16. ASSOCIATED COMMUNICATIONS V.
NTC (Seechung) Based on the second sentence, instead of a repeal, what we are given is
Feb 17, 2003 | Puno | Congressional franchise requirement
PETITIONER: Associated Communications & Wireless Services - United
Broadcasting Networks
RESPONDENTS: National Telecommunications Commission
SUMMARY: On 1931, Act 3846 was enacted which requires a congressional
franchise before a radio station can operate. On 1969, ACWS acquired a
congressional franchise for radio which made it eligible to establish a radio station.
In 1974, PD 576 was issued which requires radio and TV stations to obtain a
permit from Board of Communications and DPWH. However, on 1979, EO 546,
abolished BC and created the NTC. There has been a conflict of interpretation
with PD 576 and EO 546 and thus, DOJ issued on DOJ Opinion 98 of 1991 that
EO 546 modified the requirements granted by PD 576 (stated that NTC may issue
a permit to radio and television broadcasting stations without a franchise in light
of SC’s decision in Albano v. Reyes). On 1994, MOU between broadcasting
groups and NTC was established which requires a congressional franchise to
operate. ACWS, in the same year, tried to acquire a congressional franchise but
failed due to lack of requirements. However, ACWS was given temporary permit
to operate by the NTC which would expire in 1997. On 1997, NTC informed that
ACWS needs to acquire a congressional franchise before it can operate. Yet,
ACWS still failed to gain such franchise. Therefore, NTC held an administrative
case against ACWS and concluded that its Channel 25 shall be recalled. ACWS
raised it to CA and said that it already filed for a congressional franchise and
therefore the recall should be suspended. CA affirmed the decision of NTC.
ACWS argues that Sec. 1 of Act 3846 only applies to radio, not television stations.
(See the FACT#1) Moreover, it adds that P.D. 576-A dispenses with the legislative
franchise requirement. ACWS also contends that the DOJ Opinion is binding
because it was the NTC itself that asked for it from the government’s 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. Issue is WON a legislative franchise is required for the operation of
radio and televisin broadcasting stations? SC held YES.
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, 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”
another requirement aside from a franchise: permission from the BOC (now
the NTC) 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.
Moreover, the DOJ Opinion is not binding; it is merely persuasive.
DOCTRINE:
A legislative franchise is required for the operation of radio and television
broadcasting stations.
FACTS:
1. On November 11, 1931, Act No. 3846, entitled "An Act Providing for the
Regulation of Radio Stations and Radio Communications in the Philippines
and for Other Purposes," was enacted. Sec. 1 of the law reads, viz:
"Sec. 1. No person, firm, company, association, or corporation shall
construct, install, 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..."
2. Pursuant to the above provision, Congress enacted in 1965 R.A. No. 4551,
entitled "An Act Granting Marcos J. Villaverde, Jr. and Winfred E. Villaverde
a Franchise to Construct, Install, Maintain and Operate Public
Radiotelephone and Radiotelegraph Coastal Stations, and Public Fixed and
Public Based and Land Mobile Stations within the Philippines.” It gave the
grantees a 50-year franchise.
3. In 1969, the franchise was transferred to petitioner Associated
Communications & Wireless Services – United Broadcasting Network, Inc.
(ACWS for brevity) through Congress’ Concurrent Resolution No. 58.
ACWS then engaged in the installation and operation of several radio stations
around the country.
4. In 1974, P.D. No. 576-A, "Regulating the Ownership and Operation of Radio
and Television Stations and for other Purposes" was issued, with the
following pertinent provisions on franchise of radio and television
broadcasting systems:
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, grants, licenses, permits, certificates or other forms of
authority to operate radio or television broadcasting systems shall terminate
on December 31, 1981. Thereafter, irrespective of any franchise, grant,
license, permit, certificate or other forms of authority 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 who have
the right and authority to assign to qualified parties frequencies, channels or
other means of identifying broadcasting system.
5. A few years later or in 1979, E.O. No. 5464 was issued. It integrated the
Board of Communications and the Telecommunications Control Bureau
under the Integrated Reorganization Plan of 1972 into the NTC.
6. Among the powers vested in the NTC under Sec. 15 of E.O. No. 546 are the
following:
a. Issue Certificate of Public Convenience for the operation of
communication utilities and services…
b. Grant permits for the use of radio frequencies for wireless telephone
and telegraph systems and radio communication systems…
7. Upon termination of ACW’s franchise on December 31, 1981 pursuant to
P.D. No. 576-A, it continued operating its radio stations under permits
granted by the NTC.
8. 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:
a. P.D. 576-A did not do away with the requirement of obtaining a
legislative franchise (see Sec. 1, Act 3846);
b. 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;
c. 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;
d. 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 CPC’s (for the operation of a radio
broadcasting system) and permits (for the use of radio frequencies
for such systems).
e. The NTC may issue a permit to radio and television
broadcasting stations without a franchise in light of the
Supreme Court’s (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.”
9. 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.
10. ACWS applied for a franchise 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.
11. Congress was not able to decide ACWS’ application for a franchise
because of the latter’s 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.
12. 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.
13. 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.
14. 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.
15. Meanwhile, as regards the administrative case against ACWS, the NTC
decided to recall the frequency assigned to it’s Channel 25. The matter was
brought before the Court of Appeals (CA). CA affirmed the NTC, hence this
petition for review on certiorari.
16. ACWS argues that Sec. 1 of Act 3846 only applies to radio, not television
stations. (See the Fact#1) Moreover, it adds that P.D. 576-A dispenses with
the legislative franchise requirement.
17. ACWS also contends that the DOJ Opinion is binding because it was the NTC
itself that asked for it from the government’s 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.
ISSUE:
1. WON a legislative franchise is required for the operation of radio and
televisin broadcasting stations? YES – Congressional franchise is still
required
RULING: WHEREFORE, the petition is DENIED and the Court of Appeals' January
13, 2000 decision and February 21, 2000 resolution are AFFIRMED. No costs.

RATIO: CA decision and resolution affirmed. (Petition denied)

1. 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, it can be said that the requirement under Act 3846
also applies to television stations.
2. 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 (now the NTC) and the Secretary
of Public Works and Communications.
3. 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.
4. 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.
a. 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
agency’s exercise of its administrative regulatory powers, which
deals with procedures and technicalities.
b. Next, under E.O. 546, the NTC only has the power to issue CPC’s
or permits, not franchises.
c. 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.