Did Abs-Cbn Break The Law?

The shutdown of ABS-CBN broadcasting in the Philippines sparked controversy and raised questions about whether the network broke the law. The network was accused of various violations, including non-compliance with franchise terms and conditions, laws, and the country's Constitution. Deputy Speaker Rodante Marcoleta claimed that ABS-CBN violated the Constitution's requirement for 100% Filipino ownership of mass media companies, citing the citizenship of its former president. He also alleged unfair labor practices, tax evasion, and political bias. ABS-CBN denied the accusations, stating that it complied with all pertinent laws and regulations. The issue sparked debates about press freedom and democracy in the country, with critics arguing that the shutdown contributed to democratic backsliding under the Duterte administration.

Non-compliance with franchise terms and conditions

In May 2020, Deputy Speaker Rodante Marcoleta claimed that ABS-CBN had not complied with the terms and conditions of its franchise, as well as with existing laws and the Philippines' Constitution. He stated that the network's previous franchise had lasted longer than the constitutionally-mandated 50-year period. Marcoleta also alleged that the network was foreign-owned, in violation of the Constitution's requirement of 100% Filipino ownership and management of mass media companies. He further claimed that ABS-CBN had committed tax evasion, political bias, and unfair labour practices.

ABS-CBN denied these allegations, stating that it had not violated any laws and that the Bureau of Internal Revenue (BIR) had confirmed that the network had paid its taxes. ABS-CBN also said that the Securities and Exchange Commission (SEC) had approved the issuance of its Philippine Depository Receipts (PDRs) and that the Department of Justice (DOJ) had stated that its KBO service was not a violation of its franchise.

In July 2020, the House Committee on Legislative Franchises denied ABS-CBN's application for franchise renewal, citing issues such as the dual citizenship of Chairman Emeritus Eugenio Lopez III, potential violations of foreign ownership restrictions, alleged labour and tax irregularities, and non-compliance with franchise terms.

Violation of the Constitution's 100% Filipino ownership requirement

The Philippine Constitution requires 100% Filipino ownership and management of mass media companies. In May 2020, Deputy Speaker Rodante Marcoleta claimed that ABS-CBN violated this constitutional requirement. He alleged that the network's former president, Eugenio "Gabby" Lopez III, was an American citizen when he took the helm of the company in 1986 and only petitioned for recognition of Filipino citizenship in 2000. Marcoleta also argued that the issuance of Philippine Depositary Receipts (PDRs) to foreigners meant that ABS-CBN was effectively foreign-owned.

ABS-CBN disputed these claims, explaining that Lopez was born to Filipino parents, making him a Filipino citizen under the 1935 Constitution. They also stated that Lopez did not need to acquire Filipino citizenship as he had never lost or renounced it. Additionally, ABS-CBN noted that the PDRs had been evaluated and approved by the SEC and the Philippine Stock Exchange prior to their public offering.

The Technical Working Group (TWG) that drafted the resolution denying the franchise application of ABS-CBN Corp. also addressed the issue of Lopez's citizenship. The TWG report expressed doubt about Lopez's Filipino citizenship and allegiance to the Philippines, noting that his birth as a Filipino was never registered, and he continued to use his US passport. The report further highlighted that the issuance of PDRs to foreigners had allowed foreign ownership in ABS-CBN, potentially violating the 1987 Constitution. It was estimated that foreign holders of PDRs owned 62% of the total underlying shares of ABS-CBN Corp.

The dispute over the citizenship of Gabby Lopez III and the issuance of PDRs to foreigners formed a significant part of the debate surrounding the alleged violation of the constitutional requirement for 100% Filipino ownership and management of mass media companies.

Unfair labour practices

In the Philippines, a large proportion of the population relies on employment as their primary source of income. As such, labour policies are well-thought-out and continuously refined to protect the rights of workers. Unfair labour practices are acts that violate the workers' right to organize and are considered crimes against the state.

In the case of ABS-CBN, Deputy Speaker Rodante Marcoleta claimed that the network committed unfair labour practices, consequently denying its employees the benefits required by law. He stated that out of 11,000 employees, almost 8,500 were contractual workers and talents who had not been regularized despite performing the functions of regular workers. Marcoleta added that ABS-CBN was facing and would continue to face numerous labour cases.

ABS-CBN President and CEO Carlo Katigbak, however, denied any violations of labour laws, stating that the company had complied with the Department of Labor and Employment's (DOLE) compliance orders.

Political bias in the 2010 and 2016 elections

The 2010 and 2016 Philippine elections were marred by allegations of political bias, with the country's major media networks, including ABS-CBN, accused of favouring certain candidates.

In the 2010 elections, the eventual winner, Benigno Aquino III, was criticised for having the backing of the Iglesia ni Cristo (Church of Christ), a powerful religious organisation in the Philippines. The church is known for block voting, with its leaders endorsing a particular candidate and encouraging its members to vote for them. Aquino's main rival, Joseph Estrada, was supported by another religious group, El Shaddai, which also practices block voting.

In the 2016 elections, ABS-CBN was accused of political bias for certain candidates, contrary to the terms of its franchise and in violation of the Omnibus Election Code. Rodrigo Duterte, who eventually won the election, accused the network of refusing to air his 2016 campaign ads and instead favouring negative political ads paid by then-vice presidential candidate Antonio Trillanes, who was critical of Duterte's remarks on the campaign trail. Duterte also claimed that ABS-CBN was biased and unfavourable in its news coverage of him, beginning with his presidential campaign in 2016.

ABS-CBN was also accused of political bias in the 2016 elections for failing to air some of President Duterte's political advertisements during the 2016 campaign period despite receiving payment for these ads.

In addition to ABS-CBN, other media networks were also accused of political bias during the 2016 elections. GMA Network, for example, was criticised for its biased coverage of the elections, with some of its journalists and celebrities expressing solidarity with ABS-CBN after it was ordered to cease its radio and TV broadcast.

The allegations of political bias during the 2010 and 2016 Philippine elections highlight the influence and power of the media in shaping public opinion and electoral outcomes in the country.

Operation of pay-per-view services without approval

The Kapamilya Box Office (KBO) channel was offered by ABS-CBN Convergence as a value-added service. Subscribers paid a weekly fee on top of a one-time payment for the ABS-CBN TV Plus Digital Box.

In February 2020, Solicitor General of the Philippines Jose Calida filed a quo warranto petition to revoke ABS-CBN's franchise, citing the operation of the KBO channel as one of the reasons. Calida claimed that the KBO channel was offered without the proper permits from the National Telecommunications Commission (NTC) and was thus a violation of its franchise.

ABS-CBN responded to Calida's accusation, stating that ABS-CBN Convergence "sought and obtained NTC approvals" for the pay-per-view service. The NTC's 2019 order, according to ABS-CBN, "approved" the pay-per-view service but imposed the condition that the service be "subject to such Conditional Access guidelines that the Commission or any other relevant government agency may hereafter issue".

ABS-CBN further argued that the NTC order did not prohibit pay-per-view services before the issuance of guidelines but rather required companies to comply with guidelines if and when the government issued them. The potential penalty for such a violation, according to ABS-CBN, would be a fine "not exceeding two hundred pesos per day for every day during which such default or violation continues".

At a Senate hearing, NTC Commissioner Gamaliel Cordoba confirmed that the violation in question was ABS-CBN's decision to proceed with a pay-per-view service despite the absence of guidelines. Senator Ralph Recto countered that if there was a violation, penalties should be imposed instead of shutting down the company.

Accusation

ABS-CBN operated the KBO channel, a pay-per-view service, without the proper permits from the NTC.

Defence

ABS-CBN Convergence sought and obtained the necessary NTC approvals for the KBO channel. The NTC's 2019 order did not prohibit the operation of pay-per-view services but rather required compliance with guidelines if and when they were issued.

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