Philippines ABS-CBN Argues for Franchise Renewal

Mario Bautista, general counsel for Filipino broadcast network ABS-CBN has told a congressional hearing that the 50-year cap imposed by the country’s Constitution on franchises refers to the maximum period granted per franchise, not the number of years a company is allowed to operate.

The hearing is being held in the wake of the network’s closure on May 5 by order of the country’s National Telecommunications Commission for alleged “highly abusive practices” by ABS-CBN, including the alleged launch of its KBO channel without a permit, and allowing foreign investors to control the company.

“The 50-year limit applies to each franchise, certificate of authorization, and does not prohibit the grant of a new franchise to the same entity. Hence, Congress may grant several franchises to the same public utility.” said Mr Bautista at the House panel hearing on the network’s franchise renewal on June 17.

According to Bautista, section 11 of Article 12 of the 1987 Constitution states that “no franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted… for a longer period than 50 years.”

Similarly, the Department of Justice said Congress can grant a franchise as long as it does not exceed 50 years.

Justice Assistant Secretary Nicholas Ty also said at the hearing that Congress can issue another franchise to the same corporation after its franchise has lapsed.

“Congress can once again issue a franchise to the same applicant, the same grantee. Tulad ng sinabi ni Atty. Bautista ng ABS-CBN, ang 50-year limitation under the Constitution pertains to the franchise itself and not to the grantee,” said Ty.

“Congress can issue multiple franchises that collectively exceed 50 years as long as the individual franchises do not exceed 50 years,” he added.

Bautista, meanwhile, cited companies that have been operating for over 50 years but got their franchises renewed by Congress, such as PLDT, Inc. (100 years), Meralco (126 years), Visayas Electric Company (102 years), Philippine Airlines (93 years), Davao Light and Power Company (95 years), GMA Network (70 years), IBC Philippines (62 years), and TV5 (62 years).

Other lawmakers at the hearing have likewise stated that the 50-year limit applies to each franchise granted by Congress.

“The Constitution is very clear, no one franchise should be more than 50 years. They (ABS-CBN) are not applying for a 51-year franchise, they are applying for a renewal of their 25-year franchise,” added Rep. Lito Atienza.

Rep. Rufus Rodriguez, meanwhile, called the issue “dead and clear” and pointed out that Congress has repeatedly given franchises to companies that have existed for more than 50 years.

“It is very crystal clear that this is a non-issue and we should proceed now to other issues. This issue is, again, dead and clear. It is clear in the Constitution, clear by contemporaneous construction, and therefore this issue has no bearing at all in this franchise application of ABS-CBN,” he said.

Rep. Edcel Lagman also said that contrary interpretation of the provision is “counterproductive” because disqualifying a corporation from securing a franchise renewal would be unconstitutional.

“Corporations which have been in operation for more than 50 years have tremendous investments and gained invaluable experience and expertise, and have inevitable patronage. They should be allowed to continue serving the public and the nation instead of retiring them into oblivion,” he said.

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