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Taxpayer asks SC to stop 3rd telco award to Mislatel

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By Rey Panaligan

A taxpayer has filed a petition to intervene in the Supreme Court (SC) case that sought a stop to the government’s award of the third telecommunications slot to the Mindanao Islamic Telephone Co., Inc. (Mislatel).

Marlon Anthony R. Tonson told the SC that as a consumer he “has an interest in seeing to it that the State provides its members with the best policy environment for information and communications.”

Thus, he pointed out, he is allowed under the Rules of Court to intervene in the case filed late last year by the Philippine Telegraph & Telephone Corp. (PT&T) to stop the National Telecommunications Commission (NTC) from awarding the third telco slot to Mislatel.

PT&T had sought the issuance of a temporary restraining order (TRO) to stop the award. The SC, however, did not issue a TRO and, instead, directed the NTC to comment on the petition.

If allowed by the SC, Tonson’s intervention would be consolidated with the PT&T petition.

The SC is still on its Christmas break and will resume its sessions on January 7 for its three divisions and on January 8 for the full court or en banc.

Earlier, the NTC had confirmed that Mislatel — the consortium of Udenna Corp. of businessman Dennis Uy and China Telecom Corp. Ltd. — as the third telco player in the country.

Based on its proposal to comply with the government’s five-year commitment period, Mislatel offered to spend P258 billion to build a telco network, cover 84 per cent of the country’s population, and bring up the minimum average internet speed to 27 Megabits per second on its first year, increasing it to 55 Mbps in the succeeding years.

Reports stated that Mislatel scored 456.8 points out of a possible 500 points under the NTC’s grading system.

“For having passed the Preliminary and Detailed Evaluation phases, the NMP-SC (New Major Player-Selection Committee) has determined that the first submission package of Mindanao Islamic Telephone Company, Inc. with Udenna Corporation, Chelsea Logistics Holdings Corp. and China Telecommunications Corporation (MISLATEL Group) was complete and compliant,” the NTC’s confirmation order stated.

The confirmation led to a 90-day post-qualification process for the issuance of the frequencies and the necessary permit.

Unconstitutional

Last November 7, the NMP-SC disqualified PT&T from the bidding proceedings on the third telco. PT&T accused the selection committee of “grave abuse of discretion amounting to lack or excess of jurisdiction.”

It challenged the NTC’s definition of national scale, which became the basis for its disqualification. The NTC rules defined national scale as having telco operations “for a country or particularly regions thereof as geographically designated by the telecommunications authority of that country.”

Since PT&T failed to obtain a certification that it had 10 years of operation on a national scale, a key requirement specified in the bidding rules, it was disqualified and its bid documents remain sealed.

PT&T questioned the stand of the selection committee that having regional operations only referred to foreign companies.

It asked the SC to open its bid documents which, it stressed, contained a higher bid than that of Mislatel’s.

In his intervention, Tonson told the SC the award of the third telco slot to Mislatel violates the Constitution, particularly the bidding procedure implemented by the NTC under Memorandum Circular No. 09-09-18.

He said that “MC No. 09-09-2018 is unconstitutional as it contravenes the constitutional policy and statutory provisions on free competition.” He cited what he called as “exorbitant” P1-million fee for selection documents and P700-million participation security that were “substantial deterrent to a more participative selection process.”

He stressed that the bidding rules were unconstitutional due to lack of proper screening tests necessary to ensure compliance to the 60-40 rules on foreign ownership in public utilities under Section 11, Article XII of the Constitution.

He pointed out that “while the law allows 40 per cent ownership of foreign firms in public utilities, the law does not specifically allow a foreign corporation owned by another government just like China Telecom.”

“What remains unclear, however, is whether Section 11, Article XII permits a situation where a foreign State, acting through its government-owned enterprise, can own any part of a government utility,” he added.

“Given such distinctions, a different rule must therefore apply when it comes to the issue of ownership in a public utility by a foreign State, whether directly or indirectly through a government-owned enterprise,” Tonson stressed.

“It is essentially the Chinese government, acting through a state-owned enterprise, that would operate the Philippines’ third telecommunications utility. Considering that the gathering of sensitive information has been legislated by China as a state policy, it is expected that China Telecom will unwaveringly abide by the National Intelligence Law of China,” he said.

“Threats to Philippine security can develop into encroachments on sovereignty… The Chinese government will be placed in a strategic position to intrude into fundamental liberties,” he added.

He named the Philippine Competition Commission (PCC), the Office of the Executive Secretary, the National Security Adviser, and China Telecom as respondents in his petition for intervention.

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