[OPINION] ABS-CBN and its struggle to obtain its franchise

I can’t imagine our home without ABS-CBN.

This television station and the shows it produces have been a staple in our household. My father cannot let a single episode of “Ang Probinsyano” pass, in the same way that my mother would give up her siesta just to watch Kapamilya Gold. (READ: FAST FACTS: What you should know about ABS-CBN)

Yet the bullish threat of the man in Malacañan Palace may put an end to the never-ending saga of Cardo Dalisay.

It has happened before.

In 1974, President Ferdinand Marcos issued PD No. 576-A, “Regulating the Ownership and Operation of Radio and Television Stations and for other Purposes.” This presidential decree mandated that no radio station or television channel may obtain a franchise unless it has sufficient capital for its operation. The law further provided that “all franchises or other forms of authority to operate radio or television broadcasting systems shall terminate on December 31, 1981.”

Associated Communications and Wireless Services-United Broadcasting Networks (ACWS-UBN) was one of the franchise holders affected by this decree. Nonetheless, it continued operating its radio stations under permits granted by the National Telecommunications Commission (NTC).

The succeeding turn of events worked against ACWS-UBN.

On May 3, 1994, the NTC, the Kapisanan ng mga Brodkaster sa Pilipinas (KBP), and the Committee on Legislative Franchises of Congress forged a Memorandum of Understanding (MOU). The MOU specifically provided that the NTC shall continue to issue and grant permits or authorization to operate radio and television broadcast stations with a two-year validity, within which the permittee shall be required to file an application for legislative franchise with Congress not later than December 31, 1994. If the permittee fails to secure its franchise within this period, the NTC shall not extend or renew its permit any further.

On December 20, 1994, ACWS-UBN filed with Congress an application for its franchise. But pending its approval, NTC issued to ACWS-UBN a temporary permit to operate a television station via Channel 25 of the UHF Band from June 29, 1995 to June 28, 1997.

Unfortunately, ACWS-UBN was not able to obtain the required congressional franchise. After some squabbles at the administrative level, NTC recalled the frequency band assigned to ACWS-UBN for its failure to obtain the “much needed” franchise. ACWS-UBN fought it out all the way to the Supreme Court. One of the arguments raised by ACWS-UBN is that a legislative franchise is not anymore needed considering that an NTC permit will suffice.

On February 17, 2003, the Supreme Court held in the case of ACWS-UBN versus National Telecommunications Commission (GR No 144109, February 17, 2003) that the present state of laws continues to require a franchise for the operation of radio and television broadcasting stations. Therefore, the order of NTC recalling the frequency band assigned to ACWS-UBN is valid and in accordance with the law. With the recall of its frequency band, ACWS-UBN cannot now anymore operate as a broadcast station.

And this may happen again.

The fate of ACWS-UBN could also be the fate of ABS-CBN. The President has said it. He will block the renewal of the franchise of ABS-CBN which will expire on March 30, 2020. In light of this threat coming from no less than the Chief Executive, ABS-CBN may likewise cease to operate, just like ACWS-UBN. The commonality – denial of legislative franchise.

But what is with this legislative franchise anyway that makes it the elixir of a television network?

The Supreme Court in the case of Radio Communications Philippines, Incorporated versus National Telecommunications Commission (GR No 68729, May 29, 1987), explained that:

“A franchise started out as a ‘royal privilege or (a) branch of the King’s prerogative, subsisting in the hands of a subject.’ This definition was given by Finch, adopted by Blackstone, and accepted by every authority since. 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 its administrative agencies.”

The Supreme Court interpreted the use of the term franchise under Section 1 of PD 576-A to mean the legislative franchise issued by Congress. To distinguish, the franchise obtained by the network from Congress is its primary franchise, while the certificate, permit, or authority to operate issued by the NTC is called secondary franchise.

But why should the existence of a television network – a juridical person incorporated under a general law (which by the way under the Revised Corporation Code may enjoy perpetual existence) – depend on the grant of congressional imprimatur, when all the franchise states, after all, is for the grantee to comply with the conditions imposed by the concerned governmental agency, in this case, the NTC?

These conditions are duplicitous because the franchise grantee is required to secure from NTC the appropriate permits and licenses for the construction and operation of the network’s stations and facilities and shall not use any frequency in the radio/television spectrum without NTC’s authorization.

If that is the case, then, legislative franchise will serve no other purpose than to compel the applicant to lobby for the approval of its franchise in Congress. The purpose of the franchise is redundant; the very same law granting the franchise will eventually delegate to NTC the issuance of permits and licenses for the construction and operation of the network’s stations and facilities.

The very same decision of the Supreme Court in the ACWS-UBN case admits this redundancy of requirement. The Court sided with the views of a public utilities lawyer when the latter observes that “there seems to be no valid reason for the requirement of franchise except to impose added burden and expenses on the part of the applicant.” The Supreme Court continued, quoting heavily from the works of lawyer RE Subong. Reiterating it here is indispensable:

“As will be noted, a legislative franchise is required to install and operate a radio station before an applicant can apply for a Certificate of Public Convenience to operate a radio station based in any part of the country. Under Act No, 3846 of 1929, Sec 1, it was provided that no one may install and operate a radio station ‘without having first obtained a franchise therefore from the Congress of the Philippines.’

“Since then, this has been strictly followed. And this holds true with respect to application for electric, telephone, and many other telecommunications services. Before, even mere application for authority to operate an ice plant must have prior congressional franchise. But this was not strictly followed until ice plant operations were eventually deregulated. Right now, both houses of Congress are saddled with bills for the grant of legislative franchise to operate this and that public utility service in various places in the Philippines. During sessions, we hear the time wasted on reports and considerations of these bills. The legislature is empowered and has created respective regulatory bodies with requisite expertise to handle franchising and regulation of such types of public utility services – why not just entrust these functions to them?”

Sadly, even the highest court of the land can only do so much.

The parting words of the Supreme Court in the said decision runs as follows: “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.”

And the law remains unchanged. Up to now.

If the lawmakers are reluctant to repeal the statute that requires franchise for television networks, these networks have no choice but to lobby Congress in vain hope that its members will legislate on the issuance of franchise.

But then again, even if Congress will accommodate the application of franchise by the networks, such grant will still be at the mercy of the President. In the case of ABS-CBN, the President seems to have made up his mind to block it. He can easily veto the bill and return it to the house from where it originated. And ABS-CBN will have to lobby again to Congress for a two-thirds vote for the reconsideration of the vetoed bill. (READ: ABS-CBN stocks fall after Duterte’s threats of not renewing franchise)

And while the law remains unchanged, what now will become of the country’s biggest television network?

The law is still on the side of the lawmakers, and ABS-CBN may seem to be running out of time. Trapped in this legal dilemma, ABS-CBN has to carve out an exception from the existing laws to suit its interest. And it would take an open-minded and pragmatic tribunal which will be convinced by this experimental legal stratagem.

One way to do it is to attack the validity or constitutionality of the very law. Let PD 576-A be revisited by the court, and have it declared invalid or unconstitutional on the ground of violation of due process of the law and violation of the equal protection of the laws. The US Supreme Court decision on Hurtado vs California (110 US 516, 536 [1884]) may serve as a guidepost as it declares that “the arbitrary power, enforcing its edicts to the injury of the persons and property of its subjects, is not law, whether manifested as the decree of a personal monarch or of an impersonal multitude.”

In attacking the constitutionality of the law, the courts – to borrow the words of Justice Harlan of the US Supreme Court in the case of Mugler versus Kansas (123 US 623, 661 [1887]) – “are under a solemn duty to look at the substance of things, whenever they enter upon the inquiry whether the legislature has transcended the limits of its authority.”

The substance of things in the ABS-CBN case is to define whether PD 576-A has for its purpose that which will serve public interest in general, requiring state intervention, and whether the means employed are reasonably necessary to accomplish that purpose, and is not unduly oppressive. What is the underlying purpose of securing a legislative franchise before a television station can operate? If the purpose is to regulate networks on account of limited radio frequencies and to prevent monopoly, will such purpose be achieved by requiring them to secure franchise?

Or better yet, challenge the arbitrary exercise of legislative power.

Thus, the question to be posed is crafted in this wise: Given the fact that a television network must first secure a legislative franchise from Congress before it can validly operate, what are the criteria set in the law for the applicant to be granted the franchise?

PD 576-A provides the answer. The applicant must have sufficient capital on the basis of equity for its operation for at least one year, including purchase of equipment. This is the only statutory requirement for the grant of the franchise. The rest of the law imposes certain restrictions and undertakings. Thus, if the applicant can satisfactorily show that it has sufficient capital, there is no reason for Congress to deny the franchise.

We have no idea what guidelines Congress follows in granting or renewing a franchise. Even a review of at least 3 legislations which granted the renewal of the franchises of the 3 other networks do not give us a hint as to how Congress decided on them.

Consider the following. Republic Act No. 8954 lapsed into law on September 2, 2000 without the signature of then President Joseph Estrada. It thereby approved the grant of franchise to Intercontinental Broadcasting Corporation, allowing Channel 13 to operate for 25 years. Similarly, RA 11320 lapsed into law without the signature of President Rodrigo Duterte on April 22, 2019. This law granted the renewal of the franchise of TV5, also for 25 years. RA 10925 was passed into law on April 21, 2017, granting the renewal of the franchise of GMA Network for the same period.

These 3 pieces of legislation pertaining to the franchise of these television networks contain a general format as to the nature and scope of the franchise, manner of operation, prior NTC approval, responsibility to the public, right of the government, term of franchise, tax provision, general broadcast policy, among others.

So if these 3 other networks have been able to obtain their franchises, what reason could Congress possibly have to deny the renewal of the ABS-CBN franchise? In the absence of a valid and compelling reason for its denial, Congress could be acting arbitrarily against ABS-CBN. There is no difference between a law which denies equal protection and a law (or a lawmaking body) which permits such denial, according to one decision of the Supreme Court.

Again, these legal stratagems have not been tested. Their potential may be preempted by strict interpretation of the law. And if these will not be convincing for the court, I keep my fingers crossed. I will always hope that all these apprehensions will not come true. For all we know, Congress may work overtime to enact the law granting the franchise to ABS-CBN. And I still hope that the President will not veto it, or he could simply let it lapse into law, just like what happened to the franchise bill of TV5. Or perhaps, the threat of the President is only one of his many bluffs that should not be called. (READ: ‘For democracy’: De Lima urges lawmakers to renew ABS-CBN franchise)

My hopes are high. I still look forward to watching the much-awaited Liz-Quen teleserye as well as the possible reunion of Julia Montes and Coco Martin on primetime television. – Rappler.com

After obtaining his Bachelor’s in Liberal Arts from a private Catholic college in Guagua, Pampanga, KS David worked as a meter reader and field collector for his local water district. He eventually attended law school with help from a cooperative, though he has yet to pass the bar.


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