HULs. F REPRESENT ATES

RECEIVED
AUG 2016
DATE
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Republic of the Philippines _
HOUSE OF REPRESENTATIVES a
Quezon City REGISTRATION UNIT
& BILLS AND IWOEX SERVICE
First Regular Session

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HOUSE BILL No. 2617

Introduced by Representative Reynaldo V. Umali
of the 24 District of Mindoro

AN ACT RENEWING AND AMENDING THE FRANCHISE GRANTED TO
INNOVE COMMUNICATIONS, INC. (FORMERLY “ISLA
COMMUNICATIONS, CO.”) UNDER REPUBLIC ACT NO, 7372

EXPLANATORY NOTE

The proposed law seeks to extend Innove Communications Inc.'s (formerly “Isla
Communications Company, Inc.”; hereinafter “Innove”) legislative franchise for
another twenty-five (25) years,

Innove is a corporation organized and existing under the laws of Republic of the
Philippines, and one hundred percent (100%) owned and controlled by Globe
Telecom Inc. Innove holds its principal office is located at The Globe Tower -
Cebu, Samar Loop corner Pasay Road, Cebu Business Park, 6000 Cebu City; and
its office address is located at The Globe Tower, 32"4 Street corner 7 Avenue,
Bonifacio Global City, Taguig, Metro Manila.

Innove provides wireless mobile, wireline, data and corporate communications
solutions to households and corporate clients under the Globe Group of
Companies. It provides mobile and fixed-line telecommunications, internet,
broadband and convergent services, networks for enterprise clients, services for
internal applications, internet protocol based solutions and multimedia content
delivery. It also offers wireline voice services, which offers homes and businesses
access to advanced telecommunications functions and features; and wireline data
services, which provides business customers high-speed data services over a
nationwide broadband network.

The National Telecommunications Commission (NTC), in a Certificate of Public
Convenience and Necessity (CPCN), granted Innove with the authority to
‘operate Local Exchange Carrier (LEC) Prepaid Services, International Gateway
Facility (IGF), Cellular Mobile Telecommunications System (CMTS).

To date, Innove serves a total of not less than 18,500,000 subscribers in pre-paid
mobile, fixed-line, data and corporate telecom services. Subscribers include


regular consumers, Top 7,000 companies in the Philippines, Small and Medium
Enterprise (SMEs), and embassies and consulates located in the Philippines.

Since its incorporation, Innove has transformed itself the franchise holder under
the Globe Group providing fixed line, data and corporate services doing business
under the brands, “Innove”, “TM”, “Globelines”, “Globe Broadband”, “Tattoo”,
“GoWiFi”, to name a few.

Innove’s franchise will expire on 23 March 2017. The extension thereof will allow
Innove to continue providing various telecommunications services throughout
the Philippines and between the Philippines and other countries and territories at
rates affordable to the consuming public.

The immediate passage of the measure, which will amend and extend Republic
Act No. 7372 will be, in essence, in recognition of Innove’s contribution in nation
building. Over the years, Innove has been aggressively rolling out its wired and
wireless network throughout the country. Innove was able to prove its financial
and technical capability to operate and maintain a vast telecommunications
network. Innove has dutifully complied with the existing Service Performance
Standards, Outside Plant Standards, Technical Standards on Transmission,
Signalling, Routing, Numbering, Changing and Synchronization and such other
standards, rules and regulations of the NTC.

Extending Innove’s franchise will also ensure the uninterrupted and improved
delivery of its services to the Filipino people. The extended franchise will allow
Innove to construct, establish, install, maintain, lease, co-use, purchase and
operate the corresponding transmitting and receiving stations, satellites, lines,
systems, networks, international gateways, local exchanges, and platforms as it
may consider necessary and convenient, or reasonable.

It is to the best interest of the State and public that Innove's franchise be
extended.

‘The immediate passage of the proposed law is earnestly sought.

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MON 'REYNALDO V. UMALI
2nd District Oriental Mindoro


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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
First Regular Session
281
House Bill No 617

Introduced by Representative Reynaldo V. Umali
of the 2 District of Mindoro

AN ACT RENEWING AND AMENDING THE FRANCHISE GRANTED TO
INNOVE COMMUNICATIONS INC. (FORMERLY “ISLA COMMUNICATIONS
CO.”) UNDER REPUBLIC ACT NO. 7372

Be it enacted by the Senate and the House of Representatives of the Philippines
in Congress assembled:

SECTION 1. Republic Act No. 7372 is hereby amended to read as follows:

“Section 1. Nature and Scope of Franchise. - Subject to the
conditions established in this Act and the provisions of the
Constitution and the provisions of laws, orders or issuances not
inconsistent herewith, there is hereby granted to the Innove
Communications _Inc._[formerly “Isla Communications Co.
(ISLACOM)], its successors or assigns the right, privilege and
authority to construct, establish, install, lease, co-use, purchase,
operate and maintain all types of mobile and_fixed wireless
telecommunications, including cellular telephone _ system,
broadband and internet services (such as but not limited to the
transmission and reception of voice, data transmission, message
service/messaging, electronic mail, data facsimile, audio and video,
and all other improvements and innovations and convergence of
services pertaining to or as may be applicable to mobile
telecommunications technology) and use all the apparatus,
conduits, appliances, receivers, transmitters, antennas, satellites
and equipment necessary for the transmission/reception of data,
messages, videos _and__ signals, with the _ corresponding
technological auxiliaries, facilities, distribution or relay stations,
throughout the Philippines, as well as multi-channel microwave,
fiber optic and satellite distribution systems that may be required for
the purpose of linking together said mobile, fixed or convergent
telecommunications network internally and externally to other
mobile telecommunications network and traditional wireline
telephone systems, whether domestic or international, whether
directly or indirectly, through networks and, generally, to provide by
means of this telecommunications system a telephone service and
such other telecommunications services such as there may be
demand for in the Philippines.

There is hereby granted to the grantee, its successors or assigns, a
franchise to engage in telecommunications services by installing,
maintaining and operating telecommunications plants, exchanges,
nationwide and/or regional_transmission (backbone) _network:
terrestrial and microwave systems, lines, instruments, landlines:
international and domestic undersea cables, stations, apparatus,



telephone services; long distance _toll__services; international

gateway facilities/services; traditional wireline telephone systems,
whether domestic or international, whether directly or indirectly
through, networks; public calling offices (payphones); station or
stations and associated equipment and facilities for international
satellite communications, such ground s as needed to
deliver_telecommunications services _fror
satellite system and ground terminal or terminals and such ground
facilities shall not duplicate existing facilities of domestic common
as a carrier's carrier; any and all
types of telecommunications services available through the use of
space relay and repeater stations for domestic public
communications with authority to receive and transmit messages,
impression, pictures, music, entertainment, advertising and_signal
throughout the Philippines and between the Philippines and ships
at_sea, airplanes and other conveyances; any and all kinds of
equipment or _maintenances for communications _and_ the
transmission of messages, data, video, pictures, impressions and
signals; or any other means which hereafter be used
communications in their stead; and to install, maintain, operate or

lease, in whole or in part, telephone lines and systems and all other

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Philippines and with other countries and territories

The grantee is authorized to carry on the business of providing to
the public telecommunications services within the territory of the
Republic of the Philippines and other countries and territories and,
for the purpose of providing said telecommunications services, to
construct, own and operate telecommunications system in and
between provinces, cities and municipalities of the Republic of the
Philippines and to lay, place and operate and maintain
telecommunications lines in and between the territory of the
Republic of the Philippines and other countries, including the
construction, operation and maintenance of an international digital
gateway facility, and to construct, maintain and operate and use all
telecommunications apparatus necessary for the provision of
telecommunications services and to install, construct and maintain
telecommunications apparatus in, on, over, or under the public
roads, government rights-of-way, lands bridges, rivers, waters,
streets, lanes and sidewalks of said provinces, cities and
municipalities, and to lay submarine telecommunications cables in
the surrounding waters of the Philippines and for the purpose of
connecting its telecommunications systems with other
telecommunications systems operated by others within the
Philippines and with the telecommunications systems of other
countries, as may be necessary and best adapted to said provision
of telecommunications services, and to connect and keep
connected its telecommunications system to other
telecommunications systems for the interconnection of
telecommunications services within the territory of the Republic of
the Philippines and between the Republic of the Philippines and
other countries and territories.

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



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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
availability thereof.

Section 3. Right of Government. - The President of the Philippines,
in times of war, rebellion, public peril, calamity, emergency, disaster
or disturbance of peace and order, may temporarily take over and
operate the stations, transmitter systems, facilities and equipment
of the grantee, temporarily suspend the operation of any station in
the interest of public safety, security and public welfare, or
authorize the temporary use and operation thereof by any agency
of the Government, upon due compensations to the grantee, for the
use of said stations, transmitter systems, facilities and equipment
during the period when they shall 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 4. Authority of the National _Telecommunications
Commission (NTC). — The grantee shall not exercise any right or
privilege under this franchise without first having obtained such
certificate of public convenience and necessity and such other
permits or licenses from the National Telecommunications
Commission. This franchise shall not take effect nor shall_any
power be exercised by the grantee until the National
Telecommunications Commission shall have allotted to the grantee
the frequencies and wavelengths to be used and determined the
stations to and from which each frequency and wavelength may be
used, and issued to the grantee a license for such use. The
National Telecommunications Commission, however, shall not
unreasonably withhold or delay the grant of any such authority,
permits or licenses

The grantee may install, operate and maintain radio
telecommunications system to provide a telephone service and
other telecommunications services including mobile services within
the territory of the Republic of the Philippines and between the
Republic of the Philippines and ships at sea, aircraft in the air, and
the telecommunications systems of other countries: provided, that
the location, installation or operation of any such radio
telecommunications system must be previously approved by the
National Telecommunications Commission: provided, that_the
location, installation or _ operation of any such _ radio

telecommunications system must be previously approved by the

the National Telecommunications Commission shall have the
authority to supervise and regulate the installation or operation of
such radio telecommunications system

“Section 5._ Right of Way. - Notwithstanding any pr
the contrary and for the purpose of installing, operating and
maintaining its telecommunications network, radio equipment,
antennas, cables, lines and posts, the grantee, its successors and



assigns_shall_have a permanent utility right_of way to make
excavations, install posts or lay conduits in any of the public places,
highways, streets, lanes, alleys, avenues, sidewalks, bridges of
provinces, cities and municipalities: provided, however, that any
public place, highway, street, lane, alley, avenue, sidewalk or
bridge disturbed, altered or changed by reason of the installation,
operation and maintenance of said telecommunications lines
underground shall be repaired and replaced in a workmanlike
manner by said grantee, its successors or assigns to the
satisfaction of the National Telecommunications Commission.
Should the grantee, its successors or assigns, after thirty (30) days
notice from the proper authority, fail, refuse or neglect to repair or
replace any part of a public place, road, highway, street, lane, alley,
avenue, sidewalk or bridge altered, changed or disturbed by said
grantee, its successors or assigns, then the Secretary of the
Department of Information and Communications Technology shall
have the right to have the same repaired and placed in good order
and condition at the cost and expense of the grantee, its
successors and assigns.

“Section 6. Term - 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.

“Section 7. 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 after the effectivity of this Act.
Upon receipt such acceptance in writing, the grantee shall exercise
the privileges granted under this Act. _Non-acceptance shall render
the franchise 7 void.

“Section 8. Responsibility to_the Public. - The grantee shall
conform to the ethics of honest enterprise and not use its
stations/fé ies for obscene or indecent transmission, or for
dissemination of deliberately false information, or _ willful
misrepresentation, or assist in subversive or treasonable acts.

Alll telecommunications systems owned, operated or maintained by
the grantee, its successors or assigns shall be maintained and
operated at all times in a satisfactory manner, and it shall be the
further duty of said guarantee, its successors or assigns, whenever
required to do so by the National Telecommunications Commission,
to modify, improve and change such telecommunications systems
in such manner and to such extent as the progress of science and
improvements in the method of conveyance of telecommunications
messages by means of said systems may make reasonable, proper
and economically feasible

“Section 9.__Gross Receipts. - The grantee, its successors or
assigns shall keep a separate account of the gross receipts of the
telecommunications service business transacted by it and shall
furnish the Commission on Audit and the National Treasurer a copy
of such account not later than the thirty-first day of January of each
year for the preceding twelve = (12) ~—s months.


“Section 10. _Eminent_Domai Subject_to_the limitations and
procedures prescribed by law, the grantee is authorized to exercise
the_right_of eminent domain insofar _as_may be reasonably
necessary to further the establishment and efficient maintenance
and operation of its telecommunications systems.

No private property shall be taken for any purpose by the grantee
without proper condemnation proceedings and just compensation
paid or tendered therefore, and any authority to take and occupy
land contained herein shall not apply to the taking, use or
occupation of any land except such as is required for the actual and
necessary purposes for which this franchise is granted.

“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, as other persons or corporations
are now or hereafter may be required by law to pay except radio
equipment, machinery, spare parts, buildings and_ structures,
needed in connection with the business of the grantee and such
realties which are actually, directly and exclusively used it
operation of its franchise. These radio equipment, machinery, spare

parts, buildings and structures as mentioned, shall be exempt from
real property taxes, customs duties, tariffs and other tz d

fees, as well as those declared exempt under this section.

In order to promote the local industry and the further development
of telecommunications in the Philippines, equipment for all types of
mobile and fixed wireless _telecommunications which are
manufactured or assembled in the Philippines, with Filipino labor or
materials shall be exempted from all taxes from the date this Act
becomes in force and effect.

In addition thereto, the grantee, its successors or assigns shall pay
10% Value Added Tax under Republic Act No. 7716 and 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 tax due thereon to
the Commissioner of Internal Revenue or his duly authorized
representative in accordance with the National Internal Revenue
Code. The return shall be subject to audit by the Bureau of Internal
Revenue.

“Section 12.__Rates for Services. - The rates for the telephone
service or changes for every type of call, flat rates as well as
measured rates, are subject to the approval of the National
Telecommunications Commission.

“Section 13. 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 telecommunications services to the public on such terms
and conditions as may be prescribed from time to time by the


National Telecommunications Commission.

“Section 14. 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 quarterly reports in duplicate showing the
gross receipts and the net receipts for the past quarter and the
general condition of the business.

“Section 15. _Non-exclusivity. - The rights herein granted shall not
be exclusive, and the rights and power to grant to any corporation,
association, or person other than the grantee a franchise for the
provision of telephone service or the installation, operation and
maintenance of a telecommunications system shall not be impaired
or affected by the granting of this franchise: provided, that the
telecommunications lines installed by virtue of any franchise for the
provision of a telecommunications service of the installation,
operation and maintenance of a telecommunications systems grant
subsequent to this franchise shall be so placed as not to impair the
efficient and effective operation of the telecommunications system
installed under this franchise and actually in existence at the time of
the granting of said subsequent franchise: provided, further, that
the National Telecommunications Commission after hearing both
parties interested may compel the grantee of this franchise or its
successors or assigns to remove, relocate or replace their
telecommunications lines but in such case the reasonable cost of
the removal, relocation of replacement shall be paid by the grantee
of the subsequent franchise of his successors or assigns to the
grantee of this franchise or its successors or assigns.

“Section 16. 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, or equipment of the

grantee.

“Section 17. Sale, Lease, Transfer, Usufruct, or Assignment_of
Franchise. - The grantee shall not lease, transfer, grant the
usufruct of, sell or assign this franchise or the rights and privileges
acquired thereunder to any person, firm, company, corporation or
entity, nor merge with any other 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 (a) when such person, firm, company,
corporation or entity has a valid and existing legislative franchise for
telecommunications; or (b) where the grantee is the surviving
corporation; Provided also, That the foregoing limitations shall not
apply to: (1) any transfer or issuance of shares of stock in the
implementation of the requirement for the dispersal of the grantee’s
ownership pursuant to Section 18 of this Act; (2) any transfer or
sale of shares of stock to a foreign investor or investors; (3) any
issuance of shares to any foreign or local investors pursuant to or in



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connection with any increase in the grantee’s authorized capital
stock which results in the dilution of the stockholdings of the
grantee’s then existing stockholders; (4) any combination thereof
where such transfer, sale or issuance is effected in order to enable
the grantee to raise the necessary capital or financing for the
provision of the services for which the grantee has been
incorporated or organized: Provided further, That any such
transfer, sale or issuance is in accordance with any applicable
constitutional limitations. Any person or entity to which this
franchise is validly sold, transferred or assigned shall be subject to
all the same conditions, terms, restrictions and limitations of this
Act.

“Section 18. Dispersal of Ownership. - In accordance with the
constitutional mandate to encourage public participation in utilities,
the herein grantee shall comply with the enabling law implementing
the democratization of ownership of public _utilities.

“Section 19. Contract with Private Entities. - The grantee is
authorized to contract the installation and operation of the
telecommunications system which is the subject of this grant, with
entities with expertise in the field of telecommunications under such
terms and conditions as may be approved by the National
Telecommunications Commission.

“Section 20._Reportorial Requirements. - 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 National
Telecommunications Commission.

Failure of the grantee to submit the requisite annual report to
Congress shall be penalized with a fine in the amount of Five
Hundred Pesos (Php500) per working day of noncompliance. The
fine shall_be collected by the National _Telecommunications
Commission from delinquent franchise grantee separate from he
reportorial penalties imposed b’ ional Telecommunications
Commission

“Section 21. Equality Clause. — Any advantage, favor, privilege,
exemption, or immunity granted under other existing franchises, or
which may hereafter be granted shall, ipso facto, become part of
this franchise and | be accorded immediately and
unconditionally to the herein grantee: Provided, 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 22. Repealability. - This franchise is granted with the
understanding and upon the condition that it shall be subject to
amendment, alteration or repeal by the Congress of the Philippines


when the public _interest_and common good _so_ require.
“Section 23. _Separability Clause. - If any of the sections or
provisions of this Act is held invalid, all other provisions not affected
thereby shall remain valid.”

Section 2. Renewal/Extension of Franchise. - The term of the franchise granted
under Republic Act No. 7372, is hereby renewed/extended to another twenty-five
(25) years from the date of its expiration. This franchise shall be deemed ipso
facto revoked in the event the grantee fails to operate continuously for two (2)
years.

Section 3. All the other provisions, terms and conditions contained in Republic
Act No. 7372 which are inconsistent herewith are hereby repealed.

Section 4. _Effectivity Clause. - This Act shalll 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.