Taxpayer’s suit backs Supreme Court bid vs 3rd telco award

MANILA, Philippines — A taxpayer has joined petitioners in the Supreme Court (SC) contesting the government’s awarding of the third telecommunications slot to Mindanao Islamic Telephone Co. (Mislatel).

In a 44-page petition-in-intervention filed last Dec. 17, Marlon Anthony Tonson supported the petition filed by disqualified bidder Philippine Telegraph and Telephone Corp. (PT&T) last November that challenged the legality of the decision of the National Telecommunications Commission (NTC) to close the bidding process and to officially award the third telco franchise to the consortium of Dennis Uy’s Udenna Corp. and China Telecom Corp. Ltd., the last-standing and only qualified bidder.

Through lawyer Arnel Victor Valeña, petitioner asked the high court to annul and set aside the awarding to Mislatel consortium of the third telco slot due to violations of the 1987 Constitution in the bidding procedure implemented by the NTC, particularly the selection rules under Memorandum Circular No. 09-09-18.

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

Tonson, who invoked his legal interest on the issue as a telco consumer in filing the petition, also argued that the bidding rules were unconstitutional due to lack of proper screening tests necessary to ensure compliance with the 60-40 rule on foreign ownership in public utilities under Article XII, Section 11 of the Constitution.

He stressed that while the law allows 40 percent ownership of foreign firms in public utilities, the law does not specifically allow a foreign corporation owned by another government, 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,” read the petition.

“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,” it pointed out.

The petitioner cited the issue of national sovereignty and security and argued that MC 09-09-18 is unconstitutional due to “lack of necessary safeguard against intrusions to individual and national security.”

“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),” Tonson warned.

“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,” petitioner pointed out.

Review bidding rules

With these arguments, Tonson asked the SC to declare MC 09-09-18 unconstitutional and to also order the Philippine Competition Commission (PCC) to review bidding rules as well as the awarding of the third telco slot to Mislatel.

He also urged the Court to nullify and set aside “all the proceedings that were held or transpired pursuant to MC 09-09-18... including the declaration of Mislatel Consortium as new major player.”

The petitioner also sought promulgation of new terms of reference and the conduct of another bidding following public hearings and consultations.

Unlike the petition of PT&T, Tonson’s has included the PCC, Office of the Executive Secretary, National Security Adviser and China Telecom as respondents in the case.

PT&T filed the petition before the SC after it was disqualified by the NTC from the bidding process last Nov. 7. The SC had already ordered NTC to answer the petition.

In its petition for certiorari filed through the Zamora and Poblador Law Offices, PT&T asked the SC to “nullify its disqualification from the selection process by the New Major Player Selection Committee.”

PT&T accused the selection committee that disqualified it of “grave abuse of discretion amounting to lack or excess of jurisdiction.”

The 56-year-old firm specifically challenged the NTC’s definition of national scale, which became the basis for its disqualification.

NTC rules defined national scale as having operations “for a country or particular regions thereof as geographically designated by the telecommunications authority of that country.”

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

Since the petitioner was unable to obtain a certification that it had 10 years of operations on a national scale – a key requirement under the bidding rules – it was disqualified and its bid documents remain sealed.

Apart from voiding the NTC order disqualifying it from the bidding, PT&T also asked the SC to order the NTC and the selection committee to secure its sealed bid documents and preserve the integrity of the bidding process.

PT&T also asked the SC to have its bid documents opened, believing it should be awarded the third telco slot because its offer was higher than that of Mislatel.

The NTC had already confirmed Mislatel as provisional third telco player in an order issued last November.