CA junks PCC plea on review of PLDT, Globe PHP70-B buyout of SMC telco assets

By on March 2, 2017


The Court of Appeals denied the petition of motion for reconsideration filed by Philippine Competition Commission (PCC) in relation to the review of the the Philippine Long Distance Telephone Company (PLDT) and Globe Telecommunications’ PHP70-billion buyout deal of the telco assets of San Miguel Corporation (SMC). (Photo by Ramon FVelasquez (Own work) [CC BY-SA 3.0)
The Court of Appeals denied the petition of motion for reconsideration filed by Philippine Competition Commission (PCC) in relation to the review of the the Philippine Long Distance Telephone Company (PLDT) and Globe Telecommunications’ PHP70-billion buyout deal of the telco assets of San Miguel Corporation (SMC). (Photo by Ramon FVelasquez (Own work) [CC BY-SA 3.0)
MANILA—The Court of Appeals denied the petition of motion for reconsideration filed by Philippine Competition Commission (PCC) in relation to the review of the the Philippine Long Distance Telephone Company (PLDT) and Globe Telecommunications’ PHP70-billion buyout deal of the telco assets of San Miguel Corporation (SMC).

In a resolution dated Feb. 17, 2017 but was released to media on Thursday, penned by Associate Justice Ramon M. Bato Sr. and was concurred by Justices Maria Elisa Sempio Dy and Henri Jean Paul Inting, the CA’s 12th Division, denied PCC’s motion for reconsideration of its August 26 resolution as it stood by its findings that the existence of all the requisites for the issuance of a writ of preliminary injunction has been established by PLDT and Globe.

Last August 26, 2016, the CA issued a writ of preliminary injunction against PCC and its agents from conducting any investigation which would impair the rights of PLDT, Globe and SMC.

The injunction was issued in order not to affect the rights of the consumers and to protect the move to improve the interned speed and connection nationwide.

The petitioners, according to the CA, were able to establish the existence of a clear positive right that needs judicial protection during the pendency of the main case.

They argued that the deal has been deemed approved by operation of law since they have fully complied with the terms of the transitory circulars issued by the PCC.

PLDT said its wireless subsidiary Smart has been implementing the transaction and using the frequencies as part of its nationwide rollout.

They warned that a reversal of the transaction will result in “irreparable and incalculable injury to the public service.”

“We agree with PLDT that there is an urgent and paramount necessity to enjoin PCC from proceeding with the pre-acquisition review and/or investigation to prevent serious and irreparable damage to PLDT whose credit standing is at risk and its ability to borrow funds to fully roll out the previously unused/idle 700MHz spectrum may be jeopardized and unduly exposed it to violate the conditions imposed by NTC thereby impeding the three-year program of providing faster/reliable/affordable mobile data/internet to the consuming public all over the country,” the CA pointed out.

The CA noted that the utilization of the previously unused 700MHz by PLDT and Globe under a co-use agreement approved by the National Telecommunications Commission (NTC) will greatly benefit the public.

The CA also branded as “misplaced” PCC’s contention that the issuance of the injunction effectively disposed of the case on the merits.

“We have to stress that the Court’s determination of the existence of all the requisites for the issuance of a writ of preliminary injunction is interlocutory and preliminary in nature. The granting of a writ of preliminary injunction is an interlocutory order because it does not dispose of the main case,” the CA held.

It will be recalled that PCC, in its Letters dated June 7 and June 17, 2016, it ordered the pre-acquisition review and investigation of the acquisition made by PLDT and Globe of all the issuing and outstanding shares and assets of Vega Telecom Inc., a subsidiary of SMC.

Pursuant to the Sale and Purchase Agreement executed on May 30, 2016, for an agreed purchase price of PHP52,080,764,982 under a deferred payment scheme (the sum of PHP26,040,382,490 was paid upon the execution of the contract, PHP13,020,191,246 to be paid on December 1, 2016 and PHP13,020,191,246 to be paid on May 30, 2017).

Both PLDT and Globe purchased on an equal sharing or 50-50 basis the entire issued and outstanding shares of stock of VTI.

The PCC Letters issued against both PLDT and Globe was hailed to the CA seeking to stop the former with its orders.

Also in resolution, CA issued a gag order directing it to remove immediately from its website its Preliminary Statement of Concern (PSOC) which contained an initial finding that the deal “is likely to substantially prevent, restrict and lessen competition” within the telco industry.

Likewise, the appellate court directed PCC, PLDT and Globe to cease and desist from issuing public comments and statements that would violate the sub judice rule and subject them to indirect contempt of the court.

“Applying the sub judice rule, PCC should immediately remove its PSOC posted in its website and refrain from making comments on the subject acquisition while the case is pending in court,” the resolution stated.

“Likewise, to be fair, PLDT should also refrain from making comments on the subject acquisition and desist from communicating their opinion to the public during the pendency of this case,” it added.

The gag order was issued upon the motion filed by PLDT where it claimed that the publication of the PSOC violates Republic Act No. 10667 which considers confidential the deliberations and investigation conducted by PCC.

The PLDT alleged that PCC’s continuing communication with the media to drum up public sympathy violates the sub judice rule.