ABS-CBN didn’t comply with franchise terms, laws: House leader

MANILA – Deputy Speaker Rodante Marcoleta on Tuesday claimed that the embattled broadcast network ABS-CBN did not comply with the terms and conditions of its franchise, as well as with existing laws and the country’s Constitution.

Marcoleta made the statement during the joint hearing of the House committee on legislative franchises and the House committee on good government and public accountability on the proposals seeking to grant a full 25-year franchise to ABS-CBN.

Hon. Marcoleta, Rodante D., Deputy Speaker, House of Representatives, Quezon City

“In fact, they will show in the succeeding hearings in the committee of legislative franchises that ABS-CBN deliberately and with impunity violated the conditions of its legislative franchise, and more so of our laws and our Constitution,” Marcoleta said.

He said the panel should deny the franchise application of ABS-CBN, noting that the network’s previous franchise lasted longer than the constitutionally-mandated 50-year period.

“The ABS-CBN has been using the airwaves for more than 50 years, 53 years today to be exact. Our Constitution says that Congress can grant a franchise of up to 50 years only,” he said.

“The committee on the legislative franchise should not allow itself to be used by ABS-CBN to again circumvent the Constitution and violate the categorical 50-year limitation imposed on franchises,” he added.

Foreign Ownership

He also cited that the ABS-CBN violated the Constitution, which requires 100-percent Filipino ownership and management of mass media companies.

He said the network’s former president, Eugenio “Gabby” Lopez III, was an American citizen when he took the helm of the company in 1986. It was only in 2000 that Lopez petitioned for recognition of Filipino residency.

He further argued that the network is foreign-owned because of its Philippine Depositary Receipts (PDR), which virtually allowed foreign holders beneficial ownership and potential voting rights.

Violation of Workers’ Rights

Marcoleta said the network committed unfair labor practices, which consequently denied its employees the benefits required by law.

He said that of the 11,000 ABS-CBN employees, almost 8,500 are contractual workers and talents.

“ABS-CBN has NOT regularized its contractual workers and talents despite performing the functions of regular workers,” he said.

Hindi po maikakaila sa publiko na napakarami ng labor cases na hinarap at haharapin pa ng ABS-CBN. Ang masaklap pa dito, ni hindi nagbibigay ang ABS-CBN ng contribution sa benefits,” he added.

(It is not a secret that ABS-CBN is and will be facing numerous labor cases. What makes it worse is that ABS-CBN is not giving a contribution to the benefits [it is reaping].) 

Political Bias

Marcoleta slammed ABS-CBN for its alleged political bias for certain candidates in the 2010 and 2016 presidential elections, contrary to the terms of its franchise and in violation of the Omnibus Election Code.

“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 these political ads,” he added.

ABS-CBN alleged violations

Other violations enumerated by Marcoleta include offering a pay-per-view service Kapamilya Box Office (KBO) channel (via TV Plus) through free-to-air signals, and the “tax evasion” schemes of the network.

“ABS-CBN violated the terms and conditions of its franchise by offering its TV Plus boxes for a one-time fee, but using the free-to-air signal authorized in the franchise granted by Congress to ABS-CBN at no cost,” he said.

“ABS-CBN also violated the terms and conditions of its franchise by engaging in tax avoidance schemes which deprived the government of the much-needed revenue,” he added.

He said that the network used its fully owned subsidiary, Big Dipper Digital Content, and Design, as a tax shield. The Big Dipper’s main customer is a foreign Hungary-registered company, which is also a fully-owned subsidiary of ABS-CBN.

“Because of this unconscionable tax avoidance scheme, ABS-CBN’s alleged effective tax rate in 2018 was at -5 percent. This means that ABS-CBN managed to avoid paying taxes in 2018,” he said.

He said the network also did not pay its rightful taxes in 2019 by entering into a compromise agreement with the Bureau of Internal Revenue, with the latter accepting the former’s settlement of around PHP152 million, equivalent to 40 percent of its assessed deficiency in income tax, value-added tax, and documentary stamp tax payments.

During the same hearing, ABS-CBN president and CEO Carlo Katigbak said that the network has not violated any laws.

“We agree. The law is the law. And under the law, we are innocent under proven guilty. Up to now, there is no court that has determined we have broken any laws,” he said.

Sabi po ng BIR, bayad ang aming buwis. Nanggaling sa SEC (Securities and Exchange Commission) na aprubado sa kanila ang pag-issue ng mga PDR. Ang Department of Justice ang nagsabi na hindi labag sa prangkisa ang KBO. Ang DOLE naman ay nagsabi na sumunod kami sa lahat ng compliance orders nila,” he added.

(The BIR [Bureau of Internal Revenue] said we paid our taxes. It came from the SEC that it approved the PDR issued [to us]. The Department of Justice said that the KBO is not a violation of the franchise. Meanwhile, the DOLE said we complied with the compliance orders from them.)

Katigbak said that while they are not a perfect organization, they are prepared to fix any issues of the company. (PNA)

By Filane Mikee Cervantes  May 26, 2020