Manner of operation and interference limits
- The grantee must construct and operate stations or facilities to result at most in minimum interference on the wavelengths or frequencies of existing stations or other stations established by law.
- Operations must not diminish the grantee’s privilege to use its assigned wavelengths or frequencies.
- The grantee’s operations must maximize the quality of transmission or reception and/or availability of services.
NTC authority and required permits
- The grantee must secure from the National Telecommunications Commission (NTC) a Certificate of Public Convenience and Necessity and the appropriate permits and licenses for the construction, installation, and operation of its telecommunications systems/facilities.
- In issuing the certificate, the NTC must have the power to impose conditions relating to construction, operation, maintenance, or service level.
- The NTC must have authority to regulate the construction and operation of the grantee’s telecommunications systems.
- The grantee must not use any frequency in the radio spectrum without authorization from the NTC.
- The NTC-issued certificate must state the areas covered and the date the grantee shall commence the service.
- The NTC must not unreasonably withhold or delay the grant of the authority, permit, or license.
Excavation, conduit laying, and restoration
- For erecting and maintaining poles or other supports and for laying and maintaining underground wires, cables, or other conductors, the grantee (and successors/assignees) may make excavations or lay conduits in public places and in roads, highways, streets, lanes, alleys, avenues, sidewalks, or bridges of provinces, cities, and/or municipalities.
- Excavation or conduit laying requires prior approval of the Department of Public Works and Highways (DPWH) and the local government unit (LGU) concerned, as appropriate.
- Any public place/road/highway/street/lane/alley/avenue/sidewalk/bridge disturbed due to the erection of poles or supports or the underground laying of wires, conductors, or conduits must be repaired and replaced in a workmanlike manner by the grantee/successors/assignees.
- Repairs and replacement must follow standards set by DPWH or the LGU concerned.
- After ten (10) days’ notice from the authority, if the grantee fails to repair or replace, DPWH or the LGU may have the work done and charge the grantee/successors/assignees at double the costs and expenses for the repair or replacement.
Public responsibility and service improvements
- The grantee must conform to the ethics of honest enterprise and must not use its stations or facilities for obscene or indecent transmission, for dissemination of deliberately false information or willful misrepresentation, or to assist in subversive or treasonable acts.
- The grantee must operate and maintain all stations, lines, cables, systems, and equipment for transmission and reception in a satisfactory manner at all times.
- As far as economical and practicable, the grantee must modify, improve, or change stations, lines, cables, systems, and equipment to keep abreast with advances in science and technology.
- The grantee must improve and extend services in areas not served and in hazard- and typhoon-prone areas, as determined by the National Disaster Risk Reduction and Management Council in coordination with the NTC.
- The grantee must improve and upgrade equipment, facilities, and services to ensure effective compliance with the objectives of Republic Act No. 10639 (“The Free Mobile Disaster Alerts Act”).
Service rates subject to NTC
- Telecommunications service charges and rates of the grantee are subject to approval of the NTC or its legal successor.
- The approval requirement covers flat rates, measured rates, and variations thereof, except rates and charges on services that may hereafter be declared or considered as nonregulated services.
Government rights over spectrum and operations
- The radio spectrum is a finite resource forming part of the national patrimony, and its use is a privilege conferred by the State that may be withdrawn any time after due process.
- The President of the Philippines has a special reserved right, in times of war, rebellion, public peril, calamity, emergency, disaster, or disturbance of peace and order, to:
- Temporarily suspend the operation of any station, transmitter, facility, or equipment in the interest of public safety, security, and public welfare; or
- Authorize temporary use and operation by any government agency upon due compensation to the grantee for the use of the stations, transmitters, facilities, or equipment during the period of such operation.
Franchise term, commencement, and revocation
- The franchise is effective for twenty-five (25) years from the date of the effectivity of this Act, unless sooner cancelled.
- The franchise is ipso facto revoked if the grantee fails to comply with any of the following conditions:
- (a) Commence operations within one (1) year from approval of its operating permit by the NTC;
- (b) Commence operations within three (3) years from the effectivity of this Act; and
- (c) Operate continuously for two (2) years.
Employment and training commitments
- The grantee must create employment opportunities and must allow on-the-job trainings in franchise operations.
- Priority in employment opportunities must be accorded to residents in areas where any of its office is located.
- The grantee must follow applicable labor standards and allowance entitlements under existing labor laws, rules, and regulations and similar issuances.
- Employment opportunities/jobs created must be reflected in the General Information Sheet (GIS) submitted to the Securities and Exchange Commission annually.
Tax obligations and filings
- The grantee and its successors/assignees must pay the same taxes on real estate, buildings, and personal property, exclusive of the franchise, as required by law for other persons or corporations.
- The grantee is exempt from customs duties, tariffs, and other taxes for radio telecommunications and electronic communications equipment, machinery, and spare parts needed in connection with its business, as well as items declared exempt in the same tax section.
- The grantee must pay a value-added tax on all gross receipts in the Philippines under this franchise in lieu of any and all taxes of any kind, nature, or description levied, established, or collected by any authority (including city, municipal, provincial, or national), from which the grantee is expressly exempted effective from the date of the effectivity of this Act.
- The grantee must continue to be liable for income taxes payable under Title II of the National Internal Revenue Code pursuant to Section 2 of Executive Order No. 72, unless that enactment is amended or repealed, in which case the amendment or repeal applies.
- The grantee must file the required return and pay the tax thereon with and to the Commissioner of Internal Revenue or duly authorized representative under the National Internal Revenue Code, and the return is subject to audit by the Bureau of Internal Revenue.
Bond requirement and forfeiture
- The grantee must file a bond with the NTC in an amount determined by the NTC to guarantee compliance with and fulfillment of the franchise conditions.
- If after three (3) years from the date of approval of its NTC permit the grantee has fulfilled the conditions, the bond must be released by the NTC.
- If the conditions are not fulfilled, the bond must be forfeited in favor of the government, and the franchise is ipso facto revoked.
Interconnection and national connectivity
- The grantee is authorized to connect or demand connection of its telecommunications systems to systems installed, operated, and maintained by any other duly authorized person or entity in the Philippines.
- Interconnection must be for purposes of providing extended and improved telecommunications services to the public.
- Interconnection terms and conditions must be mutually agreed by the parties and are subject to review and modification by the NTC.
Protection of government from claims
- The grantee must hold the national, provincial, city, and municipal governments of the Philippines free from all claims, liabilities, demands, or actions arising out of accidents causing injury to persons or damage to property during the construction or operation of the grantee’s stations, transmitters, facilities, or equipment.
Mobile Number Portability mandate
- The grantee must provide mobile number portability (MNP).
- The grantee must interconnect directly or indirectly with the infrastructure, facilities, systems, or equipment of other telecommunications franchise grantees.
- The grantee must not install network features, functions, or capabilities that will impede implementation of a nationwide MNP system.
- The NTC must issue rules and regulations for MNP; the effectivity of those rules must commence upon applicability with other telecommunications franchise grantees.
Franchise transfer and corporate changes
- The grantee must not:
- Sell, lease, transfer, grant usufruct of, or assign the franchise or rights and privileges acquired thereunder;
- Merge with any other corporation or entity; or
- Transfer controlling interest of the grantee (whether as a whole or in part, and whether simultaneously or contemporaneously) to any person, firm, company, corporation, or entity, without prior approval of the Congress of the Philippines and compliance with legal requirements in other statutes.
- Any person or entity to which the franchise is sold, transferred, or assigned must be subject to the same conditions, terms, restrictions, and limitations of the Act.
Dispersal of ownership requirement
- The grantee must offer Filipino citizens at least thirty percent (30%) (or a higher percentage if later provided by law) of its outstanding capital stock in any securities exchange in the Philippines within five (5) years from commencement of operations.
- If public offer of shares is not applicable, the grantee must apply other methods of encouraging public participation by citizens and corporations operating public utilities as allowed by law.
- Noncompliance with the dispersal of ownership requirement results in ipso facto revocation of the franchise.
Annual report to Congress
- The grantee must submit an annual report to Congress through the Committee on Legislative Franchises of the House of Representatives and the Committee on Public Services of the Senate.
- The annual report must cover the grantee’s compliance with the franchise terms and conditions and its operations.
- The report must be submitted on or before April 30 every year during the term of the franchise.
- The reportorial compliance certificate issued by Congress must be required before any application for permit or certificate is accepted by the NTC.
Reportorial fines and collection
- Failure to submit the requisite annual report to Congress subjects the grantee to a fine of One million pesos (P1,000,000.00) per working day of noncompliance.
- The fine’s effectivity commences upon applicability with other telecommunications franchise grantees.
- In the interim period, the grantee must be liable to a fine of Five hundred pesos (P500.00) per working day of noncompliance.
- The fine is collected by the NTC from the delinquent franchise grantee separately from reportorial penalties imposed by the NTC, and the proceeds must be remitted to the National Treasury.
Equality clause for franchise advantages
- Any advantage, favor, privilege, exemption, or immunity granted under existing franchises, or granted in the future upon prior review and approval of Congress, must ipso facto become part of the franchise and must be accorded immediately and unconditionally to the grantee.
- The equality clause must not apply to or affect provisions on:
- Territory covered by the franchise;
- Life span of the franchise; or
- Type of service authorized by the franchise.
Amendment, nonexclusivity, and separability
- The franchise is subject to amendment, alteration, or repeal by Congress when the public interest requires, and it must not be interpreted as an exclusive grant of the privilege provided.
- If any section or provision is held invalid, the other provisions not affected by such invalidity remain valid.
Repeals and effectivity
- All laws, decrees, executive orders, rules and regulations, or parts or provisions inconsistent with Republic Act No. 11089 are repealed, amended, or modified accordingly.
- The Act takes effect fifteen (15) days after its publication in the Official Gazette or in a newspaper of general circulation.
Issuance and approval details
- Republic Act No. 11089 is dated October 18, 2018 and approved by the President on October 18, 2018.
- The Act was passed by the House of Representatives and the Senate on August 29, 2018 and August 15, 2018, respectively.
- The Act’s effectivity is governed by the publication rule under Section 23.