G.R. No. 175769 -70, January 19, 2009
ABS-CBN BROADCASTING CORPORATION, Petitioner, vs. PHILIPPINE MULTI-MEDIA SYSTEM, INC., CESAR G. REYES, FRANCIS CHUA (ANG BIAO), MANUEL F. ABELLADA, RAUL B. DE MESA, AND ALOYSIUS M. COLAYCO, Respondents.

FACTS

Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is a licensed television and radio broadcaster, airing programs via Channels 2 and 23. Respondent Philippine Multi-Media System, Inc. (PMSI) operates Dream Broadcasting System, a direct-to-home (DTH) satellite television service. PMSI, under a legislative franchise and a Provisional Authority from the National Telecommunications Commission (NTC), included ABS-CBN Channels 2 and 23 in its program line-up without ABS-CBN’s authorization. ABS-CBN demanded PMSI to cease and desist, but PMSI cited its obligation under NTC Memorandum Circular No. 4-08-88 (the “must-carry rule”), which requires cable television operators to carry signals of authorized broadcast stations. Negotiations failed. ABS-CBN filed a complaint with the Intellectual Property Office (IPO) for infringement of broadcasting rights and copyright. The IPO Bureau of Legal Affairs initially ruled for ABS-CBN, but the IPO Director-General reversed the decision, finding PMSI’s actions covered by the must-carry rule. The Court of Appeals affirmed the IPO Director-General’s decision. ABS-CBN appealed to the Supreme Court, arguing that the must-carry rule does not apply to DTH operators and that its property rights were infringed without just compensation.

ISSUE

Whether the National Telecommunications Commission’s “must-carry” rule under Memorandum Circular No. 4-08-88 applies to direct-to-home (DTH) satellite television operators, thereby allowing them to retransmit the signals of authorized television broadcast stations like ABS-CBN without the latter’s consent.

RULING

Yes. The Supreme Court upheld the application of the must-carry rule to DTH satellite operators. The Court ruled that the NTC, under its broad regulatory powers over all public telecommunications entities, validly extended the must-carry rule to DTH services. This extension was confirmed by official NTC letters and was consistent with the rule’s objective of ensuring wider public access to diverse sources of news and information, a matter of public interest. The Court found that the rule is a valid exercise of the State’s police power to promote public welfare through the dissemination of information, and it does not constitute a compensable taking of private property. The rule is a reasonable regulation incidental to PMSI’s franchise and does not appropriate ABS-CBN’s property but merely regulates its use for public benefit. Therefore, PMSI’s retransmission of ABS-CBN’s signals pursuant to the must-carry rule was lawful and not an infringement of intellectual property rights. The petition was denied.