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Senate Committee on Public Services considers granting Mislatel a franchise

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By Vanne Elaine Terrazola

The Senate Committee on Public Services is considering granting the Mindanao Islamic Telephone (Mislatel) consortium the franchise that will allow them to operate as the third telecommunications player in the country.

Senator Grace Poe, committee chairman, raised the possibility as the public services panel on Wednesday wrapped up its inquiry on the selection of the Mislatel consortium as country’s third telco player.

Senator Grace Poe (Senate of the Philippines official Facebook page / MANILA BULLETIN)

Senator Grace Poe (Senate of the Philippines official Facebook page / MANILA BULLETIN)

She noted that this is among her considerations in coming up with a decision on the issues hounding the consortium of Dennis Uy’s Udenna Corporation (Udenna), Chelsea Logistics Holdings Corp., and the state-owned China Telecommunications Corporation (China Telecom), particularly in the legislative franchise it used in its bid to be the new major player in the telecommunications sector.

“Unang una, ang kanilang prangkisa, bagama’t puwede naming ibigay sa kanila, puwedeng makuwestiyon ito sa korte. Ngayon, iniisip ko rin ang gusto ng ating mga kababayan na magkaroon ng mas mabilis na internet, mas mura (First, about their franchise, although we can give it to them, it may be challenged before the courts. But I am also considering that our countrymen are longing to have a faster and more affordable internet service),” Poe said.

Poe said the Senate’s possible approval of Mislatel’s franchise could “actually cure the defect and the questions surrounding the legality of the franchise.”

The committee chairman, anyway, said it would be Mislatel that would lose should the validity of its franchise be challenged and later on be struck down by the judiciary as invalid.

Poe noted that Mislatel would have to pay for the P27-billion performance bond to the government even if it is not successful in operating as a third telco player.

“Kung ito’y papayagan ng Senado dahil sa tingin natin emergency na kailangan natin ng serbisyo na ganyan, ibigay natin. Makaka-operate sila; pero kapag kinuwestiyon ng Korte, biglang matitigil sila (If the Senate grants Mislatel the franchise because we think that the need for internet service is an emergency, then we should give it. Mislatel can operate, but if it is challenged in courts, they would have to stop),” she said.

“Sa tingin ko malaki ang investment nila. Kaya kung mapapabilis nila ang ating serbisyo, bakit hindi. Pero wina-warningan ko rin sila na sinabi ko kapag kinuwestiyon ‘yan sa Korte maaaring maantala so ‘yun ang nagiging issue ngayon (I believe that it is a big investment for Mislatel. So if they can improve telecommunication services, why not grant them the franchise? But I am already warning them),” she added.

Poe, however, refused to categorically confirm the panel’s inclination as to Mislatel’s franchise, saying she has yet to consult her colleagues’ on their views on the matter.

“There are several opinions regarding that, some legal minds are saying that the Senate can actually cure it by granting the franchise or by accepting the franchise as valid so I will have to consult the members of the public services committee and let them weigh in on that particular opinion,” she told reporters.

Poe reiterated her belief that Congress has the authority over the franchise, and the Senate, she said, can decide whether or not grant or revoke the franchise of Mislatel.

Franchise ‘valid’

Mislatel counsel Atty. Adel Tamano, in the hearing, maintained that the consortium can continue to operate as the third telco player as he argued that previous Congresses did not revoke the legislative franchise granted to Mislatel Company in 1998 despite its supposed violations.

Mislatel Company president and CEO Nicanor Escalante, who was under oath, during the last hearing, had admitted that the firm failed to operate within one year and inform the Congress of leadership changes as imposed by the conditions of its franchise.

But Tamano said no quo warranto petition was filed against the company, and “there was no revocation by Congress of the franchise of Mislatel,” hence proving that its congressional franchise remains valid.

The corporate lawyer said a “positive action” from Congress is required for the franchise to be declared revoked.

Tamano, however, retracted his citation of a Supreme Court (SC) decision last week, clarifying that Escalante did not intend to buy the controlling interest of Mislatel in 2015, but rather a “subscription in increase of capital stocks.”

Senate Minority Floor Leader Franklin Drilon refuted Tamano, citing company documents stating that Escalante and his partners own 70 percent of the shares of the company.

He added that Congress cannot revoke such a franchise if it was not informed in the first place about the ownership changes in the company.

Drilon, who had questioned Mislatel’s franchise as “doubtful”, maintained that the congressional permit should be considered “ipso facto”, or “by the very fact,” revoked.

Senator Francis Escudero, for his part, noted that while the movements within the company remains effective, Congress still, should be notified.

“It’s a violation of the franchise that should be considered,” Escudero said.

Integrated Bar of the Philipines (IBP) president Atty. Abdiel Fajardo, sought for their legal opinion, said the IBP also believes that Mislatel’s franchise should have been revoked ipso facto.

He cited the SC’s ruling on the case of Divina-Gracia vs. Consolidated Broadcasting System, which stated that “the viability of quo warranto in the instant case does not preclude Congress from enforcing its own prerogative by abrogating the legislative franchise of respondents should it be distressed enough by the franchisees’ violations of franchise extended to them.”

It was the same ruling that Tamano mentioned in the January 24 hearing of the public services committee.

Public interest

Department of Information and Communications Technology Secretary Eliseo Rio during the Senate inquiry appealed anew to senators to consider “public interest in whatever decision you are going to make now.”

But senators stressed that they are also putting first the people in scrutinizing the validity of the Mislatel’s franchise.

Drilon said rushing their debates could result to legal concerns and could hamper the operations of the third telco player. The public, in the end, would still end up disadvantaged, he said.

“We are looking for stability in the grants. We want our infrastructure to be based on solid legal grounds so it can stand constitutional questions. We are raising these because we are concerned that the competitors of Mislatel will certainly raise these issues in the court. And we don’t want that to happen,” he said.

Escudero supported Drilon, saying legal impediments should be addressed than “end up with no third telco player.”

Senate President Pro Tempore Ralph Recto, meanwhile, raised concerns about granting a franchise to Mislatel consortium as he pointed out that state-owned China Telecom is one of its owners.

This, as he noted that pending bills in Senate, particularly the proposed amendment of the Public Services Act which would pave way for a 100-percent foreign ownership, including the telecommunications services.

Recto also pointed out the China has been participating in several other government projects.

Of the senators present in the inquiry, only Senate Majority Leader Juan Miguel Zubiri expressed backing for Mislatel, citing the country’s demand for better telecommunication services.

Zubiri, earlier, admitted personally speaking to Udenna’s Uy, who, he said, vowed that Mislatel would not be a threat to national security.

House resolution

Besides the Public Services committee report, Poe said the panel has also decided to bring to the Senate plenary the House Concurrent Resolution No. 23 seeking to authorize the transfer of Mislatel Company’s controlling interests to the Udenna-Chelsea-China Telcom consortium

At the hearing, Recto and Escudero moved to amend the House-approved measure which, aside from the transfer of control, in effect declares Mislatel consortium as the new major player.

The two lawmakers said Congress has no authority over identifying a company as the new major player especially that it is in danger of being questioned before courts.

Poe said approving the House resolution would pave way for the debates on its provisions, so that they can settle whether or not the Mislatel’s franchise is valid in the first place.

“It has to be with the concurrence of the Senate, otherwise the House cannot universally grant the decision, the Senate has to be part of that to grant a franchise,” she said.

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