NOW Telecom Company, Inc. vs. National Telecommunications Commission

A legislative franchise to operate telecommunications services does not confer a vested right over specific radio frequencies, the use of the radio spectrum being a mere privilege conferred by the State and subject to NTC regulatory authority; and the selection process for a New Major Player in telecommunications constitutes a national government project under Republic Act No. 8975, which prohibits lower courts from issuing temporary restraining orders or writs of preliminary injunction against such projects.

NOW Telecom Company, Inc. is a telecommunications service provider holding a legislative franchise originally granted under Republic Act No. 7301, as amended by Republic Act No. 7940 and renewed by Republic Act No. 10972. The National Telecommunications Commission is the government agency vested with authority to allocate and assign radio frequencies and to regulate the construction and operation of telecommunications systems pursuant to Republic Act No. 7925, the Public Telecommunications Policy Act of the Philippines. In 2018, upon the directive of then President Rodrigo R. Duterte to fast-track the entry of a New Major Player (NMP) to compete in the Philippine telecommunications market, the Department of Information and Communications Technology issued policy guidelines and the NTC promulgated a memorandum circular governing the selection process for the NMP, including the assignment of radio frequency bands.

On January 8, 2018, the Department of Information and Communications Technology (DICT) issued Memorandum Order No. 001, series of 2018, entitled "Policy Guidelines for the Entry of a New Major Player in the Public Telecommunications Market," in compliance with then President Rodrigo R. Duterte's directive to fast-track the entry of a new major player (NMP) to compete in the Philippine telecommunications market. The memorandum order required that an NMP applicant possess a valid congressional telecommunications franchise, not be a subsidiary or affiliate of the Globe or PLDT Groups, and have a written and binding commitment from a foreign joint venture company if applicable. It further required the applicant to have the highest committed investment for the first five years, secured with a performance bond, and provided that the NMP shall be assigned radio frequency bands available for assignment. The NTC was directed to promulgate a memorandum circular containing the Terms of Reference for the selection and assignment of radio frequencies.

On April 6, 2018, former President Duterte issued Administrative Order No. 11, series of 2018, creating an Oversight Committee to assist the NTC in formulating the Terms of Reference, oversee compliance, and ensure timely implementation. After conducting public hearings, the NTC promulgated the subject Circular on September 20, 2018. The Oversight Committee and the NTC determined that the best way to select the NMP was through a public, open, and competitive selection process. The DICT and NTC then published a timeline: the Circular would take effect on October 6, 2018; the Invitation to Bid would be published on October 7, 2018; the issuance of selection documents on October 8, 2018; and the submission and opening of bids on November 7, 2018.

On October 8, 2018, NOW Telecom filed before the Regional Trial Court (RTC) of Manila a Complaint for Injunction with an application for an ex-parte temporary restraining order (TRO), 20-day TRO, and/or writ of preliminary injunction (WPI) against the NTC. NOW Telecom challenged several provisions of the subject Circular as void for being excessive, confiscatory, and violative of due process: Section 6.2(j), requiring bidders to post a Participation Security with a face value of PHP 700,000,000.00; Section 11, requiring the NMP to post a Performance Security in the amount of 10% of the remaining Capital and Operational Expenditure; and Section 8, providing for a non-refundable filing fee of PHP 10,000,000.00 for appeal to the NTC En Banc. NOW Telecom likewise challenged Section 10.1, requiring submission of Business and Roll-out plans after the NMP is determined, as circumventing the prohibition on substantial variation in bids, and Section 3, providing for covered and contingent radio frequencies, for violating its alleged vested right to be allocated radio frequencies as a holder of a legislative and administrative franchise.

The NTC opposed the application for injunctive writs. After a summary hearing, the RTC denied NOW Telecom's prayer for TRO on October 12, 2018, and thereafter directed the parties to submit memoranda on the propriety of a WPI. On November 5, 2018, the RTC denied the prayer for WPI, ruling that NOW Telecom had no clear or vested right over the radio frequencies it sought to possess, that the grant of a legislative franchise and CMTS license does not bestow a vested right over specific radio frequencies, and that NOW Telecom had yet to meet the financial yardstick necessary to participate in the selection process. NOW Telecom elevated the matter to the Court of Appeals via a Petition for Certiorari, which denied the petition on May 24, 2021, holding that NOW Telecom failed to show a clear and unmistakable right or grave and irreparable injury and that Republic Act No. 8975 prohibits lower courts from issuing injunctions against government bidding or awarding of national government projects. The CA denied reconsideration on April 12, 2022. During the pendency of the proceedings, Mindanao Islamic Telephone Company, Inc. (MISLATEL) was selected as the NMP pursuant to the subject Circular and was issued a Certificate of Public Convenience and Necessity.

• Demandable Right to Radio Frequencies: Petitioner argued that the grant of a legislative franchise gives it a demandable right to be assigned sufficient radio frequencies, and that the NTC has a legal obligation to facilitate the operation of a legislative franchisee by assigning it sufficient frequencies.
• NTC Cannot Frustrate Congressional Power: Petitioner maintained that the NTC cannot frustrate the exercise of congressional power by unreasonably withholding radio frequencies from a holder of a legislative franchise, and that the NTC cannot frustrate the will of Congress by discriminating against legislative franchisees.
• Inapplicability of RA 8975: Petitioner contended that Republic Act No. 8975 is inapplicable in this case, and that injunction is proper to address the NTC's illegal acts.
• Entitlement to Injunctive Relief: Petitioner asserted that it has a clear legal right by virtue of its legislative and administrative franchise, that it is entitled to the relief sought enjoining the NTC from enforcing the vague, oppressive, and confiscatory provisions of the subject Circular, and that extreme urgency was established on account of the timeline provided by the NTC.

• Prohibition Under RA 8975: Respondent asserted that NOW Telecom's application for a WPI is legally prohibited by Republic Act No. 8975, which bars lower courts from issuing injunctions against the government for the conduct of bidding or awarding of contracts or projects of the National Government.
• Prejudgment of the Main Case: Respondent argued that the WPI would constitute a prejudgment of the main case without the benefit of a full-blown trial.
• Failure to Prove Requisites for WPI: Respondent maintained that NOW Telecom failed to prove any of the requisites for the issuance of a WPI, asserting that a legislative franchise does not give NOW Telecom a demandable legal right in esse to a specific radio frequency, that NOW Telecom does not have a right that was violated by the subject Circular, and that there is no damage in this case.
• No Frustration of Congressional Will: Respondent contended that the NTC did not frustrate the will of Congress in issuing the subject Circular.

• Mootness: Whether NOW Telecom's application for injunctive relief has been rendered moot and academic by the completion of the NMP selection process.
• Statutory Prohibition on Injunction: Whether Republic Act No. 8975 prohibits lower courts from issuing an injunctive writ against the selection process for the NMP in the telecommunications market.
• Requisites for Injunctive Relief: Whether NOW Telecom established the requisites for the issuance of a writ of preliminary injunction, particularly the existence of a clear and unmistakable right to be protected.

• Mootness: Yes. The selection process was completed and MISLATEL was selected as NMP and issued a CPCN, rendering the prayer for injunctive relief moot and academic because injunction will not issue to restrain an act already performed.
• Statutory Prohibition on Injunction: Yes. The selection process for the NMP is a national government project under RA 8975, telecommunications being a national government infrastructure, and lower courts are prohibited from issuing TROs or WPIs against such projects.
• Requisites for Injunctive Relief: No. NOW Telecom failed to establish a clear and unmistakable right to be protected, as a legislative franchise does not confer a vested right over specific radio frequencies; the use of the radio spectrum is a mere privilege subject to NTC regulation.

• Mootness: It is an established rule that injunction will not issue to restrain the performance of an act already done or to prevent events that have already happened. When the act sought to be prevented has been performed or completed, nothing more can be enjoined or restrained, and the writ becomes moot and academic because the court can no longer stop or undo the act. In this case, the actual implementation of the selection process for the NMP pursuant to the subject Circular and the resulting assignment of allocated radio frequencies to MISLATEL had already occurred during the pendency of the case. MISLATEL was selected as the NMP and issued a Certificate of Public Convenience and Necessity. The act sought to be restrained—the implementation of the subject Circular—had already been accomplished, and the issuance of an injunction could no longer preserve the status quo. Accordingly, the application for WPI was rendered moot and academic and was properly denied.

• Statutory Prohibition on Injunction: Section 3 of Republic Act No. 8975 prohibits any court, except the Supreme Court, from issuing a TRO or WPI against the government to restrain, prohibit, or compel the bidding or awarding of a contract or project of the National Government, the commencement, prosecution, execution, implementation, or operation of any such contract or project, or the undertaking or authorization of any other lawful activity necessary for such contract or project. Section 2(a) defines "national government projects" as all current and future national government infrastructure, engineering works, and service contracts, including projects covered by the Build-Operate-and-Transfer Law, and other related and necessary activities such as site acquisition, supply and/or installation of equipment and materials, implementation, construction, completion, operation, maintenance, improvement, repair, and rehabilitation. Jurisprudence interprets "other related and necessary activities" as activities related to government infrastructure, engineering works, service contracts, and projects under the BOT Law. Telecommunications is recognized as essential infrastructure—former President Duterte so declared in Administrative Order No. 11, s. 2018, and Section 2(e) of Republic Act No. 11659 classifies telecommunications as critical infrastructure. The selection process for the NMP, including the public bidding for 220MHz of frequencies, is a related and necessary activity for telecommunications, which is a national government infrastructure. The entry of the NMP is therefore a national government project under RA 8975, and the subject Circular, which pertains to that selection process, cannot be subject to injunctive relief by lower courts.

• Requisites for Injunctive Relief: Rule 58, Section 3 of the Rules of Court provides that preliminary injunction may be granted when the applicant is entitled to the relief demanded, when the commission or non-performance of the act complained of would probably work injustice, or when a party is doing or threatening acts probably in violation of the applicant's rights. Jurisprudence requires four essential requisites: (1) a clear and unmistakable right to be protected, that is, a right in esse; (2) a material and substantial invasion of such right; (3) an urgent need for the writ to prevent irreparable injury; and (4) no other ordinary, speedy, and adequate remedy exists. None of these requisites was established. As to the first requisite, the right must be actual, clear, and existing—not contingent, abstract, or future. The grant of a legislative franchise to operate telecommunications services does not necessarily carry with it a right over particular radio frequencies; NOW Telecom's own franchise does not state that it is entitled to specific radio frequencies. Section 7 of Republic Act No. 10972 expressly provides that the radio spectrum is a finite resource part of the national patrimony and the use thereof is a privilege conferred by the State, withdrawable at any time after due process. In Liberty Broadcasting Network, Inc. vs. Atlocom Wireless System, Inc., the Court held that even entities with unexpired provisional authority cannot claim a vested right on a specific frequency assignment, because the franchise is imbued with public interest. Republic Act No. 7925 gives the NTC the authority to allocate and assign radio frequencies and to facilitate the entry of qualified service providers through administrative process. NOW Telecom's own franchise (Republic Act No. 7940 and Republic Act No. 10972) recognizes that the NTC shall authorize its use of frequency and has the power to regulate and impose conditions. The assignment of radio frequencies involves the exercise of quasi-judicial power—the determination of questions of fact as to who is the "best qualified" service provider and who "can efficiently and effectively meet public demand." NOW Telecom must comply with the NTC's rules and regulations and cannot claim a right over allocated frequency bands by virtue of its franchise alone. At the time of its application, NOW Telecom was a mere prospective bidder; it had yet to form a consortium to qualify under the subject Circular's PHP 10 billion capital requirement, and there was no showing that it participated in the selection process. The challenged provisions—Participation Security, Performance Security, and Appeal Fee—were not made out of thin air but were proper impositions to ensure that only those with legal qualifications and financial and technical capabilities could participate. Since NOW Telecom had no vested right over the allocated frequencies or any clear, actual, and existing right to be protected, there could be no material or substantial invasion of a right, and it could not sustain any legal injury from the implementation of the Circular.

• Doctrine of Mootness of Injunction — Injunction will not issue to restrain the performance of an act already done or to prevent events that have already happened. When the act sought to be prevented has been performed or completed, nothing more can be enjoined; the writ becomes moot and academic because the court can no longer stop or undo the act, and to do so would violate the sole purpose of a prohibitive injunction, which is to preserve the status quo. Applied here: the selection of MISLATEL as NMP and the assignment of frequencies to it rendered NOW Telecom's prayer for injunctive relief moot.

• Nature of Radio Frequency as a Privilege, Not a Right — The radio spectrum is a finite resource that is part of the national patrimony, and the use thereof is a privilege conferred upon the grantee by the State, which may be withdrawn at any time after due process. A legislative franchise to operate telecommunications services does not confer a vested right over specific radio frequencies. Even entities with unexpired provisional authority cannot claim a vested right on a specific frequency assignment, because the franchise is imbued with public interest. The NTC, pursuant to RA 7925, has the authority to allocate and assign radio frequencies and to facilitate the entry of qualified service providers through administrative process. Applied here: NOW Telecom's legislative franchise did not vest in it a right to specific radio frequencies, and it could not claim entitlement to the allocated frequency bands without complying with the NTC's selection process.

• Requisites for the Issuance of a Writ of Preliminary Injunction — The essential requisites are: (1) the applicant must have a clear and unmistakable right to be protected, that is, a right in esse; (2) there is a material and substantial invasion of such right; (3) there is an urgent need for the writ to prevent irreparable injury to the applicant; and (4) no other ordinary, speedy, and adequate remedy exists to prevent the infliction of irreparable injury. The right must be actual, clear, and existing—not contingent, abstract, or future. Applied here: NOW Telecom failed to establish the first requisite, and consequently none of the others could be satisfied.

• Scope of RA 8975's Prohibition on Injunctions Against National Government Projects — Section 3 of RA 8975 prohibits any court, except the Supreme Court, from issuing TROs, preliminary injunctions, or preliminary mandatory injunctions against the government to restrain, prohibit, or compel the bidding or awarding of a contract or project of the National Government, or the commencement, prosecution, execution, implementation, or operation of any such contract or project, or the undertaking or authorization of any other lawful activity necessary for such contract or project. "National government projects" include all current and future national government infrastructure, engineering works, and service contracts, and other related and necessary activities. Telecommunications constitutes a national government infrastructure, and the selection process for the NMP is a related and necessary activity. Applied here: the subject Circular's selection process for the NMP falls within the prohibition, and lower courts cannot issue injunctive writs against it.

• "The grant of a legislative franchise to operate telecommunications services in NOW Telecom's favor does not necessarily carry with it a right over particular radio frequencies. Neither does NOW Telecom's franchise state that it is entitled to specific radio frequencies. NOW Telecom's use of radio frequencies is only a privilege, not a right, and is subject to compliance with the relevant laws, rules, and regulations." — This passage articulates the ratio decidendi on the nature of radio frequency rights, distinguishing between the privilege conferred by a legislative franchise and a vested right over specific frequencies.

• "The radio spectrum is a finite resource that is part of the national patrimony and the use thereof is a privilege conferred upon the grantee by the State and may be withdrawn at any time after due process." — Quoted from Section 7 of Republic Act No. 10972, this formulation is the canonical statutory statement of the privilege doctrine for radio spectrum use, frequently relied upon in telecommunications jurisprudence.

• "When the act sought to be prevented by injunction has already been performed or completed, 'nothing more can be enjoined or restrained; a writ of injunction then becomes moot and academic, and the court, by mere issuance of the writ, can no longer stop or undo the act. To do so would violate the sole purpose of a prohibitive injunction, that is, to preserve the status quo.'" — This passage defines the doctrine of mootness as applied to injunctive relief, explaining why a completed act cannot be enjoined.

• "The selection process for the NMP is essentially a bidding and awarding of a national government project, which includes the assignment of the allocated radio frequencies for the NMP to effectively compete against the current dominant players in the telecommunications market." — This passage establishes the ratio decidendi for classifying the NMP selection process as a national government project under RA 8975, thereby triggering the statutory prohibition on lower-court injunctions.

• Liberty Broadcasting Network, Inc. vs. Atlocom Wireless System, Inc., 762 Phil. 210 (2015) — Controlling precedent on the nature of radio frequency rights. The Court relied on this case for the proposition that even entities with unexpired provisional authority cannot claim a vested right on a specific frequency assignment, because the franchise is imbued with public interest and the use of the radio spectrum is a mere privilege.

• Department of Foreign Affairs vs. Falcon, 644 Phil. 105 (2010) — Cited for the interpretation that the phrase "other related and necessary activities" in Section 2(a) of RA 8975 refers to activities related to government infrastructure, engineering works, service contracts, and projects under the BOT Law.

• City Government of Caloocan vs. Carmel Development, Inc., G.R. No. 240255, January 25, 2023 — Cited for the enumeration of the essential requisites for the grant of a writ of preliminary injunction and the requirement that the right to be protected must be actual, clear, and existing.

• Go vs. Looyuko, 563 Phil. 36 (2007) — Cited for the established rule that injunction will not issue to restrain the performance of an act already done or to prevent events that have already happened.

• Co, Sr. vs. The Philippine Canine Club, Inc., 759 Phil. 134 (2015) — Cited for the principle that when the act sought to be prevented by injunction has already been performed or completed, the writ becomes moot and academic.

• Section 3, Republic Act No. 8975 — Prohibits any court, except the Supreme Court, from issuing TROs, preliminary injunctions, or preliminary mandatory injunctions against the government to restrain the bidding or awarding of contracts or projects of the National Government, their commencement, prosecution, execution, implementation, or operation, or the undertaking of any other lawful activity necessary for such projects. Applied to hold that the NMP selection process falls within this prohibition.

• Section 2(a), Republic Act No. 8975 — Defines "national government projects" as all current and future national government infrastructure, engineering works, and service contracts, including BOT Law projects, and other related and necessary activities. Applied to classify telecommunications and the NMP selection process as a national government project.

• Section 7, Republic Act No. 10972 — Provides that the radio spectrum is a finite resource part of the national patrimony and the use thereof is a privilege conferred by the State, withdrawable at any time after due process. Applied to negate NOW Telecom's claim of a vested right over specific radio frequencies.

• Section 3, Republic Act No. 7940 — NOW Telecom's franchise, subject to the Constitution and applicable laws, rules, and regulations of the NTC, requiring the grantee to secure a CPCN or appropriate permits from the NTC and providing that the grantee shall not use any frequency without NTC authorization. Applied to show that NOW Telecom's own franchise recognizes NTC regulatory authority over frequency assignment.

• Section 5(a), Republic Act No. 7925 (Public Telecommunications Policy Act of the Philippines) — Gives the NTC the authority and responsibility to allocate and assign radio frequencies and facilitate the entry of qualified service providers through administrative process. Applied to establish the NTC's statutory mandate in promulgating the subject Circular.

• Section 4(c), Republic Act No. 7925 — Provides that the NTC shall determine who is the "best qualified" service provider and who "can efficiently and effectively meet public demand." Applied to characterize the frequency assignment process as an exercise of quasi-judicial power.

• Section 2(e), Republic Act No. 11659 — Defines "critical infrastructure" to include telecommunications. Applied to support the classification of telecommunications as a national government infrastructure under RA 8975.

• Rule 58, Section 3, Rules of Court — Provides the grounds for the grant of preliminary injunction. Applied to test whether NOW Telecom established the requisites for injunctive relief.

Gesmundo, C.J. (Chairperson), Hernando, Rosario, and Marquez, JJ., concurred.