Granting Servotron Industries, Inc. a Franchise to Construct, Install, Operate, and Maintain Radio and Television Broadcasting Stations Throughout the Philippines

Case Overview and Summary

Nature and Scope of Franchise (Section 1):
- Grants Servotron Industries, Inc. a franchise to construct, install, operate, and maintain radio and/or television broadcasting stations throughout the Philippines for commercial purposes and public interest.
- Allows the use of available frequencies/channels, digital television systems, microwave, satellite, new technologies, and auxiliaries/facilities.
- Covers special broadcast, program distribution services, and relay stations.

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

Prior Approval of NTC (Section 3):
- Grantee must secure permits/licenses from NTC for construction and operation of stations/facilities.
- NTC shall not unreasonably withhold or delay granting such authority.
- NTC can revoke or suspend permits/licenses after due process for franchise violations.
- NTC may recommend to Congress the revocation of franchise for violations.

Responsibility to the Public (Section 4):
- Provide free and reasonable public service time for government, public issues, announcements, and warnings.
- Provide sound and balanced programming, promote public participation, assist in public information and education.
- Conform to ethics of honest enterprise, promote audience sensibility and empowerment, including closed captioning.
- Not broadcast obscene/indecent content, false information, or incite subversive/treasonable acts.
- Public service time shall be maximum 10% of paid commercials/ads, allocated to government branches, Judiciary, Constitutional Commissions, and recognized international humanitarian organizations.
- NTC can increase public service time during extreme emergencies/calamities.
- Allocate minimum 15% of daily total airtime to child-friendly shows per Children's Television Act of 1997.

Right of the Government (Section 5):
- Radio spectrum is part of national patrimony, and its use is a privilege that can be withdrawn.
- President can temporarily take over/operate stations during war, rebellion, public peril, calamity, emergency, disaster, or disturbance of peace and order.
- President can temporarily suspend operations for public safety/welfare or authorize temporary use by government agency with due compensation.

Term of Franchise (Section 6):
- Franchise is effective for 25 years from the Act's effectivity, unless sooner revoked or cancelled.
- Franchise is deemed revoked if grantee fails to operate continuously for 2 years.

Self-regulation and Undertaking (Section 7):
- No prior censorship, but grantee is free from liability for broadcast violating law/private rights.
- Grantee must cut off broadcast tending to propose/incite treason, rebellion, sedition, or indecent/immoral content.
- Willful failure to do so is valid cause for franchise cancellation.

Warranty to National and Local Governments (Section 8):
- Grantee shall hold national, provincial, city, and municipal governments free from claims/liabilities arising from accidents during construction or operation.

Employment Opportunities (Section 9):
- Grantee shall create employment opportunities and accept on-the-job trainees.
- Priority shall be given to residents where grantee's principal office is located.
- Grantee shall comply with applicable labor standards and allowance entitlement.
- Employment opportunities shall be reflected in the annual GIS submitted to SEC.

Sale, Lease, Transfer, Grant of Usufruct, or Assignment (Section 10):
- Grantee cannot sell, lease, transfer, grant usufruct, or assign franchise/rights without prior approval of Congress.
- Congress must be informed within 60 days after such transaction.
- Failure to report ownership change shall revoke franchise ipso facto.
- Any entity receiving the franchise shall be subject to the same conditions/terms.

Dispersal of Ownership (Section 11):
- Grantee shall offer at least 30% of outstanding capital stocks to Filipino citizens in a securities exchange within 5 years to encourage public participation.
- If public offer is not applicable, other methods of public participation must be implemented.
- Noncompliance shall revoke franchise ipso facto.

Reportorial Requirement (Section 12):
- Grantee shall submit an annual report on compliance and operations to Congress through respective committees on or before April 30.
- Report shall include business updates, audited financial statements, latest GIS, NTC certification, and update on dispersal of ownership.
- Reportorial compliance certificate from Congress is required before NTC accepts permit/certificate applications.

Fine (Section 13):
- Failure to submit annual report shall be penalized by a fine of P500 per working day of noncompliance, collected by NTC and remitted to Bureau of Treasury.

Equality Clause (Section 14):
- Any advantage/privilege granted under existing/future franchises for radio/TV broadcasting shall be accorded to this grantee upon Congress' approval, except for territorial coverage, term, or type of service.

Repealability and Nonexclusivity (Section 15):
- Franchise is subject to amendment, alteration, or repeal by Congress in public interest.
- Franchise shall not be interpreted as an exclusive grant of privileges.

Separability Clause (Section 16):
- If any section/provision is held invalid, other provisions shall remain valid.

Repealing Clause (Section 17):
- All laws/issuances inconsistent with this Act are repealed, amended, or modified accordingly.

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