Solicitor General Jose Calida filed a quo warranto case against the giant broadcasting company ABS-CBN before the Supreme Court to cancel its legislative franchise to operate. The reasons cited by Calida are highly technical and legalistic a non-lawyer will not understand them.
The public was taken by surprise, considering that ABS-CBN has been endeared to the masses, both in the Philippines and those working abroad as OFWs. The irony of it all is that a huge number of ABS-CBN fans are supporters of Pres. Rodrigo Duterte. During his speeches, Duterte has warned that he will not sign any bill to renew the franchise of ABS-CBN that reaches his office, but there was no indication at all that the Solicitor General would file a quo warranto petition before the Supreme Court. Everybody thought that Congress, specifically the House of Representatives, would tackle the issue of renewal which would expire in March 2020, not the court.
Before I talk about the legalities of the quo warranto case I will discuss first the reason for Duterte himself not to renew the franchise of ABS-CBN. Duterte claims that during the campaign period he paid ABS-CBN a sum of money to air his political advertisement, but ABS-CBN maliciously did not air it. The network admitted to its mistake, apologized and offered to return his money, but Duterte refused to accept payment. Of course, anyone would get mad if he paid for an advertisement and it was not aired. As you know, these paid political advertisements are very expensive to produce and air, and the TV networks earn a lot of money from them during the election period which in the Philippines happens every three years. So, you really cannot blame Duterte for getting mad at ABS-CBN for what it did but getting even is, of course, another story altogether.
Quo warranto is a special civil action under Rule 66 of the Rules of Court brought in the name of the Republic of the Philippines by the Solicitor General against a person or corporation. A special civil action is a kind of action that is brought only for a specific purpose, unlike an ordinary action that can be brought by anyone against anybody for any purpose. A quo warranto can only be initiated by the government, through the Office of the Solicitor General or OSG, which is the in-house lawyer of the government and its agencies.
A quo warranto, like any other ordinary action, can be filed against an individual or person, or against a corporation or association. If it is against an individual that individual should be unlawfully holding a public office that he or she is not entitled to. In other words, that person has to have a valid and legal right to hold an office, because if he doesn’t then the OSG will file a quo warranto case against him. The best example of this is the former Supreme Court Chief Justice Lourdes Sereno who was removed from office not through the process of impeachment as provided under the constitution, but through quo warranto.
A quo warranto petition can also be filed against a corporation if the corporation is operating within the Philippines without a legal right or authority. This is the ABS-CBN case. Without waiting for the franchise of ABS-CBN to expire, Calida filed a quo warranto petition to cancel the franchise of ABS-CBN due to alleged violations of its terms and conditions. A franchise is a license granted by the government to TV networks, AM and FM stations to operate. Congress alone can grant a franchise to a TV network under the constitution. Once granted a franchise which last for 25 years, and the National Telecommunication Commission (NTC) which is the government regulatory agency in-charge of TV networks shall assign a frequency for which the network may broadcast its programs and shows.
The franchise issued by Congress is in the form of a bill which shall be sent to the president of the Philippines for his signature. Once the president signs the franchise bill it becomes a law. The franchise also contains a lot of terms and conditions for the TV network to follow. If it violates any of these terms and conditions, then the government may cancel its franchise. This is what Calida is doing now. He claims that ABS-CBN has violated the terms and conditions of its franchise, and therefore, he has the duty to cancel it through a quo warranto.
The number one violation which ABS-CBN allegedly committed is the restriction on foreign ownership of a TV network. Under the 1987 Constitution and the law, broadcasting companies should be owned by Filipinos, and foreigners can only own up to 40% of the company. But is it not that ABS-CBN is owned by the Lopez family who are pure Filipinos? Yes, ABS-CBN was established by Eugenio Lopez, Jr., a Filipino citizen. Today, his children and grandchildren manage the business which has grown to become a multi-billion peso publicly listed company. ABS-CBN is listed in the stock exchange, so a huge portion of the ownership of ABS-CBN is no longer in the hands of the Lopez family, but with the public and with other investors.
This term “other investors” could be either institutional or individual. Institutional investors are investment companies and trust funds that invest the money of their clients overseas, while individual investors are mostly high-net-worth people who do not want to be known or identified. One hundred percent of these other investors are either foreign entities or Filipinos representing foreign interest. In the Philippines, the investments of these kinds of investors are commonly made through Public Depository Receipts or PDRs. These PDRs are investment instruments issued by ABS-CBN to their institutional and individual investors, like a treasury bill issued by the government to the public.
Calida claims that these PDRs are like shares of stock in ABS-CBN held by foreigners to circumvent the foreign ownership restriction, and not merely debt instruments. If the value of all the PDRs is added, it will sum up to more than 40% foreign ownership in ABS-CBN. The real purpose of a PDR according to Calida is not just to lend money to ABS-CBN and earn interest but to own a part of the company. Now, whether a PDR is a proof of ownership or a mere promise to pay a debt is up to the Supreme Court to decide in the quo warranto case filed by Calida.
Another alleged violation of the franchise terms is the sale of the ABS-CBN TV Plus box to the public without prior approval or authority from the NTC. Calida claims that the TV Plus box uses a certain frequency in the local band to broadcast their TV shows and teleserye for a fee. ABS-CBN should have asked the permission of the NTC to use this frequency, and to pay a fee for its use. Undoubtedly, the public has been entertained and immensely enjoyed the TV Plus box that they do not mind paying for the box and the recurring subscriber fee, especially OFWs who long for local Pilipino shows, but the benefit derived by the public will not legalize an otherwise unlawful act of using a frequency to broadcast without the prior approval of the NTC because that is what the law requires.
Celebrities and talents from all TV networks, including rival GMA Kapuso, have rallied behind their colleagues in ABS-CBN in an outpouring of support and sympathy, and when celebrities are involved their fans tag along. To bring home the issues in the quo warranto case is very difficult, to say the least, and so the issue that is raised in public forums is the issue of freedom of speech and of the press. The attempt by government to shut down ABS-CBN is perceived as a violation of the freedom of speech and of press because the network has been very vocal against the excesses of the Duterte administration, the gross incompetence of the appointees of the president to high positions, and most of all, the brutal war on drugs which as claimed the lives of thousands of Filipinos, mostly from poor families.
So, what is the big fuss about the quo warranto case filed by Calida against ABS-CBN before the Supreme Court? It is everything that defines the Filipino, except the quo warranto case. – It is his freedom that he won back from the repressive Marcos dictatorship 34 years ago; it is his entertainment from a routine life; it is his income from the toil of his labor, and it is his hope for a bright future for him and his family.