The Supreme Court (SC) has ended the bid of NOW Telecom Company Inc. to become the country’s third major player in the telecommunications industry.
In a 15-page ruling written by Associate Justice Rodil Zalameda, the SC’s First Division sustained the ruling issued by the Court of Appeals (CA) on May 24, 2021, dismissing NOW Telecom’s plea to nullify a circular issued by the National Telecommunications Commission (NTC) imposing certain qualifications and restrictions with respect to the entry of participants to become a new major player in the telecom industry.
The appellate court’s decision upheld the judgment rendered by the Regional Trial Court (RTC) of Manila Branch 42 in 2018 which junked the petition filed by NOW Telecom which sought the issuance of a writ of preliminary injunction (WPI) to prevent the NTC from implementing
Memorandum Circular No. 09-09-2018 entitled, “Rules and Regulations on the Selection Process for a New Major Player in the Philippine Telecommunications Market.”
“Considering all the foregoing, the CA did not commit any reversible error in the assailed Decision and Resolution. The CA properly upheld the RTC’s denial of NOW Telecom’s application for WPI,” the SC said.
Chief Justice Alexander Gesmundo, and Associate Justices Ramon Paul Hernando, Ricardo Rosario and Jose Midas Marquez of the SC’s first division concurred with the ruling.
The SC agreed with the CA and the Manila RTC that the assailed circular cannot be subject to injunctive relief by the lower courts under Section 3 of Republic Act No. 8975, An Act To Ensure the Expeditious Implementation and Completion of Government Infrastructure Projects By Prohibiting Lower Court From Issuing Temporary Restraining Orders.
The said provision prohibits lower courts from issuing a temporary restraining order (TRO) or WPI against the government for the conduct of the bidding or awarding of contract or project of the government.
The SC noted that telecommunications is considered a critical infrastructure under Section 2 ( a) of Republic Act 11659 (Public Service Act).
“Consequently, the CA correctly ruled that the implementation of the subject Circular involved an essential telecommunications infrastructure project. As such, NOW Telecom cannot enjoin the implementation of the bidding process for the selection of the NMP by a lower court’s WPI,” it stressed.
Besides, the SC said NOW Telecom’s application for a WPI has been rendered moot and academic with the entry of Mindanao Islamic Telephone Company, Inc. (MIslatel).
The SC noted that during the pendency of the case, Mislatel was selected as the NMP by virtue of the NTC Circular, and was accordingly issued a Certificate of Public Convenience and Necessity (CPCN).
“In this case, the act sought to be restrained by NOW Telecom has already been done. The actual implementation of the selection process of the NMP pursuant to the subject Circular, and the resulting assignment of the allocated radio frequencies for the NMP to Mislatel have rendered NOW Telecom’s prayer for injunctive relief moot and academic,” the SC explained.
“Accordingly, NOW Telecom’s application for WPI should be denied,” it added.
At the same time, the SC held that NOW Telecom failed to show that it has complied with the provisions of the subject circular in order for it to be entitled to the allocated radio frequencies for NMP.
“As pointed out by the CA, NOW Telecom was a mere prospective bidder at the time of its application for the issuance of a WPI,” the SC said.
The SC noted the admission of NOW Telecom that it had not formed a consortium to meet the P10 billion capital requirement under the subject circular when the complaint was filed.
It also pointed out that there was no evidence to demonstrate NOW Telecom’s participation in the selection process to establish its qualification as the best candidate for the NMP.
“Clearly, NOW Telecom has no vested right over the allocated frequencies for the NMP, or any clear, actual, and existing right to be protected against the implementation of the subject circular,” the SC said.
In particular, NOW Telecom is questioning the validity of a provision in the NTC circular NMP to post a participation security with a face value of P700 million equivalent to one-half percent (0.5%) of the minimum Capital and Operational Expenditure at the end of the commitment period.
It argued that the said provision is void for being excessive and confiscatory.
In addition, NOW Telecom also argued that Section 11 of the circular, which requires the posting of a performance security at 10 percent of the remaining cumulative capital and operational expenditures commitment, is “vague and arbitrary.”
The provision essentially requires a potential participant to post P14 billion to P24 billion for performance security
It also claimed that the non-refundable appeal fee amounting to P10 million under Section 8 of the circular was excessive.
The petitioner also challenged Section 10.1 of the circular which requires the submission of the Business and Roll-out plans after the NMP is determined.
NOW Telecom argued that the said provision circumvents the prohibition on substantial variation in bids and contracts.
The petitioner also assailed Section 3, which provides for the covered and contingent radio frequencies to be assigned to the NMP, for violating its alleged vested right to be allocated radio frequencies
as holder of a legislative and administrative franchise to operate telecommunications facility.
However, the SC ruled that the said impositions, although “excessive”, “discriminatory”, and “anti-competitive” according to NOW Telecom, “were proper to ensure that only those with legal qualifications as well as financial and technical capabilities are allowed to participate and vie for the privilege to be the NMP.”
