Third Telco Search: DICT Says Mislatel Franchise Not Revoked Yet

3 min. read By eCompareMo on

After months of radio silence, it seems there are new developments in the “third telco” war. Spoiler alert: There is no clear winner yet.

Senate Minority Leader Franklin Drilon said that the Mindanao Islamic Telephone Company (Mislatel) Consortium’s franchise is “deemed revoked” after the Senate examined the leading contender in the bid for the next telecommunications providers in the country.

Mislatel

According to Drilon, the consortium violated certain conditions that would make the franchise valid, specifically the part where it must be in operation one year after the license has been awarded by the Congress.

“The franchise of Mislatel is deemed revoked because of your failure to comply with the conditions of the franchise,” Drilon said. “There is no valid franchise. A valid franchise is a requirement under the NTC guidelines.”

“Here you have a situation where there is no existing franchise because of the violations of the grantee of the conditions imposed in the franchise because they did not operate. And there was no congressional approval for the transfer of the controlling interest,” Drilon said.

The government gave Mislatel the congressional franchise to operate in 1998. Under Republic Act No. 8627, the company has been granted a 25-year license to operate, granted that it must comply with the following terms or the franchise will be declared “ipso facto” revoked:

  1. Commence operations within one (1) year from the approval of its permit by the National Telecommunications Commission;
  2. Operate continuously for two (2) years; and
  3. Commence operations within three (3) years from the effectivity of this Act.

Although it has been around since 1998, the company has neither started its operations nor built any infrastructure that will support its business. However, Mislatel president Nicanor Escalante said that peace and order in Mindanao prevented the company from going live.

“The company was ready to roll out in Parang, Maguindanao in 2003 but the peace and order situation in that area did not allow the company to operate,” Escalante said.

No prior approval

In addition to failing to comply with the provided timetable in the congressional franchise, the company, according to Drilon, cannot transfer controlling interests to other parties without prior approval of the Congress.

Section 15 of the Republic Act No. 8485 says that Mislatel cannot transfer, sell, or assign the congressional franchise or the controlling interest to any entity “without the prior approval of the Congress of the Philippines.”

A report by BusinessWorld revealed that the original five incorporators of Mislatel during the awarding of the congressional franchise—namely Marte L. Lascano, Romeo V. Sabillo, Howard U. Evangelista, Winsberg L. Austria, and Mariano Pamintuan Jr—only had a 30-percent stake in the company.

According to Drilon, the incorporators issued 70 percent of shares to new investors in 2015, effectively giving them controlling stake over the company. The new investors included company president Nicanor Escalante as well as his other company CTE Vector Holdings.

“The transfer of control in Mislatel itself has not been approved by Congress. I am referring to the transfers done in 2015…when the original stockholders transferred and ceded 70% of Mislatel to the group of CTE. That transfer of control has never been approved by Congress, and therefore, that puts into doubt the franchise of Mislatel,” Drilon said.

Other members of the Senate like Senators Grace Poe-Llamanzares and Antonio Trillanes IV also expressed their concerns regarding Mislatel’s seemingly rubberstamped approval. Poe said that the Senate will handle the issue as soon as possible and the committee will try to release a resolution no later than February 17.

Meanwhile, Trillanes remains to criticize the government for picking the consortium due to its ties with President Rodrigo Duterte. According to the senator, the administration cherry-picking Mislatel is “oozing with preferential treatment.”

‘Still valid’

Countering the arguments of the senators, DICT chief Eliseo Rio said that the comments said by Drilon and others were “far from the truth.”

In a Facebook post, Rio said that the National Telecommunications Commission (NTC) wrote the Congress that Mislatel’s franchise is “still valid.”

“In other words, since there is no declaration of revocation by competent authorities, NTC has no right to consider the franchise as revoked as the presumption of regularity and the validity of the franchise must be respected,” Rio said.

“Also, the Supreme Court has already ruled that since a franchise is a property right, there must be due process for it to be revoked, notwithstanding the ipso facto provision. A direct action for a quo warranto is the proper action to take. To date, no quo warranto proceeding has been filed by the State against Mislatel,” he continued.

Sources: Chan-Robles; Philstar.com; PNA.gov.ph; GMA News Online

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