By Charmaine A. Tadalan, December 11 2018; Business World
Image Credit to Rappler
THE HOUSE COMMITTEE on Legislative Franchises approved on Tuesday the transfer of controlling interest in Mindanao Islamic Telephone Company, Inc. (Mislatel) to its partners in setting up the third entrant to the telecommunications industry.
Panel Chair Franz E. Alvarez of the 1st district of Palawan said the franchise bill is expected to be introduced to the plenary when Congress resumes session in January.
“It will go forward after the break, there is no more time, so January,” Mr. Alvarez told reporters in a chance interview after the hearing. Congress will adjourn on Dec. 12 and will resume on Jan. 14.
The approval went through despite the contention of some legislators that Mislatel should settle a contractual dispute with DigiPhil Technology, Inc.
Mr. Alvarez argued the chamber cannot wait for the court to rule on the issue, which is a dispute between two participants in the selection process for the third entrant to the telecommunications industry, the so-called third player.
“We cannot wait. What if it takes years? We cannot tell how long that takes, a a resolution of the issue really isn’t our problem,” he said.
According to DigiPhil legal counsel Dennis P. Manalo, the selection of the Mislatel consortium violates DigiPhil’s right of first refusal.
“If the Committee will allow, then that will be in clear violation of a right of first refusal, which is now pending before the Regional Trial Court of Pasig City,” he told the panel.
The panel was acting on House Concurrent Resolution No. 23, introduced by Quirino Rep. Dakila Carlo E. Cua, which intends to allow transfer ownership of the Mislatel to other members of the consortium: Udenna Corp., Chelsea Logistics Holdings Corp. and China Telecommunications Corp.
This is in compliance with the conditions of Mislatel’s franchise, governed by Republic Act No. 8627, which states that transfer of the controlling interest of Mislatel to another person or entity must be approved by Congress.
DigiPhil, a member of the rival Sear Telecommunications Consortium, sued Mislatel for breach of contract before the Pasig City Regional Trial Court on Nov. 14.
Mislatel consortium was declared the provisional third player on Nov. 7.
Pasig City Executive Judge Danilo S. Cruz on Nov. 29 assigned the DigiPhil case to RTC Branch 166, continuing proceedings from Branch 158.
In its complaint, DigiPhil asked the court to declare its share subscription agreement as “valid, existing, legal and enforceable” and to order Mislatel to comply with its commitment.
DigiPhil said it executed an agreement with Mislatel on May 30, under which it agreed to subscribe for 2.5 million common shares of Mislatel at P2.00 per share. Under the contract for the stake purchase, Mislatel is required to solely and exclusively partner in the utilization of frequencies, permits, licenses or authorizations with DigiPhil and DigiPhil’s nominated partners.
The agreement also entitled DigiPhil to at least one seat on Mislatel’s board. Mislatel also offered the right of first refusal for an additional P5 million.
DigiPhil also stated that it was “obligated to make payment on Mislatel’s behalf” worth P162,515 to obtain a Certificate of No Delinquency from the National Telecommunication Commission (NTC), pursuant to the agreement.
“That despite demands and payments made by DigiPhil, Defendant Mislatel, inordinately and in gross violation of its contractual commitment to exclusively venture with DigiPhil, partnered instead with another entity as NMP,” it said, referring to the government’s term for the winner of the third-player selection process, the New Major Player. It added that Mislatel did not approach DigiPhil or any of its officers for consent.
DigiPhil also claims that Mislatel also concealed to the NTC selection committee its joint venture arrangement with DigiPhil and the latter’s stake purchase.
“Defendant Mislatel’s action goes beyond a contractual breach. This is the real issue, that the defendant unbeknown to the NMP-Selection Committee of the NTC, brought in another partner other than DigiPhil,” it said.
The Sear Telecommunications consortium is led by TierOne Communications International, Inc. and former Ilocos Sur Gov. Luis C. Singson’s LCS Group of Companies (Sear-LCS-TierOne).
In a statement issued in November, Mislatel said any contract it had with members of Sear Consortium had expired and applied to projects other than third-player selection. — with Vann Marlo M. Villegas