ABS-CBN to House: PDR holders 'passive investors,' not shareholders

Jessica Fenol, ABS-CBN News

Posted at Jun 11 2020 03:16 PM | Updated as of Jun 11 2020 06:48 PM

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MANILA - Philippine Deposit Receipt (PDRs) issued by ABS-CBN Holdings are purely financial instruments and its holders are "passive investors" who have no rights to own, manage or to vote directors in ABS-CBN Broadcasting Corp, the network's legal counsel said Thursday. 

To avoid confusion, the public should take note that PDRs are issued by ABS-CBN Holdings, a company incorporated to invests in shares, while ABS-CBN Broadcasting Corp is the company involved in mass media, ABS-CBN's legal counsel Cynthia Del Castillo said during the network's franchise hearing. 

It is ABS-CBN Holdings that owns shares in ABS-CBN Broadcasting Corp and not the PDR holders, who have no link with the broadcaster, Del Castillo said.

The PDRs are contractual agreements with the holding company, which is ABS-CBN Holdings and not with ABS-CBN Broadcasting, she said.

"This contractual arrangement has nothing to do with ABS-CBN Broadcasting because ang parties po ng kontratang ito is covered by the investors and ABS-CBN Holdings. Hindi po party sa PDRs and ABS-CBN Broadcasting," Del Castillo said.

"Ang rights po ng PDR holders (The PDR holders' rights) are only against ABS-CBN Holdings. And wala po silang (they have no rights) rights on ownership or management of mass media corp which is ABS-CBN Broadcasting Corp," she added.

The passive investors have the right to "receive dividends" from the holdings company she said.

Philippine Deposit Receipts are not new in the market, the lawyer said. It was introduced in the Philippines right after the Asian Financial crisis to offer financial relief, she said.

Other companies in the country also offer PDRs. It also has a US counterpart called American Depositary Receipts, she said.

"This is something that was both beneficial to the capital market, to the company that needed financing as well as of course to the government...It increased economic activities to a lot of companies which translate to more taxes," Del Castillo said.


Solicitor General Jose Calida, in his challenge to ABS-CBN before the Supreme Court, alleged that ABS-CBN breached the constitutional prohibition on foreign ownership in mass media, citing the PDRs.

Del Castillo said ABS-CBN Holdings, not PDR holders, owns shares in ABS-CBN Broacasting Corp.

"Wala pong pakialam ang mga investors sa ownership at sa management ng ABS-CBN Broadcasting. Ang rights po ng PDR holders are only against ABS-CBN Holdings," Del Castillo said.

(Investors have nothing to do with the ownership and management of ABS-CBN Broadcasting. The rights of PDR holders are only against ABS-CBN Holdings)

The financial instrument issued by the holdings company was also "scrutinized" by the Securities and Exchange Commission and the Philippine Stock Exchange, Del Castillo said. 

"In issuing all these securities, and ABS-CBN Holdings has in good faith complied with all the requirements of the government regulatory agencies... Their acts are all above board, they have relied on the approvals and the permits and licenses issued by the SEC and the PSE," she said.

"Wala po kaming itinatago (we are not hiding anything), we have not circumvented the Philippine Constitution and all the terms and conditions of the PDRs have been fully disclosed and of course evaluated by the government agencies and the market authority," she added.

The SEC, in a Senate hearing in February, said that the PDRs issued by ABS-CBN Holdings were compliant with existing regulations at the time of issuance.

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