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Significant VOIP Ruling

March 7, 2006

Businessworld reports that PLDT lost its Supreme Court case where it tried to float the idea that so-called “International Simple Resale” (ISR) constituted the crime of “theft” of telephone calls and/or PLDT’s business. 

This is a significant blow to PLDT’s efforts to stop third parties from routing calls over the Internet into its local exchanges.  In simple terms, this means the ability to have someone abroad place a call that is sent over the Internet but is received on an ordinary telephone in the Philippines.  Since the Internet calls don’t go through PLDT’s international circuits, they’re much cheaper for the caller in the foreign countries. 

While this may very well give rise to a civil action by PLDT, this was deemed to be an insufficient disincentive to engage in this activity.   Money  damages against people without money is no remedy. Those folks are “judgment proof.”  Which is why PLDT has to resort to the criminal proceedings.  Unfortunately, there’s nothing in the telecom laws which penalizes the act of by-passing PLDT’s international circuits or routing Internet calls to PLDT’s local exchanges.  So,  they’ve tried to peddle the legal theory that this activity constitutes “theft” of telephone calls and/or its business.  They’ve filed cases accordingly and for a time, enjoyed some success including a Court of Appeals decision which ruled in their favor.  The Court of Appeals held that if electricity can be the subject of theft (citing some pretty ancient ruling), then so can “telephone calls.”

 The Supreme Court decision is a crushing defeat for PLDT since it ruled that telephone calls are not the property of PLDT, but to the callers themselves.  Moreover, the Court pointed out that Congress could not have contemplated the “theft” of telephone calls because they didn’t exist when the Revised Penal Code was passed in the 1930’s.

 

UPDATE:  Read the decision on the Supreme Court site by clicking here.

Posted by JJ Disini at 8:24 am | permalink

Previous Comments

I wonder how this ruling will impact the criminal cases filed by Globe Telecom detailed here. Seems directly relevant to me.

Posted by jim at March 9, 2006, 5:53 am

It seems RA8484 still puts VoIP is truly a gray area. It can just as well be argued that data, rather than voice, was transmitted across international boundaries. Since there are no laws that prohibit the use of devices that convert data to voice, and the accused pays for their local PLDT lines, isn't proving any violations of RA8484 a bit tricky?

Posted by Jim at March 10, 2006, 3:02 am

really cant blame the telcos…just imagine an operator with only 1 line operating only 8 hours for a month at $0.10 a minute, a forex of 50.00, do the math, that's about PhP 72,000!!!you can get a gateway for less that 50k, telephone/DSL line for less than a thousand each…ROI within the first month of operation…not bad!

Posted by Rene S Aure at April 17, 2006, 11:45 am

Looks like they are taking a new approach. From the Philippine Star:

"The Philippine National Police-Criminal Investigation and Detection Group has conducted a sweep of international simple resale (ISR)/toll bypass operators in Quezon City and Malabon, stopping illegal operations of individuals and companies which have robbed telecommunication companies of millions in revenue.

An ISR is an illegal operation that entitles subscribed lines to local telecommunication providers to deliver outbound and inbound international calls. This is a violation of Republic Act 7925 and other related laws, where it is stated 'only entities which will provide local exchange services and can demonstrably show technical and financial capability to install and operate an international gateway facility shall be allowed to operate as an international carrier.'"

Posted by ral at October 12, 2006, 6:18 pm

ISR - for me this is the practice of terminating calls to Philippines via VoIP for foreign telco carriers like AT&T, Orange, Sauditel and others.

but if you are terminating call to Philippines for VoIP originated calls from Vonage, Yahoo Voice, Net2phone and others should be treated a different case.

VoIP termination for plain VoIP originating calls, is this a telco grade service? i think its not …

Posted by arnold at October 30, 2006, 1:56 am

regarding the issue that telephone calls are the property of the callers, i dont subscribe to that idea. If the call belongs to the caller then the caller can say where he wants the calls to be routed and can even dictate how good the quality of the call should be made. however, that's not the case. PLDT and all the local telcos can route the call to the moon and send it back to the destined called party wihout the caller even knowing it. Telcos can multiplexed, decode, encode, compressed, packetized the call for all they care as long as it can be converted to sound for the called party to understand what the other end is saying. Calls once passed through the telcos network are network owned and calls are measured in minutes and minutes are the gold mine of telcos.

Posted by renesaure at December 7, 2006, 10:35 am

renesaure, looks like you dont get the point “telephone calls are the property of the callers”.

Means, PLDT should not care how people should place and how they place telephone calls, I could place a call through skype or through vonage, or through my own voip setup, and they shouldn’t care.

This is the same thing compared to the choice of buying electricity from meralco or just generating my own through wind turbine, or using Solar Energy, I have my own freedom where to get my electricity, because it is the resources is there for my own use, and they should not care.

Got the POINT?

Posted by Monty at December 21, 2006, 6:52 am

renesaure, looks like you dont get the point “telephone calls are the property of the callers”.

Means, PLDT should not care how people should place and how they place telephone calls, I could place a call through skype or through vonage, or through my own voip setup, and they shouldn’t care.

This is the same thing compared to the choice of buying electricity from meralco or just generating my own through wind turbine, or using Solar Energy, I have my own freedom where to get my electricity, because the resources is there for my own use, and they should not care.

Got the POINT?

Posted by Monty at December 21, 2006, 6:54 am

monty wrote

“Means, PLDT should not care how people should place and how they place telephone calls, I could place a call through skype or through vonage, or through my own voip setup, and they shouldn’t care”

pldt or any telcos are very strict when it comes to where and how calls are routed to their networks…it’s covered by an interconnection agreement…if the call comes from a source not covered by an interconnection agreement, telcos will not permit that call to pass through their network…if you’re using skype or vonage, if there are no interconnection agreement between skype and vonage, the telcos will block the calls…remember that incoming calls are the goldmine of every telcos…that’s one reason why i still subscribe to the idea that calls are property of the telephone companies…telcos are losing money because of these illegal operators stealing calls…these illegal operators do not pay access charge and taxes…

Posted by renesaure at January 12, 2007, 4:02 pm

Hi Atty JJ,

We met at iBlog5 and told me about the reversal of the SC decision. Can we have more details about it? Where can I get a copy of the decision? Is it final now?

Thank you.

EdZee

Posted by EdZee at September 5, 2009, 11:12 am

“Therefore, the business of providing telecommunication and the telephone service are personal property under Article 308 of the Revised Penal Code, and the act of engaging in ISR is an act of “subtraction” penalized under said article”

http://sc.judiciary.gov.ph/jurisprudence/2009/jan2009/155076.htm

Posted by renesaure at October 5, 2009, 3:03 pm

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