Missing frequencies?

We all have to pay for the sins of the past.

This old adage is now plaguing the National Telecommunications Commission, which is having a tough time explaining to the courts the whereabouts of certain frequencies assigned to Liberty Broadcasting Network Inc. (LBNI) – now the subject of rehabilitation proceedings pending before the Regional Trial Court of Makati.

The NTC earlier received an order from RTC Branch 149 requesting the NTC to inform the court of any disposition, reallocation, or assignment of frequencies made by LBNI, Liberty Telecoms Holdings Inc. and Skyphone Logistics Inc. made from Aug. 15, 2007 up to the present, as well as to inform it whether the court “whether there is such a confidential nature of the frequencies assigned to said three companies.”

The court’s interest is understandable. Since 2005, the company has been under receivership. There can be no disposition of assets without the court’s approval. The rehabilitation receiver has custody and control of all assets of LBNI, as part of his task to protect the investors and creditors and of course, the interest of the company to ensure rehabilitation. Any unauthorized disposition of assets will be deemed in fraud of the creditors.

The court and the appointed receiver likewise has to have full information of the extent of the assets of the company under receivership.

Thus, before the court can determine whether there was any disposition, reallocation or assignment of frequencies by LBNI, the former has to know what frequencies were assigned to LBNI in the first place.

Last Feb. 21, NTC commissioner Ruel Canobas received a memorandum from Engineer III Roberto Tolentino asking for “instructions” on how to deal with  certain frequencies “assigned” by former NTC commissioner Abesamis to LBNI.

To quote from the memorandum: “On Jan. 9, 2008, Mr. (Raymund) Moreno showed a copy of two letters dated June 26 and 28, 2007 both signed by Commissioner Abesamis with the initial of FMD acting chief Joselito C. Leynes granting to LBNI the exclusive assignments of frequencies 2540-2545 MHz, 2580-2595 MHz, 2535-2540 MHz, and 2565-2580 MHz. How should we treat the two NTC letter to LBNI dated June 26 and 28 granting frequencies as contained in said letters? FMD logbook showed that no application was ever received for the said assignments. Frequencies are neither found in FMD database.”

Because there was no way to truly account for the frequencies that LBNI has, the NTC has not prepared a listing of the frequencies assigned to LBNI. Conveniently, the commission now says LBNI has not disposed of any frequencies.

The court however has to deal with information that Moreno “collects frequencies from NTC and then secretly resells them to genuine telcos”, thereby defrauding its creditors, to which he owes  about P1.4 billion.

LBNI has filed for rehabilitation as early as August 2005. It has since then effectively ceased operations. Why would former Commissioner Abesamis then allocate valuable broadband wireless access (BWA) frequencies to a company which obviously does not have the financial and technical capability to provide telecommunications services to the public?

The court is now asking the NTC if there indeed were secret or confidential allocation of frequencies made to LBNI. Secret, meaning the allocation was made without any hearing and publication and service of notice to affected parties as required by the law and NTC rules to enable said parties to oppose the allocation. Without compliance with these procedural requirements, the allocation is illegal.

These BWA frequencies are scarce and valuable. There are so many telecom companies lining up for these frequencies (the band 2500-5690 MHz have been reallocated for the use of BWA as per NTC Memorandum Circular 06-08-2005 enacted Aug. 23, 2005). Smart Broadband for instance has been asking NTC for 48 MHz frequency bandwidth in the 700 MHz spectrum. Globe we learned has also applied for additional frequencies for its broadband services. LBNI itself has a pending application for BWA frequency.

If indeed Moreno has not secretly disposed of these frequencies (which according to NTC officials themselves were secretly awarded to LBNI) and all these are plain rumors and conjectures, then let the NTC explain the whereabouts of these frequencies.  

Rehab rules need review

A leading legal luminary has asked the help of Nueva Vizcaya Rep. Carlos Padilla for the immediate passage of a law that will help rehabilitate financially-distressed companies as in the case of the Steel Corp. of the Philippines.

Lawyer Marcial O.T. Balgos, a member of the Supreme Court Committee which drafted the Interim Rules of Procedure on Corporate Rehabilitation, sent a letter to Padilla after the Congressman delivered a privilege speech on the problems encountered by SCP in its rehabilitation case.

Balgos noted that the paucity of the provision on the matter in Presidential Decree No. 902-A limited the ambit of the intensions of the SC Committee when it drafted the Interim Rules that is now subject to abuse in rehabilitation cases.

He sayd House Bill No. 3425 entitled “An Act Providing for the Rehabilitation of Distress Corporations, Amending for the Purpose PD NO. 902-A, as amended” may help in arresting the malpractices as discussed by Padilla in his privilege speech.

According to Balgos, PD 902-A which was issued by former President Marcos did not contain any provision on corporate rehabilitation prompting the chief executive to issue PD No. 5063 that introduced corporate rehabilitation of domestic corporation.

HB 3425 was principally authored by Deputy Speaker for Luzon and Oriental Mindoro Rep. Amelita Villarosa and was filed before House of Representatives last Feb. 7 .

In a memorandum to Rep. Villarosa dated Feb. 12, Balgos commended the Congresswoman for her bill which has long been over due since the Interim Rules have been subject to abuse in rehabilitation cases.

Balgos said the Interim Rules were made by the SC Committee since there had been no rules to govern corporate rehabilitation as implemented by the courts.

To quote Balgos: “PD NO. 902-A as implemented by the Interim Rules since proved inadequate simply because procedural law cannot go beyond what the substantive law provides. The substantive law being only two brief sections of PD 902-A as amended, of necessity, the Interim Rules suffered from the same paucity of PD NO. 902-A as amended. He deplored the one of the most affected industries in the country as far as rehabilitation cases are concerned is the Philippine steel industry wherein several corporations are undergoing rehabilitation, either these were initiated by the companies themselves or by their creditor-banks.

He added: “It is with respect to petitions initiated by creditors that had become problematic. First, because rather than having the financially-distressed steel corporations removed and for them to be restored to their formal position of financial stability and profitability, take over of business for which they have no expertise to undertake has become the object of these creditors. Second, in their desire to have their chances for take over insured, the initiating creditor usually connive with members of the judiciary and the duly-appointed receivers.”

For comments and feeds, e-mail at [email protected]