The National Telecommunications Commission (NTC) cannot impose rates on telecommunications (telco) companies without due process.
This was the ruling of the Supreme Court in a decision penned by senior associate justice Marvic Leonen, as it set aside the NTC orders imposing a new billing scheme for telco companies.
In 2009, the NTC imposed a six-second-per-pulse billing scheme for voice calls, requiring telco companies to charge mobile phone users only for actual usage.
Before this, companies charged users by the minute, such that even a fraction of a minute was automatically charged as one minute.
Later, the NTC issued Show Cause Orders against telcos Globe Telecom, Innove Communications, Smart Communications, Connectivity Unlimited Resource Enterprises, and Digitel Mobile Philippines for defying its directive. It also issued Cease and Desist Orders to stop the telco companies from charging their subscribers using the old billing system.
The telcos challenged the orders before the Court of Appeals (CA), arguing that the NTC exceeded its authority to regulate rates when it imposed the new billing scheme in violation of their right to due process. The CA set aside the NTC’s Orders.
The SC affirmed the decision of the CA. While the NTC, under Republic Act 7925 or the Public Telecommunications Policy Act, has the power to regulate rates, these rates must be just and fair to both customers and telcos.
The rates must be reasonable and sufficient to cover the cost of business operations based on data collected through hearings and consultation with participating telco companies.
The SC held that while the NTC has the authority to impose a new baseline rate for voice calls, it cannot do so unilaterally and without basis.
The court found that the NTC did not consider the evidence presented by the companies in their proposals and that the NTC’s explanation for rejecting the proposed rates was also insufficient.
The SC also stated that the NTC cannot set rates without allowing telcos to voice their grievances or request reconsideration, as part of their right to due process.
