AN ACT RENEWING AND AMENDING THE FRANCHISE GRANTED TO EASTERN TELECOMMUNICATIONS PHILIPPINES

Case Overview and Summary

Summary of Republic Act No. 9172

Nature and Scope of Franchise (Sec. 1):
- Grants Eastern Telecommunications Philippines Inc. (ETPI) a franchise to construct, install, operate and maintain wire and wireless telecommunications systems in the Philippines and between the Philippines and other countries.
- Covers mobile, cellular, paging, fiber optic, satellite, and other technologies.

Manner of Operation (Sec. 2):
- ETPI shall operate in a manner that results in minimum interference with other stations.

Authority of NTC (Sec. 3):
- ETPI must secure certificate of public convenience and necessary permits from NTC.
- NTC can impose conditions on construction, operation, and service levels.
- NTC regulates construction and operation, and authorizes frequency use.

Ingress and Egress (Sec. 4):
- ETPI can make excavations and lay conduits in public places with DPWH approval.
- ETPI must repair and replace any disturbed public property per DPWH standards.

Responsibility to the Public (Sec. 5):
- ETPI must conform to ethics of honest enterprise and not transmit obscene or indecent content.
- ETPI must provide basic telephone service without discrimination up to exchange capacity.
- ETPI must operate and maintain systems satisfactorily and keep up with technological advances.

Rates for Services (Sec. 6):
- Charges and rates for regulated services are subject to NTC approval.
- Rates must be unbundled and not allow cross-subsidization.

Right of Government (Sec. 7):
- The President can take over ETPI's stations during war, calamity, or emergency with due compensation.
- The radio spectrum is part of national patrimony and its use is a privilege that may be withdrawn.

Term of Franchise (Sec. 8):
- The franchise is valid for 25 years from the Act's effectivity.
- It will be revoked if ETPI fails to: (a) commence operations within 3 years of NTC permit, (b) operate continuously for 2 years, or (c) commence operations within 5 years of the Act's effectivity.

Acceptance and Compliance (Sec. 9):
- ETPI must accept the franchise in writing within 60 days of the Act's effectivity.

Bond (Sec. 10):
- ETPI must file a bond determined by NTC to guarantee compliance.
- The bond will be cancelled after 5 years if ETPI fulfills conditions, otherwise forfeited.

Right of Interconnection (Sec. 11):
- ETPI can interconnect with other telecom systems, subject to NTC review.

Tax Provisions (Sec. 12):
- ETPI is subject to taxes under NIRC and other applicable laws.
- Existing tax exemptions and privileges granted to other franchises also apply to ETPI.

Gross Receipts (Sec. 13):
- ETPI must keep separate accounts of gross receipts and submit to COA and National Treasury annually.

Books and Accounts (Sec. 14):
- ETPI's books and accounts are open to COA inspection.
- ETPI must submit quarterly reports on gross receipts, net profits, and business condition to COA.

Warranty to Governments (Sec. 15):
- ETPI shall hold national and local governments harmless from claims arising from construction or operation.

Sale, Lease, Transfer, etc. (Sec. 16):
- ETPI cannot sell, transfer, or assign the franchise without Congress' prior approval.

Dispersal of Ownership (Sec. 17):
- ETPI must offer at least 30% of outstanding capital stock in a Philippine securities exchange within 5 years of operations, or the franchise will be revoked.

Equality Clause (Sec. 18):
- Any advantages granted to other franchises shall also apply to ETPI, except for territory, lifespan, and service type.

Separability Clause (Sec. 19):
- If any provision is held invalid, the other provisions remain valid.

Repealability and Non-exclusivity (Sec. 20):
- The franchise is subject to amendment, alteration or repeal by Congress when public interest requires.
- It is not an exclusive grant of privileges.

Reportorial Requirement (Sec. 21):
- ETPI must submit an annual report to Congress on franchise compliance and operations within 60 days after year-end.

Renewal/Extension (Sec. 2):
- The franchise granted under RA 808 is renewed/extended for another 25 years from expiration.
- It will be revoked if ETPI fails to operate continuously for 2 years.

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