Calida hits ABS-CBN over 'foreign ownership'

MANILA, Philippines – In filing a quo warranto petition to attempt to revoke the franchise of television giant ABS-CBN, Solicitor General Jose Calida also accused the network of having a form of foreign ownership through its Philippine Depositary Receipts (PDRs.)

"Like Rappler, ABS-CBN had issued Philippine Depositary Receipts (PDR)  through ABS-CBN Holdings Corporation to foreigners, in violation of the foreign ownership restriction on mass media in the Constitution," said Calida in a statement.

Calida did not provide reporters a copy of the full petition that he filed himself before the Supreme Court on Monday, February 10.

The petition came a little over a month before the franchise of ABS-CBN, granted by Congress, expires. Claiming it did not run his political ads during the 2016 presidential campaign, President Rodrigo Duterte has repeatedly warned ABS-CBN that its franchise will be revoked, even taunting management  to just sell. (READ: Timeline: Duterte against ABS-CBN's franchise renewal)

PDRs are financial instruments used by media entities to allow foreign investments without violating the constitutional rule that media companies should be 100% Filipino-owned. PDRs are a common, lawful practice, and their legality has been upheld by the SC. (READ: Misconceptions on PDRs)

But just like what he did in December 2016 to Rappler – which is now facing a shutdown order from the Securities and Exchange Commission (SEC) that the Court of Appeals said the commission should reinvestigate – Calida is going the same route to close down ABS-CBN. (READ: The case of Rappler's SEC registration)

"The media giant [has] been hiding behind an elaborately crafted corporate veil and [has] been allowing foreign investors to take part in the ownership of a Philippine mass media entity, in gross violation of the foreign interest of mass media provided under Section 11, Article XVI of the Constitution," said Calida.

Calida didn't answer questions from media, except to say that his action was "not political."

'Broadcasting for a fee'

In asking to revoke the franchise, Calida is using Section 1(c) of Rule 66 of the Rules of Court which provides that a quo warranto petition may be filed against "an association which acts as a corporation within the Philippines without being legally incorporated or without lawful authority so to act."

Calida said ABS-CBN sold products like ABS-CBN TV Plus and the KBO Channel and called these products as "broadcasting for a fee, which is beyond the scope of its legislative franchise."

Calida said these products do not have the approval of the National Telecommunications Commission.

ABS-CBN's franchise will expire on March 30, with the House of Representatives still sitting on bills that seek to renew the franchise.

It is unclear whether ABS-CBN can have a grace period to continue operating while the House tackles the bills, because the law that gave them the franchise, Republic Act 7966, is silent on that matter.

As many as 11,000 jobs are on the line.

ABS-CBN was shut down once under the Marcos dictatorship. – Rappler.com

Lian Buan

Lian Buan covers justice and corruption for Rappler. She is interested in decisions, pleadings, audits, contracts, and other documents that establish a trail. If you have leads, email lian.buan@rappler.com or tweet @lianbuan.

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