ABS-CBN Holdings 'legitimate,' not used to commit fraud: lawyer

ABS-CBN News

Posted at Jun 15 2020 03:55 PM | Updated as of Jun 15 2020 03:59 PM

ABS-CBN Holdings 'legitimate,' not used to commit fraud: lawyer 1
ABS-CBN legal counsel Atty Cynthia Del Castillo during the House Panel hearing on the ABS-CBN franchise issue. Behind her is ABS-CBN Chairman Mark Lopez. Mark Demayo, ABS-CBN News

MANILA - ABS-CBN Holdings is a "legitimate" company and the transfer of ABS-CBN Broadcasting shares to the holding firm was not done to commit fraud or to avoid responsibility, its legal counsel said Monday.

The holding firm, established to invest and earn in company shares, is also not an "alter ego" of ABS-CBN Broadcasting Corp, the network's legal counsel Cynthia Del Castillo told a franchise hearing at the House. 

Holding companies are "legitimate" and are registered in the Securities and Exchange Commission, she said. ABS-CBN Holdings and ABS-CBN Broadcasting Corp are separate entities, she said.

Such firms earn from dividends issued by the companies they invest in, she said.

Del Castillo was responding to SAGIP Party-list Rep. Rodante Marcoleta, who questioned the transfer of shares of the broadcasting company to the holding firm and the legality of its Philippine Deposit Receipts or PDRs.

"We stand on our ground na wala pong pananagutan ang ABS-CBN Broadcasting Company [sa shares] na inilipat sa ABS-CBN Holdings. Hindi po iyon inistructure para makaiwas sa pananagutan ng ABS-CBN Broadcasting," Del Castillo said.

(We stand on our ground that we have no liability in the transfer of ABS-CBN Broadcasting Corp shares to ABS-CBN Holdings. It was not structured to evade responsibility)

"It was not organized for the purposes of fraud or perpetrating fraud for that matter. Hindi po siya alter ego kasi po shareholder lang ng ABS-CBN Broadasting company [ang ABS-CBN Holdings]," she added.

(It is not an alter ego because ABS-CBN Holdings is just a shareholder of ABS-CBN Broadcasting Corp)

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ABS-CBN Holdings and the PDRs it issued to investors are being scrutinized after Solicitor General Jose Calida questioned their legality before the Supreme Court. 

Calida alleged that ABS-CBN breached the constitutional prohibition on foreign ownership of mass media firms because of the PDRs. Rival GMA Network also has PDRs, issued by a separate holding company.

Foreign and local PDR holders are "passive investors" who has no right to vote, influence or elect officials in the broadcasting company, Del Castillo earlier said. 

The SEC said earlier that PDRs issued by ABS-CBN Holdings complied with the law.