1. National Broadband Network Custos MorumCustos Morum APPLICATION OF LEGAL & ETHICAL CONCEPTS & PRINCPLES

2. Legal Concepts & Principles: The ZTE contract is unlawful and void for lack of competitive bidding as required by Republic Act No. 9184, the Government Procurement Reform Act. Additionally, the Public Telecommunications Policy Act of 1995 (RA 7925) was created in the hopes of creating a more level playing ground for all companies. This is in league with the government’s drive to deregularize the telecoms industry in the Philippines. Therefore, it is not clear why the government opted to enter into a government-to-government contract with ZTE to develop the National Broadband Network when it is against their policy of deregularization in telecoms. National Broadband Network Custos MorumCustos Morum

3. Legal Concepts & Principles: The Philippine Constitution guarantees the right of its people to information on matters of public concern. Section 7 of the Bill of Rights of the 1987 Constitution reads: “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 limitations as may be provided by law.” The NBN contract between the government and ZTE is considered an official public document and is a matter of public concern. However, the awarding and details of the contract were initially kept from the public, which only got to know of the deal when other parties complained about the government decision to give the contract to ZTE when there were substantially lower offers. National Broadband Network Custos MorumCustos Morum

4. Legal Concepts & Principles: Under Section 5 of the Anti-Graft and Corrupt Practices Act: “It shall be unlawful for the spouse or for any relative, by consanguinity or affinity within the third civil degree, of the President of the Philippines, the Vice-President of the Philippines, the President of the Senate, or the Speaker of the House of Representatives, to intervene, directly or indirectly, in any business, transaction, contract or application with the Government.” Some parties have accused Jose De Venecia III, co-founder of AHI and son of House Speaker Jose De Venecia, of violating Section 5. However, Section 5 also says that: “…this section shall not apply to any application filed by him the approval of which is not discretionary on the part of the official or officials concerned but depends upon compliance with requisites provided by law, or rules or regulations issued pursuant to law.” Therefore, Jose de Venecia III may be involved in this government deal since his father did not have any say in the approval of the contract. National Broadband Network Custos MorumCustos Morum

5. Legal Concepts & Principles: The Build-Operate-Transfer (BOT) scheme is meant to attract investors to implement infrastructure projects that the government is unable to put in place due to budgetary constraints. Under a BOT scheme, a private contractor will set up and finance the project until a period of time when it turns over the entire operations to government. President Arroyo also stated that she did not want the government to spend for a project that could be funded by a private proponent. AHI’s $240M proposal would not only be fully privately-funded at no cost to the government, but it also does not require a sovereign guarantee, much less a massive foreign loan. Under a sovereign guarantee, the government is liable to shoulder the debts of the private proponent in case a project fails. However, the government still chose to award a $329.5M contract to ZTE. Under the ZTE contract, the government will avail itself of a loan from the China Exim Bank to finance the National Broadband Network (NBN), which will be paid in 20 years at three percent interest with a five-year grace period. This makes it very expensive for the taxpayers. National Broadband Network Custos MorumCustos Morum

6. Legal Concepts & Principles: Article 217 of the Revised Penal Code states: Malversation of public funds or property – Presumption of Malversation. – Any public officer who, by reason of the duties of his office, is accountable for public funds or property, shall appropriate the same, or shall take or misappropriate or shall consent, or through abandonment or neglect, shall permit any other person to take such public funds or property, wholly or partially, or shall otherwise be guilty of misappropriation or malversation of such funds or property…. The original copy of the Memorandum of Agreement (MOA) signed in the presence of President Gloria Macapagal-Arroyo during her visit to Hainan province in China on April 21 was entrusted to Emmanuel Nino Wee Ang, commercial attaché of the Philippine Consulate in Guangzhou. However, just a few hours after the documents were signed, they went missing. Ang should be held liable for the loss of these documents, whether it was due to theft, misplacement or intentionally lost due to sinister motives. National Broadband Network Custos MorumCustos Morum

7. Legal Concepts & Principles: Comelec Resolution No. 7707 (Calendar of Activities and Period of Prohibited Acts in Connection with the May 14, 2007 Synchronized National and Local Elections) prohibits: "releases, disbursements or expenditures of public funds public works, social services and development" from March 30 to May 14, 2007 The NBN Contract was signed on April 21, 2007, clearly within the time period specified in the Resolution. Since the ZTE contract involved the release of government funds, it should not have been allowed during this time period. National Broadband Network Custos MorumCustos Morum