasons: 1. The summary proceeding was null and void because no hearing was conducted; and 2. The evidence presented at the summary hearing does not prove that respondent is guilty of the charges against him. Respondent insists that the summary hearing officer did not conduct any hearing at all but only relied on the affidavits and pleadings submitted to him, without propounding further questions to complainant's witnesses, or calling in other witnesses such as PO2 Villarama. It should, however, be borne in mind that the fact that there was no full-blown trial before the summary hearing officer does not invalidate said proceedings. In Samalio v. Court of Appeals,1 the Court reiterated the timehonored principle that: Due process in an administrative context does not require trial-type proceedings similar to those in courts of justice. Where opportunity to be heard either through oral arguments or through pleadings is accorded, there is no denial of procedural due process. A formal or trial-type hearing is not at all times and in all instances essential. The requirements are satisfied where the parties are afforded fair and reasonable opportunity to explain their side of the controversy at hand. The standard of due process that must be met in administrative tribunals allows a certain degree of latitude as long as fairness is not ignored. In other words, it is not legally objectionable for being violative of due process for an administrative agency to resolve a case based solely on position papers, affidavits or documentary evidence submitted by the parties as affidavits of witnesses may take the place of their direct testimony.2 (Emphasis supplied) The first issue presented by respondent must, therefore, be struck down. To resolve the second issue, respondent would have the Court re-calibrate the weight of evidence presented before the summary hearing officer, arguing that said evidence is insufficient to prove respondent's guilt of the charges against him.

However, it must be emphasized that the action commenced by respondent before the Regional Trial Court is one for certiorari under Rule 65 of the Rules of Court and as held in People v. Court of Appeals,3 where the issue or question involved affects the wisdom or legal soundness of the decision not the jurisdiction of the court to render said decision the same is beyond the province of a special civil action for certiorari. Yet, respondent-movant's arguments and the fact that the administrative case against respondent was filed way back in 1997, convinced the Court to suspend the rules of procedure. The general rule is that the filing of a petition for certiorari does not toll the running of the period to appeal.4 However, Section 1, Rule 1 of the Rules of Court provides that the Rules shall be liberally construed in order to promote their objective of securing a just, speedy and inexpensive disposition of every action and proceeding. InGinete v. Court of Appeals5 and Sanchez v. Court of Appeals,6 the Court saw it proper to suspend rules of procedure in order to promote substantial justice where matters of life, liberty, honor or property, among other instances, are at stake. The present case clearly involves the honor of a police officer who has rendered years of service to the country. In addition, it is also understandable why respondent immediately resorted to the remedy of certiorari instead of pursuing his motion for reconsideration of the PNP Chiefs decision as an appeal before the National Appellate Board (NAB). It was quite easy to get confused as to which body had jurisdiction over his case. The complaint filed against respondent could fall under both Sections 41 and 42 of Republic Act (R.A.) No. 6975 or the Department of the Interior and Local Government Act of 1990. Section 41 states that citizens' complaints should be brought before the People's Law Enforcement Board (PLEB), while Section 42 states that it is the PNP Chief who has authority to immediately remove or dismiss a PNP member who is guilty of conduct unbecoming a police officer. It was only in Quiambao v. Court of Appeals,7 promulgated in 2005 or after respondent had already filed the petition for certiorari with the trial court, when the Court resolved the issue of which body has jurisdiction over cases that fall under both Sections 41 and 42 of R.A. No. 6975. The Court held that the PLEB and the PNP Chief and regional directors have concurrent jurisdiction over administrative cases filed against members of the PNP which may warrant dismissal from service, but once a complaint is filed with the PNP Chief or regional directors, said authorities shall acquire exclusive original jurisdiction over the case. With the foregoing peculiar circumstances in this case, respondent should not be deprived of the opportunity to fully ventilate his arguments against the factual findings of the PNP Chief. He may file an appeal before the NAB, pursuant to Section 45, R.A. No. 6925. It is a settled jurisprudence that in administrative proceedings, technical rules of procedure and evidence are not strictly applied.8 In Land Bank of the Philippines v. Celada,9 the Court stressed thus: After all, technical rules of procedure are not ends in themselves but are primarily devised to help in the proper and expedient dispensation of justice. In appropriate cases, therefore, the rules may be construed liberally in order to meet and advance the cause of substantial justice.10 Thus, the opportunity to pursue an appeal before the NAB should be deemed available to respondent in the higher interest of substantial justice.

WHEREFORE, respondent's Motion for Reconsideration is partly GRANTED. The Decision of the Court dated March 6, 2007 is MODIFIED such that respondent is hereby allowed to file his appeal with the National Appellate Board within ten (10) days from finality of herein Resolution. SO ORDERED. Ynares-Santiago, Chairperson, Chico-Nazario, Nachura, Reyes, JJ., concur.

G.R. No. L-46496

February 27, 1940

ANG TIBAY, represented by TORIBIO TEODORO, manager and propietor, and NATIONAL WORKERS BROTHERHOOD, petitioners, vs. THE COURT OF INDUSTRIAL RELATIONS and NATIONAL LABOR UNION, INC., respondents. Office of the Solicitor-General Ozaeta and Assistant Attorney Barcelona for the Court of Industrial Relations. Antonio D. Paguia for National Labor Unon. Claro M. Recto for petitioner "Ang Tibay". Jose M. Casal for National Workers' Brotherhood. LAUREL, J.: The Solicitor-General in behalf of the respondent Court of Industrial Relations in the above-entitled case has filed a motion for reconsideration and moves that, for the reasons stated in his motion, we reconsider the following legal conclusions of the majority opinion of this Court: 1. Que un contrato de trabajo, asi individual como colectivo, sin termino fijo de duracion o que no sea para una determinada, termina o bien por voluntad de cualquiera de las partes o cada vez que ilega el plazo fijado para el pago de los salarios segun costumbre en la localidad o cunado se termine la obra; 2. Que los obreros de una empresa fabril, que han celebrado contrato, ya individual ya colectivamente, con ell, sin tiempo fijo, y que se han visto obligados a cesar en sus tarbajos por haberse declarando paro forzoso en la fabrica en la cual tarbajan, dejan de ser empleados u obreros de la misma; 3. Que un patrono o sociedad que ha celebrado un contrato colectivo de trabajo con sus osbreros sin tiempo fijo de duracion y sin ser para una obra determiminada y que se niega a readmitir a dichos obreros que cesaron como consecuencia de un paro forzoso, no es culpable de practica injusta in incurre en la sancion penal del articulo 5 de la Ley No. 213 del Commonwealth, aunque su negativa a readmitir se deba a que dichos obreros pertenecen a un determinado organismo obrero, puesto que tales ya han dejado deser empleados suyos por terminacion del contrato en virtud del paro. The respondent National Labor Union, Inc., on the other hand, prays for the vacation of the judgement rendered by the majority of this Court and the remanding of the case to the Court of Industrial Relations for a new trial, and avers: 1. That Toribio Teodoro's claim that on September 26, 1938, there was shortage of leather soles in ANG TIBAY making it necessary for him to temporarily lay off the members of the National Labor Union Inc., is entirely false and unsupported by the records of the Bureau of Customs and the Books of Accounts of native dealers in leather. 2. That the supposed lack of leather materials claimed by Toribio Teodoro was but a scheme to systematically prevent the forfeiture of this bond despite the breach of his CONTRACT with the Philippine Army.

3. That Toribio Teodoro's letter to the Philippine Army dated September 29, 1938, (re supposed delay of leather soles from the States) was but a scheme to systematically prevent the forfeiture of this bond despite the breach of his CONTRACT with the Philippine Army. 4. That the National Worker's Brotherhood of ANG TIBAY is a company or employer union dominated by Toribio Teodoro, the existence and functions of which are illegal. (281 U.S., 548, petitioner's printed memorandum, p. 25.) 5. That in the exercise by the laborers of their rights to collective bargaining, majority rule and elective representation are highly essential and indispensable. (Sections 2 and 5, Commonwealth Act No. 213.) 6. That the century provisions of the Civil Code which had been (the) principal source of dissensions and continuous civil war in Spain cannot and should not be made applicable in interpreting and applying the salutary provisions of a modern labor legislation of American origin where the industrial peace has always been the rule. 7. That the employer Toribio Teodoro was guilty of unfair labor practice for discriminating against the National Labor Union, Inc., and unjustly favoring the National Workers' Brotherhood. 8. That the exhibits hereto attached are so inaccessible to the respondents that even with the exercise of due diligence they could not be expected to have obtained them and offered as evidence in the Court of Industrial Relations. 9. That the attached documents and exhibits are of such far-reaching importance and effect that their admission would necessarily mean the modification and reversal of the judgment rendered herein. The petitioner, Ang Tibay, has filed an opposition both to the motion for reconsideration of the respondent National Labor Union, Inc. In view of the conclusion reached by us and to be herein after stead with reference to the motion for a new trial of the respondent National Labor Union, Inc., we are of the opinion that it is not necessary to pass upon the motion for reconsideration of the Solicitor-General. We shall proceed to dispose of the motion for new trial of the respondent labor union. Before doing this, however, we deem it necessary, in the interest of orderly procedure in cases of this nature, in interest of orderly procedure in cases of this nature, to make several observations regarding the nature of the powers of the Court of Industrial Relations and emphasize certain guiding principles which should be observed in the trial of cases brought before it. We have re-examined the entire record of the proceedings had before the Court of Industrial Relations in this case, and we have found no substantial evidence that the exclusion of the 89 laborers here was due to their union affiliation or activity. The whole transcript taken contains what transpired during the hearing and is more of a record of contradictory and conflicting statements of opposing counsel, with sporadic conclusion drawn to suit their own views. It is evident that these statements and expressions of views of counsel have no evidentiary value. The Court of Industrial Relations is a special court whose functions are specifically stated in the law of its creation (Commonwealth Act No. 103). It is more an administrative than a part of the integrated judicial system of the nation. It is not intended to be a mere receptive organ of the Government. Unlike a court of justice which is essentially passive, acting only when its jurisdiction is invoked and deciding only cases that are presented to it by the parties litigant, the function of the Court of Industrial Relations, as will appear from perusal of its organic law, is more active, affirmative and

dynamic. It not only exercises judicial or quasi-judicial functions in the determination of disputes between employers and employees but its functions in the determination of disputes between employers and employees but its functions are far more comprehensive and expensive. It has jurisdiction over the entire Philippines, to consider, investigate, decide, and settle any question, matter controversy or dispute arising between, and/or affecting employers and employees or laborers, and regulate the relations between them, subject to, and in accordance with, the provisions of Commonwealth Act No. 103 (section 1). It shall take cognizance or purposes of prevention, arbitration, decision and settlement, of any industrial or agricultural dispute causing or likely to cause a strike or lockout, arising from differences as regards wages, shares or compensation, hours of labor or conditions of tenancy or employment, between landlords and tenants or farm-laborers, provided that the number of employees, laborers or tenants of farm-laborers involved exceeds thirty, and such industrial or agricultural dispute is submitted to the Court by the Secretary of Labor or by any or both of the parties to the controversy and certified by the Secretary of labor as existing and proper to be by the Secretary of Labor as existing and proper to be dealth with by the Court for the sake of public interest. (Section 4, ibid.) It shall, before hearing the dispute and in the course of such hearing, endeavor to reconcile the parties and induce them to settle the dispute by amicable agreement. (Paragraph 2, section 4, ibid.) When directed by the President of the Philippines, it shall investigate and study all industries established in a designated locality, with a view to determinating the necessity and fairness of fixing and adopting for such industry or locality a minimum wage or share of laborers or tenants, or a maximum "canon" or rental to be paid by the "inquilinos" or tenants or less to landowners. (Section 5, ibid.) In fine, it may appeal to voluntary arbitration in the settlement of industrial disputes; may employ mediation or conciliation for that purpose, or recur to the more effective system of official investigation and compulsory arbitration in order to determine specific controversies between labor and capital industry and in agriculture. There is in reality here a mingling of executive and judicial functions, which is a departure from the rigid doctrine of the separation of governmental powers. In the case of Goseco vs. Court of Industrial Relations et al., G.R. No. 46673, promulgated September 13, 1939, we had occasion to joint out that the Court of Industrial Relations et al., G. R. No. 46673, promulgated September 13, 1939, we had occasion to point out that the Court of Industrial Relations is not narrowly constrained by technical rules of procedure, and the Act requires it to "act according to justice and equity and substantial merits of the case, without regard to technicalities or legal forms and shall not be bound by any technicalities or legal forms and shall not be bound by any technical rules of legal evidence but may inform its mind in such manner as it may deem just and equitable." (Section 20, Commonwealth Act No. 103.) It shall not be restricted to the specific relief claimed or demands made by the parties to the industrial or agricultural dispute, but may include in the award, order or decision any matter or determination which may be deemed necessary or expedient for the purpose of settling the dispute or of preventing further industrial or agricultural disputes. (section 13, ibid.) And in the light of this legislative policy, appeals to this Court have been especially regulated by the rules recently promulgated by the rules recently promulgated by this Court to carry into the effect the avowed legislative purpose. The fact, however, that the Court of Industrial Relations may be said to be free from the rigidity of certain procedural requirements does not mean that it can, in justifiable cases before it, entirely ignore or disregard the fundamental and essential requirements of due process in trials and investigations of an administrative character. There are primary rights which must be respected even in proceedings of this character: (1) The first of these rights is the right to a hearing, which includes the right of the party interested or affected to present his own case and submit evidence in support thereof. In the language of Chief Hughes, in Morgan v. U.S., 304 U.S. 1, 58 S. Ct. 773, 999, 82 Law. ed. 1129, "the liberty and property of the citizen shall be protected by the rudimentary requirements of fair play.

(2) Not only must the party be given an opportunity to present his case and to adduce evidence tending to establish the rights which he asserts but the tribunal must consider the evidence presented. (Chief Justice Hughes in Morgan v. U.S. 298 U.S. 468, 56 S. Ct. 906, 80 law. ed. 1288.) In the language of this court inEdwards vs. McCoy, 22 Phil., 598, "the right to adduce evidence, without the corresponding duty on the part of the board to consider it, is vain. Such right is conspicuously futile if the person or persons to whom the evidence is presented can thrust it aside without notice or consideration." (3) "While the duty to deliberate does not impose the obligation to decide right, it does imply a necessity which cannot be disregarded, namely, that of having something to support it is a nullity, a place when directly attached." (Edwards vs. McCoy, supra.) This principle emanates from the more fundamental is contrary to the vesting of unlimited power anywhere. Law is both a grant and a limitation upon power. (4) Not only must there be some evidence to support a finding or conclusion (City of Manila vs. Agustin, G.R. No. 45844, promulgated November 29, 1937, XXXVI O. G. 1335), but the evidence must be "substantial." (Washington, Virginia and Maryland Coach Co. v. national labor Relations Board, 301 U.S. 142, 147, 57 S. Ct. 648, 650, 81 Law. ed. 965.) It means such relevant evidence as a reasonable mind accept as adequate to support a conclusion." (Appalachian Electric Power v. National Labor Relations Board, 4 Cir., 93 F. 2d 985, 989; National Labor Relations Board v. Thompson Products, 6 Cir., 97 F. 2d 13, 15; BallstonStillwater Knitting Co. v. National Labor Relations Board, 2 Cir., 98 F. 2d 758, 760.) . . . The statute provides that "the rules of evidence prevailing in courts of law and equity shall not be controlling.' The obvious purpose of this and similar provisions is to free administrative boards from the compulsion of technical rules so that the mere admission of matter which would be deemed incompetent inn judicial proceedings would not invalidate the administrative order. (Interstate Commerce Commission v. Baird, 194 U.S. 25, 44, 24 S. Ct. 563, 568, 48 Law. ed. 860; Interstate Commerce Commission v. Louisville and Nashville R. Co., 227 U.S. 88, 93 33 S. Ct. 185, 187, 57 Law. ed. 431; United States v. Abilene and Southern Ry. Co. S. Ct. 220, 225, 74 Law. ed. 624.) But this assurance of a desirable flexibility in administrative procedure does not go far as to justify orders without a basis in evidence having rational probative force. Mere uncorroborated hearsay or rumor does not constitute substantial evidence. (Consolidated Edison Co. v. National Labor Relations Board, 59 S. Ct. 206, 83 Law. ed. No. 4, Adv. Op., p. 131.)" (5) The decision must be rendered on the evidence presented at the hearing, or at least contained in the record and disclosed to the parties affected. (Interstate Commence Commission vs. L. & N. R. Co., 227 U.S. 88, 33 S. Ct. 185, 57 Law. ed. 431.) Only by confining the administrative tribunal to the evidence disclosed to the parties, can the latter be protected in their right to know and meet the case against them. It should not, however, detract from their duty actively to see that the law is enforced, and for that purpose, to use the authorized legal methods of securing evidence and informing itself of facts material and relevant to the controversy. Boards of inquiry may be appointed for the purpose of investigating and determining the facts in any given case, but their report and decision are only advisory. (Section 9, Commonwealth Act No. 103.) The Court of Industrial Relations may refer any industrial or agricultural dispute or any matter under its consideration or advisement to a local board of inquiry, a provincial fiscal. a justice of the peace or any public official in any part of the Philippines for investigation, report and recommendation, and may delegate to such board or public official such powers and functions as the said Court of Industrial Relations may deem necessary, but such delegation shall not affect the exercise of the Court itself of any of its powers. (Section 10, ibid.)

(6) The Court of Industrial Relations or any of its judges, therefore, must act on its or his own independent consideration of the law and facts of the controversy, and not simply accept the views of a subordinate in arriving at a decision. It may be that the volume of work is such that it is literally Relations personally to decide all controversies coming before them. In the United States the difficulty is solved with the enactment of statutory authority authorizing examiners or other subordinates to render final decision, with the right to appeal to board or commission, but in our case there is no such statutory authority. (7) The Court of Industrial Relations should, in all controversial questions, render its decision in such a manner that the parties to the proceeding can know the various issues involved, and the reasons for the decision rendered. The performance of this duty is inseparable from the authority conferred upon it. In the right of the foregoing fundamental principles, it is sufficient to observe here that, except as to the alleged agreement between the Ang Tibay and the National Worker's Brotherhood (appendix A), the record is barren and does not satisfy the thirst for a factual basis upon which to predicate, in a national way, a conclusion of law. This result, however, does not now preclude the concession of a new trial prayed for the by respondent National Labor Union, Inc., it is alleged that "the supposed lack of material claimed by Toribio Teodoro was but a scheme adopted to systematically discharged all the members of the National Labor Union Inc., from work" and this avernment is desired to be proved by the petitioner with the "records of the Bureau of Customs and the Books of Accounts of native dealers in leather"; that "the National Workers Brotherhood Union of Ang Tibay is a company or employer union dominated by Toribio Teodoro, the existence and functions of which are illegal." Petitioner further alleges under oath that the exhibits attached to the petition to prove his substantial avernments" are so inaccessible to the respondents that even within the exercise of due diligence they could not be expected to have obtained them and offered as evidence in the Court of Industrial Relations", and that the documents attached to the petition "are of such far reaching importance and effect that their admission would necessarily mean the modification and reversal of the judgment rendered herein." We have considered the reply of Ang Tibay and its arguments against the petition. By and large, after considerable discussions, we have come to the conclusion that the interest of justice would be better served if the movant is given opportunity to present at the hearing the documents referred to in his motion and such other evidence as may be relevant to the main issue involved. The legislation which created the Court of Industrial Relations and under which it acts is new. The failure to grasp the fundamental issue involved is not entirely attributable to the parties adversely affected by the result. Accordingly, the motion for a new trial should be and the same is hereby granted, and the entire record of this case shall be remanded to the Court of Industrial Relations, with instruction that it reopen the case, receive all such evidence as may be relevant and otherwise proceed in accordance with the requirements set forth hereinabove. So ordered. Avancea, C. J., Villa-Real, Imperial, Diaz, Concepcion and Moran, JJ., concur.

[G.R. No. 143964. July 26, 2004]

GLOBE TELECOM, INC., petitioner, vs. THE NATIONAL TELECOMMUNICATIONS COMMISSION, COMMISSIONER JOSEPH A. SANTIAGO, DEPUTY COMMISSIONERS AURELIO M. UMALI and NESTOR DACANAY, and SMART COMMUNICATIONS, INC. respondents. DECISION
TINGA, J.:

Telecommunications services are affected by a high degree of public interest. Telephone companies have historically been regulated as common carriers, and indeed, the 1936 Public Service Act has classified wire or wireless communications systems as a public service, along with other common carriers.
[1] [2] [3]

Yet with the advent of rapid technological changes affecting the telecommunications industry, there has been a marked reevaluation of the traditional paradigm governing state regulation over telecommunications. For example, the United States Federal Communications Commission has chosen not to impose strict common regulations on incumbent cellular providers, choosing instead to let go of the reins and rely on market forces to govern pricing and service terms.
[4]

In the Philippines, a similar paradigm shift can be discerned with the passage of the Public Telecommunications Act of 1995 (PTA). As noted by one of the laws principal authors, Sen. John Osmea, under prior la ws, the government regulated the entry of pricing and operation of all public telecommunications entities. The new law proposed to dismantle gradually the barriers to entry, replace government control on price and income with market instruments, and shift the focus of governments intervention towards ensuring service standards and protection of customers. Towards this goal, Article II, Section 8 of the PTA sets forth the regulatory logic, mandating that a healthy competitive environment shall be fostered, one in which telecommunications carriers are free to make business decisions and to interact with one another in providing telecommunications services, with the end in view of encouraging their financial viability while maintaining affordable rates. The statute itself defines the role of the government to promote a fair, efficient and responsive market to stimulate growth and development of the telecommunications facilities and services.
[5] [6] [7]

The present petition dramatizes to a degree the clash of philosophies between traditional notions of regulation and the au corant trend to deregulation. Appropriately, it involves the most ubiquitous feature of the mobile phone, Short Messaging Service (SMS) or text messaging, which has been transformed from a mere technological fad into a vital means of communication. And propitiously, the case allows the Court to evaluate the role of the National Telecommunications Commission (NTC) in this day and age.
[8]

The NTC is at the forefront of the government response to the avalanche of inventions and innovations in the dynamic telecommunications field. Every regulatory action it undertakes is of keen interest not only to industry analysts and players but to the public at large. The intensive scrutiny is understandable given the high financial stakes involved and the inexorable impact on consumers. And its rulings are traditionally accorded respect even by the courts, owing traditional deference to administrative agencies equipped with special knowledge, experience and capability to hear and determine promptly disputes on technical matters.
[9]

At the same time, judicial review of actions of administrative agencies is essential, as a check on the unique powers vested unto these instrumentalities. Review is available to reverse the findings of the specialized administrative agency if the record before the Court clearly precludes the agencys decision from being justified by a fair estimate of the worth of the testimony of witnesses or its informed judgment on matters within its special competence, or both. Review may also be warranted to ensure that the NTC or similarly empowered agencies act within the confines of their legal mandate and conform to the demands of due process and equal protection.
[10] [11] [12]

Antecedent Facts Globe and private respondent Smart Communications, Inc. (Smart) are both grantees of valid and subsisting legislative franchises, authorizing them, among others, to operate aCellular Mobile Telephone System (CMTS), utilizing the Global System for Mobile Communication (GSM) technology. Among the inherent services supported by the GSM network is the Short Message Services (SMS), also known colloquially as texting, which has attained immense popularity in the Philippines as a mode of electronic communication.
[13] [14] [15]

On 4 June 1999, Smart filed a Complaint with public respondent NTC, praying that NTC order the immediate interconnection of Smarts and Globes GSM networks, particularly their respective SMS or texting services. The Complaint arose from the inability of the two leading CMTS providers to effect interconnection. Smart alleged that Globe, with evident bad faith and malice, refused to grant Smarts request for the interconnection of SMS.
[16] [17]

On 7 June 1999, NTC issued a Show Cause Order, informing Globe of the Complaint, specifically the allegations therein that, among othersdespite formal request made by Smart to Globe for the interconnection of their respective SMS or text messaging services, Globe, with evident bad faith, malice and to the prejudice of Smart and Globe and the public in general, refused to grant Smarts request for the interconnection of their respective SMS or text messaging services, in violation of the mandate of Republic Act 7925, Executive Order No. 39, and their respective implementing rules and regulations.
[18]

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 conditions precedent required in Section 6 of NTC Memorandum Circular 9-793, and its omission of the mandatory Certification of Non-Forum Shopping. Smart responded that it had already submitted the voluminous documents asked by Globe in connection with other interconnection agreements between the two carriers, and that with those voluminous documents the interconnection of the SMS systems could be expedited by merely amending the parties existing CMTS-to-CMTS interconnection agreements.
[19] [20] [21]

On 19 July 1999, NTC issued the Order now subject of the present petition. In the Order, after 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 enhancedservice given in NTC Memorandum Circular No. 8-9-95 (MC No. 8-9-95) the implementation of SMS interconnection is mandatory pursuant to Executive Order (E.O.) No. 59.
[22] [23]

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 value-added services (VAS) to secure prior approval from NTC through an administrative process. Yet, in view of what it noted as the peculiar circumstances of the case, NTC

refrained from issuing a Show Cause Order with a Cease and Desist Order, and instead directed the parties to secure the requisite authority to provide SMS within thirty (30) days, subject to the payment of fine in the amount of two hundred pesos (P200.00) from the date of violation and for every day during which such violation continues.
[24]

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. It reiterated its previous arguments that the complaint should have been dismissed for failure to comply with conditions precedent and the non-forum shopping rule. It also 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. Finally, Globe alleged that theOrder 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.
[25] [26]

The Court of Appeals issued a Temporary Restraining Order on 31 August 1999. In its Memorandum, Globe also called the attention of the appellate court to the earlier decision of NTC pertaining to the application of Isla Communications Co., Inc. (Islacom) to provide SMS, allegedly holding that SMS is a deregulated special feature of the telephone network and therefore does not require the prior approval of NTC. Globe alleged that its departure from its ruling in the Islacom case constitutes a denial of equal protection of the law.
[27]

On 22 November 1999, a Decision was promulgated by the Former Special Fifth Division of the Court of Appeals affirming in toto the NTC Order. Interestingly, on the same day Globe and Smart voluntarily agreed to interconnect their respective SMS systems, and the interconnection was effected at midnight of that day.
[28] [29] [30]

Yet, on 21 December 1999, Globe filed a Motion for Partial Reconsideration, seeking to reconsider only the portion of the Decision that upheld NTCs finding that Globe lacked the authority to provide SMS and its imposition of a fine. Both Smart and NTC filed their respective comments, stressing therein that Globe indeed lacked the authority to provide SMS. In reply, Globe asserted that the more salient issue was whether NTC complied with its own Rules of Practice and Procedure before making the finding of want of authority and imposing the fine. Globe also reiterated that it has been legally operating its SMS system since 1994 and that SMS being a
[31] [32]

deregulated special feature of the telephone network it may operate SMS without prior approval of NTC. After the Court of Appeals denied the Motion Reconsideration, Globe elevated the controversy to this Court.
[33] [34]

for

Partial

Globe contends that the Court of Appeals erred in holding that the NTC has the power under Section 17 of the Public Service Law to subject Globe to an administrative sanction and a fine without prior notice and hearing in violation of the due process requirements; that specifically due process was denied Globe because the hearings actually conducted dwelt on different issues; and, the appellate court erred in holding that any possible violation of due process committed by NTC was cured by the fact that NTC refrained from issuing a Show Cause Order with a Cease and Desist Order, directing instead the parties to secure the requisite authority within thirty days. Globe also contends that in treating it differently from other carriers providing SMS the Court of Appeals denied it equal protection of the law. The case was called for oral argument on 22 March 2004. Significantly, Smart has deviated from its original position. It no longer prays that the Court affirm the assailed Decisionand Order, and the twin rulings therein that SMS is VAS and that Globe was required to secure prior authority before offering SMS. Instead, Smart now argues that SMS is not VAS and that NTC may not legally require either Smart or Globe to secure prior approval before providing SMS. Smart has also chosen not to make any submission on Globes claim of due process violations.
[35]

As presented during the oral arguments, the central issues are: (1) whether NTC may legally require Globe to secure NTC approval before it continues providing SMS; (2) whether SMS is a VAS under the PTA, or special feature under NTC MC No. 14-11-97; and (3) whether NTC acted with due process in levying the fine against Globe. Another issue is also raised whether Globe should have first filed a motion for reconsideration before the NTC, but this relatively minor question can be resolved in brief.
[36]

Necessity of Filing Motion for Reconsideration Globe deliberately did not file a motion for reconsideration with the NTC before elevating the matter to the Court of Appeals via a petition for certiorari. Generally, a motion for reconsideration is a prerequisite for the filing of a petition for certiorari. In opting not to file the motion for reconsideration, Globe asserted before the Court of Appeals that the case fell within the
[37]

exceptions to the general rule. The appellate court in the questioned Decision cited the purported procedural defect, yet chose anyway to rule on the merits as well.
[38] [39]

Globes election to elevate the case directly to the Court of Appeals, skipping the standard motion for reconsideration, is not a mortal mistake. According to Globe, the Order is a patent nullity, it being violative of due process; the motion for reconsideration was a useless or idle ceremony; and, the issue raised purely one of law. Indeed, the circumstances adverted to are among the recognized exceptions to the general rule. Besides, the issues presented are of relative importance and novelty so much so that it is judicious for the Court to resolve them on the merits instead of hiding behind procedural fineries.
[40] [41] [42]

The Merits Now, on to the merits of the petition. Deregulation is the mantra in this age of globalization. Globe invokes it in support of its claim that it need not secure prior authority from NTC in order to operate SMS. The claim has to be evaluated carefully. After all, deregulation is not a magic incantation that wards off the spectre of intrusive government with the mere invocation of its name. The principles, guidelines, rules and regulations that govern a deregulated system must be firmly rooted in the law and regulations that institute or implement the deregulation regime. The implementation must likewise be fair and evenhanded.
[43]

Globe hinges its claim of exemption from obtaining prior approval from the NTC on NTC Memorandum Circular No. 14-11-97 (MC No. 14-11-97). Globe notes that in a 7 October 1998 ruling on the application of Islacom for the operation of SMS, NTC declared that the applicable circular for SMS is MC No. 14-11-97. Under this ruling, it is alleged, NTC effectively denominated SMS as a special feature which under MC No. 14-11-97 is a deregulated service that needs no prior authorization from NTC. Globe further contends that NTCs requiring it to secure prior authorization violates the due process and equal protection clauses, since earlier it had exempted the similarly situated Islacom from securing NTC approval prior to its operation of SMS.
[44] [45]

On the other hand, the assailed NTC Decision invokes the NTC Implementing Rules of the PTA (MC No. 8-9-95) to justify its claim that Globe and Smart need to secure prior authority from the NTC before offering SMS.

The statutory basis for the NTCs determination must be thoroughly examined. Our first level of inquiry should be into the PTA. It is the authority behind MC No. 8-9-95. It is also the law that governs all public telecommunications entities (PTEs) in the Philippines.
[46]

Public Telecommunications Act The PTA has not strictly adopted laissez-faire as its underlying philosophy to promote the telecommunications industry. In fact, the law imposes strictures that restrain within reason how PTEs conduct their business. For example, it requires that any access charge/revenue sharing arrangements between all interconnecting carriers that are entered into have to be submitted for approval to NTC. Each telecommunication category established in the PTA is governed by detailed regulations. Also, international carriers and operators of mobile radio services are required to provide local exchange service in unserved or underserved areas.
[47] [48] [49]

At the same time, the general thrust of the PTA is towards modernizing the legal framework for the telecommunications services sector. The transmutation has become necessary due to the rapid changes as well within the telecommunications industry. As noted by Senator Osmea in his sponsorship speech: [D]ramatic developments during the last 15 years in the field of semiconductors have drastically changed the telecommunications sector worldwide as well as in the Philippines. New technologies have fundamentally altered the structure, the economics and the nature of competition in the telecommunications business. Voice telephony is perhaps the most popular face of telecommunications, but it is no longer the only one. There are other faces such as data communications, electronic mail, voice mail, facsimile transmission, video conferencing, mobile radio services like trunked radio, cellular radio, and personal communications services, radio paging, and so on. Because of the mind-boggling developments in semiconductors, the traditional boundaries between computers, telecommunications, and broadcasting are increasingly becoming blurred.
[50]

One of the novel introductions of the PTA is the concept of a value-added service (VAS). Section 11 of the PTA governs the operations of a value added service provider, which the law defines as an entity which relying on the transmission, switching and local distribution facilities of the local exchange and inter-exchange operators, and overseas carriers, offers enhanced services beyond those ordinarily provided for by such

carriers. Section 11 recognizes that 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. It reads, viz:
[51] [52]

Telecommunications entities may provide VAS, subject to the additional requirements that: a) prior approval of the Commission is secured to ensure that such VAS offerings are not cross-subsidized from the proceeds of their utility operations; other providers of VAS are not discriminated against in rates nor denied equitable access to their facilities; and separate books of accounts are maintained for the VAS. (Emphasis supplied)
[53]

b) c)

Oddly enough, neither the NTC nor the Court of Appeals cited the abovequoted provision in their respective decisions, which after all, is the statutory premise for the assailed regulatory action. This failure is but a mere indicia of the pattern of ignorance or incompetence that sadly attends the actions assailed in this petition. It is clear that the PTA has left open-ended what services are classified as value-added, prescribing instead a general standard, set forth as a matter of principle and fundamental policy by the legislature. The validity of this standard set by Section 11 is not put into question by the present petition, and there is no need to inquire into its propriety. The power to enforce the provisions of the PTA, including the implementation of the standards set therein, is clearly reposed with the NTC.
[54] [55] [56]

It can also be gleaned from Section 11 that the requirement that PTEs secure prior approval before offering VAS is tied to a definite purpose, i.e., to ensure that such VAS offerings are not cross-subsidized from the proceeds of their utility operations. The reason is related to the fact that PTEs are considered as public services, and mandated to perform certain public service functions. Section 11 should be seen in relation to E.O. 109, which mandates that international gateway operators shall be required to provide local exchange service, for the purpose of ensuring availability of reliable and affordable telecommunications service in both urban and rural areas of the country. Under E.O. No. 109, local exchange services are to be
[57] [58] [59]

cross-subsidized by other telecommunications services within the same company until universal access is achieved. Section 10 of the PTA specifically affirms the requirements set by E.O. No. 109. The relevance to VAS is clear: public policy maintains that the offer of VAS by PTEs cannot interfere with the fundamental provision by PTEs of their other public service requirements.
[60]

More pertinently to the case at bar, the qualification highlights the fact that the legal rationale for regulation of VAS is severely limited. There is an implicit recognition that VAS is not strictly a public service offering in the way that voice-to-voice lines are, for example, but merely supplementary to the basic service. Ultimately, the regulatory attitude of the State towards VAS offerings by PTEs is to treat its provisioning as a business decision subject to the discretion of the offeror, so long as such services do not interfere with mandatory public service requirements imposed on PTEs such as those under E.O. No. 109. Thus, non-PTEs are not similarly required to secure prior approval before offering VAS, as they are not burdened by the public service requirements prescribed on PTEs. Due regard must be accorded to this attitude, which is in consonance with the general philosophy of deregulation expressed in the PTA.
[61]

The Pertinent NTC Memorandum Circulars Next, we examine the regulatory framework devised by NTC in dealing with VAS. NTC relied on Section 420(f) of the Implementing Rules of the PTA (Implementing Rules) as basis for its claim that prior approval must be secured from it before Globe can operate SMS. Section 420 of the Implementing Rules, contained in MC No. 8-9-95, states in full: VALUE ADDED SERVICES (VAS) (a) A non-PTE VAS provider shall not be required to secure a franchise from Congress. (b) A non-PTE VAS provider can utilize its own equipment capable only of routing, storing and forwarding messages in whatever format for the purpose of providing enhanced or augmented telecommunications services. It shall not put up its own network. It shall use the transmission network, toll or local distribution, of the authorized PTES.

(c) The provision of VAS shall not in any way affect the cross subsidy to the local exchange network by the international and national toll services and CMTS service. (d) Entities intending to provide value added services only shall submit to the commission application for registration for approval. The application form shall include documents showing, among others, system configuration, mode of operation, method of charging rates, lease agreement with the PTE, etc. (e) The application for registration shall be acted upon by the Commission through an administrative process within thirty (30) days from date of application. (f) PTEs intending to provide value added services are required to secure prior approval by the Commission through an administrative process.

(g) VAS providers shall comply strictly with the service performance and other standards prescribed commission. (Emphasis supplied.) Instead of expressly defining what VAS is, the Implementing Rules defines what enhanced services are, namely: a service which adds a feature or value not ordinarily provided by a public telecommunications entity such as format, media conversion, encryption, enhanced security features, computer processing, and the like. Given that the PTA defines VAS as enhanced services, the definition provided in the Implementing Rules may likewise be applied to VAS. Still, the language of the Implementing Rules is unnecessarily confusing. Much trouble would have been spared had the NTC consistently used the term VAS as it is used in the PTA.
[62]

The definition of enhanced services in the Implementing Rules, while more distinct than that under the PTA, is still too sweeping. Rather than enumerating what possible features could be classified as VAS or enhanced services, the Implementing Rules instead focuses on the characteristics of these features. The use of the phrase the like, and its implications of analogy, presumes that a whole myriad of technologies can eventually be subsumed under the definition of enhanced services. The NTC should not be necessarily faulted for such indistinct formulation since it could not have known in 1995 what possible VAS would be available in the future. The definition laid down in the Implementing Rules may validly serve as a guide for the NTC to determine what emergent offerings would fall under VAS.
[63] [64]

Still, owing to the general nature of the definition laid down in the Implementing Rules, the expectation arises that the NTC would promulgate further issuances defining whether or not a specific feature newly available in the market is a VAS. Such expectation is especially demanded if the NTC is to penalize PTEs who fail to obtain prior approval in accordance with Section 11 of the PTA. To our knowledge, the NTC has yet to come out with an administrative rule or regulation listing which of the offerings in the market today fall under VAS or enhanced services. Still, there is MC No. 14-11-97, entitled Deregulating the Provision of Special Features in the Telephone Network. Globe invokes this circular as it had been previously cited by the NTC as applicable to SMS. On 2 October 1998, Islacom wrote a letter to the NTC, informing the agency that it will be offering the special feature of SMS for its CMTS, and citing therein that the notice was being given pursuant to NTC Memorandum Circular No. 14-11-97. In response, the NTC acknowledged receipt of the letter informing it of Islacoms offering the special feature of SMS for its CMTS, and instructed Islacom to adhere to the provisions of MC No. 14-1197. The clear implication of the letter is that NTC considers the Circular as applicable to SMS.
[65] [66]

An examination of MC No. 14-11-97 further highlights the state of regulatory confusion befalling the NTC. The relevant portions thereof are reproduced below: SUBJECT: DEREGULATING THE PROVISION OF SPECIAL FEATURES IN THE TELEPHONE NETWORK. For the purpose of exempting specific telecommunications service from rate or tariff regulations if the service has sufficient competition to ensure fair and reasonable rates or tariffs, the Commission hereby deregulates the provision of special features inherent to the Telephone Network. Section 1. For the purpose of this Circular, Special Feature shall refer to a feature inherent to the telephone network which may not be ordinarily provided by a Telephone Service Provider such as call waiting, call forwarding, conference calling, speed dialing, caller ID, malicious call ID, call transfer, charging information, call pick-up, call barring, recorded announcement, no double connect, warm line, wake-up call, hotline, voicemail, and special features offered to customers with PABXs such as direct inward dialing and number hunting, and the like; provided that in the provision of the feature, no law, rule, regulation or international convention on telecommunications is circumvented or violated. The Commission shall

periodically update the list of special features in the Telephone Network which, including the charging of rates therefor, shall be deregulated. Section 2. A duly authorized Telephone Service Provider shall inform the Commission in writing of the special features it can offer and the corresponding rates thirty (30) days prior to launch date. xxx Section 4. Authorized Telephone Service Providers shall continue to charge their duly approved rates for special services for 3 months from the effectivity of this circular, after which they may set their own rates. xxx (Emphasis supplied) Just like VAS as defined under the PTA, special features are also not ordinarily provided by the telephone company. Considering that MC No. 1411-97 was promulgated after the passage of the PTA, it can be assumed that the authors of the Circular were well aware of the regulatory scheme formed under the PTA. Moreover, MC No. 14-11-97 repeatedly invokes the word deregulation, and it cannot be denied that the liberalization ethos was introduced by the PTA. Yet, the net effect of MC No. 14-11-97 is to add to the haze beclouding the NTCs rationale for regulation. The introduction of a new concept, special feature, which is not provided for in the PTA just adds to the confusion, especially in light of the similarities between special features and VAS. Moreover, there is no requirement that a PTE seeking to offer special features must secure prior approval from the NTC. Is SMS a VAS, enhanced service, or a special feature? Apparently, even the NTC is unsure. It had told Islacom that SMS was a special feature, then subsequently held that it was a VAS. However, the pertinent laws and regulations had not changed from the time of the Islacom letter up to the day the Order was issued. Only the thinking of NTC did. More significantly, NTC never required ISLACOM to apply for prior approval in order to provide SMS, even after the Order to that effect was promulgated against Globe and Smart. This fact was admitted by NTC during oral arguments. NTCs treatment of Islacom, apart from being obviously discriminatory, puts into question whether or not NTC truly believes that SMS is VAS. NTC is unable to point out any subsequent rule or regulation, enacted after it promulgated the adverse order against Globe and Smart, affirming the newly-arrived determination that SMS is VAS.
[67]

In fact, as Smart admitted during the oral arguments, while it did comply with the NTC Order requiring it to secure prior approval, it was never informed by the NTC of any action on its request. While NTC counters that it did issue a Certificate of Registration to Smart, authorizing the latter as a provider of SMS, such Certificate of Registration was issued only on 13 March 2003, or nearly four (4) years after Smart had made its request. This inaction indicates a lack of seriousness on the part of the NTC to implement its own rulings. Also, it tends to indicate the lack of belief or confusion on NTCs part as to how SMS should be treated. Given the abstract set of rules the NTC has chosen to implement, this should come as no surprise. Yet no matter how content the NTC may be with its attitude of sloth towards regulation, the effect may prove ruinous to the sector it regulates.
[68] [69]

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. Such rule is integral to due process, as it protects substantive rights. Such rule also promotes harmony within the service or industry subject to regulation. It provides indubitable opportunities to weed out the most frivolous conflicts with minimum hassle, and certain footing in deciding more substantive claims. If this results in a tenfold in administrative rules and regulations, such price is worth paying if it also results in clarity and consistency in the operative rules of the game. The administrative process will best be vindicated by clarity in its exercise.
[70]

In short, the legal basis invoked by NTC in claiming that SMS is VAS has not been duly established. The fault falls squarely on NTC. With the dual classification of SMS as a special feature and a VAS and the varying rules pertinent to each classification, NTC has unnecessarily complicated the regulatory framework to the detriment of the industry and the consumers. But does that translate to a finding that the NTC Order subjecting Globe to prior approval is void? There is a fine line between professional mediocrity and illegality. NTCs byzantine approach to SMS regulation is certainly inefficient. Unfortunately for NTC, its actions have also transgressed due process in many ways, as shown in the ensuing elucidation. Penalized Via a Quasi-Judicial Process, Globe and Smart are Entitled to Corresponding Protections

It is essential to understand that the assailed Order was promulgated by NTC in the exercise of its quasi-judicial functions. The case arose when Smart had filed the initial complaint against Globe before NTC for interconnection of SMS. NTC issued a Show Cause Order requiring Globe to answer Smarts charges. Hearings were conducted, and a decision made on the merits, signed by the three Commissioners of the NTC, sitting as a collegial body.
[71] [72]

The initial controversy may have involved a different subject matter, interconnection, which is no longer contested. It cannot be denied though that the findings and penalty now assailed before us was premised on the same exercise of jurisdiction. Thus, it is not relevant to this case that the process for obtaining prior approval under the PTA and its Implementing Rules is administrative in nature. While this may be so, the assailed NTCs determination and corresponding penalty were rendered in the exercise of quasi-judicial functions. Therefore, all the requirements of due process attendant to the exercise of quasi-judicial power apply to the present case. Among them are the seven cardinal primary rights in justiciable cases before administrative tribunals, as enumerated in Ang Tibay v. CIR. They are synthesized in a subsequent case, as follows:
[73]

There are cardinal primary rights which must be respected even in proceedings of this character. The first of these rights is the right to a hearing, which includes the right of the party interested or affected to present his own case and submit evidence in support thereof. Not only must the party be given an opportunity to present his case and to adduce evidence tending to establish the rights which he asserts but the tribunal must consider the evidence presented. While the duty to deliberate does not impose the obligation to decide right, it does imply a necessity which cannot be disregarded, namely, that of having something to support its decision. Not only must there be some evidence to support a finding or conclusion, but the evidence must be substantial. The decision must be rendered on the evidence presented at the hearing, or at least contained in the record and disclosed to the parties affected.
[74]

NTC violated several of these cardinal rights due Globe in the promulgation of the assailed Order. First. The NTC Order is not supported by substantial evidence. Neither does it sufficiently explain the reasons for the decision rendered. Our earlier discussion pertained to the lack of clear legal basis for classifying SMS as VAS, owing to the failure of the NTC to adopt clear rules and regulations to that effect. Muddled as the legal milieu governing SMS already is, NTCs attempt to apply its confusing standards in the case of Globe and Smart is even more disconcerting. The very rationale adopted by

the NTC in its Order holding that SMS is VAS is short and shoddy. Astoundingly, the Court of Appeals affirmed the rationale bereft of intelligent inquiry, much less comment. Stated in full, the relevant portion of the NTC Order reads: xxx Getting down [to] the nitty-gritty, Globes SMS involves the transmission of data over its CMTS which is Globes basic service. SMS is not ordinarily provided by a CMTS operator like Globe, and since SMS enhances Globes CMTS, SMS fits in to a nicety [sic] with the definition of value-added-service or enhanced-service under NTC Memorandum Circular [8]-9-95 (Rule 001, Item [15]).
[75]

The Court usually accords great respect to the technical findings of administrative agencies in the fields of their expertise, even if they are infelicitously worded. However, the above-quoted finding is nothing more than bare assertions, unsupported by substantial evidence. The Order reveals that no deep inquiry was made as to the nature of SMS or what its provisioning entails. In fact, the Court is unable to find how exactly does SMS fits into a nicety with NTC M.C. No. 8-9-95, which defines enhanced services as analogous to format, media conversion, encryption, enhanced security features, computer processing, and the like. The NTC merely notes that SMS involves the transmission of data over [the] CMTS, a phraseology that evinces no causal relation to the definition in M.C. No. 8-995. Neither did the NTC endeavor to explain why the transmission of data necessarily classifies SMS as a VAS.
[76] [77]

In fact, if the transmission of data over [the] CMTS is to be reckoned as the determinative characteristic of SMS, it would seem that this is already sufficiently covered by Globe and Smarts respective legislative franchises. Smart is authorized under its legislative franchise to establish and operate integrated telecommunications/computer/ electronic services for public domestic and international communications, while Globe is empowered to establish and operate domestic telecommunications, and stations for transmission and reception of messages by means of electricity, electromagnetic waves or any kind of energy, force, variations or impulses, whether conveyed by wires, radiated through space or transmitted through other media and for the handling of any and all types of telecommunications services.
[78] [79] [80]

The question of the proper legal classification of VAS is uniquely technical, tied as at is to the scientific and technological application of the service or feature. Owing to the dearth of substantive technical findings and data from the NTC on which a judicial review may reasonably be premised, it is not opportunely proper for the Court to make its own technical evaluation of VAS,

especially in relation to SMS. Judicial fact-finding of the de novo kind is generally abhorred and the shift of decisional responsibility to the judiciary is not favored as against the substantiated and specialized determination of administrative agencies. With greater reason should this be the standard for the exercise of judicial review when the administrative agency concerned has not in the first place come out with a technical finding based on evidence, as in this case.
[81]

Yet at the same time, this absence of substantial evidence in support of the finding that SMS is VAS already renders reversible that portion of the NTC Order. Moreover, the Order does not explain why the NTC was according the VAS offerings of Globe and Smart a different regulatory treatment from that of Islacom. Indeed, to this day, NTC has not offered any sensible explanation why Islacom was accorded to a less onerous regulatory requirement, nor have they compelled Islacom to suffer the same burdens as Globe and Smart. While stability in the law, particularly in the business field, is desirable, there is no demand that the NTC slavishly follow precedent. However, we think it essential, for the sake of clarity and intellectual honesty, that if an administrative agency decides inconsistently with previous action, that it explain thoroughly why a different result is warranted, or if need be, why the previous standards should no longer apply or should be overturned. Such explanation is warranted in order to sufficiently establish a decision as having rational basis. Any inconsistent decision lacking thorough, ratiocination in support may be struck down as being arbitrary. And any decision with absolutely nothing to support it is a nullity.
[82] [83] [84] [85]

Second. Globe and Smart were denied opportunity to present evidence on the issues relating to the nature of VAS and the prior approval. Another disturbing circumstance attending this petition is that until the promulgation of the assailed Order Globe and Smart were never informed of the fact that their operation of SMS without prior authority was at all an issue for consideration. As a result, neither Globe or Smart was afforded an opportunity to present evidence in their behalf on that point. NTC asserts that since Globe and Smart were required to submit their respective Certificates of Public Convenience and Necessity and franchises, the parties were sufficiently notified that the authority to operate such service was a matter which NTC could look into. This is wrong-headed considering the governing law and regulations. It is clear that before NTC could penalize

Globe and Smart for unauthorized provision of SMS, it must first establish that SMS is VAS. Since there was no express rule or regulation on that question, Globe and Smart would be well within reason if they submitted evidence to establish that SMS was not VAS. Unfortunately, no such opportunity arose and no such arguments were raised simply because Globe and Smart were not aware that the question of their authority to provide SMS was an issue at all. Neither could it be said that the requisite of prior authority was indubitable under the existing rules and regulations. Considering the prior treatment towards Islacom, Globe (and Smart, had it chosen to do so) had every right to rely on NTCs disposal of Islacoms initiative and to believe that prior approval was not necessary. Neither was the matter ever raised during the hearings conducted by NTC on Smarts petition. This claim has been repeatedly invoked by Globe. It is borne out by the records or the absence thereof. NTC could have easily rebuffed this claim by pointing to a definitive record. Yet strikingly, NTC has not asserted that the matter of Globes authority was raised in any pleading or proceeding. In fact, Globe in its Consolidated Reply before this Court challenged NTC to produce the transcripts of the hearings it conducted to prove that the issue of Globes authority to provide SMS was put in issue. The Court similarly ordered the NTC to produce such transcripts. NTC failed to produce any.
[86] [87]

The opportunity to adduce evidence is essential in the administrative process, as decisions must be rendered on the evidence presented, either in the hearing, or at least contained in the record and disclosed to the parties affected. The requirement that agencies hold hearings in which parties affected by the agencys action can be represented by counsel may be viewed as an effort to regularize this struggle for advantage within a legislative adversary framework. It necessarily follows that if no evidence is procured pertinent to a particular issue, any eventual resolution of that issue on substantive grounds despite the absence of evidence is flawed. Moreover, if the parties did have evidence to counter the ruling but were wrongfully denied the opportunity to offer the evidence, the result would be embarrassing on the adjudicator.
[88] [89]

Thus, the comical, though expected, result of a definitive order which is totally unsupported by evidence. To this blatant violation of due process, this Court stands athwart. Third. The imposition of fine is void for violation of due process The matter of whether NTC could have imposed the fine on Globe in the assailed Order is necessarily related to due process considerations. Since this

question would also call to fore the relevant provisions of the Public Service Act, it deserves its own extensive discussion. Globe claims that the issue of its authority to operate SMS services was never raised as an issue in the Complaint filed against it by Smart. Nor did NTC ever require Globe to justify its authority to operate SMS services before the issuance of the Order imposing the fine. The Court of Appeals, in its assailed decision, upheld the power of NTC to impose a fine and to make a pronouncement on Globes alleged lack of operational authority without need of hearing, simply by citing the provision of the Public Service Act which enumerates the instances when NTC may act motu proprio. That is Section 17, paragraph (a), which reads thus:
[90]

Sec. 17. Proceedings of [the National Telecommunications Commission] without previous hearing. The Commission shall have power, without previous hearing, subject to established limitations and exceptions and saving provisions to the contrary: (a) To investigate, upon its own initiative, or upon complaint in writing, any matter concerning any public service as regards matters under its jurisdiction; to require any public service to furnish safe, adequate, and proper service as the public interest may require and warrant; to enforce compliance with any standard, rule, regulation, order or other requirement of this Act or of the Commission, and to prohibit or prevent any public service as herein defined from operating without having first secured a certificate of public convenience or public necessity and convenience, as the case may be, and require existing public services to pay the fees provided for in this Act for the issuance of the proper certificate of public convenience or certificate of public necessity and convenience, as the case may be, under the penalty, in the discretion of the Commission, of the revocation and cancellation of any acquired rights. On the other hand, NTC itself, in the Order, cites Section 21 as the basis for its imposition of fine on Globe. The provision states: Sec. 21. Every public service violating or failing to comply with the terms and conditions of any certificate or any orders, decisions or regulations of the Commission shall be subject to a fine of not exceeding two hundred pesos per day for every day during which such default or violation continues; and the Commission is hereby authorized and empowered to impose such fine, after due notice and hearing. [Emphasis supplied.] Sections 17 and 21 of the Public Service Act confer two distinct powers on NTC. Under Section 17, NTC has the power to investigate a PTE compliance with a standard, rule, regulation, order, or other requirement imposed by law

or the regulations promulgated by NTC, as well as require compliance if necessary. By the explicit language of the provision, NTC may exercise the power without need of prior hearing. However, Section 17 does not include the power to impose fine in its enumeration. It is Section 21 which adverts to the power to impose fine and in the same breath requires that the power may be exercised only after notice and hearing. Section 21 requires notice and hearing because fine is a sanction, regulatory and even punitive in character. Indeed, the requirement is the essence of due process. Notice and hearing are the bulwark of administrative due process, the right to which is among the primary rights that must be respected even in administrative proceedings. The right is guaranteed by the Constitution itself and does not need legislative enactment. The statutory affirmation of the requirement serves merely to enhance the fundamental precept. The right to notice and hearing is essential to due process and its non-observance will, as a rule, invalidate the administrative proceedings.
[91] [92]

In citing Section 21 as the basis of the fine, NTC effectively concedes the necessity of prior notice and hearing. Yet the agency contends that the sanction was justified by arguing that when it took cognizance of Smarts complaint for interconnection, it may very well look into the issue of whether the parties had the requisite authority to operate such services. As a result, both parties were sufficiently notified that this was a matter that NTC could look into in the course of the proceedings. The parties subsequently attended at least five hearings presided by NTC.
[93] [94]

That particular argument of the NTC has been previously disposed of. But it is essential to emphasize the need for a hearing before a fine may be imposed, as it is clearly a punitive measure undertaken by an administrative agency in the exercise of its quasi-judicial functions. Inherently, notice and hearing are indispensable for the valid exercise by an administrative agency of its quasi-judicial functions. As the Court held in Central Bank of the Phil. v. Hon. Cloribel:
[95]

[T]he necessity of notice and hearing in an administrative proceeding depends on the character of the proceeding and the circumstances involved. In so far as generalization is possible in view of the great variety of administrative proceedings, it may be stated as a general rule that notice and hearing are not essential to the validity of administrative action where the administrative body acts in the exercise of executive, administrative, or legislative functions; but where a public administrative body acts in a judicial or quasi-judicial matter, and its acts are particular and immediate rather than general and prospective, the person whose rights or property may be affected by the action is entitled to notice and hearing.
[96]

The requirement of notice and hearing becomes even more imperative if the statute itself demands it, as in the case of Section 21 of the Public Service Act. As earlier stated, the Court is convinced that prior to the promulgation of the assailed Order Globe was never notified that its authority to operate SMS was put in issue. There is an established procedure within NTC that provides for the steps that should be undertaken before an entity such as Globe could be subjected to a disciplinary measure. Section 1, Rule 10 of the NTC Rules of Procedure provides that any action, the object of which is to subject a holder of a certificate of public convenience or authorization, or any person operating without authority from NTC, to any penalty or a disciplinary or other measure shall be commenced by the filing of a complaint. Further, the complaint should state, whenever practicable, the provisions of law or regulation violated, and the acts or omissions complained of as constituting the offense. While a complaint was indeed filed against Globe by Smart, the lack of Globes authority to operate SMS was not raised in the Complaint, solely predicated as it was on Globes refusal to interconnect with Smart.
[97] [98]

Under the NTC Rules of Procedure, NTC is to serve a Show Cause Order on the respondent to the complaint, containing therein a statement of the particulars and matters concerning which the Commission is inquiring and the reasons for such actions. The Show Cause Order served on Globe in this case gave notice of Smarts charge that Globe, acting in bad faith and contrary to law, refused to allow the interconnection of their respective SMS systems. Again, the lack of authority to operate SMS was not adverted to in NTCsShow Cause Order.
[99] [100]

The records also indicate that the issue of Globes authority was never raised in the subsequent hearings on Smarts complaint. Quite noticeably, the respondents themselves have never asserted that the matter of Globes authority was raised in any pleading or proceeding. In fact, Globe in its Consolidated Reply before this Court challenged NTC to produce the transcripts of the hearings it conducted to prove that the issue of Globes authority to provide SMS was put in issue. It did not produce any transcript. Being an agency of the government, NTC should, at all times, maintain a due regard for the constitutional rights of party litigants. In this case, NTC blindsided Globe with a punitive measure for a reason Globe was not made aware of, and in a manner that contravened express provisions of law. Consequently, the fine imposed by NTC on Globe is also invalid. Otherwise put, since the very basis for the fine was invalidly laid, the fine is necessarily void.
[101]

Conclusion In summary: (i) 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; (ii) the assailed Order violates due process for failure to sufficiently explain the reason for the decision rendered, for being unsupported by substantial evidence, and for imputing violation to, and issuing a corresponding fine on, Globe despite the absence of due notice and hearing which would have afforded Globe the right to present evidence on its behalf. Thus, the Order 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. Concurrently, the Court realizes that the PTA is not intended to constrain the industry within a cumbersome regulatory regime. The policy as preordained by legislative fiat renders the traditionally regimented business in an elementary free state to make business decisions, avowing that it is under this atmosphere that the industry would prosper. It is disappointing at least if the deregulation thrust of the law is skirted deliberately. But it is ignominious if the spirit is defeated through a crazy quilt of vague, overlapping rules that are implemented haphazardly.
[102] [103]

By no means should this Decision be interpreted as removing SMS from the ambit of jurisdiction and review by the NTC. The issue before the Court is only the prior approval requirement as imposed on Globe and Smart. The NTC will continue to exercise, by way of its broad grant, jurisdiction over Globe and Smarts 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 NTCs role will become more crucial than at any time before. If NTCs behavior in the present case is but indicative of a malaise pervading this crucial regulatory arm of the State, the Court fears the resultant confusion within the industry and the consuming public. The

credibility of an administrative agency entrusted with specialized fields subsists not on judicial doctrine alone, but more so on its intellectual strength, adherence to law, and basic fairness. WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals dated 22 November 1999, as well as its Resolution dated 29 July 2000, and the assailed Order of the NTC dated 19 July 1999 are hereby SET ASIDE. No cost. SO ORDERED. Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Chico-Nazario, JJ., concur.

Ombudsman v Reyes G.R. No. 170512 October 5, 2011 FACTS: Reyes as the Transportation Regular Officer/Acting OIC of LTO Penaloza as the Clerk III of LTO Acero as the complainant 1)Acero failed the examination in obtaining a drivers license. 2) Penaloza offered him a choice to either retake the exam or pay the additional cost. 3) Acero paid the additional cost 4) Acero filed a complaint against Penaloza and Reyes. 5) Penalozas counter-affidavit stated that Reyes was behind the scheme. He also offered, as evidence, the affidavits of people confirming that such scheme exists and that Reyes was the man behind it. 6) Reyes denied the allegations of Acero. 7) Ombudsman rendered a decision against Reyes and Penaloza. Reyes was not furnished with a copy of Penalozas counter-affidavit involving him as the person behind the scheme. 8) Reyes contention was that he was denied due process because he was not furnished with the counter-affidavits. ISSUE: WON failure to furnish counter-affidavits amounts to lack of due process in an administrative case HELD: Yes, there was a denial of due process. In Ang Tibay v. Court of Industrial Relations[38] that due process inadministrative proceedings requires compliance with the following cardinal principles: (1) the respondents right to a hearing, which includes the right to present ones case and submit supporting evidence, must be observed; (2) the tribunal must consider the evidence presented; (3) the decision must have some basis to support itself; (4) there must be substantial evidence; (5) the decision must be rendered on the evidence presented at the hearing, or at least contained in the record and disclosed to the parties affected ; (6) in arriving at a decision, the tribunal must have acted on its own consideration of the law and the facts of the controversy and must not have simply accepted the views of a subordinate; and (7) the decision must be rendered in such manner that respondents would know the reasons for it and the various issues involved.[39] In the present case, the fifth requirement stated above was not complied with. Reyes was not properly apprised of the evidence offered against him, which were eventually made the bases of petitioners decision that found him guilty of grave misconduct. The records reveal that only the Office of the Ombudsman-Mindanao and Acero were furnished copies of the said (Penaloza) affidavits.[40] Thus, Reyes was able to respond only to the affidavit of Acero. It would appear that Reyes had no idea that Pealoza, a co-respondent in the administrative case, would point an accusing finger at him and even supply the inculpatory evidence to prove his guilt. The said affidavits were made known to Reyes only after the rendition of the petitioners Decision dated September 24, 2001.

G.R. No. 79311 April 26, 1990 PAPER INDUSTRIES CORPORATION OF THE PHILIPPINES, petitioner, vs. THE HONORABLE DEPUTY EXECUTIVE SECRETARY, THE HONORABLE SECRETARY OF NATURAL RESOURCES and DAVAO MAHOGANY PRODUCTS INCORPORATED, respondents. Belo, Abiera & Associates for petitioner. Joaquin & Associates Law Office for private respondent.

MEDIALDEA, J.: This is a petition for certiorari under Rule 65 of the Revised Rules of Court. Petitioner Paper Industries Corporation of the Philippines (PICOP) seeks the reversal of the Decision (pp. 3338, Rollo) of then Deputy Executive Secretary Fulgencio S. Factoran, Jr. dismissing PICOP's appeal from the Decision (pp. 24-32, Rollo) of then Minister of Natural Resources Rodolfo del Rosario in MNR Case No. 6429 and the Resolution (p. 39, Rollo) of then Deputy Executive Secretary Catalino Macaraig, Jr., denying PICOP's Motion for Reconsideration. The facts of the case are as follows: On May 24, 1952, the government granted the Bislig Bay Lumber Company, Inc. (now petitioner PICOP) Timber License Agreement (TLA) No. 43 covering parcels of forest lands in Agusan and Surigao. The license was amended on April 26, 1953 (TLA No. 43-1) and on March 4, 1959 (TLA No. 43-2). It appears that sometime in 1960, the Bureau of Forestry headed by Artemio Genio established on the ground the boundary line (known as "Genio" line) of PICOP's concession area. In 1963, this line was monumented on the ground by the Land Classification (LC) Party No. 18 headed by Forester Narciso Kiocho. On June 30, 1969, the western boundary of PICOP's timber license agreement was amended in order to conform with the western boundary line established by the Bureau of Forestry as surveyed and monumented on the ground. The last amendment was reflected under PICOP's TLA No. 43-3. Upon the request of the Board of Investments, then President Marcos issued on July 29, 1969 a warranty establishing the boundaries of PICOP's TLA as described under TLA No. 43, as amended (Annex "E" of Petition, p. 57, Rollo). For its part, respondent Davao Mahogany Products, Incorporated (DMPI) acquired Ordinary Timber License (OTL) No. 2456, dated May 19, 1955 from its original grantee, Romualdo Repaso. The license was renewed in 1960 under OTL No. 1122-60 and subsequently under OTL No. 499-51267. In 1967, the concession area of DMPI was consolidated with those of Agusan Mahogany Producers Company, Inc., the Umayan Timber Company and the Sanchez Logging Company under OTL No. 175-'71, in the name of DMPI. On September 17, 1984, OTL No. 175-'71 was converted to TLA No. 17 (p. 34, Rollo), covering a public forest area of 22.500 hectares (p. 62, Rollo). PICOP's and DMPI's concession areas are adjacent to each other, with the eastern boundary of DMPI being common with the western boundary of PICOP.

In a letter dated December 2, 1983, PICOP complained to the Bureau of Forest Development against an alleged encroachment by DMPI into the former's concession area. It alleged that its western boundary is the line established by Forester Genio and affirmed by LC Party No. 18. The western boundary of PICOP was allegedly recognized by DMPI in a letter dated September 19, 1975 addressed to PICOP. DMPI disputed PICOP's allegations claiming that its common boundary with PICOP is the line described under its OTL No. 1122-'60 and PICOP's TLA No. 43-1 and not the latter's TLA No. 43-3. In a decision rendered on November 4, 1985, the Ministry of Natural Resources (Ministry), through then Secretary Rodolfo del Rosario, found that PICOP's TLA No. 43-3 amended the western boundary of PICOP's concession area to conform with the (BFFR) "Genio" line. The Ministry found tills amendment to be erroneous because it deprived its adjoining concession holder, the DMPI of an area to which it was entitled, without the latter having been afforded an opportunity to contest the change. The Ministry ruled that the change was contrary to the standards of due process and existing policy. The Ministry likewise ruled that DMPI was not precluded from questioning the technical description of the western boundary under PICOP's TLA No. 43-3 despite the former's letter recognizing the latter's boundary. What DMPI recognized in its letter was PICOP's boundary under TLA No. 43-1 and not that described under TLA No. 43-3. The decision also ordered the correction and amendment of TLA No. 43-3 of PICOP so as to exclude the area contested from PICOP's license and to include the same area as part of DMPI's concession. The dispositive portion of the Ministry's decision reads: WHEREFORE, this Office hereby declares and confirms that the true and correct common boundary line between the concession areas of Paper Industries Corporation of the Philippines (PICOP) and Davao Mahogany Products, Inc. (DMPI) are the lines embodied in the technical descriptions of Timber License Agreement No. 43-1 of PICOP and Ordinary Timber License No. 11 22-'60 of DMPI. Conformably herewith, TLA No. 43-3 of PICOP shall be corrected/amended so as to exclude the contested area and, as thus excluded, shall be included in the concession area of DMPI to form part thereof under its Timber License Agreement No. 17. The moratorium Order dated 24 August 1984 of this Office is hereby lifted insofar as DMPI is concerned and PICOP is hereby directed to refrain from conducting logging operations within the area excluded from its TLA No. 43-3. The case records are hereby forwarded to the Administrator, Wood Industry Development Authority for implementation within thirty (30) days from receipt thereof. SO ORDERED. (pp. 31-32, Rollo) PICOP appealed the Ministry's decision to the Office of the President assigning four (4) errors: 1) the Ministry's finding that there exists a boundary dispute; 2) the Ministry's failure to uphold the Presidential warranty on the boundary of PICOP; 3) the Ministry's failure to rule that DMPI was estopped to question its common boundary with PICOP; and 4) the Ministry's finding that TLA No. 17 was issued subject to the outcome of the case (p. 36, Rollo).

On November 24, 1986, the Office of the President, through then Deputy Executive Secretary Fulgencio S. Factoran, Jr., dismissed the appeal. PICOP's Motion for Reconsideration was denied on June 17, 1987 by then Deputy Executive Secretary Catalino Macaraig, Jr. (p. 39, Rollo). Hence, the instant petition with a prayer for a temporary restraining order. On August 24, 1987, We issued a temporary restraining order enjoining respondents from enforcing the decision dated November 4, 1985 in MNR Case No. 6429 (p. 82, Rollo). It is the contention of PICOP that respondent Deputy Executive Secretary gravely abused his discretion in affirming the findings of then Secretary del Rosario that the true and correct boundary lines between the concession areas of PICOP and DMPI are the lines embodied in the technical descriptions of TLA 43-1 of PICOP and OTL No. 1122-60 of DMPI. It also assails the order for the correction of its TLA No. 43-3 so as to exclude therefrom the area contested by DMPI which area shall be included in the concession of DMPI to form part of the latter's TLA No. 17. The petition is not meritorious. After going over the records of this case, We find that public respondents did not commit any grave abuse of discretion and acted within their jurisdiction when they issued the questioned decisions and resolution. As pointed out by public respondents, the true and correct boundaries of PICOP and DMPI are the lines embodied in the technical descriptions of PICOP's TLA No. 43-1 and not those embodied in TLA 43-3. The adjustment contained in TLA 43-3 moved PICOP's boundary 2,160 meters further west of its original boundary into DMPI's eastern boundary resulting in the diminution of DMPI's concession area to about 2,058 hectares. This act was accomplished without notice to the adjoining concessionaire, DMPI. The Presidential warranty issued on July 29, 1969 on the boundaries of PICOP's concession could not have referred to TLA No. 43-3 because the total area warranted thereunder referred only to 121,587 hectares of permanent forest lands and 21,580 hectares of alienable and disposable lands. This area was the original area covered by TLA 43, 43-1 and 43-2, and not the area covered under TLA 43-3 which, as found by the Minister of Natural Resources exceeded PICOP's authorized total concession area by 2,058 hectares (p. 6, Decision of the Minister of Natural Resources, p. 29, Rollo). It is not correct, as PICOP alleged, that DMPI had always recognized the BFFR Genio line as their common boundary. DMPI's letter of September 29, 1975 confirming its recognition of PICOP's boundary referred to TLA No. 43-1 and not TLA No. 43-3. This is very clear in the text of DMPI's letter to PICOP when the dispute regarding their boundaries arose (p. 59, Rollo): September 29, 1975 Paper Industries Corporation of the Philippines JMT Building, Ayala Avenue Makati, Rizal

Gentlemen: This has reference to the discussions I had with your Atty. B. G. Alvizo concerning the common boundary of O.T. No. 118-57 of Davao Mahogany Products, Inc., ("DMPI") and of T.L.A. No. 43-1 of Bislig Bay Lumber Co., Inc., now PICOP. I confirm that DMPI recognizes, as it hereby recognizes, the boundary described in the Warranty of TLA No. 43-1 to he the true and correct common boundary of TLA No. 43-1 of PICOP and O.T. No. 118-57 of DMPI. xxx xxx xxx Very truly yours, DAVAO MAHOGANY PRODUCTS, INC. SIGNED GUILLERMO R. SANCHEZ Attorney-in-Fact It has been consistently held by Us that: . . . (I)n reviewing administrative decisions of the Executive branch of the Government, . . . the findings of fact made therein must be respected, so long as they are supported by substantial evidence, even if not overwhelming or preponderant (Ang Tibay vs. C.I.R., 69 Phil. 635); that it is not for the reviewing court to weigh the conflicting evidence, determine the credibility of the witnesses, or otherwise substitute its own judgment for that of the administrative agency on the sufficiency of the evidence. . . . . (Secretary for Legal Affairs, et al. v. CA, G.R. No. 76761, 9 January 1989; Ang Tibay v. CIR, 69 Phil. 635; Lao Tang Bun v. Fabre, 81 Phil. 682; Timbancaya v. Vicente, L-19100, Dec. 27, 1963, 9 SCRA 852) Likewise, . . . (I)n the case of Espinosa, et al. vs. Makalintal, et al. (79 Phil 134; 45 Off. Gazz. 712), we held that the powers granted to the Secretary of Agriculture and Commerce (Natural Resources) by law regarding the disposition of public lands such as granting of licenses, permits, leases and contracts or approving, rejecting, reinstating or cancelling applications or deciding conflicting applications, are all executive and administrative in nature. It is a well-recognized principle that purely administrative and discretionary functions may not be interfered with by the courts. In general, courts have no supervising power over the proceedings and actions of the administrative departments of the government. This is generally true with respect to acts involving the exercise of judgment or discretion, and findings of facts. . . . (Lianga Bay Logging Co., Inc. v. Lopez Enage, L-30637, July 16, 1987, 152 SCRA 91)

Public respondents Minister of Natural Resources and Deputy Executive Secretary, the latter acting for and in behalf and with the authority of the President, did not abuse their discretion when they ordered the amendment or correction of petitioner's TLA No. 43-3. After finding that there was an authorized increase in the concession area of PICOP, the correction of its license was a necessary consequence. The allegation by petitioner that DMPI had no valid Timber License Agreement at the time the proceedings in this case was commenced by PICOP's filing with the Bureau of Forest Development a complaint against DMPI for encroachment and illegal logging activities is not entirely correct. It is noted, as held by respondent Executive Secretary, that DMPI's license before its concession was consolidated with that of three (3) other concessionaires, was OTL No. 11 22-'60. DMPI's concession was consolidated with those of three (3) others, the government issued OTL No. 175-71 in the name of DMPI. While DMPI's OTL No. 175-71 was set to expire on September 30, 1983, it already had a pending application for a Timber License Agreement. The application was granted on September 14, 1984 under TLA No. 17 and will expire on July 31, 1994. There was, in effect, a continuity in the license granted to DMPI. In the words of respondent Deputy Executive Secretary, "DMPI's timber license did not terminate upon the expiration of OTL 1122-'60. It's license subsisted until TLA No. 17 was executed" (p. 36, Rollo). This effect is recognized under the Administrative Code of 1987 which provides in its Section 18, Book VII, Chapter 11: "Sec. 18. Non-Expiration of License. Where the licensee has made timely and sufficient application for the renewal of a license with reference to any activity of a continuing nature, the existing license shall not expire until the application shall have been finally determined by the agency." Even granting that DMPI's license expired and was terminated on September 30, 1983, this fact did not grant PICOP any vested right over the portion which it erroneously included in its amended license. ACCORDINGLY, the petition is DISMISSED. The decision of public respondent Deputy Executive Secretary dated November 24, 1986 affirming the decision of Rodolfo del Rosario, then Minister of Natural Resources dated November 4, 1985 in MNR Case No. 6429 is AFFIRMED. The temporary restraining order issued by this Court on August 24, 1987 is LIFTED. Narvasa, Gancayco and Grio-Aquino, JJ., concur. Cruz, J., took no part.