Solon: Congress can ban dual citizens from media shares

Mike Defensor
Anakalusugan party-list Rep. Mike Defensor

THE Congress has the power to regulate media ownership by banning dual citizens from owning any share in any media company to protect the national interest, a House leader said on Friday.

Anakalusugan party-list Rep. Mike Defensor said the comprehensive hearings conducted jointly by the House committees on legislative franchises and on good government and public accountability on the proposed fresh grant of a 25-year franchise to ABS-CBN Broadcasting Corporation “have shown that allowing a Filipino who is at the same time a citizen of another country is inimical to national security and the nation’s interest.”

“It is contrary to the provision of the Constitution that media should be 100-percent owned and managed by Filipinos or cooperatives or corporations wholly owned by Filipinos. It is against another provision of the Charter banning dual allegiance,” said Defensor, a vice chairman of the House committee on good government and public accountability.

The constitutional prohibitions have been highlighted in the hearings on the ABS-CBN franchise proposal because Eugenio Lopez lll, the network’s current chairman emeritus and previous chairman/president/general manager is a dual citizen - a Filipino and at the same time an American.

Defensor recalled that the Department of Justice (DoJ) told them on Monday that Congress has the authority to flesh out the constitutional
mandate on ownership of media by Filipinos.

“I think the consensus is to do just that, so that dual citizens who certainly have allegiance to two countries would be prohibited from becoming media owners or shareholders. I, for one, will recommend or support legislation that would impose such prohibition,” Defensor, the chairman of the House committee on public accounts, stressed.

He said he would also initiate or support a proposal to implement the constitutional provision against dual allegiance.

Defensor reiterated his example of a Filipino who is at the same time a citizen of China and who owns a newspaper or a television or radio
station.

“At this time when Manila and Beijing are involved in a bitter dispute over the West Philippine Sea, which side such a Filipino-Chinese take? Which country’s interest he would protect?” He asked.

It is situations like this that the constitutional mandate on 100-percent Filipino ownership and another provision against dual
allegiance intend to prevent, he said.

In one hearing, House senior Deputy Speaker and Cavite Rep. Crispin Remulla echoed Defensor’s arguments.

To drive home his point against dual citizens as media owners and dual allegiance, Remulla reminded his colleagues that during the Philippine-American war, the Americans “killed 20 percent of our population.”

For his part, Cavite Rep. Elpidio Barzaga Jr. cited debates on the issues of dual citizenship and dual allegiance in the 1986 constitutional commission that drafted the present Constitution.

Barzaga said the commission held the view that to resolve the question of dual allegiance, a dual citizen has to decide which of his two citizenships he would retain for good.

ABS-CBN WILL COMPLY IF THE USE OF PDRs IN THE MEDIA INDUSTRY IS DISALLOWED

ABS-CBN president and CEO Carlo Katigbak on Thursday assured the House joint hearing about the company’s willingness to comply on the use of Philippine Depositary Receipts (PDRs) in the media industry should this will be disallowed by Congress, Securities and Exchange
Commission (SEC), and court.

"If the SEC or a court of law or even Congress wishes to disqualify the use of PDRs equally across the entire media industry, then ABS-CBN
will be willing to modify, alter, or comply with the order if so directed," Katigbak responded to House Minority Leader and Manila Rep. Benny Abante’s query about the wiliness of the giant television network to buy back the PRDs should the joint inquiry find that its issuance of the financial document violates the Constitution.

"At that time, the SEC agreed that the instrument was legal," said Katigbak, saying the giant network acted in "good faith" by seeking the blessing of SEC before offering PDRs to the public.

Deputy Speaker and Sagip party-list Rep. Rodante Marcoleta said ABS-CBN allegedly allowed foreign entities to own common shares
through PDRs, which is against the constitutional provision that media firms should be 100% Filipino-owned.

But Cynthia Del Castillo, a lawyer for ABS-CBN, said the television network did not circumvent the Constitution when ABS-CBN Holdings
Corp. issued PDRs to foreign firms.

Del Castillo explained that PDRs are not shares, but a mere financial instruments and owners of these documents do not have the right to
vote and participate in ABS-CBN Broadcasting Corporation’s management.

To stress her point, del Castillo said it was ABS-CBN Holdings and not ABS-CBN Broadcasting Corporation, the firm involved in the media industry, which issued the PDRs.

"This contractual arrangement has nothing to do with ABS-CBN Broadcasting. Because ang parties nito ay ang investors at ang ABS-CBN Holdings. Hindi party sa PDR instrument ang ABS-CBN Broadcasting," said del Castillo.

"Ang rights ng PDR holders are only against ABS-CBN Holdings, hindi against ABS-CBN Broadcasting, at wala silang rights whether of ownership or management of a mass media company which is the ABS-CBN Broadcasting Corp," del Castillo explained.

With the permits granted by SEC and the Philippine Stock Exchange (PSE), del Castillo said the issuance of PDRs were all above board.

"If for any reason those decisions are wrong and the courts declared that they are wrong, we have in good faith relied on them. If it's going to cause some effect on the Philippine capital market dahil it will erode the investor's confidence in decisions made," said del Castillo.

"Wala kaming tinatago, we have not circumvented the Philippine Constitution, and all the terms and conditions of the PDRs have been fully disclosed and evaluated by the government agencies and the market authority," del Castillo added.

Responding to the controversy, GMA Network said their issuance of PDRs is legal and valid.

The GMA Network said the company in offering PDRs is "in compliance with the regulations of the Securities and Exchange Commission and of the Philippine Stock Exchange."