POLI - #88

Divinagracia v. CBS (2009)

Doctrine:
Although there is no doubt that the President may exercise the authority granted to him under Section
5 of R.A. No. 7477 (charter of PBS) which provides that the President of the Philippines may
temporarily take over and operate the stations of the grantee, temporarily suspend the operation of
any stations in the interest of public safety, security and public welfare, or authorize the temporary
use and operation thereof by any agency of the Government, such authority can be exercised only
under limited and rather drastic circumstances. They still do not vest in the NTC the broad authority to
cancel licenses and permits.
Facts:
Santiago Divinagracia alleged that Consolidated Broadcasting System, Inc. (CBS) and Peoples
Broadcasting Service, Inc. (PBS), two of three radio networks that comprise Bombo Radyo Philippines,
violated the terms of their congressional franchises when they failed to offer at least 30 percent of their
common stocks to the public as required by law and their legislative franchises.
Divinagracia claimed that because of the misuse and violation of their franchises, the provisional
authorities granted by the NTC to PBS and CBS to install, operate and maintain various AM and FM
broadcast stations had to be cancelled.
The NTC however dismissed the complaints, claiming that while it had full jurisdiction to revoke or
cancel a PA or CPC for violations or infractions of the terms and conditions embodied therein, the
complaints actually constituted collateral attacks on the legislative franchises of the two networks which
are more properly the subject of a quo warranto action to be commenced by the Solicitor General in the
name of the Republic of the Philippines.
Divinagracia went to the Court of Appeals which upheld the NTCs denial. He then elevated the matter
to the Supreme Court.
Issue:
Whether or not the NTC has the power to cancel the CPCs it has issued to legislative franchisees
Held/Ratio:
No, the NTC does not have the power to cancel CPCs.
The Radio Control Act of 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requirement was not repealed by E.O. 546 which established the NTC, the administrative agency which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 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.
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.
But 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. There is no such expression in the law,
and by presuming such right the Court will be acting contrary to the stated State interest as expressed in
respondents legislative franchises.
Although there is no doubt that the President may exercise the authority granted to him under Section 5
of R.A. No. 7477 (charter of PBS) which provides that the President of the Philippines may temporarily
take over and operate the stations of the grantee, temporarily suspend the operation of any stations in
the interest of public safety, security and public welfare, or authorize the temporary use and operation
thereof by any agency of the Government, such authority can be exercised only under limited and rather
drastic circumstances. They still do not vest in the NTC the broad authority to cancel licenses and
permits.

Digested by: AERON B. HALOS