Renewing for Another 25 Years the Franchise Granted to Mindanao Islamic Telephone Co., Inc., Presently Known as Dito Telecommunity Corp., under RA No. 8627

Case Overview and Summary

Summary of Republic Act No. 11537:

Nature and Scope of Franchise (Section 1):
- Renews the franchise granted to Mindanao Islamic Telephone Company, Inc. (now known as Telecommunity Corporation) under Republic Act No. 8627 for another 25 years.
- Grants the right to provide telecommunications services, establish and operate telecommunications systems, including mobile, cellular, wired, wireless, fiber optics, satellite, and other technologies.
- Defines "telecommunications," "electronic communications network," and "electronic communications service."

Manner of Operation (Section 2):
- Stations or facilities shall be constructed and operated to result in minimum interference with existing stations.

Authority of the National Telecommunications Commission (NTC) (Section 3):
- Grantee must secure a Certificate of Public Convenience and Necessity or appropriate permits and licenses from the NTC.
- NTC has the power to regulate and impose conditions on the construction, operation, maintenance, or service level of the telecommunications systems.
- NTC can revoke or suspend permits or licenses for violations, reallocate redundant frequencies, and recommend franchise revocation to Congress.

Excavation and Restoration Works (Section 4):
- 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).
- Grantee must repair and replace any public place disturbed by its works in accordance with DPWH or LGU standards.

Responsibility to the Public (Section 5):
- Grantee must conform to ethics of honest enterprise and not use its facilities for obscene, indecent, false, or subversive transmissions.
- Grantee must operate and maintain its systems satisfactorily and improve them to keep up with advances in science and technology.
- Grantee must improve and extend services in unserved areas, hazard- and typhoon-prone areas, and comply with the Free Mobile Disaster Alerts Act.

Rates for Services (Section 6):
- Charges and rates for telecommunications services, except those declared as non-regulated, shall be subject to NTC approval.

Right of the Government (Section 7):
- The President can temporarily take over, suspend operations, or authorize temporary use of the grantee's stations, facilities, or equipment during times of war, rebellion, public peril, calamity, emergency, disaster, or disturbance of peace and order, with due compensation.

Term of Franchise (Section 8):
- The franchise is extended for 25 years from its expiration on April 24, 2023, unless sooner revoked or cancelled.
- The franchise shall be deemed revoked if the grantee fails to operate continuously for 2 years.

Renewal or Extension of Franchise (Section 9):
- The grantee must apply for renewal or extension 3 years before the franchise expiration, which is reckoned from 15 days after publication in the Official Gazette or a newspaper of general circulation.

Right of Interconnection (Section 10):
- The grantee is authorized to connect or demand connection of its systems to other telecommunications systems for providing extended and improved services, subject to NTC review and modification.

Mobile Number Portability (Section 11):
- The grantee shall provide mobile number portability (MNP) and its implementing mechanism, and shall interconnect with other telecommunications franchise grantees.
- The grantee shall not install network features that will impede the implementation of a nationwide MNP system.

Warranty in Favor of the National and Local Governments (Section 12):
- The grantee shall hold the national, provincial, city, and municipal governments free from claims, liabilities, accounts, demands, or actions arising out of accidents causing injury or damage during construction or operation.

Sale, Lease, Transfer, Grant of Usufruct, or Assignment of Franchise (Section 13):
- The grantee cannot sell, lease, transfer, grant usufruct, assign the franchise, merge with another entity, or transfer controlling interest without prior approval of Congress.
- Congress must be informed within 60 days after such transactions.
- Failure to report shall render the franchise revoked.
- Any entity to which the franchise is transferred shall be subject to the same conditions.

Dispersal of Ownership (Section 14):
- The grantee shall offer at least 30% of its outstanding capital stocks to Filipino citizens in a securities exchange within 5 years from the effectivity of this Act.
- Noncompliance shall render the franchise revoked.

Business Development and/or Expansion Plan (Section 15):
- The grantee is obliged to carry out its business development and/or expansion plan, which shall contain phases of development, courses of action, capitalization, and expected milestones within the franchise term.

Commitment to Provide and Promote the Creation of Employment Opportunities (Section 16):
- The grantee shall create employment opportunities and accept on-the-job trainees, with priority given to residents of the principal office location.
- At least 60% of employees must be regular employees, and contractual employees, job orders, casuals, and independent contractors combined shall not exceed 40% of the total workforce.
- The grantee shall comply with applicable labor standards and allowance entitlement.
- The employment opportunities created shall be reflected in the General Information Sheet submitted to the Securities and Exchange Commission (SEC) annually.
- The grantee shall include in its annual report to Congress the number of trainees and workers whose employment status are made regular.

Contract with Private Entities (Section 17):
- The grantee is authorized to contract the installation and operation of the telecommunications system with entities with expertise in the field of telecommunications under terms and conditions approved by the Commission.

Tax Provisions (Section 18):
- The grantee shall be liable to pay the same taxes on real estate, buildings, and personal property as other persons or corporations, except for radio telecommunications and electronic communications equipment, machinery, and spare parts, which shall be exempt from customs duties, tariffs, and other taxes.
- The grantee shall pay a value-added tax on all gross receipts of the business transacted under this franchise in lieu of any and all taxes of any kind, nature, or description, except for income taxes payable under Title II of the National Internal Revenue Code.

Reportorial Requirement (Section 19):
- The grantee shall submit an annual report on its compliance with the franchise terms and conditions and its operations to Congress on or before April 30 of every year.
- The annual report shall include updates on roll-out, development, operation, and/or expansion of business; audited financial statements; latest General Information Sheet submitted to the SEC; NTC certification on the status of permits and operations; update on the dispersal of ownership undertaking; and disclosure of any data or information, assistance, support, or cooperation made to a foreign government.
- The grantee shall also submit regular security audits of its network and facilities by the Department of Information and Communications Technology (DICT) and the National Security Council (NSC) to Congress.

Fine (Section 20):
- Failure to submit the annual report to Congress shall be penalized with a fine of One million pesos (P1,000,000.00) per working day of noncompliance, effective upon applicability with other telecommunications franchise grantees.
- In the interim, the grantee shall be liable to pay a fine of Five hundred pesos (P500.00) per working day of noncompliance.
- The fine shall be collected by the NTC and remitted to the Bureau of the Treasury.

Equality of Treatment in the Telecommunications Industry (Section 21):
- Any advantage, favor, privilege, exemption, or immunity granted under existing or future franchises, upon prior review and approval of Congress, shall become part of previously granted telecommunications franchises and shall be accorded immediately and unconditionally to the grantees of such franchises, except for provisions concerning territory covered, life span of the franchise, or type of service authorized.

Applicability (Section 22):
- All other provisions of Republic Act No. 8627 which are not inconsistent with this Act and remain unrepealed shall continue to be in full force and effect.
- All pending suits of whatever kind or nature filed by or against the grantee in connection with Republic Act No. 8627 shall continue to be prosecuted under the said law.
- All valid and existing liabilities, fines, penalties, surcharges, and/or unpaid tax assessments of the grantee from April 19, 1998 until the effectivity of this new Act shall remain valid and enforceable under Republic Act No. 8627.

Repealability and Nonexclusivity Clause (Section 23):
- This franchise shall be subject to amendment, alteration, or repeal by Congress when the public interest so requires and shall not be interpreted as an exclusive grant of the privilege.

Separability Clause (Section 24):
- If any section or provision of this Act is held invalid, all other provisions not affected shall remain valid.

Repealing Clause (Section 25):
- All laws, decrees, orders, resolutions, instructions, rules and regulations, and other issuances or parts thereof which are inconsistent with the provisions of this Act are hereby repealed, amended, or modified accordingly.

Effectivity (Section 26):
- This Act shall take effect 15 days after its publication in the Official Gazette or in a newspaper of general circulation.