Republic of the Philippines
HOUSE OF REPRESENTATIVES
Constitution Hills, Quezon City

EIGHTEENTH CONGRESS
First Regular Session

6457
House Bill No.

Introduced by: REP. HENRY R. VILLARICA, REP. JOSE ANTONIO R. SY-
ALVARADO, REP. GAVINI C. PANCHO, REP. LORNA C. SILVERIO,
REP. FLORIDA P. ROBES

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 seeks to renew the franchise granted to RACITELCOM, INC. for another twenty
five (25) years. The initial franchise was first granted on March 26, 1998 under Republic Act
No. 8606.

RACITELCOM, INC. was first granted a Municipal franchise to operate a telephone
business in Meycauayan on September 24, 1957 by the Municipal Council of Meycauayan by
virtue of Resolution.

Thereafter, the company expanded its operations to the municipality of Bocaue after it
was granted the authority to construct, maintain and operate a telephone system through
Resolution No. 19 dated February 5, 1961. The Bocaue franchise was approved by the
Provincial Board of Bulacan on February 21, 1961 by the virtue of Resolution No. 115. The
corresponding Certificate of Public Convenience and Necessity was issued by the defunct
PCS in Case No. 61-1375 dated April 17, 1961.

The Sta. Maria franchise was obtained by virtue of Resolution No. 3 series of 1961 and
which Resolution was approved by the Bulacan Provincial Board in its Resolution no. 91,
series of 1961. The Certificate of Public Convenience and Necessity was issued by the PSC
in Case No. 61-1383.

For the Municipality of Marilao, RACITELCOM, INC. through deceased ERNESTO A. PAPA.
was granted a municipal franchise to operate and maintain telephone system in said
Municipality by the Marilao Municipal Council in its Resolution No. 25 dated April 25, 1968.

‘The Bulacan provincial board approved the franchise with Resolution No. 691 dated July
31, 1968. The PSC on September 27, 1971 granted the RACITELCOM, INC. under Case No.
69-2923 a Certificate of Public Convenience and Necessity to operate the telephone system
in the said Municipality of Marilao, Bulacan.


All of the above franchise had a lifetime of thirty five (35) years each from approval and
all the telephone exchanges therein are operated manually.

To ensure delivery of better service to their present and future subscriber, Racitelcom
expanded and modernized its existing transmission telecommunication system to new digital
exchange with multiple remote subscriber units and FTTH geared towards connecting the
rest of the Province of Bulacan.

With the advent of technological advancements in the telecommunications industry,
Racitelcom, Inc. continues to provide the latest telecommunications technology to its
subscribers who are based in a rapidly growing digital society. With this, Racitelcom, Inc.
lives its by-line “Connects you to the future...”

Racitelcom, Inc. as its primary offering provides its subscribers with both the landline
voice connection and the more in demand data connection. It now focuses its operations to
More communities covered by its existing facilities and subsequent cities and municipalities
within the Province of Bulacan.

Advances in the telecommunications technological landscape had been exponential over
the past two decades and will continue to grow even at a more accelerated pace in the
coming decades. Racitelcom, Inc. is committed to make these services and products
available to the locality it serves. Racitelcom, Inc. over its decades of service, has seen that
it had substantially contributed to modemization and development of
‘telecommunications in different cities ar

Rep. LORNA C. SILVERIO m4) HENRY R. VLARICA
3° District, Bulacan 4” District, Bul

Merinst

Rep. FLORIDA P. ROBES
‘San Jose’Lone District, Bulacan


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Constitution Hills, Quezon City

EIGHTEENTH CONGRESS
First Regular Session

House Bill No. 6457

Introduced by: REP. HENRY R. VILLARICA, REP. JOSE ANTONIO R. SY-
ALVARADO, REP. GAVINI C. PANCHO, REP. LORNA C. SILVERIO,
REP. FLORIDA P. ROBES

AN ACT RENEWING FOR ANOTHER TWENTY-FIVE (25) YEARS THE
FRANCHISE GRANTED TO RACITELCOM, INC., UNDER REPUBLIC ACT NO.
8606 ENTITLED “AN ACT GRANTING THE RACITELCOM, INC. A FRANCHISE
TO CONSTRUCT, INSTALL, ESTABLISH, OPERATE AND, MAINTAIN
TELECOMMUNICATIONS SERVICES IN THE PROVINCE OF BULACAN”

Section 1. Nature and Scope of Franchise. ~ Subject to the provisions of the Constitution and
applicable laws, rules and regulations, the franchise granted to RACITELCOM,INC., under
Republic Act No. 8606, and hereunder referred to as the grantee, its successors or assignees,
to construct, install, establish, operate and maintain for commercial purposes and in the
public interest, in the Province of Bulacan, Philippines, wire and/or wireless
telecommunications system such as personal communication network, trunk radio services,
copper, fiber optics, 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 system technologies as are at present available or will be made available
through technological advances or innovations in the future; 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, is hereby
renewed for another twenty-five (25) years from the effectivity of this Act.

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, result only in the
minimum interference on the wavelengths or frequencies of the 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 and/or the availability thereof.
In no way shall the operations of the grantee, nor the radiated power of its stations or
facilities, exceed that required to cover the area where it is allowed to operate

Section 3. Authority of the National Telecommunications Commission. ~ The grantee shall
secure from the National Telecommunications Commission, hereinafter referred to as the
Commission, a certificate of public convenience or the appropriate permits and licenses for


the location, construction, installation and operation of its telecommunications systems. 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.

Section 4. Responsibility to the Public. — The grantee shall conform to the ethics of honest
enterprise and shall not use its stations 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 municipality in the
Philippines where it has an approved certificate of public convenience for the establishment,
operation, and maintenance of a local exchange service, without discrimination to 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 said service, unless the applicant for
telephone service defrays the actual expenses for the installation of the telecommunication
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.

Section 5. 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
non-regulated services, whether flat rates or measured rates or variation thereof, shall be
subject to the approval of the Commission or its legal successors. 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.

Section 6. 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 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.

Section 7. 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 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 or
provisional authority by the National Telecommunications Commission;

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

Section 8. 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.

Section 9. Bond. —If the grantee is not yet operational, the grantee shall file a bond issued in
favor of the National Telecommunications Commission, 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 the approval of its permit by the
Commission, the grantee shali 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.

Section 10. 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 or modification of the Commission.

Section 11. Tax Provisions. — The grantee, its successors or assigns, shall be liable to pay the
same taxes on their real estate, buildings and personal property, exclusive of this franchise, as
other persons or corporations are now or hereafter may be required by law to pay. In addition
thereto, the grantee, its successors or assigns, shall pay the value-added tax under Republic
Act No. 7716 or a franchise tax of three percent (3%) per annum or at such percentage as
may be prescribed by law, on all gross receipts of its telecommunications business transacted
under this franchise, whichever is higher: provided, that the grantee, its successors or assigns,
shall continue to be liable for income taxes payable under Title II of the National Internal
Revenue Code pursuant to Sec. 2 of Executive Order No. 72, unless the latter enactment is
amended or repealed, in which case the amendment or repeal shall be applicable thereto.


The grantee shall file the return with, and pay the taxes due thereon to the Commissioner of
Internal Revenue or his duly authorized representatives in accordance with the National
Internal Revenue Code and the return shall be subject to audit by the Bureau of Internal
Revenue.

Section 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 and the National Treasury a copy of such account not later than the
31st day of January of each year, for the preceding twelve (12) months.

Section 13. Books and Accounts. — The books and accounts of the grantee, its successors or
assigns, shall always be open to the inspection of the Commissioner on Audit or his
authorized representatives, and it shall be the duty of the grantee to submit to the Commission
on Audit, two (2) copies of the quarterly reports on the gross receipts, the net profits and the
general condition of the business.

Section 14. Warranty in Favor of National and Local Governments. ~ 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.

Section 15. Sale, Lease, Transfer, Usufruct, Etc. ~The grantee shall not lease, transfer, grant
the usuffuct 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 corporation or entity, nor shall the controlling interest in 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, except when such person, firm, company, corporation or entity has a valid
and existing legislative franchise for telecommunications or it is in pursuance of the
provisions of Section 16 of this Act. Any person or entity to which this franchise is sold,
transferred or assigned, shall be subject to all the same conditions, terms, restrictions, and
limitations of this Act.

Section 16. Dispersal of Ownership. ~ In accordance with the constitutional provisions to
encourage public participation in the 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 ten (10) years from the
commencement of its operations or from the effectivity of this Act, whichever is later. Non-
compliance therewith shall render the franchise ipso facto revoked.

Section 17. 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

Section 18. 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 privileges herein provided
for.


Section 19. Reportorial Requirement. ~ The grantee shall submit an annual report to the
Congress of the Philippines on its compliance with the terms and conditions of its franchise
and on its operations within sixty (60) days from the end of every year.

Section 20. Effectivity Clause. — This Act shall take effect fifteen (15) days from the date of
its publication in at least two (2) newspapers of general publication.

Approved, —

INIO R. SY-ALVARADO erase Cc Mehran

Bulacan YA 3 District, Bulacan

Rep. HENRY!
4” District, Bulacan

Rep. FLORIDA P. ROBES
‘San Jose Lone District, Bulacan