Appeals court stops text refund order vs Digitel

MANILA, Philippines - The Court of Appeals (CA) stopped the National Telecommunications Commission (NTC) yesterday from implementing its order for telecommunications companies to refund alleged excessive charges on short messaging system (SMS) or text messages and to cut rates.

Smart Communications Inc., Globe Telecom Inc. and Digitel Philippines Inc. had filed separate petitions before the CA questioning NTC’s decision in November 2012 directing them to reduce their regular retail price for SMS to other networks to not more than P0.80 per SMS from P1, and reimburse their subscribers the excess charge of P0.20 per off-net SMS from effectivity of NTC Memorandum Circular (MC) No. 02-10-2011 in December 2011. Off-net SMS refers to messages transmitted across different networks.

The appellate court first acted on the case of Digitel, which operates Sun Cellular.

Through a 60-day temporary restraining order (TRO), the sixth division of the appellate court stopped the NTC from implementing its rulings denying the appeal of Digitel against the implementation of the circular.

Digitel was also asked to post a cash bond or surety bond of P500,000.

“To our minds, justice would be better served if the implementation of the NTC decision is restrained at this stage of the proceeding, especially that those who recently intervened in the case had already moved for the issuance of a writ of execution,” read the order penned by Associate Justice Pricilla Baltazar-Padilla.

“To prevent any irremediable injury that petitioner may sustain in view of the enforcement of the impugned decision, it is prudent to preserve the status quo, pending determination of the propriety of the issuance of the said judgment,” it added.

The CA said a TRO on the enforcement of the refund is necessary as the recovery of the amounts to be paid by Digitel in favor of subscribers might be impossible in the event that such order is nullified.

“We agree with petitioner that there is no means for it to ascertain the existence of the subscribers and the identities of the actual users of the mobile identification numbers as may be found in its system. In addition, most of its subscribers are prepaid SIM card users,” the CA noted.

Apart from the TRO, the court also directed the NTC to show cause why a writ of preliminary injunction should not be issued in favor of Digitel.

Other divisions of the CA have yet to act on similar petitions filed by Smart and Globe against the NTC orders on their respective cases.

In its ruling, the NTC declared that Digitel violated MC No. 02-10-2011, which required the telecom firm as well as Globe and Smart to reduce their interconnection charge to P0.15 per off-net SMS from the then prevailing P0.35.

The NTC said it found that Digitel did not lower its regular retail prices for SMS to other networks.

However, in its petition for TRO or a writ of preliminary injunction, Digitel argued that that NTC order is “patently illegal and utterly without factual and legal basis.”

It claimed that its enforcement would result in great and irreparable injury to the firm.

The petitioner pointed out that it complied with the NTC directive that it communicate with Globe and Smart to reduce interconnection charges from P0.35 to P0.15.

It also argued that the interconnection rate is not the only component of the retail rate of SMS and that there is nothing in the circular that requires the reduction of the retail prices of SMS.

Digitel also noted that the NTC decision would force the company to make individual computations of every amount due per subscriber based on the number of regular SMS messages sent to other networks starting Dec. 1, 2011 up to present.

Digitel said the NTC decision would also require the company to determine who among its subscribers availed of promos or bucket rates – an undertaking that is logistically and technically difficult.