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‘Network tax cheat, foreign-owned’

Hananeel Bordey

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House of Representatives Deputy Speaker Rodante Marcoleta has strongly opposed the proposed renewal of ABS-CBN’s franchise, citing alleged network violations ranging from avoidance of taxes to unfair labor practices and of the company being foreign-owned.

Marcoleta, a SAGIP Partylist representative, said these are serious violations that should merit a denial of the media giant’s application for a new 25-year permit.

The lawmaker raised ABS-CBN’s alleged tax avoidance, claiming the network did not pay taxes in 2018. He also alleged that ABS-CBN did not pay the right amount of taxes the following year.

He then echoed Solicitor General (SolGen) Jose Calida’s charges that the company violated the country’s foreign ownership restrictions “through an intricate web of corporate layering.”

“ABS-CBN violated the terms and conditions of its franchise by engaging in tax avoidance schemes which deprived the government of the much-needed revenue,” Marcoleta said.

He revealed that the broadcast giant used its fully-owned subsidiary-Big Dipper Digital Content, and Design-as a tax shield, and explained that the Big Dipper’s main customer is a foreign Hungary-registered company, which he charges is also a fully-owned subsidiary of ABS-CBN.

“Because of this unconscionable tax avoidance scheme, ABS-CBN’s alleged effective tax rate in 2018 was at negative five percent. This means that ABS-CBN managed to avoid paying taxes in 2018,” he said.

He claimed the network also did not pay its rightful taxes in 2019 by entering into a compromise agreement with the Bureau of Internal Revenue, which settled for P152 million — equivalent to 40 percent of its assessed deficiency in income tax, value-added tax and documentary stamp tax payments.

Marcoleta also disclosed that ABS-CBN Corp.’s chairman emeritus Eugenio “Gabby” Lopez III was an American citizen at the time he headed the company, a supposed violation of the constitutional provision against foreign ownership in mass media.

However, the broadcast network claimed that Lopez was born in the United States in 1952 to Filipino parents and was automatically a Filipino citizen under the constitution prevailing at that time.

The lawmaker also alleged that its issuance of Philippine Depositary Receipts – through ABS-CBN Holdings Inc. — gave foreign holders “beneficial ownership and potential voting rights.”

Marcoleta then raised the complaint of a group of cable operators that ABS-CBN violated the terms of its old franchise by introducing a pay-per-view feature in its TV Plus box and having six channels under one franchise.

He also confronted the network for its alleged “bias” in favor of Benigno Aquino III in the 2010 presidential elections, as well as Sen. Grace Poe and then Rep. Leni Robredo, who ran separately for president and vice president in 2016.

Marcoleta cited an anti-Rodrigo Duterte political ad aired by ABS-CBN during the 2016 campaign and a Duterte campaign ad that was not aired by ABS-CBN regional stations to prove his point.

“It is also a matter of record that ABS-CBN failed to air some of President Duterte’s political advertisements during the 2016 campaign period despite receiving the payment of these political ads,” Marcoleta said.

“You are a broadcasting company, not a political kingmaker. Either you play ball or you play fair,” he said, directing his statement to the network.

Meanwhile, Marcoleta’s accusations, according to University of Santo Tomas professor and head of the UST journalism program Felipe Salvosa, must be “fact-checked.”

“All of these things could be validly a subject of legislation. If he’s complaining of tax loopholes, violation of labor laws, then his job is to introduce amendments to these laws so companies would not be violating legal provisions,” Salvosa stated. “But this is a franchise hearing. To include other extraneous issues betrays their agenda basically.”

University of the Philippines professor Danilo Arao, meanwhile, likened Marcoleta to “an internet troll” for raising accusations against the network without presenting facts.

“It’s like saying something is true because you watched it on YouTube or read it on Wikipedia,” Arao narrated. “Unfortunately, Rep. Marcoleta is not acting like an informed legislator but simply trying to mouth certain words and trying to make sense of them by putting words together into a sentence.”

NTC’s shutdown order
The National Telecommunications Commission (NTC) could have been lax with ABS-CBN pending the approval of its franchise by the House of Representatives, but the SolGen’s quo warranto petition weighed heavily on its shutdown order against the beleaguered media network.

This was the admission by NTC Commissioner Gamaliel Cordoba before the Senate Constitutional Amendments Committee on Wednesday during a hearing on a bill seeking to amend the Administrative Code of the Philippines on licenses and franchises.

Cordoba disclosed that the quo warranto petition filed at the Supreme Court (SC) by SolGen Jose Calida had put them in an “untenable position” that forced the agency to force the closure of the country’s top media network.

“We never issued a provisional license to any broadcaster while their franchises (were) pending in Congress. We just allowed them to continue operating. The difference from those instances on the ABS-CBN issue is that (with) ABS-CBN, a case for quo warranto was actually filed by the Office of the Solicitor General,” he said.

“It was untenable on our part to let (the network) continue because of the clear letter of the law — in RA 3846, and as interpreted and decided by the Supreme Court in the ACWS case,” he added.

The law says “no person, firm, company, association, or corporation shall construct, install, establish, or operate a radio transmitting station, or radio receiving station used for commercial purposes, or a radio broadcasting station, without having first obtained a franchise therefor from the Congress of the Philippines.”

Cordoba also disclosed that it was not the first time that the NTC had issued a cease and desist (CDO) to a media station for lack of permit.

“We (have) already issued that (in the past), because sometimes — especially during elections — some stations start broadcasting (without permits). We issued cease and desist orders for illegal operations and for having no permit from the government,” Cordoba reiterated.

Cordoba failed to name what other networks had been denied airtime after he was pressed for a list by Constitutional Amendments chairman Francis Pangilinan. He committed to submit a roster to the panel within the week.

“I think, your honor, (the latest CDO we issued) was during the 2019 elections. We issued cease and desist orders because most of these illegal stations cropped up and start(ed) operations without franchises and licenses during elections. There are plenty of such cases,” he said.

Cordova’s presence was called by the Senate panel as it tackled Senate Bill 1530 filed by Senate Minority Leader Franklin Drilon, who is seeking to amend Section 18, Book VII, Chapter 3 of the Administrative Code of the Philippines.

The bill seeks to authorize the franchise holder to continue their operations while an application for a renewal has yet been determined by a department or any branch of the government that grants or renews the permit.

The bill also states that final determination only comes when the applicant was given a written notice of approval or denial of their renewal application.

“Inaction on a pending application shall not be considered a denial thereof,” the bill reads.

During the deliberations, the NTC along, with other government agencies related to public utilities, backed Drilon’s bill.

“We agree to the bill of Senator Drilon. It can fix gaps in the law,” Cordova said.

Last 5 May, the NTC issued a cease and desist order against ABS-CBN, forcing it stop operation after its legislative franchise expired a day before its shutdown.

Currently, there are 11 bills filed in the House while four are filed in the Senate seeking the renewal of ABS-CBN’s franchise.

With the 18th Congress already working for almost a year, the House Legislative Franchises Committee joint with the Committee on Good Governance has only conducted a hearing on the ABS-CBN franchise last Tuesday.

Meanwhile, ACT-CIS Partylist Rep. Eric Yap filed House Resolution 853, along with Reps. Paolo Duterte and Abraham Tolentino, seeking to probe ABS-CBN for its allegedly biased coverage of the 2017 Congressional Hearings in the drug smuggling at the Bureau of Customs.

Yap claimed the network did not exert an effort to clear the President’s son from allegations that he was a drug lord. The young Duterte’s name was reportedly besmirched by the coverage, which Yap said had focused mostly on his accuser.

President Duterte’s anti-illegal drugs campaign had catapulted him to the highest government post.

with MJ BLANCAFLOR @tribunephl_MJB 
and ELMER N. MANUEL
@tribunephl_lmer

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