Ex-SEC chair reminder on bid to seize ABS-CBN from Lopezes: There are laws
As President Rodrigo Duterte’s allies in the House of Representatives seek ways to pressure the influential Lopez family to exit ABS-CBN Corp., they should first consider the country’s laws.
Following through with the President’s pronouncements for the Lopezes to sell out, a lawmaker suggested a so-called workers’ takeover and the transfer of the family’s controlling stake in the publicly-listed media giant to its employees.
This was proposed by Anakalusugan Rep. Michael Defensor at an online meeting last week.
He urged employees facing loss of jobs to petition the President and the National Telecommunications Commission (NTC) so they can start operating ABS-CBN at the soonest possible time.
Defensor said he believed employees can run ABS-CBN on a “push button” basis given their experience.
It was also implied that the transfer of shares, presumably a donation and subject to a 6 percent donor’s tax amounting to billions of pesos, will allow the company to win a new franchise.
But businesses like ABS-CBN, controlled by Lopez Inc., are covered by the Revised Corporation Code of the Philippines or Republic Act No. 11232.
Teresita Herbosa, former chair of the Securities and Exchange Commission (SEC), said owners are allowed to decide what to do with their corporations but not the NTC or members of Congress.
“It is an attribute of ownership to be able to sell, donate or transfer one’s shares to another,” she told the Inquirer.
“However, it is voluntary on the part of the shareholder to do so,” said Herbosa, who initiated amendments to the Corporation Code.
Herbosa said a court might be convinced to rule against a company should cases be filed. In this situation, she explained the assets of the company “will answer for the judgment and not the shares owned by the shareholders.”
ABS-CBN has yet to comment on a workers’ takeover being proposed by some members of the lower chamber of Congress. A spokesman said last May 11 that the company is not for sale.
ABS-CBN was ordered to cease all TV and radio broadcasts last May 5, a day after its franchise expired. This is the second time ABS-CBN went off the air since 1972, when the then dictator Ferdinand Marcos seized the network from the Lopezes.
In an interview, the head of ABS-CBN’s largest labor union merely chuckled when asked about the suggestion of Defensor and his colleagues in Congress.
“I believe I speak for all our members when I say I do not believe any proposal from these congressmen,” Generoso A. Villanueva Jr., president of the ABS-CBN Rank and File Union, told the Inquirer.
“If they were truly concerned, why did they not bring this up during the hearings and only now?,” he added.
Villanueva said the union will never support the plan even as their ranks were decimated after 70 lawmakers, including Defensor, voted to deny ABS-CBN a new 25-year franchise in the middle of a global health crisis and an economic recession.
ABS-CBN, which has about 11,000 workers and relies on TV advertising for most of its earnings, announced mass layoffs days later. Villanueva said about 70 percent of the union’s employees will be retrenched.
Rep. Luis Raymund Villafuerte Jr., one of at least 22 deputy Speakers in the lower chamber, last week also suggested that the Lopezes sell the company. Amid threats to block ABS-CBN’s franchise renewal, Duterte told the Lopez family last Dec. 30 to “just sell it.”
A corporate lawyer questioned the motives of lawmakers urging the Lopezes to sell out of ABS-CBN, which had operated the country’s largest TV network.
“It’s not the job of Congress to determine whether a party is guilty or liable. That’s for our courts to decide,” said the lawyer, who declined to be named because he was not authorized to speak to media.
The absence of a franchise allows the government to recall ABS-CBN’s assigned frequencies and use the spectrum or award it to another company.
But ABS-CBN retains valuable assets, including transmission antennas tuned to its frequencies apart from a vast library of content such as TV shows and movies. The company also continues to air its shows over the internet and pay television.
At one point during the online meeting, Rep. Rodante Marcoleta, another deputy Speaker, raised the prospect of the government taking over ABS-CBN’s sprawling headquarters in Quezon City—the site of transmission equipment for TV and radio broadcasts.
A new player would need both frequencies and transmission assets to rapidly roll out a nationwide TV network.
Herbosa said the government may seize a company’s assets if it commits serious crimes outlined in the Revised Corporation Code. But she explained these apply only to specific cases.
Section 138 of the law states a corporation can be “dissolved” by the SEC if the courts determine with finality that a company engaged or was established to commit “securities violations, smuggling, tax evasion, money laundering, graft or corrupt practices.”
A company can also be dissolved if it repeatedly and knowingly allowed illegal and corrupt activities by its directors, trustees, officers and employees. Other grounds for dissolution included the non-use of its corporate charter or continuous non-operation.
Once a corporation is dissolved, a court can then order the company’s assets to be seized by the government after the payment of debts and obligations and “without prejudice to innocent stockholders and employees.”
ABS-CBN has maintained it complies with all taxation and government laws and regulations relating to its business operations.
On recent threats to seize its land assets, ABS-CBN said in a stock exchange filing on Monday it has “no knowledge of any proceedings that impose fines or penalties or claims against the property cited therein.”