By Vann Marlo M. Villegas
ABS-CBN Corp. stands to suffer millions of pesos in foregone advertising revenues daily, impair its credit standing, and risks defaulting on debts after it was forced to stop broadcasting with the issuance of a cease-and-desist order (CDO) by the National Telecommunications Commission (NTC), the Lopez-led media network said.
In its 46-page petition for temporary restraining order and/preliminary injunction, the listed company said it was losing P30-P35 million every day it was off air.
“While its most immediate loss would be loss of advertising revenues, ABS-CBN risks incurring a lot more,” it said. “Because of the CDO, ABS-CBN will not be able to service its debts and this would constrain its creditors to require collateral from its loans.”
The network noted that it had received a notice from a bank demanding that it come up with a loan collateral, and that its credit lines and letters of credit “had already been adversely affected,” hindering activities that it funded.
“Even if the total potential financial impact of the foregoing may be estimated, the injury is still irreparable because ABS-CBN cannot recover its losses from the NTC,” it said.
ABS-CBN told the stock exchange it has P16 billion in short-term liabilities due this year and P26.5 billion in long-term liabilities.
The NTC on May 5 issued the order against ABS-CBN, immediately directing it to stop broadcast operations in radio and television. ABS-CBN turned directly to the Supreme Court (SC) on May 7 and filed the petition.
The CDO is contrary to the guidance provided by the Department of Justice in a Senate hearing that the Congress may authorize the NTC to issue provisional authority for ABS-CBN to operate while it awaits approval of its franchise renewal application.
The House of Representatives sent a letter and the Senate issued a resolution asking the NTC to issue the provisional authority.
ABS-CBN also noted that the injury extends to the public as its shutdown would result in loss of livelihood for its more than 11,000 employees and their families.
It also claimed that with the closure, the public is deprived of a source of news and entertainment in the time of the pandemic and lockdown “just when it is most needed to disseminate information.”
The network also said that it had raised more than P237 million to support the fight against the coronavirus disease 2019, and that it plans to do more but the shutdown order limited its capacity to do so.
PROVISIONAL AUTHORITY
Legal experts said the NTC should have granted ABS-CBN provisional authority to operate when the validity of its franchise lapsed as the issuance has been the practice, pending the renewal in Congress.
Antonio G.M. La Viña, a law professor at the University of the Philippines, said not granting the provisional authority to the network is “disruptive” of the business operations of companies that have been issued a franchise.
“Basically kasi, ang rule, ang practice is kung mag-expire ang franchise mo, hindi ka titigil, hindi ka mag-o-off air, bibigyan ka ng provisional authority until ma-renew ‘yung franchise mo or ma-deny. That’s always been the practice,” he told BusinessWorld in a phone interview.
(Basically, the practice is if your franchise is expiring, you won’t stop operating, you will not go off-air, and you will be given provisional authority until your franchise is renewed or denied. That’s always been the practice.)
“Simple lang siya (It’s simple). If you are an existing business, you have business, you have loans, you have suppliers, you have investors, it’s very disruptive you tell them to stop, only to be given the franchise a week from now, one month from now, one year later,” he added.
Eugenio H. Villareal, a law professor at the Ateneo de Manila University, said the NTC should have “reflected well” before issuing the order.
“ABS-CBN, and by the extension the viewing public, have the constitutional right to equal protection of the laws as well as due process,” he said in an e-mailed response to questions.
Nilo T. Divina, dean of the University of Santo Tomas Faculty of Civil Law, said the grant of provisional authority by the NTC, like any regulatory authority is “on a case by case basis.”
He noted that under Section 3, Rule 12, of the Rules of Practice and Procedure of the NTC, the commission “may issue provisional authorizations on the basis of the documents and applicant’s compliance with the requirements of the case, and when public interest so requires.”
“Clearly, the use of the word ‘may’ gives NTC enough discretion in evaluating applications for provisional authority on a case by case basis,” he said.
Mr. Divina, however, said that statements made during legislative hearings are made under oath and a witness who testifies falsely may be cited in contempt.
“When NTC reneged on its statement under oath to grant ABS-CBN a provisional authority after the expiration of the latter’s franchise, it’s as if NTC testified falsely during the committee hearing and this could be a valid ground for citing NTC in contempt,” he added.
Mr. Divina said that a resolution issued by the Senate alone does not function as a law and is not legally binding on the commission, as only joint resolution by the Congress signed by the President has an effect of a law. He, however, noted that even if there is a joint resolution, “jurisprudence has yet to address” if it can extend franchise or direct the NTC to issue the provisional authority.
LEGAL STEP
Filing of petition for certiorari and prohibition with prayer for the issuance of a TRO and/or writ of preliminary injunction is one of the steps ABS-CBN could take aside from abiding by the order of the NTC, which will be followed by a hearing, Mr. Divina said.
While filing the petition can be filed to the SC, Mr. Divina said filing the petition to the Court of Appeals is the more appropriate course, following the hierarchy of courts.
Mr. Villareal, said “it will not be a surprise” if the network filed the petition to the SC as it may involve a matter of “transcendental importance,” adding that it is an exception under the rules that an act or omission by a quasi-judicial agency may be reviewed by the appellate court.
ABS-CBN’s option is to go back to Congress and have lawmakers renew its franchise, Mr. La Viña said. He noted that if the rules of the NTC will be followed, wherein it has to ask for a reconsideration before going to the court, it could take six months to two years.
This could give the Congress an excuse to stall the franchise renewal and defer until the case is settled.
“So but theoretically, there are these options legally that they can pursue together with the Congress option. But the problem with the legal part, is it can give Congress an excuse for not acting on it,” Mr. La Viña said.
