Associated Communications & Wireless Services v. NTC
98 (1991), wherein it made
G.R. No. 144109, February 17, 2003.
ER: ACWS franchise has expired. It sought renewal from NTC. NTC did not know
whether it may issue permits to stations lacking a legislative franchise. ACWS is
contending that legislative franchise only applies to radio stations and not television.
SC said a legislative franchise is still needed along with permission from BOC and
Secretary of Public Works and Communications.
FACTS
In November 1911, Congress enacted Act No. 3846, Sec. 1 of which reads:
No person, firm, company, association, or corporation shall construct,
establish, or operate a radio transmitting station, or a radio receiving
station used for commercial purposes, or a radio broadcasting station,
without having first obtained a franchise therefor from the Congress
of the Philippines x x x
In 1965, Congress granted Marcos Villaverde, Jr. and Winfred Villaverde a
franchise to construct, install, maintain, and operate radio stations in the
country. This franchise was transferred to Associated Communications &
Wireless Services-United Broadcasting Networks (ACWS) in 1969.
In 1974, P.D. No. 576-A was issued, Secs. 1 and 6 of which read,
respectively:
Sec. 1. No radio station or television channel may obtain a franchise unless it has
sufficient capital on the basis of equity for its operation for at least one year, including
purchase of equipment.
Sec. 6. All franchises x x x to operate radio or television broadcasting systems shall
terminate on December 31, 1981. Thereafter, irrespective of any franchise x x x to operate
granted by any office, agency, or person, no radio or television station shall be authorized to
operate without the authority of the Board of Communications and the Secretary of Public
Works and Communications or their successors
x x x
In 1979, E.O. No. 546 was issued. It integrated the Board of Communications (BOC)
and the Telecommunications Control Bureau (TCB) into the National
Telecommunications Commission (NTC). It was granted the following powers,
among others:
(1) Issue Certificate[s] of Public Convenience (CPC) for the operation of x x x
radio and television broadcasting system[s] x x x; and
(2) Grant permits for the use of radio frequencies for x x x radio and television
broadcasting systems.
When ACWS franchise expired on December 31, 1981, it continued operating its
radio stations under permits granted by the NTC.
NTC sought to clarify the issue of whether or not it could issue permits to radio
and television broadcasting stations lacking a legislative franchise. In 1991, the
Department of Justice (DOJ) rendered Opinion No.
the following conclusions:
(1) P.D. 576-A did not do away with the requirement of obtaining a legislative
franchise (see Sec. 1, Act 3846);
(2) Act 3846 has three requirements for those desiring to construct, install, or
operate a radio broadcasting station: (a) legislative franchise, (b) permit to
construct or install from the Secretary of Commerce and Industry, and (c)
permit to operate from the same;
(3) By virtue of Sec. 6 of P.D. 576-A, the power to issue the above-mentioned
permits were transferred to the BOC and the Secretary of Public Works and
Communications;
(4) By virtue of E.O. 546, the BOC and TCB were integrated, giving birth to the
NTC, which, according to Sec. 15(a) and (c) of the same E.O., has the power to
issue CPCs (for the operation of a radio broadcasting system) and permits (for the
use of radio frequencies for such systems).
(4) The NTC may issue a permit to radio and television broadcasting stations
without a franchise in light of the Supreme Courts (SC) decision in Albano v.
Reyes, where it was held that franchises issued by Congress are not required
before each and every public utility may operate. [Administrative agencies may be
empowered by law] to grant licenses for or to authorize the operation of certain
public utilities.
In 1994, Congress Committee on Legislative Franchises, the NTC, and the
Kapisanan ng mga Brodkaster sa Pilipinas (of which ACWS is a member)
signed a Memorandum of Agreement, whereby a franchise is required
for the operation of a radio or television station. Broadcasting stations
operating under temporary permits were given until December 31, 1994 to
apply for a franchise.
ACWS applied for one prior to the deadline. Pending its approval, it was granted
a temporary permit, allowing it to operate from June 1995 to June 1997.
During this time, it was allowed to increase the power output of its television
station, Channel 25, and was authorized to purchase additional equipment for it.
ACWS applied for the renewal of its temporary permit in May 1997.
Congress was not able to decide ACWS application for a franchise because
of the latters failure to submit the necessary paperwork. NTC found out
about this when it inquired on the matter. ACWS did not refile its application
for a franchise.
Through a letter from the NTC, ACWS was warned that without a franchise,
it will no longer be allowed to operate its stations, and that its application for
a temporary permit will be held in abeyance until it submits a new
application for a legislative franchise. As mentioned in the preceding bullet
point, ACWS did not refile its application for a franchise.
Despite the absence of a franchise however, the NTC informed ACWS in
January 1998 that its May 17 application for a temporary permit was
approved, and that it will be released upon payment of a prescribed fee.
Instead of releasing the permit though when ACWS paid the said
 amount, the NTC commenced an administrative case against it,
threatening to recall the frequency that was assigned to it.
NTC issued Memorandum Circular No. 14-10-98. Broadcasting stations
without a franchise were given until December 31, 1999 to obtain one. It was
also mandated that the franchise bill should already be before Congress
not later than November 30, 1998. The franchise bill of ACWS was filed
before the deadline.
Meanwhile, as regards the administrative case against ACWS, the NTC
decided to recall the frequency assigned to its Channel 25. The matter was
brought before the Court of Appeals (CA). CA affirmed the NTC, hence this
petition for review on certiorari.
ISSUES
W/N a legislative franchise is required in this case
ACWS argues that Sec. 1 of Act 3846 only applies to radio, not television
stations. (See the first bullet point under FACTS.) Moreover, it adds that
P.D. 576-A dispenses with the legislative franchise requirement.
It also contends that the DOJ Opinion is binding because it was the
NTC itself that asked for it from the governments legal adviser, the
DOJ. It must be noted that the DOJ opined that by virtue of E.O. 546 and
Albano v. Reyes, the NTC may issue permits to broadcasting stations
without a franchise.
HELD: YES, a legislative franchise is still required.
ACWS argues that Act 3846 only applies to radio stations.
Act 3846 should be read in conjunction with P.D. 576-A. Even if the
former only refers to radio stations, since the latter is a directly related law
which covers both radio and television stations ( see the bullet point
below), it can be said that the requirement under Act 3846 also applies to
television stations.
P.D. 576-A did not do away with the legislative franchise
requirement. As a matter of fact, its Sec. 1 reads: No radio or television channel may
obtain a franchise unless x x x
Sec. 6 of the same also reveals that there is no intention to repeal Sec. 1 of Act
3846. Although the first sentence seems to point to a repeal, the second one reveals
that the requirement was not scrapped, to wit: x x x Thereafter, irrespective of any
franchise x x x granted by any office, agency, or person, no radio or television
station shall be authorized to operate without the authority of the Board of
Communications and the Secretary of Public Works and Communications or their
successors x x x Based on the second sentence, instead of a repeal, what we are
given is another requirement aside from a franchise: permission from the BOC
and the Secretary of Public Works and Communications.
Dispensing with the requirement is not in line with the declared purposes of
P.D. 576-A, which is to prevent monopolies and to regulate the allocation of
limited frequencies. Doing away with the requirement defeats public interest,
the determination of which is a function of the legislature.
The DOJ Opinion is not binding; it is merely persuasive. Its conclusion that the
NTC may issue permits to stations without a franchise is erroneous.
First, there is a difference between a franchise and a CPC/permit. A
franchise involves the exercise of the legislature of an exclusive
regulatory power resulting in a grant under authority of government,
conferring a special right to do an act or series of acts of public concern; on
the other hand, a CPC/permit involves a specialized agencys exercise of
its administrative regulatory powers, which deals with procedures and
technicalities.
Next, under E.O. 546, the NTC only has the power to issue CPCs or
permits, not franchises.
Lastly, ACWS reliance on Albano v. Reyes is misplaced. In that case,
there was no law requiring that a legislative franchise be obtained first.
Here, we have Act 3846, as amended by P.D. 576-A and E.O. 546. When
there is a law requiring a franchise, an administrative agency cannot allow a
public utility to operate without it.