Title
Republic Act No. 8704
Date
Jul 9, 1998
Panay Telephone Corporation is granted a 25-year franchise to establish and operate a local exchange network providing telecommunications services in Aklan, Antique, and Janiuay, Iloilo, under the regulation of the National Telecommunications Commission.
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Law Summary

Overview

Republic Act No. 8704, enacted on July 9, 1998, grants the Panay Telephone Corporation a franchise to construct, maintain, and operate local exchange networks in the provinces of Aklan and Antique, and the Municipality of Janiuay, Province of Iloilo.

SECTION 1: Nature and Scope of Franchise

  • Legal Principle: Grants the franchise to operate telecommunications services in specified areas, adhering to the Constitution and applicable laws.
  • Key Definitions:
    • Grantee: Panay Telephone Corporation and its successors or assigns.
    • Local Exchange Network: Infrastructure for providing basic telephone services.
  • Requirements: The grantee must provide telecommunications services in the public interest.
  • Important Procedures: None specified.
  • Timeframes: None specified.
  • Consequences: None specified.

SECTION 2: Manner of Operation of Station or Facilities

  • Legal Principle: Operations must minimize interference with existing telecommunications.
  • Key Definitions:
    • Wavelength/Frequencies: Technical parameters governing telecommunications.
  • Requirements:
    • Operations must not exceed required coverage areas.
  • Important Procedures: None specified.
  • Timeframes: None specified.
  • Consequences: None specified.

SECTION 3: Authority of the National Telecommunications Commission

  • Legal Principle: The grantee must secure necessary permits from the National Telecommunications Commission (NTC).
  • Key Definitions:
    • Certificate of Public Convenience and Necessity: Required for construction and operation.
  • Requirements:
    • Obtain permits and comply with conditions set by NTC.
  • Important Procedures: NTC to issue permits without unreasonable delay.
  • Timeframes: None specified.
  • Consequences: Operation without authorization is prohibited.

SECTION 4: Responsibility to the Public

  • Legal Principle: The grantee must operate ethically and provide equitable services.
  • Key Definitions: None specified.
  • Requirements:
    • Conform to ethical standards and provide service without discrimination.
  • Important Procedures: Increase service capacity as demand grows.
  • Timeframes: None specified.
  • Consequences: Failure to comply leads to potential service limitations.

SECTION 5: Rates of Services

  • Legal Principle: Service rates must be approved by the NTC.
  • Key Definitions:
    • Regulated Services: Services subject to NTC approval.
  • Requirements:
    • Rates must be distinct and not subsidized by other services.
  • Important Procedures: NTC determines service rates.
  • Timeframes: None specified.
  • Consequences: Non-compliance with rate provisions can incur penalties.

SECTION 6: Right of Government

  • Legal Principle: The government reserves the right to temporarily take control in emergencies.
  • Key Definitions: None specified.
  • Requirements: Due compensation for the use of facilities during government takeover.
  • Important Procedures: None specified.
  • Timeframes: None specified.
  • Consequences: Government control can lead to suspension of operations.

SECTION 7: Term of Franchise

  • Legal Principle: The franchise is granted for 25 years, subject to compliance.
  • Key Definitions: None specified.
  • Requirements:
    • Must commence operations within three years of permit approval.
    • Must operate continuously for two years.
  • Timeframes:
    • 3 years to commence operations.
    • 5 years to commence operations from the Act's effectivity.
  • Consequences: Non-compliance results in automatic revocation of the franchise.

SECTION 8: Acceptance and Compliance

  • Legal Principle: The franchise must be accepted in writing.
  • Key Definitions: None specified.
  • Requirements: Acceptance must occur within 60 days of effectivity.
  • Important Procedures: Non-acceptance voids the franchise.
  • Timeframes: 60 days for written acceptance.
  • Consequences: Franchise becomes void if not accepted.

SECTION 9: Bond

  • Legal Principle: A bond must be filed to guarantee compliance.
  • Key Definitions: None specified.
  • Requirements:
    • Bond amount determined by NTC.
  • Important Procedures: Bond cancelled after 5 years of compliance.
  • Timeframes: 5 years for bond compliance.
  • Consequences: Forfeiture of bond and revocation of franchise for non-compliance.

SECTION 10: Right of Interconnection

  • Legal Principle: Grantee can connect with other authorized systems.
  • Key Definitions: None specified.
  • Requirements: Connection terms must be mutually agreed upon.
  • Important Procedures: Subject to NTC review.
  • Timeframes: None specified.
  • Consequences: Non-compliance may limit service expansion.

SECTION 11: Tax Provisions

  • Legal Principle: The grantee is subject to various taxes.
  • Key Definitions:
    • Value-Added Tax: Tax on gross receipts.
  • Requirements: Pay standard taxes and a franchise tax of 3% or as prescribed.
  • Important Procedures: Tax returns filed with the Bureau of Internal Revenue.
  • Timeframes: Annual tax submission.
  • Consequences: Failure to pay taxes can lead to penalties.

SECTION 12: Gross Receipts

  • Legal Principle: Separate accounts for gross receipts must be maintained.
  • Key Definitions: None specified.
  • Requirements: Annual reporting to the Commission on Audit and National Treasury.
  • Important Procedures: Report due by January 31 annually.
  • Timeframes: 12-month reporting period.
  • Consequences: Non-compliance can result in audits or penalties.

SECTION 13: Books and Accounts

  • Legal Principle: Financial records must be open for inspection.
  • Key Definitions: None specified.
  • Requirements: Submit quarterly reports on business condition.
  • Important Procedures: Reports due quarterly.
  • Timeframes: Quarterly submission.
  • Consequences: Non-compliance can lead to audits or penalties.

SECTION 14: Warranty in Favor of National and Local Governments

  • Legal Principle: Hold governments harmless for claims arising from operations.
  • Key Definitions: None specified.
  • Requirements: Liability for accidents or injuries related to operations.
  • Important Procedures: None specified.
  • Timeframes: None specified.
  • Consequences: Potential legal claims against the grantee.

SECTION 15: Sale, Lease, Transfer, Usufruct, Etc.

  • Legal Principle: Restrictions on the transfer of the franchise.
  • Key Definitions: None specified.
  • Requirements: Prior Congressional approval required for transfer.
  • Important Procedures: Compliance with existing franchise laws.
  • Timeframes: None specified.
  • Consequences: Unauthorized transfers lead to revocation.

SECTION 16: Dispersal of Ownership

  • Legal Principle: Encourage public participation in ownership.
  • Key Definitions: None specified.
  • Requirements: At least 30% of capital stock to be offered publicly.
  • Important Procedures: Compliance within 10 years of operation commencement.
  • Timeframes: 10 years for public offering.
  • Consequences: Non-compliance results in franchise revocation.

SECTION 17: Separability Clause

  • Legal Principle: Validity of provisions.
  • Key Definitions: None specified.
  • Requirements: None specified.
  • Important Procedures: None specified.
  • Timeframes: None specified.
  • Consequences: Invalid provisions do not affect others.

SECTION 18: Repealability and Nonexclusivity Clause

  • Legal Principle: Franchise may be amended or repealed.
  • Key Definitions: None specified.
  • Requirements: Subject to public interest amendments.
  • Important Procedures: None specified.
  • Timeframes: None specified.
  • Consequences: Amendments can change franchise conditions.

SECTION 19: Reportorial Requirement

  • Legal Principle: Annual reporting obligation to Congress.
  • Key Definitions: None specified.
  • Requirements: Submit reports on franchise compliance and operations.
  • Important Procedures: Reports due within 60 days after the year-end.
  • Timeframes: Annual reporting requirement.
  • Consequences: Non-compliance may lead to scrutiny or penalties.

SECTION 20: Effectivity Clause

  • Legal Principle: Timing of Act's effectiveness.
  • Key Definitions: None specified.
  • Requirements: Publication in two newspapers.
  • Important Procedures: Effectivity begins 15 days post-publication.
  • Timeframes: 15 days from publication.
  • Consequences: Failure to comply with publication delays effectivity.

Key Takeaways

  • The grant of a 25-year franchise to Panay Telephone Corporation includes strict compliance with operational, financial, and ethical standards.
  • The grantee must secure necessary permits from the NTC, maintain transparent financial records, and adhere to public service obligations.
  • The franchise carries significant government oversight, including the right to regulate service rates and temporarily take control under specific circumstances.
  • Non-compliance with any conditions may lead to revocation of the franchise or penalties.
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