SC upholds ruling vs P17-billion telco SMS refund order

MANILA, Philippines – The Supreme Court has upheld a Court of Appeals ruling that blocked the National Telecommunications Commission (NTC) from enforcing its 2012 order for telecommunications firms to refund subscribers more than P17 billion in alleged excessive text messaging charges.

The CA had stopped NTC’s November 20, 2012 and May 7, 2014 orders, which had required Globe Telecom, Smart Communications and Digitel Mobile Philippines to reduce SMS interconnection rates from P1 to a maximum of P0.80 per text. The directive stemmed from NTC Memorandum Circular No. 02-10-2011, issued in October 2011 and known as the Interconnection Circular.

The NTC had also ordered a refund of P0.20 per off-net text overcharged from the circular’s effectivity, and set interconnection fees between networks at P0.15 per message, down from P0.35, citing lower costs, stronger competition, and more affordable SMS rates.

The appellate court, however, ruled the refund directive had no legal basis and was issued without due process.

The dispute stemmed from complaints received by the NTC’s One-Stop Public Assistance Center (QSPAC) from December 5 to 9, 2011, alleging that the firms continued charging P1 per off-net text despite the circular. The NTC issued show-cause orders requiring the companies to explain why they did not reduce SMS rates by at least P0.20, saying this was a consequence of lowering interconnection charges from P0.35 to P0.15.

On November 20, 2012, the NTC ruled against the firms and ordered lower SMS retail rates and refunds.

The case was elevated to the SC by former Bayan Muna representatives Carlos Zarate and Neri Colmenares, along with the NTC, which separately sought to overturn the CA rulings issued in 2016 and 2017. The SC’s 1st Division dismissed the petitions in a 20-page decision.

The High Court said the NTC circular did not require a cut in SMS retail rates, only a reduction in interconnection charges for off-net texts from P0.35 to P0.15.

“In this case, the records show that respondent-PTEs have reduced their interconnection rates for off-net SMS from P0.35 to P 0.15, and they have made the corresponding amendment to their respective interconnection agreements to effect such reduction prior to December 1, 2011,” read part of the ruling.

It also rejected Bayan Muna’s claim that the NTC’s action was merely an interpretation of the circular that should be given weight, saying the text of the order did not support a retail rate reduction.

Read part of the ruling: “The Court cannot judicially supply such omission in the circular even if it was the intention of the NTC. The Court is not authorized to insert into the circular what should have been in it, or to supply what the NTC would have supplied if its attention had been called to the omission.”

The SC also threw out arguments that lower interconnection charges should automatically translate to lower retail SMS prices, noting the petitioners failed to prove any direct link between the two.

“Considering all the foregoing, it is clear that the NTC cannot order the reduction of the SMS retail rates based on the Interconnection Circular as it does not direct such reduction,” the SC stated. “Necessarily, respondent-PTEs cannot be held liable or be penalized for violation of the circular when they did not reduce their SMS retail rates despite the issuance of the Interconnection Circular.” – Rappler.com