Press Release
May 13, 2020

Drilon bill provides non-expiration of franchise

Amid franchise woes involving the legislative franchise of ABS-CBN broadcasting network, Senate Minority Leader Franklin Drilon filed on Wednesday Senate Bill No. 1530 which provides for the non-expiration of a franchise as long as the application for its renewal has been filed.

SBN 1530 amends Section 18, Book VII, Chapter 3 of Revised Administrative Code which provides for the non-expiration of a license where the licensee has filed a timely and sufficient application for renewal, until a final determination by the agency is made. The amendment expands the provision to also include franchises granted by Congress.

"While it is recognized that a franchise, license or certificate is not a privilege, this rule must be tempered with considerations of equity, fairness, due process, and equal protection, particularly when the service being provided has been so woven into everyday life, that its abrupt cessation could give rise to devastating consequences," Drilon said in his explanatory note.

Last week, the National Telecommunications Commission (NTC) shut down the largest broadcast company in the country upon lapse of its franchise. The application for renewal of ABS-CBN's franchise is still pending with the House of Representatives. A bill seeking to renew its franchise CBN has been filed in the House of Representatives as early as November 2016 and was refiled in 2019. The company's operations were forced to an abrupt stop when the franchise was not acted upon until its expiration on May 4.

"We should prevent similar incidents from happening again in the future. We cannot afford to wake up one day without water, electricity or public transportation, only because an agency, a department or a branch of government failed to act on the renewal before the lapse of the license or franchise," Drilon said.

Drilon's proposed amendment will ensure that a license or franchise will not expire until the application for renewal has been acted upon by the agency, department, or branch of government that grants or renews such license or franchise.

Drilon's proposed amendment also states that "there is final determination when an applicant is given written notice of approval or denial of its application for renewal."

"Inaction on a pending application shall not be considered a denial thereof," it adds.

"This makes it incumbent upon the issuing authority to act on an application and avoid situations where silence or inaction could effectively bar the operations of an enterprise," Drilon explained.

The former justice secretary said the bill will not violate the power of the Congress with regard to franchises under the Constitution.

He explained: "The bill does not diminish the Congress' power to grant franchises as it merely addresses the situation in the interim period. It places in the statute what has been a common practice in the past when it comes to renewal of an expiring franchise, which is to allow it to operate, provided that an application for renewal has been filed within the same Congress."

"The amendment we propose is merely an instruction to the concerned agency or branch of government to act decisively on an application for renewal, and to express its decision in clear, unmistakable terms, to ensure that the applicant is not punished for the authority's indecision or inaction," Drilon said.

"The bill does not propose to do away with the license or franchise requirement, despite views expressed by the Supreme Court that the power to grant franchises may be delegated by Congress," he added.

In Albano v. Reyes, the court ruled that while the Constitution reserves to Congress the right to amend, alter or repeal a franchise, it does not say that a Congressional franchise is required before each and every public utility may operate.

The Supreme Court, in the case of Associated Communications & Wireless Services v. National Telecommunications Commission has recognized that there are existing statutes which delegate to agencies the power to issue a franchise, certificate or authorization for certain classes of public utilities.

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