AN ACT GRANTING THE DATELCOM CORPORATION A FRANCHISE TO CONSTRUCT

Case Overview and Summary

Summary of Republic Act No. 9317

Nature and Scope of Franchise (Section 1):
- Grants Datelcom Corporation a franchise to construct, install, establish, operate and maintain local exchange network and value-added services in Region III, Philippines.
- Allows the provision of basic telephone service capable of accessing local, national, international and other networks.

Manner of Operation (Section 2):
- Stations/facilities to be operated in a manner resulting in minimum interference with existing stations.
- Radiated power not to exceed the required level to cover the allowed area of operation.

Authority of NTC (Section 3):
- Grantee must secure certificate of public convenience and necessity from NTC.
- NTC can impose conditions on construction, operation, maintenance or service level.
- NTC to regulate frequency usage and specify covered areas and commencement date.

Responsibility to the Public (Section 4):
- Grantee to conform to ethics of honest enterprise and not engage in obscene, indecent or false transmissions.
- Grantee to provide non-discriminatory basic/enhanced telephone service within approved areas, up to capacity limits.
- Grantee to operate and maintain stations/equipment satisfactorily and keep up with technological advances.

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

Right of Government (Section 6):
- President can temporarily take over/suspend operations during war, calamity or emergency.
- Radio spectrum is part of national patrimony and its use is a privilege.

Term of Franchise (Section 7):
- Franchise valid for 25 years from effectivity, unless revoked/cancelled.
- Conditions for ipso facto revocation: failure to commence operations within 3 years of NTC permit, failure to operate continuously for 2 years, failure to commence operations within 5 years of effectivity.

Acceptance and Compliance (Section 8):
- Acceptance to be given in writing within 60 days of effectivity.
- Non-acceptance renders franchise void.

Bond (Section 9):
- Grantee to file bond determined by NTC to guarantee compliance.
- Bond cancelled after 5 years if conditions fulfilled, otherwise forfeited.

Right of Interconnection (Section 10):
- Grantee authorized to interconnect with other telecommunications systems, subject to mutually agreed terms and NTC review.

Tax Provisions (Section 11):
- Grantee subject to taxes, duties and fees under NIRC 1997 and other applicable laws.
- To enjoy rights, privileges and exemptions accorded to other telecommunications franchises.

Gross Receipts (Section 12):
- Grantee to keep separate account of gross receipts and furnish copy to COA and National Treasury annually.

Books and Accounts (Section 13):
- Books and accounts open to COA inspection.
- Grantee to submit quarterly reports on gross receipts, net profits and general condition.

Warranty to Government (Section 14):
- Grantee to hold national/local governments harmless from claims arising from construction/operation.

Sale, Lease, Transfer, etc. (Section 15):
- Grantee cannot lease, transfer, sell or assign franchise without prior Congressional approval.
- Transferee subject to same conditions.

Dispersal of Ownership (Section 16):
- Grantee to offer at least 30% of outstanding capital stock in securities exchange within 10 years of operations.
- Non-compliance renders franchise ipso facto revoked.

Equality Clause (Section 17):
- Advantages/exemptions granted to other franchises to be extended to this grantee, except territory covered, lifespan and type of service.

Separability Clause (Section 18):
- If any provision is held invalid, other provisions remain valid.

Repealability and Non-Exclusivity (Section 19):
- Franchise subject to amendment, alteration or repeal by Congress in public interest.
- Not an exclusive grant of privileges.

Reportorial Requirement (Section 20):
- Grantee to submit annual report to Congress on compliance and operations within 60 days after year-end.

Effectivity (Section 21):
- Act effective 15 days after publication in at least 2 newspapers of general circulation.