Franchises and the law

By Atty. Rolex T. Suplico

I remember the late Ben “Boyong” Palma who first asked me to write a column for his newspaper The Sentinel in the early 1990s. I named my column Dura Lex, Sed Lex.  When The Sentinel closed, we went our separate ways. I dabbled in politics thereafter. Then, sometime in 2015, Lemuel “LF” Fernandez asked to write for the Daily Guardian. I agreed, but for some reason, politics again got the better of me, and I stopped. This time, I am back writing again for the Daily Guardian. And it’s still my old column – Dura Lex, Sed Lex. I wish to thank the Daily Guardian family, led by Mr. “LF”, the publisher, and Francis Allan “Kiko” Angelo, the Editor-In-Chief.

 

For my first article, I picked the following case because of its relevance to one of the hottest issues today, the fall of ABS-CBN. And this case is often quoted. I hope that you, dear readers, will enjoy reading this case and understand what had happened to ABS-CBN.

 

ARE FRANCHISES REQUIRED FOR RADIO AND TV STATIONS?

This question, which is relevant to the troubles of the media giant ABS-CBN, has already been decided 17 years ago in the case of Associated Communications & Wireless Services United Broadcasting Networks vs. NTC (GR No. 144109, Feb. 17, 2003), in a decision written by Justice Reynato Puno, who became the 22^nd Chief Justice (2006-2010) of the Supreme Court. The facts are as follows:

In 1931, Act No. 3846 was enacted into law. It provided that no one shall operate a radio station without first securing a franchise from Congress. In 1965, the Villaverde group, through Republic Act No. 4551, obtained a 50-year radio franchise from Congress. In 1969, RA 4551 was transferred to the Associated Communications & Wireless Services United Broadcasting Network, Inc. (ACWS), which then operated several radio stations around the country.

In 1974, Presidential Decree No. 576-A was enacted, terminating all radio or television franchises on Dec. 3, 1981. In 1979, Executive Order No. 546 was issued, creating the National Telecommunications Commission (NTC), and vested it with the power to issue Certificates of Public Convenience (CPC) for the operation of radio and television stations and to grant permits for the use of frequencies. ACWS’ franchise ended on Dec. 3, 1981, pursuant to PD 576-A. It continued to operate its radio stations based on permits granted by NTC.

On May 3, 1994, NTC, the Committee on Legislative Franchises of the House of Representatives and the Kapisanan ng mga Brodcaster sa Pilipinas signed a Memorandum of Understanding, to clear the confusion brought by conflicting laws, decrees and executive orders. They agreed that NTC shall issue temporary 2-year permits to radio and television broadcast stations, within which the permittees should file franchise applications with Congress not later than December 31, 1994. They also agreed not to renew the permits of those who would fail to secure franchises within the 2-year period. On Dec. 20, 1994 and prior to the deadline of Dec. 31, 1994, ACWS filed a franchise application.

Meantime, ACWS applied and secured from NTC a temporary permit dated July 7, 1995 to operate Channel 25 for 2 years. In 1996, NTC also authorized ACWS to increase Channel 25’s power output from 1 to 25 kW. It also granted ACWS a permit to purchase equipment for Channel 25. In May 14, 1997, ACWS timely applied for the renewal of its temporary permit.

In Oct. 28, 1997, the Committee on Legislative Franchises informed NTC that ACWS’ application for a franchise was not deliberated for its failure to submit the documentary requirements. On Nov. 17, 1997, NTC filed Administrative Case No. 98-009 against ACWS. On Feb. 26, 1998, it issued an order directing ACWS cease and desist from operating Channel 25 and  “to show cause why its assigned frequency should not be recalled.” After filing its answer on Mar. 17, 1998 and halfway through its presentation of evidence, ACWS filed a petition on May 4, 1998 with the Court of Appeals for mandamus, prohibition and damages to compel NTC to issue it a temporary permit to operate, which it had filed on May 14, 1997.

Meantime, on Aug. 17, 1998, NTC issued Memorandum Circular No. 14-10-98, which extended the deadline to Dec. 31, 1999 for securing a franchise from Congress, which application should have been filed not later than Nov. 30, 1998. If they fail to do so, their temporary permits would not be renewed. It added that: “Henceforth, no application/petition for Certificate of Public Convenience to establish, maintain and operate a broadcast station shall be accepted for filing without showing that the applicant has an approved Legislative Franchise.” On Sept. 2, 1998, ACWS beat the Nov. 30, 1998 deadline and filed House Bill No. 3216, seeking the grant of a radio and television franchise.

However, on Jan. 13, 1999, NTC rendered a decision in Administrative Case 98-009 against ACWS, which recalled Channel 25, denied its application for a temporary permit and ordered it to cease and desist from operating Channel 25 for lack of a legislative franchise. ACWS ran to the Court of Appeals, which, however, affirmed the NTC’s decision. The CA held that “a congressional franchise is required for the operation of radio and television broadcasting stations as this requirement was not expressly repealed by PD 576-A nor EO 546.” It explained that “without an express repeal, a subsequent law cannot be construed as repealing a prior law unless there is an irreconcilable inconsistency and repugnancy in the language of the new and the old laws, which (ACWS) failed to show.”

ACWS then filed a petition for review on certiorari with the Supreme Court, questioning the decision of the Court of Appeals. The issue presented is whether or not franchises are required to operate radio and television stations.

ACWS contended that television stations are not included under Act 3846 because in 1931, when the law was enacted, there were no TV stations in the country. It reasoned that TV stations are not covered under Act 3846 based on the rule on statutory construction that “what is not included in the law is deemed excluded.” It noted that NTC had issued it permits without requiring a franchise. It argued that its application for the renewal of its permit filed on May 14, 1997 did not require a franchise.

The Court upheld the decision of the Court of Appeals that “a congressional franchise is necessary for (ACWS) to operate Channel 25. Even assuming that Act No. 3846 applies only to radio stations and not to television stations as (ACWS) adamantly insists, the subsequent PD No. 576-A clearly shows in Section 1 that a franchise is required to operate radio as well as television stations.”

The Court explained that the regulatory and technical aspect of the legal process to the full exercise of the privilege to operate radio and television stations is different from the grant of the franchise from Congress. “The former covers matters dealing with the technical side of radio and television broadcasting, while the latter involves the exercise by the legislature of an exclusive power resulting in a franchise or grant under authority of government, conferring a special right to do an act or series of acts of public concern.”

The Court stated that “there is no clear showing that the laws here involved cannot stand together, the presumption is against inconsistency or repugnance, hence, against implied repeal of the earlier law by the later statute.”

The Court further stated that “a franchise is distinguish from a CPC in that the former is a grant or privilege from the sovereign power, while the latter is a form of regulation through administrative agencies x x x. A franchise started out as a royal privilege or a branch of the King’s prerogative, subsisting in the hands of a subject. x x x. Today, a franchise, being merely a privilege emanating from the sovereign power of the state and owing its existence to a grant, is subject to regulation by the state itself by virtue of its police power through administrative agencies.”

Chief Justice Puno interestingly ended with this:

“What exactly is the reason or rationale for imposing a prior congressional franchise? There seems to be no valid reason for it except to impose added burden and expenses on the part of the applicant. The justification appears to be simply because this was required in the past so it is now. We are reminded of the forceful denunciation of Justice Holmes of a stubborn adherence to an anachronistic rule of law:

“It is revolting to have no better reason for a rule of law that so it was laid down in the time of Henry IV. It is still more revolting if the grounds upon which it was laid down have vanished long time since, and the rules simply persists from blind imitation of the past. (The Path of the Law, Collected Legal Papers [1920] 210,212 quoted from The Justice Holmes Reader, Julius N. Marke, 1955 ed., p. 278.)

The call to dispense with the requisite legislative franchise must, however, be addressed to Congress as the lawmaker of the land for the Court’s function is to interpret and not to rewrite the law. As long as the law remains unchanged, the requirement of a franchise to operate a television station must be upheld.” (Underscoring supplied.)

 

ABS-CBN: THE PAINFUL LESSON

The rule is that a franchise – a law enacted by Congress – is required before one can operate radio or television stations. The above case of ACWSUBN vs. NTC settled this issue.

ABS-CBN’s franchise is Republic Act No. 7966, entitled “AN ACT GRANTING THE ABS-CBN BROADCASTING CORPORATION A FRANCHISE TO CONSTRUCT, INSTALL, OPERATE AND MAINTAIN TELEVISION AND BROADCASTING STATIONS IN THE PHILIPPINES, AND FOR OTHER PURPOSES. Its 25-year term expired on May 4, 2020. It was not extended by Congress, and its application is currently pending with the House Committee on Legislative Franchises. Just like in the case of ACWSUBN vs. NTC, NTC issued a cease and desist order dated May 5, 2020 against ABS-CBN, a day after its franchise expired, stopping the networks’ operation, and toppling the media giant.

Let me add that a law may only be amended, modified and/or repealed by another law, which in the case of ABS-CBN, was never enacted as of this writing. What the Senate did was to pass a resolution expressing its support for the issuance of a temporary permit by the NTC, sans a franchise. The Chairman of the Committee on Legislative Franchises wrote a letter to NTC concurred in by the Speaker to the same effect. It is elementary that laws are not affected by mere resolutions or letters by any or all of the gods in the Senate or in the House. The procedure for making laws is found in par. 2, Sec. 26, Art. VI of the 1987 Constitution. Thus: ”No bill passed by either House shall become a law unless it has passed three readings on separate days, and printed copies thereof in its final form have been distributed to its Members three days before its passage, x x x.” A franchise bill is a private bill. Therefore, “x x x, private bills, shall originate exclusively in the House of Representatives, but the Senate may propose or concur with amendments (Sec. 24, infra.).” Amen. Period.