Manner of Operation of Stations or Facilities
- Stations and facilities must be operated to cause minimum interference to existing or legally established stations.
- The grantee retains the right to optimal use of its selected wavelengths or frequencies.
- Quality of transmission and reception should maximize service rendition and availability.
Authority of the National Telecommunications Commission (NTC)
- Grantee must secure a certificate of public convenience or appropriate permits from the NTC for location, construction, installation, and operation.
- NTC may impose conditions related to construction, operation, maintenance, and service level.
- NTC regulates the telecommunications system.
- Use of frequencies requires prior authorization from NTC.
- Certificate will specify coverage areas and commencement date.
- NTC shall not unreasonably withhold or delay granting permits or licenses.
Responsibility to the Public
- Grantee must adhere to ethics of honest enterprise; no obscene, indecent, false, or subversive transmissions.
- Provide basic or enhanced telephone service without discrimination in approved municipalities.
- Service must be provided in order of application until capacity limits are reached.
- If demand exceeds capacity, grantee must increase capacity.
- Grantee not obliged to provide service below viable exchange size unless applicant pays installation expenses.
- Stations, systems, and equipment must be maintained satisfactorily and updated as technology advances.
Rates for Services
- Charges and rates subject to NTC approval, except for non-regulated services.
- Rates must be unbundled, separable, and distinct among services offered.
- Regulated services should not subsidize unregulated services.
Right of Government
- President reserved special rights in war, rebellion, emergencies, disasters, or peace disturbances to:
- Temporarily take over and operate stations or equipment.
- Suspend operations for public safety and welfare.
- Authorize government use with due compensation.
- Radio spectrum is a national patrimony; use is a state-granted privilege subject to withdrawal after due process.
Term of Franchise
- Franchise lasts 25 years from effectivity unless revoked or cancelled.
- Franchise automatically revoked if grantee:
- Fails to commence operations within 3 years from NTC permit approval.
- Does not operate continuously for 2 years.
- Fails to commence operations within 5 years from effectivity.
Acceptance and Compliance
- Grantee must accept the franchise in writing within 60 days from effectivity.
- Nonacceptance renders the franchise void.
- Acceptance obligates exercise of granted privileges.
Bond
- Grantee must file a compliance bond with NTC; amount determined by NTC.
- Bond guarantees fulfillment of franchise conditions.
- Bond cancelled after 5 years if compliance is fulfilled.
- Bond forfeited and franchise revoked if conditions are not met.
Right of Interconnection
- Grantee authorized to connect its telecommunications system with others operated by duly authorized entities.
- Interconnection terms agreed mutually and subject to NTC review or modification.
Tax Provisions
- Grantee liable for taxes on property and value-added tax under RA 7716 or franchise tax of 3% on gross receipts, whichever higher.
- Income tax liability remains unless laws change.
- Taxes filed and paid to Commissioner of Internal Revenue; subject to audit.
Gross Receipts
- Grantee must maintain separate accounts of gross receipts.
- Annual submission of gross receipts account to Commission on Audit and National Treasury by January 31.
Books and Accounts
- Books and accounts open to inspection by Commissioner on Audit.
- Quarterly reports on gross receipts, net profits, and business condition must be submitted in duplicate.
Warranty in Favor of National and Local Governments
- Grantee liable to hold governments harmless from claims arising from accidents or injuries from its operations and equipment.
Sale, Lease, Transfer, Usufruct, etc.
- Franchise and rights cannot be leased, sold, assigned, transferred, or merged without prior Congressional approval.
- Controlling interest transfer is similarly restricted.
- Successors/subsequent owners subject to same conditions.
Dispersal of Ownership
- Constitutional mandate for at least 30% of outstanding capital stock to be offered in Philippine securities exchange within 5 years of operation commencement.
- Failure results in automatic franchise revocation.
Separability Clause
- Invalidity of any provision does not affect other provisions which remain valid.
Repealability and Nonexclusivity Clause
- Franchise subject to amendment or repeal by Congress as public interest requires.
- Franchise is not exclusive.
Reportorial Requirement
- Annual report to Congress on compliance and operations due within 60 days after end of each year.
Effectivity Clause
- Act takes effect 15 days after publication in two newspapers of general circulation.
- Approved by lapse into law without Presidential signature in accordance with the Constitution.