Granting Allied Broadcasting Center, Inc. a Franchise to Construct, Install, Operate, and Maintain Radio and Television Broadcasting Stations in the Philippines

Case Overview and Summary

Nature and Scope of Franchise (Section 1):
- Grants Allied Broadcasting Center, Incorporated (the grantee) a franchise to construct, install, operate, and maintain radio and television broadcasting stations in the Philippines for commercial purposes and public interest.
- Allows the use of available frequencies and channels for radio and television broadcasting, including digital television system, through microwave, satellite or any new technology.
- Permits the use of technological auxiliaries, facilities, special broadcast, program distribution services, and relay stations.

Manner of Operation of Stations or Facilities (Section 2):
- The stations or facilities shall be constructed and operated in a manner that results in minimum interference on existing stations' wavelengths or frequencies.
- The grantee's privilege to use its assigned wavelengths or frequencies and the quality of transmission or reception shall not be diminished.

Prior Approval of the National Telecommunications Commission (NTC) (Section 3):
- The grantee shall secure appropriate permits and licenses from the NTC for the construction and operation of its stations or facilities.
- The grantee shall not use any frequency without authorization from the NTC.
- The NTC shall not unreasonably withhold or delay the grant of authority.
- The NTC has the authority to revoke or suspend permits or licenses after due process for any violation of the franchise provisions.
- The NTC may recommend to Congress the revocation of the franchise for any violation.

Responsibility to the Public (Section 4):
- The grantee shall provide free public service time, which is reasonable and sufficient, to enable the government to reach the public on important issues, announcements, and warnings.
- The public service time shall be equivalent to a maximum of 10% of paid commercials or advertisements, allocated to the Executive, Legislative, and Judiciary branches, Constitutional Commissions, and recognized international humanitarian organizations.
- The NTC shall increase the public service time in case of extreme emergency or calamity.
- The grantee shall provide sound and balanced programming, promote public participation, assist in public information and education, conform to ethics, promote audience sensibility and empowerment including closed captioning, and not broadcast obscene, indecent, false, or treasonable content.
- Pursuant to the Children's Television Act of 1997, the grantee shall allot a minimum of 15% of the daily total airtime to child-friendly shows.

Right of the Government (Section 5):
- The radio spectrum is part of the national patrimony, and its use is a privilege conferred by the State that may be withdrawn after due process.
- The President has the right to temporarily take over, suspend the operation, or authorize temporary use of the grantee's stations or facilities during times of war, rebellion, public peril, calamity, emergency, disaster, or disturbance of peace and order, with due compensation to the grantee.

Term of Franchise (Section 6):
- The franchise shall be in effect for 25 years from the effectivity of this Act, unless sooner revoked or cancelled.
- The franchise shall be deemed ipso facto revoked if the grantee fails to operate continuously for 2 years.

Self-regulation by and Undertaking of the Grantee (Section 7):
- The grantee shall not require previous censorship, but shall cut off the airing of speech, play, act or scene that proposes or incites treason, rebellion, sedition, or is indecent or immoral.
- Willful failure to do so shall constitute a valid cause for the cancellation of the franchise.

Warranty in Favor of the National and Local Governments (Section 8):
- The grantee shall hold the national, provincial, city, and municipal governments free from all claims, liabilities, demands, or actions arising out of accidents causing injury to persons or damage to properties during the construction or operation of the stations.

Commitment to Provide and Promote the Creation of Employment Opportunities (Section 9):
- The grantee shall create employment opportunities and accept on-the-job trainees in its franchise operations, with priority given to residents of the place where the principal office is located.
- The grantee shall comply with applicable labor standards and allowance entitlement under existing labor laws, rules and regulations.
- The employment opportunities created shall be reflected in the General Information Sheet (GIS) submitted to the Securities and Exchange Commission (SEC) annually.

Sale, Lease, Transfer, Grant of Usufruct, or Assignment of Franchise (Section 10):
- The grantee shall not sell, lease, transfer, grant the usufruct of, nor assign the franchise or the rights and privileges acquired thereunder to any person, firm, company, corporation or other commercial or legal entity without the prior approval of Congress.
- The grantee shall inform Congress of any such transaction within 60 days after completion.
- Failure to report such change of ownership shall render the franchise ipso facto revoked.
- Any entity to which the franchise is sold, transferred, or assigned shall be subject to the same conditions, terms, restrictions, and limitations of this Act.

Dispersal of Ownership (Section 11):
- In accordance with the constitutional provision to encourage public participation in public utilities, the grantee shall offer at least 30% of its outstanding capital stocks, or a higher percentage as may be provided by law, to Filipino citizens in any securities exchange in the Philippines within 5 years from the effectivity of this Act.
- Noncompliance shall render the franchise ipso facto revoked.

Reportorial Requirement (Section 12):
- The grantee shall submit an annual report on its compliance with the franchise terms and conditions and on its operations to Congress on or before April 30 of every year during the term of the franchise.
- The annual report shall include an update on the roll-out, development, operation or expansion of business; audited financial statements; latest GIS officially submitted to the SEC, if applicable; certification of the NTC on the status of its permits and operations; and an update on the dispersal of ownership undertaking, if applicable.
- The reportorial compliance certificate issued by Congress shall be required before any application for permit or certificate is accepted by the NTC.

Fine (Section 13):
- Failure of the grantee to submit the requisite annual report to Congress shall be penalized by a fine of Five hundred pesos (P500.00) for each working day of noncompliance, to be collected by the NTC and remitted to the Bureau of the Treasury.

Equality Clause (Section 14):
- Any advantage, favor, privilege, exemption, or immunity granted under existing franchises or which may hereafter be granted for radio and television broadcasting, upon prior review and approval of Congress, shall become part of this franchise and shall be accorded immediately and unconditionally to the grantee, except for provisions concerning territorial coverage, term, or type of service authorized by the franchise.

Repealability and Nonexclusivity Clause (Section 15):
- This franchise shall be subject to amendment, alteration, or repeal by Congress when the public interest so requires and shall not be interpreted as an exclusive grant of the privileges provided.

Separability Clause (Section 16):
- If any section or provision of this Act is held invalid, all other provisions not affected shall remain valid.

Repealing Clause (Section 17):
- All laws, decrees, orders, resolutions, instructions, rules and regulations, and other issuances or parts thereof which are inconsistent with the provisions of this Act are hereby repealed, amended, or modified accordingly.

Effectivity (Section 18):
- This Act shall take effect 15 days after its publication in the Official Gazette or in a newspaper of general circulation.