HeLSl oF REPRESENTATIVES

REGEINED
8

Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

TON UNIT
SEVENTEENTH CONGRESS {gyi g jy) «AOE SERVICE
First Regular Session Le

1422
HOUSE BILL NO,
Introduced by HON. RONALD M, COSALAN

EXPLANATORY NOTE

This bill seeks to amend Republic Act No. 7940, further extending the franchise
granted to Infocom Communications Network Inc. (ICNI) and expanding the nature
and scope of its franchise. ICNI is the former Satellite Paging Systems Philippines, Inc.
(SPSPI). At present, it also seeks approval for another change of name to Now Telecom
Company, Inc.

Republic Act No. 7301 granted Satellite Paging Systems a franchise to construct,
establish, operate and maintain a radio paging systems and trunked radio systems for
twenty-five years. In R.A. No. 7940, its franchise was expanded to include cellular
phone systems and personal communication network (PCN) and extended its term for
another twenty-five years to expire on March 26, 2017.

Advancement in technology, more particularly in telecommunications require
further amendment of the franchise to include fiber optics, satellite and wire and/or
wireless communication systems. Modernization and economic development of the
country are highly dependent on available communication systems that
telecommunication companies are forced to adopt and adapt such advancements in
technology for the common good. Such improvements would also spur new
investments to come in which would eventually redound to the benefit of the country
as a whole.

In the Constitution, the State recognizes the vital role of communication and
information in nation-building and the indispensable role of the private sector. In the
Sixteenth Congress, this bill was approved on third reading. Hence, approval of this
measure is earnestly requested.

aa ee

prateth M. COSALA)
District, Benguet


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
First Regular Session

ae
House Bill NoL422

Introduced by HON. RONALD M. COSALAN.

AN ACT

RENEWING THE FRANCHISE GRANTED TO SATELLITE PAGING SYSTEMS
PHILIPPINES, INC. (PRESENTLY KNOWN AS NOW TELECOM COMPANY,
INC.) UNDER REPUBLIC ACT NO. 7301, AS AMENDED BY REPUBLIC ACT NO,
7940, ENTITLED “AN ACT GRANTING SATELLITE PAGING SYSTEMS
PHILIPPINES, INC, A FRANCHISE TO CONSTRUCT, ESTABLISH, OPERATE
AND MAINTAIN RADIO PAGING SYSTEMS AND TRUNKED RADIO SYSTEMS
WITHIN THE PHILIPPINES FOR A PERIOD OF TWENTY-FIVE (25) YEARS, AND
FOR OTHER PURPOSES” FOR ANOTHER TWENTY-FIVE (25) YEARS FROM THE
EFFECTIVITY OF THE ACT

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, the
franchise granted to Satellite Paging Systems Philippines, Inc., (now Now Telecom
Company, Inc.) under Republic Act No. 7301 entitled “An Act Granting Satellite
Paging Systems Philippines, Inc., A Franchise To Construct, Establish, Operate and
Maintain Radio Paging Systems and Trunked Radio Systems Within The Philippines
For A Period of Twenty-Five (25) Years, And For Other Purposes,” and 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,
wire and/or wireless telecommunications systems, including but not limited to
mobile, cellular, paging, fiber optics, satellite transmit and receive systems,

transoceanic cable landing station and 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 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 within and without the Philippines, 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
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 availability thereof.

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

licenses.


SECTION 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 assigns, with the prior approval of
the Department of Public Works and Highways (DPWH) or the local government
unit concerned, as may be appropriate, to make excavations or lay conduits in any of
the public places, highways, streets, lanes, alleys, avenues, sidewalks or bridges of
said province, cities and/or municipalities: Provided, however, That a public place,
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 assigns, in accordance with
the standards set by DPWH or the local government unit concerned. Should the
Grantee, its successors assigns, 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 assigns, then the DPWH or the local government unit
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

assigns. ~

SECTION 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
and/or 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 grant 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 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 non-regulated 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.

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 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.

SECTION 8. Term of Franchise. - This franchise shall be in effect for a period
of twenty-five (25) years from the date of effectivity of this Act, unless sooner
cancelled. This franchise shall be deemed ipso facto revoked in the event the grantee

fails to operate continuously for two (2) years.

SECTION 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. Non-acceptance shall render the franchise void.

SECTION 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 NIC. Otherwise, the bond shall be

forfeited in favor of the government and the franchise ipso facto revoked.

SECTION 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.

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 (COA) and the National Treasury a copy of
such account not later than the thirty-first (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
Successor or assigns, 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 of the quarterly reports on the gross

receipts, the net profits and the general condition of the 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 sell, lease, transfer, grant the usufruct of, or assign this franchise or
the rights and privileges acquired thereunder to any person, firm, company,
corporation or other commercial or legal entity, or merge with any other corporation
or entity, or shall 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
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
Jacto 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.

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 per centum (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.

Noncompliance therewith shall render the franchise ipso facto revoked

SECTION 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 the succeeding year.

SECTION 18. Penalty Clause. - Any grantee who fails to submit the requisite
Annual Report to Congress shall be fined Five Hundred Pesos (P500.00) per working
day of non-compliance. The fine shall be collected by the NTC from said delinquent
franchise grantee separate from the reportorial penalties imposed by NTC. All
proceeds from said fines or penalties shall accrue to the monitoring fund of the NTC

in line with its supervisory and regulatory functions. The reportorial compliance


certificate issued by Congress shall be required before any application for permit or

certificate is accepted by NTC.

SECTION 19. Equality Clause. - Any advantage, favor, privilege, exemption,
or immunity granted under other existing franchise, 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, 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 20. Separability Clause. - If any of the sections or provisions of this

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

the Philippines.

Approved,