NOW Telecom loses Supreme Court case

NOW Telecom once sued the NTC over the fees it set in the bidding process, but the Supreme Court says the guidelines 'were proper' to ensure that companies were financially and technically capable

MANILA, Philippines – It’s the end of the road for NOW Telecom, a company that once sought to become the Philippines’ third major telco player, after the Supreme Court (SC) junked its case against the National Telecommunications Commission (NTC).

The High Court ruling originated from NOW Telecom’s move in 2018 to sue NTC over what it described as “money-making schemes” in the bidding process.

The 15-page ruling by the Supreme Court’s 1st Division upheld a June 2021 Court of Appeals ruling which in turn affirmed a trial court decision in favor of NTC in October 2018.

Associate Justice Rodil Zalameda wrote the decision, with the concurrence of Chief Justice Alexander Gesmundo, and associate justices Ramon Paul Hernando, Ricardo Rosario and Jose Midas Marquez of the Court’s 1st Division.

Timeline

In October 2018, NOW Telecom filed a case against NTC with the Manila Regional Trial Court to challenge the multi-billion-peso fees that the agency required for interested bidders.

These fees included:

• P700 million participation security
• P14 to P24 billion performance security
• P10 million non-refundable appeal fee 

The company argued that such “barriers of entry” were “onerous, confiscatory, and potentially extortionary.”

In November of the same year, the trial court junked NOW Telecom’s plea for a writ of preliminary injunction due to mootness of the case, since the company still expressed its intention to participate in the bidding process.

NOW Telecom elevated the case to the Court of Appeals, which in June 2021 said that NTC’s Memorandum Circular (MC) No. 09-09-2018 – which contained the bidding guidelines – was valid and not anticompetitive.

How the SC ruled

The Supreme Court said that the guidelines imposed by NTC in its search for the country’s third telco player “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 new major player.”

The High Court also agreed with the CA that the NTC memo in question cannot be stopped by the lower courts, in accordance with Republic Act No. 8975, which explicitly prohibits lower courts from issuing preliminary injunctions against the government to prohibit it from the bidding or awarding of infrastructure contracts.

The magistrates also said that the case is moot and academic since Mislatel, later renamed Dito Telecommunity, won in the bidding process.

“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 [new major playor] pursuant to the subject circular, and the resulting assignment of the allocated radio frequencies for the [new major player] to Mislatel have rendered NOW Telecom’s prayer for injunctive relief moot and academic,” the SC explained.    

The court also said NOW Telecom failed to show it was compliant with the memorandum circular’s provisions, having been unable to form a consortium to meet the P10-billion capital requirement when it filed the complaint. – Rappler.com