Case:

ABS-CBN Corporation Vs. National Telecommunications Corporation

G.R. No. 252119 - August 25, 2020
J. Perlas-Bernabe

● March 30, 1995: ABS-CBN was granted a legislative franchise to "construct, operate and
maintain, for commercial purposes and in the public interest, television and radio
broadcasting stations in and throughout the Philippines" under RA 7966. The franchise
was valid for a term of 25 years from the law's effectivity on May 4, 1995, or until May 4,
2020.
● 2014 and 2018: bills for the renewal of ABS-CBN's franchise were filed in the 16th and
17th Congress. In the current (or 18th) Congress, 11 bills for the renewal of ABS-CBN's
franchise were submitted in the House and 2 were filed in the Senate.
● February 26, 2020: another bill was filed seeking the amendment of Section 1 of RA
7966 to extend the term of ABS-CBN's franchise while Congress is still deliberating on
the issue of franchise renewal.
● February 24, 2020: the Senate Committee on Public Services called a hearing to "look
into, in aid of legislation, the operations of [ ABSCBN] to determine compliance with the
terms and conditions of its franchise under [RA] 7966."
○ During the hearing, NTC's Commissioner Cordoba stated that the NTC has not
withdrawn any Provisional Authority to operate under similar circumstances and
has not closed any broadcast company in the past due to an expired franchise,
pending its renewal.
○ Commissioner Cordoba also declared that in the case of ABS-CBN, it will issue a
Provisional Authority if so advised by the Department of Justice (DOJ).
● Feb. 26: DOJ Secretary Menardo Guevarra refrained from rendering a formal legal
opinion on the matter. Nonetheless, he made the following observations for the NTC's
"guidance":
○ (a) there is an "established practice" or "equitable practice" to allow a broadcast
company to continue its operations despite an expired franchise, pending its
renewal;
○ (b) the plenary power of Congress includes the auxiliary power to define and
preserve the rights of the franchise applicant pending final determination of the
renewal of the franchise; and
○ (c) the NTC may provisionally authorize an entity to operate.
● Feb. 26: House Committee on Legislative Franchises sent a letter to NTC enjoining it to
grant ABS-CBN a provisional authority to operate until such time that the House of
Representatives/Congress has made a decision on its application.
● March 4: the Senate adopted a Resolution stating that [ABS-CBN], its subsidiaries
and/or affiliates, ABS-CBN Convergence, Inc., Sky Cable Corporation and Amcara
Broadcasting Network, Inc., should continue to operate pending final determination of
the renewal of its franchise
● March 10: NTC said it will follow the DOJ’s advice and let ABS-CBN continue its
operations based on equity
 ● March 16: due to the ECQ, NTC issued an MO declaring all subsisting permits expiring
within the quarantine period shall automatically be renewed and shall continue to be
valid 60 days after the end of the quarantine
● May 3: SolGen Calida warned the NCT against granting ABS-CBN provisional authority
to operate while the franchise approval is pending
○ But Chairperson Alvarez said that with the DOJ’s legal opinion and the authority
given by the House, there was no reason for ABS to discontinue its operations
● May 4: ABS franchise expired
● May 5: NTC issued the CDO directing ABS to immediately cease and desist from
operating its radio and tv stations, based solely on the expiration of rA 7966.
○ ABS complied = went off-air
● May 7: ​ABS filed petition for certiorari and prohibition with TRO @SC alleging GAD by
NTC in issuing the CDO
○ ABS-CBN mainly argues that instead of issuing the CDO, the NTC should have
allowed ABS-CBN to continue its operations pending Congress' determination of
whether or not to renew its legislative franchise based on the bills already filed
therefor. In this regard, ABS-CBN posits that "the plenary power of Congress to
grant or renew a franchise necessarily includes the corollary power to define and
preserve rights and obligations pending its final determination of the matter.”
● May 11: NTC received a show cause order from HoR requiring it to explain why it should
not be cited in contempt for issuing the CDO
○ NTC explained that based on the wording of the consti, laws, and prevailing
jurisprudence, it could not issue a provisional authority in favor of ABS-CBN
pending the deliberations of the Congress on its franchise, as to do so would
amount to an encroachment into the exclusive power of Congress to grant
legislative franchises to broadcasting companies.

W/N NTC gravely abused its discretion in issuing the CDO against ABS-CBN = ​case
dismissed on the ground of mootness since the House already denied the renewal of the ABS
franchise
● Based on our Constitution and laws, a legislative franchise is both a pre-requisite and a
continuing requirement for broadcasting entities to broadcast their programs through
television and radio stations in the country.
● A franchise is basically a legislative grant of a special privilege to a person which does
not belong to citizens generally of common right.
○ It is subject to regulation by the State itself by virtue of its police power through its
administrative agencies.
○ Section 11, Article XII of the 1987 Constitution further states that "for the
operation of a public utility," no "such franchise or right [shall] be granted except
under the condition that it shall be subject to amendment, alteration, or repeal by
the Congress when the common good so requires.
 ● With respect to the broadcast industry, Section 1 of Act No. 3846​1 as amended, clearly
provides that "[n]o person, firm, company, association or corporation shall construct,
install, establish, or operate a radio station within the Philippine Islands ​without having
first obtained a franchise therefor​ from the Philippine Legislature x x x."
● Section 6 of PD 576-A​2 further imposes, as an ​additional requirement to operate a
radio or television station, ​an "authority" coming from "the Board of Communications
and the Secretary of Public Works and Communications or their successors [(i.e., the
NTC​)] who have the right and authority to assign to qualified parties frequencies,
channels or other means of identifying broadcasting systems."
● Divinagracia v. Consolidated Broadcasting System, Inc.​: Broadcast and television
stations are required to obtain a legislative franchise. After securing their legislative
franchises, stations are required to obtain CPCs from the NTC before they can operate
their radio or television broadcasting systems.
● ITC, the core of ABS-CBN's petition rests on its argument that the NTC should not have
pre-empted the will of Congress by directing it (ABS-CBN) to halt its broadcasting
operations pending the determination of Congress on the renewal of its legislative
franchise based on the bills specifically filed therefor.
○ ABS-CBN claims that Congress has the "corollary/auxiliary power" to define and
preserve rights and obligations pending its final determination on the matter.
● The Court takes judicial notice of the fact that on July 10, the House Committee on
Legislative Franchises had adopted the recommendation of the Technical Working
Group (TWG) to "deny the application of ABS-CBN Corporation for a franchise to
construct, install, establish, operate and maintain radio and broadcasting stations in the
Philippines" by an overwhelming 70 affirmative votes from the 85 voting members
present.
○ While ABS-CBN states that there are two (2) pending bills for the renewal of its
legislative franchise authored by members of the Senate, the Constitution
provides that private bills, such as those pertaining to the grant or renewal of a
franchise, must exclusively originate from the lower house of Congress.
■ These "substitute" bills (from Senate) are nonetheless only prepared in
anticipation of the corresponding bill from the lower House, and that the
action of the Senate as a body is withheld pending receipt of the said
House bill. Unfortunately, the House Committee already denied the house
bills.
● The denial pertained to "all of the House Bills and House Resolutions relative to the
grant or renewal of the franchise application of ABS-CBN Corporation
● The adoption of the TWG's recommendation by the House Committee on Legislative
Franchises is considered as the official expression of the legislative will that has
dispelled any previous uncertainty regarding ABS-CBN's franchise status insofar as the
pending franchise renewal bills are concerned.

1
AN ACT PROVIDING FOR THE REGULATION OF RADIO STATIONS AND RADIO COMMUNICATIONS IN THE PHILIPPINE
ISLANDS, AND FOR OTHER PURPOSES
2
REGULATING THE OWNERSHIP AND OPERATION OF RADIO AND TELEVISION STATIONS AND FOR OTHER PURPOSES
 ○ The supervening denial of these bills means that ABS-CBN cannot any more
invoke the same as basis for continuing the operation of the radio and television
networks covered by the CDO issued by the NTC.
○ Accordingly, the issue on the "corollary/auxiliary" powers of Congress pending
the renewal of these bills had already been rendered moot.
■ case or issue is considered moot and academic when it ceases to present
a justiciable controversy by virtue of supervening events, so that an
adjudication of the case or a declaration on the issue would be of no
practical value or use.
● Even if the CDO is annulled as prayed for, ABS-CBN cannot altogether resume its
broadcast operations through its radio and television stations because its legislative
franchise therefor had already expired and that, considering the denial of the House
Committee on Legislative Franchises, has not been renewed.
● ABS-CBN failed to provide sufficient legal basis to support its theory on Congress'
so-called "corollary/auxiliary" powers pending determination of the renewal of its expired
franchise.
○ A legislative franchise granting broadcasting entities the privilege to broadcast
their programs through television and radio stations in the country must be in the
form of a duly enacted law.
○ The congressional deliberations on pending bills are not equivalent and cannot
take the place of a duly enacted law, which requires the entire constitutional
process for legislation to take its full course.
○ Neither can it be inferred from our Constitution and our present statutes that
temporary statutory privileges may be accorded to a franchise applicant pending
deliberation of a franchise grant or renewal.
● While the Court understands the plight and concerns of ABS-CBN, its employees, and its
supporters in general, it wishes to emphasize that the act of granting or renewing
legislative franchises is beyond the Court's power.
○ Congress has the sole authority to grant and renew legislative franchises for
broadcasting entities such as ABS

Ruling:​ Petition dismissed on the ground of mootness.

OTHER NOTES:
At the end of the congressional hearings on the ABS-CBN franchise application – where the
media network was given the wide latitude and opportunity to defend itself against the alleged
violations it is being accused of – the Committee on Franchises’ Technical Working Group
(TWG) recommended the denial of the franchise application of ABS-CBN Corporation based on
following grounds:
1. Dual citizenship of its Chairman Emeritus, Eugenio “Gabby” Lopez III as against the 100
percent Filipino requirement for the ownership and management of mass media as
prescribed by the 1987 Constitution. The Filipino citizenship and allegiance of Mr. Lopez
to the Philippines was found to be doubtful and implausible;
 2. Issuance of Philippine Depositary Receipts (PDRs) to foreigners which allowed foreign
ownership in ABS-CBN. This possibly violated the constitutional provision against
ownership and management of mass media by foreigners;
3. Unlawful return of assets to the Lopez family after martial law. In the course of the
hearings, ABS-CBN was not able to prove beyond a reasonable doubt that it is indeed
the absolute owner of its assets and properties and not the government or someone
else. To note, the submitted copy of ABS-CBN’s Transfer Certificate of Title (TCT) of its
Mother Ignacia property where its main broadcast station and transmitter are located has
no actual record in the Register of Deeds. Likewise, there are no records of the
arbitration proceedings, there was just a “Compromise Agreement” between the parties.
There are also no records of proceedings leading to the said Compromise Agreement.
4. Violation of its previous franchise by operating a pay-per-view channel in its ABS-CBN
TV Plus (the KBO Channel) without prior approval or permission from the National
Telecommunications Commission (NTC);
5. Its unauthorized use of AMCARA’s legislative franchise, and ABS-CBN apparent use of
a dummy;
6. The less than exemplary labor practices including the many documented labor law
violations like the failure to regularize many of its employees. To note, only 25 percent or
2,661 out of the total 11,701 total workers of ABS-CBN Corporation and all its
subsidiaries are regular employees.
7. Questionable and unjust tax avoidance schemes, which are not necessarily illegal, but
not also commendable and praiseworthy, and borders on being immoral when viewed in
light of the billions of pesos of lost revenue for the Philippine government, which could
have funded much needed basic services for the Filipino people.
8. Biased reporting, inappropriate program content, and political meddling.

These grounds formed the very basis as to why Congress denied the ABS-CBN franchise
application.

After the denial of its franchise application, ABS-CBN supporters are now pursuing a “People’s
Initiative” (PI) to allow the media network to get its franchise.
● A lawyer who is a supporter of ABS-CBN has already drafted a proposal for a petition to
grant the media network a franchise through a PI, arguing that the sovereign people can
directly pass a law granting the media a franchise under Republic Act No. 6735 or the
Initiative and Referendum Act.

https://theaseanpost.com/article/why-did-congress-deny-abs-cbn-franchise