SC junks PLDT’s bid to stop Globe-Bayantel debt-to-equity deal

Published February 18, 2021, 5:31 PM

by Rey Panaligan 

The Supreme Court (SC) has dismissed the petition filed by the Philippine Long Distance Telephone Company (PLDT) which challenged the joint application for the approval of the debt-to-equity transaction involving $131 million between Globe Telecom, Inc. (Globe) and Bayan Telecommunications, Inc. (Bayantel).

Supreme Court (SC)
(MANILA BULLETIN FILE PHOTO)

In its petition, PLDT challenged the 2015 decision of the Court of Appeals (CA) which affirmed the validity of the orders issued by the National Telecommunications Commission (NTC) in 2014.

The CA ruling allowed the NTC to continue with the proceedings on the joint application. It denied PLDT’s plea to dismiss or suspend the NTC proceedings.

In a resolution released last Wednesday, February 17, the SC ruled that PLDT’s petition has become moot and academic because the NTC had approved the joint application on July 2, 2015.

In dismissing PLDT’s petition, the SC said:

“In this case, while the certiorari petition filed by PLDT questioning the interlocutory orders issued by the NTC was pending, the NTC rendered a decision on the Joint Application. In fact, PLDT moved for reconsideration of the NTC decision on the Joint Application.

“Given this development, any action on the certiorari petition on mere incidental matters of the Joint Application would not accord any practical relief to PLDT.

“Hence, this case has become moot and academic. PLDT’s remedy is to file an appeal questioning the decision of the NTC in the Joint Application and not to insist on the certiorari petition involving interlocutory orders earlier issued by the NTC as an incident to the Joint Application.”

On Oct. 11, 2013, Globe and Bayantel filed before the NTC a joint application for the approval of the debt-to-equity transaction between them after a rehabilitation court approved Bayantel’s amended rehabilitation plan (ARP) and its master restructuring agreement (MRA) which allowed Bayantel’s creditors the option to convert their restructured debt into additional equity.

As the principal creditor, Globe agreed to convert its exposure into 56.6 percent of Bayantel’s outstanding shares.

Under the Public Service Act, before a transfer of more than 40 percent of a grantee’s subscribed capital stock can be done, the grantee and the transferee must obtain the approval or authorization of NTC, otherwise, the transfer is deemed null and void.

Globe acquired 98.26 percent of Bayantel’s loans and 100 percent of the liabilities of Radio Communications of the Philippines, Inc’s (RCPI), a unit of Bayantel.

In challenging Globe and Bayantel’s joint application before the CA, PLDT said that the NTC violated its own rules and its (PLDT’s) right to due process when it did not order the joint applicants to include in their application the amended ARP and MRA.

Also, PLDT claimed that since the joint application sought the transfer of Bayantel’s franchise to Globe, prior congressional approval is needed.

Thus, PLDT alleged that by holding in abeyance the resolution of the issue of whether or not prior legislative approval is required to entertain the join application, the NTC arrogated unto itself the powers that are vested in Congress.

But the CA noted that the ARP and the MRA were furnished to the NTC during its course of proceedings, thus, the issue raised by PLDT on the matter is already moot and academic.

The appellate court also that the NTC did not commit grave abuse of discretion when it deferred the resolution of the issue on whether or not  prior congressional approval is needed before the NTC can proceed to hear the joint application of Globe and Bayantel.

It said such allegation requires proof that there would be actual transfer of the franchise.

 
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