VERA FILES FACT CHECK: Defensor mistakes PDRs for foreign ownership

Issuing Philippine Depositary Receipts (PDRs) to foreigners does not equate to granting them actual ownership, contrary to a statement of ANAKALUSUGAN Party-list Rep. Mike Defensor on the denial of ABS-CBN’s franchise bid.


In a July 13 interview on ANC, Defensor defended his and the House franchise committee’s decision that “killed” the franchise renewal of ABS-CBN. He said:

“The case of [ABS-CBN’s] PDRs is strong for me because it is a constitutionally mandated provision that there should be no foreign ownership. PDRs are equal to actual ownership.”

Source: ANC 24/7, Rep. Defensor: ABS-CBN franchise denial not a death penalty, but ‘life imprisonment to reform’| ANC, July 13, 2020, watch from 15:36 to 15:49

Defensor echoed the findings of the technical working group (TWG) report, which argued that ABS-CBN’s “mechanism of corporate layering…makes the PDR holders indirect owners of the underlying shares of stock of ABS-CBN,” and thus violates Sec. 11, Article XVI of the Constitution banning foreign ownership of mass media entities.


Issuing PDRs to foreigners does not grant them actual ownership of a company or corporation.

PDRs are forms of securities that grant holders the right to the delivery of sale of underlying shares. They are, however, “not evidences [sic] or statements nor certificates of ownership of a corporation,” according to the Philippine Stock Exchange (PSE).

Securities are “shares, participation or interests” in a corporation, commercial enterprise or profit-making venture, “evidenced by a certificate, contract [or] instrument,” as defined by the PSE.

Lawyer Romel Bagares, in a 2017 interview with VERA Files, said PDRs are “investment tools” devised by businesses and lawyers to factor in foreign investors without violating the Constitution. (See VERA FILES FACT CHECK: Three things Duterte got wrong about Rappler, VERA FILES FACT CHECK: SEC revocation of Rappler’s registration explained)

By investing, PDR holders get a share in the profits of the company but have “no control” in the day-to-day operations, no representation in the board, nor can they decide on policy, Bagares then said.

However, the House committee’s TWG report asserted that the pledge agreement securing PDRs to holders restricts ABS-CBN Holdings’ right to dispose of underlying shares, thus compromising full ownership.

Solicitor General Jose Calida cited the same issue with foreign ownership in a quo warranto petition filed before the Supreme Court (SC) on Feb. 10, seeking to nullify the media giant’s now-expired legislative franchise. (See VERA FILES FACT CHECK: SolGen’s claim that ABS-CBN ‘violated’ foreign ownership restriction needs context)

Bagares, in an interview in February following Calida’s petition, further explained that ABS-CBN’s PDRs, which are publicly listed on the PSE, “don’t give voting rights but only cash or stock dividends.”

The SC junked Calida’s plea on June 23 — over a month after the network’s franchise expired on May 4 — noting that the issue has become “moot and academic.”

The network has maintained throughout the marathon franchise hearings that ABS-CBN Holdings’ PDRs have been “evaluated and approved by the [Securities and Exchange Commission (SEC)] and the [PSE].” (See VERA FILES FACT SHEET: What’s next for ABS-CBN after losing franchise bid)

SEC Commissioner Ephyro Luis Amatong said in a Senate hearing on the network’s franchise renewal led by the committee on public services on Feb. 24 that ABS-CBN had “no pending violations” with the commission.

Amatong reiterated this in the June 11 joint hearing of the House committees on legislative franchises and on good government and public accountability:

Wala kaming basehan para sabihin na nag-violate sila ng regulations namin (We have no basis to say they violated our regulations).”

Other broadcast companies, such as GMA Network, Inc., also use PDRs to raise capital for the improvement of their services.

ABS-CBN is owned by ABS-CBN Corporation, the country’s biggest media conglomerate, which is part of Lopez, Incorporated, an investment company owned by the family of the late Eugenio Lopez Sr. (See VERA FILES FACT CHECK: Gabby Lopez still HAS shares in ABS-CBN Corporation)


Editor’s note: This fact check was produced by a student from the University of the Philippines Diliman who is doing her internship with VERA Files.



ANC 24/7, Rep. Defensor: ABS-CBN franchise denial not a death penalty, but ‘life imprisonment to reform’| ANC, July 13, 2020

BusinessMirror, TWG Findings and Recommendations, Accessed July 21, 2020

Official Gazette, 1987 Constitution

Philippine Stock Exchange, Philippine Deposit Receipts (PDR), Accessed July 20, 2020

Philippine Stock Exchange, Securities, Accessed July 21, 2020

ABS-CBN News, READ: Statement of ABS-CBN on OSG’s Quo Warranto petition: We did not violate the law, Feb. 10, 2020

Senate of the Philippines, Committee on Public Services (February 24, 2020), Feb. 24, 2020

House of Representatives, Comm on Legislative Franchises Joint with Comm on Good Government and Public Accountability Day 5, June 11, 2020

ABS-CBN News, Supreme Court junks SolGen’s quo warranto plea vs ABS-CBN Corp, June 23, 2020

Media Ownership Monitor Philippines, ABS-CBN 2, Accessed July 20, 2020


(Guided by the code of principles of the International Fact-Checking Network at Poynter, VERA Files tracks the false claims, flip-flops, misleading statements of public officials and figures, and debunks them with factual evidence. Find out more about this initiative and our methodology.)