AN ACT AMENDING THE FRANCHISE OF EXPRESS TELECOMMUNICATIONS CO. INC.

Case Overview and Summary

Nature and Scope of Franchise (Section 1):
- Grants Express Telecommunications Co. Inc. (formerly Felix Alberto and Company, Incorporated) a franchise to construct, install, establish, operate and maintain wire and/or wireless telecommunications systems throughout the Philippines and between the Philippines and other countries.
- Covers various technologies like mobile, cellular, paging, fiber optics, multi-channel distribution system (MMDS), local multi-point distribution system (LMDS), satellite transmit and receive systems, switches, and value-added services such as transmission of voice, data, facsimile, control signs, audio, video, and information services bureau.
- Allows construction, acquisition, lease and operation of transmitting and receiving stations, lines, cables, systems and facilities.

Manner of Operation of Stations or Facilities (Section 2):
- Stations or facilities shall be constructed and operated in a manner that results in minimum interference on existing stations' wavelengths or frequencies.
- Grantee has the right to use its selected wavelengths or frequencies and quality of transmission or reception.

Authority of the National Telecommunications Commission (Section 3):
- Grantee shall secure a certificate of public convenience and necessity or appropriate permits and licenses from the National Telecommunications Commission (NTC).
- NTC has the power to impose conditions on construction, operation, maintenance, or service level of the telecommunications system.
- NTC has the authority to regulate the construction and operation of the telecommunications systems.
- Grantee shall not use any frequency without NTC's authorization.
- NTC shall not unreasonably withhold or delay the grant of authority, permits or licenses.

Ingress and Egress (Section 4):
- Grantee can make excavations or lay conduits in public places, highways, streets, lanes, alleys, avenues, sidewalks or bridges with prior approval from the Department of Public Works and Highways (DPWH).
- Grantee shall repair and replace any public place, highway, street, lane, alley, avenue, sidewalk or bridge disturbed, altered or changed due to its activities.
- If grantee fails to repair or replace after 10 days' written notice from DPWH, DPWH can have it repaired at double the expense of the grantee.

Responsibility to the Public (Section 5):
- Grantee shall provide basic or enhanced telephone service in any municipality within the coverage of an approved certificate of public convenience and necessity, without discrimination and in the order of applications, up to the capacity of its local telephone exchange.
- If demand exceeds capacity, grantee shall increase capacity to meet demand.
- If expansion cost is less than the smallest viable local exchange, grantee is not obliged to furnish service unless applicant defrays the actual expenses.
- Grantee shall operate and maintain all stations, lines, cables, systems, and equipment in a satisfactory manner and modify or improve them to keep abreast with advances in science and technology.

Rates for Services (Section 6):
- Charges and rates for telecommunications services, except those declared as non-regulated services, shall be subject to NTC's approval.
- Rates shall be unbundled, separable and distinct among the services offered.
- Regulated services shall not subsidize unregulated ones.

Right of Government (Section 7):
- In times of war, rebellion, public peril, calamity, emergency, disaster or disturbance of peace and order, the President can temporarily take over and operate the grantee's stations, transmitters, facilities or equipment, or temporarily suspend their operation in the interest of public safety, security and welfare.
- The government can temporarily use and operate the grantee's stations, transmitters, facilities or equipment, upon due compensation to the grantee.
- The radio spectrum is part of the national patrimony and its use is a privilege that may be withdrawn anytime after due process.

Bond (Section 8):
- Grantee shall file a bond in favor of NTC, with an amount determined by NTC, to guarantee compliance with the franchise conditions.
- If grantee fulfills the conditions after 5 years from the approval of its permit, the bond shall be cancelled by NTC. Otherwise, the bond shall be forfeited in favor of the government.

Right of Interconnection (Section 9):
- Grantee is authorized to connect or demand connection of its telecommunications systems to any other duly authorized telecommunications systems in the Philippines for providing extended and improved services to the public.
- The terms and conditions shall be mutually agreed upon by the parties and subject to NTC's review and modification.

Gross Receipts (Section 10):
- Grantee shall keep a separate account of the gross receipts of its business and furnish the Commission on Audit and National Treasury a copy of such account not later than January 31st of each year for the preceding 12 months.

Books and Accounts (Section 11):
- Grantee's books and accounts shall always be open to inspection by the Commission on Audit or its authorized representatives.
- Grantee shall submit to the Commission on Audit two copies of the quarterly reports on gross receipts, net profits and general condition of the business.

Warranty in Favor of the National and Local Governments (Section 12):
- Grantee shall hold the national, provincial, city and municipal governments harmless from all claims, accounts, demands or actions arising out of accidents or injuries caused by the construction or operation of its stations, transmitters, facilities and equipment.

Nontransferability of Franchise (Section 13):
- Grantee shall not lease, transfer, grant the usufruct of, sell or assign this franchise or the rights and privileges acquired thereunder to any person, firm, company, corporation or other commercial or legal entity, nor merge with any other corporation or entity, nor shall the controlling interest of the grantee be transferred, without the prior approval of the Congress of the Philippines.
- Any entity to which this franchise is validly sold, transferred or assigned, shall be subject to the same conditions, terms, restrictions and limitations of this Act.

Dispersal of Ownership (Section 14):
- In accordance with the constitutional provision to encourage public participation in public utilities, the grantee shall offer at least 30% of its outstanding capital stock or a higher percentage provided by law in any securities exchange in the Philippines within 5 years from the commencement of its operations.

Equality Clause (Section 15):
- Any advantage, favor, privilege, exemption, or immunity granted under existing or future telecommunications franchises shall ipso facto become part of this franchise and shall be accorded immediately and unconditionally to the grantee.
- However, this shall not apply to provisions concerning territory covered by the franchise, the life span of the franchise or the type of service authorized by the franchise.

Reportorial Requirement (Section 16):
- Grantee shall submit an annual report to the Congress of the Philippines on its compliance with the terms and conditions of the franchise and on its operations within 60 days from the end of every year.

Separability Clause (Section 17):
- If any section or provision of this Act is held invalid, all other provisions not affected shall remain valid.

Repealability and Non-exclusivity Clause (Section 18):
- This franchise shall be subject to amendment, alteration or repeal by the Congress of the Philippines when the public interest so requires.
- This franchise shall not be interpreted as an exclusive grant of the privileges provided.

Renewal/Extension of the Term of Franchise (Section 2):
- This franchise shall be for a term of 25 years from the date of effectivity of this Act.
- This franchise shall be deemed ipso facto revoked if the grantee fails to operate continuously for 2 years.

Acceptance and Compliance (Section 3):
- Acceptance of the amendment and renewal/extension of the franchise shall be given in writing within 60 days from the date of effectivity of this Act.

Repealing Clause (Section 4):
- All laws, decrees, orders, resolutions, instructions and rules and regulations or parts thereof, which are inconsistent with this Act, are hereby deemed repealed or modified accordingly.

Effectivity Clause (Section 5):
- This Act shall take effect 15 days from the date of its publication, upon the initiative of the grantee, in at least two newspapers of general circulation in the Philippines.