FOURTEENTH CONGRESS OF THE REPUBLIC 
) 
7 
* 
OF THE PHILIPPINES 
1 
First Regular Session 
1 
S. No. 
Introduced by Senator Manuel "Lito" M. Lapid 
EXPLANATORY NOTE 
Prior to 1986, the policy of the government on telecommunications was 
integrated. In accordance with the said policy, one carrier provided all national and 
international voice network and services. However, in 1987, the government saw the 
wisdom of allowing the entry of competition in the industry, albeit regulated. Other 
carriers, aside from the Philippine Long Distance Telephone Company (PLDT) were 
authorized to provide national and international long distance services. Two cellular 
mobile telephone service operators, three radio paging service operators and five 
domestic satellite service operators were likewise authorized to operate. 
With the entry of new players in the telecommunications field, the government 
issued Executive Order NO. 59, which mandates the compulsory interconnection of all 
public telecommunications networks in order to ensure universally accessible 
telecommunications facilities and services. 
The deregulation policy of the government resulted in the rapid expansion of the 
telecommunications networks. From less than one million lines, the number of installed 
telephone lines increased to more than six million. Subscribed capacity went up from 
one million to three million. And the number of cellular mobile phone subscribers has 
grown from one hundred thousand to more than ten million. 
However, along with the entry of more competition came numerous disputes 
pertaining to commercial terms, quality of service and the number of additional 
interconnection trunks, among others. 
This bill proposes to address interconnection problems and other concerns to 
ensure expeditious interconnection between and among parties. 
In view of the foregoing, early passage of this bill is earnestly requested. 
6 1  I 
MANUEL yLITOn M. LAPID. 
Senator 
Lr 


FOURTEENTH CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINES 
1 
First Regular Session 
1 
S E N A T E  
S. No. 
Introduced by Senator Manuel “Lito” M. Lapid 
STRENGTHENING THE 
BETWEEN AND AMONG 
PROVIDING PENALTIES 
PURPOSES 
AN ACT 
MANDATE ON THE 
INTERCONNECTION 
PUBLIC TELECOMMUNICATION ENTITIES, 
FOR ITS VIOLATION AND FOR OTHER 
Be it enacted by the Senate and House of Representative3 of the Philippines in 
Congress assembled: 
SECTION 1. 
Declaration of Policy. - 
Recognizing the vital role of 
communications and information in nation-building and economic development, the 
State shall promote the rapid expansion of telecommunications services in all areas of 
the Philippines, maximize the use of all available telecommunications service, and 
ensure access to such facilities at a mandated standard of service and at a reasonable 
cost. 
Pursuant thereto, every authorized public network operator shall interconnect 
with other providers of telecommunications services in a speedy, efficient, fair, 
transparent and nondiscriminatory manner. Interconnection between or among public 
telecommunications companies (PTCs) shall be mandatory and compulsory, and, such 
interconnection shall encompass other telecommunications services such as, but not 
limited to, value-added services or radio paging, trunked radio, short messaging system, 
other store and forward systems of facsimile or messaging (voice or data), packet 
switching and circuit data switching (including conveyance of messages which have 
been or are to be transmitted or received at such points of interconnection), and any 
information and services as the National Telecommunications Commission (NTC) may 
determine to be in the interest of the public. 
Matters to be Covered by the Interconnection Agreement, - The 
interconnection agreement among the public telecommunications entities shall be 
nondiscriminatory and shall contain, but not be limited to, the following matters: 
SEC. 2. 
(a) 
scope of agreement; 
(b) 
(c) 
(d) 
period of implement; 
(e) 
(9 
(g ) 
(h) 
maintenance procedure; 
point(@ of interconnection and technical configuration; 
provision of capacity (interconnection circuits); 
technical performance and quality standards and grade of service, as well 
as measurement and monitoring thereof; 
measurement of calls, settlement and dispute resolution procedure; 
interconnection charge I compensation scheme; 
1 


(i) 
(j) 
(k) 
The NTC shall within ninety (90) days from the approval of this Act, prepare a pm 
forma lnterconnection Agreement, covering the above matters and provide guidelines 
which shall be used as basis for public telecommunications entities to arrive at an 
agreement that will effect a timely, fair and efficient interconnection. 
The NTC shall also, within ninety (90) days from the approval of this Act, 
prescribe revised technical and service performance standards for interconnection and 
establish a performance monitoring system to ensure compliance therewith; 
fault reporting and clearing procedures; 
duration and re-negotiation of agreement; and 
arbitration agreement as may be directed by the NTC. 
The NTC shall, upon request of a carrier and within a period of thirty (30) days: 
(a) 
Decide a dispute relative to the implementation of the interconnection 
agreement and of the amounts due from and payable by a party thereunder. Any 
uncontested amount shall immediately be payable to the parties; and 
In the absence of a carry-over clause, the NTC shall, in case of an 
impasse between the interconnected carriers, determine and fix the terms and 
conditions, of the renewal or extension of an interconnection agreement, to include the 
compensation scheme thereof. 
SEC. 3. 
lnterconnection Parameters. - The following shall be the 
minimum parameters: 
(1) 
The parties shall jointly and equally provide and share the costs of 
interconnection facilities necessary to interconnect the systems of both parties: 
Provided, That in an interconnection between an Inter Exchange Carrier (IXC) and a 
Local Exchange Carrier (LEC) with less than five thousand (5,000) total system-wide 
line capacity and does not offer or provide any other telecom services, except value- 
added service (VAS), the former shall shoulder the costs of interconnection; 
The point(s) of interconnection (POI) shall be made at a technically 
feasible point; 
The quantity of interconnection circuits shall be based on traffic studies or 
interconnecting parties. In case of disagreement, the NTC shall, within a period of thirty 
(30) days from the request of either patty, decide on the quantity of interconnection 
circuits; 
The underwriting of interconnection costs as may be determined by the 
The determination of interconnection charges by the NTC in compliance 
(b) 
(2) 
(3) 
(4) 
NTC; and 
(5) 
with law. 
SEC. 4. 
lnterconnection Procedure. - The following shall be strictly 
observed to ensure interconnection between or among the parties: 
(a) 
Parties shall negotiate and enter into an interconnection agreement within 
a non-extendible period of sixty (60) days commencing from notice to NTC of the 
initiation of negotiation for interconnection. During the sixty (60) day period, upon the 
request of any of the parties negotiating for interconnection, the NTC shall intervene 
and take an active role to facilitate and expedite interconnection. The NTC may, in the 
interest of the State, motu propio intervene in the negotiation or direct patties, as may 
2 


be appropriate, to submit to compulsory arbitration after the lapse of thirty (30) days 
from the start of negotiations. The arbitration shall be terminated and decided upon 
within a period of thirty (30) days; 
Despite absence of notice to it by any party to a proposed interconnection, 
the NTC in the exercise of police power, may initiate on its own, the interconnection of 
two or more telecommunications carriers if the public interest will be served thereby: 
Provided, That such interconnection must be arrived at within a sixty (60) day period 
from the commencement of NTC's action; and 
Should the parties fail to enter into an interconnection agreement after the 
lapse of the sixty (60) day period, the NTC shall, within thirty (30) days, determine and 
fix the equitable terms and conditions for interconnection and draw up the 
Interconnection Agreement and direct the parties, under pain of sanctions prescribed 
hereunder, to strictly comply therewith. 
SEC. 5. 
Prohibited Acts or Omissions. - The following shall be 
considered prohibited acts or omissions: 
(a) 
Refusal or neglect of any public telecommunications entity to interconnect, 
after having been so directed by written order of the NTC within the period fixed, and, 
under such terms and conditions as expressly set forth; 
(b) 
Willful disruption or termination of interconnection by any public 
telecommunications entity, except for any of the reasons stated in Section 6 hereof, or 
for any other lawful cause; 
Refusal or neglect of any public telecommunications entity, after having 
been required by written order of the N E ,  to re-establish I 
resume interconnection 
within a period of five (5) days from receipt of the NTC order; and 
Refusal or neglect of any public telecommunications entity, after having 
been required by written order of the NTC, to comply with any of the technical and 
service performance standards set by the NTC or with any of the terms and conditions 
of the interconnection agreement entered into by the parties, within a period of five (5) 
days from receipt of the NTC order. 
Grounds for the Disruption or Termination of Interconnection. - 
The following shall be the grounds for the disruption or termination of interconnection: 
Notwithstanding a receipt of a written notice or demand to cure or remedy 
a breach to pay an undisputed amount due, andlor desist or cease from committing 
such activities or violations of interconnection, as the case may be, within a period of 
thirty (30) days from receipt, of such notice or demand, a public telecommunications 
entity may, upon prior hearing and approval by the NTC, terminate, or disrupt any 
interconnection when the other public telecommunications entity: 
(i) 
is not duly licensed, or has lost its certificate, license or 
authorization by revocation, cancellation or suspension of its right to operate as a 
public telecommunications entity; or 
has committed material breach of the terms and conditions of the 
interconnection agreement between the parties; or 
Interconnection Agreement; or 
(b) 
(c) 
(c) 
(d) 
SEC. 6. 
(a) 
(ii) 
(iii) 
is in default of any amount due and payable under the 
3 


(iv) 
is using or allowing the use of interconnection facilities for 
uncompensated toll bypass through the use of schemes such as, but not limited 
to, callback, unauthorized audiotex, international simple resale (ISR), and other 
analogous services or any alternative calling procedures (ACP) which are 
prohibited in the Philippines; or 
(v) 
has violated the rules and regulations of the NTC. 
The NTC shall, within thirty (30) days, resolve any of the above issues. 
(b) 
Where it is necessary for a public telecommunications entity to maintain, 
repair, upgrade or expand any of its interconnection facilities or network: Provided, That 
prior written notice of the planned maintenance, repair, upgrade or expansion activity is 
served on the NTC, and other public telecommunications entities that may be affected 
thereby. Fifteen (1 5) days prior to any expansion or upgrades, the NTC shall be notified 
and notice to the public shall be effected by publication. 
By reason of force majeure, being the proximate and only cause of failure 
to maintain the existing interconnection relationship between the parties, such as any of 
the following circumstances: 
(c) 
(i) 
(ii) 
(iii) 
SEC. 7. 
Reconnection Procedure. - The following shall be strictly 
observed to ensure interconnection at all times, between or among parties: 
(a) 
The NTC shall, within five (5) days from receipt of notice from a public 
telecommunications entity whose services were arbitrarily disrupted or terminated by 
another public telecommunications entity, order the parties to reestablish / resume 
interconnection services within five (5) days from receipt of said order; 
During the five (5) day period, in the public interest and in the exercise of 
police power, the NTC may at any time, intervene at any stage of the negotiation and 
take an active role therein to ensure, facilitate and expedite resumption of 
interconnection: 
earthquake, lightning or other natural disaster or calamity; 
act of public enemy in war, whether international or civil; and 
order or act of competent public authority for reason of national security. 
(b) 
(c) 
The NTC shall, in the exercise of police power and in the interest of public 
welfare, despite the absence of notice from any telecommunications entity whose 
services were disrupted or terminated by another telecommunications entity, order the 
parties to reestablish / resume interconnection within a period of five (5) days from 
receipt of said order; and 
Within five (5) days after issuing the order adverted to in the preceding 
paragraphs directing the reestablishment I resumption of the interconnection, the NTC 
shall commence an investigation to find out the cause of the disruption or termination 
and, within a period of thirty (30) days, issue its resolution imposing appropriate 
penalties and fines on the erring party. 
Crimina/ Penalties. - (1) The President or Chief Executive Officer 
and the Board of Directors of the public telecommunications entity who fail to comply 
with the written order of the NTC directing the interconnection or reconnection shall be 
liable for imprisonment of not less than one (I) year but not more than two (2) years. 
(d) 
SEC. 8. 
4 


(2) 
The President or Chief Executive Officer and the Board of Directors of a 
public telecommunications entity who shall illegally disrupt or, terminate its existing 
interconnection with another public telecommunications entity, as may be determined by 
the Commission after due notice and hearing, shall be liable for imprisonment of not 
less than six (6) months but not more than one (I) year. 
SEC. 9. 
Administrative Penalties. - 
(I) 
The following fines shall be imposed by the NTC on any public 
telecommunications entity and its President or Chief Executive Officer for willful and 
deliberate failure to interconnect or reestablishlresume interconnection within the period 
stated in the order of the NTC: 
From one (1) to ten (IO) days after the lapse of the period to comply as 
stated in the NTC order, a fine of Five Hundred Thousand Pesos 
(Php500,000.00) per day shall be imposed; 
From eleven (11) to twenty (20) days after the lapse of the period to 
comply as stated in the NTC order, a fine of Two Million Five Hundred 
Thousand Pesos (Php2,500,000.00) per day shall be imposed; and 
From the twenty-first day onward after the lapse of the period to comply as 
stated in the NTC order, a fine of Five Million Pesos (Php5,000,000.00) 
per day shall be imposed. 
The following administrative penalties shall be imposed by the NTC after a 
determination that a public telecommunications entity has witlfully, deliberately and 
unjustifiably disrupted or terminated its interconnection with another public 
telecommunications entity: 
A fine of not less than Five Million Pesos (Php5,000,000.00) but not 
exceeding Fifteen Million Pesos (Php15,000,000,00); and 
Disqualification of the Chief Executive Officer of the violating public 
telecommunications entii from being employed thereat and in any other 
entity under the supervision or regulation of the NTC. 
(3) 
Administrative Penalties for Failure to Comply with Interconnection 
Technical, Service, Performance Standards - The following fines shall be imposed by 
the NTC on any public telecommunications entity for deliberate and willful failure to 
comply with an order of the NTC requiring compliance with any interconnection such as 
the technical, service performance, standards prescribed by the NTC and/or those 
agreed upon under the parties’ interconnection agreement: 
From one (1) to ten (IO) days after the lapse of the period to comply as 
stated in the NTC order, a fine of Two Hundred Thousand Pesos 
(Php200,000.00) per day shall be imposed; 
From eleven (11) to twenty (20) days after the lapse of the period to 
comply as stated in the NTC order, a fine of Five Hundred Thousand 
Pesos (Php500,000.00) per day shall be imposed; and 
From the twenty-first day after lapse of the period to comply as stated in 
the NTC order, a fine of One Million Pesos (Phpl,OOO,OOO.OO) per day 
shall be imposed. 
(a) 
(b) 
(c) 
(2) 
(a) 
(b) 
(a) 
(b) 
(c) 
5 


(4) 
Compensation Payable to Aggrieved Public Telecommunications Entity - 
The erring public telecommunications entity shall also pay the aggrieved public 
telecommunications entity compensation in the amount of not less than One Million 
Pesos (Php1,000,000.00) but not exceeding Ten Million Pesos (Php10,000,000.00) to 
be determined upon application with the appropriate court to cover losses and damages 
incurred by the latter caused by the unjustified disruption or termination of the 
interconnection. 
(5) 
Collection of Fine or Payment of Compensation - The amount of the fine 
imposed by the NTC shall be paid by the erring public telecommunications entity to the 
NTC within fifteen (15) days from receipt of the NTC order. In case the erring public 
telecommunications entity moves for a reconsideration of the order imposing such fine 
or brings the matter on appeal to the Court of Appeals or the Supreme Court, the 
payment of the fine shall be a condition for the perfection of the motion or appeal but the 
payment shall be deposited in escrow with the NTC until the final adjud’ication of the 
case. 
Prohibition Against the Issuance of Restraining Orders and 
injunctions Against NTC Decision andlor Orders. - The decision of the NTC on 
interconnection and on matters pertaining to Section 8 and 9 of this Act shall be 
immediately executory. No court, other than the Court of Appeals and the Supreme 
Court of the Philippines, shall have jurisdiction to issue a temporary restraining order, 
preliminary injunction, or preliminary mandatory injunction against the implementation of 
interconnection of networks pursuant to the provisions of this Act. 
implementing Rules end Regulation (IRR). - Within ninety (90) 
days from the effectivity of this Act, the NTC shall promulgate rules and regulations for 
the effective and proper implementation of this Act. The NTC shall be the administrator 
of this Act and for this purpose, shall establish a performance monitoring system. 
Separability Clause. - If any provision of this Act is held invalid, all 
the other provisions not affected hereby shall remain valid. 
SEC. 13. 
Repealing Clause. -Any provision of law, executive order, rule and 
regulation or circular inconsistent with the provisions of this Act is hereby modified or 
repealed accordingly. 
SEC. 14. 
€ffecfiv@y. - This Act shall take effect fifteen (15) days after its 
publication in two (2) national newspapers of general circulation. 
SEC. IO. 
SEC. 11. 
SEC. 12. 
Approved, 
6