MANILA, Philippines – Solicitor General Jose Calida will once again try his quo warranto luck as he

tries to revoke ABS-CBN's franchise through the Supreme Court, filing a 63-page petition before the
High Court on Monday, February 10.

The petition accuses ABS-CBN of unlawfully exercising its franchise, by allegedly offering paid
broadcast without government approval, and by allegedly allowing foreign ownership of the
corporation.

Section 1(c), Rule 66 of the Rules of Court says a quo warranto petition can be filed against "an
association which acts as a corporation within the Philippines without being legally incorporated or
without lawful authority so to act."

Is Supreme Court the proper venue?

Time and time again, the Supreme Court has reiterated that it is not a trier of facts, dismissing big
cases on grounds that it violated the hierarchy of courts.

In the landmark ruling Gios-Samar vs DOTC in March 2019, the Supreme Court said it would no
longer tolerate cases that invoke "transcendental importance."

"Direct resort to the Honorable Court is justified as this case is of transcendental importance and of
first impression," Calida said in the petition.

Law Professor Ted Te said Calida cannot go straight to the Supreme Court for the ABS-CBN case,
citing the Gios Samar decision, particularly the part where the High Court said:

"When a question before the Court involves determinaion of a factual issue indispensable to
the resolution of the legal issue, the Court will refuse to resolve the question....Such question
must first be brought before the proper trial courts or the Court of Appeals, both of which are
specially equipped to try and resolve factual questions."

One of the factual issues in the petition is whether ABS-CBN violated its franchise terms when it
sold its product ABS-CBN TV Plus, under which subscribers can pay another fee on top to be able to
watch movies for a week through the Kapamilya Box Office (KBO) channel.

Calida said ABS-CBN did not secure the necessary permits from the National Telecommunications
Commission (NTC), citing an order from the NTC in 2019 that supposedly orders the network to
"refrain from offering any pay television service."

ABS-CBN, in a statement, said "all our broadcast offerings, including KBO, have received the
necessary government and regulatory approvals and are not prohibited by our franchise."

Te said that to resolve this, Calida could have gone to the NTC and launched an administrative
action against ABS-CBN.

It's similar to what Calida did when he initiated an investigation against Rappler before the
Securities and Exchange Commission (SEC), which is a quasi-judicial body.
Calida cited the 2009 Supreme Court decision Divinagracia vs Consolidated Broadcasting System
(CBS), where the petitioner asked the NTC to revoke the license of CBS.

The Supreme Court ruled in that case that there is no law that allows an administrative agency such
as the NTC to take away CBS' legislative franchise. The ruling contemplated a quo warranto petition
as an alternative mode.

What does this mean for PDRs?

Calida also hit ABS-CBN for alleged foreign ownership, comparing the case to Rappler which is
facing an SEC shutdown order because of its Philippine Depositary Receipts (PDRs).

PDRs are financial instruments used by media entities to allow foreign investments without
violating the constitutional rule that media companies should be 100% Filipino-owned. PDRs are a
common, lawful practice, and their legality has been upheld by the SC. (READ: Misconceptions on
PDRs)

But unlike Rappler, Calida seems to be implying that the mere issuance of a PDR to a foreign
company is illegal.

"I think that is his working theory," said Te.

In the Rappler case, the SEC found questionable the terms that Rappler entered into with foreign
investor Omidyar, particularly the provision where Rappler commits to having a prior good faith
discussion before changing anything in its articles of incorporation.

In ABS-CBN's case, Calida's petition makes no mention of such similar terms.

Calida just listed the foreign companies that have been issued PDRs by ABS-CBN, saying the scheme
has allowed "foreigners to influence and participate in the mass media enterprise of the Philippines
through the PDRs."

"This scheme is not only prohibited by the 1987 Constitution but criminal liability is also imposed
on those who violate foreign equity restrictions and evade nationalization laws of the Philippines
through various modes of proxy arrangement, making it appear as legal, but the entirety of the
arrangement is to accomplish a transaction not allowed under Philippine laws," said the petition.

Calida's holistic attack on ABS-CBN's PDR may have implications on the mechanism of PDRs in
general, especially since other broadcast companies issue the same to raise capital.

"ABS-CBN Holdings’ Philippine Deposit Receipts or PDRs were evaluated and approved by the
Securities and Exchange Commission and the Philippine Stock Exchange prior to its public offering,"
said ABS-CBN.

Constitutional law professor Tony La Viña said this theory implies "that all PDRs are not
constitutional for industries that have nationality requirements."
"If accepted by the Supreme Court, the economic implications not only to media companies but to
many other industries are enormous. Capital will quickly dry up and Foreign Direct Investment will
go down dramatically," said La Viña.

What will happen now?

Section 8 of Rule 66 allows the court to reduce the normal period for resolving the case and says
quo warranto actions "may be given precedence over any other civil matter pending in the court."

Meanwhile, ABS-CBN's franchise is set to expire on March 30.

Te said the quo warranto petition cannot stop the House of Representatives from deliberating on
the bills to renew ABS-CBN's franchise.

"If franchise is granted the petition is moot. If Calida airs his arguments in Congress, if summoned, it
will be moot because he has now shown that there is a viable forum outside the Supreme Court,"
said Te.

"If the SC grants the quo warranto petition before the Congress renews the franchise, Congress can
still grant the franchise because it’s a separate power in itself," said Te.

Justice Secretary Menardo Guevarra said as much.

"The filing of the petition for quo warranto seeking the forfeiture of ABS-CBN's franchise is
independent of and separate from the legislative process of granting the renewal of the said
franchise upon expiration of its term in march," said Guevarra. – Rappler.com
MANILA, Philippines — A congressman on Monday says the quo warranto petition filed by the
Office of the Solicitor General (OSG) against ABS-CBN might have a “chilling effect” not just on other
media entities, but also on other lawmakers supportive of renewing the franchise of the media
giant.

House Deputy Speaker Johnny Pimentel (Surigao) said the OSG’s move could lead to some
lawmakers being afraid to speak up and express their support towards the franchise renewal.

“This could also be a clear signal to the congressmen who will be attending the hearings. Nakikita
na nila na nag-file na ng case (They are seeing that a case has been filed) so those who would be in
favor of the renewal, might change their mind or they could not speak up anymore because we
know very well that the executive department is moving for the cancellation of the franchise,”
Pimentel told reporters in Quezon City.

Pimentel cited the case of Maria Lourdes Sereno, whose quo warranto case also lobbed by the OSG
resulted in her ouster as chief justice of the Supreme Court in 2018.

“‘Yung iba dyan, ang tingin ko matatakot, matatakot na magsalita yan (I think some of the
lawmakers would be afraid to speak up) if they are in favor because the signal is very clear already
and we know very well also that the quo warranto that was filed against Chief Justice Sereno also
had clearance from the higher ups,” the House leader said.

Pimentel is one of the principal authors of House Resolution 639 filed in early January which called
on the House committee on legislative franchise to report out a consolidated version of the eight
pending bills proposing for the renewal of ABS-CBN’s franchise.

“We should always think — one of the problems of this country is unemployment. We could say
that ABS-CBN is one of the companies that have a big amount of employees… Saan na mapupunta
ito e problema na nga natin ang unemployment (Where would these workers go when we already
have problems with unemployment)?” Pimentel said.

“Aside from the employees that will be affected, I think this is an affront to the freedom of the press.
We are a democratic country,” he added.

Republic Act No. 3846 requires television and radio broadcasting companies to secure a franchise
from the government before they are allowed to operate. It is Congress that will decide whether to
extend the franchise to public utilities, such as the media.

But over a month before ABS-CBN’s franchise expires, the House committee on legislative franchise
has yet to tackle the issue despite continuous calls from a number of congressmen.

Quo warranto petition

Solicitor General Jose Calida said that the petition was filed in order to stop the supposed “abusive
practices” of the network.
MANILA, Philippines — Lawmakers slammed the quo warranto petition filed by government
lawyers against broadcasting giant ABS-CBN, saying the move is an assault to the separation of
powers of the legislature and the judiciary.

Solicitor General Jose Calida asked Monday the Supreme Court to revoke the legislative franchise of
ABS-CBN and its communications arm ABS-CBN Convergence Inc. Government lawyers accused the
television network of “unlawfully exercising their legislative franchises.”

“We want to put an end to what we discovered to be highly abusive practices of ABS-CBN
benefitting a greedy few at the expense of millions of its loyal subscribers. These practices have
gone unnoticed or were disregarded for years,” Calida said in a statement.

According to Rule 66 of the Rules of Civil Procedure, the solicitor general can file a quo warranto
(Latin for "by what authority") against “a person who usurps, intrudes into, or unlawfully holds or
exercises a public office, position or franchise.”

In 2018, Calida filed a quo warranto petition against former Chief Justice Maria Lourdes Sereno that
eventually led to her removal from office.

The petition is filed as the House of Representatives continues to sit on the bills that seek to renew
the network’s franchise. ABS-CBN’s legislative franchise will expire by the end of March.

‘Pre-empted action of Congress’

Rep. Rufus Rodriguez (Cagayan de Oro), one of the proponents of ABS-CBN franchise renewal in the
lower house, said the move is an “assault to constitutional press freedom and separation of powers
of the judiciary and the legislature.”

Deputy House Speaker Johnny Pimentel (Surigao del Sur) called the quo warranto petition a
“questionable and alarming development.”

“It is only Congress that has the power to grant or cancel franchises. In this case, the OSG has
already pre-empted the action to be taken by Congress,” Pimentel said in an interview on ABS-CBN
News Channel.

He added: “In effect, OSG is usurping the power of Congress. Congress has not even decided
whether to renew or cancel the franchise of ABS-CBN and with this development, this can have an
adverse effect during the hearing, if ever we hold hearings on the renewal.”

Neri Colmenares, Bayan Muna chair, said the move shows that OSG has become a “biased institution
used for President Duterte’s political vendetta.”

Instead of targeting the Lopez-owned broadcasting company, government lawyers should go after
public utilities “which have a major impact on the people’s suffering,” he said.

ABS-CBN has been at the receiving end of Duterte's rants, often complaining the broadcasting giant
did not air his political advertisements.
House panel urged not to ‘temporize’ action on pending bills
Rep. Lawrence Fortun (Agusan del Norte) said the quo warranto petition might be “moot and
academic” in few weeks.

“I hope the committee on legislative franchises does not use this as a justification not to proceed
with hearing of the network’s application for renewal. This is a sad picture I’m seeing: the
committee may not hear the franchise renewal bills saying there’s a pending matter in the Supreme
Court related to the validity of ABS-CBN’s current franchise,” Fortun said.

For Rep. Edcel Lagman (Albay), the petition is “unwarranted and misplaced.”

The opposition lawmaker called on the House panel “not [to] temporize its action on the pending
bills proposing the extension of ABS-CBN franchise “because it must maintain its independence
from the executive and judicial departments.”

Sen. Grace Poe, who chairs Senate public services committee, said her panel still intends to tackle
the corporation’s franchise renewal despite the quo warranto petition.

“The Senate’s jurisdiction over franchises remains despite the existence of the petition,” she said.

Attack on press freedom, loss of livelihood

The National Union of Journalists of the Philippines chair Nonoy Espina told ABS-CBN News
Channel that should Congress fail to act on pending bills, this proves that “they are nothing but
administration lapdogs.”

“We call on Congress and the Supreme Court to once and for all prove to the people that they are
truly, as the Constitution envisions, independent and co-equal branches of government that are not
at the beck and call of the executive,” NUJP said in a separate statement.

“We must not allow the vindictiveness of one man, no matter how powerful, to run roughshod over
the constitutionally guaranteed freedoms of the press and of expression, and the people’s right to
know,” the group added.

Up to 11,000 workers, who depend on ABS-CBN and its subsidiaries or sister companies for their
bread and butter, fear to lose their jobs or will indirectly be dislocated once the company’s
franchise is denied.

“This is not just about ABS-CBN. This is not just about the Philippine media. This is all about
whether anyone can or should deprive you, the Filipino people, of your right to know,” NUJP said. —
Gaea Katreena Cabico with reports from The STAR and BusinessWorld