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Court summons NTC execs to shed light on Liberty frequency

() - May 23, 2008 - 12:00am

The Makati Regional Trial Court has ordered National Telecommunications Commission (NTC) chief Ruel Canobas and three other NTC officials to appear before the court today (May 23) to shed light on claims that the agency allowed the transfer of frequencies owned by Liberty Broadcasting Network Inc. (LBNI) to the prejudice of company creditors.

 In an order issued yesterday, the Makati RTC Branch 149 granted the urgent ex parte request for the issuance of a subpoena duces tecum and ad testificandum filed by LBNI creditor Rizal Commercial Banking Corp. (RCBC).

Last May 15, RCBC filed with the same court another motion to terminate the rehabilitation proceedings involving LBNI, publicly listed Liberty Telecoms Holdings, and Skyphone Logistics, and to allow the liquidation of three companies, all owned by businessman Raymond Moreno, due to their failure to comply with the terms and conditions of the court-approved rehabilitation plan for the company.

In yesterday’s order, the court directed Canobas, NTC frequency management division (FMD) chief Priscilla Demition, former acting FMD chief Joselito Leynes, former acting chief, and NTC legal department director Abigail Santillan-Felix to testify with respect to matters under their respective areas of concern on the telecommunications service which the NTC has authorized the Liberty group to provide to the public and the corresponding frequencies allocated for said purpose.

It also ordered the concerned NTC officials to inform the court of the status of the provision of said telco services and the frequencies allocated thereto, particularly but not limited to the WiMax Network service which the group proposed to provide under the revised rehabilitation plan approved by the court, and to bring the documents in connection with these.

RCBC has asked the courts to direct the NTC to explain why a certain radio frequency owned by the company has been allocated to the Philippine Long Distance Telephone Inc. (PLDT) group without court approval.

The three companies owe RCBC and several other creditors around P1.7 billion. Most of the company assets such as buildings and telecommunications equipment have been attached by said creditors. Foreclosure of these assets, however, has been suspended by the court due to the rehabilitation proceedings.

In August 2005, the group of companies filed a petition for corporate rehabilitation. Its rehabilitation plan was approved in December 2006.

RCBC has sought the termination of the rehabilitation proceedings for the group on the grounds that the latter’s transfer of its major asset, a 700 Mhz frequency granted by the NTC to PLDT subsidiary Smart Broadband Inc. (SBI) renders the proceedings useless.

The bank claimed that based on NTC records, LBNI’s proposed WiMax network under the 700 MHz frequency is no longer possible since SBI has applied for and reportedly been granted and allocated this particular bandwidth. “In this connection, the Honorable Court can direct the commissioner of the NTC and other NTC officials to inform the court of the allocation or assignment of the 700 Mhz frequency,” RCBC said.

RCBC noted that LBNI, in its rehabilitation petition, undertook to use its existing nationwide backbone network, specifically the frequencies allegedly already assigned and allocated to it by the NTC, for the purpose of operating a nationwide voice and data network (WiMax) which shall be the center of its rehabilitation.

According to LBNI’s revised rehabilitation plan, their proposed WiMax network, which is the main product/service in their 10-year rehab plan, shall account for more than 90 percent of their projected total revenue. This will be established on LBNI’s existing backbone network and making use of technology and frequencies (such as their 700 MHz frequency) they claim to have, RCBC noted.

RCBC said that since the proposed WiMax network shall be LBNI’s primary source of revenues, it is axiomatic that the failure of the proposed network necessarily spells the death of its rehabilitation.

“It is thus clear that for petitioners to be able to comply with and carry out their revised rehab plan as approved by the court, it is crucial that they retain possession, disposition, and control of their claimed existing assets and frequency allocations. Accordingly, possession, disposition and control of the 700 MHz frequency is indispensable as without it, petitioners cannot set up, maintain and operate the proposed WiMax network considered by the court in approving the revised rehab plan,” RCBC noted in its motion.

Under the interim rules on corporate rehabilitation, the rehabilitation proceedings can be terminated on the ground of the failure of the debtor-corporation to perform its obligations under the approved rehabilitation plan or upon determining that the plan may no longer be implemented in accordance with its terms, conditions, restrictions, or assumptions.

ABIGAIL SANTILLAN-FELIX COURT FREQUENCY NETWORK NTC PLAN RCBC REHABILITATION
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