Franchise Grant to Baycomms Broadcasting Corp.

Manner of operation and interference limit

Section 2 requires the grantee’s stations or facilities to be constructed and operated to result in only the minimum interference on the wavelengths or frequencies of existing stations or other stations that may be established by law.
Section 2 protects the grantee’s right to use its selected wavelengths or frequencies and to maintain the quality of transmission or reception.
Section 2 directs operations to maximize the grantee’s service rendition and/or availability.

NTC permits and authority to use frequencies

Section 3 requires the grantee to secure from the National Telecommunications Commission (NTC) the appropriate permits and licenses for the construction and operation of its stations and facilities.
Section 3 prohibits use of any frequency in the radio/television spectrum without authorization from the NTC.
Section 3 commands that the NTC shall not unreasonably withhold or delay the grant of authority.

Public-service duties and content restrictions

Section 4 requires the grantee to provide adequate public service time so the government can reach the population on important public issues through the broadcasting stations or facilities.
Section 4 mandates sound and balanced programming at all times.
Section 4 requires the grantee to assist in public information and education, and to conform to the ethics of honest enterprise.
Section 4 prohibits the grantee from using its stations or facilities for broadcasting obscene and indecent language, speech, act or scene, or for disseminating deliberately false information or willful misrepresentation to the detriment of the public interest.
Section 4 prohibits content that incites, encourages, or assists in subversive or treasonable acts.

Government takeover and spectrum as privilege

Section 5 reserves to the President of the Philippines a special right, in times of war, rebellion, public peril, calamity, emergency, disaster, or disturbance of peace and order, to temporarily take over and operate the grantee’s stations or facilities.
Section 5 authorizes the President to temporarily suspend operation of any station or facility in the interest of public safety, security, and public welfare.
Section 5 allows the President to authorize temporary use and operation of the stations or facilities by any government agency.
Section 5 requires due compensation to the grantee for the use during periods of temporary operation by government or takeover.
Section 5 characterizes the radio spectrum as a finite resource part of national patrimony, and states that its use is a privilege conferred by the State that may be withdrawn anytime, after due process.

Franchise term, revocation triggers, and acceptance

Section 6 sets the franchise term at twenty-five (25) years from the date of effectivity of the Act, unless sooner revoked or cancelled.
Section 6 provides that the franchise is ipso facto revoked if the grantee fails to comply with any of these conditions:
- Commence operations within one (1) year from NTC approval of its permit.
- Operate continuously for two (2) years.
- Commence operations within three (3) years from the effectivity of the Act.
Section 7 requires written acceptance of the franchise within sixty (60) days after the Act’s effectivity.
Section 7 provides that upon acceptance, the grantee shall exercise the privileges granted, and nonacceptance renders the franchise void.

Bonding requirement and forfeiture

Section 8 requires the grantee to file a bond issued in favor of the NTC.
Section 8 states that the NTC determines the bond amount to guarantee compliance and fulfillment of franchise conditions.
Section 8 provides that if, after three (3) years from NTC approval of its permit, the grantee fulfills the conditions, the bond shall be cancelled by the NTC.
Section 8 provides that otherwise the bond is forfeited in favor of the government, and the franchise is ipso facto revoked.

Tax obligations and filing/audit

Section 9 requires the grantee (and successors/assigns) to pay the same taxes on real estate, buildings, and personal property, exclusive of this franchise, as other persons or corporations are required by law to pay.
Section 9 imposes Value-Added Tax under Republic Act No. 7716, as amended, on all gross receipts of the radio/television business transacted under the franchise.
Section 9 requires continuation of income taxes payable under Title II of the National Internal Revenue Code, pursuant to Section 2 of Executive Order No. 72, unless that enactment is amended or repealed (and then the amendment or repeal applies).
Section 9 requires filing of the tax return with and payment of taxes to the Commissioner of Internal Revenue or duly authorized representatives under the National Internal Revenue Code.
Section 9 provides that the return is subject to audit by the Bureau of Internal Revenue.

No pre-censorship and live cut-off rule

Section 10 prohibits the grantee from requiring previous censorship of any speech, play, act or scene, or other matter to be broadcast.
Section 10 requires the grantee, during any broadcast, to cut off from the air any speech, play, act or scene, or other matter being broadcast if:
- It tends to propose and/or incite treason, rebellion, or sedition, or
- The language used is indecent or immoral, or the theme is indecent or immoral.
Section 10 provides that willful failure to cut off constitutes a valid cause for cancellation of this franchise.

Government hold-harmless on accidents

Section 11 requires the grantee to hold the national, provincial and municipal governments harmless from all claims, accounts, demands, or actions arising out of accidents or injuries to property or persons caused by the grantee’s construction or operation of its stations.

Transfer limits and congressional approval

Section 12 prohibits the grantee from leasing, transferring, granting the usufruct of, selling, or assigning the franchise or the rights and privileges acquired thereunder to any person, firm, company, corporation, or other commercial or legal entity.
Section 12 prohibits the grantee from merging with any other corporation or entity.
Section 12 prohibits transfer of the grantee’s controlling interest, whether as a whole or in parts and whether simultaneously or contemporaneously, to any such person or entity.
Section 12 requires prior approval of Congress of the Philippines for any permitted sale, transfer, assignment, or controlling interest transfer.
Section 12 provides that any person or entity to which the franchise is sold, transferred, or assigned is subject to the same conditions, terms, restrictions, and limitations of the franchise.

Ownership dispersal requirement for networks

Section 13 requires the grantee, to encourage public participation in public utilities, to offer at least thirty percent (30%) of its outstanding capital stock (or a higher percentage if later provided by law) in any securities exchange in the Philippines.
Section 13 requires this offering to occur within five (5) years from the time the grantee achieves the status of a national broadcasting network.
Section 13 defines a “national broadcasting network” as one that operates three or more radio and/or television stations.
Section 13 provides that noncompliance renders the franchise ipso facto revoked.

Compliance with future general broadcast policy

Section 14 requires the grantee to comply with and be subject to the provisions of a general broadcast policy law that Congress may hereafter enact.

Franchise reports to Congress

Section 17 requires the grantee to submit an annual report to Congress of the Philippines on:
- compliance with the franchise terms and conditions, and
- its operations,
  within sixty (60) days from the end of every year.

Effectivity and publication requirement

Section 18 provides that the Act takes effect fifteen (15) days from the date of its publication in at least two (2) newspapers of general circulation in the Philippines.

Separability and nonexclusivity

Section 15 provides a separability rule: if any section or provision is held invalid, all other provisions not affected remain valid.
Section 16 states the franchise is subject to amendment, alteration, or repeal by Congress when the public interest so requires, and is not to be interpreted as an exclusive grant of the privileges provided.