Wednesday, September 12, 2007 SC stops broadband deal implementation
THE Supreme Court (SC) on Tuesday issued a temporary restraining order (TRO) enjoining the government from implementing the US$330-million (P15-billion) broadband infrastructure deal sealed with a Chinese firm, ZTE Corporation.
The SC granted the petition for TRO filed by Iloilo Vice Governor Rolex Suplico pending the court's resolution of his prayer to nullify and declare unconstitutional the controversial contract to set up the National Broadband Network (NBN) project, which aimed to inter-connect all government agencies down to the barangays.
"Acting on the instant petition, without giving due course to the petition, to issue a TRO, effective immediately and continuing until further orders from this Court, enjoining respondents and any of and all persons acting on their behalf from 'pursuing, entering into indebtedness, disbursing funds and implementing the ZTE-Department of Transportation and Communication (DOTC) broadband deal and project,' as prayed for," the court ruled.
Named respondents in the case are the National Economic Development Authority (Neda), Neda-Investment Coordination Committee, DOTC, Commission on Information and Communications Technology headed by its chairman Ramon Sales, Telecommunications Office-Bids and Awards for Information and Communications Technology Committee (ICT) headed by DOTC Assistant Secretary Elmer Soneja and its Technical Working Group, DOTC Assistant Secretary Lorenzo Formoso and all other operation units of the DOTC for ICT and ZTE Corporation, Amsterdam Holdings Inc. (AHI) and Arescom Inc.
A similar petition filed by AHI, a local firm, whose principal stockholder was a son of House Speaker Jose de Venecia Jr., was consolidated with the petition filed last August 1 by Suplico, a former member of the House committee on telecommunications.
AHI was the original proponent for the contract and which also submitted an unsolicited proposal for the NBN project.
The SC however did not act on Suplico's request to set the case for oral arguments.
The high court also granted the motion of ZTE's lawyers from the Angara Abello Concepcion Regala and Cruz law offices which sought to be given an additional period of 20 days or until September 28 within which to file their comment on Suplico's petition.
In his taxpayer suit before the SC, Suplico said the project was actually a "Lutong-Macao" for violating existing laws and jurisprudence and is inconsistent with government policies on public transparency, accountability and self-reliance.
Suplico's petition was filed a day after the Department of Justice (DOJ) gave its conditional approval to the controversial project.
He said the alleged anomalous deal entails the government "entering into indebtedness, disbursing funds for, and implementing deal without competitive, transparent and public bidding."
Maintaining the equipment will also place the state in gross disadvantage and would mean added financial burden to it as the country does not have the technology or means to repair or replace the equipment, petitioner said.
Suplico said the multibillion-peso contract between the DOTC and ZTE should be nullified for violating Section 20, Article VII of the Constitution which states that sovereign loans and guarantees require the prior concurrence of the Monetary Board, the governing body of the Bangko Sentral ng Pilipinas.
He further said the transaction was carried out without a public bidding, contrary to Republic Act (RA) 9184, or the Government Procurement Reform Act, which requires competitors to submit their bids simultaneously via Internet on a specified date and time.
The deal, Suplico said, also violates the Build-Operate-Transfer (BOT) Law which provides that in case of unsolicited proposals "no direct guarantee, subsidy or equity is required."
"The terms of the contract in question, insofar as it obliges the government to incur a foreign loan in the amount of US$330 million runs afoul of constitutional and statutory proscriptions on incurring public debt and contracting and/or guaranteeing foreign loans," he said.
He added that the deal is also contrary to the government telecommunications policy and a violation of the Telecoms Policy Act which ordered the government since 1995 to privatize all its telecoms facilities.
Suplico pointed out that other interested parties such as AHI and Arescom have already signified their interest to build and operate a similar network in full compliance with President Gloria Macapagal-Arroyo's instruction that this would be carried out without any government expenditure.
Under the agreement between the governments of the Philippines and China, the NBN project will be financed by the Export-Import Bank (Exim) Bank of China under the terms of three percent annual interest and 20-year repayment period inclusive of five-year grace period.
The original NBN contract with ZTE for US$330 million was signed by Arroyo last April 20 in Hainan, China. Since its signing, the DOTC has not disclosed the details of the contract.
The contract was signed in a bid to save the government about P3.4 billion yearly in telephone bills. Funding under the contract with ZTE would come from a 15-year loan from the Chinese state-owned bank with a five-year grace period.
Anakpawis party-list Representative Crispin Beltran and other congressmen lauded the SC decision to stop the implementation of the NBN contract.
Beltran hoped that the court’s move would lead to the complete cancellation of the project, given that the contract was forged and finalized under anomalous circumstances and the project's inherent usefulness and necessity has been declared minimal by local education and technology experts.
"Malacañang should take its cue from the SC and declare the project null and void,” he said.
Meanwhile, Transportation Secretary Leandro Mendoza reviewed with several Cabinet secretaries the key aspects of the NBN project.
Mendoza showed how the project would save the government more than P3 billion a year. The annual cost will be P990 million when repayments begin on the proposed 20-year, three-percent interest rate loan to fund the project.
He said the NBN system would provide telecom services now costing P4 billion yearly for national agencies alone, plus billions more for local governments, government corporations, community e-centers, and other state entities down to the poorest municipalities.
The NBN system will have 300 WiMAX wireless broadband stations to serve 25,800 offices nationwide. (ECV/Sunnex)
