Gov’t asks SC to scrap ABS-CBN franchise


    GOVERNMENT yesterday asked the Supreme Court to revoke the legislative franchise granted to broadcast giant ABS-CBN Corp. and its subsidiary, ABS-CBN Convergence Inc.

    Solicitor General Jose Calida, in a statement distributed to reporters after the filing, said the quo warranto petition is aimed at stopping the “highly-abusive practices” of the broadcast network, which benefit “a greedy few at the expense of millions of its loyal subscribers.”

    ABS-CBN said it did not violate any law. It said it “complies with all pertinent laws governing its franchise and has secured all necessary government and regulatory approvals for its business operations.”

    In a statement, it also said Calida’s filing of the quo warranto case “appears to be an effort to shut down ABS-CBN to the serious prejudice of millions of Filipinos who rely on the network for news, entertainment and public service.”

    The petition was filed 40 days before the network’s legislative franchise expires on March 30.

    The 66-year-old entertainment and media conglomerate drew the ire of President Duterte during his 2016 election campaign for allegedly refusing to air his campaign commercials.

    Duterte has threatened for three years to torpedo the franchise renewal of ABS-CBN.

    Presidential spokesman Salvador Panelo said Duterte personally had nothing to do with the complaint, and in criticizing ABS-CBN, he was exercising his right to free speech.

    The filing was slammed by lawmakers and activists as an attack designed to intimidate independent media.

    Duterte’s opponents said the quo warranto petition was timed to deny Congress the chance to renew the franchise of ABS-CBN, which employs nearly 7,000 people and engages hundreds of celebrities in radio, television, and online content.

    A quo warranto petition is filed by the solicitor general or a public prosecutor to void the position of a public officer if he or she is found to have usurped office or disqualified from the post, as what Calida did to then Chief Justice Maria Lourdes Sereno. In Sereno’s case, the solicitor general argued that she should be ousted from her post because she failed to file her statement of assets, liabilities and net worth.

    Under the Rules of Court, a quo warranto petition can also 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 refused to be interviewed by reporters after the filing, saying he has an appointment to go to.

    When ABS-CBN reporter Mike Navallo pressed him for details, Calida again said he has to go and even asked the latter if he is a lawyer.

    When Navallo answered in the affirmative, Calida asked him to just practice his profession.

    “Lagi mo akong binabanatan ha. Lawyer ka rin pala, mag-practice ka na lang para magkita tayo sa korte,” he added, to which Navallo replied he was just doing his job as a journalist.


    In a statement distributed to reporters, Calida said, “We want to put a stop to what we discovered to be highly-abusive practices of ABS-CBN benefiting a greedy few at the expense of millions of its loyal subscribers. These practices have gone unnoticed or were disregarded for years.”

    He said ABS-CBN abused the privilege granted by the state when it “launched and operated a pay-per-view channel in ABS-CBN TV Plus, the KBO Channel, without prior approval or permit from the National Telecommunication Communication.”

    “While it is true that broadcasting is a business, the welfare of the people must not be sacrificed in the pursuit of profit,” Calida said.

    He further accused the network of hiding behind an “elaborately crafted corporate veil” as he said foreign investors are part owners of the network, which he said is a violation of the foreign interest restriction of mass media under the 1987 Constitution.

    He said ABS-CBN issued Philippine deposit receipts (PDRs) through ABS-CBN Holdings Corp. to foreigners, in violation of the Constitution.

    “This simply means that mass media companies operating in the Philippines must be 100 percent Filipino owned because they play an integral role in a nation’s economic, political, and socio-cultural landscape,” Calida said.

    A PDR allows foreign investors to invest in a Filipino company without conferring control or ownership on that company.

    The accusation of foreign ownership is similar to that against online news outfit, Rappler, which led to a closure order from the Securities and Exchange Commission.

    “Like Rappler, ABS-CBN had issued PDRs through ABS-CBN Holdings Corp to foreigners, in violation of the foreign ownership restriction on mass media in the Constitution,” Calida said.

    On ABS-CBN Convergence Inc., Calida said it resorted to an “ingenious corporate layering scheme” in order to transfer its franchise without the necessary congressional approval.

    It also failed to publicly offer any of its outstanding capital stock to any securities exchange within the Philippines within five years from the start of its operations, Calida said, adding that is an indispensable condition of its franchise.

    “The legislative franchises of ABS-CBN Corporation and its subsidiary, ABS-CBN Convergence Inc. must be revoked. A franchise is a special privilege granted by the State, and should be restricted only to entities which faithfully adhere to Constitution and laws,” the solicitor general added.


    ABS-CBN said all its broadcast offerings, including KBO, “have received the necessary government and regulatory approvals and are not prohibited by our franchise.”

    On the PDRs, it said these “were evaluated and approved” by SEC and the Philippine Stock Exchange prior to its public offering. “These are the same instruments used by other broadcast companies to raise capital for the improvement of services.”

    On the ownership of ABS-CBN in ABS-CBN Convergence, it said this was undertaken “under the same law and structures that have been utilized by other telecommunications companies. These are transfers that are approved under the Public Telecommunications Policy Act and are fully compliant with law.”

    “We reiterate that everything we do is in accordance with the law. We did not violate the law. This case appears to be an attempt to deprive Filipinos of the services of ABS-CBN,” it also said.


    Panelo acknowledged the President’s constant tirades against ABS-CBN which he said stemmed from his “displeasure” over the media network’s failure to air his campaign ads during the 2016 presidential polls despite its collection of his payment.

    “Now, that’s part of freedom of expression, when you express your displeasure on something of which you are the subject of a fraud. You cannot deprive the President as a citizen of this country to express himself; kaya walang kaugnayan itong petisyon ni SolGen (So the petition has nothing to do with it). The statement of the President is in connection with his displeasure after he paid for the airing of campaign material that never happened,” he said.

    Panelo also said Duterte’s statements like the owners should sell the network, warnings about difficulties in the media network’s franchise renewal, and he would not allow a franchise renewal are just his way of expressing his displeasure.

    He also said the job of the Solicitor General is to file petitions and charges whenever he sees violation of laws, and the President does not interfere with the jobs of the heads of the different departments, offices, and constitutional bodies.

    He added the petition is not a curtailment of the freedom of the press or an issue of press freedom.


    At the House, Cagayan de Oro Rep. Rufus Rodriguez, chair of the House committee on constitutional amendments, said the filing “is an unconstitutional encroachment of the exclusive power of Congress to grant franchises.”

    “The Executive, through the solicitor general, cannot initiate franchise cancellation, a power belonging to Congress,” he also said.

    Buhay party-list Rep. Lito Atienza said Palawan Rep. Franz Alvarez should just resign as chair of the committee on legislative franchise if the panel will not tackle the bills seeking to renew ABS-CBN’S franchise.

    Atienza, whose son Kim works as a host and weather anchor in the network, said some 14,000 employees stand to lose their jobs if Congress will not act on their franchise renewal.

    He also slammed Calida for filing a quo warranto petition before the Supreme Court, saying he is undermining congressional powers like what he did when he sought Sereno’s removal.
    “It weakens our democratic system. It is weakening Congress, too,” said Atienza.

    Deputy speaker Johnny Pimentel of Surigao del Sur accused the OSG of “usurping” the power of Congress, saying the petition was filed even if the House committee on legislative franchises has not even decided whether to renew or cancel ABS-CBN’s franchise.

    “The quo warranto has preempted the actions of Congress,” Pimentel told ANC. “I hope that the Supreme Court will dismiss this case.”

    Albay Rep. Edcel Lagman of the Liberal Party, a leader of the opposition, said the quo warranto petition “preempts or usurps the sole authority of the Congress to extend or not an existing and expiring franchise.”

    ACT party-list Rep. France Castro said the OSG under Calida has become Duterte’s “private law firm” which is being used for political vendetta.


    Sen. Grace Poe, Senate public services committee chair, assured the public her committee will conduct a fair hearing on the franchise renewal.

    Senate President Vicente Sotto III declined to comment on the filing. “Considering the possibility of the franchise reaching the Senate, I would rather reserve my opinion on the matter. I mean it might have an effect when we decide later should it reach us. Therefore, it’s prudent to not judge it,” he said.

    Senate minority leader Franklin Drilon said: “I do not know what the SolGen wants to achieve in filing a quo warranto case against ABS-CBN. The franchise of ABS-CBN will expire on March 30. Hence, a quo warranto becomes moot by then if Congress does not act on extension. If between now and March, Congress decides to hear the franchise renewal of ABS-CBN, all these issues raised by SolGen Calida in his quo warranto petition can be taken up during the hearing.”

    Sen. Francis Pangilinan said Congress has the duty to give due process to ABS-CBN’s application for franchise renewal and complaints against the network should be formally lodged before Congress.

    Sen. Panfilo Lacson said he understands that the solicitor general has a mandate to file the petition but Congress also has a duty to either renew or cancel the franchise of broadcasting networks.

    “It is a matter of different jurisdictions. The quo warranto petition is under the original jurisdiction of the Court. Approval or renewal of legislative franchise is the jurisdiction of both house of Congress. As such, I see no conflict of interest,” Lacson said.

    Sen. Joel Villanueva said, “The Constitution bestowed on Congress the power to grant or revoke legislative franchise of utilities. Any issues related to congressional franchises are best taken up with the legislature. Congress always has the power to act on franchises.” — With Jocelyn Montemayor, Wendell Vigilia, Raymond Africa, and Reuters

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