G.R. Nos. 175769-70. January 19, 2009.

* sports event and entertainment programs other than those

provided for by mass media and afforded television programs to
ABS-CBN BROADCASTING CORPORATION, petitioner, vs. attain a well informed, well-versed and culturally refined citizenry
PHILIPPINE MULTI-MEDIA SYSTEM, INC., CESAR G. REYES, and enhance their socio-economic growth: WHEREAS, cable
FRANCIS CHUA (ANG BIAO), MANUEL F. ABELLADA, RAUL B. DE television (CATV) systems could support or supplement the
MESA, AND ALOYSIUS M. COLAYCO, respondents. services provided by television broadcast facilities, local and
overseas, as the national information highway to the countryside.

Intellectual Property Code of the Philippines (R.A. No. 8293);

Intellectual property protection is merely a means towards the end
Copyrights; Broadcasting; Rebroadcasting is “the simultaneous
of making society benefit from the creation of its men and women
broadcasting by one broadcasting organization of the broadcast
of talent and genius.—Intellectual property protection is merely a
of another broadcasting organization.”—Under the Rome
means towards the end of making society benefit from the
Convention, rebroadcasting is “the simultaneous broadcasting by
creation of its men and women of talent and genius. This is the
one broadcasting organization of the broadcast of another
essence of intellectual property laws, and it explains why certain
broadcasting organization.” The Working Paper prepared by the
products of ingenuity that are concealed from the public are
Secretariat of the Standing Committee on Copyright and Related
outside the pale of protection afforded by the law. It also explains
Rights defines broadcasting organizations as “entities that take
why the author or the creator enjoys no more rights than are
the financial and editorial responsibility for the selection and
consistent with public welfare.
arrangement of, and investment in, the transmitted content.”
Evidently, PMSI would not qualify as a broadcasting organization
because it does not have the aforementioned responsibilities Same; Broadcasting; The radio spectrum is a finite resource that is
imposed upon broadcasting organizations, such as ABS-CBN. a part of the national patrimony and the use thereof is a privilege
conferred upon the grantee by the State and may be withdrawn
anytime, after due process.—PMSI was likewise granted a
Same; Same; While the Rome Convention gives broadcasting
legislative franchise under Republic Act No. 8630, Section 4 of
organizations the right to authorize or prohibit the rebroadcasting
which similarly states that it “shall provide adequate public service
of its broadcast, however, this protection does not extend to cable
time to enable the government, through the said broadcasting
retransmission.—While the Rome Convention gives broadcasting
stations, to reach the population on important public issues;
organizations the right to authorize or prohibit the rebroadcasting
provide at all times sound and balanced programming; promote
of its broadcast, however, this protection does not extend to cable
public participation such as in community programming; assist in
retransmission. The retransmission of ABS-CBN’s signals by PMSI
the functions of public information and education x x x.” Section 5,
—which functions essentially as a cable television—does not
paragraph 2 of the same law provides that “the radio spectrum is
therefore constitute rebroadcasting in violation of the former’s
a finite resource that is a part of the national patrimony and the
intellectual property rights under the IP Code. It must be
use thereof is a privilege conferred upon the grantee by the State
emphasized that the law on copyright is not absolute. The IP Code
and may be withdrawn anytime, after due process.”
provides that: Sec. 184. Limitations on Copyright.—184.1.
Notwithstanding the provisions of Chapter V, the following acts
shall not constitute infringement of copyright: x x x x (h) The use Same; Telecommunication Franchise; In Telecom & Broadcast
made of a work by or under the direction or control of the Attys. of the Phils., Inc. v. COMELEC, 289 SCRA 337 (1998), the
Government, by the National Library or by educational, scientific Court held that a franchise is a mere privilege which may be
or professional institutions where such use is in the public interest reasonably burdened with some form of public service.—In
and is compatible with fair use. Telecom. & Broadcast Attys. of the Phils., Inc. v. COMELEC, 289
SCRA 337 (1998), the Court held that a franchise is a mere
privilege which may be reasonably burdened with some form of
Same; Same; Must-Carry Rule; The imposition of the must-carry
public service. Thus: All broadcasting, whether by radio or by
rule is within the National Telecommunications’ (NTC’s) power to
television stations, is licensed by the government. Airwave
promulgate rules and regulations, as public safety and interest
frequencies have to be allocated as there are more individuals
may require, to encourage a larger and more effective use of
who want to broadcast than there are frequencies to assign. A
communications, radio and television broadcasting facilities, and
franchise is thus a privilege subject, among other things, to
to maintain effective competition among private entities in these
amendment by Congress in accordance with the constitutional
activities whenever the commission finds it reasonably feasible.—
provision that “any such franchise or right granted . . . shall be
The carriage of ABS-CBN’s signals by virtue of the must-carry rule
subject to amendment, alteration or repeal by the Congress when
in Memorandum Circular No. 04-08-88 is under the direction and
the common good so requires.”
control of the government though the NTC which is vested with
exclusive jurisdiction to supervise, regulate and control
telecommunications and broadcast services/facilities in the Same; Same; In truth, radio and television broadcasting
Philippines. The imposition of the must-carry rule is within the companies, which are given franchises, do not own the airwaves
NTC’s power to promulgate rules and regulations, as public safety and frequencies through which they transmit broadcast signals
and interest may require, to encourage a larger and more and images.—In truth, radio and television broadcasting
effective use of communications, radio and television companies, which are given franchises, do not own the airwaves
broadcasting facilities, and to maintain effective competition and frequencies through which they transmit broadcast signals
among private entities in these activities whenever the and images. They are merely given the temporary privilege of
Commission finds it reasonably feasible. As correctly observed by using them. Since a franchise is a mere privilege, the exercise of
the Director-General of the IPO: Accordingly, the “Must-Carry the privilege may reasonably be burdened with the performance
Rule” under NTC Circular No. 4-08-88 falls under the foregoing by the grantee of some form of public service. x x x There is
category of limitations on copyright. This Office agrees with the likewise no merit to ABS-CBN’s claim that PMSI’s carriage of its
Appellant [herein respondent PMSI] that the “Must-Carry Rule” is signals is for a commercial purpose; that its being the country’s
in consonance with the principles and objectives underlying top broadcasting company, the availability of its signals allegedly
Executive Order No. 436, to wit: The Filipino people must be given enhances PMSI’s attractiveness to potential customers; or that the
wider access to more sources of news, information, education,
unauthorized carriage of its signals by PMSI has created found to be in accord with the Constitution before it was finally
competition between its Metro Manila and regional stations. enacted and approved.

Same; Same; Anyone in the country who owns a television set and Same; As a general rule, the question of constitutionality must be
antenna can receive ABS-CBN’s signals for free.—Administrative raised at the earliest opportunity so that if not raised in the
charges cannot be based on mere speculation or conjecture. The pleadings, ordinarily it may not be raised in the trial, and if not
complainant has the burden of proving by substantial evidence raised in the trial court, it will not be considered on appeal.—The
the allegations in the complaint. Mere allegation is not evidence, records show that petitioner assailed the constitutionality of
and is not equivalent to proof. Anyone in the country who owns a Memorandum Circular No. 04-08-88 by way of a collateral attack
television set and antenna can receive ABS-CBN’s signals for free. before the Court of Appeals. In Philippine National Bank v. Palma,
Other broadcasting organizations with free-to-air signals such as 466 SCRA 307 (2005), we ruled that for reasons of public policy,
GMA-7, RPN-9, ABC-5, and IBC-13 can likewise be accessed for the constitutionality of a law cannot be collaterally attacked. A law
free. No payment is required to view the said channels because is deemed valid unless declared null and void by a competent
these broadcasting networks do not generate revenue from court; more so when the issue has not been duly pleaded in the
subscription from their viewers but from airtime revenue from trial court. As a general rule, the question of constitutionality must
contracts with commercial advertisers and producers, as well as be raised at the earliest opportunity so that if not raised in the
from direct sales. pleadings, ordinarily it may not be raised in the trial, and if not
raised in the trial court, it will not be considered on appeal. In
Same; Same; It must be emphasized that, as a national Philippine Veterans Bank v. Court of Appeals, 462 SCRA 336
broadcasting organization, one of ABS-CBN’s responsibilities is to (2005), we held: We decline to rule on the issue of
scatter its signal to the widest area of coverage as possible.— constitutionality as all the requisites for the exercise of judicial
There is no merit to ABS-CBN’s argument that PMSI’s carriage of review are not present herein. Specifically, the question of
Channels 2 and 23 resulted in competition between its Metro constitutionality will not be passed upon by the Court unless, at
Manila and regional stations. ABS-CBN is free to decide to pattern the first opportunity, it is properly raised and presented in an
its regional programming in accordance with perceived demands appropriate case, adequately argued, and is necessary to a
of the region; however, it cannot impose this kind of programming determination of the case, particularly where the issue of
on the regional viewers who are also entitled to the free-to-air constitutionality is the very lis mota presented. x x x
channels. It must be emphasized that, as a national broadcasting
organization, one of ABS-CBN’s responsibilities is to scatter its Judgments; Where the issues have become moot, there is no
signals to the widest area of coverage as possible. That it should justiciable controversy, thereby rendering the resolution of the
limit its signal reach for the sole purpose of gaining profit for its same of no practical use or value.—It bears stressing that the
regional stations undermines public interest and deprives the proceedings for punishment of indirect contempt are criminal in
viewers of their right to access to information. nature. The modes of procedure and rules of evidence adopted in
contempt proceedings are similar in nature to those used in
Broadcasting; Must-Carry Rule; The “Must-Carry Rule” favors criminal prosecutions. While it may be argued that the Court of
both broadcasting organizations and the public.—The “Must- Appeals should have ordered respondents to comment, the issue
Carry Rule” favors both broadcasting organizations and the public. has been rendered moot in light of our ruling on the merits. To
It prevents cable television companies from excluding order respondents to comment and have the Court of Appeals
broadcasting organization especially in those places not reached conduct a hearing on the contempt charge when the main case
by signal. Also, the rule prevents cable television companies from has already been disposed of in favor of PMSI would becircuitous.
depriving viewers in far-flung areas the enjoyment of programs Where the issues have become moot, there is no justiciable
available to city viewers. In fact, this Office finds the rule more controversy, thereby rendering the resolution of the same of no
burdensome on the part of the cable television companies. The practical use or value.
latter carries the television signals and shoulders the costs without
any recourse of charging. On the other hand, the signals that are
carried by cable television companies are dispersed and scattered
by the television stations and anybody with a television set is free DECISION
to pick them up.
YNARES-SANTIAGO, J.:
Constitutional Law; One of the essential requisites for a successful
judicial inquiry into constitutional questions is that the resolution
This petition for review on certiorari assails the July 12, 2006
of the constitutional question must be necessary in deciding the
Decision of the Court of Appeals in CA-G.R. SP Nos. 88092 and
case.—With regard to the issue of the constitutionality of the
90762, which affirmed the December 20, 2004 Decision of the
must-carry rule, the Court finds that its resolution is not necessary
Director-General of the Intellectual Property Office (IPO) in Appeal
in the disposition of the instant case. One of the essential
No. 10-2004-0002. Also assailed is the December 11, 2006
requisites for a successful judicial inquiry into constitutional
Resolution3 denying the motion for reconsideration.
questions is that the resolution of the constitutional question
must be necessary in deciding the case. In Spouses Mirasol v.
Court of Appeals, 351 SCRA 44 (2001), we held: As a rule, the Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is
courts will not resolve the constitutionality of a law, if the licensed under the laws of the Republic of the Philippines to
controversy can be settled on other grounds. The policy of the engage in television and radio broadcasting. It broadcasts
courts is to avoid ruling on constitutional questions and to television programs by wireless means to Metro Manila and
presume that the acts of the political departments are valid, nearby provinces, and by satellite to provincial stations through
absent a clear and unmistakable showing to the contrary. To Channel 2 on Very High Frequency (VHF) and Channel 23 on Ultra
doubt is to sustain. This presumption is based on the doctrine of High Frequency (UHF). The programs aired over Channels 2 and 23
separation of powers. This means that the measure had first been are either produced by ABS-CBN or purchased from or licensed by
carefully studied by the legislative and executive departments and other producers.
ABS-CBN also owns regional television stations which pattern their delivering such services (i.e. the former by satellite and the latter
programming in accordance with perceived demands of the by cable). Both can carry broadcast signals to the remote areas,
region. Thus, television programs shown in Metro Manila and thus enriching the lives of the residents thereof through the
nearby provinces are not necessarily shown in other provinces. dissemination of social, economic, educational information and
cultural programs.
Respondent Philippine Multi-Media System, Inc. (PMSI) is the
operator of Dream Broadcasting System. It delivers digital direct- The DTH pay television services of PMSI is equipped to provide
to-home (DTH) television via satellite to its subscribers all over the nationwide DTH satellite services. Concededly, PMSI’s DTH pay
Philippines. Herein individual respondents, Cesar G. Reyes, Francis television services covers very much wider areas in terms of
Chua, Manuel F. Abellada, Raul B. De Mesa, and Aloysius M. carriage of broadcast signals, including areas not reachable by
Colayco, are members of PMSI’s Board of Directors. cable television services thereby providing a better medium of
dissemination of information to the public.
PMSI was granted a legislative franchise under Republic Act No.
8630 on May 7, 1998 and was given a Provisional Authority by the In view of the foregoing and the spirit and intent of NTC
National Telecommunications Commission (NTC) on February 1, memorandum Circular No. 4-08-88, particularly section 6
2000 to install, operate and maintain a nationwide DTH satellite thereof, on mandatory carriage of television broadcast signals,
service. When it commenced operations, it offered as part of its DTH pay television services should be deemed covered by such
program line-up ABS-CBN Channels 2 and 23, NBN, Channel 4, ABC NTC Memorandum Circular.
Channel 5, GMA Channel 7, RPN Channel 9, and IBC Channel 13,
together with other paid premium program channels. For your guidance. (Emphasis added)

However, on April 25, 2001, ABS-CBN demanded for PMSI to cease On August 26, 2003, PMSI filed another Manifestation with the
and desist from rebroadcasting Channels 2 and 23. On April 27, BLA that it received a letter dated July 24, 2003 from the NTC
2001, PMSI replied that the rebroadcasting was in accordance enjoining strict and immediate compliance with the must-carry
with the authority granted it by NTC and its obligation under NTC rule under Memorandum Circular No. 04-08-88, to wit:
Memorandum Circular No. 4-08-88, Section 6.2 of which requires
all cable television system operators operating in a community
Dear Mr. Abellada:
within Grade “A” or “B” contours to carry the television signals of
the authorized television broadcast stations.
Last July 22, 2003, the National Telecommunications Commission
(NTC) received a letter dated July 17, 2003 from President/COO
Thereafter, negotiations ensued between the parties in an effort
Rene Q. Bello of the International Broadcasting Corporation (IBC-
to reach a settlement; however, the negotiations were terminated
Channel 13) complaining that your company, Dream Broadcasting
on April 4, 2002 by ABS-CBN allegedly due to PMSI’s inability to
System, Inc., has cut-off, without any notice or explanation
ensure the prevention of illegal retransmission and further
whatsoever, to air the programs of IBC-13, a free-to-air television,
rebroadcast of its signals, as well as the adverse effect of the
to the detriment of the public.
rebroadcasts on the business operations of its regional television
stations.
We were told that, until now, this has been going on.
On May 13, 2002, ABS-CBN filed with the IPO a complaint for
“Violation of Laws Involving Property Rights, with Prayer for the Please be advised that as a direct broadcast satellite operator,
Issuance of a Temporary Restraining Order and/or Writ of operating a direct-to-home (DTH) broadcasting system, with a
Preliminary Injunction,” which was docketed as IPV No. 10-2002- provisional authority (PA) from the NTC, your company, along
0004. It alleged that PMSI’s unauthorized rebroadcasting of with cable television operators, are mandated to strictly comply
Channels 2 and 23 infringed on its broadcasting rights and with the existing policy of NTC on mandatory carriage of
copyright. television broadcast signals as provided under Memorandum
Circular No. 04-08-88, also known as the Revised Rules and
Regulations Governing Cable Television System in the
On July 2, 2002, the Bureau of Legal Affairs (BLA) of the IPO
Philippines.
granted ABS-CBN’s application for a temporary restraining order.
On July 12, 2002, PMSI suspended its retransmission of Channels 2
and 23 and likewise filed a petition for certiorari with the Court of This mandatory coverage provision under Section 6.2 of said
Appeals, which was docketed as CA-G.R. SP No. 71597. Memorandum Circular, requires all cable television system
operators, operating in a community within the Grade “A” or “B”
contours to “must-carry” the television signals of the authorized
Subsequently, PMSI filed with the BLA a Manifestation reiterating
television broadcast stations, one of which is IBC-13. Said
that it is subject to the must-carry rule under Memorandum
directive equally applies to your company as the circular was
Circular No. 04-08-88. It also submitted a letter dated December
issued to give consumers and the public a wider access to more
20, 2002 of then NTC Commissioner Armi Jane R. Borje to PMSI
sources of news, information, entertainment and other
stating as follows:
programs/contents.

This refers to your letter dated December 16, 2002 requesting for
This Commission, as the governing agency vested by laws with the
regulatory guidance from this Commission in connection with the
jurisdiction, supervision and control over all public services, which
application and coverage of NTC Memorandum Circular No. 4-08-
includes direct broadcast satellite operators, and taking into
88, particularly Section 6 thereof, on mandatory carriage of
consideration the paramount interest of the public in general,
television broadcast signals, to the direct-to-home (DTH) pay
hereby directs you to immediately restore the signal of IBC-13 in
television services of Philippine Multi-Media System, Inc. (PMSI).
your network programs, pursuant to existing circulars and
regulations of the Commission.
Preliminarily, both DTH pay television and cable television services
are broadcast services, the only difference being the medium of
For strict compliance. (Emphasis added) Thus, ABS-CBN filed a petition for review with prayer for issuance
of a temporary restraining order and writ of preliminary injunction
Meanwhile, on October 10, 2003, the NTC issued Memorandum with the Court of Appeals, which was docketed as CA-G.R. SP No.
Circular No. 10-10-2003, entitled “Implementing Rules and 88092.
Regulations Governing Community Antenna/Cable Television
(CATV) and Direct Broadcast Satellite (DBS) Services to Promote On July 18, 2005, the Court of Appeals issued a temporary
Competition in the Sector.” Article 6, Section 8 thereof states: restraining order. Thereafter, ABS-CBN filed a petition for
contempt against PMSI for continuing to rebroadcast Channels 2
As a general rule, the reception, distribution and/or transmission and 23 despite the restraining order. The case was docketed as
by any CATV/DBS operator of any television signals without any CA- G.R. SP No. 90762.
agreement with or authorization from program/content providers
are prohibited. On November 14, 2005, the Court of Appeals ordered the
consolidation of CA-G.R. SP Nos. 88092 and 90762.
On whether Memorandum Circular No. 10-10-2003 amended
Memorandum Circular No. 04-08-88, the NTC explained to PMSI in In the assailed Decision dated July 12, 2006, the Court of Appeals
a letter dated November 3, 2003 that: sustained the findings of the Director-General of the IPO and
dismissed both petitions filed by ABS-CBN.
To address your query on whether or not the provisions of MC 10-
10-2003 would have the effect of amending the provisions of MC ABS-CBN’s motion for reconsideration was denied, hence, this
4-08-88 on mandatory carriage of television signals, the answer is petition.
in the negative.
ABS-CBN contends that PMSI’s unauthorized rebroadcasting of
xxxx Channels 2 and 23 is an infringement of its broadcasting rights
and copyright under the Intellectual Property Code (IP Code ); that
The Commission maintains that, MC 4-08-88 remains valid, Memorandum Circular No. 04-08-88 excludes DTH satellite
subsisting and enforceable. television operators; that the Court of Appeals’ interpretation of
the must-carry rule violates Section 9 of Article III  of the
Constitution because it allows the taking of property for public use
Please be advised, therefore, that as duly licensed direct-to-home
without payment of just compensation; that the Court of Appeals
satellite television service provider authorized by this
erred in dismissing the petition for contempt docketed as CA-G.R.
Commission, your company continues to be bound by the
SP No. 90762 without requiring respondents to file comment.
guidelines provided for under MC 04-08-88, specifically your
obligation under its mandatory carriage provisions, in addition to
your obligations under MC 10-10-2003. (Emphasis added) Respondents, on the other hand, argue that PMSI’s rebroadcasting
of Channels 2 and 23 is sanctioned by Memorandum Circular No.
04-08-88; that the must-carry rule under the Memorandum
Please be guided accordingly.
Circular is a valid exercise of police power ; and that the Court of
Appeals correctly dismissed CA-G.R. SP No. 90762 since it found
On December 22, 2003, the BLA rendered a decision finding that no need to exercise its power of contempt.
PMSI infringed the broadcasting rights and copyright of ABS-CBN
and ordering it to permanently cease and desist from
After a careful review of the facts and records of this case, we
rebroadcasting Channels 2 and 23.
affirm the findings of the Director-General of the IPO and the
Court of Appeals.
On February 6, 2004, PMSI filed an appeal with the Office of the
Director-General of the IPO which was docketed as Appeal No. 10-
There is no merit in ABS-CBN’s contention that PMSI violated its
2004-0002. On December 23, 2004, it also filed with the Court of
broadcaster’s rights under Section 211 of the IP Code which
Appeals a “Motion to Withdraw Petition; Alternatively,
provides in part:
Memorandum of the Petition for Certiorari” in CA-G.R. SP No.
71597, which was granted in a resolution dated February 17,
2005. Chapter XIV
BROADCASTING ORGANIZATIONS
On December 20, 2004, the Director-General of the IPO rendered
a decision in favor of PMSI, the dispositive portion of which Sec. 211. Scope of Right. - Subject to the provisions of Section 212,
states: broadcasting organizations shall enjoy the exclusive right to carry
out, authorize or prevent any of the following acts:
WHEREFORE, premises considered, the instant appeal is hereby
GRANTED. Accordingly, Decision No. 2003-01 dated 22 December 211.1. The rebroadcasting of their broadcasts;
2003 of the Director of Bureau of Legal Affairs is hereby REVERSED
and SET ASIDE. xxxx

Let a copy of this Decision be furnished the Director of the Bureau Neither is PMSI guilty of infringement of ABS-CBN’s copyright
of Legal Affairs for appropriate action, and the records be under Section 177 of the IP Code which states that copyright or
returned to her for proper disposition. The Documentation, economic rights shall consist of the exclusive right to carry out,
Information and Technology Transfer Bureau is also given a copy authorize or prevent the public performance of the work (Section
for library and reference purposes. 177.6), and other communication to the public of the work
(Section 177.7).20
SO ORDERED.
Section 202.7 of the IP Code defines broadcasting as “the Accordingly, this Office is of the view that the transmission
transmission by wireless means for the public reception of sounds contemplated under Section 202.7 of the IP Code presupposes
or of images or of representations thereof; such transmission by that the origin of the signals is the broadcaster. Hence, a program
satellite is also ‘broadcasting’ where the means for decrypting are that is broadcasted is attributed to the broadcaster. In the same
provided to the public by the broadcasting organization or with its manner, the rebroadcasted program is attributed to the
consent.” rebroadcaster.

On the other hand, rebroadcasting as defined in Article 3(g) of the In the case at hand, Appellant is not the origin nor does it claim to
International Convention for the Protection of Performers, be the origin of the programs broadcasted by the Appellee.
Producers of Phonograms and Broadcasting Organizations, Appellant did not make and transmit on its own but merely
otherwise known as the 1961 Rome Convention, of which the carried the existing signals of the Appellee. When Appellant’s
Republic of the Philippines is a signatory, 21 is “the simultaneous subscribers view Appellee’s programs in Channels 2 and 23, they
broadcasting by one broadcasting organization of the broadcast of know that the origin thereof was the Appellee.
another broadcasting organization.”
Aptly, it is imperative to discern the nature of broadcasting. When
The Director-General of the IPO correctly found that PMSI is not a broadcaster transmits, the signals are scattered or dispersed in
engaged in rebroadcasting and thus cannot be considered to have the air. Anybody may pick-up these signals. There is no restriction
infringed ABS-CBN’s broadcasting rights and copyright, thus: as to its number, type or class of recipients. To receive the signals,
one is not required to subscribe or to pay any fee. One only has to
That the Appellant’s [herein respondent PMSI] subscribers are have a receiver, and in case of television signals, a television set,
able to view Appellee’s [herein petitioner ABS-CBN] programs and to tune-in to the right channel/frequency. The definition of
(Channels 2 and 23) at the same time that the latter is broadcasting, wherein it is required that the transmission is
broadcasting the same is undisputed. The question however is, wireless, all the more supports this discussion. Apparently, the
would the Appellant in doing so be considered engaged in undiscriminating dispersal of signals in the air is possible only
broadcasting. Section 202.7 of the IP Code states that through wireless means. The use of wire in transmitting signals,
broadcasting means such as cable television, limits the recipients to those who are
connected. Unlike wireless transmissions, in wire-based
transmissions, it is not enough that one wants to be connected
“the transmission by wireless means for the public reception of
and possesses the equipment. The service provider, such as cable
sounds or of images or of representations thereof; such
television companies may choose its subscribers.
transmission by satellite is also ‘broadcasting’ where the means
for decrypting are provided to the public by the broadcasting
organization or with its consent.” The only limitation to such dispersal of signals in the air is the
technical capacity of the transmitters and other equipment
employed by the broadcaster. While the broadcaster may use a
Section 202.7 of the IP Code, thus, provides two instances wherein
less powerful transmitter to limit its coverage, this is merely a
there is broadcasting, to wit:
business strategy or decision and not an inherent limitation when
transmission is through cable.
1. The transmission by wireless means for the public
reception of sounds or of images or of representations
Accordingly, the nature of broadcasting is to scatter the signals in
thereof; and
its widest area of coverage as possible. On this score, it may be
said that making public means that accessibility is
2. The transmission by satellite for the public reception undiscriminating as long as it [is] within the range of the
of sounds or of images or of representations thereof transmitter and equipment of the broadcaster. That the medium
where the means for decrypting are provided to the through which the Appellant carries the Appellee’s signal, that is
public by the broadcasting organization or with its via satellite, does not diminish the fact that it operates and
consent. functions as a cable television. It remains that the Appellant’s
transmission of signals via its DTH satellite television service
It is under the second category that Appellant’s DTH satellite cannot be considered within the purview of broadcasting. x x x
television service must be examined since it is satellite-based. The
elements of such category are as follows: xxxx

1. There is transmission of sounds or images or of This Office also finds no evidence on record showing that the
representations thereof; Appellant has provided decrypting means to the public
indiscriminately. Considering the nature of this case, which is
2. The transmission is through satellite; punitive in fact, the burden of proving the existence of the
elements constituting the acts punishable rests on the shoulder of
3. The transmission is for public reception; and the complainant.

4. The means for decrypting are provided to the public Accordingly, this Office finds that there is no rebroadcasting on
by the broadcasting organization or with its consent. the part of the Appellant of the Appellee’s programs on Channels
2 and 23, as defined under the Rome Convention. 22

It is only the presence of all the above elements can a

determination that the DTH is broadcasting and consequently, Under the Rome Convention, rebroadcasting is “the simultaneous
rebroadcasting Appellee’s signals in violation of Sections 211 and broadcasting by one broadcasting organization of the broadcast of
177 of the IP Code, may be arrived at. another broadcasting organization.” The Working
Paper23 prepared by the Secretariat of the Standing Committee on
Copyright and Related Rights defines broadcasting organizations
as “entities that take the financial and editorial responsibility for xxxx
the selection and arrangement of, and investment in, the
transmitted content.”24 Evidently, PMSI would not qualify as a (h) The use made of a work by or under the direction or control of
broadcasting organization because it does not have the the Government, by the National Library or by educational,
aforementioned responsibilities imposed upon broadcasting scientific or professional institutions where such use is in the
organizations, such as ABS-CBN. public interest and is compatible with fair use;

ABS-CBN creates and transmits its own signals; PMSI merely The carriage of ABS-CBN’s signals by virtue of the must-carry rule
carries such signals which the viewers receive in its unaltered in Memorandum Circular No. 04-08-88 is under the direction and
form. PMSI does not produce, select, or determine the programs control of the government though the NTC which is vested with
to be shown in Channels 2 and 23. Likewise, it does not pass itself exclusive jurisdiction to supervise, regulate and control
off as the origin or author of such programs. Insofar as Channels 2 telecommunications and broadcast services/facilities in the
and 23 are concerned, PMSI merely retransmits the same in Philippines.26 The imposition of the must-carry rule is within the
accordance with Memorandum Circular 04-08-88. With regard to NTC’s power to promulgate rules and regulations, as public safety
its premium channels, it buys the channels from content providers and interest may require, to encourage a larger and more
and transmits on an as-is basis to its viewers. Clearly, PMSI does effective use of communications, radio and television
not perform the functions of a broadcasting organization; thus, it broadcasting facilities, and to maintain effective competition
cannot be said that it is engaged in rebroadcasting Channels 2 and among private entities in these activities whenever the
23. Commission finds it reasonably feasible. 27 As correctly observed by
the Director-General of the IPO:
The Director-General of the IPO and the Court of Appeals also
correctly found that PMSI’s services are similar to a cable Accordingly, the “Must-Carry Rule” under NTC Circular No. 4-08-
television system because the services it renders fall under cable 88 falls under the foregoing category of limitations on copyright.
“retransmission,” as described in the Working Paper, to wit: This Office agrees with the Appellant [herein respondent PMSI]
that the “Must-Carry Rule” is in consonance with the principles
(G) Cable Retransmission and objectives underlying Executive Order No. 436,28 to wit:

47. When a radio or television program is being broadcast, it can The Filipino people must be given wider access to more sources of
be retransmitted to new audiences by means of cable or wire. In news, information, education, sports event and entertainment
the early days of cable television, it was mainly used to improve programs other than those provided for by mass media and
signal reception, particularly in so-called “shadow zones,” or to afforded television programs to attain a well informed, well-
distribute the signals in large buildings or building complexes. versed and culturally refined citizenry and enhance their socio-
With improvements in technology, cable operators now often economic growth:
receive signals from satellites before retransmitting them in an
unaltered form to their subscribers through cable. WHEREAS, cable television (CATV) systems could support or
supplement the services provided by television broadcast
48. In principle, cable retransmission can be either simultaneous facilities, local and overseas, as the national information highway
with the broadcast over-the-air or delayed (deferred transmission) to the countryside.29
on the basis of a fixation or a reproduction of a fixation.
Furthermore, they might be unaltered or altered, for example The Court of Appeals likewise correctly observed that:
through replacement of commercials, etc. In general, however,
the term “retransmission” seems to be reserved for such
[T]he very intent and spirit of the NTC Circular will prevent a
transmissions which are both simultaneous and unaltered.
situation whereby station owners and a few networks would have
unfettered power to make time available only to the highest
49. The Rome Convention does not grant rights against bidders, to communicate only their own views on public issues,
unauthorized cable retransmission. Without such a right, cable people, and to permit on the air only those with whom they
operators can retransmit both domestic and foreign over the air agreed – contrary to the state policy that the (franchise) grantee
broadcasts simultaneously to their subscribers without permission like the petitioner, private respondent and other TV station
from the broadcasting organizations or other rightholders and owners, shall provide at all times sound and balanced
without obligation to pay remuneration. 25 (Emphasis added) programming and assist in the functions of public information and
education.
Thus, while the Rome Convention gives broadcasting organizations
the right to authorize or prohibit the rebroadcasting of its This is for the first time that we have a structure that works to
broadcast, however, this protection does not extend to cable accomplish explicit state policy goals. 30
retransmission. The retransmission of ABS-CBN’s signals by PMSI –
which functions essentially as a cable television – does not
Indeed, intellectual property protection is merely a means
therefore constitute rebroadcasting in violation of the former’s
towards the end of making society benefit from the creation of its
intellectual property rights under the IP Code.
men and women of talent and genius. This is the essence of
intellectual property laws, and it explains why certain products of
It must be emphasized that the law on copyright is not absolute. ingenuity that are concealed from the public are outside the pale
The IP Code provides that: of protection afforded by the law. It also explains why the author
or the creator enjoys no more rights than are consistent with
Sec. 184. Limitations on Copyright. - public welfare.31

184.1. Notwithstanding the provisions of Chapter V, the following Further, as correctly observed by the Court of Appeals, the must-
acts shall not constitute infringement of copyright: carry rule as well as the legislative franchises granted to both ABS-
CBN and PMSI are in consonance with state policies enshrined in
the Constitution, specifically Sections 9,32 17,33 and 2434 of Article II xxxx
on the Declaration of Principles and State Policies.35
In truth, radio and television broadcasting companies, which are
ABS-CBN was granted a legislative franchise under Republic Act given franchises, do not own the airwaves and frequencies
No. 7966, Section 1 of which authorizes it “to construct, operate through which they transmit broadcast signals and images. They
and maintain, for commercial purposes and in the public interest, are merely given the temporary privilege of using them. Since a
television and radio broadcasting in and throughout the franchise is a mere privilege, the exercise of the privilege may
Philippines x x x.” Section 4 thereof mandates that it “shall provide reasonably be burdened with the performance by the grantee of
adequate public service time to enable the government, through some form of public service. x x x37
the said broadcasting stations, to reach the population on
important public issues; provide at all times sound and balanced There is likewise no merit to ABS-CBN’s claim that PMSI’s carriage
programming; promote public participation such as in community of its signals is for a commercial purpose; that its being the
programming; assist in the functions of public information and country’s top broadcasting company, the availability of its signals
education x x x.” allegedly enhances PMSI’s attractiveness to potential
customers;38 or that the unauthorized carriage of its signals by
PMSI was likewise granted a legislative franchise under Republic PMSI has created competition between its Metro Manila and
Act No. 8630, Section 4 of which similarly states that it “shall regional stations.
provide adequate public service time to enable the government,
through the said broadcasting stations, to reach the population on ABS-CBN presented no substantial evidence to prove that PMSI
important public issues; provide at all times sound and balanced carried its signals for profit; or that such carriage adversely
programming; promote public participation such as in community affected the business operations of its regional stations. Except for
programming; assist in the functions of public information and the testimonies of its witnesses,[39] no studies, statistical data or
education x x x.” Section 5, paragraph 2 of the same law provides information have been submitted in evidence.
that “the radio spectrum is a finite resource that is a part of the
national patrimony and the use thereof is a privilege conferred
Administrative charges cannot be based on mere speculation or
upon the grantee by the State and may be withdrawn anytime,
conjecture. The complainant has the burden of proving by
after due process.”
substantial evidence the allegations in the complaint. 40 Mere
allegation is not evidence, and is not equivalent to proof. 41
In Telecom. & Broadcast Attys. of the Phils., Inc. v. COMELEC, 36 the
Court held that a franchise is a mere privilege which may be
Anyone in the country who owns a television set and antenna can
reasonably burdened with some form of public service. Thus:
receive ABS-CBN’s signals for free. Other broadcasting
organizations with free-to-air signals such as GMA-7, RPN-9, ABC-
All broadcasting, whether by radio or by television stations, is 5, and IBC-13 can likewise be accessed for free. No payment is
licensed by the government. Airwave frequencies have to be required to view the said channels 42 because these broadcasting
allocated as there are more individuals who want to broadcast networks do not generate revenue from subscription from their
than there are frequencies to assign. A franchise is thus a privilege viewers but from airtime revenue from contracts with commercial
subject, among other things, to amendment by Congress in advertisers and producers, as well as from direct sales.
accordance with the constitutional provision that “any such
franchise or right granted . . . shall be subject to amendment,
In contrast, cable and DTH television earn revenues from viewer
alteration or repeal by the Congress when the common good so
subscription. In the case of PMSI, it offers its customers premium
requires.”
paid channels from content providers like Star Movies, Star World,
Jack TV, and AXN, among others, thus allowing its customers to go
xxxx beyond the limits of “Free TV and Cable TV.” 43 It does not
advertise itself as a local channel carrier because these local
Indeed, provisions for COMELEC Time have been made by channels can be viewed with or without DTH television.
amendment of the franchises of radio and television broadcast
stations and, until the present case was brought, such provisions Relevantly, PMSI’s carriage of Channels 2 and 23 is material in
had not been thought of as taking property without just arriving at the ratings and audience share of ABS-CBN and its
compensation. Art. XII, §11 of the Constitution authorizes the programs. These ratings help commercial advertisers and
amendment of franchises for “the common good.” What better producers decide whether to buy airtime from the network. Thus,
measure can be conceived for the common good than one for free the must-carry rule is actually advantageous to the broadcasting
air time for the benefit not only of candidates but even more of networks because it provides them with increased viewership
the public, particularly the voters, so that they will be fully which attracts commercial advertisers and producers.
informed of the issues in an election? “[I]t is the right of the
viewers and listeners, not the right of the broadcasters, which is
On the other hand, the carriage of free-to-air signals imposes a
paramount.”
burden to cable and DTH television providers such as PMSI. PMSI
uses none of ABS-CBN’s resources or equipment and carries the
Nor indeed can there be any constitutional objection to the signals and shoulders the costs without any recourse of
requirement that broadcast stations give free air time. Even in the charging.44 Moreover, such carriage of signals takes up channel
United States, there are responsible scholars who believe that space which can otherwise be utilized for other premium paid
government controls on broadcast media can constitutionally be channels.
instituted to ensure diversity of views and attention to public
affairs to further the system of free expression. For this purpose,
There is no merit to ABS-CBN’s argument that PMSI’s carriage of
broadcast stations may be required to give free air time to
Channels 2 and 23 resulted in competition between its Metro
candidates in an election. Thus, Professor Cass R. Sunstein of the
Manila and regional stations. ABS-CBN is free to decide to pattern
University of Chicago Law School, in urging reforms in regulations
its regional programming in accordance with perceived demands
affecting the broadcast industry, writes:
of the region; however, it cannot impose this kind of programming
on the regional viewers who are also entitled to the free-to-air Whereas, Cable Television Systems or Community Antenna
channels. It must be emphasized that, as a national broadcasting Television (CATV) have shown their ability to offer additional
organization, one of ABS-CBN’s responsibilities is to scatter its programming and to carry much improved broadcast signals in the
signals to the widest area of coverage as possible. That it should remote areas, thereby enriching the lives of the rest of the
limit its signal reach for the sole purpose of gaining profit for its population through the dissemination of social, economic,
regional stations undermines public interest and deprives the educational information and cultural programs;
viewers of their right to access to information.
Whereas, the national government supports the promotes the
Indeed, television is a business; however, the welfare of the orderly growth of the Cable Television industry within the
people must not be sacrificed in the pursuit of profit. The right of framework of a regulated fee enterprise, which is a hallmark of a
the viewers and listeners to the most diverse choice of programs democratic society;
available is paramount.45 The Director-General correctly observed,
thus: Whereas, public interest so requires that monopolies in
commercial mass media shall be regulated or prohibited, hence,
The “Must-Carry Rule” favors both broadcasting organizations and to achieve the same, the cable TV industry is made part of the
the public. It prevents cable television companies from excluding broadcast media;
broadcasting organization especially in those places not reached
by signal. Also, the rule prevents cable television companies from Whereas, pursuant to Act 3846 as amended and Executive Order
depriving viewers in far-flung areas the enjoyment of programs 205 granting the National Telecommunications Commission the
available to city viewers. In fact, this Office finds the rule more authority to set down rules and regulations in order to protect the
burdensome on the part of the cable television companies. The public and promote the general welfare, the National
latter carries the television signals and shoulders the costs without Telecommunications Commission hereby promulgates the
any recourse of charging. On the other hand, the signals that are following rules and regulations on Cable Television Systems;
carried by cable television companies are dispersed and scattered
by the television stations and anybody with a television set is free
The policy of the Memorandum Circular is to carry improved
to pick them up.
signals in remote areas for the good of the general public and to
promote dissemination of information. In line with this policy, it is
With its enormous resources and vaunted technological clear that DTH television should be deemed covered by the
capabilities, Appellee’s [herein petitioner ABS-CBN] broadcast Memorandum Circular. Notwithstanding the different
signals can reach almost every corner of the archipelago. That in technologies employed, both DTH and cable television have the
spite of such capacity, it chooses to maintain regional stations, is a ability to carry improved signals and promote dissemination of
business decision. That the “Must-Carry Rule” adversely affects information because they operate and function in the same way.
the profitability of maintaining such regional stations since there
will be competition between them and its Metro Manila station is
In its December 20, 2002 letter, 50 the NTC explained that both DTH
speculative and an attempt to extrapolate the effects of the rule.
and cable television services are of a similar nature, the only
As discussed above, Appellant’s DTH satellite television services is
difference being the medium of delivering such services. They can
of limited subscription. There was not even a showing on part of
carry broadcast signals to the remote areas and possess the
the Appellee the number of Appellant’s subscribers in one region
capability to enrich the lives of the residents thereof through the
as compared to non-subscribing television owners. In any event, if
dissemination of social, economic, educational information and
this Office is to engage in conjecture, such competition between
cultural programs. Consequently, while the Memorandum Circular
the regional stations and the Metro Manila station will benefit the
refers to cable television, it should be understood as to include
public as such competition will most likely result in the production
DTH television which provides essentially the same services.
of better television programs.” 46

In Eastern Telecommunications Philippines, Inc. v. International

All told, we find that the Court of Appeals correctly upheld the
Communication Corporation,51 we held:
decision of the IPO Director-General that PMSI did not infringe on
ABS-CBN’s intellectual property rights under the IP Code. The
findings of facts of administrative bodies charged with their The NTC, being the government agency entrusted with the
specific field of expertise, are afforded great weight by the courts, regulation of activities coming under its special and technical
and in the absence of substantial showing that such findings are forte, and possessing the necessary rule-making power to
made from an erroneous estimation of the evidence presented, implement its objectives, is in the best position to interpret its
they are conclusive, and in the interest of stability of the own rules, regulations and guidelines. The Court has consistently
governmental structure, should not be disturbed. 47 yielded and accorded great respect to the interpretation by
administrative agencies of their own rules unless there is an error
of law, abuse of power, lack of jurisdiction or grave abuse of
Moreover, the factual findings of the Court of Appeals are
discretion clearly conflicting with the letter and spirit of the law. 52
conclusive on the parties and are not reviewable by the Supreme
Court. They carry even more weight when the Court of Appeals
affirms the factual findings of a lower fact-finding body, 48 as in the With regard to the issue of the constitutionality of the must-carry
instant case. rule, the Court finds that its resolution is not necessary in the
disposition of the instant case. One of the essential requisites for a
successful judicial inquiry into constitutional questions is that the
There is likewise no merit to ABS-CBN’s contention that the
resolution of the constitutional question must be necessary in
Memorandum Circular excludes from its coverage DTH television
deciding the case.53 In Spouses Mirasol v. Court of Appeals,54 we
services such as those provided by PMSI. Section 6.2 of the
held:
Memorandum Circular requires all cable television system
operators operating in a community within Grade “A” or “B”
contours to carry the television signals of the authorized television As a rule, the courts will not resolve the constitutionality of a law,
broadcast stations.49 The rationale behind its issuance can be if the controversy can be settled on other grounds. The policy of
found in the whereas clauses which state: the courts is to avoid ruling on constitutional questions and to
presume that the acts of the political departments are valid, It bears stressing that the proceedings for punishment of indirect
absent a clear and unmistakable showing to the contrary. To contempt are criminal in nature. The modes of procedure and
doubt is to sustain. This presumption is based on the doctrine of rules of evidence adopted in contempt proceedings are similar in
separation of powers. This means that the measure had first been nature to those used in criminal prosecutions. 63 While it may be
carefully studied by the legislative and executive departments and argued that the Court of Appeals should have ordered
found to be in accord with the Constitution before it was finally respondents to comment, the issue has been rendered moot in
enacted and approved.55 light of our ruling on the merits. To order respondents to
comment and have the Court of Appeals conduct a hearing on the
The instant case was instituted for violation of the IP Code and contempt charge when the main case has already been disposed
infringement of ABS-CBN’s broadcasting rights and copyright, of in favor of PMSI would be circuitous. Where the issues have
which can be resolved without going into the constitutionality of become moot, there is no justiciable controversy, thereby
Memorandum Circular No. 04-08-88. As held by the Court of rendering the resolution of the same of no practical use or value. 64
Appeals, the only relevance of the circular in this case is whether
or not compliance therewith should be considered manifestation WHEREFORE, the petition is DENIED. The July 12, 2006 Decision of
of lack of intent to commit infringement, and if it is, whether such the Court of Appeals in CA-G.R. SP Nos. 88092 and 90762,
lack of intent is a valid defense against the complaint of sustaining the findings of the Director-General of the Intellectual
petitioner.56 Property Office and dismissing the petitions filed by ABS-CBN
Broadcasting Corporation, and the December 11, 2006 Resolution
The records show that petitioner assailed the constitutionality of denying the motion for reconsideration, are AFFIRMED.
Memorandum Circular No. 04-08-88 by way of a collateral attack
before the Court of Appeals. In Philippine National Bank v. SO ORDERED.
Palma,57 we ruled that for reasons of public policy, the
constitutionality of a law cannot be collaterally attacked. A law is
deemed valid unless declared null and void by a competent court;
more so when the issue has not been duly pleaded in the trial
court.58

As a general rule, the question of constitutionality must be raised

at the earliest opportunity so that if not raised in the pleadings,
ordinarily it may not be raised in the trial, and if not raised in the
trial court, it will not be considered on appeal. 59 In Philippine
Veterans Bank v. Court of Appeals,60 we held:

We decline to rule on the issue of constitutionality as all the

requisites for the exercise of judicial review are not present
herein. Specifically, the question of constitutionality will not be
passed upon by the Court unless, at the first opportunity, it is
properly raised and presented in an appropriate case,
adequately argued, and is necessary to a determination of the
case, particularly where the issue of constitutionality is the very
lis mota presented.x x x61

Finally, we find that the dismissal of the petition for contempt

filed by ABS-CBN is in order.

Indirect contempt may either be initiated (1) motu proprio by the

court by issuing an order or any other formal charge requiring the
respondent to show cause why he should not be punished for
contempt or (2) by the filing of a verified petition, complying with
the requirements for filing initiatory pleadings. 62

ABS-CBN filed a verified petition before the Court of Appeals,

which was docketed CA G.R. SP No. 90762, for PMSI’s alleged
disobedience to the Resolution and Temporary Restraining Order,
both dated July 18, 2005, issued in CA-G.R. SP No. 88092.
However, after the cases were consolidated, the Court of Appeals
did not require PMSI to comment on the petition for contempt. It
ruled on the merits of CA-G.R. SP No. 88092 and ordered the
dismissal of both petitions.

ABS-CBN argues that the Court of Appeals erred in dismissing the

petition for contempt without having ordered respondents to
comment on the same. Consequently, it would have us reinstate
CA-G.R. No. 90762 and order respondents to show cause why they
should not be held in contempt.