APPENDIX

Exhibit 1. Map of the Philippines and its Surroundings

Source: The CIA World Factbook 2001

Exhibit 2. Executive Order No. 59

PRESCRIBING THE POLICY GUIDELINES FOR COMPULSORY INTERCONNECTION OF AUTHORIZED PUBLIC TELECOMMUNICATIONS CARRIERS IN ORDER TO CREATE A UNIVERSALLY ACCESSIBLE AND FULLY INTEGRATED NATIONWIDE TELECOMMUNICATIONS NETWORK AND THEREBY ENCOURAGE GREATER PRIVATE SECTOR INVESTMENT IN TELECOMMUNICATIONS

WHEREAS, in recognition of the vital role of communications in nation-building, it has become the objective of government to promote advancement in the field of telecommunications and the expansion of telecommunications services and facilities in all areas of the Philippines;

WHEREAS, there is a need to enhance effective competition in the telecommunications industry in order to promote the State policy of providing the environment for the emergence of communications structures suitable to the balanced flow of information into, out of, and across the country;

WHEREAS, there is a need to maximize the use of telecommunications facilities available and to encourage investment in telecommunications infrastructure by service providers duly authorized by the National Telecommunications Commission (NTC);

WHEREAS, there is a need to ensure that all users of the public telecommunications service have access to all other users of the service wherever they may be within the Philippines at an acceptable standard of service and at reasonable cost;

WHEREAS, the much needed advancement in the field of telecommunications and expansion of telecommunications services and facilities will be promoted by the effective interconnection of public telecommunications carriers or service operators;

WHEREAS, the Supreme Court of the Philippines, in the case of Philippine Long Distance Telephone Co. v. The National Telecommunications Commission [G.R. No. 88404, 18 October 1990, 190 SCRA 717, 734], categorically declared that "Rep. Act No. 6849, or the Municipal Telephone Act of 1989, approved on 8 February 1990, mandates interconnection providing as it does that ‘all domestic telecommunications carriers or utilities … shall be interconnected to the public switch telephone network.’";

WHEREAS, under Executive Order No. 546 dated 23 July 1979, as amended, the NTC has the power, as the public interest may require, "to encourage a larger and more effective use of communications facilities, and to maintain effective competition among private entities whenever the NTC finds it reasonably feasible"; and

WHEREAS, there is a need to prescribe the consolidated policy guidelines to implement Rep. Act No. 6849 and Executive Order No. 546, as amended. NOW, THEREFORE, I, FIDEL V. RAMOS, President of the Republic of the Philippines, by virtue of the powers vested in me by law, do hereby order:

• Section 1. The NTC shall expedite the interconnection of all NTC authorized public telecommunications carriers into a universally accessible and fully integrated nationwide telecommunications network for the benefit of the public.

• Section 2. Interconnection between NTC authorized public telecommunications carriers shall be compulsory. Interconnection shall mean the linkage, by wire, radio, satellite or other means, of tow or more existing telecommunications carriers or operators with one another for the purpose of allowing or enabling the subscribers of one carrier or operator to access or reach the subscribers of the other carriers or operators.

• Section 3. Interconnection shall be established and maintained at such point or points of connections, preferably at the local exchanges level and at the junction side of trunk exchanges as are required within a reasonable time frame and shall be for sufficient capacity and in sufficient number to enable messages conveyed or to be conveyed to conveniently meet all reasonable traffic demands for conveyance of messages between the system of the parties involved in the interconnection.

• Section 4. Interconnection shall permit the customer of either party freedom of choice on whose system the customer wishes his call to be routed regardless which system provides the exchange line connecting to the local exchange. Such a choice may be done initially through the use of distinct carrier access code assigned to the relevant connectable system and ultimately, as the local exchange providers upgrade to stored-program-controlled (SPC) exchanges, comparatively efficient interconnect (CEI) or equal access pre-programmed option.

• Section 5. Interconnection shall be mandatory with regard to connecting other telecommunications services such as but not limited to value-added services of radio paging, trunking radio, store and forward systems of facsimile or messaging (voice or data), packet switching and circuit data switching (including the conveyance of messages which have been or are to be transmitted or received at such points of connection), information and other services as the NTC may determine to be in the interest of the public and in the attainment of the objective of a universally accessible, fully integrated nationwide telecommunications network.

• Section 6. Interconnection shall be negotiated and effected through bilateral negotiations between the parties involved subject to certain technical/operational and traffic settlement rules to be promulgated by the NTC; Provided, that if the parties fail to reach an agreement within ninety (90) days from date of notice to the NTC and the other party of the request to negotiate, the NTC shall, on application of any of the parties involved, determine the terms and conditions that the parties have not agreed upon but which appear to the NTC to be reasonably necessary to effect a workable and equitable interconnection and traffic settlement.

• Section 7. Interconnection among public communications carriers shall be effected in such a manner that permits rerouting of calls from an international gateway operator which is rendered inoperative, whether in whole or in part, in the event of strikes, lock-outs, disasters, calamities and similar causes, to another international gateway operator not so affected. A public telecommunications carrier shall be allowed such permits to operate an international gateway as may be necessary to service its own network requirements; Provided, that its subsidiaries shall not be given a permit to operate another international gateway.

• Section 8. In prescribing the applicable technical/operational and traffic settlement rules, the NTC shall consider the following:

  8.1	The technical/operational rules should conform with the relevant recommendations of the Consultative Committee on International Telegraph and Telephone (CCITT) and the International Telecommunications Union (ITU).
  8.2	For traffic settlement rules: Either meet-on-the-air and/or midpoint circuit interconnection between parties; For local exchange point of interconnection, settlement shall be on the basis of volume of traffic on the local connection based on per minute with day and night rate differential. In case of store and forward services for facsimile, data and voice mail, settlement shall be on the basis of equivalent monthly trunk line charges as generally charged by the local exchange carrier (LEC) to its customer owning their own PABX; For junction exchange point of interconnection, settlement shall be on the basis of volume of traffic carrier over: short haul connection not exceeding 150 kilometers; and long haul connection exceeding 150 kilometers. Similarly, a per minute rate shall be evolved with day and night differential. The determination of the per minute rate is based on the principle of recognizing recovery of the toll related cost and fair return of the investment of the facilities employed in making the toll call exchange between the systems. Subsidies which shall be approved on the basis of the sound public policy shall be allowed in two (2) ways: for operator assisted calls – an operator surcharge kept by the system that employs the operator; and access charge – the principle of access charge is an assistance to the unprofitable rural telephone development, remote pay stations, etc., thereby assuring the universal service obligation of the PSTN operators. The introduction of the access charge may result in a charge that will be passed on to the subscribers of the PSTN.

• Section 9. Interconnection shall at all times satisfy the requirements of effective competition and shall be effected in a non-discriminatory manner.

• Section 10. The Points of Connection (PC) between public telecommunications carriers shall be defined by the NTC, and the apportionment of costs and division of revenues resulting from interconnection of telecommunications networks shall be approved or prescribed by the NTC.

• Section 12. Interconnection and revenue-sharing agreements approved or prescribed by the NTC may be revoked, revised, or amended as the NTC deems fit in the interest of the public service.

• Section 13. In the implementation of this Executive Order, the NTC may, after due notice and hearing, impose the following penalties in case of violation of any of the provisions hereof:

  13.1	Imposition of such administrative fines, penalties and sanctions as may be allowed or prescribed by existing laws;
  13.2	Suspension of further action on all pending and future applications for permits, licenses or authorizations of the violating carrier or operator and in which particular case, the NTC shall be exempted from compliance with the provisions of Executive Order No. 26 dated 7 October 1992 on the period for the disposition of cases or matters pending before it;
  13.3	With the approval of the President, directive to the appropriate government financial or lending institutions to withhold the releases on any loan or credit accommodation which the violating carrier or operator may have with them;
  13.4	Disqualification of the employees, officers or directors of the violating carrier or operator from being employed in any enterprise or entity under the supervision of the NTC; and
  13.5	In appropriate cases, suspension of the authorized rates for any service or services of the violating carrier or operator without disruption of its services to the public.

• Section 14. The NTC is directed to promulgate the implementing rules to this Executive Order within ninety (90) days from the date of effectivity hereof.

• Section 15. All executive orders, administrative orders, and other issuance inconsistent herewith are hereby repealed, modified or amended accordingly.

• Section 16. This Executive Order shall take effect immediately. DONE in the City of Manila, this 24th day of February in the year of Our Lord, Nineteen Hundred and Ninety-Three.

(Sgd.) FIDEL V. RAMOS
By the President
(Sgd.) ANTONIO T. CARPIO
Chief Presidential Legal Counsel

Exhibit 3. Executive Order No. 109

POLICY TO IMPROVE THE PROVISION OF LOCAL EXCHANGE CARRIER SERVICE

WHEREAS, local exchange service is fundamental to the goal of providing universal access to basic and other telecommunications services;

WHEREAS, during the development phase, cost-based pricing of services such as national and international long distance and other telecommunications services may be employed to generate funds which my then be used to subsidize the local exchange service;

WHEREAS, while the telecommunications sector as a whole is profitable, the profits mainly come from the toll services particularly from the international long distance service; and

WHEREAS, there is a need to promulgate new policy directives to meet the targets of Government through the National Telecommunications Development Plan (NTDP) of the Department of Transportation and Communications (DOTC), specifically: (1) to ensure the orderly development of the telecommunications sector through the provision of service to all areas of the country, (2) to satisfy the unserviced demand for telephones and (3) to provide healthy competition among authorized service providers.

NOW, THEREFORE, I, FIDEL V. RAMOS, President of the Republic of the Philippines, by virtue of the powers vested in me by law do hereby order:

• Section 1. Definition of Terms. The following definitions shall apply within the context of this policy:

  1. Basic Telecommunications Service – refers to local exchange residence and business telephone service and telegraph service without additional features;

  2. Cost-based pricing – refers to a system of pricing in which the actual cost of providing service establishes the basic charge to which a fixed mark-up is added to collect a standard charge to all users without discrimination;

  3. Local Exchange Carrier Service – refers to a telecommunications service, primarily but not limited to voice-to-voice service, within a contiguous geographic area furnished to individual Subscribers under a common local exchange rate schedule;

  4. Value-based pricing – also known as value of service pricing refers to a system of pricing where cost of .service establishes the minimum charge and a variable mark-up is added to collect revenue from those who value .the service more highly; and

  5. Universal Access – refers to the availability of reliable and affordable telecommunications service in both urban and rural areas of the country.

• Section 2 Objective. The objective of this policy is to improve the provision of local exchange service in unserved and underserved areas as defined by the National Telecommunications Commission (NTC), thus promoting universal access to basic telecommunications service.

• Section 3. General Policy. The Government shall pursue the policy of democratization in the ownership and operation of telecommunication facilities and services.

• Section 4. Cross-Subsidy. Until universal access to basic telecommunications service is achieved, and such service is priced to reflect actual costs, local exchange service- shall continue to be cross-subsidized by other telecommunications services within the same company.

• Section 5. Service- Packaging. Authorized international gateway operators shall be required to provide local exchange service in unserved and underserved areas, including Metro Manila, within three (3) years from the grant of an authority from the NTC, under the following guidelines:

  1. Authorized gateway operators shall provide a minimum of three hundred (300) local exchange lines per international switch termination;

  2. At least one (1) rural exchange line shall be provided for every ten (10) urban local exchange lines installed;

  3. The establishment of Public Calling Offices at the rural barangay level shall be given an appropriate credit by the NTC towards the obligation to provide local exchange service.

     The above figures are derived from the following factors: number of exchange lines, number of international switch-terminations, traffic, grade of service and demand;

  4. No permit for an international gateway facility shall be granted an applicant unless there is a clear showing that it can establish the necessary foreign correspondenceships; and

  5. Carriers already providing local exchange service in accordance with Section (a), (b) and (c) shall be authorized to operate an international gateway subject to applicable laws.

• Section 6. Subsidiary. The subsidiaries of a public telecommunication carrier operating an authorized international gateway shall not be allowed to operate another gateway in accordance with Executive Order No. 59 (1993).

  For this purpose, a telecommunications company shall be considered as a subsidiary if any or all of the following conditions exist:

  1. The two companies share the services of key operating and management personnel;

  2. The shareholdings of one company, together with the shareholdings of its stockholders, in the other company aggregate more than fifty percent (50%) of the outstanding capital stock of the letter company; or

  3. One company and its stockholders have a combined exposure in the other company in the form of loans, advances, or asset-lease equivalent to more than fifty percent (50%) of the capital accounts of the other company.

• Section 7. Cellular Mobile Telephone System. Authorized international gateway operator may also be authorized to provide Cellular Mobile Telephone System (CMTS) service and other non-basic telecommunications service which are possible source of subsidy for local exchange carrier service.

• Section 8. Non-Basic Services. Authorized providers of other non-basic telecommunications service which are possible sources of subsidy shall be required to provide local exchange carrier service in accordance with guidelines, rules and regulations prescribed by the NTC.

• Section 9. Duration of Services. The obligation to provide local exchange carrier service shall remain in force for as long as the service providers described in Sections 5, 7 and 8 hold their authorizations to provide their respective non-basic services.

• Section 10. Other Requirements. The foregoing provisions shall be without prejudice to the other requirements for the grant of franchises and Certificates of Public Convenience and Necessity.

• Section 11. Interconnection Requirement. All telecommunications service networks shall be interconnected in a non-discriminatory manner in accordance with Executive order No. 59 (1993) and its implementing guidelines.

• Section 12. Financial Reporting Requirements. The internal subsidy flows shall be made explicit in the financial reporting system of the telecommunications service providers.

• Section 13. Policy Implementation. The NTC is hereby directed to promulgate the guidelines, rules and regulations to implement this Executive Order within (30) thirty days from the effective date of this Executive Order.

• Section 14. Violations. Any violation of the Executive Order shall be subject to the same penalties provided for in Section 13 of Executive Order No. 59 (1993).

• Section 15. Transitory Provisions. Existing telecommunications servicee providers described in Section 5, 7 and 8 shall have a period of five (5) years to comply with the above requirements to provide local exchange service.

• Section 16. Pending Applications. Telecommunications service providers with existing and pending applications for International Gateway Facility, Cellular Mobile System (CMTS) and other Value Added Services (VAS) providers need not revise their applications with the NTC. However, upon issuance of the Provisional Authority of CPCN, as the case may be, they shall be given a period of three (3) months within which to submit and file the necessary applications for local exchange service in accordance with the provisions hereof.

• Section 17. Repealing Clause. All executive orders, administrative orders and other Executive issuance inconsistent herewith are hereby repealed, modified or amended accord.

• Section 18. Effectivity. This Executive Order shall take effect immediately.

  DONE in the City of Manila, this 12th day of July in the year of the Lord, Nineteen Hundred and Ninety-Three.

(sgd) FIDEL V. RAMOS
By the President:
TEOFISTO T. GUINGONA, JR.
Executive Secretary

Exhibit 4. Globe Telecom's Business Vision, Mission, and Value Statements

Vision

The pursuit of our mission is guided by the company's vision and actualizes our corporate values:

"Globe Telecom provides more than just lines. We advance the quality of life of individuals and organizations by delivering the SOLUTIONS to their communications-based needs. We provide quality and personalized service that exceeds our customers' needs and expectations. We are driven by a culture of excellence and innovation, enabled by best-in-market talent and superior operating effectiveness and flexibility. WE ARE THE COMPANY OF CHOICE BECAUSE, IN WHAT WE PROVIDE, WE ARE THE BEST."

Mission

Our mission is to advance the quality of life by delivering the best solutions to the communications-based needs of our subscribing publics. We take lead of the industry as the service provider of choice. We secure our competitive edge by packaging solutions enhanced by pioneering innovations in service delivery, customer care, and the best appropriate technologies. We acknowledge the importance of our key stakeholders. In fulfilling our mission, we create value for:

• Customers: Customer satisfaction is the key to our success. We help individuals improve their way of life and organizations do their business better.

• Shareholders: Our business is sustained by the commitment of Ayala Corporation and Singapore Telecom International. We take pride and build on the value our shareholders provide. In return, we maximize the value of their investments.

• Employees: Our human resources are our most valuable assets. We provide gainful employment that promotes the dignity of work and professional growth and thus attract and retain best-in-market talent.

• Community: Community support is vital. We will act as responsible citizens in the communities in which we operate.

• Government: We are the partners of government in nation building. We support and participate in the formation of policies, programs and actions that promote fair competition, judicious regulation and economic prosperity.

Values

These values are the anchor of our corporate existence:

• Customer Commitment—a steadfast pledge to provide only the best to the customer

• Excellence—the relentless pursuit of outstanding performance

• Integrity—a faithful adherence to the highest ethical standards

• Primacy and Worth of the Individual—respect for every employee as a unique individual, a professional in his own right, and with his own sense of dignity and self-worth

• Teamwork—the collective drive to achieve the company's vision and mission and uphold the company's values

• Commitment to Society and the Environment—a responsibility to uplift the quality of people's lives and protect the environment

Exhibit 5. Globe Telecom Leadership

Board of Directors	Executive Management Team
Jaime Agusto Zobel de Ayala II Chairman	Gerardo C. Ablaza, Jr. President & Chief Executive Officer
Lee Shin Koi Co-Vice Chairman	Edward Ying Chief Operating Adviser
Delfin L. Lazaro Co-Vice Chairman	Gil B. Genio Islacom Chief Operating Officer & Senior Vice President
Renato O. Marzan Corporate Secretary	Manuel R. De los Santos Senior Vice President – Wireless Data
Gerardo C. Ablaza, Jr.	Delfin C. Gonzalez, Jr. Senior Vice President & Chief Financial Officer
Fernando Zobel de Ayala	Oscar L. Contreras, Jr. Senior Vice President – Human Resources
Lucas Chow	Rodolfo A. Salalima Senior Vice President – Corporate & Regulatory Affairs
Rufino Luis T. Manotok	Rafael L. Llave Vice President – Logistics & Management Services
Mark Anthony N. Javier	Lizanne C. Uychaco Vice President – Retail Operations & Centers Management
Tay Chek Khoon	Rodell A. Garcia Vice President & Chief Information Officer
Edward Ying	Rebecca V. Ramirez Vice President – Internal Audit
	Emmanuel A. Aligada Vice President – Customer Service
	Joaquin L. Teng, Jr. Vice President – Fixed Network Business
	John W. Young Vice President – Carrier Business

Exhibit 6. Key Historical Advances in Globe Telecom, 1994–2002

Source: Globe Telecom Product Development Unit