TROs seen restraining PHL economic potential

PRESIDENT Rodrigo Duterte assumed his post with a warning against the courts’ unwarranted issuance of injunction orders that tend to delay government projects.

In his second State of the Nation Address in July, Duterte even wrongly called on the country’s Supreme Court to lift the temporary restraining order (TRO) against the distribution of contraceptives provided under the Reproductive Health (RH) Law.

It has been two years, according to Duterte, since the government purchased medicines for the law’s implementation. The country’s chief executive blamed the TRO for tying the hands of government in distributing the medicines.

The medicines, he said, will expire this month and puts to waste P350 million worth of taxpayers’ money.

These views of Duterte, a former prosecutor for Davao City, were clarified by no other than Chief Justice Maria Lourdes Sereno. Sereno said the Court never issued a TRO against the implementation of the RH law but merely against two specific contraceptives regulated under the law: Implanon and Impanon NXT.

She added that the lifting of the TRO against the two implants no longer depends on the Court but on the required certification from the Food and Drug Administration (FDA). The FDA must in effect certify these contraceptives are not abortifacient.

With regard to government projects, Duterte lamented that losing bidders would usually seek redress from the courts through a petition for a TRO or injunction. He said the latter has resulted in the delay of the implementation of these projects.

“For the courts especially, I would like to address myself to the Court of Appeal[s], to the court and all the courts, do not make it a habit to issue injunctions, particularly on government projects. That would cause trouble between us,” Duterte said in one of his speeches.

However, under Republic Act 8975, only the Supreme Court can issue injunctions on “national government infrastructure, engineering works and service contracts.”

TROs, telcos

JUST two months after the President assumed his post in June 2016, a TRO was issued by the Court of Appeals enjoining the Philippine Competition Commission (PCC) from reviewing the Philippine Long Distance Telephone Co. (PLDT) and Globe Telecom Inc.’s P70-billion buyout deal of the telecommunications assets of San Miguel Corp. (SMC).

The PCC, in its letters dated June 7 and June 17, 2016, ordered the preacquisition review and investigation of the acquisition made by PLDT and Globe of all the issuing and outstanding shares and assets of Vega Telecom Inc. (VTI), a subsidiary of SMC.

Pursuant to the sale and purchase agreement executed on May 30, 2016, for an agreed purchase price of P52,080,764,982 under a deferred payment scheme (the sum of P26,040,382,490 was paid upon the execution of the contract, P13,020,191,246 to be paid on December 1, 2016, and P13,020,191,246 to be paid on May 30, 2017).

Both listed firms PLDT and Globe purchased on an equal sharing or 50-50 basis the entire issued and outstanding shares of VTI’s stocks.

Thumbed down

THE CA also turned down the motion for reconsideration filed by the PCC seeking the lifting of the TRO in a resolution issued in March.

Instead, the CA issued a gag order directing all the parties in the case 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.

It also directed the PCC to remove immediately from its website its Preliminary Statement of Concern (PSOC). The latter contained an initial finding that the deal “is likely to substantially prevent, restrict and lessen competition” within the telco industry.

The PCC earlier claimed that the deal would likely discourage potential competition in retail mobile, reduce options for wholesale customers of mobile services and fixed broadband services and allow collusion between PLDT and Globe.

Risk increase

PRIOR to the gag order issued by the CA, the PCC earlier said the deal is too risky to be sealed.

“This setup increases the risk associated with cartel-like behavior,” said the PCC, an independent, quasi-judicial body formed to implement the Philippine Competition Act.

Despite the impasse, Globe Telecom Head of Corporate Communications Yolly Crisanto assured that the company continues to find ways and means to improve its services.

“We are on track in terms of our rollout commitment to the government. To date, we have more than 1,300 sites using the 700-megahertz (Mhz) spectrum, and our LTE deployment across the country has reached 4,800 sites,” Crisanto said. “As the leader in mobile, we will continue to advocate for first-world Internet experience in the Philippines.”

She also appealed to the government to assist the telco industry in addressing issues that hamper the efficient delivery of its services.

“Having said these, we call on the government to help the sector with regard to the permitting issues that continue to plague our industry.”

Supply options

ON February 21, 2016, the SC issued a TRO enjoining the implementation of the retail competition and open access (RCOA) policy implemented by the Department of Energy (DOE) and Energy Regulatory Commission (ERC) in the power industry through DOE Circular DC2015-06-0010, Series of 2015, and Energy Regulatory Commission (ERC) Resolutions 5, 10, 11 and 28, Series of 2016.

The TRO was issued based on the petition the Philippine Chamber of Commerce and Industry (PCCI), Ateneo de Manila University, San Beda College (Alabang) and mall owner Riverbanks Development Corp. questioning the constitutionality of the new DOE regulations requiring big power consumers to source their electricity supply from any of the 23 retail electricity suppliers (RES) designated by ERC.

The PCCI argued that the RCOA has violated the basic constitutional right to freedom of choice of electricity consumers as it deprived them of the right to choose RES outside ERC’s listed firms.

It stressed that the new regulations do not actually open the power industry nor do they create a fair competition.

They explained that imposing mandatory contestability to electricity consumers would limit their choice of suppliers as it prohibits distribution utilities from participating in the contestable market even if the distribution utilities can offer the lowest price to consumers.

Petitioners also lamented that new regulations abandoned a previous policy allowing distribution utilities and their retail supply units from competing for large consumers in the contestable market.

As a result, the new policy limited choices of large power consumers from the list of retail suppliers deemed qualified by the ERC.

These arguments, however, were contradicted by various stakeholders and consumer groups who claimed that the TRO would actually promote monopolization.

Among these groups are the National Association of Electricity Consumers for Reforms (Nasecore), Action for Consumerism and Transparency in Nation Building (Action) and Bayan Muna (literally “country first”) Partylist Rep. Neri Colmenares.

They argued that without RCOA, “certain industry players will be able to monopolize and abuse the electricity market.”

They insisted that the new DOE and ERC regulations are valid and reasonable regulatory measures geared toward the promotion of the purposes of the Electric Power Industry Reform Act of 2001 (Epira), which is to promote true market competition and prevent harmful monopoly and market power abuse in the electric power industry.

Bayan Muna, on the other hand, argued that delaying or stopping open access works in favor of big distributors such as Meralco, “who incidentally also owns power-generation companies,”

Energy Secretary Alfonso G. Cusi has noted that the TRO would have a big impact on the desire of the government to provide power consumers freedom of choice as to which power provider they prefer to deal with.

“The spirit of the RCOA is giving the consumers the freedom of choice which would result in higher productivity for them. And the power of choice can only be maximized when there is a level playing field for all suppliers,” Cusi earlier said.

The Philippine Independent Power Producers Association (Pippa) has also called for the SC to lift the TRO. The group insists that the RCOA is mandated by the Epira, but implemented only in 2013.

The Pippa explained that the RCOA is aimed at institutionalizing competition in the supply of electricity, allowing the electricity end-users to choose their suppliers based on low price and other factors.

The TRO, it said, would effectively put on hold some aspects of the RCOA, specifically the timeline for lowering of thresholds. The RCOA allows electricity end-users with at least one megawatt of peak demand to choose their suppliers.

End-users can choose between 23 retail electricity suppliers designated by the ERC.

It was supposed to take effect on February 26, but was derailed due to the issuance of the TRO by the SC.

Common station

MEANWHILE, it has been three years since the Supreme Court issued a TRO in connection with the construction of the common station interconnecting LRT Taft and the Metro Rail Transit (MRT) Edsa.

The Court also directed the Regional Trial Court of Pasay City to hear and resolve with dispatch the damage suit filed by SM Prime Holdings Inc. (SMPHI) against the Light Rail Transit Authority (LRTA) and the Department of Communications and Transportation (DOTC).

The SC has refused to lift the TRO despite pleas from the LRTA and the DOTC, now called the Department of Transportation, or DOTr.

The TRO specifically stopped the LRTA and DOTC from proceeding with the transfer of the common station in front of SM City North Edsa to the new site in front of TriNoma Mall on North Avenue, Quezon City.

In its petition, SM Prime assailed the decision of the DOTC and LRTA to build the common station interconnecting the LRT Taft, the Metro Rail Transit-Edsa and the forthcoming MRT 7 in front of the TriNoma Mall, which is being operated by the Ayala Group of Companies.

The petition claimed that the move was in violation of a memorandum of agreement it signed with LRTA on September 28, 2009, to construct the same in front of SM City North Edsa.

SMPHI and LRTA entered into a memorandum of agreement (MOA) on September 28, 2009, for the construction of the common station in front of SM City North Edsa, Quezon City. On October 16, 2009, SMPHI paid and delivered to LRTA P200 million to help finance the cost of the construction of the common station.

However, the DOTC, through its Special Bids and Awards Committee, subsequently declared the change of site of the common station’s location.

The Court held that it “cannot turn a blind eye” to the serious implications of a change in the location of the common station.

It added that “it is to the benefit of the common good that the issue of the legality and propriety of the transfer of the common station be threshed out in proper proceedings before work on the common station be allowed to commence as such work cannot be undone without great, perhaps even immeasurable, cost to the public.”

It noted that the issue involved is a priority infrastructure project of the national government within the strategic framework of the transportation sector.

The Court noted that petitioner SMPHI has shown that it had entered into a MOA with the LRTA wherein the primary consideration for petitioner’s grant to the government of P200 million as assistance in the construction of the common station was the previous official determination of the government agencies involved, the LRTA included, that the location of said common station shall be in front of the SM City North Edsa mall.

It further noted that respondents LRTA and DOTC neither deny the existence of this MOA nor claim that the same has been terminated or rescinded, nor do they disclaim that the DOTC intends to transfer the site of the common station to the front of the TriNoma Mall.

Under the MOA, among others, the common station “shall forever bear and include in its final name ‘SM North Edsa.’”

Likewise, SM shall “be allowed to construct, maintain and operate a walkway/bridgeway on its own property, which shall interconnect the common station with the pertinent level of SM City North Edsa.”

The parties initially carried out the construction design of the common station, including the bridgeway that will interconnect the common station and SM City North Edsa, and the government even started the bored piling works in front of SM.

However, construction stopped with neither the LRTC nor the DOTC informing the SMPHI of the reasons for such action.

SMPHI said its repeated requests for updates were ignored. The company said it later learned from news reports regarding DOTC’s plans to change the location of the common station.

Following DOTC’s formal declaration of the change of site of the common station’s location, SMPHI instituted a civil action before the Pasay RTC and, later, sought a TRO with the High Court.

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