AN ACT AMENDING THE FRANCHISE OF ORMOC CITY TELEPHONE COMPANY

Case Overview and Summary

Nature and Scope of Franchise (Section 1):
- Grants Ormoc City Telephone Company, Inc. a franchise to construct, install, establish, operate and maintain local exchange network, public calling stations, wireless local loop and value-added services in Leyte, Southern Leyte and Biliran provinces, including all component and chartered cities.
- Provides basic telephone service capable of accessing local, national, international and other networks.

Manner of Operation (Section 2):
- Stations or facilities shall be constructed and operated to result in minimum interference on existing stations' wavelengths or frequencies.
- Operations shall not exceed the required power to cover the allowed area.

Authority of NTC (Section 3):
- Grantee must secure certificate of public convenience and necessity or appropriate permits and licenses from NTC.
- NTC can impose conditions on construction, operation, maintenance or service level.
- NTC regulates construction and operation, and authorizes use of radio spectrum frequencies.
- NTC shall not unreasonably withhold or delay granting authority, permits or licenses.

Responsibility to the Public (Section 4):
- Grantee shall conform to ethics of honest enterprise and not use stations for obscene, indecent, false, misrepresented or subversive transmissions.
- Grantee shall provide service without discrimination, in order of application, up to capacity.
- Grantee shall increase capacity to meet demand, unless expansion cost is less than smallest viable exchange.
- Grantee shall operate and maintain stations satisfactorily and improve to keep up with advances.

Rates for Services (Section 5):
- Charges and rates for regulated services are subject to NTC approval.
- Rates shall be unbundled and separable among services offered.
- Regulated services shall not subsidize unregulated ones.

Right of Government (Section 6):
- President can temporarily take over, suspend operations, or authorize government use of stations during war, rebellion, peril, calamity, emergency, disaster or disturbance, with due compensation.
- Radio spectrum is national patrimony and its use is a revocable privilege.

Acceptance and Compliance (Section 7):
- Acceptance must be given in writing within 60 days from effectivity of the Act.
- Non-acceptance renders the franchise void.

Bond (Section 8):
- Grantee shall file a bond determined by NTC to guarantee compliance.
- Bond shall be cancelled after 5 years if grantee has fulfilled conditions, otherwise forfeited.

Right of Interconnection (Section 9):
- Grantee can interconnect with other telecommunications systems for improved services, under mutually agreed terms subject to NTC review.

Tax Provisions (Section 10):
- Grantee is subject to all applicable taxes, duties, fees and charges under tax laws.
- Specific tax exemptions, incentives or privileges granted remain applicable.
- Grantee enjoys rights, privileges, benefits and exemptions accorded to other telecommunications franchises.

Gross Receipts (Section 11):
- Grantee shall keep separate account of gross receipts and submit copy to COA and National Treasury annually by January 31st.

Books and Accounts (Section 12):
- Books and accounts shall be open for COA inspection.
- Grantee shall submit quarterly reports on gross receipts, net profits and general condition to COA.

Warranty (Section 13):
- Grantee shall hold national and local governments free from claims arising out of accidents or injuries caused by its operations.

Non-transferability of Franchise (Section 14):
- Grantee cannot lease, transfer, sell, assign or merge the franchise without Congress approval.
- Any transfer in violation renders the franchise revoked.

Reportorial Requirement (Section 15):
- Grantee shall submit annual report to Congress on compliance with franchise terms within 60 days from year-end.

Equality Clause (Section 16):
- Any advantage, favor, privilege, exemption or immunity granted to other franchises shall immediately apply, except territory covered, lifespan and type of service.

Separability Clause (Section 17):
- If any provision is held invalid, other provisions remain valid.

Repealability and Non-exclusivity Clause (Section 18):
- Franchise is subject to amendment, alteration or repeal by Congress when public interest requires.
- Franchise shall not be interpreted as an exclusive grant.

Renewal/Extension (Section 2):
- Franchise term is 25 years from effectivity, unless sooner revoked or cancelled.
- Franchise deemed revoked if grantee fails to operate continuously for 2 years.

Effectivity (Section 3):
- Act takes effect 15 days after publication in at least 2 newspapers of general circulation, upon grantee's initiative.