ABS-CBN Corporation vs. National Telecommunications Commission

A legislative franchise is both a prerequisite and a continuing requirement for broadcasting entities to operate, and no provisional authority or temporary statutory privilege may be accorded to a franchise applicant pending congressional deliberation on renewal, as congressional deliberations on pending bills are not equivalent to a duly enacted law.

ABS-CBN Corporation operated under Republic Act No. 7966, which granted it a twenty-five-year franchise to construct, operate, and maintain television and radio broadcasting stations throughout the Philippines, effective from May 4, 1995 until May 4, 2020. Prior to expiration, multiple bills were filed in the 16th, 17th, and 18th Congresses seeking renewal. In the 18th Congress, the House Committee on Legislative Franchises conducted hearings regarding ABS-CBN's compliance with franchise terms, while the Senate Committee on Public Services examined similar issues. The Department of Justice initially indicated an "established practice" allowing continued operation pending renewal, and the NTC Commissioner represented that the agency would follow DOJ guidance and allow continued operations based on equity. However, the Solicitor General warned the NTC against granting provisional authority, citing potential anti-graft liability. On May 5, 2020, one day after the franchise expired, the NTC issued a CDO directing ABS-CBN to cease operations based solely on the expiration of RA 7966.

• The Legislative Franchise: Republic Act No. 7966, enacted on March 30, 1995, granted ABS-CBN Broadcasting Corporation (now ABS-CBN Corporation) a franchise to construct, operate, and maintain television and radio broadcasting stations throughout the Philippines for twenty-five years from the law's effectivity on May 4, 1995, until May 4, 2020.

• Renewal Proceedings: Bills for franchise renewal were filed in the 16th Congress (House Bill No. 4997) and 17th Congress (House Bill No. 4349). In the 18th Congress, eleven House Bills and two Senate Bills sought renewal or extension. The House Committee on Legislative Franchises conducted initial hearings on March 10, 2020, and joint committees conducted extensive hearings from May 26 to July 9, 2020. House Resolution No. 639 urged the committee to report out pending bills; House Joint Resolutions Nos. 28 and 29 sought extensions until 2022 and 2021, respectively. Senate Resolution No. 40 expressed the sense that ABS-CBN should continue operating pending final determination.

• Executive Branch Positions: On February 26, 2020, the Department of Justice Secretary issued guidance observing that an "established practice" allowed broadcast companies to continue operations pending renewal, that Congress possessed auxiliary power to preserve franchise applicant rights pending final determination, and that the NTC could provisionally authorize continued operation. Conversely, on May 3, 2020, the Solicitor General warned the NTC against granting provisional authority, stating that commissioners risked prosecution under anti-graft laws for issuing "unlawful" provisional authorities without a franchise.

• The Cease and Desist Order: On May 5, 2020, the NTC issued the assailed Order in Administrative Case No. 2020-008, directing ABS-CBN to "immediately CEASE and DESIST" from operating its enumerated radio and television stations based solely on the expiration of RA 7966. ABS-CBN complied and suspended broadcast operations on even date.

• Supervening Denial: On July 10, 2020, the House Committee on Legislative Franchises adopted the Technical Working Group's recommended resolution denying ABS-CBN's franchise application by a vote of 70 to 11, with two inhibitions. The resolution laid on the table all House Bills and House Resolutions relative to the grant or renewal of ABS-CBN's franchise, constituting an official expression of unfavorable legislative action.

• Congressional Auxiliary Power: ABS-CBN maintained that the plenary power of Congress to grant or renew franchises necessarily includes the corollary power to define and preserve rights and obligations pending final determination of the matter, thereby precluding the NTC from issuing a CDO while franchise renewal bills remained pending.

• Equal Protection: Petitioner argued that the CDO violated the equal protection clause, pointing to an established NTC practice of allowing broadcast entities to continue operating pending congressional renewal of their franchises, which the NTC deviated from in this instance.

• Due Process: The CDO was assailed as a deprivation of property without due process, having been issued without prior notice or hearing and causing irreparable injury to ABS-CBN, its employees, and various stakeholders.

• Press Freedom: ABS-CBN asserted that the CDO constituted prior restraint on freedom of the press and compromised the right to public information, particularly during the COVID-19 public health emergency where the network played a significant role in disseminating news.

• Procedural: The NTC, through the Office of the Solicitor General, moved to discharge the House of Representatives and Senate as parties, arguing they were neither indispensable nor necessary parties since ABS-CBN sought no relief against them but only against the NTC which issued the CDO.

• Substantive: Respondent countered that the NTC could not lawfully issue provisional authority to operate without a valid legislative franchise, as to do so would encroach upon the exclusive constitutional power of Congress to grant such franchises to broadcasting entities.

• Mootness: Whether the petition had become moot and academic in light of the supervening denial of the franchise renewal bills by the House Committee on Legislative Franchises.

• Congressional Auxiliary Power: Whether Congress possesses "corollary" or "auxiliary" power to define and preserve the rights of a franchise applicant pending final determination of renewal, sufficient to preclude the NTC from issuing a cease and desist order.

• Equal Protection: Whether the NTC's issuance of the CDO violated the equal protection clause given its past practice of allowing broadcasters to operate pending franchise renewal.

• Due Process: Whether the issuance of the CDO without prior notice or hearing violated ABS-CBN's right to due process.

• Press Freedom: Whether the CDO constituted an unconstitutional prior restraint on freedom of the press and violated the right to public information.

• Mootness: The petition was dismissed upon the ground that the supervening denial of the franchise bills by the House Committee on Legislative Franchises on July 10, 2020, eliminated any justiciable controversy. No substantial relief could be granted since, absent a valid legislative franchise, ABS-CBN could not legally resume broadcast operations regardless of the CDO's validity; conversely, annulling the CDO would serve no practical purpose given the denial of the franchise application.

• Congressional Auxiliary Power: No such auxiliary power exists to grant temporary statutory privileges pending deliberation. The plenary power of Congress to grant franchises does not include the authority to preserve rights through pending bills, as congressional deliberations are not equivalent to a duly enacted law, which requires completion of the full constitutional legislative process including passage by both Houses and approval by the President.

• Equal Protection, Due Process, and Press Freedom: Resolution of these constitutional claims cannot yield actual practical relief. Even assuming the CDO violated these rights, ABS-CBN remains unable to operate its stations without a legislative franchise, and the denial of the pending bills by the House Committee forecloses any basis for interim relief.

• Mootness Due to Supervening Events — A 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 would be of no practical value or use. Courts decline jurisdiction over such cases because judgments will not serve any useful purpose or have any practical legal effect. Here, the denial of the franchise bills rendered any decision on the CDO's validity inconsequential to ABS-CBN's ability to operate.

• Legislative Franchise as Special Privilege — A franchise is a special privilege to do certain things conferred by government on an individual or corporation, which does not belong to citizens generally of common right. It is a legislative grant subject to regulation by the State through its police power, and for broadcasting entities, it is both a prerequisite and a continuing requirement under Section 11 of Article XII of the Constitution and Section 1 of Act No. 3846.

• Co-existence of Franchise and Administrative Authority — The requirement of a legislative franchise under Act No. 3846 co-exists with the requirement of a Certificate of Public Convenience from the NTC under Presidential Decree No. 576-A and Executive Order No. 546. The franchise must be secured first from Congress before the NTC may grant authority to operate.

• Origination of Private Bills — Private bills, including those granting or renewing franchises, must exclusively originate in the House of Representatives under Section 24, Article VI of the Constitution. Senate bills on franchise renewal are merely substitutes prepared in anticipation of House bills, and Senate action is withheld pending receipt of the House bill.

• "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."

• "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."

• "Absent a valid and subsisting legislative franchise embodied in a duly passed law, no such statutory privilege, even if temporary, can be enjoyed."

• "Congress has the sole authority to grant and renew legislative franchises for broadcasting entities... As it presently stands, the legislative branch of our government has yet to grant or renew ABS-CBN's legislative franchise, which decision - whether fortunate or unfortunate - this Court must impartially respect, else it violates the fundamental principle of separation of powers."

• Associated Communications & Wireless Services v. NTC, 445 Phil. 621 (2003) — Controlling precedent defining a franchise as a privilege granted by the State through its legislative body, subject to regulation by the State through administrative agencies.

• Divinagracia v. Consolidated Broadcasting System, Inc., 602 Phil. 625 (2009) — Followed for the rule that the legislative franchise requirement under Act No. 3846 was not repealed by Presidential Decree No. 576-A; the requirements co-exist.

• Tolentino v. Secretary of Finance, G.R. No. 115455, August 25, 1994, 235 SCRA 630 — Cited for the constitutional interpretation that private bills must originate in the House, though Senate substitute bills may be filed in anticipation.

• Peñafrancia Sugar Mill, Inc. v. Sugar Regulatory Administration, 728 Phil. 535 (2014) — Cited for the definition of mootness as cessation of justiciable controversy by supervening events.

• Section 11, Article XII, 1987 Constitution — "No 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."

• Section 24, Article VI, 1987 Constitution — "All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local application, and private bills shall originate exclusively in the House of Representatives, but the Senate may propose or concur with amendments."

• Section 1, Act No. 3846 — "No 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..."

• Section 6, Presidential Decree No. 576-A — Imposes the additional requirement of authority from the Board of Communications (now NTC) to operate radio or television stations.

• Executive Order No. 546 — Established the National Telecommunications Commission and provides the basis for its authority to issue Certificates of Public Convenience.

Leonen, J. — filed a separate concurring opinion and concurred in the result.