Republic of the Philippines
HOUSE OF REPRESENTATIVES
QUEZON CITY

FIFTEENTH CONGRESS
‘Second Regular Seesion

House BillNo__—«S872

Introduced by HON. PAOLO EVERARDO S. JAVIER

EXPLANATORY NOTE

‘The state recognizes the vital role of communication and information in nation-building ' The
impact of information and communication exchange has been great in shaping and building our
nation. This was clearly scen by the Filipino People in the last three major political upheavals
that has changed the political landscape of our country through the EDSA People Power
Movements, when cellular phones, television, and the internet played vital roles in disseminating
information among our countrymen,

‘The impact of Telecommunications, however, is not only confined to the political arena, it is a
declared Policy of the State considering that telecommunications is essential to the economic
development, integrity and security of the Philippines, und as such it shall be developed and
administered as to safeguard, enrich and strength the economic, cultural, social and political
fabric of the Philippines".

In order to fully realize this, itis incumbent upon congress, to assist and participate in sustaining
and encouraging the development of the Telecommunications Industry through healthy
competition.

Philippine Global Communications, which was granted Legislative Franchise in 1965, is seeking
to renew and amend its Legislative Franchise in order that it may be able to fully relevant and
responsive to the need of the times, for the Franchise it was granted is no longer responsive and
applicable in this digital age.

‘The Franchise it was granted will expire on June 19, 2015, and considering the process for which
a bill is passed into law, the introduction of this bill now is timely. Philippine Global
Communications must be able to provide security to its investors and to entice future investors
through the renewal of their Legislative Franchise for this cannot be done, considering the
impending expiration of its Legislative Franchise.

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

HON. P: ‘VERARDO S. JAVIER

“ARTICLE ll, SEC. 24, 1987 CONSTITUTION,
*SE.4 (FRA 7925,



5872
AN ACT RENEWING AND AMENDING THE FRANCHISE GRANTED

‘TO PHILIPPINE GLOBAL COMMUNICATIONS, INC. (RCA.
COMMUNICATIONS, INC.) UNDER REPUBLIC ACT NO. 4617

Be it enaoted by the Senate and the House of Representatives of the Philippines in Congress
assembled:

Sec 1. REPUBLIC ACT NO. 4617, is hereby amended to read as follows:

"Sec 1. Nature and Scope and Franchise. - Subject to the provisions of the Constitution and
applicable laws, rules and regulations, there is hereby granted to PHILIFPINE GLOBAL
COMMUNICATIONS , INC. (RCA COMMUNICATIONS, INC), hereunder referred to as the
grantee, its successors or assigns, a franchise to construct, install, establish, ope-ate and maintain
for commercial purposes and in the public interest, throughout the Philippines and between the
Philippines and other countries and territories, wire and/or wireless tclecommurications systems,
including but not limited to mobile, cellular, paging, fiber optic, multi-chennel distribution
system (MMDS), local multi-point distribution system (LMDS), satellite transmit and receive
systems, switches, and their value-added services such 9s, but not limited 1 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 bz made available
through technologiéal advances or innovations in the future; and construct, a2quire, lease and
operate or manage transmitting and receiving stations, lines, cables or systeims, as is, or 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 facilitiss 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 ste ions 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 the availability thereof.

"SEC 3. Authority of the National Telecommunications Commission (NTC). - The grantee shall
secure from the NTC, hereinafter referred to as the Commission, a certficate 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, and 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 shall not use any frequency in the radio spectrum without having been
authorized by the Commission. Such certificate shall state the areas covered and the 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 un Jerground wires,
cables or other conductors, it shall be lawful for the grantee, its successors or assigns, with 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, aven ies, sidewalks or
bridges of said provinces, cities and/or municipalities: Provided, however, Thit a public place,
highway, stect, lane, alley, avenue, sidewalk or bridge disturbed, altered or chinged, by reason



of the erection of poles or other supports or the underground laying of wires, oter conductors or
conduits, shall be repaired and replaced in a workmanlike manner by said grantee, its successors
‘or assigns, in accordance with the standards set by the DPWH. Should the grantee, its successors
or ussigns, after the ten (10) 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 said grantee, its successors or assigns, then the DPWH shall
Ihave the right to have the same repaired and placed in good order and covdition 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 shall not use its stations/facilities for obscene or indecent trensmission or for
dissemination of deliberaicly 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 @ local exchange service, without discrimination to
any applicant therefor, in the order of the date of their applications, up to the lint of the capacity
of its local telephone exchange, and should the demand for the telephone sevice 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 expansicn 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 jelephone service
defrays the actual expenses for the installation of the telecommunication appari tus necessary for
such services and in such case, the Commission may extend the time within \hich the grantee
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 u satisfactory manner at all
times, and as fir as economical and practicable, modify, improve or change su-h stations, lines,
cables, systems and equipment to keep abreast with the advances in science and technology.

"See. 6. Rates for Services. - The charges and rates for telecommunication 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 Commission or its legal successor. The rates to be charg sd 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.

"See. 7. Right of Government.- A special right is hereby reserved to the President of the
ippines, in times of war, rebellion, public peril, calamity, emergency, disaster or disturbance
of peace and order, to temporarily take over and operate the stations, transmi ters, fucilities 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 welfire, or to authorize the
temporary use and operation thereof by any agency of the government, upon cue 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 a part of the national patrimony and the use
thereof is a privilege conferred upon the grantee by the State and may be withdrawn anytime,
afler due process.



“See. 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 cancelled. This fianchise shall be
deemed ipso facto revoked in the event the grantee fails to comply with any of the following
conditions:

*(a) Commence operations within three (3) years from the approval of its opzrating permit or
provisional authority by the NTC;

"(b) Operate continuously for two (2) years; and
*(c) Commence operations within five (5) years from the effectivity of this Act.

“See. 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 acceprance, the grantee
shall exereise the privileges granted under this Act. Non acceptance shall reniler the franchise
void.

"Sec. 10. Bond. - The grantee shall file a bond issued in favor of the NTC, which shall determine
the amount, to guarantee the compliance with and fulfilment 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,

"See. 11, Right of Interconnection. - ‘The grantee is hereby authorized to connect or demand
connection of its telecommunications systems to any other tclecommunications systems
installed, maintained and operated by any other duly authorized person or entity in the
Philippines for the purpose of providing extended and improved telecommunictions services to
the public, under such terms and conditions mutually agreed upon by the partis concemed and
the same shall be subject to the review or modification of the Commission,

"See, 12. Gross Receipts. - The grantee, its successors or assigns, shall keep a separate account
of the gross receipts of the business transacted by it in the Philippines 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.

"See. 13. Books and Accounts. - The books and accounts of the grantee, its succ=ssors or assigns,
shall always be open to the inspection of the Commissioner on Audit or his duly authorized
representatives, and it shall be the duty of the grantee to submit to the COA twe (2) copies of the
quarterly reports on the gross receipts, the net profits and the general condition cf the business.

"See. 14. Warranty in Favor of National and Local Governments. - ‘The grantze shall hold the
national, provincial, city and municipal governments of the Philippines harmles; 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.

"See. 15. Sale, Lease, Transfer, Usufruct, etc.- The grantee shall not lease, tansfer, grant the
‘usafruct of, sell nor assign this franchise or the rights and privileges acquired thereunder to any
person, firm, company, corporation or other commercial or legal entity, nor mer3e with any other
corporation or entity, nor shall the controlling interest of the grantee be transferred, whether as a
whole or in parts and whether simultaneously or contemporaneously, to any Sich person, firm,
company, corporation or entity without the prior approval of the Congress 0° the Philippines.



Any person or entity to which this franchise is sold, transferred or assigned shal) be subject to the

"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 perzentum (30%) of
its outstanding capital stock or a higher percentage that may hereafter be proviced by law in any
securities exchange in the Philippines within five (5) years from the comoiencement of its
operations. Noncompliance therewith shall render the franchise ipso facto revok=d.

"Sec. 17. Equality Clause. - Any advantage, favor, privilege, exemption or inmunity granted
under existing franchises, or may hereafter be granted, shall ipso facto become art of previously
granted telecommunications franchises and shall be accorded immediately and unconditionally to
the grantees of such franchises; Provided, however, That the foregoing shall ne ther apply to nor
affect provisions of telecommunications franchises conceming territory covered by the franchise,
the life span of the franchise, or the type of service authorized by the franchise.

"See. 18, Separability Clause. - If any of the sections or provisions of this Act is held invalid, all
the other provisions not affected thereby shall remain valid,

"See. 19, Repealubility and NonexclusivityClause. - This franchise shal) 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 privileges herein provided for.
“See. 20, Reportorial Requirement. - The grantee shall submit an annual repor: to the Congress
of the Philippines on its compliance with the terms and conditions of its frexchise and on its
operations within sixty (60) days from the end of every year."

“See. 21, Renewal/Extension of Franchise. - The term of this franchise grante! under Republic
Act No, 4617, is hereby renewed/extended (o another twenty-five (25) years frum the date of its
expiration, subject to renewal for another twenty-five (25) years thereafter. This franchise shall
be deemed ipso facto revoked in the event the grantee fails to operate continuyusly for two (2)
years.

“Section 22. 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.