FOURTEENTH CONGRESS OF THE REPUBLIC) 
Third Regular Session 
OF THE PHILIPPINES 
1 
Introduced by SENATOR JUAN PONCE ENRILE 
EXPLANATORY NOTE 
The onslaught of advancements in information technology, especially in the area of 
storage, retrieval, and transmission of information to the public, has made people and 
communities aware of its vital importance in the life of society. Information frees people from 
ignorance, empowers them, and enables them to become participants in the molding of a society 
and a social order that is both responsive and responsible to its constituents. Among the key 
sectors in the information technology field is telecommunications: that sector which, through its 
infrastructure and facilities, allows the storage and transmission of information through wired 
and wireless telecommunications systems. 
Our contemporary experience proves much of this claim. Since the liberalization of the 
telecommunications industry, major companies have invested in telecommunications to the point 
where people are able to communicate in a manner unforeseen in the pre-liberalization era. 
Now, the industry has so much potential for growth, and the competitiveness of the industry 
players also appeals to other interested parties to avail of what this growing market has to offer. 
In this light, the Schutzengel TeIecom, Inc., seeks to offer itself as one of the service 
providers in the telecommunication industry. 
It has the capacity and capability to provide 
storage and transmission systems, both wired and wireless, nationwide. This bill seeks to grant 
the company the franchise required for it to be able to operate and offer its services in the 
industry in particular, and our people in general, thus paving the way for more opportunities for 
access to information, choices in communication systems, and improved products and services 
through the fostering of healthy competition. 
In view of the foregoing reasons, approval of this bill is 


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f>F;.'- 
I 
r 
FOURTEENTH CONGRESS OF THE REPUBLIC) 
OF THE PHILIPPINES 
Third Regular Session 
SENATE 
~~ 
Introduced by SENATOR JUAN PONCE ENRILE 
AN ACT 
GRANTING THE SCHUTZENGEL TELECOM, 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 
Constitution and applicable laws, rules and regulations, there is hereby granted to 
Schutzengel Telecom, Inc., hereunder referred to as the grantee, its successors or assigns, 
a franchise to construct, install, establish, operate 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 telecommunications systems 
including, but not limited to, mobile, cellular, paging, fiber optics, Multichannel 
Multipoint Distribution System (MMDS), Local Multipoint 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 hereafter be made available through 
technological advances or innovations in the future; andor 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 Operations 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 andor the availability 
thereof. 


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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 systedfacilities. 
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 shall 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 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, avenues, sidewalks or bridges of said provinces, 
cities and/or municipalities: Provided, however, That a public place, highway, street, 
lane alley, avenue sidewalk or bridge distributed, altered or changed by reason of erection 
of places 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 assigns, in accordance with the standards set by the DPWH. 
Should the 
grantee, its successors or assigns, after 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 the said grantee, its 
successors or assigns, the DPWH shall have the right to have the same repaired and 
placed, its successors or assigns. 
SEC. 5. Responsibility to the Public. - The grantee shall conform to the ethics 
of honest enterprise and not use its stationdfacilities for obscene or indecent transmission 
or for the 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 basic and/or enhanced local exchange service, without discrimination to 


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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 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 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. 
Rate for Services. - The charges and rates for telecommunications 
services of the grantees, 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 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 the Government. - A special 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 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 anytime after due process. 


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SEC. 8. 
Term of Franchise. - The franchise shall be for a term of twenty-five 
(25) years from the date of effectivity of this Act, renewable for another twenty-five 
years or for such number of years as may hereafter be allowed by Congress, unless 
sooner revoked or 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 three (3) years from the approval of its 
operating permit by the NTC; 
Operate continuously for two (2) years; and 
Commence operations within five (5) years from the effectivity of this 
Act. 
b) 
c) 
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 NTC, 
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 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, 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 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 (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 preceding twelve (12) 
months. 


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SEC. 13. 
Books and Accounts. - The books and accounts of the grantee its 
successors or assigns, shall always be open to the inspection of the COA or 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 National and Local Government. - 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. 
Non-transferability of Franchise. - The grantee shall not lease, 
transfer, grant the usuhct 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 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 shall 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. 
Non-compliance therewith 
shall render the franchise ipso facto revoked. 
SEC. 17. 
Equality Clause. - Any advantage, favor, privilege, exemption or 
immunity granted under existing franchise for telecommunications system, 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 franchise 
concerning territory covered by the franchise, the life span of the hanchise or the type of 
service authorized by the franchise. 


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SEC. 18. Reportorial Requirements. - The grantee shall submit an annual report 
to the Congress of the Philippines 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 is 
held invalid, all the other provisions not affected thereby shall remain valid. 
SEC. 20. Repealing and Nan-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 privileges 
herein provided for. 
SEC. 21. E’ectivity 
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,