Republic of the Philippines
HOUSE OF REPRESENTATIVES
. Quezon City

EIGHTEENTH CONGRESS
First Regular Session

HOUSE BILL No, 5928

Introduced by HON. PRINCESS RIHAN M. SAKALURAN

EXPLANATORY NOTE

As enshrined in the Constitution, the State recognizes the vital role of communication and
information in nation-building and the indispensable role of the private sector.

This bill secks to renew the franchise granted to Sultan Kudarat Telephone System, Inc. for
another twenty five (25) years.

Sultan Kudarat Telephone System, Inc. is a 100% Filipino-owned corporation established in
1994. Its primary purpose is to construct, install, operate and maintain a Provincial telephone network a
‘community antenna television system, TV cabled operation, through the broadcast, of quality television
programs, television and radio broadcast station systems and services in the Province of Sultan Kudarat
and a telephone system through voice , facsimile and data transmission in all of its municipalities and in
such other areas as may be permitted by law or by the appropriate government agencies alone or in joint
venture with the government or any of its political subdivision or any person, firm or corporation and to
acquire from the government or any of its political subdivision of from persons, the necessary franchise,
permits, privilege, right, interest, grant, license or certificate of Public Convenience.

Republic Act No. 8637 granted Sultan Kudarat Telephone System, Inc. to construct, establish,
install, maintain and operate local exchange network in the province of Sultan Kudarat.

At present, the SKTSI is operating in five (5) exchanges: Tacurong City, Isulan, Esperanza,
Lebak and Kalamansig in Sultan Kudarat, which provides and serves global access for the general public
through the latest telecommunications technology, advanced data and broadband facilities, and focuses
its operation more on remote localities within its franchise area.

Technological advances in telecommunications had been growing rapidly over the past two
decades and will continue to evolve in the coming years. Sultan Kudarat Telephone System, Inc.'s
‘operations contributed a big part on the economic growth of the province. The SKTSI is pursuing its goal
of delivering excellent service of communication and information adding substantially to the
modernization and development of its area of operations. To be able to continue this responsibility, the
SKTSI needs its franchise to be renewed by Congress.

Hence, the approval of this bill is earnestly and immediately sous

RIHAN M. SAKALURAN
tative, 1* District - Sultan Kudarat


Republic of the Philippines
CONGRESS OF THE PHLIPPINES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

5929
House Bill No.

Introduced by: PRINCESS RIHAN M. SAKALURAN

AN ACT
RENEWING FOR ANOTHER TWENTY-FIVE (25) YEARS THE FRANCHISE GRANTED TO
SULTAN KUDARAT TELEPHONE SYSTEM, INC. UNDER REPUBLIC ACT NO. 8637,
ENTITLED “AN ACT GRANTING THE SULTAN KUDARAT TELEPHONE SYSTEM, INC. A
FRANCHISE TO CONSTRUCT, ESTABLISH, INSTALL, MAINTAIN AND OPERATE LOCAL
EXCHANGE NETWORK IN THE PROVINCE OF SULTAN KUDARAT”

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, the franchise granted to Sultan Kudarat
Telephone System, Inc. (SKTSI), hereunder referred to as the grantee, its successors or assignees, to
establish, construct, maintain, operate, own, manage, lease and purchase for commercial purposes and
in the public interest in the Province of Sultan Kudarat, Philippines, station or stations,
telecommunication systems, terminal stations, lines, cables or systems, and associated equipment and
facilities for domestic communications including satellite transmissions, for any and all forms or types
of telecommunications services with authority to receive and transmit messages, facsimile,
impressions, pictures, music, data, and voice, is hereby extended for twenty-five (25) years from the
effectivity of this Act.

This franchise includes the right and privilege of cable and wireless operations, such as
telephone, wired or wireless telecommunications systems fiber optics, multi-channel transmission
distribution systems, satellite transmit, receive and other telecommunications systems and their value-
added services, control signals, audio and video, information service bureau and other
telecommunications systems/technologies as are at present available or be made available through
technological/technical advances or innovations in the future, and to purchase any or all of the
equipment and materials needed in its operations. The grantee shall be authorized to lease or acquire
facilities, channels or circuits in the pursuance of its business.

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 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 or the availability thereof.

SEC. 3. Authority of the National Telecommunications Commission. - The grantee shall
secure from the National Telecommunications Commission (NTC) a Certificate of Public
Convenience and Necessity (CPCN) and the appropriate permits and licenses for the construction,
installations and operation of its telecommunications systems or 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 provinces, cities, 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 the DPWH or the LGU concerned. Should the grantee, its successors or assignees,
afier the ten (10)-day notice from the said authority, fal, refuse or neglect to repair or replace any part
of public place, road, highways, street, lane, alley, avenue, sidewalk, or bridge altered, changed or
disturbed by the said grantee, its successors or assigned, 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 the amount
spent for such repair or replacement, 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 or 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 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.

The grantee shall improve and extend its services in areas not yet served, and hazard-and-
typhoon-prone areas that shall be determined by the National Disaster Risk Reduction and
Management Council, or its legal successor, in coordination with the NTC.

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 rate or measured rates or variation thereof, shall be subject to the
approval of the NTC or its legal successor.

SEC. 7. Right of the Government. — 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.

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 goverment, upon due compensation to the grantee for the use of said stations, transmitters,
facilities, or equipment during the period when these shall be operated.


SEC. 8. Term of Franchise. ~ This franchise shall be extended and in effect for a period of
twenty-five (25) years from the date of the effectivity of this Act, unless sooner revoked or cancelled.
This franchise shall be deemed ipso facto revoked in the event the grantee fails to operate
continuously for two (2) years.

SEC 9. Commitment to Provide and Promote the Creation of Employment Opportunities. -
The grantee shall create employment opportunities and shall allow on-the-job trainings in their
franchise operation: Provided, That priority shall be accorded to the residents in areas where any of its
offices is located: Provided, further, That the grantee shall follow the applicable labor standards and
allowance entitlement under existing labor laws, rules and regulations and similar issuances:
Provided, finally, That the employment opportunities or jobs created shall be reflected in the General
Information Sheet (GIS) to be submitted to Securities and Exchange Commission annually.

SEC. 10. 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 the
terms and conditions mutually agreed upon by the parties concerned, the right shall be subject to the
review and modification of the NTC.

SEC. 11. Warranty in Favor of National and Local Governments. ~The grantee shall hold
the national, provincial, city, and municipal governments of the Philippines free from all claims,
liabilities, accounts, demands, or actions arising out of accidents, causing injury to persons or damage
to properties, during the construction or operation of the stations, transmitters, facilities, or equipment
of the grantee.

SEC. 12. Sale, Lease, Transfer, Grant of 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 entity, nor merge
with any other corporation or entity, nor shall transfer the controlling interest of the grantee,
simultaneously or contemporaneously, to any person, firm, company, corporation, or entity without
the prior approval of the Congress of the Philippines. Congress shall be informed of any sale, lease,
transfer, grant of usufruct, or assignment of franchise or the rights and privileges acquired thereunder,
or of the merger of transfer of the controlling interest of the grantee, within sixty (60) days after the
completion of the said transaction. Failure to report to Congress such change of ownership shall
render the franchise ipso facto revoked. 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. 13. Dispersal of Ownership. — In accordance with the constitutional provision to
encourage public participation in public utilities, the grantee shall continue to offer to Filipino citizens
at least thirty percent (30%) or a higher percentage that may hereafter be provided by law of is
‘common stocks in any securities exchange in the Philippines within five (5) years from the renewal of
its franchise: Provided, That in cases where public offer of shares is not applicable, other methods of
encouraging public participation by citizens and corporations operating public utilities must be
implemented. Noncompliance therewith shall render the franchise ipso facto revoked.

SEC. 14. 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 annual report shall include an update on the roll-out, development, operation and/or
expansion of business; audited financial statements; latest GIS officially submitted to SEC, if


applicable; certification of the NTC on the status of its permits and operations; and an update on the
dispersal of ownership, if applicable.

The reportorial compliance certificate issued by Congress shall be required before an
application for any permit, CPCN, or any equivalent thereof is accepted by the NTC.

SEC. 15. Penalty Clause. — Failure of the grantee to submit the requisite annual report to
Congress shall be penalized with a fine in the amount of One million pesos (P1,000,000.00) per
working day of noncompliance, the effectivity of which shall commence upon applicability with other
telecommunications franchise grantecs: Provided, That in the interim, the grantee shall be liable to
pay the fine of Five hundred pesos (PS00.00) 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 and the same shall be remitted to the Bureau of Treasury.

SEC. 16. 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 effect provisions of
telecommunications franchises concerning the territorial coverage, life term, or the type of service
authorized by the franchise.

SEC. 17. 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. 18. Repealability and Nonexclusivity 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. 19. Repealing Clause. — All other laws, decrees, orders, issuance, resolutions,
instructions, rules and regulations or parts thereof inconsistent with the provisions of this Act are
hereby repealed, amended or modified accordingly.

SEC. 20. Effectivity. — This Act shall take effect fifteen (15) days after its publication in the
Official Gazette or in any newspaper of general circulation.

Approved,