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Republika ng Filipinas KAGAWARAN NG KATARUNGAN

Department of Justice Manila

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JUN 11 1011 Commissioner GAMALIEL A. CORDOBA National Telecommunications Commission NTC Building, BIR Road., East Triangle Diliman, Quezon City 1104

Dear Commissioner Cordoba:

This has reference to your request for legal opinion on whether, under the standard legislative franchises of broadcast companies, TV broadcasters are allowed to engage in Conditional Access (CA) or Conditional Access System (CAS) and, accordingly, may offer TV pay-per-view services.

We understand that the request was prompted by the views advanced by certain stakeholders that the words "commercial purposes" appearing in standard legislative franchises of broadcast companies "only refer to the advertisement fee/charge imposed by tv broadcast companies on their advertisers".

The provisions of Section 1 of the standard text of such franchises read as follows:

"Section 1. Nature and Scope of Franchise — Subject to the provisions of the Constitution and applicable laws, rules and regulations, the (name of corporation/company) hereunder referred to as the grantee, its successors and assigns, is hereby granted a franchise to construct, install, establish, operate and maintain, for commercial purposes and in the public interest, television and radio broadcasting stations in and throughout the Philippines, through microwave satellite or whatever means including the use of any new technology in television and radio systems, with the corresponding technological auxiliaries or facilities, special broadcast and other broadcast distribution services and relay stations."

You state that on 11 June 2010, the National Telecommunications Commission (NTC) issued Memorandum Circular (MC) No. 02-06-2010 adopting the Integrated Service Digital Broadcasting — Terrestrial (ISDB-T), the Japanese Digital TV System, as the sole standard in the delivery of the Digital Terrestrial Television (DTT); and that while I3DB-1 was reviewed and suspended by the Aquino Administration, former President Benign° Aquino III thereafter approved the adoption thereof, which led to the NTC's issuance of Memorandum Circular (MC) No. 0541-2013, reaffirming the adoption of the ISDB-T standard.

Emphasis suppiied

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You also state the! DTT provides for various technical applications, includino CA or CAS, a technology used to control access to digital television services to authorized users by encrypting the transmitted programming; and that the DTT, therefore, allows TV broadcasters not only to offer clear, free-to-air multiple channels, but also pay-TV, or pay-per-view services for highly proprietary premium programs, one of the features of digital television that the TV industry can adopt as a new business model.

The query is resolved in the affirmative.

A rule in interpretation of statutes states that where a statute deals with a genus and the thing that afterwards comes into existence is a species thereof, the language of the statute will generally be extended to the new species, although it was not known and could not have been contemplated by the legislature when it was passed.

Likewise, it is basic that the intent of the legislature must be determined from a consideration of the whole of the statute and not from a reading of only a particular or an isolated part thereof.' Stated differently, a word, phrase or provision should not be construed in isolation but must be interpreted in relation to the other provisions of the law. This rule is expressed in the latin maxim ut res magis valeat quam pereat or, that construction is to be sought which gives effect to the whole of the statute.3

Equally settled is the rule that when the law is clear, plain and free from ambiguity, it must be given its literal meaning without attempted interpretation.4 Known as the plain meaning rule, or verba legis, this rule, which was derived from the maxim index animi sermo est (speech is the index of intention), rests on the valid presumption that the words employed by the legislature in a statute correctly express its intent or will and preclude a different construction.5

Resolving the issue raised vis-a-vis the wordings of the provisions of Section 1 of the standard legislative franchises of TV broadcasters, we find it clear enough that broadcast companies can engage in Conditional Access (CA) or Conditional Access System (CAS) and, for the same reason can offer TV pay-per-view services The provisions of Section 1 are categorical enough that there is no need for interpretation—only application. There is nothing in said provisions that would give any impression that "commsrcial purposes are limited only to income derived by TV broadcast companies from paid advertisements.

Nonetheless, the NTC should take into account Executive Order (E0) No. 436 (s.1997) and Republic Act (RA) No. 10515, or the Anti-Cable Television and Cable Internet Tapping Act of 2013, in the issuance of its guidelines for the Conditional Access (CA) or Conditional Access System (CAS) services of TV broadcasters.

2 See, Philippine Global Communications, Inc. v. Relova. 145 SCRA 385; also, Aisporna v. Court of Appeals, 113 SCRA 459. 3 Op cit, No. 9,7, s. 2013; No. 29, s. 2011; No. 41, 21, s. 2010; No 31,s.2009; No. 10, 2, s. 2008. 4 Ramos v. Court of Appeals, 108 SCRA 728, 733. 5 See also, PN8 v. Garcia 388 SCRA 485, 491.

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More particularly, Sections 1 and 4 of EC 436 provide as follows.

"Section 1. The operation of cable television systems. as a subscriber service undertaking with a unique technology, shall be maintained separate and distinct from telecommunications or broadcast televisicit.

X X X

"Section 4. Local exchange operators and/or broadcasters, as well as operators of direct broadcast satellite service, multi-point distribution service, television receive-only satellite program distribution service and other systems of providers of video programming utilizing whatever technology, shall not operate cable television systems or any form of service involving the delivery [of] television programs and signals, by wire or cable or through the airwaves and other wireless video signal transmission systems without specific permits, licenses and/or authority to operate a cable television system as provided hereunder and under applicable laws and rules and regulations, which permits, licenses and/or authority shall be issued in accordance with the provisions of this Executive Order.r6

Furthermore, Section 3 of RA 10515 provides:

"SECTION 3. Definition of Terms. — As used in this Act:

(a) Cable Television (CATV) Service refers to the transmission or delivery of video and audio signals and programming for a fee, through fiber optics, coaxial cable and other technological means."

The implementing rules and regulations of the foregoing Ad further defines cable television service as follows:

'SECTION 3. Definition of Terms. —As used in these Rules:

X X X

(b) 'Cable Television (CATV) Service' — refers to the transmission or delivery of video and audio signals and programming for a fee through fiber opVcs, coaxial cable, and other technological means which shall include, but not limited to, transmission via wired or wireless means, including microwave, radio signal or frequencies for purposes of providing multiple channel CATV service. The term shall also include electronic equipment such as digital or analog receiver-decoder boxes, set-top and converter boxes as well as, but not limited to, master antenna television, satellite master antenna television, direct broadcast satellite/direct to home,

6 Emphasis supplied

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multi-point distribution service, a television receive-only satellite program distributor and other providers of video and audio programming, whatever the technology; x x x"7

To summarize, it is our opinion that TV broadcasters may be allowed to engage in Conditional Access (CA) or Conditional Access System (CAS). more specifically to offer TV pay-per-view services, provided that it does not amount to CATV service, which shall only be considered as such if it is "for purposes of providing multiple channel CATV service".

Please be guided accordingly.

Very truly yours,

MENARDO I. GUEVARRA Secretary

Deft.lf :mem or hi :171C° CA: 020180:1343

7 Emphasis supplied.