Associated Communications & Wireless Services v.

NTC
Associated Communications & Wireless Services v. NTC | Puno
G.R. No. 144109, February 17, 2003 | 397 SCRA 574
Keywords: Channel 25, legislative franchise v. CPC or permit

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

NOTE
This digest was adjusted to meet our needs for the June 16 class.
RATIO DECIDENDI
When there is a law requiring a franchise, an administrative agency
cannot allow a public utility to operate without it.
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.

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. 98 (1991), wherein it
made the following conclusions:
(1) P.D. 576-A did not do away with the requirement of
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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
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Associated Communications & Wireless Services v. NTC

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 & ARGUMENTS

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 & RATIONALE
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
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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.
FALLO
Petition DENIED. The NTC and the CA are AFFIRMED.

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