Granting a Telecommunications Systems Franchise to Purple Flower Telecommunication Corp.
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Granting a Telecommunications Systems Franchise to Purple Flower Telecommunication Corp.
Republic Act No. 11838
June 2, 2022
Case Overview and Summary
Nature and Scope of Franchise- Grants Purple Flower Telecommunication Corp. (the Grantee) a franchise to construct, install, establish, operate, and maintain wired and wireless telecommunications systems, including internet access, throughout the Philippines for commercial purposes and public interest. (Section 1)
Manner of Operation
- The Grantee's stations or facilities shall be constructed and operated in a manner that results in minimum interference with existing stations. (Section 2)
Authority of the National Telecommunications Commission (NTC)
- The Grantee must secure a Certificate of Public Convenience and Necessity or appropriate permits and licenses from the NTC for construction, installation, and operation of its systems or facilities. (Section 3)
- The NTC has the power to regulate and impose conditions on the Grantee's operations. (Section 3)
- The NTC can revoke or suspend permits or licenses after due process for violations. (Section 3)
- The NTC can recommend to Congress the revocation of the franchise for violations. (Section 3)
Excavation and Restoration Works
- The Grantee can make excavations or lay conduits in public places with prior approval from the Department of Public Works and Highways (DPWH) or local government unit (LGU). (Section 4)
- The Grantee must repair and replace any public place disturbed by its works according to DPWH or LGU standards. (Section 4)
- If the Grantee fails to repair after a 10-day notice, the DPWH or LGU can repair and charge the Grantee double the cost. (Section 4)
Responsibility to the Public
- The Grantee must conform to ethics of honest enterprise and not use its facilities for obscene, indecent, false, or subversive transmissions. (Section 5)
- The Grantee must operate and maintain its systems satisfactorily and keep up with technological advances. (Section 5)
- The Grantee must improve and extend services to unserved areas, hazard-prone areas, and comply with the Free Mobile Disaster Alerts Act. (Section 5)
Rates for Services
- The Grantee's rates and charges for regulated services are subject to NTC approval, except for non-regulated services. (Section 6)
- Rates must be unbundled and separable among services offered, and regulated services cannot subsidize non-regulated services. (Section 6)
Right of the Government
- The government reserves the right to temporarily take over, suspend operations, or authorize temporary use of the Grantee's facilities during war, public peril, calamity, or emergency, with due compensation. (Section 7)
Term of Franchise
- The franchise is valid for 25 years from the effectivity of the Act, unless sooner cancelled. (Section 8)
- The franchise will be revoked if the Grantee fails to: (1) commence operations within 3 years from NTC permit approval, (2) commence operations within 5 years from the Act's effectivity, or (3) continuously operate for 2 years. (Section 8)
Bond
- The Grantee must file a bond with the NTC, in an amount determined by the NTC, to guarantee compliance with the franchise conditions. (Section 9)
- If the Grantee fulfills the conditions after 3 years from NTC permit approval, the bond will be released; otherwise, it will be forfeited. (Section 9)
Right of Interconnection
- The Grantee is authorized to interconnect its systems with other authorized telecommunications systems for providing extended and improved services, subject to NTC review and modification. (Section 10)
Warranty in Favor of the National and Local Governments
- The Grantee shall hold the national, provincial, city, and municipal governments free from claims, liabilities, or demands arising from accidents during construction or operation of its facilities. (Section 11)
Sale, Lease, Transfer, Grant of Usufruct, or Assignment of Franchise
- The Grantee cannot sell, lease, transfer, grant usufruct, assign the franchise, or merge with another entity without prior approval from Congress. (Section 12)
- The Grantee must inform Congress within 60 days of any such transaction; failure to report will revoke the franchise. (Section 12)
- Any entity to which the franchise is transferred will be subject to the same conditions. (Section 12)
Dispersal of Ownership
- The Grantee must offer at least 30% (or higher percentage required by law) of its outstanding capital stock to Filipino citizens in a securities exchange within 5 years from the Act's effectivity. (Section 13)
- Non-compliance will revoke the franchise. (Section 13)
Commitment to Provide and Promote Employment Opportunities
- The Grantee must create employment opportunities and accept on-the-job trainees, prioritizing residents where its principal office is located. (Section 14)
- The Grantee must comply with applicable labor standards and allowances. (Section 14)
- Employment opportunities created must be reflected in the annual General Information Sheet submitted to the Securities and Exchange Commission. (Section 14)
Reportorial Requirement
- The Grantee must submit an annual report to Congress on its compliance with the franchise terms and operations by April 30 every year. (Section 15)
- The annual report must include updates on activities, development, operations, expansion, audited financial statements, General Information Sheet, NTC certification, and ownership dispersal update. (Section 15)
- A reportorial compliance certificate from Congress is required before the NTC accepts any permit or certificate application. (Section 15)
Fine
- Failure to submit the annual report to Congress will be penalized with a fine of One million pesos (₱1,000,000.00) for each working day of non-compliance, effective upon applicability to other franchise grantees. (Section 16)
- In the interim, the Grantee will be liable to pay a fine of Five hundred pesos (₱500.00) per working day of non-compliance to the NTC. (Section 16)
- The fine will be collected separately from NTC penalties and remitted to the Bureau of the Treasury. (Section 16)
Equality of Treatment in the Telecommunications Industry
- Any advantage, favor, privilege, exemption, or immunity granted to existing or future telecommunications franchises, upon prior review and approval of Congress, shall be accorded immediately and unconditionally to the Grantee, except for provisions concerning territorial coverage, term, or type of service. (Section 17)
Repealability and Non-exclusivity Clause
- The franchise is subject to amendment, alteration, or repeal by Congress when the public interest requires, and shall not be interpreted as an exclusive grant of privileges. (Section 18)
Separability Clause
- If any section or provision of the Act is held invalid, all other valid provisions shall remain in effect. (Section 19)
Repealing Clause
- All laws, decrees, orders, resolutions, instructions, rules and regulations, and other issuances inconsistent with the Act are repealed, amended, or modified accordingly. (Section 20)
Effectivity
- The Act shall take effect 15 days after its publication in the Official Gazette or a newspaper of general circulation. (Section 21)
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telecommunications franchise
Philippines
Purple Flower Telecommunication Corp.
wired and wireless systems
internet access
National Telecommunications Commission
excavation and restoration works
rates and charges
government control
term of franchise
bond
interconnection
warranty
sale or transfer
ownership dispersal
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Law
Granting a Telecommunications Systems Franchise to Purple Flower Telecommunication Corp.
Republic Act No. 11838
•June 2, 2022
June 2, 2022
REPUBLIC ACT NO. 11838
AN ACT GRANTING PURPLE FLOWER TELECOMMUNICATION CORP. A FRANCHISE TO CONSTRUCT, INSTALL, ESTABLISH, OPERATE, AND MAINTAIN TELECOMMUNICATIONS SYSTEMS THROUGHOUT THE PHILIPPINES
SECTION 1. Nature and Scope of Franchise. — Subject to the provisions of the Constitution and applicable laws, rules and regulations, there is hereby granted to Purple Flower Telecommunication Corp., hereunder referred to as the Grantee, its successors or assignees, a franchise to construct, install, establish, operate, and maintain, for commercial purposes and in the public interest, in the Philippines, wired and wireless telecommunications systems, including internet access, through copper, fiber optics, satellite systems, switches, and all other telecommunication system or information and communications technologies as are at present available or will be made available through technological advances or innovations in the future, and offer telecommunications services, value-added services, including internet access service, or other electronic communication services such as the transmission and reception of voice, data, facsimile, control signs, audio and video information services, or to construct, acquire, lease, and operate, or manage transmitting and receiving...
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