Section 7Sec./Art. 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 Commissions 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 Treasury the sum of One hundred thousand pesos (₱100,000), or negotiable bonds of the Philippine government or other securities approved by the national government with the face value of One hundred thousand pesos (₱100,000).

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 Treasury, 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.