RMC No. 46-2017 — Publishes the full text of RA No. 10926, which extends for 25 years the franchise granted to Smart Communications, Inc. to establish, maintain, lease and operate Integrated Telecommunications/Computer/Electronic Services and Stations throughout the Philippines for public domestic and international telecommunications and for other purposes

BUREAU OF INTERNAL REVENUE REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE Quezon City

May 16, 2017

REVENUE MEMORANDUM CIRCULAR NO. 4(6 - 3D/7

SUBJECT: Publishing the Full Text of Republic Act No. 10926 which was ApproVed on ApriI 21, 2017,EntitIed "AN ACT EXTENDING FOR REPUBLIC ACT NO. 7294, ENTITLED "AN ACT GRANTING SMART DOMeStIC And INterNAtiONAL teLeCOMMUNICAtiONS, ANd FOR OTHER PURPOSES. " COMMUNICAtiONS, INC. (FORMERLY SMART INFORMAtiON TeChnoLogies, inC.), Amending FOr the PurPOse AND STATIONS THROUGHOUT THE PHILIPPINES FOR PUBLIC TWENTY-FIVE (25) YEARS THE FRANCHISE GRANTED TO SMART INFORMATION TECHNOLOGIES, INC. (SMART) A FRANCHISE TO ESTABLISH, MAINTAIN, LEASE AND OPERATE INTEGRATED TELECOMMUNICATIONS/ COMPUTER/ ELECTRONIC SERVICES

TO : All Internal Revenue Officials, Employees and Others Concerned

Computer/ Electronic Services, and Stations Throughout the Philippines for Public Director III of Malacanang Records Office and the certified copy of Republic Act No. Smart Information Technologies, Inc.), Amending for the Purpose Republic Act No. 7294, entitled "An Act Granting Smart Information Technologies, Inc. (Smart) a Domestic and International Telecommunications, and for Other Purposes. 10926 which was approved on April 21, 2017, entitled "An Act Extending for Twenty- Five (25) Years the Franchise Granted to Smart Communications, Inc. (Formerly Franchise to Establish, Maintain, Lease and Operate Integrated Telecommunications concerned, attached is the letter from Atty. Concepcion Zeny E. Ferrolino-Enad For the information and guidance of all internal revenue officials, and others

Circular a wide publicity as possible. All concerned are hereby enjoined to be guided accordingly and give this

O-5 BUREAU OF INTERNAL REVENUE RECORUS MGT DIVISION JUN 2 0 2017 2:3* pM MaM Commissioner of Internal Revenue CAeSAr R. DuLAY CRCYA 007270

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H No. 4637

Hungress af the Hhilippines Kepublit af fhe #hilippines

lletrr Mantla Seirentenfi dangreas FirstRrgular Sexan

Begun and held in Metro Manila, on Monday, the twenty-fifth day of July, two thousand sixteen.

[REPUBLIC ACT NO. 10926]

AN ACT EXTENDING FOR TWENTY-FIVE (25) YEARS TELECOMMUNICATIONS/COMPUTER/ELECTRONIC PHILIPPINES FOR PUBLIC DOMESTIC AND INTERNATIONAL TELECOMMUNICATIONS, AND FOR OTHER PURPOSES LEASE SERVICES. AND STATIONS THROUGHOUT THE INFORMATION TECHNOLOGIES, INC). AMENDING INFORMATION TECHNOLOGIES, INC. (SMART) A COMMUNICATIONS, FOR ENTITLED THE FRANCHISE THE FRANCHISE AND PURPOSE "AN TO ESTABLISH, MAINTAIN ACT OPERATE INC. GRANTED REPUBLIC AOT NO. 7294. GRANTING (FORMERLY INTEGRATED TO SMART SMART SMART

Be it endcted by the Senate and House of Representatives of the Philippines in Congress assembled: BUREAU OF JNTERNAL REVENUE RECORDS MGT DIVISION 2:5tP.M.

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SECTION 1. Section l of Republic Act No. 7294 is hereby amended to read as follows:

Subject to the provisions of the Philippine Constitution and applicable laws, rules and regulations, the "SECrION 1. Nature and Scope of Franchise.

Inc.), hereunder referred to as the grantee, its franchise granted to the Smart Communications, Inc. CsMART', formerly Smart Informatiox Technologies,

successors or assignees, to construct, establish, install, maintain, lease, purchase, operate and carry

territories, including outer space, as public interest including electronic telecommunications or electronic may warrant, for public domestic and international on the business of providing telecommunications, communications services throughout the Philippines and between the Philippines and other countries and

telecommunications is hereby extended for

For this purpose, the grantee is hereby granted the twenty-five (25) years from the effectivity of this Act. right to construct, establish, install, maintain, lease, purchase andoperate the corresponding transmitting networks, international gateways, local exchanges, and platforms as it may consider necessary, convenient, or reasonable. and receiying stations, satellites, lines, systems,

shall include 'electronic communications'. In addition, "In this Act, the term 'telecommunications'

the following terms shall have the meanings set forth herein:

use of electrical, magnetic or electro-magnetic energy. mean: (a) a transmission system for conveyance, by of signals of any description; and (b) any of the " 'Electronic communications network' shall

following as are used, by the person providing the system and in association with it, for conveyance of

the signals; and (3) software and stored data. the signals: (l) apparatus comprised in the system; (2) apparatus used for the switching and routing of

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integrated telecommunications/computer/electronic present available or made available through technical advances or innovations in the future, feature, the conveyance by means of an electronic communications network of signals. It includes services, including value-added services, or technologies related to such service which are at and fixed and mobile stations.* a service consisting in, or having as its principal wired, wireless, fixed, cellular, and/or mobile, or " Electronic communications service' shall mean

amended toread as follows: SEc. 2. Section 4 of RepubHic Act No. 7294 is hereby

grantee shall conform to the ethics of honest enterprise and shall not use its stations for obscene or indecent assist in subversive or treasonable acts. transmissions,or for the dissemination of deliberately false information or willful misrepresentation, or "SEC. 4. Responsibility to the Public. - The

services in areas not yet served, and in hazard- and typhoon-prone areas that shall be determined by the National Disaster Risk Reduction and Management Council in coordination with the National Telecommunications Commission (NTC): "The grantee shall improve and extend its

effective compliance with the objectives of Republic equipment, facilities, and services in order to ensure Act No. 10639 or the 'Free Mobile Disaster Alerts Actt" "The grantee shall also improve and upgrade its

amended to read as follows: SEc. 3. Section 7 of Republic Act No. 7294 is hereby

of this Act, unless sooner revoked or cancelled. shall be extended and in effect for a period of twenty-five (25) years from the date of the effectivity "SeC. 7. Term of Franchise. --- The franchise

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

amended toread as follows: SEc. 4. Section 8 of Republic Act No. 7294 is hereby

period shall render the franchise void." Public Services of the Senate, within sixty (60) 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 days from the effectivity of this Act. Upon giving privileges granted under this Act. Refusal or failure to accept the franchise within the prescribed the acceptance, the grantee shall exercise the "SEc. 8. Acceptance and Compliance.

amended to read as follows: SEC. 5. Section 9 of Republic Act, No. 7294 is hereby

from which the grantee is hereby expressly exempted same taxes on their real estate, buildings and hereafter may be required by law to pay, except radio telecommunications and electronic communications connection with the business of the grantee which In addition thereto, the grantee, its successors or receipts of the business transacted under this in the Philippines, in lieu of any and all taxes of any shall be exempt from customs duties, tariffs and other taxes, as well as those declared exempt in this section. assignees, shall pay a value-added tax on all gross franchise by the grantee, its successors or assignees, kind, nature or description levied, established or collected by an authority whatsoever including, but successors or assignees, shall be liable to pay the personal property, exclusive of this franchise, as other persons or corporations which are now or equipment, machinery and spare parts needed in not limited to, city, municipal, provincial or national "SEc. 9. Tax Provisions. RECOROE MGT. DVISION BUREAU OF INTERNAL REVENUE JUN 2 0 2017 -- The grantee, its 2:51P.M.

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Provided, That the grantee, its successors or Internal Revenue Code pursuant to Section 2 of Executive Order No. 7z unless the latter enactment is amnended or repealed, in which case the amendment effective from the date of the effectivity of this Act: assignees, shall continue to be liable for income taxes payable under Title II of the National or repeal shall be applicable thereto.

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." "The grantee shall file the return with and pay

amended to read as follows: SEc. 6. Section 11 of Republic Act No. 7294 is hereby

Assignment of Franchise. --- The grantee shall not without the prior approval of the Congress of the sell, lease, transfer, grant the usufructof, nor assign the franchise herein granted or the rights and privileges acquired thereunder to any person, firm company, corporation or other commercial or legal entity, nor shall transfer the controlling interest of the grantee, whether as a whole or in parts, and whether simultaneously or contemporaneously, to any person, firm, company, corporation or entity Philippines. or assigned shall be subject to the same conditions, terms, restrictions, and limitations of this Act.: franchise herein granted is validly sold, transferred "SEc. 1. Sale, Lease, Transfer, Usufruct, or Any person or entity to which the

amended to read as follows: SEC. 7. Section 13 of Republic Act No. 7294 is hereby

exchange concerned, and make a public offering Securities and Exchange Commission and the stock shall list, subject to the requirements of the "SEc. i3. Listing of Shares. -- The grantee

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its authorized capital stock in any securities representing at least thirty per centum (30%) of from the effectivity of this Act, unless the grantee is wholly owned by a publicly listed company with through the stock exchange of the shares exchange in the Philippines within two (2) years at least thirty per centum (30%) of whose authorized capital stock is publicly owned.

13 of Republic Act No. 7294 to read as follows: SEC. 8. A new Section 14 is hereby inserted after Section

The grantee, its successors or assignees shall comply with the applicable labor standards under other issuances as may be promulgated by the consideration the nature and peculiarities of the Department of Labor and Employment, taking into telecommunications industry.' existing labor laws, rules and regulations and such "SEc. 14. Compliance with Labor Standards.

No. 7294 are hereby renumbered as Sections 17, 18 and 19. respectively. SEc. 9. The present Sections 14, 15 and 16 ofRepublicAct

SEc. 10. A new Section 15 shall now read as follows:

mechanism for the purpose of impiementing MNP. It shall interconnect directly or indirectly with the infrastructure, facilities, systems or equipment of grantee shall provide Mobile Number Portability (MNP) to all its subscribers. It shall set up a other telecommunications franchise grantees. It capabilities that will impede the implementation of a nationwide MNP system. The NTC shall issue rules and regulations for this purpose, the effectivity of which shall commence upon applicability with shall not install network features, functions or other telecommunications franchise grantees.' "SEc. 15. Mobile Number Portability. -- The

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Sec. 11. A new Section i6 shall now read as follows:

favor, privilege, exemption, or immunity granted to the herein grantee: Provided, That the foregoing under existing franchises, or which may hereafter be granted upon prior review and approval of shall be accorded immediately and unconditionally shall neither apply to nor affect provisions of covered by the franchise, the lifespan of the franchise or the type of service authorized by the franchise." Congress, shall become part of this franchise and telecommunications franchises concerning territory "SEc. 16. Equality Clause. -- Any advantage,

folows: SEc. 12. A new Section 20 is hereby inserted to read as

pay the fine of five hundred pesos (P500.00) per imposed by the NTC and the same shall be grantee to submit the requisite annual report.to shall commence upon applicability with other telecommunications franchise grantees: Frovided, collected by the NTC from the delinquent franchise remitted to the National Treasury." day of noncompliance, the effectivity of which working day of noncompliance. The fine shall be grantee separate from the reportorial penalties Congress shall be penalized by a fine in the amount of one million pesos (P1,000,000.00) per working That in the interim, the grantee shall be liable to "Sec. 20. Penalty Clause. -- Failure of the

is hereby renumbered as Section 2i. SEc. 13. The present Section 17 of Republic Act No. 7294

provisions of this Act and remain unrepealed shall continue to be in full force and effect: Provided, That all pending suits of whatever kind or nature, whether civil,criminal or administrative filed by or against the grantee in connection with the provisions of Republic Act No. 7294 shall continue Republic Act No. 7294 which are not inconsistent with the SEc. 14. Applicability Clause. -- All other provisions of

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March 27, 1992 until the effectivity of this new law shall remain valid and enforoeable under Republic Act No. 7294. to be prosecuted under the said law: Prounided, further, That and/or unpaid tax assessments of the grantee from all valid and existing habilities, fines, penalties, surcharges

(I5) days after its publication in the Official Gazette or in a newspaper of general circuation. SEo. I5. Effectivity. --- This Act shall take effoct fifteen

Approved.

f3 AQULINO KOKO"PIMENTELIII PANTALEON D. ALYAREZ

President of the Senate Sneaker of the Hoase of Represert tefives

on January 16, 2017, amended by the Senate on March 13, 2017. and which amendments were concurred in by the House of Representatives waa passed by the House of Represontatives Representatives on March ii, 20l7. This Act which originated in the House Oo

LUTGARDOB.BARBO C ESAR STRMTPAREJA Secretary of the Senate House of Representatives Secretr Gcheral

Approved: APR 2 1 Z017

RODRICO ROA. DUTERTE

President of the Philippines

REPUALIC OF THE PHILIPPIARS :..a.2 PRRD ZOi6 Cee - 002371 O

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