"Is the SEC so blind?"
"Is the SEC so blind?"
At the fifth hearing on the renewal of the franchise of Lopez-owned network ABS-CBN, the Securities and Exchange Commission came to the network’s defense. There are currently 13 bills now with the House Committee on Legislative Franchises to grant the network another 25 years.
I was amused by the arguments of the SEC and some congressmen to justify the 132,000,000 shares of ABS-CBN Holdings given to foreigner-holders of Philippine Depositary Receipts. This is clearly in violation of Article XVI Section11 (1) which provides that “The ownership and management of mass media shall be limited to citizens of the Philippines or to corporations, cooperatives or associations wholly-owned and managed by such citizens.”
This alleged violation of ABS-CBN of the Constitution is also part of the quo warranto (by what right) petition filed before the Supreme Court by Solicitor General Jose Calida.
The facts of the case speak for themselves.
On March 30, 1999, a thinly capitalized corporation named Worldtech Holdings was organized by the owners of ABS-CBN called Lopez Inc. The authorized capital stock of Worldtech at this time was P1,000, divided into 1,000 common shares with a par value of P1. The owners of 400 subscribed and issued shares were Lopez Inc. (50 percent) and certain directors and officers of Lopez Inc (50 percent). All are admittedly Filipino. The primary purpose of Worldtech was to invest, purchase and hold real and personal properties, shares of stock, bonds, debentures of own securities or obligations.
On September 16, 1999, the name of Worldtech Holdings was changed to ABS-CBN Holdings.
From March 30, 1999, until today, ABS-CBN Holdings never had any business of its own. It is more of a shell corporation with no other purpose of its own other than as sole issuer of Philippine Depositary Receipts and as a receptacle and custodian of common shares of ABS-CBN Corporation (the network). It is obvious that the intent of the Filipino owners, or the Lopezes, was pursuant to a financial scheme. The creation of ABS-CBN Holdings was also obviously intended to circumvent and overcome the constitutional requirement of the Constitution. The only right denied to PDR holders is the right to vote.
What I am writing about can be found in the financial records of ABS-CBN at the SEC. This is why I was amused at what the SEC people said at the hearing at the House of Representatives.
And here’s the clincher, Santa Banana! On September 29, 1999, ABS-CBN Holdings offered 132,000,000 PDRs now under common shares, with each being issued for a total consideration of P46.00 (deposit of P45.90 and PDR option price of P0.10).
But, Santa Banana, whatever you call it, the PDRs are an exercise of ownership and possession of shares of the network itself because those shares can partake of dividends issued by the network. This is clearly to circumvent the constitutional provision that only Filipinos can own and manage mass media.
Don’t tell me that SEC officials are that dumb! And are the lawyers and lawmakers defending ABS-CBN also stupid?
My gulay, exposing the PDRs at ABS-CBN is what lawyers, including myself, would call “piercing the corporate veil!”
The Lopezes believe they can get away with the offer of PDRs to foreigners in violation of the Constitution.
Now look at this and weep: The 132,000,000 PDRs, with an issue value of P46.00 each for a total monetary value of P6,072,000,000, are now floating obviously in the hands of foreigners. Can the SEC explain this?
A good question to be asked is whether the transfer of those shares is free from income taxation. Note that when you sell something, you have to pay capital gains tax, Santa Banana!
These disclosures are so clear, and Calida’s quo warranto petition is so timely and relevant.
PDR holders who own shares, even though they cannot vote, in any language have ownership of the company. They enjoy dividends and other benefits. These foreigners are part-owners of this mass media organization. They do not vote but they have possession of shares.
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Sunday, June 14, came and went despite the fact that 75 years ago, the Armed Forces of the Philippines ended more than three years of Japanese Occupation of the Philippines with the surrender of General Tomiyuki Yamashita, commander-in-chief of the Japanese Imperial Forces here.
On that day, Yamashita finally surrendered in Apayao. He and his forces retreated.
In the annals of the AFP, the decisive battle that caused him to surrender was the Battle of Bessang Pass at the border of Benguet and Ifugao.
After a three-month siege against the entrenched Japanese who had the advantage of higher ground and war materials, an assault team, E Company of the third battalion under Major Conrado Rigor was able to penetrate the Japanese line. It was my older brother, Desi, who eventually became a justice at the Court of Appeals, who led the assault.
The battle was also called Battle Among the Clouds.
Sadly, this Filipino victory has not been given the recognition it deserves. Only President Fidel V. Ramos acknowledged the Battle of Bessang Pass as a momentous victory.