Philippine Global Communications, Inc. vs. Relova

A legislative franchise for international communications that authorizes the grantee to establish stations in places it selects with the approval of the Secretary, and that is construed by the enforcing agency as allowing branch stations for international record operations, permits the grantee to establish, maintain, and operate branch stations within the Philippines apart from its principal station; such branch stations do not constitute domestic service where the franchise refers to the destination of the message and not the manner of transmittal.

Philippine Global Communications, Inc., formerly RCA Communications, Inc., holds legislative franchise R.A. No. 4617, which grants the right and privilege of constructing, maintaining, and operating a communications system by radio, wire, satellites, and other means for the reception and transmission of messages between any point in the Philippines and points exterior thereto. Private respondents are telecommunications carriers whose interests are affected by the scope of that franchise. R.A. No. 4630 is identical to R.A. No. 4617 except as to the grantee, and the two statutes are in pari materia.

On May 10, 1976, Philippine Global Communications, Inc. filed with the Board of Communications, now the National Telecommunications Commission, an application for authority to establish a branch station in Cebu City for the purpose of rendering international telecommunication services from Cebu City to any point outside the Philippines where it was authorized to operate. Private respondents opposed the application. On March 24, 1977, while the application was pending, the BOC issued Memorandum Circular No. 77-13 designating the Metropolitan Manila area as the sole gateway, or point of entrance into or exit from, for communications in the Philippines, and defining what constitutes domestic record operations.

On January 16, 1979, the BOC granted petitioner provisional authority to establish a station in Cebu City subject to the condition that, as soon as domestic carriers upgraded their facilities, petitioner would cease its operation and interface with domestic carriers. On May 24, 1979, the BOC granted petitioner final authority to establish a branch or station in Cebu City and, subject to its prior approval, anywhere in the Philippines. In that decision, the BOC explained that although it had earlier taken the position in Memorandum Circular No. 77-13 that no international record carrier could establish stations outside the Metropolitan Manila Area, a review of the individual franchises and an earlier opinion of the Secretary of Justice convinced it that petitioner’s franchise allowed a branch station in Cebu City solely for international record operations, with Metropolitan Manila remaining the sole gateway and all messages received and transmitted in the course of an international record carrier operation coursed through that gateway. Respondents filed a joint motion for reconsideration of the May 24, 1979 decision.

On August 27, 1979, while the joint motion for reconsideration was pending, private respondents filed with the Court of First Instance of Manila, Branch XI, a petition for declaratory judgment regarding the proper construction of petitioner’s franchise, R.A. No. 4617. Petitioner moved to dismiss the petition, but the motion was denied. Petitioner assailed the order on the ground of lack of jurisdiction, but the SC sustained the lower court and held that the suit for declaratory relief fell within the competence of the Judiciary and did not require prior action by the administrative agency concerned under the concept of primary jurisdiction (G.R. No. L-52819, October 2, 1980, 100 SCRA 254). After the issues were joined, the parties at the pre-trial conference agreed to submit the case for decision on the basis of their respective pleadings and memoranda because the issues involved were legal.

• Jurisdiction: Petitioner assailed the order denying its motion to dismiss on the ground of lack of jurisdiction, but the SC sustained the lower court and held that the declaratory relief suit fell within the competence of the Judiciary and did not require prior action by the administrative agency under the concept of primary jurisdiction.
• Declaratory Judgment Procedure: Petitioner belatedly claimed in its Second Supplemental Memorandum that the declaratory judgment was improperly made because it was based on the pleadings alone, although the declaratory relief petition presented genuine issues of fact that required trial.

• Franchise Authority: Whether petitioner is authorized under its legislative franchise, R.A. No. 4617, to establish stations or substations in places or points outside Metropolitan Manila.
• Domestic Service: Whether the establishment of such stations or substations constitutes “domestic service” within the terms of petitioner’s legislative franchise.
• Declaratory Judgment Procedure: Whether the lower court erred in rendering the declaratory judgment on the pleadings alone despite petitioner’s belated claim that the declaratory relief petition presented genuine issues of fact requiring trial.

• Franchise Authority: Yes. R.A. No. 4617 authorizes petitioner to establish, maintain, and operate other stations or branches within the Philippines for its international communications operations apart from its principal Makati station; the franchise as a whole, especially Sections 3, 4(a), 6, and 9, allows stations in places selected by the grantee and approved by the Secretary.
• Domestic Service: No. Such stations or substations do not constitute “domestic service” within the franchise; the franchise refers to the destination of the message and not the manner of transmittal, and the BOC’s contemporaneous construction allowed branch stations for international record operations with Metro Manila remaining the sole gateway.
• Declaratory Judgment Procedure: No. The lower court could not be faulted for rendering judgment on the pleadings because the parties had agreed to submit the case for decision on the basis of their pleadings and memoranda.

• Franchise Authority: The SC began from the rule that courts must first apply the law and resort to construction only when application is impossible or inadequate, and that legislative intent must be gathered from the statute as a whole, not from detached words. Section 1 of R.A. No. 4617 grants petitioner the right and privilege of constructing, maintaining, and operating a communications system by radio, wire, satellites, and other means for the reception and transmission of messages between any point in the Philippines and points exterior thereto. The lower court read the word “any” in Section 1 as limiting petitioner to a single point and treated other stations as domestic service under Section 17. The SC rejected that isolated reading because Section 3 allows the grantee to establish stations in such places in the Philippines as it may select and the Secretary of Public Works and Communications may approve; Section 4(a) empowers the Secretary to allot frequencies and wave lengths and determine the stations to and from which they may be used; Section 6 reserves to the Government the right to take over and operate the said stations in time of war, insurrection, or domestic trouble; and Section 9 requires the grantee to hold the national, provincial, and municipal governments harmless from claims arising from the construction or operation of the stations. These provisions, read together, authorize petitioner to establish, maintain, and operate other stations or branches within the Philippines for its international communications operations apart from its principal Makati station. The SC also gave weight to the BOC’s May 24, 1979 decision, which construed the franchise as allowing a branch station in Cebu City solely for international record operations, with Metropolitan Manila remaining the sole gateway and all messages coursed through it, and to the Secretary of Justice’s opinion on the identical R.A. No. 4630.
• Domestic Service: The SC held that the establishment of branch stations for petitioner’s international record operations did not amount to “domestic service” under the franchise. It adopted the view in the Secretary of Justice’s June 17, 1954 Opinion No. 146, rendered on the similar clause in Act No. 3495 as amended by Act No. 3692 and R.A. No. 4630, that the franchise has reference to the destination of the message and not to the manner of transmittal, whether sent directly or through relays. The reservation in favor of the Philippine Government of all wireless communications between points or stations within the Philippine Islands was intended to refer only to domestic communications. No extra fees or tolls could be collected for transmittal of messages from a relay station to the principal station in Manila, because doing so would make it domestic service and bring it into competition with domestic radio and telegraph service. The Undersecretary of Justice reaffirmed this opinion on Nov. 28, 1973, and R.A. Nos. 4630 and 4617 are in pari materia and must be construed together. The NTC’s Memorandum Circular No. 08-8-83, issued Oct. 25, 1983, likewise confirmed that existing public offices of International Record Carriers were duly authorized by their respective legislative franchises, while Metropolitan Manila remained the gateway.
• Declaratory Judgment Procedure: The SC rejected petitioner’s belated claim that the declaratory judgment was improperly rendered on the pleadings alone. The parties had agreed at pre-trial to submit the case for decision on the basis of their respective pleadings and memoranda because the issues involved were legal, so the lower court could not be faulted for rendering judgment accordingly.

• Contemporaneous Construction — The interpretation placed upon a statute by the executive officers charged with its enforcement is entitled to great respect and should ordinarily control the courts unless clearly erroneous. The SC applied this to the BOC’s May 24, 1979 decision and the Secretary of Justice’s opinion on the identical R.A. No. 4630, both of which read the franchise as allowing branch stations for international record operations.
• Statutes in Pari Materia — Statutes are in pari materia when they relate to the same person or thing, or to the same class of persons or things, or have the same purpose or object; they should be construed together. The SC treated R.A. No. 4617 and R.A. No. 4630 as in pari materia because they are identical except as to the grantee, and used the Justice Secretary’s opinion on R.A. No. 4630 to construe R.A. No. 4617.
• Legislative Intent from the Statute as a Whole — Particular words, clauses, and phrases should not be studied as detached and isolated expressions; the whole statute and every part must be considered to fix the meaning of any part and to produce a harmonious whole. The SC applied this by reading Sections 3, 4(a), 6, and 9 of R.A. No. 4617 with Section 1, rather than isolating the word “any.”
• Destination, Not Manner of Transmittal — A franchise for international communications refers to the destination of the message and not to the manner of transmittal, whether directly or through relays; relay stations used for onward international transmission do not become domestic service if no extra fees or tolls are collected for the relay to the principal station. The SC applied this to allow petitioner’s Cebu branch station for international record operations, with Metropolitan Manila remaining the sole gateway.
• Primary Jurisdiction — The prior SC ruling in G.R. No. L-52819 held that a suit for declaratory relief on the construction of the franchise fell within the competence of the Judiciary and did not require prior action by the administrative agency under the concept of primary jurisdiction. The SC in this case proceeded to decide the merits after that ruling.

• “the first and fundamental duty of courts, in our judgment, is to apply the law. Construction and interpretation come only after it has been demonstrated that application is impossible or inadequate without them.” — The SC reiterated that courts must apply the law first and interpret only when application is impossible or inadequate, framing its approach to the franchise.
• “The particular words, clauses and phrases should not be studied as detached and isolated expressions, but the whole and every part of the statute must be considered in fixing the meaning of any of its parts and in order to produce harmonious whole.” — The SC used this to explain why it read the franchise as a whole rather than isolating the word “any” in Section 1.
• “I take the view that the franchise has reference to the destination of the message and not to the manner of transmittal. Not as to whether it should be sent to the point of destination directly or through relays.” — Adopting the Secretary of Justice’s opinion on the identical R.A. No. 4630, the SC held that relay stations for international messages did not convert the service into domestic service.
• “The last-quoted provision confirms that the existing public offices of International Record Carriers were duly authorized by their respective legislative franchises.” — The SC cited the NTC circular as confirming that existing public offices of International Record Carriers were authorized by their franchises.

• Lizarraga Hermanos vs. Yap Tico, 24 Phil. 504, 513 — Relied on for the rule that the first and fundamental duty of courts is to apply the law, with construction and interpretation coming only when application is impossible or inadequate.
• Republic Flour Mills, Inc. vs. Commissioner of Customs, 39 SCRA 269 — Cited with Lizarraga for the same rule on application before interpretation.
• Aisporna vs. Court of Appeals, 113 SCRA 459, 466 — Relied on for the rule that legislative intent must be ascertained from the statute as a whole, not from detached words and phrases.
• In re Allen, 2 Phil. 630 — Cited for the doctrine of contemporaneous construction by executive officers charged with enforcing a statute.
• Molina vs. Rafferty, 37 Phil. 545 — Cited for the rule that courts respect the contemporaneous construction placed upon a statute by executive officers unless clearly erroneous.
• Philippine Association of Free Labor Unions (PAFLU) vs. Bureau of Labor Relations, 72 SCRA 396, 402 — Cited as reiterating the doctrine of contemporaneous construction.
• City of Naga vs. Agna, 71 SCRA 176, 184 — Relied on for the rule that statutes in pari materia should be construed together.

• Section 1, Republic Act No. 4617 — Grants the grantee the right and privilege of constructing, maintaining, and operating a communications system by radio, wire, satellites, and other means for the reception and transmission of messages between any point in the Philippines and points exterior thereto, including airplanes, airships, or vessels even within the territorial limits. The SC read it with the rest of the franchise rather than isolating the word “any.”
• Section 3, Republic Act No. 4617 — Provides that the grantee may establish stations in such places in the Philippines as the grantee may select and the Secretary of Public Works and Communications may approve. The SC relied on this to show authority for branch stations.
• Section 4(a), Republic Act No. 4617 — Empowers the Secretary of Public Works and Communications to allot frequencies and wave lengths, determine the stations to and from which each frequency and wave length may be used, and issue a license for such use. The SC relied on this as part of the franchise’s station scheme.
• Section 6, Republic Act No. 4617 — Reserves to the Government the special right, in time of war, insurrection, or domestic trouble, to take over and operate the said stations. The SC cited this as another provision contemplating stations of the grantee.
• Section 9, Republic Act No. 4617 — Requires the grantee to hold the national, provincial, and municipal governments harmless from claims, accounts, demands, or actions arising out of accidents or injuries caused by the construction or operation of the stations. The SC cited this as further showing that the franchise contemplated stations.
• Section 17, Republic Act No. 4617 — The lower court relied on it to hold that the establishment of stations outside the principal station constituted domestic communication service; the SC rejected that application because the branch stations were for international record operations.
• Republic Act No. 4630 — Identical to R.A. No. 4617 except as to the grantee; the SC treated the two as in pari materia and applied the Secretary of Justice’s opinion on R.A. No. 4630 to R.A. No. 4617.
• Memorandum Circular No. 08-8-83, National Telecommunications Commission — Adopted guidelines designating Metropolitan Manila as the international gateway; allowed International Record Carriers to continue owning, constructing, and expanding their own stations, inside plant, branches, and terminals within Metro Manila, and allowed customer terminals with marketing and technical support outside Metro Manila. The SC cited its last-quoted provision as confirming that existing public offices of International Record Carriers were duly authorized by their franchises.