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Republic of the Philippines Ta U8 29 2019
HOUSE OF REPRESENTATIVES 2, By
Quezon City
18*
First Regular Session

HOUSE BILL No._ 4258

Introduced by: HON. LORNA C. SILVERIO

EXPLANATORY NOTE

The State, under Article II, Section 24 of the 1987 Constitution, has long recognized the
importance of information and communication technology in nation-building, It further declared
the need to create an information-friendly environment which supports and ensures the
availability, diversity and affordability of ICT products and services, and the primary
responsibility of the private sector in contributing investments and services in
telecommunications and information technology.

Given the sorry state of telecommunication industry in the Philippines now where a
virtual duopoly exists resulting to exorbitant charges and deplorable quality of service, it is clear
that there is a need for a better alternative for the public to consider. Thus, in order to address
this issue it is imperative for the government to welcome and encourage new players to directly
invest in telecommunications. Truly, the more quality players in the industry, the more beneficial
it is going to be for our country and the people.

This measure seeks to grant Philand Communications Network Corporation a franchise to
construct, install, establish, operate and maintain telecommunication system throughout the
Philippines which may include, among others, fiber optics, multi-channel multi-point distribution
systems (MMDS), local multi-point distribution system (LMDS), satellite transmit and received
systems, switches and their value-added services, such as but not limited to transmission of
voice, data, facsimile, control signs, audio and video, information service bureau and all other
value-added technologies as are presently available or will be available or will be made available
through technological advances or innovations in the future. The bill shall likewise allow the
applicant to construct, acquire, lease and operate or manage transmitting and receiving stations,
lines, cables or systems as is or are convenient or essential to efficiently carry out the purpose of
this franchise.

The applicant intends to assist the government in the improvement and revitalization of
the telecommunications industry, through its topnotch management and human resource, and by
providing the best technology available at reasonable rates.

In view of the foregoing, the immediate passage of this proposed measure is earnestly
recommended.

LORNA C. SILVERIO.



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

18" Congress
First Regular Session

HOUSE BILL No._4258

Introduced by: HON. LORNA C. SILVERIO

AN ACT GRANTING PHILAND COMMUNICATIONS NETWORK CORPORATION A
FRANCHISE TO CONSTRUCT, INSTALL, ESTABLISH, OPERATE AND MAINTAIN
TELECOMMUNICATIONS SYSTEMS THROUHOUT 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 Constitution
and applicable laws, rules, and regulations, there is hereby granted to Philand Communications
Network Corporation, 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, in the Philippines and between the Philippines and other countries and
territories, wire and/or wireless telecommunications systems including international and local
exchange carrier (LEC), international and domestic gateway facility, international and domestic
submarine cable landing stations, mobile cellular,copper, fiber optics, coaxial cable, satellite
transmit and receive systems, switches, and their value added services such as the transmission
of voice, facsimile, control signs, audio and video, information services 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. Mega Services, Basic services
and/or Value Added Service, Internet Service Provider.

SECTION 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, results 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 privilege to use its
assigned 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.

SECTION 3. Authority of the Department of Information and Communications
Technology (DICT) - The grantee shall secure from the DICT a Certificate of Public
Convenience and Necessity or the appropriate permits and lic i

installation, and operation of its telecommunications systems/facil
the DICT shall have the power to impose such conditions relative to the construction, operation,



make excavations or lay conduits in any of the public places, roads, highways, streets, lanes,
alleys, avenues, sidewalks, or bridges of the provinces, cities andlor municipalities: Provided,
however, That a public place, road, highway, stret, lane, alley, avenue sidewalk, or bridge
cisturbed, altered or changed by reason of erection of poles or other supports or the underground

public place, road, highway, street, lane, alley, avenue, sidewalk, or bridge altered, changed or
distributed by the said grantee, its successors or assignees, then the DPWH or the LGU

SECTION S. 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
dissemenation of deliberately false information or willful misrepresentation, or assist in
subversive or treasonable acts.

such services and in such cases, the DICT may extend the time within which the grantee shall
furnish the 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.

SECTION 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 os
nonregulated services, whether flat rates or measured rates or variation thereof, shall be subject
to the approval of the DICT or its legal successor. The rates to be charged 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.

SECTION 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 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 the said stations, transmitters, facilities, or equipment during the
period when these 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.

SECTION 8. Term of Franchise. ~ This franchise shall be in effect for a period of twenty five
(25) years from the date of the 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
(c.) Operate continuously for two (2) years.

SECTION 9. Acceptance and Compliance. ~ upon payment of the cash bond to the DITC,
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.

SECTION 10. Bond. — The Grantee shall file a bond with the DITC in the amount that it shall
determine to guarantee compliance with and fulfillment of the conditions under which the
franchise is granted. If, after three (3) years from the date of the approval of its permit by the
DITC, the Grantee shall have fulfilled the conditions, the bond shall be cancelled by the DITC.


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 review and modification of the DITC.

SECTION 12. Gross Receipts. — The Grantee, its successors or assignees, shall keep a separate
acount 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
(31°) day of January of each year for the preceeding twelve (120) months.

SECTION 13. Books and Accounts. ~ The books and accounts of the Grantee, its successor or

assignees, 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 ofthe quarterly reports on the gross receipts, the net profits, and the general condition of
business..

SECTION 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.

SECTION 15. Sale, Lease, Transfer, Usufruct, or Assignment of Franchise. - The Grantee
shall not lease, transfer, grant the usufruct 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 merge 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 such person, firm, company, corporation or entity without prior approval
of the Congress of the Philippines: Provided, That the foregoing limitation shall not apply to: (a)
any transfer or issuance of shares of stock in the implementation of the requiremnt for the
dispersal of the Grantee’s ownership pursuant to Section 16 of this Act; (b) any transfer or
issuances of shares to any investor pursuant to or in connection with any increase in the
Grantee’s authorized capital stock which shall result in the dilution of the stockholdings of the
Grantee’s then existing stockholders; (c) any transfer or sale of shares of stock to any local
investor or investors; and (d) any combination thereof where such transfer , sale or issuances
effected in order to enable the Grantee to raise the necessary capital or financing for the
provision of any services authorized by this Act and/or carry out the purposes for which the
Grantee has been incorporated or organized. Any person or entity to which this franchise is
validly sold, transferred or assigned shall be subject to the same condition, terms, restrictions,
and limitations of this Act.



SECTION 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 percent (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 (5) 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. Non-
compliance therewith shall render the franchise ipso facto revoked.

SECTION 17. Equality Clause. - Any advantage, favor, privilege, exemption or immunity
granted under existing franchise for telecommunications systems, or which may hereafter be
granted, shall 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 service authorized by the franchise.

SECTION 18. Repertorial requirement. — The Grantee shall submit an annual Teport 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, certified true copy as filed
in the SEC and the BIR 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 DITC.

SECTION 19. Penalty Clause. - Failure of the Grantee to submit the requisite annual report to
Congress shall be penalized with a fine of five hundred pesos (Php 500.00) per working day of
non-compliance. The fine shall be collected by the DICT from the delinquent franchise Grantee
separate from the repertorial penalties imposed by the DICT.

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

SECTION 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.

SECTION 22. Effectivity. - This Act shall take effect fifteen (15) days after its publication in
the Official Gazette or at least two (2) newspapers of general circulation.

Approved,