Franchise for Reliance Broadcasting Inc.

Franchise grant and covered systems

Section 1 grants Reliance Broadcasting Unlimited, Inc. (the “grantee”), including its successors or assigns, the franchise to construct, install, establish, operate and maintain radio and television broadcasting stations for commercial purposes and in the public interest.
The franchise covers broadcasting in the Philippines where frequencies and/or channels are still available for radio and television broadcasting, including digital radio and television systems (Section 1).
The franchise covers IP-related services and IP-value-added services through microwave, satellite or whatever means, including the use of any new technologies in radio and television systems, with corresponding technological auxiliaries and facilities (Section 1).
The franchise covers special broadcast and other program and distribution services and relay stations (Section 1).

Operational standard and interference limits

The grantee must construct and operate its stations or facilities so that, at most, they 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).
Operations must not diminish the grantee’s own right to use its selected wavelengths or frequencies and must maintain the quality of transmission or reception to maximize service rendition and/or availability (Section 2).

NTC permits, spectrum authorization, and timing

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

Public service duties and broadcast restrictions

The grantee must provide adequate public service time so government can reach the population on important public issues through the broadcasting stations or facilities (Section 4).
The grantee must provide sound and balanced programming at all times (Section 4).
The grantee must assist in the functions of public information and education (Section 4).
The grantee must conform to the ethics of honest enterprise (Section 4).
The grantee must not use its stations or facilities to broadcast obscene and indecent language, speech, actor scene, or for the dissemination of deliberately false information or willful misrepresentation to the detriment of the public interest, or to incite, encourage or assist in subversive or treasonable acts (Section 4).

Government takeover and spectrum as privilege

In times of war, rebellion, public peril, calamity, emergency, disaster or disturbance of peace and order, Section 5 reserves a special right to the President of the Philippines to:
- temporarily take over and operate the grantee’s stations or facilities;
- temporarily suspend operation of any station or facility for public safety, security, and public welfare; or
- authorize temporary use and operation by any government agency, with due compensation to the grantee during the period of such government operation (Section 5).
The Act states that the radio spectrum is a finite resource part of national patrimony and that its use is a privilege conferred by the State, which may be withdrawn anytime after due process (Section 5).

Franchise duration and automatic revocation triggers

The franchise term is twenty-five (25) years, unless sooner revoked or cancelled (Section 6).
The franchise is ipso facto revoked if the grantee fails to comply with any of the following conditions (Section 6):
- (a) Commence operations within one (1) year from the approval of its operating permit, by the NTC;
- (b) Operate continuously for two (2) years; and
- (c) Commence operations within three (3) years from the effectivity of this Act.

Acceptance, bond, and compliance consequences

The grantee must give written acceptance of the franchise within sixty (60) days from the effectivity of this Act (Section 7).
Upon giving acceptance, the grantee must exercise the privileges granted under the Act (Section 7).
Nonacceptance renders the franchise void (Section 7).
The grantee must file a bond with the NTC in an amount that the NTC shall determine to guarantee compliance with and fulfillment of the franchise conditions (Section 8).
If, after three (3) years from approval of the grantee’s permit by the Commission, the grantee has fulfilled the same, the bond is cancelled by the Commission (Section 8).
Otherwise, the bond is forfeited in favor of the government and the franchise is ipso facto revoked (Section 8).

Programming self-regulation and franchise cancellation

The grantee must not require any previous censorship of any speech, play, act or scene, or other matter to be broadcast (Section 9).
During any broadcast, the grantee must 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 if the language used or the theme is indecent or immoral (Section 9).
Willful failure to make such required cut-off constitutes a valid cause for cancellation of the franchise (Section 9).

Government indemnity and franchise transfer limits

The grantee must hold the national, provincial, city and municipal governments harmless from all claims, accounts, demands or actions arising out of accidents or injuries (to property or persons) caused by construction or operation of the grantee’s stations (Section 10).
The grantee may not lease, transfer, grant the usufruct of, sell, or assign the franchise or the rights and privileges acquired thereunder (Section 11).
The grantee may not merge with any other corporation or entity, and the grantee’s controlling interest may not be transferred whether as a whole or in parts and whether simultaneously or contemporaneously to any other person/entity, without the prior approval of the Congress of the Philippines (Section 11).
Any sale, transfer, or assignment must impose the Act’s conditions, terms, restrictions and limitations on the person or entity receiving the franchise (Section 11).

Ownership dispersal and equality clause

Within five (5) years from achieving the status of a national broadcasting network, the grantee must offer at least thirty percent (30%) (or a higher percentage that may be provided by law) of its outstanding capital stock in any securities exchange in the Philippines (Section 12).
A “national broadcasting network” is defined as operating three (3) or more radio and/or television stations (Section 12).
Noncompliance with the ownership dispersal requirement renders the franchise ipso facto revoked (Section 12).
The Equality Clause requires that any advantage, favor, privilege, exemption, or immunity granted under existing franchise, or which may later be granted for radio and television broadcasting, ipso facto becomes part of this franchise and is accorded to the grantee immediately and unconditionally (Section 13).
The Equality Clause does not apply to or affect provisions of broadcasting franchises concerning territory covered, life span of the franchise, or type of service authorized (Section 13).

Future general broadcast policy law and reporting

The grantee must comply with and be subject to a general broadcast policy law that Congress may enact (Section 14).
The grantee must submit an annual report to the Congress of the Philippines on its compliance with franchise terms and conditions and on its operations within sixty (60) days from the end of every year (Section 15).

Separability, amendment/repeal, and nonexclusivity

If any section or provision of the Act is held invalid, the remaining provisions not affected remain valid (Section 16).
Congress may amend, alter or repeal the franchise when public interest requires, and the franchise must not be interpreted as an exclusive grant of the privileges provided in the Act (Section 17).