Case Summary (G.R. No. 162272)
Petitioner, Respondents, and Key Dates
Petitioner: Santiago C. Divinagracia (12% shareholder)
Respondents: Consolidated Broadcasting System, Inc. (CBS); People’s Broadcasting Service, Inc. (PBS)
Key Dates:
• R.A. No. 7477 enacted 5 May 1992 (PBS franchise)
• R.A. No. 7582 enacted 27 May 1992 (CBS franchise)
• Provisional Authorities issued 1993–1998
• Complaints filed with NTC on 1 March 1999
• NTC decision dismissing complaints on 1 August 2000
• Court of Appeals affirmed 18 February 2004
• Supreme Court decision 7 April 2009
Applicable Law and Constitutional Basis
The case is governed by the 1987 Philippine Constitution, particularly Article XII, Section 11 (public utility franchises), Article XVI, Section 11(1) (regulation of mass media monopolies), and Article III, Section 3 (freedom of expression). Statutory background includes the Radio Control Act of 1931 (Act No. 3846), P.D. No. 1 (1972), E.O. No. 546 (1979), and the dual requirement of congressional franchise plus NTC-issued CPC for broadcast operations.
Legislative Franchise and Licensing Regime
Since Act No. 3846 (1931), any radio broadcaster must secure a legislative franchise and then a CPC from the administrative authority. P.D. No. 576-A (1974) and E.O. No. 546 (1979) reallocated licensing functions to the Board of Communications and later the NTC, without abrogating the franchise requirement. Associated Communications v. NTC (2003) reaffirmed that Congress alone grants franchises, and the NTC’s CPC implements but does not replace congressional authority.
Petitioner’s Complaints and NTC’s Dismissal
Divinagracia’s NTC complaints alleged CBS and PBS violated their franchises’ “democratization of ownership” clause—mandating an initial public offering for at least 30% stock within three years—and thus misused their franchises. He sought cancellation of all provisional authorities and CPCs. The NTC recognized its power to revoke CPCs for license infractions but deemed itself incompetent to adjudicate franchise compliance and dismissed the complaints, suggesting a quo warranto action by the Solicitor General as proper.
Court of Appeals and Central Issue
The Court of Appeals upheld the NTC, characterizing the complaints as collateral attacks on congressional franchises. Both tribunals held that only the courts via quo warranto could determine franchise forfeiture. The Supreme Court framed the ultimate question: Does the NTC have jurisdiction to cancel its own licenses when franchisees allegedly violate franchise terms?
Delegation of Licensing Power and Its Limits
Under separation of powers, Congress enacts franchises and may delegate technical regulation of the spectrum to the NTC. E.O. No. 546 enumerates the NTC’s functions—issuing CPCs, prescribing rules, supervising stations—but does not expressly confer the power to revoke or cancel CPCs. Unlike Act No. 3846’s Section 3(m), which authorized the Secretary of Public Works and Communications to suspend or revoke licenses, neither P.D. No. 1 nor E.O. No. 546 retains such power for the NTC.
Constitutional Free Expression and Strict Scrutiny
Broadcast media enjoys First Amendment–equivalent protection under Section 3, Article III of the 1987 Constitution, tempered by the “scarcity doctrine” recognized in Red Lion (U.S.) and Philippine jurisprudence. License cancellation constitutes a prior restraint of free speech so severe it requires str
...continue readingCase Syllabus (G.R. No. 162272)
Parties and Case Reference
- G.R. No. 162272, April 7, 2009, Second Division
- Petitioner: Santiago C. Divinagracia (represented posthumously by his daughter, Elsa)
- Respondents: Consolidated Broadcasting System, Inc. (CBS) and People’s Broadcasting Service, Inc. (PBS)
- Petition under Rule 43 of the Rules of Court for review of NTC and Court of Appeals decisions
Factual Background
- CBS and PBS incorporated in 1961 and 1965, respectively, operating radio broadcasting services
- PBS granted a 25-year legislative franchise under R.A. No. 7477 (effective May 5, 1992)
- CBS’s franchise extended for 25 years under R.A. No. 7582 (effective May 27, 1992), itself extending R.A. No. 3902
- Both statutes contain a “democratization of ownership” clause requiring public offering of at least 30% of common stocks within three years, with no single person holding over 5%
- Between 1993 and 1998, NTC issued four Provisional Authorities to PBS and six to CBS for various AM, FM, and cable stations
Petitioner’s Allegations
- Divinagracia claims to own 12% of the shares of each of PBS and CBS
- Alleged failure by PBS and CBS to comply with the 30% public offering mandate constitutes misuse of franchise and contravention of law
- Prayed for cancellation of all Provisional Authorities and Certificates of Public Convenience (CPCs) issued by the NTC
Procedural History
- March 1, 1999: Divinagracia filed separate complaints with the NTC against PBS and CBS
- August 1, 2000: NTC dismissed both complaints, ruling it lacked competence to cancel franchises and suggesting quo warranto as proper remedy
- Motion for reconsideration denied by NTC
- Petition for review under Rule 43 lodged with the Court of Appeals
- February 18, 2004: Court of Appeals upheld NTC dismissal, confirming complaints were collateral attacks on legislative franchises
- Elevated to the Supreme Court: principal issue is NTC’s jurisdiction to cancel CPCs and Provisional Authorities
Core Issue
- Does the National Telecommunications Commission possess authority to cancel or revoke Certificates of Public Convenience and Provisional Authorities it issued to holders of duly-enacted legislative franchises on grounds of franchise term violations?
Regulatory and Statutory Framework
- Dual requirement for broadcast operation:
• Legislative franchise by act of Congress (Radio Control Act of 1931, sustained by later laws)
• License or CPC issued by the NTC (derivi