US court rules out jurisdiction over RP telecom firms

Efforts by the US government to nail down Philippine telecommunications companies (telcos) for alleged anti-trust or discriminatory business practices suffered a major setback after the US District Court of Hawaii ruled that US courts have no jurisdiction over Philippine telcos that do not operate in the US on a continuous basis like Globe Telecom.

Judge David Alan Ezra of the district court of Hawaii upheld an earlier fact-finding recommendation of Judge Kobayashi granting Globe’s motion to quash a subpoena duces tecum served upon the company by the Honolulu jury to compel Globe to submit documents in connection with an investigation by the jury on the complaints for violation of US anti-trust laws by Philippine telcos filed by the US Department of Justice Anti-Trust Division.

Ezra affirmed Kobayashi’s findings on two grounds: First, US courts have no personal jurisdiction over Globe, being a non-resident company since its does not conduct continuous, systematic business activity in the US; and second, US courts have no specific jurisdiction because the act of Globe in increasing its call termination rates to 12 cents a minute for landline calls and to 16 centers a minute for mobile phone calls "is not specifically or intentionally directed against the forum of America."

Globe officials said that its US lawyers have yet to decide whether to ask for a dismissal of the Honolulu jury investigations, especially now that a US has ruled that it cannot acquire jurisdiction over a non-resident like Globe which is not doing business in the US. "Eventually, the hearings by the Honolulu jury will have to be dismissed for lack of jurdiction," an official pointed out.

It will be recalled that Philippine telcos led by Philippine Long Distance Telephone Co. (PLDT), Globe, Smart Communications, Bayantel, Digitel, and Subic Telecom unilaterally raised their call termination rates (the amount which US carriers have to pay terminating or landing calls from the US to the Philippines), from eight to 12 cents a minute for calls terminating to landlines in the Philippines and from 12 to 16 cents to calls terminating to mobile phones in February 2003.

However, US carriers led by AT&T and MCI WorldCom filed a complaint with the US Federal Communications Commission which ordered US telcos not to pay until the Philippine carriers roll back their rates. After a series of negotiations between US and Philippine carriers, the matter was finally put to rest and the FCC lifted its stop-payment order until the US DOJ Anti-Trust Division initiated an investigation for possible violations by Philippine carriers of US anti-trust laws.

The anti-trust case is currently being investigated by a Honolulu jury and as part of its investigations, the jury issued subpoenas to several Philippine companies, including Globe, for their officials to testify and for the companies to submit documents that could aid the jury in its inquiry.

Globe, however, filed a motion to quash the subpoena duces tecum (for the production of documents) issued against it by the Honolulu jury before the US courts, since the issue of jurisdiction is a question of law that must be raised before the proper forum, which is not the Honolulu jury but the regular US courts.

Globe senior vice-president Rodolfo Salalima said in an interview that while Ezra’s ruling can still be appealed by the US DOJ to a higher court, if the ruling is sustained, then the case in Hawaii will be dismissed because Ezra’s order is directed at the very case itself and says that US courts have no jurisdiction over Globe.

Salalima emphasized that Ezra’s ruling is well-anticipated. "Even before, I already believed that US courts have no jurisdiction over non-residents like Globe, more so because its activities are confined within Philippine territory," he said.