ABS-CBN may operate sans franchise with congressional nod

By Vann Marlo M. Villegas and Charmaine A. Tadalan
Reporters

A BROADCASTING giant critical of President Rodrigo R. Duterte may continue operating pending its application for a franchise renewal, the Justice department told senators on Monday.

Congress can file a resolution authorizing the National Telecommunications Commission (NTC) to issue a provisional authority to ABS-CBN Corp., whose franchise is expiring on May 4, Justice Secretary Menardo I. Guevarra said at a hearing on alleged violations of its franchise.

“Congress, by a concurrent resolution, may authorize the NTC to issue a provisional authority — subject to such terms and conditions the NTC may deem fit — to ABS-CBN,” he said.

Mr. Guevarra said the law is silent on whether a franchise holder can operate pending a congressional hearing on the renewal of its permit. “When there is a gap in the law, equity comes in to fill the gap,” he added, citing the need for “substantial justice.”

The NTC last week sought a legal opinion from the Justice department on whether ABS-CBN can operate once its franchise expires.

Mr. Guevarra said the agency was not inclined to issue an opinion when a private company is involved, adding that legal opinions usually cover only government agencies.

“Our legal opinion will not be binding on a private company, which may actually go to court to have the matter resolved,” he told reporters after the Senate committee on public services hearing.

Mr. Guevarra also corrected earlier news reports that said the media network’s franchise was expiring on March 30.

The law that authorized ABS-CBN to operate for 25 years was enacted on March 30, 1995, but it only took effect 15 days after it was published in a newspaper.

“The franchise (law) was published on April 19, 1995. For that reason, the franchise will expire on May 4, 2020,” he said.

Several bills seeking to renew the network’s franchise have been filed in both Houses of Congress.

Solicitor General Jose C. Calida has asked the Supreme Court to revoke ABS-CBN’s franchise, accusing it of “highly abusive practices.”

The broadcaster allegedly used an “elaborately crafted corporate veil” to allow foreign investors to take part in its ownership.

The company allegedly violated the ownership restriction when it issued Philippine depositary receipts to foreigners. The financial instruments allow foreign funds to buy into the company, allowing it to raise funds globally.

ABS-CBN also went beyond the scope of its legislative franchise by “broadcasting for a fee,” Mr. Calida said. The company allegedly launched and operated a pay-per-view channel in ABS-CBN TV Plus, the KBO Channel, without regulatory approval.

Unit ABS-CBN Convergence, Inc. had also resorted to an “ingenious corporate layering scheme” in order to transfer its franchise without congressional approval, he said.

It also failed to list its shares on the Philippine Stock Exchange within five years, which was a condition of its franchise, Mr. Calida said.

The media network, which Mr. Duterte accused in 2017 of swindling after it allegedly refused to run political ads he had paid for during the 2016 presidential campaign, has denied the allegations.

NO VIOLATIONS
At yesterday’s Senate hearing, regulators cleared ABS-CBN of alleged violations of its franchise.

NTC, Bureau of Internal Revenue and Securities and Exchange Commission (SEC) officials told senators the network had no pending violations or complaints from third parties.

NTC Commissioner Gamaliel Cordoba noted that in the past, franchise holders whose permits have expired had been allowed to continue operating even without a provisional authority.

He noted, however, that given the solicitor general’s quo warranto lawsuit against ABS-CBN, they deemed it prudent to seek advice from the Justice department.

SEC Commissioner Ephyro Luis B. Amatong also cleared the network, saying he was not aware of any violations or complaints against the network.

“As far as the ABS-CBN account is concerned, they are regularly filing and paying their taxes for the past number of years,” said Roberto A. Baquiran, chief of the BIR’s National Investigation Division.

The broadcaster has paid P14.4 billion from 2016 to 2019, covering all national revenues except the 2019 corporate income tax due in April, he said.

Senator Ralph G. Recto said the broadcaster should have been fined if it had violated the law instead of forcing its shutdown.

“You are the regulator and you are not complaining of any penalty,” he told telecommunication officials. “And here we are talking of the possibility of closing ABS-CBN.”

At the hearing, ABS-CBN President and Chief Executive Officer Carlo L. Katigbak admitted that of the P65 million worth of local ads placed by Mr. Duterte during the 2016 presidential campaign, the network had failed to broadcast P7 million worth of ads for lack of time.

“Of the P7 million, we refunded approximately P4 million and that was accepted,” Mr. Katigbak said. “We were delayed in refunding the P2.6 million and that was no longer accepted.”

Also at yesterday’s hearing, the Philippine Competition Commission (PCC) said shutting down ABS-CBN, leaving the three other major media companies to control the market, might be a cause for concern.

PCC Commissioner Johannes Benjamin R. Bernabe said 89% of the market is controlled by ABS-CBN, GMA Network, TV5 and Nine Media. ABS-CBN has a market share of 31-44%, while GMA has 34-46%.

GMA Network could end up swallowing a portion of ABS-CBN’s market share, he said.

“In other jurisdictions, an increasing market share of at least 10% raises a red flag in terms of competition,” he said. “We will have to assess it in a case-to-case basis in the context of the Philippine market.”

Meanwhile, Palawan Rep. Franz E. Alvarez, chairman of the House committee on legislative franchises, said formal hearings on ABS-CBN’s franchise may start either in May or August.

“Maaaring sa May na po ito o sa August na talaga kasi maraming marami po talaga. Hindi po ito kayang matapos agad (We may start in May or August because we have a lot of work. We cannot finish this immediately),” he said in a radio interview on Monday. — with inputs from Genshen L. Espedido