By Ben Rosario
A joint congressional panel on Thursday ordered all mass media firms, especially major broadcasting firms, granted legislative franchises and have issued Philippine Deposit Receipts (PDR) to submit documents relative to their transactions.
Anakalusugan Party-List Rep. Mike Defensor (Mike Defensor FACEBOOK / MANILA BULLETIN/ FILE PHOTO)
This developed as Anakalusugan Rep. Mike Defensor reminded broadcast giant ABS-CBN that the constitutional provision on media ownership requires them to be unadulterated and wholly Filipino enterprise.
Defensor’s statement at the resumption of the ABS-CBN franchise hearing clashed head-on with the view aired by Albay Rep. Edcel Lagman that the issuance of PDRs by the embattled network and other broadcast entities does not violate the 100 percent Filipino ownership and management of mass media provided for under the 1987 Constitution.
“PDRs are not vested with voting rights and full beneficial ownership to which shares of stock are entitled,” stressed Lagman.
During the hearing, Bulacan Rep. Jonathan Sy-Alvarado, chairman of the House Committee on Good Government, ordered the committee secretariat to secure the PDR documents of other mass media and broadcasting firms, whether these have already secured or are still applying for legislative franchises.
Sy-Alvardo said these will be compared with the PDR transactions of the ABS-CBN, a broadcast company founded and owned by the Lopez family.
Also presiding over the hearing was Palawan Rep. Franz Alvarez, chairman of the House Committee on Legislative Franchises.
Popularly known as the Kapamilya network, ABS-CBN chief executive officer Carlo Katigbak had previously disclosed that GMA-7, their stiffest network rival, had also issued PDR’s.
Former Ateneo de Manila School of Law Dean Cynthia del Castillo, counsel for ABS-CBN Holdings, recalled that the firm started with the business of transacting PDRs in 1999 after it was hit by the global financial crisis, pointing out its beneficial effect to companies that are not required to dispose of ownership of the firm to be able to secure financing for operations or expansion.
While admitting that there were indeed foreigners that secured PDRs, transactions were strictly limited between these entities and the holding company.
“Ang ownership nila ay sa PDRs, hindi sa shares ng ABS CBN broadcasting. Wala silang right to participate in the management of ABS-CBN broadcasting because hindi sila shareholders nito (Their ownership is for the PDRs, not the ABS CBN broadcasting shares. They do not have right to participate in the management of ABS CBN broadcasting because they are not shareholders),” Del Castillo stressed.
The corporate lawyer shared the view of Lagman who said that PDR holders do not enjoy voting rights and full beneficial ownership of ABS CBN thus, “do not dilute the 100 percent ownership and management of mass media.”
“PDR holders are only entitled to: (1) receive dividends accruing to the underlying shares after operating costs and other expenses are deducted from the profits; and (2) the option to convert the underlying shares to shares of stock, if qualified as a Filipino,” explained Lagman, author of one of the bills calling for the grant of legislative franchise for the network.
According to Lagman the ABS-CBN Holdings Corporation secured beforehand the authority to offer PDRs as securities pursuant to the “Certificate of Permit to Offer Securities for Sale” issued by the Securities and Exchange Commission (SEC) on October 4, 1999 and another permit on January 7, 2014.
However, Defensor opposed the pro-ABS-CBN arguments, pointing out that mass media requires undiluted, full ownership of Filipinos as required under the charter.
The administration lawmaker said PDRs are instruments used to conceal foreign ownership of a firm prohibited by the Constitution from allowing alien participation.
“Our Constitution is very clear, there should be no foreign ownership, foreign control of our mass media corporations. Iyan po ay malinaw na malinaw at hindi po natin pwedeng palusutan (That is very clear and a loophole is not allowed),” he said.
Defensor insisted that two Lopez-owned corporations, the ABS-CBN Holdings and Lopez Holdings have PDRs owned by foreigners, adding that these PDRs are represented with shares in the broadcast company.
According to Deputy Speaker and Laguna Rep. Dan Fernandez, foreign firms with huge PDR stakes are a Singaporean corporation and US-based Mercury Holdings Company.
On the other hand, Cavite Rep. Crispin Remulla charged that the Lopez-owned ABS-CBN firms are involved in so-called “layering” method of concealing foreign interest in the firm.