EIGHTEENTH CONGRESS OF THE )    
REPUBLIC OF THE PHILIPPINES )          
First Regular Session 
 
) 
 
 
 
S E N A T E 
 
S. No. _____ 
 
Introduced by Senator FRANKLIN M. DRILON 
 
AN ACT AMENDING SECTION 18, BOOK VII, CHAPTER 3 OF THE 
ADMINISTRATIVE CODE OF THE PHILIPPINES 
 
EXPLANATORY NOTE 
 
 
Aristotle, in Nichomachean Ethics has said, “the laws in their enactments 
on all subjects aim at the common advantage either of all or of the best or of 
those who hold power, or something of the sort; so that in one sense we call 
those acts just that tend to produce and preserve happiness and its 
components for the political society. And the law bids us do both the acts of a 
brave man, and those of a temperate man, and those of a good-tempered man, 
and similarly with regard to the other virtues and forms of wickedness, 
commanding some acts and forbidding others; and the rightly-framed law does 
this rightly, and the hastily conceived one less well.” In the same treatise, he 
also wrote, “For where it is in our power to act, it is also in our power not to 
act.” 
The Constitution gives the government the power to regulate commerce. 
More stringent rules apply to public utilities, which render services to the public.  
Protection of public welfare underlies the requirement to obtain licenses, 
authorizations or franchises. Like it or not, entities are at the mercy of licensing 
authorities. There is little choice left, except to rely in good faith that such 
powers will be exercised judiciously, not arbitrarily, capriciously, or oppressively 
against anyone.  
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 
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has been so woven into everyday life, that its abrupt cessation could give rise to 
devastating consequences.  
The bill provides that where a licensee or franchisee has made a timely 
and sufficient application for renewal of a franchise or license, the same shall not 
expire until after finally determined by the relevant department, agency or branch 
of government. The bill amends an existing provision under the Revised 
Administrative Code to also include franchises. 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. 
The bill will not violate the power of the Congress with regard to 
franchises under the Constitution. Article XII, Section 11 of the Constitution 
provides that no franchise, certificate or authorization shall be granted “except 
under the condition that it shall be subject to amendment, alteration or repeal 
by the Congress when the common good so requires”. 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. This was the ruling in the case of Albano v. Reyes.1  
 
The Supreme Court, in the case of Associated Communications & 
Wireless Services v. National Telecommunications Commission2 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. It 
noted that there is a modern trend in legislation toward that direction. 
Therefore, the requirement of an existing and valid franchise is not 
Constitutional but merely statutory.  
 
The Court has even gone as far as saying that there is no reason for 
imposing a prior congressional franchise except to impose added burden and 
expenses on the part of the applicant. It even quoted “the forceful denunciation 
of Justice Holmes against a stubborn adherence to an anachronistic rule of law” 
where Holmes has described it as “revolting to have no better reason for a rule 
of law than that it was laid down in the time of Henry IV.” 
 
1 175 SCRA 264 
2 G.R. No. 144109, 17 February 2003 


 
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The criticism of the Court notwithstanding, the bill does not propose to 
do away with the license or franchise requirement. The amendment we propose 
would merely encourage 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.  
In view of the foregoing, the urgent approval of this bill is earnestly 
sought.  
 
 
 
 
 
 
 
         FRANKLIN M. DRILON 
 
 
  
 


EIGHTEENTH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
 
) 
 
SENATE 
 
S. No. ______ 
 
Introduced by SENATOR FRANKLIN M. DRILON 
 
AN ACT AMENDING SECTION 18, BOOK VII, CHAPTER 3 OF THE 
ADMINISTRATIVE CODE OF THE PHILIPPINES 
 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
 
SECTION 1. Section 18, Book VII, Chapter 3 of Executive Order No. 292, is 
1 
hereby amended to read as follows: 
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“SECTION 18. Non-expiration of License OR FRANCHISE.— 
3 
ANY 
PROVISION 
OF 
LAW 
TO 
THE 
CONTRARY 
4 
NOTWITHSTANDING, where the licensee OR FRANCHISEE has 
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made timely and sufficient application for the renewal of a license OR 
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FRANCHISE with reference to any activity of a continuing nature, the 
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existing license OR FRANCHISE shall not expire until the application 
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shall have been finally determined by the agency, DEPARTMENT, OR 
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BRANCH OF GOVERNMENT THAT GRANTS OR RENEWS SUCH 
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LICENSE OR FRANCHISE. 
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THERE 
IS 
FINAL 
DETERMINATION 
WHEN 
AN 
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APPLICANT IS GIVEN WRITTEN NOTICE OF APPROVAL OR 
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DENIAL OF ITS APPLICATION FOR RENEWAL. INACTION ON 
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A PENDING APPLICATION SHALL NOT BE CONSIDERED A 
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DENIAL THEREOF.” 
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SEC. 2. Separability Clause. – If any provision of this Act is declared 
17 
unconstitutional or invalid, the provisions not affected thereby shall continue to be in 
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full force and effect.  
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SEC. 3. Repealing Clause. – All laws, decrees, orders, rules and regulations 
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inconsistent with the provisions of this Act are hereby repealed or modified 
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accordingly.  
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SEC. 4.  Effectivity. –  This Act shall take effect upon its publication in the 
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Official Gazette or in a newspaper of general circulation. 
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Approved,