G.R. No. 189026. November 09, 2016
PHILIPPINE TELEGRAPH & TELEPHONE CORP., PETITIONER, VS. SMART COMMUNICATIONS, INC., RESPONDENT.

FACTS

Petitioner Philippine Telegraph & Telephone Corporation (PT&T) and respondent Smart Communications, Inc. (Smart) entered into an interconnection agreement on June 23, 1997. Due to PT&T’s financial difficulties, the parties amended the agreement on November 28, 2003, which included provisions for adjustments to their mutual access charges. On April 4, 2005, Smart informed PT&T it was increasing the access charge pursuant to the amended agreement. On September 2, 2005, PT&T sent a letter to Smart claiming overcharges and demanding a refund, citing an NTC resolution from a separate dispute where the NTC disallowed Smart’s access charges for being discriminatory. On September 15, 2005, PT&T filed a letter-complaint with the National Telecommunications Commission (NTC) alleging that Smart’s access charges were discriminatory. The NTC ordered mediation and, after its failure, directed the parties to file pleadings. Before submitting pleadings, Smart filed a complaint for breach of contract and specific performance against PT&T with the Regional Trial Court (RTC) of Makati City on April 7, 2006, and also sought a temporary restraining order against the NTC and PT&T, which the RTC granted. The RTC later issued a writ of preliminary injunction, reasoning that allowing the NTC to proceed would violate Smart’s contractual rights, and denied PT&T’s motion to dismiss, holding that the case for specific performance was incapable of pecuniary estimation and within its jurisdiction, and that the NTC had no jurisdiction over breach of contract. The Court of Appeals upheld the RTC. PT&T filed this petition, arguing that the NTC has primary jurisdiction over access charge determinations and that the RTC’s injunction constituted interference with a co-equal body.

ISSUE

Whether the NTC has primary jurisdiction over questions involving access charge stipulations in a bilateral interconnection agreement, and whether regular courts can restrain the NTC from reviewing the negotiated access charges.

RULING

Yes, the NTC has primary jurisdiction. The Supreme Court ruled that the dispute over access charges, even if arising from a bilateral agreement, falls within the primary jurisdiction of the NTC. The Court emphasized that under Section 18 of the Public Telecommunications Policy Act (RA 7925), interconnection agreements must be submitted to the NTC, which is tasked to ensure equity, reciprocity, and fairness in adopting or approving access charge arrangements. The specialized competence of the NTC is necessary to resolve technical and complex issues involving telecommunications rates and charges. The doctrine of primary jurisdiction applies because the question of whether the access charges are discriminatory and conform with industry standards requires the NTC’s expertise. Consequently, the RTC should have suspended the civil case and deferred to the NTC’s ongoing proceedings. The RTC’s issuance of an injunction against the NTC was a grave abuse of discretion, as it improperly interfered with the NTC’s exercise of its regulatory powers. The case was remanded to the RTC with instructions to suspend proceedings until the NTC resolves the access charge issue.