Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
Second Regular Session

HOUSE BILL No. 5844

Introduced by REP. ELEANDRO JESUS F. MADRONA

EXPLANATORY NOTE

The rise and development of telecommunications and information and
communications technology (ICT) in the past years proved to be beneficial in opening up
countless opportunities for the nation's entrepreneurs and investors and in improving
governance in general. ICT has grown to become a vital sector in the modern economy,
providing for increased interconnectivity and ease of access in obtaining information,
leading to an empowered and productive national citizenry, Indeed, ICT has a positive
impact on the social and economic development of our country

The ICT industry has the potential of providing for an avenue to which innovation
and creativity can freely grow. The introduction of a greater number of
telecommunications utilities will lead to a competitive ICT market that has the potential of
producing better and more efficient services that will be made available to the nation’s
consumers.

That being said, Avocado Broadband Telecoms Inc. seeks to enter the industry as
provider of telecommunication services. Financially capable and technologically
knowledgeable in the provision of these services, it seeks to build an international gateway
facility (IGF) for cable operators to drive costs down and ultimately benefit the consuming
public.

This bill seeks to grant Avocado Broadband Telecoms, Inc. a franchise to construct,
install, establish, operate, and maintain for commercial purposes and in the public interest
telecommunications systems in the Philippines. The entry of Avocado Broadband
Telecoms, Inc. in the telecommunications industry will afford the public with better choices
and opportunities in the access to information through healthy competition.

In view of the foregoing, approval of this measure is earnestly sought

LE

REP. ELEANDRO JESUS F. MADRONA
Lone District-Romblon


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
Second Regular Session

HOUSE BILL No. 5844

Introduced by REP. ELEANDRO JESUS F. MADRONA

AN ACT
GRANTING THE AVOCADO BROADBAND TELECOMS INC. 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 Avocado Broadband Telecoms, Inc., 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, data, 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

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


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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 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.

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 the date the grantee shall commence the service. The NTC, however,
shall not unreasonably withhold or delay the grant of such authority, permit, or

license.

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 the province, cities and/or municipalities: Provided, however, That a public
place, road, highway, 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 or 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
andlor 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 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.


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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 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 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.

SEC. 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 jpso 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


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(c) 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. Nonacceptance 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 @ 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 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


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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 shalll transfer the controlling interest of the grantee, whether as a whole
or in parts, 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 of the merger, or transfer of 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 cent (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 () 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


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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 of the grantee to submit the requisite
annual report to Congress shall be penalized with a fine of Five hundred pesos
(P500.00) per working day of noncompliance. The fine shall be collected by the NTC
from the delinquent franchise grantee separate from the reportorial penalties
imposed by the 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, That the foregoing shall neither 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

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. Repeatability 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. - This Act shall take effect fifteen (15) days after its
publication in the Official Gazette or in a newspaper of general circulation

Approved,