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SPECIAL SECOND DIVISION

[G.R. NO. 135992 - January 31, 2006]

EASTERN TELECOMMUNICATIONS PHILIPPINES, INC. and TELECOMMUNICATIONS TECHNOLOGIES, INC., Petitioners, v. INTERNATIONAL COMMUNICATION CORPORATION, Respondent.

AMENDED DECISION

AUSTRIA-MARTINEZ, J.:

On July 23, 2004, the Court promulgated its Decision in the above-captioned case with the following dispositive portion:

WHEREFORE, the Petition for Review on Certiorari is PARTIALLY GRANTED. The Order of the National Telecommunications Commissions dated November 10, 1997 in NTC Case No. 96-195 is AFFIRMED with the following modifications:

Respondent International Communication Corporation, in accordance with Section 27 of NTC MC No. 11-9-93, is required to:

(1) Deposit in escrow in a reputable bank 20% of the investment required for the first two years of the implementation of the proposed project; andcralawlibrary

(2) Post a performance bond equivalent to 10% of the investment required for the first two years of the approved project but not to exceed P500 Million.

within such period to be determined by the National Telecommunications Commission.

No pronouncement as to costs.

SO ORDERED.¹

Respondent now seeks a partial reconsideration of the portion of the Court's decision requiring it to make a 20% escrow deposit and to post a 10% performance bond. Respondent claims that Section 27 of NTC MC No. 11-9-93, which required the foregoing amounts, pertains only to applications filed under Executive Order No. 109 (E.O. No. 109) and not to applications voluntarily filed. In its Manifestation in support of the motion for partial reconsideration, respondent attached a letter from Deputy Commissioner and Officer-in-Charge (OIC), Kathleen G. Heceta, of the National Telecommunications Commission (NTC), stating thus:

x x x

Please be informed that the escrow deposit and performance bond were required to public telecommunications entities to ensure that the mandated installation of local exchange lines are installed within three (3) years pursuant to EO 109 and RA 7925. Since your company has already complied with its obligation by the installation of more than 300,000 lines in Quezon City, Malabon City and Valenzuela City in the National Capital Region and Region V in early 1997, the escrow deposit and performance bond were not required in your subsequent authorizations.²

In a Resolution dated October 4, 2004, the Court required petitioners and the NTC to file their respective comments on the motion.³

Subsequently, in its Manifestation/Comment filed on January 11, 2005, the Office of the Solicitor General (OSG), in behalf of the NTC, likewise referred to the same letter of OIC Heceta and declared that it fully agrees with respondent that the escrow deposit and performance bond are not required in subsequent authorizations for additional/new areas outside its original roll-out obligation under the Service Area Scheme of E.O. No. 109.

Petitioners did not file any comment and it was only after the Court issued a show cause and compliance Resolution on October 19, 2005 that petitioners manifested in their Entry of Special Appearance, Manifestation and Compliance dated November 25, 2005 that they have no further comments on respondent's motion for partial reconsideration.⁴

The Court has observed in its Decision that Section 27 of NTC MC No. 11-9-93 is silent as to whether the posting of an escrow deposit and performance bond is a condition sine qua non for the grant of a provisional authority. The NTC, through the OSG, explicitly clarified, which was not disputed by petitioners, that the escrow deposit and performance bond are not required in subsequent authorizations for additional/new areas outside its original roll-out obligation under E.O. No. 109. The OSG agreed with respondent's stance that since the provisional authority in this case involves a voluntary application not covered by the original service areas created by the NTC under E.O. No. 109, then it is not subject to the posting of an escrow deposit and performance bond as required by E.O. No. 109, but only to the conditions provided in the provisional authority. Further, the OSG adapted the ratiocination of the Court of Appeals on this matter, i.e., respondent was not subjected to the foregoing escrow deposit and performance bond requirement because the landline obligation is already outside its original roll-out commitment under E.O. No. 109.⁵

The NTC, being the government agency entrusted with the regulation of activities coming under its special and technical forte, and possessing the necessary rule-making power to implement its objectives,⁶ is in the best position to interpret its own rules, regulations and guidelines. The Court has consistently yielded and accorded great respect to the interpretation by administrative agencies of their own rules unless there is an error of law, abuse of power, lack of jurisdiction or grave abuse of discretion clearly conflicting with the letter and spirit of the law.⁷

In City Government of Makati v. Civil Service Commission,⁸ the Court cited cases where the interpretation of a particular administrative agency of a certain rule was adhered to, viz.:

As properly noted, CSC was only interpreting its own rules on leave of absence and not a statutory provision in coming up with this uniform rule. Undoubtedly, the CSC like any other agency has the power to interpret its own rules and any phrase contained in them with its interpretation significantly becoming part of the rules themselves. As observed in West Texas Compress & Warehouse Co. v. Panhandle & S.F. Railing Co. -

x x x

This principle is not new to us. In Geukeko v. Araneta this Court upheld the interpretation of the Department of Agriculture and Commerce of its own rules of procedure in suspending the period of appeal even if such action was nowhere stated therein. We said -

x x x

x x x It must be remembered that Lands Administrative Order No. 6 is in the nature of procedural rules promulgated by the Secretary of Agriculture and Natural Resources pursuant to the power bestowed on said administrative agency to promulgate rules and regulations necessary for the proper discharge and management of the functions imposed by law upon said office. x x x x Recognizing the existence of such rule-making authority, what is the weight of an interpretation given by an administrative agency to its own rules or regulations? Authorities sustain the doctrine that the interpretation given to a rule or regulation by those charged with its execution is entitled to the greatest weight by the Court construing such rule or regulation, and such interpretation will be followed unless it appears to be clearly unreasonable or arbitrary (42 Am. Jur. 431). It has also been said that:

x x x

The same precept was enunciated in Bagatsing v. Committee on Privatization where we upheld the action of the Commission on Audit (COA) in validating the sale of Petron Corporation to Aramco Overseas Corporation on the basis of COA's interpretation of its own circular that set bidding and audit guidelines on the disposal of government assets'

The COA itself, the agency that adopted the rules on bidding procedure to be followed by government offices and corporations, had upheld the validity and legality of the questioned bidding. The interpretation of an agency of its own rules should be given more weight than the interpretation by that agency of the law it is merely tasked to administer (underscoring supplied).

Given the greater weight accorded to an agency's interpretation of its own rules than to its understanding of the statute it seeks to implement, we simply cannot set aside the former on the same grounds as we would overturn the latter. More specifically, in cases where the dispute concerns the interpretation by an agency of its own rules, we should apply only these standards: "Whether the delegation of power was valid; whether the regulation was within that delegation; and if so, whether it was a reasonable regulation under a due process test." An affirmative answer in each of these questions should caution us from discarding the agency's interpretation of its own rules. (Emphasis supplied)cralawlibrary

Thus, the Court holds that the interpretation of the NTC that Section 27 of NTC MC No. 11-9-93 regarding the escrow deposit and performance bond shall pertain only to a local exchange operator's original roll-out obligation under E.O. No. 109, and not to roll-out obligations made under subsequent or voluntary applications outside E.O. No. 109, should be sustained.

IN VIEW THEREOF, respondent's Motion for Partial Reconsideration is GRANTED. The Court's Decision dated July 23, 2004 is AMENDED, the dispositive portion of which should read as follows:

WHEREFORE, the Petition for Review on Certiorari is DENIED. The Order of the National Telecommunications Commission dated November 10, 1997 in NTC Case No. 96-195 is AFFIRMED.

thereby deleting the order requiring respondent to make a 20% escrow deposit and to post a 10% performance bond.

SO ORDERED.

Endnotes:

¹ Rollo, p. 312.

² Id., p. 327.

³ Id., p. 329.

⁴ Id., p. 355.

⁵ Id., pp. 339-340.

⁶ Section 11, Commonwealth Act No. 146, as amended; Section 15, Executive Order No. 546.

⁷ Melendres, Jr. v. COMELEC, 377 Phil. 275.

⁸ 426 Phil. 631, 646-649.