THE  LEGAL  DIMENSIONS  OF  A  SCANDALOUS  CONTRACT

MANILA, SEPTEMBER 8, 2007
(STAR) By Josefina T. Lichauco, Former DOTC secretary - (First of two parts)

These past few weeks have been replete with horror stories and very valid concerns about the now infamous National Broadband Network (NBN)/ZTE contract. This may not even exist, inasmuch as, in spite of the formal written requests for a copy of the contract and the loan agreement – if they indeed do exist because DOTC officials have announced successively that they do – no copy has been sent, seen, touched or even smelled.

I do not intend to write about any of the scandalous exposés, but, as a former DOTC secretary and undersecretary for many years in this particular infrastructure agency – 19 years to be exact – I feel a compelling urge to write about the violations of law and the legal processes and procedures from the initiation of the conceptualization of the project until its execution, being familiar with them.

It was during my time as Usec for Communications when RA 7925 was initiated and passed in 1995; so with RA 8792 (E-Commerce Act) of 2000. We did give our comments on both drafts and did some coordination with the people responsible for their passage. This article of mine will be divided into “Violations of Laws” and “Violations of Standard Procedures.”

I. Violation of Laws: a) the specific mandates of demonopolization, liberalization and privatization found in RA 7925 are intended to be followed, not violated! One of the fundamental rationales for the enactment of this law was not only the heavy burden of obsolescence which the government sector can certainly not afford to suffer, especially as regards the extremely rapid pace of technology. The telecom private sector, the “telcos” as I fondly call them since they started their operations during my incumbency at the DOTC, are in business for profit, bearing in mind, I hope, that their business as a telco is a public service.

After the demonopolization and liberalization efforts of government which really started in 1987 through Department Order 87-188, the telecom private sector has become the most profitable sector in the country today, with Smart, Globe and PLDT earning huge profits surpassing, from the point of view of net income, even the members of the banking, manufacturing, etc. sectors. Aside from this are the operation and maintenance expenses, should government operate a network which can come up to very high figures.

b) The E-Commerce Act of 2000 (RA 8792) and its IRRs (Implementing Rules and Regulations) were blatantly violated. DOTC Asec Lorenzo Formoso, during a TV interview where I was also an interviewee, pronounced that they are only following the provisions of Sections 40 and 41 of the IRRs of the E-Commerce Act. This is not true! Its falsity lies in the fact that the “Declaration of Policy” at the beginning precisely of the IRRs, section 1, Part I, demolishes his legal basis. This “Declaration of Policy” precisely provides that “The State recognizes the vital role of information and communications technology (ICT) in nation-building…and the primary responsibility of the private sector in contributing investments and services in telecommunications and information technology; …and the need to marshal, organize and deploy national information infrastructures, comprising both telecommunications networks and strategic information services, including their interconnection to the global information networks, with the necessary and appropriate legal, financial, diplomatic and technical framework, systems and facilities.”

It is so clear and specific that it is private sector investments that have to be involved in ICT development, expansion and upgrade. Enacted in 1995, RA 7925 is the basic law governing telecom development in our country, and unless an amendatory or abolishing law is passed, it remains firmly in our statute books. When the IRRs provided in its section 40 for an electronic online system to be established by government, this provision should have been taken in light of its very own Section 1, Part I, Declaration of Policy. The “electronic online network” under section 40 is supposed to be undertaken through the telcos like Globe now offering broadband services. And PLDT will be ready with its New Generation Network (NGN) by mid-2008.

It is such a ridiculous assertion by the DOTC to use sections 40 and 41 of the IRRs for their legal basis in order to be able to implement what, to my mind, and that of a great many others, is a scandalous and shameless contract with the Chinese firm ZTE. If the DOTC intent is to consider the IRRs as law, it is important for them to know that the IRRs’ Declaration of Policy was copied verbatim from the E-Commerce Act of 2000 (RA 8792).

And if they don’t believe in the predominance of the Declaration of Policy in the IRRs, the law is there, to let them know that they have in truth and in fact, committed another violation of law, which is the E-Commerce Act.

c.) The fundamental law of the land, which we all know is the Constitution of the Philippines, provides in its Section 7, Art. III Bill of Rights: “The right of the people to information on matters of public concern shall be recognized. Access to official records, and to documents and papers pertaining to official acts, transactions, or decisions, as well as to government research data used as basis for policy development, shall be afforded the citizen, subject to such limitations as may be provided by law.”

This is a fundamental right of every Filipino and any limitations to this right can only be done through the enactment of a law.

Why is the DOTC not complying with the formal requests for a copy of the contract? DOTC Secretary Leandro Mendoza announced, in fact, a couple of weeks ago that the DOTC had successfully “reconstituted the contract,” since there were no copies available, no computer copies, or any kinds of copies whatsoever, so that it had to be reconstituted. The announcement that was given was, in very precise terms of the DOTC secretary: “The contract has been reconstituted and re-signed.” That was loud and clear. Unfortunately, up to this writing, no copies were made available.

Is it because this announcement was premature, because the loan agreement had not yet been signed? But before the loan agreement can be signed, the Constitution provides under its section 21, Article 12, that: “Foreign loans may be incurred in accordance with law and the regulation of the monetary authority. Information on foreign loans obtained or guaranteed by the Government shall be made available to the public.” In the following section, it is provided that, “Acts which circumvent or negate any of the provisions of this Article shall be considered inimical to the national interest and subject to criminal and civil sanctions as may be provided by law.”

Having announced that the loan agreement has been signed, where indeed is a copy of it? The public is entitled to “information on foreign loans.” The citizen is entitled to copies of both the contract documents and the loan agreement. Why has not the DOTC recognized this basic right of the citizen? For these violations, criminal and civil sanctions may accrue. Does the DOTC know this? Is the sequential order of the actions being arranged in a studied premeditated manner, so that the Monetary Board approval will come first, followed by the Loan Agreement, and then finally the contract? Remember that the Monetary Board has not approved the loan.

(To be continued Monday)


Chief News Editor: Sol Jose Vanzi

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