By Rey Panaligan
The Supreme Court (SC) on Tuesday (November 6) decided to inquire into the alleged unconstitutionality of the “Co-Use Agreement” between Philippine Long Distance Telephone Co./Smart Communications, Inc. (PLDT/Smart) and Globe Telecoms, Inc. (Globe) over the 700 megahertz (MHz) broadcast frequency and other frequencies that were conditionally assigned to them by the National Telecommunications Commission (NTC).
During its full court session, the SC directed the NPC, the Philippine Competition Commission (PCC), and the involved telecommunications companies to comment in 10 days on both the petition and the plea for a temporary restraining order (TRO) sought by two lawyers who filed the case.
The SC’s action on the petition was confirmed by Acting Chief Justice Antonio T. Carpio in reply to inquiries made by journalists covering the High Court.
Lawyers Lemuel Baligod Baquiran and Ferdinand Tecson claimed that the original legislative franchise on the 700 MHz frequency was granted to Liberty Broadcasting Network, Inc. for television broadcasting and not for telecommunications.
Their plea for TRO also covered the use by PLDT/Smart and Globe of other telecommunications frequencies they identified as 2540-2545 MHz, 2580-2595 MHz, 2535-2540 and 2565-2580 MHz.
The lawyers said the 700 MHz “is a highly valuable and very scarce public resource since it is able to travel longer distances, requiring fewer cell towers and penetrating through building walls, elevators, and even through underground parking lots.”
Thus, they said, the acquisition of the frequency “is undeniably anti-competitive and, worse, unconstitutional since the same is a combination ‘in restraint of trade or unfair competition’ proscribed by Section 19, Article XII of the Constitution,” it stressed.
When the “Co-Use Agreement” is revoked, the lawyers asked the SC to compel the NTC to make available the frequencies to the “best qualified” telecommunications companies.
PLDT/Smart and Globe acquired last year the said broadcast and telecom frequencies after purchasing, on 50-50 basis, all the issued and outstanding shares of stock of San Miguel Corporation’s (SMC) Vega Telecommunications, Inc. for about P70 billion.
The two firms completed their acquisition of the Vega Telecommunications with the final payment of P13 billion.
The petition stated that while Liberty was no longer engaged in broadcasting business, “and despite the underutilization or, worse, non-utilization at all of the conditionally assigned said frequencies within the prescribed period, respondent Liberty continued to illegally hoard the said 700 MHz broadcast frequency.”
“Worse, respondent NTC unlawfully neglected to recall the said frequencies conditionally and illegally assigned to respondent Liberty,” it said.
In 2015, Liberty assigned the 700 MHz broadcast frequency and the 2540-2545 MHz, 2580-2595 MHz, 2535-2540 and 2565-2580 MHz frequencies to BellTel, a subsidiary of Vega Telecommunications, Inc., it said.
The petition stated that Liberty’s assignment of the 700 MHz frequency and the four sets of telecom frequencies to Bell Tel was illegal and invalid because under its legislative franchise in Republic Act No. 10183, Liberty cannot lawfully assign the “rights and privileges acquired thereunder” without congressional approval.
It said Liberty’s original franchise was under RA 1553 as amended by RA 4154 and later under RA 10183.
“At the time of the said assignment of the broadcast frequency to BellTel in the early 2015, it is a telecommunications entity authorized to engage solely in telecommunication business and not broadcasting business and it had substantial foreign equity,” it added.
It also pointed out that Vega Telecoms owns and controls BellTel, which, in turn, was the assignee of the 700 MHz broadcast frequency and the pertinent telecom frequencies from Liberty.
“Thus, through the acquisition of all the issued and outstanding shares of stocks of Vega Telecoms, on 50-50 basis, respondent Globe and PLDT acquired equal ownership of the valuable 700 MHz frequency and the 2540-2545 MHz, 2580-2595 MHz, 2535-2540 and 2565-2580 telecommunication frequencies, thereby cementing the Duopoly’s stranglehold of the telecommunications and internet business in the country,” it said.
“Considering that respondent NTC’s conditional assignments of the 700 MHz broadcast frequency and the 2540-2545 MHz, 2580-2595 MHz, 2535-2540 and 2565-2580 MHz frequencies to respondent Liberty were illegal and void, and considering further that, in turn, respondent Liberty’s assignment of the same to respondent BellTel was similarly illegal and void, the same frequencies cannot serve as possible object of the ‘Co-Use Agreement’ between Globe and PLDT/Smart,” it added.