THE House of Representatives on Tuesday opened committee hearings on bills seeking to renew the franchise of ABS-CBN Corporation whose executives faced congressmen for the first time and were grilled on allegations against the network, from alleged tax evasion to bias in its political reporting.
The network was represented by its chairman, Martin Lopez; Carlo Katigbak, president and CEO; Cory Vidanes, chief executive officer for broadcast; and other executives during the joint hearing of the committees on legislative franchises and on good government which was held at the plenary to ensure physical distancing.
“We believe there’s no reason not to grant ABS-CBN a franchise. There have been many accusations thrown against us, about alleged violations of laws or violations of our franchise. Our critics say, the law is the law. We agree. The law is the law. And under the law, we are innocent unless proven guilty. Up to now, there is no court that has determined we have broken any laws,” Katigbak said in his opening statement.
Katigbak appealed to lawmakers to save the network’s 11,000 employees from potential unemployment, warning them that the network will be forced to lay off some of them to keep the company afloat because it has been losing a lot every day that it is not on air.
The network stopped its TV and radio operations on May 5, hours after the National Telecommunications Commission issued a cease and desist order and a day after its 25-year franchise lapsed.
“We’re not here to appear pitiful. We’re appealing — restore ABS-CBN so we can protect our 11,000 Kapamilya and their loved ones,” he said. “In the coming weeks, we’ll be forced to come up with a list of employees who’ll lose their jobs. We hope Congress realizes that it’s within your power to save their futures.”
While NTC officials led by Deputy Commissioner Edgardo V. Cabarios attended the hearing to explain the NTC’s issuance of a cease and desist order, Solicitor General Jose Calida was a no-show at the hearing, prompting the joint panel to order him to explain why he should not be cited in contempt.
In a letter to the franchises panel, Calida invoked the sub-judice rule, saying it prevents him from “sharing views and recommendations” on the issue since he has two pending petitions against ABS-CBN before the Supreme Court.
“This rule aims to immunize the court from every extraneous influence and to maintain the dignity and authority of the court in the administration of impartial justice,” the official said.
Speaker Alan Peter Cayetano, who attended the hearing with majority leader Martin Romualdez, appealed for “leniency,” which prompted the joint panel to be more diplomatic in requiring his presence next Monday.
The House leadership has been at loggerheads with Calida since he warned the NTC against issuing ABS-CBN a provisional license even if the regulatory body has assured the House it will issue one to allow ABS-CBN to continue operating while the franchise bills are pending in Congress.
Cayetano, however, took exception to Calida’s use of the sub-judice rule, saying that if his interpretation of the principle would be followed, not a single hearing will be held at the House because many issues it is tackling are also subject of court proceedings.
Obviously taking a dig at Calida, Bulacan Rep. Jose Antonio Sy-Alvarado, good government panel chair, said the joint panel will not be “bullied” and will be fair and objective.
‘SHUT THE DOOR’
Speaking for those opposed to the franchise renewal bills, deputy speaker Rodante Marcoleta said the House should deny the application because of the network’s violations of its franchise.
Marcoleta, of the SAGIP party-list group, said the allegations against the network have long been circulating “but many are afraid of the influential network which can destroy anyone, candidate or not.”
He said the government should “shut the door” on ABS-CBN and take it off the air because it has been using the air waves for 53 years in violation of the Constitution which states that Congress can only grant a franchise of up to 50 years.
He said ABS-CBN started in 1967 when Chronicle Broadcasting Network (CBN) owner Eugenio Lopez Sr. obtained the Alto Broadcasting System (ABS) through a merger.
TAX EVADER?
Marcoleta accused ABS-CBN of engaging in tax “avoidance schemes, which deprived the government of the much-needed revenue.” He said it used its owned subsidiary, Big Dipper Digital Content and Design Inc., a company registered with the Philippine Economic Zone Authority (PEZA) as a “tax shield.”
“Because of this unconscionable tax avoidance scheme, ABS-CBN’s alleged effective tax rate in 2018 was at negative five percent. This means that ABS-CBN managed to avoid paying taxes in 2018,” he said.
In contrast, Marcoleta said the smaller GMA-7 network paid P1.6 billion in the same year while ABS-CBN did not pay anything for having a negative income tax of P84 million which he said made it appear that it is the government that owe it.
He presented a graph showing tax payments of GMA-7 network.
“May tax credit pa ABS-CBN at gobyerno pa ang lumalabas na may utang dito. (ABS-CBN had a tax credit and the it appears that the government is the one that owed it),” he said.
He also asked how ABS-CBN was returned to the Lopez family in the aftermath of the 1986 “EDSA people power revolution” under the Aquino administration, saying it happened while there was still a pending arbitration case.
CITIZENSHIP ISSUE, FOREIGN OWNERSHIP
Marcoleta said Congress should deny the franchise application for ABS-CBN’s clear violation of the Constitution requiring 100 percent Filipino ownership and management of mass media companies because ABS-CBN’s former president Eugenio “Gabby” Lopez III was an American citizen when he took the helm of the company in 1986 as director and president and chairman in later years. He said it was only in 2000 that Lopez petitioned for recognition of Filipino citizenship and was issued a certificate of recognition as a Filipino citizen in 2002.
The lawmaker said that through an “intricate web of corporate layering,” ABS-CBN allowed foreigners to own its common its shares through the issuance of PDRs (Philippine depositary receipts).
In September 1999, he said, ABS-CBN Holdings Corp. offered 132 million PDRs, underlying the 132 million common shares of the company. Immediately prior to the closing of the PDRs offering, he said Lopez Inc., the main stockholder of ABS-CBN Corp., transferred 132 million ABS-CBN shares to ABS-CBN Holdings Corporation, “its alter-ego.”
“With the many rights afforded to the holders of these PDRs, most of whom if not all are foreigners, ABS-CBN Corp. virtually allowed these foreign holders beneficial ownership and potential voting rights. This is a circumvention of the strict foreign equity restriction imposed by the Constitution on mass media companies,” he said.
In his speech, Katigbak defended the network from the allegations, saying even the BIR has made it clear that the company did not evade taxes.
Katigbak also said the Securities and Exchange Commission has said ABS-CBN’s use of PDR was above board while the Department of Justice has said that having the Kapamilya Box Office channel is a violation of its franchise.
CONTRACTUALIZATION, BIAS
Marcoleta alleged ABS-CBN violated the rights of its own workers when it committed unfair labor practices as seen in the case of a least 100 workers who won a case before the National Labor Relations Commission.
“Sana ibalita din ng TV Patrol para mabunyag libo-libong ENDO (end of contract cases) sa kanila (We hope that you also report it on TV Patrol so that the thousands of ENDO cases will be known),” he said.
The complainants did not enjoy the benefits the company owed them as they were classified as “talents and not regular employees.”
“They won even in the Court of Appeals. Why did you have to file an appeal before the SC? Is that what you were referring to in your opening salvo when you talked about love for your employees?” Marcoleta said.
Marcoleta noted that only 2,661 ABS-CBN workers are regular employees while more than 8,500 do not have government-mandated benefits like SSS, PhilHealth and Pag-IBIG.
Katigbak, on the allegations of unfair labor practice, said the Department of Labor and Employment has clarified that the network followed all its compliance orders.
“Wala po kaming nilabag na batas. Pero inaamin namin na hindi kami isang perpektong organisasyon. May mga kakulangan din po kami at handa naming ayusin ang mga ito (We did not violate the law but we admit that we’re not a perfect organization. We also have shortcomings and we’re prepared to make amends),” he said.
Marcoleta accused ABS-CBN of being biased and partisan during the 2010 and 2016 elections, “contrary to the terms of its franchise and in violation of the omnibus election code.”
Marcoleta said it is not a secret that ABS-CBN supported then Sen. Benigno Aquino III in the 2010 presidential race and then Sen. Grace Poe and Camarines Sur Rep. Leni Robredo in the 2016 presidential and vice-presidential race, respectively.
“It is also a matter of record that ABS-CBN failed to air some of President Duterte’s political advertisements during the 2016 campaign period despite receiving the payment of said political ads,” he said, adding that political ads against Duterte which was paid by a former senator was also supposed to be aired after the campaign period but was halted when Cayetano filed a court petition against it.
Marcoleta said ABS-CBN also illegally operated a pay-per-view channel through free-to-air signals in violation of its legislative franchise.
He was referring to the pay-per-view Kapamilya Box Office channel aired through ABS-CBN’s TV Plus which uses the air frequencies provided by the government for free.
The NTC has asked the Supreme Court to deny ABS-CBN’s petition for a temporary restraining order against the cease and desist order (CDO), saying it did not commit grave abuse of discretion or violate the equal protection clause.
“The issuance of the CDO is valid. Republic Act 3846 and Presidential Decree 576-A requires a franchise as well as a license or permit from the NTC before any broadcast operation,” the NTC said in a comment with omnibus motion filed on Monday. — With Ashzel Hachero
