Grant of Franchise to Omninet Philippines, Inc. (Wire and/or Wireless Telecommunication Systems)

March 26, 1992

REPUBLIC ACT NO. 7298

AN ACT GRANTING TO OMNINET PHILIPPINES, INC., A FRANCHISE TO ESTABLISH, INSTALL, MAINTAIN, LEASE AND OPERATE WIRE AND/OR WIRELESS TELECOMMUNICATION SYSTEMS, LINES, CIRCUITS AND STATIONS WITHIN AND WITHOUT THE PHILIPPINES AND FOR OTHER PURPOSES

SECTION 1. Nature and Scope of Franchise. — Subject to the provisions of the Constitution and applicable laws, rules and regulations, there is hereby granted to the Omninet Philippines, Inc., hereunder referred to as the grantee, its successors or assigns a franchise to establish, install maintain, lease and operate for commercial purposes and in the public interest wire and/or wireless telecommunication systems, lines, circuits and stations, fibre optics, microwave and other facilities that are appropriate to the provision of up-to-date telecommunication facilities within and without the Philippines for public communications including but not limited to two-way radio communications systems, paging, mobile/cellular services, packet switched system, satellite transmit and receive systems, switches, pay television and/or program services by wire or wireless means and other telecommunication systems and their value-added services.

SECTION 2. Manner of Operation of Stations of Facilities. — The stations 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 in accordance with law of other telecommunication services grantees, 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.

SECTION 3. Prior Approval of the National Telecommunications Commissions. — The grantee shall secure from the National Telecommunications Commission the appropriate permits and licenses for its stations and shall not use any frequency in the radio spectrum without having been authorized by the Commission.

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 transmissions or for the dissemination of deliberately false information or willful misrepresentation or assist in subversive or treasonable acts.

SECTION 5. Rates for Services. — The subscription charges and rates for services, excluding the sale or lease of equipment or units, that the grantee shall offer to the public shall be subject to the approval of the National Telecommunications Commission or its legal successors.

SECTION 6. 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 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 compensation to the grantee, for the use of said stations, transmitter systems, facilities and equipment during the period when they shall be so operated.

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. In the event the grantee fails to operate continuously for two (2) years, this franchise shall be deemed ipso facto revoked.

SECTION 8. Acceptance and Compliance. — Acceptance of this franchise shall be given in writing within (60) days after effectivity of this Act. The grantee shall operate telecommunication systems for which this franchise granted within two (2) years from the date of its acceptance in writing of this franchise. Refusal or failure to accept the franchise or to operate within the prescribed period shall render the franchise void.

SECTION 9. 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 which are now or hereafter may be required by law to pay. In addition thereto, the grantee, its successors or assigns shall pay a franchise tax equivalent to three percent (3%) of all gross receipts of the business transacted under this franchise by the grantee, its successors or assigns and the said percentage shall be in lieu of all taxes on this franchise or earnings thereof: 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 Section 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 10. Warranty in Favor of National and Local Governments. — The grantee shall hold the national, provincial 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, systems, facilities and equipment of the grantee.

SECTION 11. Sale, Lease, Transfer, Usufruct, etc.— The grantee shall not lease, transfer, grant the usufruct of, sell or assign the franchise herein granted or the rights and privileges acquired thereunder to any person, firm, company, corporation or entity nor merge with any 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. Any person or entity to which the franchise herein granted is validly sold, transferred or assigned, shall be subject to the same conditions, terms, restrictions and limitations of this Act.

SECTION 12. General Telecommunications Policy Law. — The grantee shall comply with and be subject to the provisions of a general telecommunications policy law that may hereafter be enacted.

SECTION 13. Public Offering of Stocks. — In compliance to the constitutional mandate to democratize ownership of public utilities, the herein grantee shall make a public offering through the stock exchange of the least thirty percent (30%) of its common stocks within a period of three (3) years from the date of effectivity of this Act: Provided, That no single person or entity shall be allowed to own more than five percent (5%) of the stock offering.

SECTION 14. 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 15. Repealability and Non-exclusively Clause. — The franchise herein granted 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 16. Reportorial Requirement. — The grantee shall submit an annual report to the Congress of the Philippines on its compliance with the terms and conditions of the franchise and on its operations within sixty (60) days from the end of every year. cdt

SECTION 17. Effectivity Clause. — This Act shall take effect fifteen (15) days from the date of its publication in at least two (2) newspapers of general circulation in the Philippines.

Approved: March 26, 1992

Published in the Philippine Times Journal and Malaya on April 3, 1992. Published in the Official Gazette, Vol. 88 No. 19 page 2748 on May 11, 1992.