Tegg, Irma Fe: Legal Dynamics on Telecommunication Issues


“Telecommunication” is a term coming from Greek which means “communication at a distance” through signals of varied nature coming from a transmitter to a receiver. In order to achieve effective communication, the choice of a proper means of transport for the signal has played (and still plays) a fundamental role.

In ancient times, the most common way of producing a signal would be through light (fires) and sound (drums and horns). However, those kinds of communications were insecure and certainly left room for improvement as they did not permit message encryption nor a fast transmission of information on a large scale.

The true ‘jump’ in terms of quality came with the advent of electricity. Electromagnetic energy, in fact, is able to transport information in an extremely fast way (ideally to the speed of light), in a way that previously had no equals in terms of costs reliability. Therefore, we may say that the starting point of all modern telecommunications was the invention of the electric cell by Alessandro Volta in 1800, and then subsequent inventions arise such as telegraphs and telephones. With the use of telegraphs and telephones, the need for a distributed and reliable communication network soon became evident. Routing issues were first solved b y means of human operators and circuit commutation. The PSTN (Public Switched Telephone Network) was born. However, this system didn’t guarantee the privacy and secrecy of conversations, and efforts towards the development of an automatic circuit commutation were made.

From the time the invention of the electric cell up to the innovation of the computers, cell phones, fax machines, etc., telecommunications emerged its development through the information technology. Telecommunications become the easiest and fastest way of communicating and reaching out people from every corners of the world, be it through e-mails, text messaging, phone calls, fax, and other sources of communications where the exchange of messages, data, documents, and even business transactions in a corporate world are at stake. Likewise, in cases of emergency, just a phone call away from your loved ones, teleconference in closing a business deal or having a business meeting where physical appearance of your business partners are impossible to get as they are out of the country or far from the area of the business meeting.

It has been achieved thus far, by way of telecommunications, inter-personal relationship has been developed, successful businesses sprout anywhere and everywhere, of course with the proper business management, that includes the use of telecommunications. and no one would say that telecommunications is not part of one’s life, from the start of the day up to the time you laid to rest, telecommunications played its role perfectly.

The Future of Communications

Public computer stations, or kiosks, will make accessing the Internet as easy as making a telephone call. To shoppers, it means being able to locate merchandise or place orders from anywhere, for nearly anything produced anywhere in the world. The Internet will bring entire libraries into the home, with full motion video and digital audio capabilities. Business for institutions which facilitate studies at home could replace having to drive to campus, and it will use texts and information administered over the Internet. Financial transactions will become easier and faster than ever before. Digital cash will allow the purchase of goods without giving a credit card number. 

There will be movies on demand and interactive TV in which the audience participates in shows they watch. Voters will be able to cast their ballots on-line from home or office. Virtual reality, providing lifelike simulations, will be used for training and instruction.

However, while telecommunication development is booming, there arise as well problems in relation to telecommunications. The widespread necessity of telecommunications and its innovative emergence come to a point where some human species take part in pestering the telecommunication lines, hindering the possibility of connecting to others thereby infiltrating someone’s privacy or worst, ruin the entire business transactions.

Issues on Telecommunication Development

It is an oft-cited fact that while developments in telecommunications are moving along in leaps and bounds throughout the world’s richer nations, some developing countries are lagging even farther behind. More than half of the people living in the developing world still do not have access to a simple voice telephone. Communications capabilities for those who lives in Europe, the Americas or the wealthy nation of the Pacific Rim take for granted everyday – telephone, fax, voicemail, e-mail, mobile cellular and paging – are a world away from the everyday lives of people living in the vast majority of countries around the world. In reality, the new communications revolution has touched only a very few nations, which have the networks, development capital and large user base necessary to support growth and deployment of new services.

In the Philippines, the National information Technology Council included in its agenda that by the first quarter of the 21st century, the Philippines would have a greater efficiency and productivity in communications among various sectors and would have been achieved through the modernization of the country’s telecommunications facilities and production tools.

In this modern age of technology, telecommunications systems have become so tightly merged with computer systems that it is difficult to know where one starts and the other finishes. The telephone set is highly computerized and allows computer to communicate across long distances.


One of the problems encountered in the telecommunication development is the phreaking. Phreaking is a slang term coined to describe the activity of a subculture of people who study, experiment with, or explore telecommunication systems; such as equipment and systems connected to public telephone networks. As telephone networks have become computerized, phreaking has become closely linked with computer hacking. This is sometimes called the H/P culture (with H standing for Hacking and P standing for Phreaking). The term “phreak” is a portmanteau of the words “phone” and “freak”, and may also refer to the use of various audio frequencies to manipulate a phone system. “Phreak”, “phreaker”, or “phone phreak” are names used for and by individuals who participate in phreaking. A large percentage of the phone Phreaks were blind. Since identities were usually masked, an exact percentage cannot be calculated. The phreaker takes delight in finding out how telephone systems work, and in manipulating the phone companies equipment and telephone lines. Sometimes, the aim is to get free phone calls, but the phreaker is mainly interested in understanding how the telecommunications network operates.

The hacker often takes advantage of phreaking techniques to make sure he remains anonymous and untraceable while he’s trying to break into high profile networks by using his laptop with a phreaked connection.

Toll Fraud

The 1984 AT&T break up gave rise to many small companies intent upon competing in the long distance market. These included the then-fledgling Sprint and MCI, both of whom had only recently entered the marketplace. At the time, there was no way to switch a phone line to have calls automatically carried by non-AT&T companies. Customers of these small long distance operations would be required to dial a local access number, enter their calling card number, and finally enter the area code and phone number they wish to call. Because of the relatively lengthy process for customers to complete a call, the companies kept the calling card numbers short – usually 6 or 7 digits. This opened up a huge vulnerability to phone phreaks with a computer.

6-digit calling card numbers only offer 1 million combinations. 7-digit numbers offer just 10 million. If a company had 10,000 customers, a person attempting to ‘guess” a card number would have a good chance of doing so correctly once every 100 tries for a 6-digit card and once every 1000 tries for a 7-digit card. While this is easy enough for people to do manually, computers made the task far easier. “Code hack” programs were developed for computers with modem. The modems would dial the long distance access number, enter a random calling card number (of the proper number of digits), and attempt to complete a call to a computer bulletin board system (BBS). If the computer connected successfully to the BBS, it proved that it had found a working card number, and it saved that number to disk. If it did not connect to the BBS in a specified amount of time (usually 30 or 60 seconds), it would hang up and try a different code. Utilizing this methodology, code hacking programs would turn up hundreds (or in some cases thousands) of working calling card numbers per day. These would subsequently be shared amongst fellow phreakers.

There was no way for these small phone companies to identify the culprits of these brute-force hacks. They had no access to local phone company records of calls into their access numbers, and even if they had access, obtaining such records would be prohibitively expensive and time-consuming. While there was some advancement in tracking down these code hackers in the early 1990s, the problem did not completely disappear until most long distance companies were able to offer standard 1 + dialing without the use of an access number.

In the Philippines, a case for theft of personal property through the use of telecommunication or telephone services was filed by the Philippine Long Distance Telephone Company (PLDT) against Baynet Co., Ltd., thus:

PLDT alleges that one of the alternative calling patterns that constitute network fraud and violate its network integrity is that which is known as International Simple Resale (ISR). ISR is a method of routing and completing international long distance calls using International Private Leased Lines (IPL), cables, antenna or air wave or frequency, which connect directly to the local or domestic exchange facilities of the terminating country (the country where the call is destined). The IPL is linked to switching equipment which is connected to a PLDT telephone line/number. In the process, the calls bypass the IGF found at the terminating country, or in some instances, even those from the originating country.

One such alternative calling service is that offered by Baynet Co., Ltd. (Baynet) which sells “Bay Super Orient Card” phone cards to people who call their friends and relatives in the Philippines. With said card, one is entitled to a 27-minute call to the Philippines for about ¥37.03 per minute. After dialing the ISR access number indicated in the phone card, the ISR operator requests the subscriber to give the PIN number also indicated in the phone card. Once the caller’s identity (as purchaser of the phone card) is confirmed, the ISR operator will then provide a Philippine local line to the requesting caller via the IPL. According to PLDT, calls made through the IPL never pass the toll center of IGF operators in the Philippines. Using the local line, the Baynet card user is able to place a call to any point in the Philippines, provided the local line is National Direct Dial (NDD) capable.

PLDT asserts that Baynet conducts its ISR activities by utilizing an IPL to course its incoming international long distance calls from Japan. The IPL is linked to switching equipment, which is then connected to PLDT telephone lines/numbers and equipment, with Baynet as subscriber. Through the use of the telephone lines and other auxiliary equipment, Baynet is able to connect an international long distance call from Japan to any part of the Philippines, and make it appear as a call originating from Metro Manila. Consequently, the operator of an ISR is able to evade payment of access, termination or bypass charges and accounting rates, as well as compliance with the regulatory requirements of the NTC. Thus, the ISR operator offers international telecommunication services at a lower rate, to the damage and prejudice of legitimate operators like PLDT.

PLDT pointed out that Baynet utilized the following equipment for its ISR activities: lines, cables, and antennas or equipment or device capable of transmitting air waves or frequency, such as an IPL and telephone lines and equipment; computers or any equipment or device capable of accepting information applying the prescribed process of the information and supplying the result of this process; modems or any equipment or device that enables a data terminal equipment such as computers to communicate with other data terminal equipment via a telephone line; multiplexers or any equipment or device that enables two or more signals from different sources to pass through a common cable or transmission line; switching equipment, or equipment or device capable of connecting telephone lines; and software, diskettes, tapes or equipment or device used for recording and storing information.


Another method of obtaining free phone calls involved the use of so-called “diverters”. Call forwarding was not an available feature for many business phone lines in the 1980s and early 1990s, so they were forced to buy equipment that could do the job manually between two pone lines. When the business would closed, they would program the call diverting equipment to answer all calls, pick up another phone line, call their answering service, and bridge the two lines together. This gave the appearance to the caller that they were directly forwarded to the company’s answering service. Unfortunately, the switching equipment would typically reset the line after the call had hang up and timed out back to dial tone, so the caller could simply wait after the answering service had disconnected, and would eventually get a usable dial tone from the second line. Phreakers recognized the opportunity thus provided, and they would spend hours manually dialing businesses after hours, attempting to identify faulty diverters. Once a phreaker had access to one of these lines, he could use it for one of many purposes. In addition to completing phone calls anywhere in the world at the business’ expense, they could also dial 1-900 phone sex/entertainment numbers, as well as use the phone line to harass their enemies without fear of being traced. Victimized small businesses were usually required to put the bill for the long distance calls, as it was their own private equipment (not phone company security flaws) that allowed such fraud to occur. By 1993, call forwarding was offered to nearly every business line subscriber making these diverters obsolete. As a result, hackers stopped searching for the few remaining ones, and this method of phreaking died.

Applicable Laws on Telecommunications

Article 308 of the Revised Penal Code defines theft as follows:

Art. 308. Who are liable for theft.– Theft is committed by any person who, with intent to gain but without violence, against or intimidation of persons nor force upon things, shall take personal property of another without the latter’s consent.

For one to be guilty of theft, the accused must have an intent to steal (animus furandi) personal property, meaning the intent to deprive another of his ownership/lawful possession of personal property which intent is apart from and concurrently with the general criminal intent which is an essential element of a felony of dolo (dolus malus).

An information or complaint for simple theft must allege the following elements: (a) the taking of personal property; (b) the said property belongs to another; (c) the taking be done with intent to gain; and (d) the taking be accomplished without the use of violence or intimidation of person/s or force upon things.

One is apt to conclude that “personal property” standing alone, covers both tangible and intangible properties and are subject of theft under the Revised Penal Code. But the words “Personal property” under the Revised Penal Code must be considered in tandem with the word “take” in the law. The statutory definition of “taking” and movable property indicates that, clearly, not all personal properties may be the proper subjects of theft. The general rule is that, only movable properties which have physical or material existence and susceptible of occupation by another are proper objects of theft.

According to Cuello Callon, in the context of the Penal Code, only those movable properties which can be taken and carried from the place they are found are proper subjects of theft. Intangible properties such as rights and ideas are not subject of theft because the same cannot be “taken” from the place it is found and is occupied or appropriated.

Thus, under Article 308 of the Revised Penal Code, the term personal property does not include “telecommunication or telephone services” or computer services for that matter. In the case of PLDT, it is to render local and international telecommunications services and such other services as authorized by the CPCA issued by the NTC. Even at common law, neither time nor services may be taken and occupied or appropriated. A service is generally not considered property and a theft of service would not, therefore, constitute theft since there can be no caption or asportation. Neither is the unauthorized use of the equipment and facilities of PLDT by the petitioner theft under the aforequoted provision of the Revised Penal Code.

If it was the intent of the Philippine Legislature, in 1930, to include services to be the subject of theft, it should have incorporated the same in Article 308 of the Revised Penal Code. The Legislature did not. In fact, the Revised Penal Code does not even contain a definition of services.

If taking of telecommunication services or the business of a person, is to be proscribed, it must be by special statute or an amendment of the Revised Penal Code. Several states in the United States, such as New York, New Jersey, California and Virginia, realized that their criminal statutes did not contain any provisions penalizing the theft of services and passed laws defining and penalizing theft of telephone and computer services. The Pennsylvania Criminal Statute now penalizes theft of services, thus:

(a) Acquisition of services. —

(1) A person is guilty of theft if he intentionally obtains services for himself or for another which he knows are available only for compensation, by deception or threat, by altering or tampering with the public utility meter or measuring device by which such services are delivered or by causing or permitting such altering or tampering, by making or maintaining any unauthorized connection, whether physically, electrically or inductively, to a distribution or transmission line, by attaching or maintaining the attachment of any unauthorized device to any cable, wire or other component of an electric, telephone or cable television system or to a television receiving set connected to a cable television system, by making or maintaining any unauthorized modification or alteration to any device installed by a cable television system, or by false token or other trick or artifice to avoid payment for the service.

In the State of Illinois in the United States of America, theft of labor or services or use of property is penalized:

(a) A person commits theft when he obtains the temporary use of property, labor or services of another which are available only for hire, by means of threat or deception or knowing that such use is without the consent of the person providing the property, labor or services.

In 1980, the drafters of the Model Penal Code in the United States of America arrived at the conclusion that labor and services, including professional services, have not been included within the traditional scope of the term “property” in ordinary theft statutes. Hence, they decided to incorporate in the Code Section 223.7, which defines and penalizes theft of services, thus:

(1) A person is guilty of theft if he purposely obtains services which he knows are available only for compensation, by deception or threat, or by false token or other means to avoid payment for the service. “Services” include labor, professional service, transportation, telephone or other public service, accommodation in hotels, restaurants or elsewhere, admission to exhibitions, use of vehicles or other movable property. Where compensation for service is ordinarily paid immediately upon the rendering of such service, as in the case of hotels and restaurants, refusal to pay or absconding without payment or offer to pay gives rise to a presumption that the service was obtained by deception as to intention to pay; (2) A person commits theft if, having control over the disposition of services of others, to which he is not entitled, he knowingly diverts such services to his own benefit or to the benefit of another not entitled thereto.

Interestingly, after the State Supreme Court of Virginia promulgated its decision in Lund v. Commonwealth, declaring that neither time nor services may be taken and carried away and are not proper subjects of larceny, the General Assembly of Virginia enacted Code No. 18-2-98 which reads:

Computer time or services or data processing services or information or data stored in connection therewith is hereby defined to be property which may be the subject of larceny under § § 18.2-95 or 18.2-96, or embezzlement under § 18.2-111, or false pretenses under § 18.2-178.

In the State of Alabama, Section 13A-8-10(a)(1) of the Penal Code of Alabama of 1975 penalizes theft of services:

“A person commits the crime of theft of services if: (a) He intentionally obtains services known by him to be available only for compensation by deception, threat, false token or other means to avoid payment for the services …”

In the Philippines, Congress has not amended the Revised Penal Code to include theft of services or theft of business as felonies. Instead, it approved a law, Republic Act No. 8484, otherwise known as the Access Devices Regulation Act of 1998, on February 11, 1998. Under the law, an access device means any card, plate, code, account number, electronic serial number, personal identification number and other telecommunication services, equipment or instrumentalities-identifier or other means of account access that can be used to obtain money, goods, services or any other thing of value or to initiate a transfer of funds other than a transfer originated solely by paper instrument. Among the prohibited acts enumerated in Section 9 of the law are the acts of obtaining money or anything of value through the use of an access device, with intent to defraud or intent to gain and fleeing thereafter; and of effecting transactions with one or more access devices issued to another person or persons to receive payment or any other thing of value. Under Section 11 of the law, conspiracy to commit access devices fraud is a crime. However, the petitioner is not charged of violation of R.A. 8484.

Significantly, a prosecution under the law shall be without prejudice to any liability for violation of any provisions of the Revised Penal Code inclusive of theft under Rule 308 of the Revised Penal Code and estafa under Article 315 of the Revised Penal Code. Thus, if an individual steals a credit card and uses the same to obtain services, he is liable of the following: theft of the credit card under Article 308 of the Revised Penal Code; violation of Republic Act No. 8484; and estafa under Article 315(2)(a) of the Revised Penal Code with the service provider as the private complainant. The petitioner is not charged of estafa before the RTC in the Amended Information.

However, there is still a possibility of punishing the hackers or phreakers, under the Republic Act No. 8792 or the Electronic Commerce Act of 2000.
Section 33 of Republic Act No. 8792, Electronic Commerce Act of 2000 provides:

Sec. 33. Penalties.— The following Acts shall be penalized by fine and/or imprisonment, as follows:

a) Hacking or cracking which refers to unauthorized access into or interference in a computer system/server or information and communication system; or any access in order to corrupt, alter, steal, or destroy using a computer or other similar information and communication devices, without the knowledge and consent of the owner of the computer or information and communications system, including the introduction of computer viruses and the like, resulting on the corruption, destruction, alteration, theft or loss of electronic data messages or electronic documents shall be punished by a minimum fine of One hundred thousand pesos (P100,000.00) and a maximum commensurate to the damage incurred and a mandatory imprisonment of six (6) months to three (3) years.

Therefore, violations concerning telecommunications can be prosecuted not by filing a case for theft under Article 308 of the Revised Penal Code but under Article 315 of the Revised Penal Code for Estafa, violation of Republic Act No. 8484 and under Section 33 of Republic Act No. 8792, the Electronic Commerce Act of 2002.


  • http://www.google.com
  • http://en.wikipedia.org/wiki/Phreaking
  • The Dynamics of the Information Technology Industry in the Philippines (I.T. Action Agenda for the 21st Century (National Information Technology Council, Manila, October 1997)
  • Laurel vs Hon. Abrogar and PLDT [ G.R. NO. 155076. February 27, 2006]
  • R.A. 8484, Access Devices Regulation Act of 1998
  • R.A. 8792, Electonic Commerce Act of 2000
  • Revised Penal Code.

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