AN ACT GRANTING THE CONNECTIVITY UNLIMITED RESOURCE ENTERPRISE

Case Overview and Summary

Nature and Scope of Franchise (Section 1)
- Grants Connectivity Unlimited Resource Enterprise, Inc. (the grantee) a franchise to construct, install, establish, operate and maintain telecommunications, multimedia systems, networks, stations, services and technologies for commercial purposes and public interest.
- Allows the grantee to receive and transmit messages, facsimile, impressions, pictures, music, data and voice within and outside the Philippines.
- Covers various types of telecommunications and multimedia systems, including e-commerce systems, paging systems, cellular telephone systems, trunk radio systems, personal communications networks, cable and fiber optics networks, terrestrial, submarine, satellite transmission networks, multi-channel distribution systems, and service bureaus.
- Authorizes the grantee to construct, install, establish, operate and maintain transmitting, receiving, switching and gateway stations and facilities for local and international services.

Manner of Operation of Stations or Facilities (Section 2)
- The grantee's stations or facilities shall be constructed and operated in a manner that results in minimum interference on the wavelengths or frequencies of existing or future stations established by law.

Authority of the National Telecommunications Commission (Section 3)
- The grantee shall secure a certificate of public convenience and necessity or appropriate permits and licenses from the National Telecommunications Commission (NTC) for the construction, installation and operation of its telecommunications systems/facilities.
- The NTC has the power to impose conditions on the construction, operation, maintenance, or service level of the telecommunications system.
- The NTC has the authority to regulate the construction and operation of the grantee's telecommunications systems.
- The grantee shall not use any frequency in the radio spectrum without authorization from the NTC.

Ingress and Egress (Section 4)
- The grantee, with prior approval from the Department of Public Works and Highways (DPWH), can make excavations or lay conduits in public places, highways, streets, lanes, alleys, avenues, sidewalks or bridges for erecting and maintaining poles or other supports, or laying underground wires, cables or other conductors.
- The grantee shall repair and replace any public place, road, highway, street, lane, alley, avenue, sidewalk or bridge disturbed, altered or changed due to its activities, in accordance with DPWH standards.
- If the grantee fails to repair or replace after a 10-day notice from the DPWH, the DPWH has the right to have the same repaired and placed in good order at double expense to be charged against the grantee.

Responsibility to the Public (Section 5)
- The grantee shall conform to the ethics of honest enterprise and shall not use its stations/facilities for obscene or indecent transmission, dissemination of deliberately false information or willful misrepresentation, or assist in subversive or treasonable acts.
- The grantee shall provide basic or enhanced telephone service in any municipality where it has an approved certificate of public convenience and necessity for local exchange service, without discrimination, in the order of applications, up to the capacity of its local telephone exchange.
- If demand exceeds capacity, the grantee shall increase the capacity, unless the total demand is less than the smallest viable local exchange available, in which case the applicant shall defray the actual expenses for installation.
- The grantee shall operate and maintain all its stations, lines, cables, systems, and equipment for transmission and reception in a satisfactory manner and modify or improve them to keep abreast with advances in science and technology.

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

Right of Government (Section 7)
- The President of the Philippines has a special right, in times of war, rebellion, public peril, calamity, emergency, disaster or disturbance of peace and order, to 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, or authorize temporary use and operation by any government agency, upon due compensation to the grantee.
- The radio spectrum is part of the national patrimony, and its use is a privilege conferred by the State that may be withdrawn anytime, after due process.

Term of Franchise (Section 8)
- The franchise is granted for a term of 25 years from the date of effectivity of this Act, unless sooner revoked or cancelled.
- The franchise shall be deemed ipso facto revoked if the grantee fails to:
(a) Commence operations within 3 years from the approval of its operating permit or provisional authority by the NTC;
(b) Operate continuously for 2 years; and
(c) Commence operations within 5 years from the effectivity of this Act.

Acceptance and Compliance (Section 9)
- Acceptance of this franchise shall be given in writing within 60 days from the effectivity of this Act.
- Upon giving such acceptance, the grantee shall exercise the privileges granted under this Act.
- Non-acceptance shall render the franchise void.

Bond (Section 10)
- The grantee shall file a bond issued in favor of the NTC, in an amount determined by the NTC, to guarantee compliance with and fulfillment of the conditions under which this franchise is granted.
- If the grantee has fulfilled the conditions after 5 years from the date of approval of its permit by the NTC, the bond shall be cancelled by the NTC; otherwise, the bond shall be forfeited in favor of the government and the franchise ipso facto revoked.

Right of Interconnection (Section 11)
- The grantee is authorized to connect or demand connection of its telecommunications systems to any other duly-authorized telecommunications systems in the Philippines for the purpose of providing extended and improved telecommunications services to the public, under terms and conditions mutually agreed upon by the parties concerned and subject to review or modification by the NTC.

Tax Provisions (Section 12)
- The grantee, its successors or assigns, shall be subject to the payment of all taxes, duties, fees or charges and other impositions under the National Internal Revenue Code (NIRC) of 1997, as amended and other applicable laws.
- Nothing herein shall be construed as repealing any specific tax exemptions, incentives, or privileges granted under any relevant law.
- All rights, privileges, benefits and exemptions accorded to existing and future telecommunications franchises shall likewise be extended to the grantee.
- The grantee shall file the return with the city or province where its facility is located and pay the taxes due thereon to the Commissioner of Internal Revenue or his duly authorized representatives in accordance with the NIRC, and the return shall be subject to audit by the Bureau of Internal Revenue.

Gross Receipts (Section 13)
- The grantee, its successors or assigns, shall keep a separate account of the gross receipts of the business transacted by it and shall furnish the Commission on Audit (COA) and the National Treasury a copy of such account not later than the 31st day of January of each year for the preceding 12 months.

Books and Accounts (Section 14)
- The books and accounts of the grantee, its successors or assigns, shall always be open to the inspection of the Commissioner on Audit or his authorized representatives.
- The grantee shall submit to the COA two copies of the quarterly reports on the gross receipts, the net profits and the general condition of the business.

Warranty in Favor of National and Local Governments (Section 15)
- The grantee shall hold the national, provincial, city and municipal governments of the Philippines harmless from all claims, accounts, demands or actions arising out of accidents or injuries, whether to property or to persons, caused by the construction or operation of the stations, transmitters, facilities and equipment of the grantee.

Sale, Lease, Transfer, Usufruct, etc. (Section 16)
- The grantee shall not lease, transfer, grant the usufruct of, sell nor 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, whether as a whole or in parts and whether simultaneously or contemporaneously, to any such person, firm, company, corporation or entity without the prior approval of the Congress of the Philippines.
- Any person or entity to which this franchise is sold, transferred or assigned, shall be subject to the same conditions, terms, restrictions and limitations of this Act.

Dispersal of Ownership (Section 17)
- 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 that may hereafter be provided by law in any securities exchange in the Philippines within 5 years from the commencement of its operations.
- Noncompliance therewith shall render the franchise ipso facto revoked.

Equality Clause (Section 18)
- Any advantage, favor, privilege, exemption, or immunity granted under existing franchises, or may hereafter be granted, shall ipso facto become part of previously granted telecommunications franchises and shall be accorded immediately and unconditionally to the grantees of such franchises.
- However, this shall not apply to nor affect provisions concerning territory covered by the franchise, the life span of the franchise, or the type of service authorized by the franchise.

Separability Clause (Section 19)
- If any of the sections or provisions of this Act is held invalid, all the other provisions not affected thereby shall remain valid.

Repealability and Nonexclusivity Clause (Section 20)
- This franchise shall be subject to amendment, alteration or repeal by the Congress of the Philippines when the public interest so requires and shall not be interpreted as an exclusive grant of the privileges herein provided for.

Reportorial Requirement (Section 21)
- The 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.

Effectivity Clause (Section 22)
- 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.