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Sixteenth Congress
Third Regular

HOUSE BILL NO. 6314

Introduced by Representative NEPTALI M. GONZALES II

EXPLANATORY NOTE

This Bill seeks to grant MEGAMANILA TELECOM CORP. a franchise to construct,
install, establish, operate and maintain telecommunications systems.

The telecom is an industry that has so much potential for growth such that more public
telecom utilities there are in the field to enhance competition, the more the products and
services as well as choices will be made available, thus giving our innovators, entrepreneurs
and other consumers more access to an ever growing market for services.

This is the reason why MEGAMANILA TELECOM CORP. seeks to offer itself as one
of the service providers in the telecommunications industry. It possesses the technical and
financial capacity and capability to provide broadband and internet connectivity and
backbone and transmission systems and networks for the benefit of our consuming public in
general and our innovators, entrepreneurs and other business entities in particular, by
means of wire and/or wireless telecommunications and broadband systems. This bill seeks
to grant the company the franchise required for it to be able to operate and offer its services
herein mentioned and therefore open the way for more opportunities for access to
information and choice in communications services through the fostering of healthy

competition.

In the light of the foregoing, approval of this measure is earnestly sought.

NEPTALI M. GONZALES II


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

Sixteenth Congress
Third Regular Session

House BILLNO. 6314

Introduced by Representative Neptali M. Gonzales II

AN ACT
GRANTING THE MEGAMANILA TELECOM CORP. A FRANCHISE TO CONSTRUCT, INSTALL,
ESTABLISH, OPERATE AND MAINTAIN TELECOMMUNICATIONS SYSTEMS THROUGHOUT
THE PHILIPPINES

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

SECTION 1. Nature and Scope of Franchise. - Subject to the provisions of the 1987
Philippine Constitution and applicable laws, rules and regulations, there is hereby granted
to Megamanila Telecom Corp., hereunder referred to as the grantee, its successors or
assignees, a franchise to construct, install, establish, operate and maintain for commercial
purposes and in the public interest, throughout the Philippines, with central base of
operations located at Ortigas Center, San Antonio, Pasig City, wire and/or wireless
telecommunications systems, including but not limited to mobile, cellular, paging, fiber
optics, 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 are convenient or essential
to efficiently carry out the purpose of this franchise.

SEC. 2. Manner of Operation of Stations or 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 grantee’s services and/or availability thereof.

SEC.3. Authority of the National Telecommunications Commission (NTC). — The
grantee shall secure from the NTC 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 NTC shall have the
power to impose such conditions relative to the construction, operation, maintenance, or
service level of the telecommunications system. The NTC shall have the authority to
regulate the construction and operation of its telecommunications systems. The grantee
shall not use any frequency in the radio spectrum without authorization from the NTC.
Such certificate shall state the areas covered and date the grantee shall commence the
service. The NTC, however, shall not unreasonably withhold or delay the grant of any such
authority, permits or licenses.

SEC. 4. Excavation and Restoration Works. . — 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 conductors, it shall be lawful for
the grantee, its successors or assignees, with the prior approval of the Department of
Public Works and Highways (DPWH) or the local government unit (LGU) concerned, as
may be appropriate, to make excavations or lay conduits in any of the public places, roads,
highways, streets, lanes, alleys, avenues, sidewalks or bridges of said province, cities
and/or municipalities: Provided, however, That a public place, highway, road, street, lane,
alley, avenue, sidewalk or bridge disturbed, altered or changed by reason of erection of
poles or 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
assignees, in accordance with the standards set by DPWH or the LGU concerned. Should
the grantee, its successors assignees, after the ten (10) day 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 assignees, then the DPWH or the LGU concerned 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 assignees.

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 city and/or
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 therefor, 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 NTC, 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 NTC 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 economical and practicable, modify,
improve, or change such stations, lines, 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 non-regulated services, whether flat rates or measured rates or
variation thereof, shall be subject to the approval of the NTC 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 special right is hereby reserved 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 welfare, 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 any time after due process.

SEC. 8. Term of Franchise. — This franchise shall be in effect for a period of twenty-
five (25) years from the date of effectivity of this Act, unless sooner cancelled. This
franchise shall be deemed ipso facto revoked in the event the grantee fails to comply with
any of the following conditions:

(a) Commence operations within one (1) year from the approval of its operating permit
by the National Telecommunications Commission;

(b) Commence operations within three (3) years from the effectivity of this Act; and

(©) Operate continuously for two (2) years.

SEC. 9. Acceptance and Compliance. — Acceptance of this franchise shall be given
in writing to the Congress of the Philippines, through the Committee on Legislative
Franchises of the House of Representatives and the Committee on Public Services of the
Senate, 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 with the NTC in the amount that. it
shall determine to guarantee compliance with and fulfillment of the conditions under
which this franchise is granted. If after three (3) years from the date of the approval of its
permit by the NTC, the grantee shall have fulfilled the conditions, the bond shall be
cancelled by the NTC. 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 other telecommunications
systems installed, operated 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
NTC.

SEC. 12. Gross Receipts. - The grantee, its successors or assignees, shall keep a
separate account of the gross receipts of the business transacted by it and shall furnish
the Commission on Audit (COA) 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 Commission on Audit
(COA) and its duly-authorized representatives. 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 free
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. Sale, Lease, Transfer, Usufruct, or Assignment.of Franchise. - The
grantee shall not sell, lease, transfer, grant the usufruct of, nor assign this franchise or the
rights and privileges acquired thereunder to any person, firm, company, corporation or
other commercial or legal entity, nor merge with any other corporation or entity, nor shall
transfer the controlling interest of the grantee, whether as a whole or in part, and whether
simultaneously or contemporaneously, to any such person, firm, company, corporation, or
entity without the prior approval of the Congress of the Philippines: Provided, That
Congress shall be informed of any sale, lease, transfer, grant of usufruct, or assignment of
franchise or the rights or privileges acquired thereunder, or the merger or transfer of the


controlling interest of the grantee, within sixty (60) days after the completion of said
transaction: Provided, further, That failure to report to Congress such change of ownership
shall render the franchise ipso facto revoked: Provided, finally, That any person or entity to
which this franchise is 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 shall offer to Filipino citizens
at least thirty per centum (30%) or a higher percentage that may hereafter be provided by
law of its outstanding capital stock in any securities exchange in the Philippines within five
(6) years from the commencement of its operations: Provided, That in cases where public
offer of shares is not applicable, establishment of cooperatives operating public utilities
must be implemented. Noncompliance therewith shall render the franchise ipso facto
revoked

SEC. 17. Reportorial Requirement. — The grantee shall submit an annual report to
the Congress of the Philippines, through the Committee on Legislative Franchises of the
House of Representatives and the Committee on Public Services of the Senate, on its
compliance with the terms and conditions of the franchise and on its operations on or
before April 30 of every year during the term of its franchise. The reportorial compliance
certificate issued by Congress shall be required before any application for permit or
certificate is accepted by the NTC.

SEC. 18. Penalty Clause. — Failure to submit the requisite annual report to
Congress shall be penalized by a fine of five hundred pesos (P500.00) per working day of
non-compliance. The fine shall be collected by the NTC from said delinquent franchise
grantee separate from the reportorial penalties imposed by NTC.

SEC. 19. Equality Clause. - Any advantage, favor, privilege, exemption, or immunity
granted under other existing franchises, or which may hereafter be granted, upon prior
review and approval of Congress, shall 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
service authorized by the franchise.


SEC. 20. Separability Clause. — If any of the sections or provisions of this Act is
held invalid, all other provisions not affected thereby shall remain valid.

SEC. 21. Repealability and Non-exclusivity Clause. — This franchise shall be
subject to amendment, alteration, or repeal by the Congress of the Philippines when the
public interest so requires and shall not be interpreted as an exclusive grant of the
privilege herein provided for.

SEC. 22. Effectivity Clause. — This Act shall take effect fifteen (15) days after its
publication in the Official Gazette or in a newspaper of general circulation.

Approved,