3rd telco at risk from legal questions

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THE FATE of the Mindanao Islamic Telephone Company, Inc.’s (Mislatel) franchise hangs in the balance as the Senate committee on public services forwarded to the Senate plenary the House concurrent resolution formalizing the company’s transfer of controlling interest to the Mislatel consortium that has been chosen as the Philippines’ third major telecommunications service provider.

The committee concluded its public hearing on the “third telco” bidding on Wednesday with committee chair Senator Grace S. Poe-Llamanzares saying that the panel has not yet reached a decision whether to recommend for Senate approval the House concurrent resolution.

She said she will submit the Senate committee report on the issue next week to allow extensive discussion in the Senate plenary on legal issues surrounding the validity of Mislatel’s franchise and eventually put the House concurrent resolution to a vote.

She added that the committee will take into consideration whether the Senate can “cure” the defects of Mislatel’s legislative franchise and, hence, accepting it as valid or deem it invalid from the beginning.

“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 would have to consult with the members of the public services committee and let them weigh in on that particular opinion. I strongly believe that Congress — the Senate and the lower House — really has the authority to either revoke or grant the franchise, so if we will go by that, then certainly we can probably… be able grant them the authority,” she told reporters after the hearing.


“On the other hand, when a quo warranto is presented before the courts, they may ask that at the time of their application, is their franchise actually effective?”

Mislatel’s franchise was granted in April 1998 for 25 years through the enactment of Republic Act No. 8627. It is set to expire in 2023. The consortium that won the auction for the country’s third major telco will operate using Mislatel’s franchise. House concurrent resolution no. 23, which the House of Representatives adopted on Dec. 12, grants the transfer of controlling interests of Mislatel to Davao-based businessman Dennis A. Uy’s Udenna Corp. and Chelsea Logistics Holdings Corp., as well as China Telecommunications Corp. (China Telecom). The government last November declared the Mislatel Consortium of China Telecommunications Corp., Udenna Corp., Chelsea Logistics Holdings Corp, and Mislatel as the new major player in the telecommunications industry.

The validity of Mislatel’s franchise was questioned in the previous Senate hearing after Senate Minority Leader Franklin M. Drilon said the company’s franchise was ipso facto revoked after it failed to fulfill the requirements provided in its April 1998 franchise. He said Mislatel did not start operations within a year of National Telecommunications Commission approval of its permit and did not seek congressional approval when it sold its controlling interest in 2015.

In Wednesday’s hearing, Mislatel spokesman Adel A. Tamano stood by the consortium’s position, saying: “In regard to the validity of the franchise, just in terms of matter of fact, no quo warranto proceeding has been filed against the franchise of Mislatel. Matter fact also, there has been no revocation of the franchise of Mislatel.”

“Without going to the legal matters, there has been no positive act that would revoke the existence of the franchise of Mislatel,” he said.

The Senate committee on public services also consulted with lawyers from the government and the private sector regarding their opinion on the legal questions surrounding Mislatel’s franchise.

Integrated Bar of the Philippines (IBP) representative Robert Beltejar said it was the view of the legal group that Mislatel’s franchise was invalid from the start.

However, the Office of the Solicitor General had a different view, with Assistant Solicitor General Marra Victoria Sardillo Salom telling senators at the hearing: “As far as the Solicitor General is concerned, we abide by the doctrine under PLDT vs NTC that proper remedy is through a quo warranto proceeding. This remedy, we believe, is the appropriate remedy considering the factual issues that also need to be threshed out.”

Senate Majority Leader Juan Miguel F. Zubiri insisted that Mislatel’s franchise was valid, given that it did not undergo quo warranto proceedings and that no bill was filed in Congress revoking the franchise. He even noted that several public utilities have also violated the conditions of their respective franchises.

Ms. Poe-Llamanzares also warned the Mislatel consortium that even if Congress were to finally approval its franchise, the issue may still be challenged in the courts.

In response, Mr. Tamano said they are willing to take the risk to proceed with the third telco’s selection process despite concerns that their franchise may be questioned in the courts.

Sumusugal kami para sa bayan. Ang susi po para mapatuloy itong proyekto ay nasa komiteng ito (We are taking this risk for the good of the country. The fate of this program is in the hands of the committee),” he said.

“We’ve come to you, we’re asking for your approval. Your approval will cure any deficiencies. And if we are challenged in courts, with your approval, we can say that there is no revocation of the franchise. We have gotten approval from both the Lower and Upper House. So we can run our business and give you the world class service that this country deserve.” — Camille A. Aguinaldo