In an official statement, ABS-CBN said that the Intelligence Service of the Armed Forces of the Philippines (ISAFP) "committed factual errors" when it accused Babao of being a coddler of Dawud Santos.
"ABS-CBN finds Julius Babao did not violate any ethical boundaries as a journalist in pursuing his exclusive stories," read the statement.
"After a thorough investigation which tracked down primary participants and documents which chronicle the events, ABS-CBN concludes that Julius Babao did not post nor guarantee bail in the case of suspected terrorist Dawud Santos."
ABS-CBN said Babao had returned to his anchoring duties as of yesterday.
"ABS-CBN values its reputation and that of its employees," read the statement.
"That is why we embarked on this exercise of accountability and hope ISAFP and Malacañang will do the same."
However, the Armed Forces has stood firm in saying it never directly accused Babao of being a coddler of Dawud, brother of Ahmad Santos, founder and leader of the RSM.
The RSM is a group of former Catholics who have converted to Islam.
Col. Tristan Kison, Armed Forces public information chief, said the military "simply aired its observations" on Babao’s dealings with Dawud.
"Imbestigasyon nila yon (That’s their investigation)," he said. "Kung ano ang lumabas (Whatever the outcome), we respect it. We respect their investigation."
Kison said ISAFP agents were surprised when Dawud’s counsel initially manifested that they could not afford to post the P200,000 bail required by the court.
"After a five-minute recess, nagbago at kaya na nila," he said, expressing surprise that they suddenly came up with the money.
Kison said when Dawud was released from ISAFP custody, he was hauled off to a waiting ABS-CBN van despite a scheduled press conference.
"Lahat naman nakita na doon sumakay sa (Everybody saw him board an) ABS-CBN van," he said.
Dawud is said to be the number two man in the RSM, which has been linked to a foiled plot to bomb a crowded nightclub in Ermita, Manila during the Holy Week.
Ahmad Santos was arrested recently during a military raid in the RSM’s supposed hideout in Zamboanga City.
The military claims that the RSM has links with the Abu Sayyaf and Indonesia-based terrorist network, Jemaah Islamiyah.
Following Ahmad’s arrest, anti-terrorism authorities claimed that they had once again foiled another RSM plot to bomb strategic points in Metro Manila on All Saints’ Day. — Jaime Laude