Court of Appeals stops NTC from bidding last 3G band

MANILA, Philippines - The Court of Appeals (CA) has ordered the National Telecommunications Commission (NTC) to stop the bidding for the last remaining third generation (3G) mobile communications technology frequency and from resolving any application for its award.

In a decision penned March 22, the CA also granted a petition filed by Lopez-owned Bayan Telecommunications for the setting aside of an order issued by the NTC in 2005 that denied Bayan’s application for the last 3G frequency, noting that the telecom firm deserves the assignment of the last unassigned 3G radio frequency band.

Bayan counsel Ariel Tubayan lauded the ruling, saying the auction was intended to “oust the courts of its jurisdiction over Bayan’s appeal involving the last 3G frequency and render moot the ongoing judicial review.”

The NTC, however, is expected to file a motion for reconsideration of the CA ruling and even bring the matter to the Supreme Court.

The NTC, under a new circular, is poised to bid out the last remaining 3G frequency bandwidth. But according to the appellate court, the NTC’s adoption of a 30-point rating system and 20-point (minimum) qualification threshold in deciding which telecommunication company deserves a 3G frequency is invalid and void.

It explained that NTC Memorandum Circular 07-08-2005 which contained the rules for the award of the then five 3G frequency bandwidths never authorized NTC to apply the 30-point rating system which was used to disqualify Bayan.

Under the said MC, the NTC awarded 3G licenses and frequencies to Smart Communications, Globe Telecom, Digitel Mobile Philippines and Connectivity Unlimited Resources Enterprises (CURE).

The CA noted that NTC’s adoption of the formula was invalid for not having been published in a newspaper of general circulation and a copy was not furnished the UP Law Center as required by law.

It said what the circular provides as regards ranking is only that applicants for the assignment of the 3G radio frequency bands be ranked based on track record, roll-out commitments, and rates to be charged on users.

“Yet in NTC ‘s Dec. 28, 2005 consolidated order, it adopted the concept of a rating system. NTC cannot justify its adopting the rating system by a plain desire to determine who among the qualified applicants should best be granted a 3G frequency band assignment. For such determination cannot be exercised without a properly promulgated and published rule,” the court explained.

It added that “affecting applicants who are third persons insofar as the NTC as an administrative agency is concerned, its power to promulgate rules and regulations is subject to publication in a newspaper of general circulation and the submission of a copy thereof to the UP Law Center before it can have the force and effect of law.”

The CA said the adoption of a rating system is an exercise of NTC’s rule making power separate and distinct from that which it exercised in promulgating MC 07-08-2005.

“NTC cannot use the rating system for purposes of ranking the qualified applicants for a 3G frequency band assignment. That it did so, the NTC evidently abused whimsically and arbitrarily Bayan’s right to due process,” it noted.

It added that the NTC evidently committed grave abuse of discretion amounting to lack of jurisdiction when it issued its Dec. 28, 2005 consolidated order, an abuse which was further aggravated by its denial of Bayan’s motion for reconsideration in its Aug. 28, 2008 order.

The appellate court also emphasized that even for the sake of argument that the NTC’s 30-point rating system was validly adopted, the NTC had no legal basis to deny Bayan a slot in the five vacancies.

In applying the said system, the commission ranked Smart with 30 points, Globe with 29 points, Digitel with 28 points, CURE with 20.5 points, and Bayan and Multi Media Telephony Inc. (MTI) with 18.5 points. Thus, Bayan and MTI were disqualified for failing to reach the required minimum 20 points.

However, the CA noted that in the same Dec. 28 order, the NTC admitted that Bayan was automatically qualified as an applicant for the assignment. “It surprises us to no end that the NTC, after admitting that Bayan was ‘automatically qualified as applicant for the assignment’, disqualified it as an assignee for the fifth slot which remains vacant until now,” it said.

It said that Bayan sufficiently complied with all the requirements provided for under MC 07-08-2005, as it noted that it was legally and physically impossible for the company to complete its commitment to rollout its cellular mobile telephone system (CMTS) service within the period required of it do so.

It added that NTC is not in a jurisdictional position to disqualify any of the qualified applicants and that it was obliged only under the MC to evaluate them in order that the best qualified be assigned any of the five 3G slots.

The court also noted that even if the ‘rating system” was validly applied, Bayan could not be possibly outranked by CURE, much less disqualified in the assignment. It said Bayan should have received a total of 24.5 points.