What went badly for ABS-CBN during the Congressional hearings of their franchise renewal?
We all saw the hearings at the House of Representatives for the renewal of the TV network's franchise where we sat in front of our televisions and saw, played out in front of our eyes, every ‘drama’ that can happen during a Congressional hearing.
Committee members bringing in information and inquisitions, and some throwing bombshells that poleaxed most of us because they were completely shocking and unexpected. All this within 12 gruelling marathon hearings!
The House Committee on Legislative Franchises voted 70-11, with two inhibitions and one abstention, adopting a resolution denying the franchise application of ABS-CBN Corporation to Construct, Install, Establish, Operate and Maintain Radio & Broadcasting Stations in the Philippines.
The resolution was recommended by a three-person Technical Working Group (TWG) that summarized seven key issues taken up in deliberations in the hearings on their application to renew their franchise.
Here's 7 reasons why Congress rejected ABS CBN's bid to renew their network franchise.
1. Gabby Lopez's citizenship
"In sum, Mr. Lopez's birth as a Filipino was never registered. It took him 50 years to apply for a recognition as Filipino citizen, presenting no clear and convincing evidence that his parents were Filipino citizens at the time of his birth. From birth even to the present, he continues to use his US passport. He even voted during the last US Presidential elections. All this acts taken together demonstrate a pattern and ultimately cast doubt on the Filipino citizenship and allegiance of Mr. Lopez."
The TWG said mass media companies should be 100 percent owned and managed by Filipinos.
2. PDRs (Philippine Depositary Receipts)
"The PDRs appear to have been utilized to allow foreign ownership in ABS-CBN which could have violated the 1987 Constitution."
“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."
The TWG said that the foreign holders of PDRs practically own 187 million underlying shares of ABS-CBN Corp., which is already 62 percent of the total.
3. Lopez family's reacquisition of ABS-CBN after the EDSA revolution
"The fifty-year [rule] does not prohibit the grant of a new franchise to the same entity upon the expiry of a previous franchise. This Committee agrees with the position of ABS-CBN."
"[But] it appears that the prescribed process for the return of the subject assets and equipment was not followed."
"This Committee is moreover perplexed why, despite the said supposed conduct of said arbitration proceedings, there was no records of said proceeding submitted to the Committee despite request by its members."
4. Digital services
"ABS-CBN, contrary to the terms of its franchise, operated its pay-per-view (PPV) channel, otherwise known as the Kapamilya Box Office, without a valid permit from the NTC."
"ABS-CBN and/or ABS-CBN Convergence, Inc. do not have a franchise as Cable TV operators, nor do they have any permit/authority from the NTC as such, yet they have circumvented the law and regulations through the ABS-CBN TV Plus Box (with multiple channels) and the KBO PPV channel which both charge the public fees."
The TWG said 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.
5. AMCARA
"ABS-CBN, in doing its actual broadcasting using the franchise of AMCARA, thus obtained exclusive use and control of AMCARA's legislative franchise without the consent of Congress. This is not just a mere usufruct allowing ABS-CBN to enjoy the fruits of AMCARA;s franchise, but a fraudulent machination."
"There is thus sufficient reason for this Committee to believe that AMCARA is a mere dummy of ABS-CBN which should warrant the piercing of the veil of corporate fiction."
6. Labor Violations
"ABS-CBN's labor practices are less than exemplary."
“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 employees' welfare must not be sacrificed in the pursuit of profits."
The TWG said only 25 percent or 2,661 of the total 11,701 workers of ABS-CBN are regular employees. As of this writing, there are 67 pending cases against the TV company in the National Labor Relations Commission (NLRC) and various courts.
7. Tax Issues
“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 [Philippine Economic Zone Authority] incentives, we see that only a minimal fraction is remitted to the government,”
"The study of the operations and structure of Big Dipper, however, complies with none of these objectives for which PEZA was created for."
“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.”
“Although legal, the employment of tax avoidance schemes could undermine the integrity of a tax system.”
"The continuous practice of ABS-CBN to navigating through the loopholes of the system and our tax laws appeared to have reached the extent of depriving the government of the taxes due."
Speaker Alan Peter Cayetano had 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.”
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