AN ACT RENEWING THE FRANCHISE GRANTED TO PHILIPPINE GLOBAL COMMUNICATIONS

Case Overview and Summary

Summary of Republic Act No. 10343

Nature and Scope of Franchise (Section 1):
- Grants Philippine Global Communications, Inc. (formerly RCA Communications, Inc.) a franchise to construct, install, operate and maintain wire and/or wireless telecommunications systems throughout the Philippines and between the Philippines and other countries.
- Covers mobile, cellular, paging, fiber optics, multi-channel multi-point distribution system (MMDS), local multi-point distribution system (LMDS), satellite transmit and receive systems, switches and value-added services such as transmission of voice, data, facsimile, control signs, audio and video, information services bureau and other technologies.

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

Authority of NTC (Section 3):
- Grantee must secure certificate of public convenience and necessity or appropriate permits and licenses from the National Telecommunications Commission (NTC).
- NTC has the power to impose conditions on construction, operation, maintenance or service level.
- NTC has authority to regulate construction and operation of telecommunications systems.
- Grantee cannot use any radio frequency without NTC authorization.

Excavation and Restoration Works (Section 4):
- Grantee may make excavations or lay conduits in public places with prior approval from Department of Public Works and Highways (DPWH) or local government unit (LGU).
- Grantee must repair and replace any public place disturbed in a workmanlike manner according to DPWH or LGU standards, otherwise DPWH or LGU can do it at double expense charged to the grantee.

Responsibility to the Public (Section 5):
- Grantee must conform to ethics of honest enterprise and not use stations for obscene, indecent, false or subversive transmissions.
- Grantee must provide basic or enhanced telephone service without discrimination in areas with approved certificate, up to capacity of local exchange.
- Grantee must operate and maintain stations, lines, cables, systems and equipment satisfactorily and keep up with advances in science and technology.

Rates for Services (Section 6):
- Charges and rates for telecommunications services, except those declared as non-regulated, shall be subject to NTC approval.
- Rates shall be unbundled and separable among services offered, and regulated services shall not subsidize unregulated ones.

Right of Government (Section 7):
- The President may temporarily take over, suspend operations, or authorize temporary use of grantee's stations in times of war, public peril, calamity, emergency or disturbance.
- The radio spectrum is part of national patrimony and its use is a privilege that may be withdrawn anytime after due process.

Term of Franchise (Section 8):
- Franchise is valid for twenty-five (25) years from effectivity of this Act, unless sooner cancelled.
- Franchise shall be deemed revoked if grantee fails to operate continuously within two (2) years.

Acceptance and Compliance (Section 9):
- Grantee must accept franchise in writing to Congress within sixty (60) days from effectivity.
- Non-acceptance shall render the franchise void.

Bond (Section 10):
- Grantee shall file a bond with NTC in an amount determined by NTC to guarantee compliance with conditions.
- If conditions are fulfilled after three (3) years, the bond shall be cancelled, otherwise forfeited.

Right of Interconnection (Section 11):
- Grantee is authorized to interconnect its systems with other duly authorized telecommunications systems for providing extended and improved services, under terms subject to NTC review.

Gross Receipts (Section 12):
- Grantee shall keep separate account of gross receipts and furnish it to Commission on Audit (COA) and National Treasury not later than January 31st of each year for the preceding twelve (12) months.

Books and Accounts (Section 13):
- Grantee's books and accounts shall be open to inspection by COA.
- Grantee shall submit to COA two (2) copies of quarterly reports on gross receipts, net profits and general condition of business.

Warranty in Favor of Government (Section 14):
- Grantee shall hold national, provincial, city and municipal governments free from claims arising out of accidents or injuries caused by construction or operation of its stations and facilities.

Sale, Lease, Transfer, Usufruct or Assignment (Section 15):
- Grantee cannot sell, lease, transfer, grant usufruct of, or assign this franchise or rights without prior approval of Congress.
- Congress must be informed within sixty (60) days after such transaction, otherwise franchise shall be revoked.
- Any entity to which franchise is transferred shall be subject to the same conditions.

Dispersal of Ownership (Section 16):
- Grantee shall offer at least thirty per centum (30%) or higher percentage provided by law of its outstanding capital stock to Filipino citizens in a securities exchange within five (5) years from operations, otherwise franchise shall be revoked.

Reportorial Requirement (Section 17):
- Grantee shall submit an annual report to Congress on its compliance with franchise terms and operations on or before April 30 of the succeeding year.

Penalty Clause (Section 18):
- Failure to submit annual report shall be fined Five hundred pesos (P500.00) per working day of non-compliance, collected by NTC.
- Reportorial compliance certificate from Congress is required before NTC accepts permit applications.

Equality Clause (Section 19):
- Any advantage, favor, privilege, exemption or immunity granted under other franchises shall become part of this franchise, except provisions on territory, life span or type of service.

Separability Clause (Section 20):
- If any section is held invalid, other provisions shall remain valid.

Repealability and Non-exclusivity Clause (Section 21):
- Franchise is subject to amendment, alteration or repeal by Congress when public interest requires, and shall not be interpreted as an exclusive grant.

Publication and Effectivity (Sections 22-23):
- Act shall be published by grantee within fifteen (15) days after being signed by the President or lapsing into law.
- Act shall take effect fifteen (15) days from publication in at least two (2) newspapers of general circulation.