Shutting down the masses’ station of choice: NTC vs. ABS-CBN

The Philippine National Telecommunications Commission (NTC) recently ordered the private radio and television broadcaster ABS-CBN to cease and desist all broadcasts using radio and television frequencies over which it once held a franchise over upon the expiration of its current legislative franchise. The timing could not have been worse. We are in the midst of a pandemic, and one could not have missed the fact that even as its main competitor, GMA, and other stations like CNN Philippines and public stations went silent, or limited their broadcasts when the Enhanced Community Quarantine (ECQ) was imposed over the island of Luzon, ABS-CBN remained on air 24/7.

It should be noted that ABS-CBN’s franchise did expire, and one needs a valid Congressional franchise to legally operate a radio and television station. However, the NTC has admitted that it can issue a provisional license to operate even if there is as yet no franchise such as when the application for a new, or renewal of a Congressional franchise is still pending before a Congress as was the case with ABS-CBN. There were a number of entities that have benefited from such a provisional license. Once the Congressional franchise has been obtained, the NTC issued the license to operate. Those who fail to obtain the franchise are asked to explain why the license to operate should not be cancelled. If the broadcaster fails to provide a reasonable explanation, then the license is cancelled. Naturally, the process seeks to ensure that the cancelation of the license observed due process of law. The Philippine Constitution requires that no person, natural or juridical, be deprived of life, liberty and property – like the NTC license – without due process of law. The thing is, the NTC did nothing of the sort.

It is notable that the NTC simply issued the cease and desist order (CDO) against ABS-CBN even without asking the latter to explain itself. Even as it acknowledged that it had previously allowed other entities to continue broadcasting despite the lapse of a Congressional franchise, it sought to justify the issuance of the CDO by highlighting the fact that, unlike in the case of the other entities, the franchise of ABS-CBN was legally challenged. I assume they are referring to the fact that the Solicitor General has filed a Quo Warranto proceeding against ABS-CBN for allegedly being partially foreign-owned when the Constitution requires 100% Filipino ownership. This case, however, is still pending having been caught up in the pandemic and the restrictions imposed by the Philippine government with the ECQ.

People and ABS-CBN have latched on to this as an attack on the free press, which the Constitution also protects especially since this particular Constitution is a direct reaction to the Martial Law years where a free press was practically nonexistent. It is undeniable that ABS-CBN has earned the ire of the current President for its alleged failure to show his campaign materials during the last election period. ABS-CBN says the President’s campaign team dragged its feet in deciding when the materials were to be shown. When it did finally decide, the slots were already full, and the network offered to return the payments made. It is said that the campaign took this in stride and, as it turns out, the President won anyway. The President now remembers things differently, and has openly declared his desire, and intention, to see the station closed. Viewed from this prism, I do not believe it is an attack against a free press. Regardless of the station’s actual political leanings, or the content of its broadcasts, the current situation is nothing more than a personal matter between two parties. It is just unfortunate that one happens to be the President and the other a broadcaster.

It is also worthy to note that the application to renew the franchise was originally filed around 2014, which was during the previous administration. For some reason, the President then was not supportive of the application. Speculation was that it was around the same time that the sister of the then President left the network. The network appears to have withdrawn that application. Perhaps it was waiting for a particular Presidential candidate to win as he may be more inclined to support its application for renewal. The candidate appeared to lead in the polls, and (more importantly?) is the partner of a news presenter of the network. Well, imagine their surprise when the former mayor of Davao took the crown instead! The network was then forced to refile their application under new, more unwelcome circumstances as I noted above. What chance do they have when the House of Representatives is dominated by the President’s allies, and those courting his favor? Despite the time the application was pending before the House, the franchise lapsed without being renewed. Why? Well, it appears that, aside from the President’s interests, there was a lot of opposition to the franchise renewal because of the network’s allegedly illegal operations that aims to kill off the cable industry (even if the reason for that is because of the coming of content streaming over the internet – cut the cable, view on demand – which is cheaper: P1,000/month for cable versus P500/month for a Netflix subscription) as well as a host of other alleged violations that the Bureau of Internal Revenue, the Securities and Exchange Commission (SEC), and the NTC itself have dismissed as unfounded.

Which brings us back to the fact that the NTC did not issue a provisional license while the application for a Congressional franchise was still pending before the House. It should also be noted that, one, the NTC said it can issue the provisional license; two, both the House and Senate leadership supported the issuance of the provisional license And have asked the NTC to do so; and, third, the Department of Justice has declared (although not through a formal opinion) that the NTC can issue a provisional license to ABS-CBN. Only the Solicitor General was not on board, and, as I noted above, filed the Quo Warranto case against the network. He also wrote a letter to the NTC threatening its leadership with graft charges if it will allow the network to continue to operate without a Congressional franchise. Well, as we all know now, the NTC did not issue the provisional license and instead issued the CDO allegedly on advise of counsel. The fact that they actually had to say this is also notable. “Laying the basis” as lawyers would like to say.

To my mind, this was a reversible error by the NTC. There is no argument that whether or not a license should issue is up to the NTC but it should do so in a transparent manner. Due process. Under the circumstances, I think the NTC failed to observe due process when it simply issued the CDO against the network. Remember, ABS-CBN is not an unknown entity without a track record in broadcasting seeking a new franchise. It was a station that existed before the Martial Law years that was shut down by then President Marcos. When Marcos was ousted in 1986, the network regained a franchise to operate and has done so until 2020 when said franchise expired. I think the law clearly allows the NTC to issue a provisional license independently of the network’s application for a Congressional franchise.

As for the Solicitor General’s Quo Warranto case, it is still pending in Court. If this is the basis for the NTC’s decision, then it appears to have prejudged the case. It also deprived the network of its right to due process since it was not given the opportunity to contest the allegations of the Solicitor General. There’s just something fundamentally wrong if a government agency takes such an extreme act as issuing a CDO on the mere say-so of an interested party. Due process dictates that ABS-CBN be given its day in accordance with the two-notice rule established by the Supreme Court in the venerable Ang Tibay case. So, it should have either waited for the Quo Warranto case to be resolved, or opened a separate administrative proceeding against the network. To be honest, the Quo Warranto case should be dismissed and the matter referred to the NTC or the SEC if due process is to be properly observed.

I hear that ABS-CBN has filed a petition before the Supreme Court challenging the NTC’s CDO. I think it’s best case lies in the denial of due process rather than alleging its an assault on press freedom but that’s just me.

Meanwhile, the Palace, on behalf of the President, has shrugged off any implication that the President was involved in the issuance of the CDO pointing to Congress as the culprit because it failed to issue the Congressional franchise. Congress, for its part, its leadership at least since some Congressmen have issued a mea culpa, pointed to the NTC as the culprit. No doubt the NTC will just stick to its guns and say “no franchise, no license” even if history, jurisprudence and the law appear to say otherwise.

The masses, however, are left without their favorite news anchors and reruns of their favorite programs at least as long as the ECQ persists. Even as the network has moved its shows to media other than radio and television, it is not making, or even reaching as much as it could. In a country so technologically challenged as the Philippines, radio and television are still king. For us, you can never take anything for granted because these are the most unusual of times in more ways than one…

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Unwrapping Rappler

The Philippine Securities and Exchange Commission (SEC) revoked Rappler’s certificate of incorporation. Rappler is a Philippine media organization that, in the Philippines, is required to be 100% Filipino-owned and controlled. However, it needs money to continue as a going concern and most of the money are in the hands of foreigners. How now?

It seems that other media organizations found the answer: Philippine Depository Receipts (PDR). I am no expert on this and what I know about them comes from reading two articles, both from the Inquirer. In simple terms, it is a participation in profits. The shareholder allows third parties to purchase a share in the profits earned by his stocks in the media organization. In this manner, the legal requirement on Filipino ownership is not breached because the stocks remain in the name of the shareholder. The investor only gets a part of the earnings (dividends) earned by the stock; so, they could not even participate in the management of the media organization. That’s the theory at least.

What Rappler offered its investors to their PDRs was a bit more than the regular PDR. They actually allowed the PDR investors to have a say if Rappler was ever inclined to amend its Articles of Incorporation or undertake some manner of reorganization. Under the Rappler PDR, you can’t do that unless the PDR investors says its okay to do so. Boom. They’re dead.

According to the SEC, that provision effectively gives the PDR investor a measure of control over the media organization, and if the investor is a foreigner — anyone other than a Filipino — you just violated the legal requirement of 100% Filipino ownership and control. The SEC, therefore, cancelled the PDRs. Makes sense to me.

Here’s where it doesn’t make sense: not happy with just cancelling the PDRs, the SEC went to the max and cancelled Rappler’s certificate of incorporation because it violated the legal requirement to be 100% Filipino. Why did they impose so extreme a penalty as cancelation of its certificate of incorporation? Many suspect the hand of the Government of which Rappler has been critical of. To be fair, Rappler was also critical of the previous administration but the current one, with its controversial war on drugs and cozy relationship with China, has been a far more frequent subject much to their discomfort. People, therefore, see this as payback.

As I noted before, PDRs are not unique to Rappler. Other media organizations like ABS-CBN and GMA have also issued PDRs, and some have been bought by foreign investors. However, the SEC points out that these PDRs do not have the controversial provisions that the Rappler PDRs have. Nevertheless, it was pointed out that PLDT, a telecom company also required by Philippine law to be 100% owned and controlled by Filipinos, also violated the 100% Filipino requirement when it issued its PDRs but they were allowed to rectify their mistake and PLDT still exists today. Why was the SEC then so harsh with Rappler?

The Commissioners of the SEC were appointed by the previous Administration; so, there are those who do not see this as payback. How could it be when these people are Aquino appointees but, in the Philippines, everything is possible and political butterflies thrive in great numbers. Perhaps they do not want to share in the fate of other heads of commissions and government agencies and instrumentalities who were unceremoniously kicked out for one reason or another. In this administration, a “single whiff” of corruption is supposed to be enough to have your head roll (but it also depends on who is doing the sniffing and who is being sniffed at as it appears that friends of the administration usually gets a free pass and just gets shuffled around the vast governmental bureaucracy). Are there skeletons in the SEC closet that could cause them their heads?

Or did the SEC just make an honest mistake when it imposed the ultimate penalty? It said that Rappler can still operate and it does have the right to ask the SEC to reconsider its decision and, failing that, appeal the same all the way to the Supreme Court, which, unfortunately for them, are majority pro-government. This Government in particular; so, good luck with that but at least there’s a chance no matter how slim, and with litigation cases moving at a snail’s pace in Philippine courts, they may even survive this Administration and get a reprieve in the next.

The Inquirer articles on the PDR says in Rappler’s defense that the controversial provision is just a measure of investor protection; however, if that protection also grants them some control over the company, and the investors are foreigners, then that still violates the legal requirement to be 100% Filipino-owned and controlled. The Rappler’s lawyers should have carved that out; and investors are left with the choice of take it or leave it. It should be noted that other Rappler PDRs were not cancelled because there was no control granted to holders of those PDRs.

For now though, some people suspect that there is an attack on the free press with the Government setting its eyes next on the Inquirer. For sure, the Administration has not been happy about the coverage it has been getting from these two but, usually, governments just let it slide. It is after all the hallmark of a healthy democracy to have a free press. With populism so very in these days, however, democracy seems so last century.

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