House panel votes 70-11 to reject ABS-CBN franchise renewal
This, after the House Committee on Legislative Franchises adopted a resolution — based on the work of a hastily formed technical working group — denying the franchise application of ABS-CBN Corporation to construct, install, establish, operate and maintain radio and broadcasting stations in the Philippines.
The resolution to deny the ABS-CBN franchise application was adopted with 70 committee members voting in favor of the resolution, 11 against, and with 1 abstention and 2 inhibitions.
Before approving the resolution, the committee adopted the recommendation of its technical working group’s resolution recommending the denial of the franchise.
However, authors of the measures granting ABS-CBN franchise may still ask the committee to reconsider its decision or refile bills granting the network a fresh legislative franchise.
The ABS-CBN Corp. went off air last May 5 after the National Telecommunication Commission issued a cease and desist order (CDO) against the network following the expiration of its legislative franchise last May 4.
The giant network’s saga has raised concern here and abroad that the “politicalization” of the process of granting franchises, which the Constitution reposes in Congress, could stymie investor confidence in the Philippines.
‘Violations’
Citing several violations embodied in six segments of the TWG report, the House Committee on Legislative Franchises rejected the 25-year franchise application of the Lopez-led network, sparking protests that it was really a political decision arising from President Duterte’s publicly stated disdain for the media company.
The committee, however, said the network’s franchise application is not a press freedom issue.
“It is what it is — a denial of a privilege granted by the State because the applicant was seen as undeserving of the grant of a legislative franchise,” it said.
The 12 House hearings discussed: the citizenship of ABS-CBN chair emeritus Gabby Lopez; possible violation of the constitutional prohibition against ownership and management of mass media by foreigners; use of Philippine Depositary Receipts; questionable and unjust, if not immoral, tax avoidance schemes; ABS-CBN’s apparent use of a dummy; and ABS-CBN’s less-than-exemplary labor practices.
Speaker Alan Peter Cayetano described the committee’s work as fair, impartial, thorough.
“Because of the highly partisan nature of this issue, we accepted from the start that there would be those who will vehemently disagree with the committee’s decision, no matter what they resolve,” he said.
He asked “that the people read the findings carefully in order to appreciate the reasons for their decision. And for those who do not agree, at the least, understand why the the decision had to be so.”
Albay Rep. Edcel Lagman noted the lightning speed with which the TWG finished a comprehensive report in less than 24 hours.
“While reasonable dispatch in the accomplishment of the work of a TWG is laudable, inordinate alacrity is suspect like in the case of the TWG which recommended the denial of the application of ABS-CBN Corporation for a franchise renewal in less than 24 hours after it was formed and despite the fact that it had to review more than 100 hours of hearings, voluminous documents and records, as well as major contentious issues,” Lagman said.
“The pretense of the Speaker for a “conscience vote” was unmasked by his own closing statement at the end of the hearings which was a virtual final summation for the ‘antis’ rooting for the denial of ABS-CBN’s franchise renewal,” he said.
Agusan del Norte Rep. Lawrence Fortun said the TWG findings are a complete departure from the official position and statements of the departments, agencies, offices and independent organizations invited to the joint committee hearings.
“The TWG recommendation for a resolution denying the franchise is a departure from truth, justice and reason,” he said.
“History will judge the House on this,” he added.
Network executives
In a statement, ABS-CBN President and CEO Carlo Katigbak said the ABS-CBN will remain committed to public service, and it hopes to find other ways to achieve its mission.
“We are deeply hurt that the Committee on Legislative Franchises has denied the franchise application of ABS-CBN. We believe that we have been rendering service that is meaningful and valuable to the Filipino public. Nevertheless, we would like to thank the Committee for allowing us a chance to air our side on all the issues raised against us,” he said.
“ABS-CBN would like to thank all the congressmen who stood by their bills to renew our franchise, or who spoke out on our behalf during the hearings. We are forever grateful. We also thank everyone who expressed their support and offered their prayers for us. We could not have gotten to this point without you,” said Katigbak.
The findings
According to the 40-page findings and recommendations of the TWG, there is a cloud of doubt on Lopez’s Filipino citizenship and allegiance to the Philippines. Lopez has said he is a dual citizen, both a natural-born Filipino and an American citizen.
“Dual allegiance of citizens is inimical to the national interest and shall be dealt with by law,” said the panel, citing the 1987 Constitution.
It said mass media companies should be 100 percent owned and managed by Filipinos.
“Mr. Lopez’s birth as a Filipino was never registered. It took him 50 years to apply for recognition as Filipino citizen, presenting no clear and convincing evidence that his parents were Filipino citizens at the time of his birth,” it said. “From birth even to the present, he continues to use his US passport.”
PDRs
Also, the panel said issuance of Philippine depositary receipts (PDR) to foreigners has allowed foreign ownership in ABS-CBN, which could have violated the 1987 Constitution.
According to the committee, the mechanism of “corporate layering” employed by ABS-CBN and ABS-CBN holdings effectively makes the PDR holders the indirect owners of the underlying shares of stock of ABS-CBN.
It said foreign holders of PDRs practically own 187 million underlying shares of ABS-CBN Corp., which is already 62 percent of the total.
“The impression given by the issuance of PDRs is that it was resorted to creatively allow the participation of foreigners to fully nationalized and partially nationalized activities,” it said.
Digital services
The legislative franchise committee said the ABS-CBN used frequency Channel 43 to generate multiple channels or programs to be included in its digital television service, TV Plus Box, which continued even beyond the expiration of the demonstration permit in June 2015.
Also, it added there is no authorization from the National Telecommunications Commission (NTC) on record allowing ABS-CBN to produce the TV Plus Box containing multiple channels, much less to sell it for profit.
“It was shown that ABS-CBN violated the terms of its legislative franchise by encrypting its various digital sub-channels which led the public to purchase ABS-CBN’s TV Plus Boxes,” it said.
It added it was also learned that ABS-CBN did not secure any prior permit to charge the viewers of its Kapamilya Box Office (KBO) pay-per-view channel.
Amcara
Also, the committee said the ABS-CBN has continuous control over Amcara’s channel, and such control only rests when the signal is turned off the air for only three hours every day.
It said Amcara’s franchise allowed it to maintain and operate Channel 23, then called Studio 23, which was rebranded to ABS-CBN Sports+Action in 2014.
However, for the past 23 years, the panel said Amcara maintained an agreement with ABS-CBN, which it calls a “block-time” agreement, to allow ABS-CBN to broadcast its programs over Studio 23/ABS-CBN Sports+Action.
“Further, the block-time agreement between ABS-CBN and AMmcara allows ABS-CBN to use Amcara’s Channel 23 for almost the whole day, at 21 hours, every day,” it said.
With this, the panel said there is reason to believe that ABS-CBN controls Amcara in its entirety and not only its frequency.
Labor violation
The committee, citing the Department of Labor and Employment’s official statement on July 1, said its labor inspectors found violations of laws and labor standards by ABS-CBN.
It said there are 67 pending cases against the TV company in the National Labor Relations Commission (NLRC) and various courts.
The panel also noted the network’s former employees who had filed cases against ABS-CBN testified that they were illegally dismissed because they formed unions.
“These former employees also declared that they were made to sign employment contracts containing a waiver of the right to regularization. Those who refused to sign an employment contract containing a waiver of regularization were downgraded to project employees and later dismissed,” the committee.
The ABS-CBN said the reason in failing to regularize many of its employees is the “uniqueness” of their industry, claiming that many of these employees are hired for specific programs, which mostly only last for a period of time.
The committee said only 25 percent or 2,661 of the total 11,701 workers of ABS-CBN are regular employees.
Tax issue
On ABS-CBN’s claim that it is paying proper taxes — a matter attested to by BIR officials — the House panel said a tax clearance does not absolve a taxpayer from tax liabilities and delinquencies, nor from acts of fraud or tax evasion.
“ABS-CBN earns revenues in the billions of pesos. However, through corporate layering, taking advantage of well-known tax havens such as Hungary, Luxembourg and the Cayman Islands and even through the use of our own PEZA incentives, we see that only a minimal fraction is remitted to the government,” it said.
The panel said the continuous practice of ABS-CBN in navigating through the loopholes of the system and tax laws appeared to have reached the extent of depriving the government of the taxes due.
“If we focus on the harm of tax avoidance to society, rather than how it is legally defined, then we can see that it contributes to growing inequality, increases tax burdens on resident taxpayers and undermines state legitimacy,” it said.
“Although legal, the employment of tax avoidance schemes could undermine the integrity of a tax system,” it added.
On the issue of the return of ABS-CBN to the Lopez family after Martial Law, the panel said it appears that the prescribed process for the return of the subject assets and equipment was not followed.
“Based on the statutory provisions above, the assets should have been identified by the Committee on Privatization and then transferred to the Asset Privatization Trust (APT) or referred to the proper government institutions to constitute as an operative fact of transfer or referral,” it said.
“The APT should then proceed with divestment. However, it appears that the disposition did not pass the Committee on Privatization. The PCGG representative testified that the prescribed process was not observed,” it added.
Meanwhile, the committee refrained from giving a finding on the alleged biased reporting of the network, alleged meddling in politics, as well as the content of its programs.
“The principles of press freedom, fair comment, and self-regulation of media militiate against any attempt at such ruling,” it said.
ABS-CBN: We’re not perfect
While the ABS-CBN admitted that there are times it commits mistakes since it is not a perfect organization, it points out that it promptly corrects its mistakes. ABS-CBN said it has a Network Ombudsman who handles complaints against news personnel, and it makes sure that its news personnel adhere to the Journalist’s Code of Ethics.
The committee also said ABS-CBN is accused of favoring candidates and using its closeness to favored candidates to gain political and economic advantage for itself. Specifically, during the 2016 elections, ABS-CBN appeared biased against then Presidential candidate Rodrigo Roa Duterte.
ABS-CBN also admitted that it did not completely air the total paid political advertisements of then presidential candidate Duterte. ABS-CBN reasoned that it was due to the first-come, first-served policy of the company.
ABS-CBN said it had apologized to President Duterte for the delay in refunding the cost of unaired political advertisements. In the end, Duterte didn’t accept the refund, and gave it to charity instead.
Senators react
Senator Grace Poe, on learning about the House committee decision, rued that “the pandemic of intolerance has claimed another victim.”
Poe, who chairs the Senate counterpart Committee on Public Services tasked to review franchises, lamented that the House action, if not reversed, means that “thousands of breadwinners will lose their jobs, and millions [of viewers] their source of entertainment and information.”
Poe pointed out that “ABS-CBN is far from a perfect organization, and has admitted to its many failings. But in its balance sheet of accomplishments, the good it had done for our people are valuable.”
The senator suggested that “the correct – and constitutional – response is to allow it to remedy them, the same chance extended to thousands of franchise applicants.”
She explains this is so “because a media organization that occasionally commits mistakes is in the nation’s interest than one that is permanently muzzled.”
“It is not just news that is curtailed but entertainment shows which represent the finest in the craft, delight the public, and inspire our people to be the best,” the lawmaker lamented.
Sen. Poe noted that “the House has indeed set a high and unforgiving bar in approving franchises,” adding that “this may affect current active franchises.”
Senate Minority Leader Frank Drilon deplored the House Committee decision to disapprove the franchise renewal of ABS-CBN, admitting he was “deeply saddened by this episode in the history of our nation,” as he recalled the House panel’s action was “reminiscent of the dark pages in the history of Philippine press in 1972.”
In a statement, Drilon stressed that democracy thrives when there is free press and when journalists can exercise complete freedom to do their mandate of reporting facts without fear. But with what happened to ABS-CBN, he added, it has shown that the “sword of Damocles” can be unleashed any time.
“After monitoring the exhaustive proceedings in the House of Representatives, I am more convinced that the only fault of ABS-CBN is it stepped on some powerful political toes, hence the sword has been unleashed on it,” says Drilon.
At the same time, the Senate Minority Leader warned that “the sword of Damocles will continue to hang perilously over other media networks,” noting that “both the legislators and the executive can wield the sword at their whim and caprice. This is when democracy starts to weaken.”
In the face of a global pandemic, Drilon stressed the people “need more access to information” and the ABS-CBN complements other stations in providing “timely and accurate reportage even in the farthest locality unreachable to others, even to the government.”
He aired optimism that the ABS-CBN as an institution “can survive this episode, no doubt, but the people whose livelihood depends on the network are the real casualties of this unfortunate and politically charged event.”
Drilon deplored the prospect that 11,000 ABS-CBN workers losing jobs next month have families to feed, rent and mortgages to pay and children to send to schools.
“They will suffer the consequences of the decision of the House of Representatives,” Drilon said, adding “this could have been avoided had Congress granted the franchise renewal of the broadcasting network.”
Drilon earlier filed a resolution to extend the ABS-CBN franchise until December of 2022 but the Senate, unfortunately, can no longer act on it and other bills seeking to renew the franchise of ABS-CBN due to Constitutional limitations.
Recalling that “ABS-CBN has been through this before during martial law in 1972,” the Senate Minority Leader remained confident that “it can face this difficult trial once more.
“To prevent this from happening in the future, I urge Congress to immediately enact Senate Bill 1530, which I filed, seeking the non-expiration of a franchise whose renewal has been filed and remained pending in Congress,” said Drilon, adding that the pending bill was crafted to “encourage Congress to act decisively on an application for renewal, and to express its decision in clear, unmistakable terms, ensuring that the applicant is not punished for the authority’s indecision or inaction.”
With a report by Butch Fernandez