SECOND DIVISION

[G.R. No. 161140. January 31, 2007.]

BAYAN TELECOMMUNICATIONS INC. (Formerly International

Communications Corporation) , petitioner, vs . REPUBLIC OF THE
PHILIPPINES and NATIONAL TELECOMMUNICATIONS
COMMISSION , respondents.

RESOLUTION

QUISUMBING , J : p

This petition for review assails (a) the Decision 1 dated September 25, 2003 of
the Court of Appeals in CA-G.R. CV No. 74283, which a rmed the Order 2 dated
October 12, 2000 of the Regional Trial Court (RTC) of Pasig City, Branch 71, dismissing
SCA No. 1962 for declaratory relief; and (b) the Court of Appeals' Resolution 3 dated
December 5, 2003, which denied the motion for reconsideration.
The case stemmed from the petition for declaratory relief led before the RTC of
Pasig City, by petitioner Bayan Telecommunications Inc., against respondents Republic
of the Philippines and National Telecommunications Commission (NTC). Petitioner
speci cally sought the suspension of the requirement, under Section 21 of Republic Act
No. 7925, 4 of a public offering of 30% of the aggregate common stocks of
telecommunication entities with regulated types of services within ve years from the
effectivity of the Act or the entity's rst start of commercial operations, whichever
comes later. Petitioner claimed that it was impossible for it to make a bona de public
offering at that time because its nancial condition, the Philippine economy, and the
stock market were not conducive for a successful public offering. It also claimed that
impossibility of performance was an implied exception to the abovecited provision of
Rep. Act No. 7925.
The Solicitor General moved for the dismissal of the petition for failure to state a
cause of action. The Solicitor General maintained that the provisions of Section 21 5 of
Rep. Act No. 7925 are clear and free of any ambiguity, and that petitioner failed to
exhaust administrative remedies as it did not rst ask for an exemption from the
application of said provision.
On October 12, 2000, the trial court dismissed the petition for failure to state a
cause of action. It ruled as follows:
WHEREFORE, in view of the foregoing, the Motion to Dismiss is hereby
GRANTED. The case is DISMISSED as the petition states no cause of action,
without costs.
SO ORDERED. 6

Petitioner sought reconsideration, but it was denied. Petitioner then elevated the
case to the Court of Appeals.
On September 25, 2003, the appellate court a rmed the trial court's ruling. It
held that the elements of justiciable controversy and ripeness for judicial determination
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 were absent as there was no showing that petitioner asked for an exemption from or
deferment of compliance with the requirement of Section 21, from the NTC, and was
refused. The dispositive portion of the Court of Appeals' decision reads:
WHEREFORE, premises considered, the present appeal is hereby
DISMISSED and the appealed Order dated October 12, 2000 of the court a quo in
SCA No. 1962 is hereby AFFIRMED and UPHELD.
With costs against the petitioner-appellant.

SO ORDERED. 7

Petitioner now comes before us raising the following issues:

1. Whether or not there is ambiguity in the provisions of Section 21 of R.A.
7925 that would require the remedy of a declaratory relief?
2. Whether or not there is a justiciable controversy ripe for judicial
determination?
3. Whether or not the matters relating to a [bona de] public offering by
Telecommunication Entities are within the regulatory power or authority of
the National Telecommunications Commission (NTC)?

4. Whether or not the petitioner, which is not in a position to make a [bona

fide] public offering due to the negative condition of the economy, the
negative interest of the investing public in the stock market and the
condition of the company, is still bound by the provisions under section 21
of the Telecommunications Law. . . 8

Simply stated, we are asked to resolve: (1) Whether there is an ambiguity in the
cited provision of Section 21, Rep. Act No. 7925 which justi es an action for
declaratory relief. And, also whether there is a justiciable controversy ripe for judicial
determination. (2) If so, is petitioner excused from complying with Section 21 of Rep.
Act No. 7925?
Petitioner contends that there is a justiciable controversy ripe for judicial
determination as it faces a possible sanction from the NTC for its inability to comply
with the mandate of Rep. Act No. 7925. It claims that the present case falls within the
exceptions to the general rule of exhaustion of administrative remedies, since there is
no administrative review provided by law as the NTC does not have the power to decide
the validity of the law and the questions involved are essentially judicial.
Petitioner contends that applying blindly the literal import of Section 21 would
lead to absurd and destructive results because the huge amount needed to undertake a
public offering could only bring more losses to the corporation in case it fails to attract
the investing public due to its unattractive nancial condition. It maintains that
impossibility or impracticability of compliance excuses it from complying with said
provision.
Respondents counter that Section 21 is clear and unambiguous, hence, there is
no need for judicial interpretation. They maintain that petitioner's claim of impossibility
or impracticability of compliance is purely speculative, adding that there are a good
number of publicly listed telecommunication companies. Besides, respondents argue,
Section 21 does not provide for any exception.
Respondents state, however, that there were yet no implementing rules and
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 guidelines by the NTC or any administrative agency to carry into effect the requirement
imposed by Section 21 of Rep. Act No. 7925. Hence, according to respondents,
petitioner's apprehension of an administrative sanction was merely conjectural and
anticipatory. Citing Garcia v. Executive Secretary , 9 they argue that under the
circumstances, there is no justiciable controversy ripe for judicial determination.
Respondents also contend that courts do not have the power to order the suspension
of the application of a law or its provision especially where there is no constitutional
challenge to such legal provision. They assert that the NTC has the power and authority
to implement Rep. Act No. 7925, hence they aver that the issue of suspension or
deferment of the initial public offering for telecommunication companies is best left to
its sound judgment.
After seriously considering the submission of the parties, we agree that
respondents' contentions are valid while petitioner's plea lacks merit.
Section 1, Rule 63 of the Rules of Court reads:
Any person interested under a deed, will, contract or other written
instrument, or whose rights are affected by a statute, executive order or regulation,
ordinance, or any other governmental regulation may, before breach or violation
thereof, bring an action in the appropriate Regional Trial Court to determine any
question of construction or validity arising, and for a declaration of his rights or
duties, thereunder.

xxx xxx xxx

For such an action for declaratory relief before a trial court to prosper, it must be
shown that (a) there is a justiciable controversy, (b) the controversy is between persons
whose interests are adverse, (c) the party seeking the relief has a legal interest in the
controversy, and (d) the issue invoked is ripe for judicial determination. 1 0 Respondents
contest the presence of the rst and last requisites insofar as petitioner's case is
concerned.
A justiciable controversy is a de nite and concrete dispute touching on the legal
relations of parties having adverse legal interests, which may be resolved by a court of
law through the application of a law. 1 1 In the case at bar, petitioner fears the risk of
possible sanctions. However, a mere apprehension of an administrative sanction does
not give rise to a justiciable controversy. 1 2 Rep. Act No. 7925 does not provide for a
penalty for noncompliance with Section 21, and as correctly pointed out by the Solicitor
General, there are yet no implementing rules or guidelines to carry into effect the
requirement imposed by the said provision. Whatever sanctions petitioner fears are
merely hypothetical. DISEaC

An issue is ripe for judicial determination when litigation is inevitable, 1 3 or when

administrative remedies have been exhausted. 1 4 There is no showing of either in the
present case. Instead, petitioner asserts that this case falls within the exceptions to the
rule on exhaustion of administrative remedies, speci cally when there is no
administrative review provided by law or when the questions involved are essentially
judicial. To our mind, petitioner should have rst raised its concerns with the NTC, the
agency authorized to implement Rep. Act No. 7925. Only after a categorical denial of its
claim of exemption from or deferment of compliance with Section 21 can petitioner
proceed to court. As it is now, we agree with the trial and appellate courts that
petitioner has no cause of action.
Observance of the mandate regarding exhaustion of administrative remedies is a
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 sound practice and policy. The doctrine insures an orderly procedure which favors a
preliminary sifting process and withholds judicial interference until administrative
process would have been allowed to duly run its course. 1 5 The underlying principle of
the rule rests on the presumption that the administrative agency, if afforded a complete
chance to pass upon the matter, will decide correctly. 1 6
Considering that the requirements of an action for declaratory relief have not
been met, the trial court properly dismissed the case for lack of cause of action. The
appellate court did not err in a rming said dismissal. At this point, we shall no longer
discuss the second issue, involving excuse from compliance with Section 21 of Rep.
Act No. 7925, for it will not serve any practical purpose in the resolution of this petition.

WHEREFORE, the instant petition is DE NI E D for lack of merit. The Decision

dated September 25, 2003 and Resolution dated December 5, 2003 of the Court of
Appeals in CA-G.R. CV No. 74283 are hereby AFFIRMED . Costs against petitioner.
SO ORDERED. DEHaTC

Carpio, Carpio-Morales, Tinga and Velasco, Jr., JJ., concur.

Footnotes
1. Rollo, pp. 97-106. Penned by Associate Justice Martin S. Villarama, Jr., with Associate
Justices Mario L. Guariña III and Jose C. Reyes, Jr. concurring.
2. Id. at 47-49.
3. Id. at 115.
4. AN ACT TO PROMOTE AND GOVERN THE DEVELOPMENT OF PHILIPPINE
TELECOMMUNICATIONS AND THE DELIVERY OF PUBLIC TELECOMMUNICATIONS
SERVICES. (Promulgated on March 1, 1995 and became effective on March 23, 1995.)
5. SEC. 21. Public Ownership. — In compliance with the Constitutional mandate to
democratize ownership of public utilities, all telecommunications entities with regulated
types of services shall make a bona fide public offering through the stock exchanges of
at least thirty percent (30%) of its aggregate common stocks within a period of five (5)
years from the effectivity of this Act or the entity's first start of commercial operations,
whichever date is later. The public offering shall comply with the rules and regulations of
the Securities and Exchange Commission.
6. Rollo, p. 49.
7. Id. at 106.
8. Id. at 14-15.
9. G.R. No. 100883, December 2, 1991, 204 SCRA 516.
10. Office of the Ombudsman v. Ibay, G.R. No. 137538, September 3, 2001, 364 SCRA 281,
286. TSIDEa

11. Cutaran v. Department of Environment and Natural Resources, G.R. No. 134958,
January 31, 2001, 350 SCRA 697, 704-705.

12. Id. at 705; Guingona, Jr. v. Court of Appeals, G.R. No. 125532, July 10, 1998, 292 SCRA
402, 416.
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 13. Office of the Ombudsman v. Ibay, supra.
14. See Corsiga v. Defensor, G.R. No. 139302, October 28, 2002, 391 SCRA 267, 276.
15. Garcia v. Court of Appeals, G.R. No. 100579, June 6, 2001, 358 SCRA 416, 432.
16. Carale v. Abarintos, G.R. No. 120704, March 3, 1997, 269 SCRA 132, 141, citing De los
Santos v. Limbaga, No. L-15976, January 31, 1962, 4 SCRA 224, 226.

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