AN ACT GRANTING THE CONVERGE INFORMATION AND COMMUNICATIONS TECHNOLOGY SOLUTIONS

Case Overview and Summary

Summary of Republic Act No. 9707

Nature and Scope of Franchise (Section 1):
- Grants Converge Information and Communications Technology Solutions, Inc. (the grantee) a franchise to construct, install, establish, operate and maintain telecommunications systems throughout the Philippines and between the Philippines and other countries.
- Covers wire and wireless systems including mobile, cellular, paging, fiber optics, satellite, and other technologies.

Manner of Operation (Section 2):
- Stations or facilities shall be operated in a manner that results in minimum interference with existing stations.

Authority of the National Telecommunications Commission (NTC) (Section 3):
- The grantee must secure a certificate of public convenience and necessity or appropriate permits from the NTC.
- The NTC has the power to impose conditions and regulate the construction and operation of the telecommunications systems.
- The grantee cannot use any frequency without NTC authorization.

Ingress and Egress (Section 4):
- The grantee can make excavations or lay conduits in public places with prior approval from the Department of Public Works and Highways (DPWH).
- The grantee must repair and replace any public place altered or disturbed by its activities, as per DPWH standards.

Responsibility to the Public (Section 5):
- The grantee must conform to ethics of honest enterprise and not use its stations for obscene, indecent, or false transmissions, or assist in subversive or treasonable acts.
- The grantee must provide basic or enhanced telephone service without discrimination, up to the capacity of its local exchange.
- The grantee must operate and maintain its stations, lines, cables, systems, and equipment in a satisfactory manner and keep up with technological advances.

Rates for Services (Section 6):
- Exchange and rates for regulated telecommunications services are subject to NTC approval.
- Rates must be unbundled and separable among services, and regulated services cannot subsidize unregulated ones.

Right of Government (Section 7):
- The President can temporarily take over and operate the grantee's stations, transmitters, facilities, or equipment during times of war, rebellion, public peril, calamity, emergency, disaster, or disturbance of peace and order.
- The radio spectrum is part of the national patrimony, and its use is a privilege that may be withdrawn after due process.

Term of Franchise (Section 8):
- The franchise is valid for 25 years from the date of effectivity, unless revoked or cancelled.
- The franchise will be revoked if the grantee fails to: (a) commence operations within 3 years from NTC permit approval, (b) operate continuously for 2 years, or (c) commence operations within 5 years from the effectivity of this Act.

Acceptance and Compliance (Section 9):
- The grantee must accept the franchise in writing within 60 days from the effectivity of this Act.
- Non-acceptance will render the franchise void.

Bond (Section 10):
- The grantee must file a bond determined by the NTC to guarantee compliance with the franchise conditions.
- The bond will be forfeited in favor of the government if the grantee fails to comply after 5 years from the NTC permit approval.

Right of Interconnection (Section 11):
- The grantee is authorized to interconnect with other authorized telecommunications entities in the Philippines to provide extended and improved services, subject to NTC review and modification.

Gross Receipts (Section 12):
- The grantee must keep a separate account of gross receipts and furnish copies to the Commission on Audit (COA) and National Treasury annually by January 31st.

Books and Accounts (Section 13):
- The grantee's books and accounts must be open for COA inspection, and the grantee must submit quarterly reports on gross receipts, net profits, and general business conditions to the COA.

Warranty in Favor of National and Local Governments (Section 14):
- The grantee shall hold the national, provincial, city, and municipal governments harmless from claims, accounts, demands, or actions arising out of accidents or injuries caused by the construction or operation of its stations, transmitters, facilities, and equipment.

Non-transferability of Franchise (Section 15):
- The grantee cannot lease, transfer, grant usufruct, sell, assign, or merge the franchise or controlling interest without prior approval from the Congress of the Philippines.

Distribution of Ownership (Section 16):
- The grantee must offer at least 30% of its outstanding capital stock in any securities exchange to encourage public participation in public utilities.
- Non-compliance will render the franchise ipso facto revoked.

Equality Clause (Section 17):
- Any advantage, favor, privilege, exemption, or immunity granted under existing or future telecommunications franchises shall become part of this franchise, except for provisions concerning territory, life span, or type of service.

Reportorial Requirement (Section 18):
- The grantee must submit an annual report to the Congress of the Philippines on its compliance with the franchise terms and conditions and its operations within 60 days from the end of every year.

Separability Clause (Section 19):
- If any section or provision of this Act is held invalid, the other provisions shall remain valid.

Repealing and Non-exclusivity Clause (Section 20):
- The franchise is subject to amendment, alteration, or repeal by the Congress of the Philippines when the public interest requires it.
- The franchise shall not be interpreted as an exclusive grant of the privileges provided.

Effectivity Clause (Section 21):
- This Act shall take effect 15 days from the date of its publication in at least two newspapers of general circulation in the Philippines, upon the initiative of the grantee.