G.R. No. 144109
It integrated the Board of
February 17, 2003
ASSOCIATED COMMUNICATIONS & WIRELESS SERVICES – UNITED BROADCASTING
NETWORKS, petitioner, vs.
NATIONAL TELECOMMUNICATIONS COMMISSION, respondent.
(The question that has taken a long life is whether the operation of a radio or television
station requires a congressional franchise.)
Facts:
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..."
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. 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. Petitioner ACWS then engaged in the
installation and operation of several radio stations around the country.
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.
A few years later or in 1979, E.O. No. 5464 was issued.
Communications and the Telecommunications Control Bureau under the Integrated
Reorganization Plan of 1972 into the NTC.
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…
mc. Grant permits for the use of radio frequencies for wireless telephone and telegraph
systems and radio communication systems…
Upon termination of petitioner’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.
Issue:
Has E.O. No 546 modified the franchising and licensing arrangement for radio and television
broadcasting systems under Act No. 3846 and P.D. No. 576-A; consequently, the requirement
of obtaining a congressional/legislative franchise can already be dispensed with?
Ruling:
E.O. No. 546 integrated the Board of Communications and the Telecommunications Bureau
into a single entity known as the NTC, and vested the new body with broad powers, among
them, the power to issue Certificates of Public Convenience for the operation of
communications utilities, including radio and televisions broadcasting systems and the power
to grant permits for the use of radio frequencies. Additionally, NTC was vested with broad
rule making authority ‘to encourage a larger and more effective use of communications,
radio and television broadcasting facilities, and to maintain effective competition among
private entities in these activities whenever the Commission finds it reasonably feasible.
In the recent case of Albano vs. Reyes (175 SCRA 264), the Supreme Court 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.’ The Supreme Court stated that the
provision in the Constitution (Art. XII, Sec. 11) ‘that the issuance of a franchise, certificate or
other form of authorization for the operation of a public utility shall be subject to
amendment, alteration or repeal by Congress, does not necessarily imply . . . that only
Congress has the power to grant such authorization. Our statute books are replete with laws
granting specified agencies in the Executive Branch the power to issue such authorization for
certain classes of public utilities.’
We believe that E.O. No. 546 is one law which authorizes an administrative agency, the NTC,
to issue authorizations for the operation of radio and television broadcasting systems
without need of a prior franchise issued by Congress.
However, on May 3, 1994, the NTC, the Committee on Legislative Franchises of Congress, and
the Kapisanan ng mga Brodkaster sa Pilipinas of which petitioner is a member of good
standing, entered into a Memorandum of Understanding (MOU) that requires a
congressional franchise to operate radio and television stations. The MOU states in part:
‘The NTC shall continue to issue and grant permits or authorizations to operate radio and
television broadcast stations within their mandate under Section 15 of Executive Order No.
546, provided that such temporary permits or authorization to operate shall be valid for two
(2) years within which the permittee shall be required to file an application for legislative
franchise with Congress not later than December 31, 1994; provided finally, that if the
permittee of the temporary permit or authorization to operate fails to secure the legislative
franchise with Congress within this period, the NTC shall not extend or renew its permit or
authorization to operate any further.’
And whether or not the benefits of the Memorandum Circular extend to petitioner, the fact
is, as correctly pointed out by the appellate court, petitioner failed to secure a legislative
franchise by December 31, 1999.
Therefore, as long as the law remains unchanged, the requirement of a franchise to operate
a television station must be upheld. 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.

Petitioner stresses that Act. No. 3846 covers only the operation of radio and not television
stations. the Court of Appeals held that a congressional franchise is required for the
operation of radio and television broadcasting stations as this requirement under Act No.
3846 was not expressly repealed by P.D. No. 576-A nor E.O. No. 546.

The appellate court correctly ruled that a congressional franchise is necessary for petitioner
to operate television Channel. Even assuming that Act No. 3846 applies only to radio stations
and not to television stations as petitioner adamantly insists, the subsequent P.D. No. 576-A
clearly shows in Section 1 that a franchise is required to operate radio as well as television
stations.

There is nothing in P.D. No. 576-A which reveals any intention to do away with the
requirement of a franchise for the operation of radio and television stations. Section 6 of P.D.
No. 576-A merely identifies the regulatory agencies from whom authorizations, in addition to
the required congressional franchise, must be secured after December 31, 1981.

Thus, while it is correct to say that specified agencies in the Executive Branch have the power
to issue authorization for certain classes of public utilities, this does not mean that the
authorization or CPC issued by the NTC dispenses with the requirement of a franchise as this
is clearly required under P.D. No. 576-A.

The petitioner however insists that the Constitution provides in Art. XII, Sec. 11 that the
issuance of a franchise, certificate or other form of authorization for the operation of a public
utility shall be subject to amendment, alteration or repeal by Congress does not necessarily
imply, as petitioner posits, that only Congress has the power to grant such authorization. Our
statute books are replete with laws granting specified agencies in the Executive Branch the
power to issue such authorization for certain classes of public utilities.

Where there is a law such as P.D. No. 576-A which requires a franchise for the operation of
radio and television stations, that law must be followed until subsequently repealed. There is
nothing in the subsequent E.O. No. 546 which evinces an intent to dispense with the
franchise requirement. Thus, while it is correct to say that specified agencies in the Executive
Branch have the power to issue authorization for certain classes of public utilities, this does
not mean that the authorization or CPC issued by the NTC dispenses with the requirement of
a franchise as this is clearly required under P.D. No. 576-A.
Divinagracia v. Consolidated Broadcasting System, Inc.

Facts:
Divinagracia, alleging to be the actual and beneficial owner of 12% of Consolidated
Broadcasting System, Inc (CBS) and People’s Broadcasting Service, Inc. (PBS), filed two
complaints with the NTC against CBS and PBS praying for the cancellation of all the
provisional authorities or Certificates of Public Convenience (CPCs) as well as the legislative
franchise issued to CBS (R.A. 7582) and PBS (R.A. 7477) on account of the alleged violation of
the conditions set therein, to wit: failure to comply with the mandated public offering of at
least 30% of their common stocks. NTC dismissed the complaints. While positing that it had
full jurisdiction to revoke or cancel CPCs for violations or infractions of the terms and
conditions embodied therein, the complaints constitute collateral attacks on the legislative
franchise and that NTC is not competent to render judgment on such issue.
Issue:
WoN the NTC has the power to cancel the CPCs it has issued to legislative franchisees.

Held:
The Radio Control Act in 1931 requires broadcast stations to obtain a legislative franchise and
such requirement was not repealed by E.O. 546 which established the NTC, the
administrative agency which has regulatory jurisdiction over broadcast stations. When the
Congress grants a legislative franchise, it is the legal obligation of the NTC to facilitate the
operation by the franchisee of its broadcast station and since public administration of the
airwaves is a highly technical function, the Congress has delegated to the NTC the task of
administration over the broadcast spectrum. The licensing power of the NTC arises from the
necessary delegation by Congress of legislative power geared towards the orderly exercise by
franchisees of the rights granted them by Congress.

The life and authority of an administrative agency emanates solely from an Act of Congress,
and its faculties confined within the parameters set by the legislative branch of government.
Even as the NTC is vested with the power to issue CPCs to broadcast stations, it is not
expressly vested with the power to cancel such CPCs, or otherwise prevent broadcast
stations with duly issued franchises and CPCs from operating radio and television stations.
Although the Radio Control Act empowered the government through the then Secretary of
Public Works and Communications to suspend or revoke issued licenses, the NTC did not
retain such power when it was established by E.O. 546 to replace the previous regulatory
agencies. Said E.O. 546 promulgated by then President F. Marcos in the exercise of his
legislative power withheld from it the authority to cancel licenses and CPCs.
JOSE M. ROY III v. CHAIRPERSON TERESITA HERBOSA, GR No. 207246, 2016-11-22
Facts:
On June 28, 2011, the Court issued the Gamboa Decision,... that the term "capital" in Section
11, Article XII of the 1987 Constitution refers only to shares of stock entitled to vote in the
election of directors, and thus in the present case only to common shares, and not to the
total outstanding capital stock (common and non-voting preferred shares).
The Gamboa Decision attained finality on October 18, 2012, and Entry of Judgment was
thereafter issued on December 11, 2012
On May 20, 2013, the SEC, through respondent Chairperson Teresita J. Herbosa, issued SEC-
MC No. 8
Section 2. All covered corporations shall, at all times, observe the constitutional or statutory
ownership requirement. For purposes of determining compliance therewith, the required
percentage of Filipino ownership shall be applied to BOTH (a) the total number of
outstanding shares of stock entitled to vote in the election of directors; AND (b) the total
number of outstanding shares of stock, whether or not entitled to vote in the election of
directors.
Section 2 of SEC-MC No. 8 clearly incorporates the Voting Control Test or the controlling
interest requirement. In fact, Section 2 goes beyond requiring a 60-40 ratio in favor of
Filipino nationals in the voting stocks; it moreover requires the 60-40 percentage ownership
in the total number of outstanding shares of stock, whether voting or not. The SEC
formulated SEC-MC No. 8 to adhere to the Court's unambiguous pronouncement that "[f]ull
beneficial ownership of 60 percent of the outstanding capital stock, coupled with 60 percent
of the voting rights is required."[79] Clearly, SEC-MC No. 8 cannot be said to have been
issued with grave abuse of discretion
While SEC-MC No. 8 does not expressly mention the Beneficial Ownership Test or full
beneficial ownership of stocks requirement in the FIA, this will not, as it does not, render it
invalid meaning, it does not follow that the SEC will not apply this test in determining
whether the shares claimed to be owned by Philippine nationals are Filipino, i.e., are held by
them by mere title or in full beneficial ownership. To be sure, the SEC takes its guiding lights
also from the FIA and its implementing rules, the Securities Regulation Code

On June 10, 2013, petitioner Roy, as a lawyer and taxpayer, filed the Petition, assailing the
validity of SEC-MC No. 8 for not conforming to the letter and spirit of the Gamboa Decision
and Resolution and for having been issued by the SEC with grave abuse of discretion.

Issues:
whether the SEC gravely abused its discretion in issuing SEC-MC No. 8 in light of the Gamboa
Decision and Gamboa Resolution

Ruling:
SEC did not commit grave abuse of discretion amounting to lack or excess of jurisdiction
when it issued SEC-MC No. 8. To the contrary, the Court finds SEC-MC No. 8 to have been
issued in fealty to the Gamboa Decision and Resolution.

Gamboa Decision
"capital" in Section II, Article XII of the I987 Constitution refers only to shares of stock
entitled to vote in the election of directors, and thus in the present case only to common
shares, and not to the total outstanding capital stock (common and non-voting preferred
shares).

the Gamboa Resolution

Foreign Investments Act of 1991 ("FIA")

Gamboa Resolution put to rest the Court's interpretation of the term "capital"
Full beneficial ownership of stocks, coupled with appropriate voting rights is essential...
reiterates and confirms the interpretation that the term "capital" in Section 11, Article XII of
the 1987 Constitution refers to shares with voting rights, as well as with full beneficial
ownership.
Kilusang Mayo Uno Labor Center v. Jesus Garcia, Jr., LTFRB, Provincial Bus Operators
Association of the Philippines (PBOAP)
FACTS:
 public utilities – privately owned and operated businesses whose service are essential to
the general public; enterprises which specially cater to the needs of the public and
conducive to their comfort and convenience
 DOTC Sec. issued Memorandum Circular No. 90-395 to then LTFRB Chairman allowing
provincial bus operators to charge passengers rates within a range of 15% above and
15% below the LTFRB official rate for a period of 1 year
 PBOAP – pursuant to Memo. Cir. it filed an application for fare rate increase. An across-
the-board increase of eight and a half centavos (P0.085) per kilometer for all types of
provincial buses with a minimum-maximum fare range of fifteen (15%) percent over and
below the proposed basic per kilometer fare rate, with the said minimum-maximum
fare range applying only to ordinary, first class and premium class buses and a fifty-
centavo (P0.50) minimum per kilometer fare for aircon buses, was sought
 respondent LTFRB rendered a decision granting the fare rate increase in accordance
with a specified schedule of fares on a straight computation method
 DOTC Sec. issued Department Order No. 92-587 defining the policy framework on the
regulation of transport services. It provides inter alia that “Passenger fares shall also be
deregulated, except for the lowest class of passenger service (normally third class
passenger transport) for which the government will fix indicative or reference fares.
Operators of particular services may fix their own fares within a range 15% above and
below the indicative or reference rate.”
 LTFRB issued Memorandum Circular No. 92-009 promulgating the guidelines for the
implementation of DOTC Department Order No. 92-587, which provides, among others,
that:
“The issuance of a Certificate of Public Convenience is determined by public need. The
presumption of public need for a service shall be deemed in favor of the applicant, while
burden of proving that there is no need for the proposed service shall be the oppositor’s.”
“The existing authorized fare range system of plus or minus 15 per cent for provincial buses
and jeepneys shall be widened to 20% and -25% limit in 1994 with the authorized fare to be
replaced by an indicative or reference rate as the basis for the expanded fare range”
 PBOAP - availing itself of the deregulation policy of the DOTC allowing provincial
bus operators to collect plus 20% and minus 25% of the prescribed fare without
first having filed a petition for the purpose and without the benefit of a public
hearing, announced a fare increase of twenty (20%) percent of the existing fares
 KMU filed a petition before the LTFRB opposing the upward adjustment of bus
fares.
ISSUE: WON the above memoranda, circulars and/or orders of the DOTC and the LTFRB which, among
others, (a) authorize provincial bus and jeepney operators to increase or decrease the prescribed
transportation fares without application therefor with the LTFRB and without hearing and approval
thereof by said agency is in violation of Sec. 16(c) of CA 146, and in derogation of LTFRB’s duty to fix and
determine just and reasonable fares by delegating that function to bus operators, and (b) establish a
presumption of public need in favor of applicants for certificates of public convenience and place on the
oppositor the burden of proving that there is no need for the proposed service, in patent violation not
only of Sec. 16(c) of CA 146, as amended, but also of Sec. 20(a) of the same Act mandating that fares
should be “just and reasonable”
HELD: Yes.
 Section 16(c) of the Public Service Act, as amended, reads:
Sec. 16. Proceedings of the Commission, upon notice and hearing. — The Commission shall
have power, upon proper notice and hearing in accordance with the rules and provisions of
this Act, subject to the limitations and exceptions mentioned and saving provisions to the
contrary:
xxx xxx xxx
(c) To fix and determine individual or joint rates, tolls, charges, classifications, or schedules
thereof, as well as commutation, mileage kilometrage, and other special rates which shall be
imposed, observed, and followed thereafter by any public service: Provided, That the
Commission may, in its discretion, approve rates proposed by public services provisionally
and without necessity of any hearing; but it shall call a hearing thereon within thirty days
thereafter, upon publication and notice to the concerns operating in the territory affected:
Provided, further, That in case the public service equipment of an operator is used principally
or secondarily for the promotion of a private business, the net profits of said private business
shall be considered in relation with the public service of such operator for the purpose of
fixing the rates.
 LTFRB is authorized under EO 202, s. 1987 to determine, prescribe, approve and
periodically review and adjust, reasonable fares, rates and other related charges,
relative to the operation of public land transportation services provided by
motorized vehicles
 LTFRB – not authorized to delegate that power to a common carrier, a transport
operator, or other public service
 authority given by the LTFRB to the provincial bus operators to set a fare range
over and above the authorized existing fare, is illegal and invalid as it is tantamount
to an undue delegation of legislative authority
 rate should not be confiscatory as would place an operator in a situation where he
will continue to operate at a loss; rate should enable public utilities to generate
revenues sufficient to cover operational costs and provide reasonable return on the
investments
 CPC - authorization granted by the LTFRB for the operation of land transportation
services for public use as required by law. Pursuant to Section 16(a) of the Public
Service Act, as amended, the following requirements must be met before a CPC
may be granted, to wit: (i) the applicant must be a citizen of the Philippines, or a
corporation or co-partnership, association or joint-stock company constituted and
organized under the laws of the Philippines, at least 60 per centum of its stock or
paid-up capital must belong entirely to citizens of the Philippines; (ii) the applicant
must be financially capable of undertaking the proposed service and meeting the
responsibilities incident to its operation; and (iii) the applicant must prove that the
operation of the public service proposed and the authorization to do business will
promote the public interest in a proper and suitable manner; there must be proper
notice and hearing before the PSC can exercise its power to issue a CPC
 LTFRB Memorandum Circular No. 92-009, Part IV is incompatible and inconsistent
with Section 16(c)(iii) of the Public Service Act which requires that before a CPC will
be issued, the applicant must prove by proper notice and hearing that the
operation of the public service proposed will promote public interest in a proper
and suitable manner. On the contrary, the policy guideline states that the
presumption of public need for a public service shall be deemed in favor of the
applicant.
Globe Telecoms v NTC
G.R. No. 143964
July 26, 2004
FACTS:
1. On 4 June 1999, Smart filed a Complaint with public respondent NTC, praying that
NTC order the immediate interconnection of Smarts and Globes GSM networks.
Smart alleged that Globe, with evident bad faith and malice, refused to grant
Smarts request for the interconnection of SMS.
2. Globe filed its Answer with Motion to Dismiss on 7 June 1999, interposing grounds
that the Complaint was premature, Smarts failure to comply with the conditions
precedent required in Section 6 of NTC Memorandum Circular 9-7-93,19 and its
omission of the mandatory Certification of Non-Forum Shopping.
3. On 19 July 1999, NTC issued the Order now subject of the present petition.
a. both Smart and Globe were equally blameworthy for their lack of
cooperation in the submission of the documentation required for
interconnection and for having unduly maneuvered the situation into the
present impasse
b. NTC held that since SMS falls squarely within the definition of value-
added service or enhanced-service given in
NTC Memorandum Circular No. 8-9-95 (MC No. 8-9-95)
the implementation of SMS interconnection is mandatory
c. The NTC also declared that both Smart and Globe have been providing
SMS without authority from it
4. Globe filed with the Court of Appeals a Petition for Certiorari and Prohibition25 to
nullify and set aside the Order and to prohibit NTC from taking any further action in
the case. Globe
a. reiterated its previous arguments that the complaint should have been
dismissed for failure to comply with conditions precedent and the non-
forum shopping rule.
b. claimed that NTC acted without jurisdiction in declaring that it had no
authority to render SMS, pointing out that the matter was not raised as
an issue before it at all.
c. alleged that the Order is a patent nullity as it imposed an administrative
penalty for an offense for which neither it nor Smart was sufficiently
charged nor heard on in violation of their right to due process
5. The CA issued a TRO on 31 Aug 1999.
6. In its Memorandum, Globe called the attention of the CA in an earlier NTC decision
regarding Islacom, holding that SMS is a deregulated special feature and does not
require the prior approval of the NTC. Globe that its departure from its ruling in the
Islacom case constitutes a denial of equal protection of the law.
7. On 22 Nov 1999, the CA affirmed in toto the NTC Order.
8. On 21 December 1999, Globe filed a Motion for Partial Reconsideration, seeking to
reconsider only the portion of the Decision that upheld NTCs finding that Globe
lacked the authority to provide SMS and its imposition of a fine. After the Court of
Appeals denied the Motion , Globe elevated the controversy to this Court
ISSUES:
1. Whether NTC may legally require Globe to secure NTC approval before it continues
providing SMS;
2. Whether SMS is a VAS under the PTA, or special feature under NTC MC No. 14-11-
97; and
3. Whether NTC acted with due process in levying the fine against Globe
RULING:
1. The petition is GRANTED. The Decision of the Court of Appeals dated 22 November
1999, as well as its Resolution dated 29 July 2000, and the assailed Order of the
NTC dated 19 July 1999 are hereby SET ASIDE.
2. The assailed NTC Decision invokes the NTC Implementing Rules of the PTA (MC No.
8-9-95) to justify its claim that Globe and Smart need to secure prior authority from
the NTC before offering SMS.
a. The statutory basis for the NTCs determination must be thoroughly
examined.
b. Next, the regulatory framework devised by NTC in dealing with VAS
should be examined. In short, the legal basis invoked by NTC in claiming
that SMS is VAS has not been duly established. The fault falls squarely on
NTC.
4. NTC violated several of these cardinal rights due Globe in the promulgation of the
assailed Order.
a. The NTC Order is not supported by substantial evidence. Neither does it
sufficiently explain the reasons for the decision rendered.
b. Globe and Smart were denied opportunity to present evidence on the
issues relating to the nature of VAS and the prior approval. Another
disturbing circumstance attending this petition is that until the
promulgation of the assailed Order Globe and Smart were never
informed of the fact that their operation of SMS without prior authority
was at all an issue for consideration.
c. The imposition of fine is void for violation of due process. The matter of
whether NTC could have imposed the fine on Globe in the assailed Order
is necessarily related to due process considerations
5. In summary:
a. there is no legal basis under the PTA or the memorandum circulars
promulgated by the NTC to denominate SMS as VAS, and any subsequent
determination by the NTC on whether SMS is VAS should be made with
proper regard for due process and in conformity with the PTA;
b. the assailed Order violates due process for failure to sufficiently explain
the reason for the decision rendered, for being unsupported by
substantial evidence, and for imputing violation to, and issuing a
corresponding fine on, Globe despite the absence of due notice and
hearing which would have afforded Globe the right to present evidence
on its behalf