Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 94374 August 27, 1992

PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, petitioner,

vs.
EASTERN TELECOMMUNICATIONS PHILIPPINES, INC. (ETPI) and NATIONAL TELECOMMUNICATIONS
COMMISSION (NTC), respondents.

Meer, Meer, & Meer Law Office and Alampay & Manhit Law Offices for petitioner.

Arthur D. Lim Law Office for private respondent ETPI.

GUTIERREZ, JR., J.:

The petition seeks to set aside and annul the decision of the National Telecommunications Commission (NTC)
signed by former NTC Commissioner Jose Luis Alcuaz dated November 14, 1989 as well as the order dated
July 16, 1990 of the NTC En Banc.

On July, 16, 1987, Eastern Telecommunications Philippines, Inc. (Eastern) filed with the NTC an application
(docketed as NTC Case No. 8758) for a Certificate of Public Convenience and Necessity (CPCN) to construct,
maintain and operate an International Digital Gateway Facility (IDGF). In its application, Eastern alleged that
it is a domestic corporation and that it has the "franchise to land, construct, maintain and operate
telecommunications systems by cable, or any other means now known to science or which in the future may
be developed for the reception and transmission of messages to and between any point in the Philippines to
point exterior thereto . . . (R.A. 5002)

On July 22, 1987, NTC issued a notice of hearing, requiring publication of Eastern's application and
submission of financial and technical requirements and setting the case for initial hearing on May 31, 1988.

On June 23, 1988, petitioner Philippine Long Distance Telephone Company (PLDT) filed an "Opposition to
Main Application and to Prayer for Provisional Authority" dated June 20, 1988 based primarily on the
following grounds:

1. Since PLDT already operates and maintains three (3) international gateway switching
facilities or exchanges and will construct and operate by the year 1989 a new large-capacity
international digital exchange in Metro Manila, ETPI's proposed international digital
gateway constitutes a needless and wasteful duplication of facilities and an improvident
expenditure of dollars, contrary to public policy and detrimental to the public interest;

2. ETPI is basically an international data or record carrier and an such it has no local
telephone exchanges or much less a telephone network of its own in the Philippines;
 3. ETPI's proposal to operate its own international gateway is a device, scheme or strategem
to exploit PLDT's domestic telephone network and expand its inordinately lucrative business
as a telephone correspondent;

4. ETPI's proposed international gateway will only enable ETPI to relegate to lesser
importance its primary obligation to operate as a record carrier, obtain at the expense of
PLDT an increasing but undeserved share in revenue from international telephone traffic, for
ETPI will ride piggy-back on PLDT's own for nationwide telephone network, and undermine
the viability of PLDT's programmed new large-capacity international digital gateway;

5. There will be substantial diminution and stunted growth of PLDT's revenue from its
international toll services vis-a-vis its huge investments for its ongoing development
projects; and

6. The establishment of ETPI's' proposed international gateway is contrary to the

international practice to have one or more gateways of single ownership. (Rollo, pp. 224 to
225)

On July 8, 1988, PLDT served on Eastern a "Request for Admission and Interrogatories" which was answered
by Eastern on August 9, 1988.

On August 31, 1988, NTC issued an order defining the issues for trial on the basis of the respective
formulations of issues by Eastern and PLDT.

At the scheduled hearing on September 14, 1988, PLDT filed a Motion to Dismiss Eastern's Application,
questioning the jurisdiction of the NTC to hear and decide the application upon the ground that Eastern was
disqualified by its franchise from acquiring the CPCN applied for. After protracted debate between the parties,
the NTC denied the Motion to Dismiss and the trial proceeded.

On various hearing dates, Eastern and PLDT presented their respective documentary and testimonial
evidence. Thereafter, both applicant Eastern and oppositor PLDT filed extensive memoranda in support of
their respective positions.

On July 10, 1989, NTC motu proprio ordered that hearing be conducted for the purpose of propounding
clarificatory questions to Eastern and PLDT. Afterwhich, per order dated November 3, 1989, the case was
considered submitted for final resolution.

On November 10, 1989, the NTC through Commissioner Jose Luis A. Alcuaz rendered a decision granting
Eastern's application. The dispositive portion reads as follows:

WHEREFORE, in the interest of public service, the Commission hereby issues a Certificate of
Public Convenience and Necessity (CPCN) to applicant EASTERN TELECOMMUNICATIONS
PHILIPPINES, INC. (ETPI) for the authority to install, operate and maintain an International
Digital Gateway Facility in Metro Manila, subject to the following

CONDITIONS:

1. Applicant shall within fifteen (15) days from receipt of this Decision, file with this
Commission its acceptance of the terms and conditions herein prescribed.

2. Within sixty (60) days from receipt by this Commission of applicant's acceptance of the
terms and conditions of this decision, applicant shall submit to this Commission a detailed
schedule of activities together with a detailed listing of all equipments required to carry out
this authorization from the start up to the completion of the installation and commencement
of operations.

3. That the applicant shall install and establish the proposed international digital gateway
including all equipments necessary to put up the system in accordance with the plans and
specifications submitted and approved in this case, to wit:

3.1 Exhibit D-1

3.2 Exhibit D-2
3.3 Exhibit D-2-b
3.4 Exhibit D-3-a
3.5 Exhibit D-3

4. Within Ninety (90) days from the date of acceptance of the terms and conditions herein
prescribed, applicant ETPI and PLDT shall enter into an interconnection agreement for the
provision of adequate interconnection facilities between applicant's gateway switch and
PLDT's telephone network and shall jointly submit such interconnection agreement to the
Commission for approval. Such interconnection agreement shall include among others the
following:

4.1 General Statement of agreement to interconnect and abide with all the
terms and conditions included in the interconnection agreement;

4.2 Technical standards of interconnection. inclusive of the agreed

interconnection criteria and quality or grade of interconnection facilities;

4.3 Terms and conditions regarding the provision and operation and
maintenance of any and all interconnection facilities between network;

4.4 Terms and conditions as well as the manner of traffic revenue sharing
and account settlement therefor for all types of service as may be agreed
upon by PLDT and applicant ETPI;

4.5 Provisions regarding amendments to the interconnection of ETPI and

PLDT insofar as the maintenance, operation and monitoring are concerned
and insofar as maintaining a reliable grade of service is concerned;
liabilities of anyone or both of the parties for any loss or damages or
interruption of service resulting from various causes;

4.6 Any and all terms and conditions necessary to insure an efficient
interconnection of the network facilities of both parties;

4.7 Effectivity of the agreement.

5. That applicant shall complete the installation of the system including full interconnection
with the Public Switched Telephone Network (PSTN) and commence providing the service
within the period three hundred sixty (360) days from the date of this decision and inform
the Commission in writing at least fifteen (15) days before the date of commencement of
actual service to allow the Technical Staff of this Commission to conduct an ocular inspection
and field test of the entire international digital gateway of applicant including its
interconnection with the PSTN.
 6. Within thirty (30) days from the completion of the installation of the system but before
the commencement of actual operations, applicant shall submit to this Commission, a
detailed listings of all equipment actually installed to establish the system, together with
their specifications and corresponding costs.

7. That applicant, ETPI shall file before the Commission within One Hundred Eighty (180)
days from the approval hereof petition for the approval of the corresponding rates to be
charged for its international telephone service.

8. That the applicant shall allow interconnection of its international digital gateway switch
with other authorized telecommunications network desiring interconnect in accordance
with cost efficient interconnection.

9. Applicant shall submit to this Commission on or before March lst of each year, an Annual
Report of finances and operations for the previous year ending December 31st as required in
Section 7(h) of Commonwealth Act No. 146, as amended, the said report to be prepared in
the Annual Report Form prescribed by this Commission.

10. That applicant shall pay to this Commission on or before September 30th of each year,
supervision and regulation fees as required under Section 40 of Commonwealth Act 146, as
amended.

11. That applicant shall not suspend operation of the herein authorized service without prior
authority from this Commission except in cases of emergency or interruption of service, in
which case applicant shall inform the Commission in writing at least (2) days from the
occurrence of such service interruption with detailed explanation as to the nature, cause and
duration of interruption as well as details of immediate measures being undertaken or to
restore service in the shortest possible time.

12. The technical staff of this Commission may at any time inspect the facilities of applicant
to determine compliance with the requirements of this Commission.

13. That applicant shall not alter, modify, revise any of the approved technical specifications
authorized without prior authority from this Commission.

14. That applicant shall comply with all laws, rules and regulations as are now existing and
shall be promulgated by the National Telecommunications Commission. (NTC decision dated
Oct. 13, 1989, pp. 12 -15; NTC Case No. 87-149; Annex "A")

Commissioner Alcuaz signed the decision on November 10, 1989 and released the same to the NTC
Secretariat on November 14, 1989. Thus, the decision was entered into the NTC docket on November 14,
1989. Also on the same day, Eastern was served with a copy of the decision by Commissioner Alcuaz in his
NTC office. The next day, Eastern submitted its "acceptance" of the terms and conditions specified in the
decision.

A day later, on November 15, 1989, the NTC received a latter dated November 13, 1989 from the Office of the
President addressed to Commissioner Alcuaz stating that he had been replaced as head of NTC. President
Aquino stated, that she was designating Undersecretary of Transportation Josefina T. Lichauco as acting
Commissioner of the NTC.

On January 3, 1990, the NTC En Banc issued an order directing its board Secretary formally to release copies
of the NTC decision dated November 14, 1989 to the parties.
PLDT then filed a "Motion To Declare So-Called Alcuaz Decision Void/Inexistent" as well as a motion for
reconsideration of that decision. After further pleadings and counter pleadings, the NTC by an order dated
July 16, 1990 En Banc denied the PLDT motions assailing the validity of the said decision and confirmed the
November 14, 1989 decision signed by Commissioner Alcuaz.

Hence, the present petition for certiorari filed by PLDT premised on the following grounds:

THE NTC LACKED OR EXCEEDED ITS JURISDICTION, AND/OR GRAVELY ABUSED ITS
DISCRETION IN EXERCISING THE SAME, WHEN IT AUTHORIZED ETPI TO INSTALL AND
OPERATE AN EQUIPMENT INHERENT TO OR ESSENTIAL ONLY FOR A TELEPHONE SYSTEM
WHICH THE LATTER (ETPI), UNDER ITS LEGISLATIVE FRANCHISE, WAS PROHIBITED OR
UNAUTHORIZED TO ENGAGE IN.

II

THE NTC LACKED OR EXCEEDED ITS JURISDICTION, AND/OR GRAVELY ABUSED ITS
DISCRETION IN EXERCISING THE SAME, WHEN IT COMPELLED PLDT TO ALLOW THE
LINKAGE WITH ITS TELEPHONE SYSTEM, IN THE GUISE OF "INTERCONNECTION," ETPI'S
PROPOSED IGS EQUIPMENT, SINCE (A) INTERCONNECTION IS AUTHENTIC AND PROPER
ONLY BETWEEN TWO EXISTING TELECOMMUNICATIONS/TELEPHONE SYSTEMS AND AN
IGS IS NOT SYSTEM BUT A MERE EQUIPMENT AND (B) SUCH LINKAGE OF ETPI'S
PROPOSED IGS WITH PLDT'S TELEPHONE SYSTEM WAS DIRECTED NOT TO MEET OR
SATISFY A PUBLIC NEED FOR IT BUT RATHER AND EXCLUSIVELY TO ALLOW ETPI TO
EXPLOIT PLDT's PRESENT TELEPHONE SUBSCRIBERS.

III

RESPONDENT NTC LACKED OR EXCEEDED ITS JURISDICTION, AND/OR GRAVELY ABUSED

ITS DISCRETION IN EXERCISING THE SAME, WHEN IT DECIDED ETPI'S SUBJECT
APPLICATION WITHOUT RECITING THE FACTS AND THE LAW UPON WHICH IT BASED ITS
SAID JUDGMENT BUT INSTEAD MERELY ADOPTED WORD FOR WORD VIRTUALLY EN
TOTO ITS EARLIER DECISION IN A SIMILAR APPLICATION OF AN ENTIRELY DIFFERENT
APPLICANT.

IV

THE NTC LACKED OR EXCEEDED ITS JURISDICTION AND/OR GRAVELY ABUSED ITS
DISCRETION IN THE EXERCISE THEREOF WHEN IT COMPELLED PLDT IN ITS SUBJECT
DECISION AND ORDER TO INTERCONNECT ITS TELEPHONE SYSTEM WITH ETPI'S
PROPOSED IGS ALL TO THE END THAT THE LATTER MIGHT THEREBY ENGAGE ITSELF IN
TELEPHONE SERVICES BY TAKING UNDUE ADVANTAGE OF PLDT'S PRESENT TELEPHONE
SYSTEM AND OPERATION. (Petition, pp. 13-14)

The basic issue is whether or not the rendition of the assailed NTC decision and order was attended by grave
abuse of discretion amounting to lack of jurisdiction on the part of the NTC.

There is merit in the petition.

1. Eastern filed its application for a CPCN to operate an IGF with the NTC on the basis of its franchise granted
by law under R.A. 5002. It is undisputed that the proposed IGF is nothing else but an international telephone
exchange. (OSG Comment, p. 13) It is an equipment that is a component or constitutive element of a voice or
telephone system rather than a non-voice or data service. Since an IGF is useful only for a telephone system,
NTC cannot validly grant Eastern the CPCN it seeks because of franchise limitations.

The specific rights and privileges granted to Eastern are recited in Section 1 of R.A. 5002 which reads in full:

Sec. 1. There is hereby granted to "The Eastern Extension Australasia and China Telegraph
Company, Ltd." its successors and assigns, hereinafter referred to as the "Grantee"
a franchise to land, construct, maintain and operate telecommunication systems by cable, or
any other means now known to science or which in the future may be developed for the
reception and transmission of messages between any point in the Philippines to points exterior
thereto, including airplanes, airships or vessels even though such airplanes airships or
vessels may be located within territorial limits of the Philippines. (Emphasis supplied)

It is clear from the foregoing that the privilege so granted by the legislature was for the construction,
operation and maintenance of communications systems for the transmission of messages by cables or means
other than telephone. This is a significant distinction from the legislative franchise in PLDT v. National
Telecommunications, et al. (190 SCRA 717 [1990]) where the franchise of Express Telecommunications Co.
specifically used the word "radiotelephony."

The respondents contend that the law does not make any distinction between voice and non-voice
transmission of messages. Since a "message" is any written or oral communication or other transmitted
information sent by messenger or by some other means (as by signals) and "gateway" is the point of entry
and exit for inbound and outbound international messages (data as well as voice) the respondents argue that
there is no question that Eastern is qualified to own and operate its own international gateway facility or
telephone exchange for receiving had transmitting messages between any point in the Philippines to any
exterior part thereto or abroad (OSG Comment, p. 14)

In the absence of any qualification or intention to the contrary, the technical, not the general or ordinary
meaning of a word used in a statute should be adopted in the construction of the statute. (Agpalo, Statutory
Construction 1986, p. 138) This is particularly true in this case. The word "message," as used in the franchise
and in the telecommunication industry has a peculiar meaning when used with reference to communication
systems. The literal or common meaning can not be applied to key words in a franchise for highly technical
and scientifically advanced services so as to broaden a legislative grant beyond its plain and intended
meaning.

We agree with PLDT's contention that no one "transmits" on the telephone his or her "message." Telephone
technology precisely eliminates the intermediary role of a messenger (human or mechanical) by allowing the
calling and the called parties, respectively, to directly communicate with one another. A party need not
"transmit" any "message" through cable to be received and given to the other party. This procedure of
sending data (the "message") by cable transmission is characteristic of a telegraph but not of a telephone
system. Thus, when RA 5002 speaks of a "telecommunication (system) by cable . . . for the reception and
transmission of message," it can only be referring to a record or data service such as a telegraph system.

It is not the product, effect or end result, nor the act of receiving and transmitting messages which is given a
franchise. It is the system used, the facility established, and the entire network whose costs run into hundreds
of millions of pesos which is given legislative approval. A radio-television company, a computer-network, a
cable system, a postal system, a package and message delivery firm, and many other schemes for
broadcasting and communicating messages, information, and entertainment are all engaged in the reception
and transmission of messages. But to say that their franchises can be interpreted to include a telephone
exchange system is to strain interpretation into incredulous limits.
Franchises are always interpreted strictly against the franchise holder, never liberally and certainly not in a
strained and exaggerated manner. (Philippine Long Distance Telephone Co. v. National Telecommunications
Commission, 190 SCRA 717 [1990]).

The legislative history of the law granting Eastern's franchise is most instructive and belies the arguments of
Eastern.

Eastern is actually not the original grantee of the franchise under RA 5002. It acquired its franchise from
Eastern Extension Australasia and China Telegraph Co., Ltd., a foreign corporation organized and existing
under the laws of Great Britain which was engaged in international telecommunications in Manila since
Spanish times. This company was given a concession for the construction, operation and maintenance of a
submarine telegraph cable from Hongkong to Manila. On June 21, 1952, when the concession expired, RA 808
was approved granting a legislative franchise "to land, construct, maintain and operate at Manila in the
Philippines a submarine telegraph cable connecting Manila with Hongkong."

On May 2, 1967, R.A. 808 was amended by R.A. 5002 by enlarging the scope of the franchise granting Eastern
Extension Australasia a franchise to land, construct, maintain and operate telecommunications by cable or
other means known to science or which in the future may be developed for the transmission of messages
between any point in the Philippines to points exterior thereto.

On July 24, 1974, P.D. 484 was issued by President Ferdinand E. Marcos authorizing Eastern Extension
Australasia to transfer and assign the franchise granted to it under R.A. 808, as amended by R.A. 5002 to the
Eastern Telecommunications Philippines, Inc. (Commissioner of Internal Revenue v. Court of Tax Appeals,
195 SCRA 444 [1991])

The original legislative grant was a franchise for a submarine telegraph (not telephone) cable. The grantee
upon whom Congress vested the franchise was a telegraph and not a telephone company. From 1952 until the
franchise was assigned to Eastern and, in fact since Spanish times, it's predecessor never operated any
telephone service. The assignment of the franchise contemplated only what the transfer could convey which
is a telegraph system. And even from the time of the transfer in 1974, Eastern never operated a telephone
service. Eastern has always been aware of the limits of its franchise and the exact nature of its operations.

The clear intention of the law granting the franchise cannot be disputed. If Congress had contemplated the
use of telephone, the law would have stated so. Undeniably, telephone technology was already existing in
1952 when R.A. 808 was enacted. To construe the phrased "telecommunication system by cable or any
other means now known to science or which in the future may be developed for the reception and transmission
of messages" so as to include telephones is well-nigh preposterous. Indeed, telephones did not have to be
discovered or developed. They were not for the future. They were already existing at that time. As held in De
los Santos v. Mallare (87 Phil. 289 [1950]), the history of the times and state of things when the act was
framed must be followed. Conditions of the things at the time of enactment of the law should be considered to
determine the legislative intent. (Gomez Garcia v. Hipolito, et al., 2 Phil. 732 [1903]; United States v. De
Guzman, 30 Phil. 416 [1915])

Eastern's franchise was intended from the beginning and has been interpreted to cover only record or data
telecommunications services. This is bolstered by the fact that at present, Eastern is the holder of various
CPCN's from the NTC to operate only non-voice telecommunications services.

2. The only opportunity when Eastern had anything to do with voice communications was in 1977 when
President Marcos authorized it to be a correspondent of telephone administrations in Singapore, Taiwan and
Hongkong. Eastern wrote Malacañang for approval and the President placed a marginal note on the letter
telling Eastern to go ahead. Notwithstanding this authority given by President Marcos, the act of the President
did not amend the legislative franchise and is of doubtful validity. The marginal note is certainly not in the
exercise of the President's legislative power. It was never published and could not have amended or enlarged
an act of Congress.

Eastern, meanwhile, capitalizes on this marginal note on its letter to show that it is also engaged in voice
communication. It, therefore, asserts that PLDT is now estopped to question the franchise limitation of
Eastern since PLDT entered into an agreement with Eastern involving international telephone service in 1978
(Letter-Agreement dated September 29, 1978, Exhibit "O," ETPI Comment, pp. 8-9)

This argument is specious.

The alleged assent of PLDT to Eastern's operation as a "voice correspondent" is contained in an agreement
extracted from PLDT at a time when it could not have resisted such a Presidential imposition. PLDT never
intended to voluntarily recognize the validity of Eastern's voice correspondentship. This is shown by the fact
that after the former President had been removed from office, PLDT refused to implement the agreement.
PLDT can not therefore be deemed in estoppel under these circumstances.

The fact that Eastern agreed "to limit itself to correspondent relationship for voice traffic" can not be taken to
mean that Eastern may operate a telephone service now. Its franchise does not authorize it to do so. NTC
Circular No. 3-06-88 dated March 16, 1988 provides that "no Certificate of Public Convenience (CPC) can be
granted by this Commission to a person or entity who does not hold any valid franchise."

3. Significantly, in its July 29, 1988 answer to a request for admission and interrogatories in NTC Case No. 87-
50, Eastern admitted that it does not and has never operated any telephone exchange or network in the
Philippines and has no decision or order from any regulatory commission granting it a certificate of public
convenience to operate a telephone exchange or network in this country.

This alone shows that Eastern was then fully aware of its franchise limitation that it can not operate a
domestic telephone or telecommunications system.

Eastern, however, asserts that it is not asking for authority to install and operate a domestic telephone or
telecommunications system. The international gateway facility it proposes to undertake is understood as a
system which would mediate between the domestic telephone system of PLDT and the transmitting and
carrying facilities of Eastern. The gateway facility will permit messages originating from a person using
PLDT's domestic telephone system to enter the transmitting and carrying facilities of Eastern, as well as
messages incoming from abroad through Eastern's carrying facilities to enter PLDT's domestic system.

Thus, there is a need to interconnect with PLDT's domestic telephone network as ordered by the NTC.
Eastern's expounded services would be useless if it cannot mainly use the existing PLDT grid. Interconnection
as the term denotes, contemplates or relates to the linkage of two existing telephone companies with one
another in order to allow the subscribers of one system to access or reach the subscribers of the other
operator.

Interconnection is proper only between two legitimate companies with valid legislative franchises and not
between an international message transmission company and a legitimate telephone firm as in the case at
bar. Eastern's franchise can not be strained or distorted to enable it to become a carrier's carrier. Certainly,
an interconnection system requires a specific franchise.

While PLDT has franchises for both domestic and international telephone services, Eastern has none. The
pretense that it does not need any to tap into an existing domestic telephone network is misleading. Unless it
utilizes PLDT's domestic network, the gateway facility or telephone exchange of Eastern would be completely
useless. This is the meaning of interconnection whether termed "interfacing" or some other name.
In the absence of legislative authority to operate a telephone system, it was therefore grave abuse of
discretion for NTC to order Eastern to interconnect with PLDT.

4. Eastern had no use for a "gateway facility" in its many decades of operations in the Philippines. Only when
it decided to go into the telephone business as an expansion of its "message transmission" business because
of various hi-tech developments did it suddenly need a gateway facility and read into its franchise something
which was never there .The use of gibberish and esoteric jargon and such high sounding technical terms as
analog or digital levels, interfacing with broadband transmission, switching maintenance, traffic operations,
network maintenance management, transmission center, etc. can not disguise the fact that a gateway facility
is part of a telephone system and that Eastern wants to engage in combined international and substantially
extensive domestic telephone services without any legislative authority.

The proposed gateway facility by interconnecting with PLDT's domestic telecommunications network will
enable local subscribers to talk directly with users of telephones abroad. It is in effect a long distance
telephone exchange system. Eastern will charge long distance telephone rates and collect from local
subscribers who use its services. This is a far cry from its franchised business of being an international carrier
of messages to and from its terminals or landing stations. It will be engaged in domestic services from the
gateway or exchange to the local telephone user and international services from the gateway to the foreign
country.

Eastern has no telephone system in the Philippines or anywhere else in the world. It does not have a single
telephone subscriber. Yet, it has been authorized by NTC to open a telephone exchange connecting PLDT
subscribers with telephone systems around the world.

5. In Commissioner of Internal Revenue v. Court of Tax Appeals, (supra), this Court accepted the submissions of
Eastern that it is engaged exclusively in international communications and international commerce. We ruled
that its legislative franchise was granted on the premise that its operations are international and what it has
in the Philippines is a terminal or station only. Eastern argued and this Court agreed in a case involving
domestic tax assessments that the company operates only a cable station or a terminal in the Philippines and
does not fall under the citizenship requirements of the Constitution. We ruled that the Court "is not prepared
to punish the respondent corporation which remained firm in not violating its franchise."

Eastern was firm in not violating its franchise when domestic tax assessments were in issue. Not so when it
comes to expanding its business into an entirely different and fast-growing profitable field. It is now adopting
an entirely new position. In big advertisements in all major newspapers around May 15, 1992, Eastern
advertised as its first line of business, direct dial and cellular international telephone services. We see no
reason why the Court should suddenly fall for specious and deceptive arguments and come out with findings
and conclusions diametrically opposed to its earlier decision.

6. The main reason for our decision is legal. Eastern has no franchise. It must first go to Congress. An
additional point, however, is that there is no urgent public need for the establishment of another IGF.

PLDT puts forth the argument that at present it has five (5) existing gateway facilities to meet the needs of the
people but NTC nevertheless approved Eastern's application in the event that PLDT's operations might be
suspended i.e. labor dispute, fortuitous event, technical causes etc.

In its order of July 16, 1990, the NTC states that:

. . . [W]ith PLDT's cut-cover of its Makati gateway facility it will have a total of 4575
international switch termination. The combined capacity of the new international gateway
operators, namely Philcom and ETPI will only amount to 33% of PLDT's capacity. It is the
Commission's position that in the event, therefore, that any of PLDT's gateway facilities
become inoperative, relief can be provided by the gateway facilities of Philcom and the
 applicant. The possibility that any two of the gateway operator's facilities would fail at the
same time is very remote. . . . (Emphasis supplied, page 12, Order — Annex "B" of petition)

xxx xxx xxx

. . . The Commission is also convinced of the economic viability of another gateway operator
and that authorizing applicant is not unnecessary and wasteful duplication. The grant to
another operator of another international gateway would provide for excess capacity which
will take care of any abnormal increase in the international traffic which can be expected with
the trend in the economic activities in the country. . . . (Emphasis supplied; p. 13; Order,
Annex "B" of petition).

The proposed combined facilities of applicants Eastern (NTC Case No. 87-149) which will be thirty-three
percent (33%) of PLDT's capacity are intended to provide relief" in the event any of PLDT's gateway facilities
become inoperative and to provide excess capacity to "take care of any abnormal increase in international
traffic."

NTC's fear is more illusory than real. In PLDT's 63 years of existence, it could only point to one outage of
consequence at the PLDT gateway which took place in November 1987. But this did not even totally disrupt
PLTD's international operations.

We do not see how the common good may be served when there are other remedies available which are less
costly and more expedient than constructing and maintaining a sixth gateway in a stand-by capacity which
would function only in the extreme case that the other five (5) gateways may shutdown.

7. Finally, NTC's reliance on free competition in the industry is to allow a private purpose for gain to
masquerade behind a noble policy against which nobody can dissent.

Citing the recent case of Philippine Long Distance Telephone Co. v. National Telecommunications, supra, that
"neither PLDT nor any other public utility has a constitutional right to a monopoly position," PLDT has never
claimed as a right the power to exclusively operate IGF's in the Philippines. In fact, Philippine Global
Communications (PHILCOM) was granted a CPCN to operate another IGF in NTC Case No. 87-149 under
Philcom's legislative franchise, R.A. 4167. (See Urgent Motion Reiterating Prayer for a Temporary Restraining
Order, p. 2) But the indubitable fact is that PLDT has invested billions of pesos over decades of operating,
maintaining and improving the country's telephone system.

Eastern had been in the Philippines long before petitioner PLDT was incorporated and commenced business.
Eastern and PLDT existed peacefully together for decades because they had separate franchises for different
and specific purposes. Only when Eastern tried to muscle into PLDT's turf did litigation arise. What Eastern is
trying to accomplish is to ride piggy back on the existing infrastructure built and developed by PLDT. It is
competing with PLDT's gateway facilities but in order to compete, it must interconnect with PLDT's domestic
network. It will become what is known in the business as a carrier's carrier. This is even worse than what
Justice Isagani A. Cruz characterized in Philippine Long Distance Telephone Co. v. National Telecommunications
Commission (supra)through his story of the little red hen who found some rice but none of the barnyard
animals would help her plant, water, harvest, and finally cook it.

PLDT has existing gateway facilities which are used by its own domestic telephone subscribers. The records
do not show any urgency for another company, especially a non-franchised one, to operate a similar facility
for exactly the same people without having spent a single centavo to build up the domestic system. The
proposed international gateway will not add a single telephone unit to existing phones in the country. We fail
to see how a non-franchised telephone system will improve telephone services in the Philippines through the
proposed scheme. There will be a diversion of profits to Eastern, but no additional telephone anywhere and
no improvement of services. Unless, like the proverbial camel in the desert poking its head into a tent, Eastern
proposes to later expand into other profitable areas of the telephone business and starts installing its own
phones. Eastern should first go to Congress, get its own franchise, and prove that it can really contribute to
more efficient telephone services instead of merely riding piggy back on the most profitable aspect of another
company's operations.

WHEREFORE, the petition is hereby GRANTED. The decision of the National Telecommunications
Commission dated November 14, 1989 as well as the order dated July 16, 1990 are ANNULLED and SET
ASIDE.

SO ORDERED.

Narvasa, C.J., Cruz, Bidin, Medialdea, Regalado, Davide, Jr., Nocon, Bellosillo and Melo, JJ., concur.