Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

FIFTEENTH CONGRESS.

First Regular Session

House Bill No. 3628

Introduced by HON. KARLO ALEXEI B. NOGRALES

EXPLANATORY NOTE

‘Telecommunications is as vital as our natural resources. And for the Philippines to
cope with the growing demand for such services, we must open new doors to promote the
upliftment and improvement of our present telecommunications system.

As embodied by in Section 24, Article Il of the 1987 Constitution, the State
recognizes the vital role of communication and information in nation building, Explicitly, the
State recognizes the establishment of communication and information facilties.

Indeed, for an archipelagic country with a widely dispersed population and an
uneven level of development, telecommunications services provide a unifying, uplifting and
democratizing force.

Digidata Inc. intends to do its share in improving and augmenting the present
telecommunications system in the country. The company will avail of state-of-the-art and
appropriate technologies that will allow the most effective and efficient delivery of it's
services to as many of our contrymen, especially in the countryside.

In view of the foregoing, approval of this bill is earnestly requested.

KARLO ALEXEI B. NOGRALES:


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City
FIFTEENTH CONGRESS

First Regular Session

3628

House Bill No.

Introduced by : KARLO ALEXEI B. NOGRALES

AN ACT
GRANTING THE DIGIDATA INC. A FRANCHISE TO CONSTRUCT, INSTALL
‘ABLISH, OPERATE AND MAINTAIN TELECOMMUNICATIONS SYSTEMS,
THROUGHOUT THE PHILIPPINES

Be it enacted by the Senate and the House of Representatives of the Philippines in
Congress assembled.

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 DIGIDATA INC.,
hereunder referred to as the grantee, its successors or assigns, a franchise to construct, install,

establish, operate and maintain for commercial purpos

and in the public interest, throughout
the Philippines and between the Philippines and other countries and territories, wire and/or
wireless telecommunications systems, including but not limited to mobile, cellular, paging fiber
optics, multi-channel distribution system (MMDS), local multi-point distribution system
(LMDS), satellite transmit and receive systems, switches, and their value-added services such
as. but not limited to, transmission of voice, data, facsimile, control signs, audio and video,
information services bureau and all other telecommunications systems technologies as are at

present available or will be made available through technological advances or innovations in the


future; and/or construct, acquire, lease and operate or manage transmitting
and receiving stations, lines, cables or systems as in or are convenient or

essential to efficiently carry out the purpose of this franchise.

SEC. 2. Manner of Operation of Stations of Facilities. - The stations or
facilities of the grantee shall be constructed and operated in a manner as will
at most result only in the minimum interference on the wavelengths or
frequencies of existing stations or other stations which may be established
by law, without in any way diminishing its own right to use its selected
wavelengths or frequencies and the quality of transmission or reception
thereon as should maximize rendition of the grantees services and/or the

availability thereof.

SEC. 3. Authority of the National Telecommunications Commission. -
The grantee shall secure from the National Telecommunications Commission
(NTC), hereinafter referred to as the Commission, a Certificate of Public
Convenience and Necessity or the appropriate permits and licenses for the
construction, installation and operation of its telecommunications
systems/ facilities. In issuing the certificate, the Commission shall have the
power to impose such conditions relative to the construction, operation,
maintenance, or service level of the telecommunications system. The
Commission shall have the authority to regulate the construction and
operation of its telecommunications systems. The grantee shail not use any
frequency in the radio spectrum without having been authorized by the
Commission. Such certificate shall state the areas covered and date the
grantee shall commence the service. The Commission, however, shall not
unreasonably withhold or delay the grant of any such authority, permits or

licenses.

SEC. 4. Ingress and Egress. ~ For the purpose of erecting and

maintaining poles or other supports for said wires or other conductors for

the purpose of laying and maintaining underground wires, cables or other

ne


successors or assigns, with

conductors, it shall be lawful for the grantee, i
the prior approval of the Department of Public Works and Highways (DPWH),
to make excavations or lay conduits in any of the public places, highways,
streets, lanes, alleys, avenues, sidewalks or bridges of said province, cities
and/or municipalities: Provided, however, That a public place, highway,

street, lane, alley, avenue, sidewalk or bridge disturbed, altered or changed

by reason of erection of poles ur other supports or the underground laying of
wires, other conductors or conduits, shall be repaired and replaced in
workmanlike manner by said grantee, its successors or assigns, in
accordance with the standards set by DPWH. Should the grantee, its
successors assigns, after the ten days notice from the said authority, fail,
refuse or neglect to repair or replace any part of public place, road, highway,
street, lane, alley, avenue, sidewalk or bridge altered, changed or disturbed
by the said grantee, its successors or assigns, then the DPWH shall have the
right to have the same repaired and placed in good order and condition at
double expense to be charged against the grantee, its successors or assigns.

SEC. 5. Responsibility to the Public. - The grantee shall conform to the
ethics of honest enterprise and not use its stations/facilities for obscene or
indecent transmission or for dissemination of deliberately false information

or willful misrepresentation, or assist in subversive or treasonable acts.

The grantee shall provide basic or enhanced telephone service in any
municipality in the Philippines where it has an approved Certificate of Public
Convenience and Necessity for the establishment, operation and
maintenance of a local exchange service, without discrimination to any
applicant therefore, in the order of the date of their applications, up to the
limit of the capacity of its local telephone exchange, and should the demand
for the telephone service at any time increase beyond the capacity thereof,
the grantee shall increase the same to meet such demand: Provided, That in
case the total demand to be satisfied by the expansion is less than the

smallest viable local exchange available in the market as determined by the


Commission, the grantee shall not be obliged to furnish such service unless
the applicant for telephone service defrays the actual expenses for the
installation of the telecommunications apparatus necessary for such services
and in such case, the Commission may extend the time within which the

grant shall furnish such service.

‘The grantee shall operate and maintain all its stations, lines, cables,
systems, and equipment for the transmission and reception of messages;

signals and pulses in a satisfactory manner at all times, and as far as
lines,

economical and practicable, modify, improve or change such stations,
cables, systems, and equipment to keep abreast with the advances in science

and technology.

SEC. 6. Rates for Services. - The charges and rates for
telecommunications services of the grantee, except the rates and charges on
those that may hereafter be declared or considered as nonregulated services,
whether flat rates or measured rates or variation thereof, shall be subject to
the approval of the Commission or its legal successor. The rates to be
charged by the grantee shall be unbundled, separable and distinct among
the services offered and shall be determined in such a manner that regulated

services do not subsidize the unregulated ones.

SEC. 7. Right of Government. - A spccial right is hereby granted to the
President of the Philippines, in times of war, rebellion, public peril, calamity,
emergency, disaster or disturbance of peace and order, to temporarily take
over and operate the stations, transmitters, facilities or equipment of the
grantee, to temporarily suspend the operation of any station, transmitter,
facility or equipment in the interest of public safety, security and public
weifare, or to authorize the temporary use and operation thereof by any
agency of the government, upon due compensation to the grantee for the use
of said stations, transmitters, facilities or equipment during the period when

they shall be so operated.


The radio spectrum is a finite resource that is part of the national
patrimony and the use thereof is a privilege conferred upon the grantee by

the State and may be withdrawn anytime after due process.

SEC. 8. Term of Franchise. — This franchise shall be for a term of
twenty-five (25) years from the date of effectivity of this Act, unless sooner
revoked or cancelied. This franchise shall be deemed ipso facto revoked in

the event the grantee fails to comply with any of the following conditions:

(a) Commence operation within three (3) years from the approval of its
operating permit by the National Telecommunications Commission;

(b) Operate continuously for two (2) years; and

(c) Commence operations within five (5) years from the effectivity of this

Act.

SEC. 9. Acceptance and Compliance. - Acceptance of this franchise
shall be given in writing within sixty (60) days from the effectivity of this Act.
Upon giving such acceptance, the grantee shall exercise the privileges
granted under this Act. Non-acceptance shall render the franchise void.

SEC. 10. Bond. - The grantee shall file a bond issued in favor of the
National Telecommunications Commission, which shall determine the
amount, to guarantee the compliance with and fulfillment of the conditions
under which this franchise is granted. If, after five (5) years from the date of
the approval of its permit by the Commission, the grantee shall have fulfilled
the same, the bond shall be cancelled by the Commission. Otherwise, the
bond shall be forfeited in favor of the government and the franchise ipso
facto revoked.

SEC. 11. Right of Interconnection. - The grantee is hereby authorized
to connect or demand connection of its telecommunications systems to any

other telecommunications systems installed, operate and maintained by any


other duly authorized person or entity in the Philippines for the purpose of

providing extended and improved telecommunications services to the public,
under such terms and conditions mutually agreed upon by the parties
concerned and the same shall be subject to the review and modification of

the Commission.

SEC. 12. Gross Receipts. - The grantee, its successors or assigns, shall
keep a separate account of the gross receipts of the business transacted by it
and shall furnish the Commission on Audit and the National Treasury a copy
of such account not later than the thirty-first (31st) day of January of each

year for the preceding twelve (12) months.

SEC. 13. Books and Accounts. - The books and accounts of the
grantee, its successor or assigns, shall always be open to the inspection of
the Commissioner on Audit or his authorized representatives and it shall be
the duty of the grantee to submit to the COA two (2) copies of the quarterly
reports on the gross receipts, the net profits and the general condition of the

business.

SEC. 14. Warranty in Favor of the National and Local Governments. -
‘The grantee shall hold the national, provincial, city and municipal
governments of the Philippines harmless from all claims, accounts, demands
or actions arising out of accidents or injuries, whether to property or to

persons, caused by the construction or operation of the stations,

transmitters, facilities and equipment of the grantee.

SEC. 15. Nontransferability of Franchise. - The grantee shall not lease,
transfer, grant the usufruct of, sell nor assign this franchise or the rights
and privileges acquired there under to any person, firm, company,
corporation or other commercial or legal entity, nor merge with any other
corporation or entity, nor shall the controlling interest of the grantee be

and whether simultan:

transferred, whether as a whole or in par e

usly or

6


contemporancously, to any such person, firm, company, corporation or
entity without the prior approval of the Congress of the Philippines. Any
person or entity to which this franchise is validly sold, transferred or
assigned, shall be subject to the same conditions, terms, restrictions and

limitations of this Act.

SEC. 16. Dispersal of Ownership. - In accordance with the
constitutional provision to encourage public participation in public utilities,
the grantee shell offer at least thirty per centum (30%) of its outstanding
capital stock or a higher percentage that may hereafter be provided by law in
any securities exchange in the Philippines within five (5) years from the
commencement of its operations. Noncompliance therewith shall render the

franchise ipso facto revoked.

SEC. 17. Equality Clause. - Any advantage, favor, privilege, exemption,
or immunity granted under existing franchise, or which may hereafter be
granted, shali ipso facto become part of this franchise and shall be accorded
immediately and unconditionally to the herein grantee: Provided, however,
That the foregoing shall neither apply to nor affect provisions of
telecommunications franchises concerning territory covered by the franchise,

the life span of the franchise or the type of se

¢ authorized by the

franchise.

SEC. 18. Reportorial Requirement. ~ The grantce shall submit an
annual report to the Congress of the Phi

pines on its compliance with the
terms and conditions of the franchise and on its operations within sixty (60)
days from the end of every year.

SEC. 19. Separability Clause. — If any of the sections or provisions of
this Act
valid

is held invalid, all other provisions not affected thereby shall remain


SEC. 20. Repealability and Nonexclusivity Clause. - This franchise
of the

shall be subject to amendment, alteration, or repeal by the Congr
Philippines when the public interest so requires and shall not be interpreted

as an exclusive grant of the privileges herein provided for.

SEC. 21. Effectivity Clause. — This Act shall take effect fifteen (15) days

from the date of its publication, upon the initiative of the grantee, in at least

two (2) newspapers of general circulation in the Philippines.

Approved,