Solicitor General Jose Calida has found an ally in former senator Juan Ponce Enrile in his bid to nullify the franchise of ABS-CBN, the country’s biggest media network.
Enrile said Calida was “correct” in filing a quo warranto case against ABS-CBN before the Supreme Court over its issuance of Philippine Depository Receipts (PDRs), which allowed foreigners to invest in the company.
“I think the Solicitor General is correct in raising the issue before the Supreme Court. Article XVI, Section 11(1) provides that ‘The ownership and management of mass media shall be limited to citizens of the Philippines, or to corporations, cooperatives or association, wholly owned and managed by such citizens.’ It is about time for the Supreme Court to clarify this issue once and for all for the benefit of the nation,” he said in a Facebook post.
Enrile said the Lopezes formed Worldtech Holdings Corp., later renamed as ABS-CBN Holdings Corp. in 1999 to become a “shell corporation… with no other business purpose of its own that as sole issuer of PDRs and custodian” of ABS-CBN common shares owned by the Lopezes.
“Clearly, the creation of ABS-CBN holdings was intended simply to circumvent and overcome the Filipino ownership requirement of the Constitution for mass media. These can be gleaned from its financial records in the Securities and Exchange Commission (SEC),” he said.
Quoting documents from SEC, Enrile said: “The Company has not conducted any business other than in connection with the issuance of Philippine Depositary Receipts (PDRs), the performance of obligation under the PDRs and the acquisition and holding of shares of ABS-CBN Corporation (ABS-CBN) in respect of PDRs issued.”
Enrile said it is likely that the PDRs issued by the Lopezes, which have grown from the original 132,000,000 PDRs in 1999 to 320,412,442 at the end of September 2019, are owned by foreigners.
“It is also obvious from the financial records of ABS-CBN Holdings in the SEC that the PDRs are ‘securitization’ of the 132,000,000 ABS-CBN shares that Lopez, Inc. transferred to its alter ego, ABS-CBN Holdings, before the closing of the PDR offering. Those PDRs of ABS-CBN Holdings are clones or virtual replications of the 132,000,000 ABS-CBN shares it acquired from Lopez, Inc,” he explained.
Enrile said the PDRs “have all the earmarks or attributes of ownership: possession, enjoyment, and disposition.”
“The holders of PDRs have possession of their PDRs; they enjoy the fruits or dividends accruing to those 132,000,000 ABS-CBN shares; and they can trigger the disposition of any of those 132,000,000 ABS-CBN shares through the exercise of the option attached to each PDR. The only right denied to them is the voting rights of those 132,000,000 ABS-CBN shares,” he said.