REPUBLIC ACT NO. 7678 - AN ACT
GRANTING THE DIGITAL TELECOMMUNICATIONS PHILIPPINES, INCORPORATED, A
FRANCHISE TO INSTALL, OPERATE AND MAINTAIN TELECOMMUNICATIONS SYSTEMS
THROUGHOUT THE PHILIPPINES AND FOR OTHER PURPOSES
Section 1. Nature and Scope of Franchise. — Subject to the
provisions of the Constitution and applicable laws, there is hereby
granted to the Digital Telecommunications Philippines, Incorporated,
its successors or assigns, for a period of twenty-five (25) years from
the effectivity of this Act, the right, privilege and authority to
construct, maintain and operate telecommunications systems throughout
the Philippines, and to provide by means of the said telecommunications
systems a telephone service and other telecommunications services in
the Philippines. The grantee is further authorized to carry on
the business of providing basic and enhanced public telecommunications
services in and between provinces, cities, and municipalities in the
Philippines, and between the Philippines and other countries and
territories, and for the purpose of providing said telecommunications
services, to construct, own and operate telecommunications systems, in
and between said provinces, cities or municipalities, to contract for
telecommunications lines in and between the Republic of the Philippines
and other countries, to construct, maintain and operate and use all
telecommunications apparatus necessary for the provision of
telecommunications services and install, construct and maintain
telecommunications apparatus, in, on, over or under lands, and waters,
as may be necessary and best adapted to the provision of
telecommunications services, and to connect and keep connected its
telecommunications services in the Philippines and between the
Philippines and other countries and territories: provided, however,
that all telecommunications apparatus installed or used by the grantee
shall be located in places authorized by the National
Telecommunications Commission (hereinafter referred to as the
Commission) and shall be installed in a workmanlike manner to the
satisfaction of the said Commission: provided, further, that, upon
reasonable notice of the Commission, the grantee may be required to
relocate its telecommunications lines so as to permit the access to or
between buildings or other structures on condition that the actual cost
of such relocation of telecommunications lines shall be paid by the
person at whose instance the telecommunications line is moved; and, at
the expense of the grantee, its successors or assigns, to relocate
telecommunications lines when the Commission so orders in the public
interest: provided, finally, that said grantee shall have the right to
appeal to the President.
Should the grantee fail, refuse or neglect within a period of thirty
(30) days after notice of the order of the Commission to relocate its
telecommunications lines, said Commission may relocate the
telecommunications lines at the expense of the grantee: provided, that
the installation of all telecommunications apparatus and construction
work shall be done in accordance with the rules and regulations
prescribed by the Commission: provided, further, that whenever a
telecommunication line is carried on poles in any city or municipal
center, then the telecommunication line shall be placed underground,
whenever so ordered by the Commission: provided, furthermore, that the
pole erected and the telecommunications lines installed by virtue of
this franchise shall be so placed 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 in accordance with
law of other telecommunications services grantees, without in any way
diminishing its own right to use its selected wavelengths or
frequencies or reception thereon as would maximize rendition of the
grantee's services and/or the availability thereof: provided, finally,
that any pole erected by the grantee shall be of such a height as to
maintain any telecommunication line attached to them at a height of at
least fifteen (15) feet roads or streets, and shall be placed so as not
to be a danger to the public safety, in accordance with a plan approved
by the Commission.
Sec. 2. Definition of Terms. —
(a) "Telecommunications system" means a facility for
conveyance through the agency of the electric, magnetic,
electromagnetic, electrochemical or electromechanical energy of speech,
music and other sounds, visual images and signal serving either for the
importation of any matter or for the actuation or control of machinery
or apparatus.
(b) "Telecommunication apparatus" means any apparatus
constructed or adapted for use in transmitting or receiving anything
conveyed by a telecommunication system and includes any
telecommunication line used in telecommunication system.
(c) "Telecommunication message" means anything
conveyed by means of telecommunication system.
(d) "Telecommunication service" means a service
consisting of the conveyance by means of a telecommunication system of
any telecommunication message and includes a directory information
service and installation, maintenance, adjustment, repair, movement, or
replacement of telecommunication apparatus, excluding the broadcasting
of any telecommunication message, the purpose of which is to advertise
any product or service other than the use of the telecommunication
service itself.
(e) "Telephone service" means a telecommunication
service consisting of the conveyance of voice and non-voice
telecommunication messages and data including, but not limited to video
transmission, telefax, teleconferencing, television, and the like.
(f) "Telecommunication line" means any wire, cable,
tube, pipe, conduit or other similar things, including its casing or
coating, which is so designated or adapted to be a telecommunication
apparatus.
(g) "Local telephone exchange" means an item of
telecommunication apparatus designated by the grantee as such in its
application with the National Telecommunications Commission for a
certificate of public necessity and convenience under Section 10
hereof.
Sec. 3. Authority of the National
Telecommunications Commission. — The grantee shall secure from the
Commission the appropriate permits and licenses for the location,
construction, installation and operation of its radio
telecommunications systems. The Commission shall have the
authority to supervise and regulate the construction, operation and
regulation of its radio telecommunications systems. The grantee
shall not use any frequency in the radio spectrum without having been
authorized by the Commission.
The grantee shall not begin any construction whatsoever pursuant to
this franchise or exercise any right or privilege under this franchise
without first obtaining a certificate of public necessity and
convenience from the Commission. After due hearing, the
Commission shall determine whether such construction or such exercise
of the right or privilege under this franchise is necessary and proper
for public convenience, and in a proper case issue the
certificate. In issuing the certificate, the Commission shall
have the power to impose such conditions relative to the construction,
operation, maintenance, or service of the radio telecommunications
systems as the public convenience and interest may reasonably require
for each certificate it shall have obtained. Such certificate
shall state the date the grantee shall commence the construction work
and the period within which the work shall be completed.
Sec. 4. Responsibility to the Public. — The
grantee shall supply telephone service in any municipality in the
Philippines where it has established a local telephone exchange to any
applicant therefore, and as between such applicant and other like
applicants, in the order of the date of their applications up to the
limit of the capacity of its telephone exchange as determined by the
Commission in any application made by the grantee for the construction
of the relevant telecommunications systems, and should the demand for
the telephone service at any time increase beyond capacity of its local
telephone exchange to supply the same, the capacity of said telephone
exchange shall be increased by the grantee to meet such demand, in
accordance with the decision of the Commission: provided, that in case
the point at which the telephone service to be supplied is more than
fifty meters (50 m.) from the distribution points operated by the
grantee, the latter shall not be obliged to furnish said service,
unless the applicant for the telephone service defrays the actual
expenses for the installation of the telecommunications apparatus
necessary for such service and in such case the Commission may extend
the time within which the grantee shall furnish such service.
For the purpose of installing, operating and maintaining its
telecommunications lines, it shall be lawful for the grantee to make
excavations or lay conduits in any of the public places, highways,
streets, lanes, alleys, avenues, sidewalks, bridges of said
municipalities, forest reserves and other similar property of the
government of the Philippines or any of its branches or
instrumentalities: 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 the said grantee to the
satisfaction of the Department of Public Works and Highways.
Should the grantee, its successors or assigns, after the lapse of
thirty (30) days from receipt of notice from the proper authority fail,
refuse, or neglect to repair or replace any part of a public place,
road, highway, street, lanes, alley, avenue, sidewalk or bridge
altered, changed, or distributed by said grantee, then the Department
of Public Works and Highways shall have the right to have the same
repaired and placed in good order and condition at the cost and expense
of the grantee.
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 satisfactory manner at all times and whenever
required by the Commission in the interest of the public good, and as
far as practicable, modify, improve or change such stations, lines,
cables, systems, and equipment to keep abreast with the advance in
science and technology.
Sec. 5. Tax Provisions. — The grantee shall be
liable to pay the same taxes on its 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 shall pay to the Bureau of Internal
Revenue each year, within thirty (30) days after the audit and approval
of the accounts, a franchise tax as may be prescribed by law of all
gross receipts of the telephone or other telecommunications businesses
transacted under this franchise by the grantee: provided, that the
grantee 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
and the return shall be subject to audit by the Bureau of Internal
Revenue.
Sec. 6. Acceptance of Franchise. — Within sixty
(60) days after the effectivity of this Act, the grantee shall file
with the Secretary of Transportation and Communications its written
acceptance of this franchise and all of the terms and conditions
thereof. In default of such acceptance within the said time, this
franchise shall become null and void.
Sec. 7. Deposit for Acceptance of Franchise and
Telephone Service. — As a guaranty that it has accepted this franchise
in good faith and that within twenty-four (24) months from the date of
the Commission's granting of a certificate of public necessity and
convenience, it shall be fully equipped and ready to operate a
telephone service according to the terms of this franchise, and shall
furthermore extend its telecommunications systems as rapidly as
conditions so warrant. The grantee shall, within thirty (30) days
from the granting of such certificate, deposit with the National
Treasurer the sum of One hundred thousand pesos (P100,000), or
negotiable bonds of the Philippine government or other securities
approved by the national government with the face value of One hundred
thousand pesos (P100,000).
Should the grantee for any other cause than an act of God, act of
public enemy, usurpation of military power, martial law, riot, civil
commotion, or inevitable cause, fail, refuse or neglect to begin the
business of providing a telephone service within twenty- four (24)
months from the date of the granting of said certificate of public
necessity and convenience, or fail, refuse, or neglect to be fully
equipped and be ready to operate the telecommunications systems
approved and ordered by the Commission according to the terms of this
franchise within the same period, then the deposit prescribed by this
section to be made with the national treasurer, whether in money, bonds
or other securities, shall become the property of the national
government as liquidated damages caused to the government.
Should the grantee perform on time the undertaking for which the
deposit is required, then said deposit shall be returned by the
government to the grantee.
Sec. 8. Filing of Application for Certificate with
the Commission. — Within six (6) months after the approval of this Act,
the grantee shall file for the initial availment of the franchise
herein granted, an application with the Commission for a certificate of
public necessity and convenience authorizing it to construct, operate
and maintain a telecommunication system in such municipalities, cities
and/or provinces as may be authorized by the Commission. Should
the grantee fail to comply with the conditions set forth in any of the
certificates issued by the Commission, the certificate concerned shall
become null and void.
Sec. 9. Acceptance of Certificate. — To avail
itself of the rights granted in the certificate of public necessity and
convenience, the grantee must file with the Commission, within such
period as the Commission shall fix, its acceptance in writing of the
terms and conditions of said certificate.
SECTION 10. Interconnection. — The grantee is
authorized to connect or demand interconnection of its
telecommunications systems to any other telecommunications systems
installed, maintained and operated by any other duly authorized person
or entity in the Philippines for the purpose of providing
telecommunications services to the public under such terms and
conditions mutually agreed upon by the parties: provided, that the
terms and conditions of such interconnection shall be subject to the
review of the Commission: provided, further, that if the parties fail
to agree within a period of ninety (90) days from the initial date of
interconnection proposal, any interconnection shall be made in
accordance with such terms and conditions mandated by the National
Telecommunications Commission.
SECTION 11. Book of Accounts. — The grantee shall
keep a separate account of the gross receipts of the telecommunications
businesses transacted by it in each of the municipalities of the
various provinces and shall furnish the Commission on Audit and the
National Telecommunications Commission a copy of such account not later
than the thirty-first (31st) day of July of each year for the preceding
twelve (12) months.
The books and accounts of the grantee shall always be open for
inspection by the Commission on Audit or its 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 quarter past and the
general condition of the business.
SECTION 12. Non-exclusivity of Franchise;
Interpretation of Franchise. — The franchise granted under this Act is
not exclusive and shall not prevent the grant of similar franchises to
other qualified persons or entities: provided, however, that the
telecommunications lines which shall be installed by virtue of a
subsequent franchise shall be so placed as not to impair the efficient
and effective operation of the telecommunications systems which shall
have been installed under this franchise and actually in existence at
the time of granting of said subsequent franchise: provided, further,
that the telecommunications lines installed by virtue of this franchise
for the provision of a telephone service or the installation, operation
and maintenance of a telecommunications system under this franchise
shall be so placed as not to impair the efficient and effective
operation of such telephone service or telecommunications systems:
provided, finally, that if any subsequent franchise for
telecommunications services is awarded or granted by the Congress of
the Philippines with terms, privileges and conditions more favorable
and beneficial than those contained in this Act, then the same
privileges or advantages shall, ipso facto, accrue to the herein
grantee and be deemed part of this Act.
SECTION 13. Warranty in Favor of National and Local
Governments. — The grantee shall hold the national, provincial, city
and municipal government harmless from all claims, accounts, demands or
actions arising out of accidents or injuries, whether to property or to
persons, caused by the installation and operation of the
telecommunications systems of the grantee.
SECTION 14. Rates for Services. — The rates to be
charged to the subscribers for telephone service and other
telecommunications services, whether flat rates or measured rates, are
subject to the approval of the Commission.
SECTION 15. Sale, Lease, Transfer, Usufruct, etc. —
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 without the prior approval of the Congress
of the Philippines. Neither 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: provided, that the foregoing limitations shall not apply
to: (1) any transfer or issuance of shares of stock in the
implementation of requirement for the dispersal of the grantee's
ownership pursuant to Sec. 21 of this Act, (2) any transfer or sale
of shares to a foreign investor or investors, (3) any issuance of
shares to any foreign or local investors, pursuant to or in connection
with any increase in the grantee's authorized capital stock which shall
result 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 any of the
services authorized by this Act and/or to carry out any of the purposes
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 16. Annual Report to Congress. — The grantee
shall file a detailed annual report to the Congress of the Republic of
the Philippines with respect to its programs, operations and/or
compliance with the terms and conditions of the franchise.
SECTION 17. Right of Government. — The government
shall have the privilege of using without compensation the poles of the
grantee to attach, install, maintain and operate wires of its telegraph
system: provided, however, that the Bureau of Posts shall have the
right to place additional crossarms and wires on the poles of the
grantee by paying a compensation, the rate of which is to be agreed
upon by the Postmaster General and the grantee: provided, further, that
in case of disagreement as to the rate of contract rental, the same
shall be fixed by the Commission.
Municipalities shall also have the privilege of using, without
compensation, the poles of the grantee, to attach, install, maintain
and operate wires of local police and fire alarm system; but the wires
of such telegraph lines, police or fire alarm shall be placed and
strung in such manner as to cause no interference with or damage to the
wires or the telephone service of the grantee.
SECTION 18. Guarantee Bond for Compliance with
Conditions of Franchise: Effect of Non-compliance. — Within forty (40)
days after the effectivity of this Act, the grantee shall file a bond
in the amount of One million pesos (P1,000,000) to guarantee for the
full compliance with the fulfillment of the conditions under which this
franchise is granted. In the event the grantee fails to fulfill
any of the said conditions, this franchise shall become null and void
and the bond shall be forfeited in favor of the government.
SECTION 19. Alteration or Repeal of Franchise. — This
franchise shall be subject to amendment, alteration or repeal by the
Congress. All lands or rights to use or occupy lands secured by
virtue of this franchise shall revert upon its termination to the
national, provincial, or municipal governments concerned which were the
owners thereof on the date of the granting of this
franchise.
Sec. 20. Separability Clause. — If any section or
provision of this Act is declared unconstitutional or invalid, the
other sections or provisions hereof shall continue to be in force as if
the section or provision so declared unconstitutional had never been
incorporated in this Act.
Sec. 21. Dispersal of Ownership. — In accordance
with the constitutional provision to encourage participation in 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
two (2) years from the effectivity of this Act.
Sec. 22. Effectivity Clause. — This Act shall take
effect fifteen (15) days after the date of its publication in at least
two (2) newspapers of general circulation in the Philippines.
Approved: February 17,
1994
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