The first telephone lines installed in Davao arrived just as the Americans started taking over the various townships in the region. With telephony, there were telegraph lines that improved the communication channels between the town of Davao and the remote regions.
Established on November 28, 1928, Philippine Long Distance Telephone (PLDT) eventually became a giant in local communications following the passage of Act 3436 and its approval by American Governor-General Henry L. Stimson. The American company General Telephone & Electric Corporation (GTE), with four phone companies under it, was sold and became PLDT.
As part of its franchise requirements, PLDT was given a maximum of four years to implement its system so much so that by the 1930s the country was already linked by fixed-line network to the outside world through radio telephone services.
In 1931, prior to the Commonwealth era, an exchange was put up in Davao. The local link registered only thirty-five phones, which was a disappointment. Instead of using landlines, the patrons turned to messenger service in transacting business with the government. By October 1, 1938, from an initial of 175 patrons, phone subscription more than doubled in the first half of 1939 to 375, with PLDT charging PhP5 and PhP11 for homes and offices, respectively.
It was in 1963 when the city government of Davao decided to establish its own phone company, which it named Davao City Telephone System (DCTS), with the help of ITT Philippines, Inc., a subsidiary of an American communications outfit. This was made possible when the Davao City Council, on August 7, 1963 and December 27, 1963, passed Resolutions Nos. 664 and 2015, respectively, “authorizing the establishment and maintenance of a city-wide telephone system, owned, maintained and operated” by the city.
The following year, on February 26, 1964, the city signed a contract with ITT Philippines, Inc. “to install and deliver the telephone system” amounting to P3,587,000.00. Three months later, on May 29, 1964, the city released a downpayment of P717,000, hopeful the project would be finished in eighteen months or until November 29, 1966.
But PLDT opposed the telephone project by filing a prohibition and mandamus against the city and the Public Service Commission (PSC) on June 23, 1964 and sought to order the city from fulfilling its contract with ITT Philippines, Inc. and to force the PSC to require the city to “first obtain a certificate of public convenience and necessity.”
In response, the PSC, on July 15, 1964, filed its answer while the city submitted its response on August 11, 1964. For its part, the ITT Philippines, Inc. “filed a motion to intervene… and an answer in intervention on August 7, 1964.” The legal battle would eventually reach the Supreme Court as case G.R. No. L-23080, which was decided en banc on September 20, 1965.
The petitioner, meanwhile, responded to the answer in intervention on October 15, 1964 and twice applied for preliminary injunction but was denied. PLDT argued the installation of a telephone system would result in the illegal spending of public funds and prejudice its rights “as prior owner and operator since 1931 of a city-wide telephone system.”
Moreover, PLDT argued the city “has no power to establish and operate a telephone system” and must “first secure a certificate of public convenience and necessity” from the PSC.
In Resolution No. 644, the City Council held that “it will be to the advantage of the people and [city] government… if the automatic telephone system proposed… should be owned and operated by the City Government of Davao, not only because of its profitable nature, but because of the need of expanding it to a minimum of 3000 lines which is actually the immediate requirement in order to satisfy long standing requests for telephone connections.”
Moreover, it argued the project would “include… the establishment of microwave telephone system for the Districts of Calinan, Tugbok, Mintal, Daliao, Toril, Talomo, Panacan, Tibungco, Bunawan and Lasang and pave the way for better control of peace and order and emergencies arising from the occurrence of fire and epidemics.”
In rebuttal, PLDT said the “Davao City’s telephone system cannot be justified under general welfare clause provisions because said telephone system is commercial in nature and, therefore, not the proper subject of the exercise of police power,” adding the city’s “entry as another and new telephone operator in the area covered by petitioner’s franchise would violate its vested rights as prior operator.”
But the Supreme Court, in its decisions, said “A municipal corporation is not prevented from constructing and operating a competing plant, although a franchise had been granted a private company for a similar public utility, provided the franchise is not exclusive.”
The high tribunal, in responding to the issue of whether the city must first to secure a certificate of public convenience and necessity, cited the Public Service Act which exempts all government entities from the said requirement.
Section 13 (a) of the Act states: “That public service owned or operated by government entities or government-owned or controlled corporations shall be regulated by the [PSC] in the same way as privately-owned public services, but certificates of public convenience or certificates of public convenience and necessity shall not be required of such entities or corporations.”
PLDT lost the case but the DCTS, decades later, would close shop, overtaken by the developments obtaining the global telecommunications industry.
