Closing down Rappler – Opening up Pandora’s box
By Chemrock
The Securities and Exchange Commission ordered the closure of Rappler, a private limited corporation running an online news platform, on grounds that it breached the no-foreign ownership rules for media. Early news pointed to SEC’s decision being predicated on some Philippines Depository Receipts (PDR) issued by Rappler to foreign investors, thus subjecting the company to control by foreigners.
Given that PDR is a unique way of raising capital in Philippines and some of these are traded in the Stock Exchange of Philippines (PSEI), the action by SEC raised lots of concern. The anti-dictatorial stand by Rappler, the numerous past threats from the Admin towards owners and editorial staff, and Duterte’s rant against ABS-CNN and the Inquirer, naturally led many, both locally and internationally, to view it as suppression of the press.
Let’s be the ‘man on the Clapham omnibus’, or the reasonable man. Courts in the British Commonwealth countries often fall back on the minds of the ordinary man whenever faced with a murky situation. What would a reasonable man make of it.
PDR Primer:
Now just what the heck are PDRs? It is a security. In financial parlance, a security is a debt instrument evidence by a physical form, in this case it is a ‘receipt’. In an outright loan transaction, the borrower signs a loan agreement and lender recoups from the loan repayment. In a securitized loan transaction, the borrower signs a form (the instrument which is the security) and the lender can recoup by trading the security. Examples are bonds, treasury bills etc. Very often these securities are collaterized by other assets or guarantees.
PDRs are tacked to certain shares for purpose of ROI computation. Holders of PDRs receive the returns pecked to what shareholders receive by way of dividends, rights issues, bonus issues, etc. In this way they are financial derivatives as their values depend on another asset.
As I understand it, PDRs are issued in one of 3 ways (I stand corrected on this) :
(1) Company issues PDRs which investors buy.
The PDRs being the legal instrument evidencing the debt. The investor is free to dispose of the PDR and recoup his money. If the PDR is listed on the PSEI, investors can trade in the market freely. It’s a normal way to raise capital without loosing control of ownership. But if that’s the purpose, why not issue good old-fashioned Notes or Bonds?
(2) The PDRs carry an option and right to convert to shares in the company.
This is troubling. It would be a foolish bank to lend to company A against a pledge of its own shares, that is shares in A. It has no value as collateral. When borrower goes burst, what’s the value in the shares. Normally banks obtain these from director share holders merely as assurance for good performance.
In the case of listed PDRs, can a holder of 10,000 pesos PDR exercise the option to convert to shares? Of course it’s not possible because a share issue is a major exercise with lots of regulations to comply as well as stamp duties and loss of tax credits, etc. It’s never done piece meal.
When millions of pesos of PDRs are converted to shares, capital is diluted and share prices tumble. Why should a PDR investor shoot his own feet?
(3) The PDRs are backed by certain blocks of shares.
It is OK if company A issues PDRs collaterized by some other assets. If it is backed by shares in itself, isn’t there some double accounting going on? And which share holder will allow their share to be collaterized to the PDR unless the funds raised from the issue of the PDRs go into their pockets? If that were the case, it’s not the company raising capital for its own use, but a pseudo divestment by the share holders.
Rappler’s PDRs:
Rappler issued no PDRs. It was the parent company Rappler Holdings that issued the PDRs. Having no full details of critical information, we can only speculate here. Were the PDRs tacked to shares in Rappler for the purpose of computing ROI for the security holders? Hardly the case as Rappler is not listed and not making money at the moment. Were the shares collaterals for the PDR, in which case these are not financial derivatives, but simple collaterized securities? The truth can only be exposed if we follow the money. If the funds from the investors went into the accounts of the shareholders of Rappler Holdings, then it is crystal clear the PDR issuance was a camouflaged divestment and Rappler has foreign owners in breach of the laws. If the holding company pumps the funds back into Rappler, then it COULD be an honest to goodness investment by foreign funders. But this doesn’t make sense in the execution. If it were so, then Rappler itself should issue the PDRs.
In any case, Rappler Holdings issued 3 tranches of PDRs. It is only in one of the tranches that Rappler was caught out. Only the PDRs issued to Omidyar Network carry a restrictive clause. It requires shareholders to obtain the approval of investors for any changes in Rappler’s Articles of Association and by-laws. It is on this single lapse that the SEC case stands. This is being interpreted as surrender of control, and thus tantamount to ownership, of Rappler by foreigners. Before you subscribe to any devilish notion of this clause that is deemed to evidence the breach of no-foreigner ownership, I’ll touch on the juridical significance of it further down.
What is media, what is ownership:
The crux of the matter is what constitutes ‘media’ and what constitutes ‘ownership’. I do not wish to go eager beaver on legal definitions, but if you like to see where Rappler stands as a media, click here for a nice argument by Mel Sta.Maria. She maintains Rappler is not ‘media’ as far as existing legal interpretations go. I do not share her views. For all intents and purposes, to me, Rappler is media. The courts and the law have not adequately defined this. It’s simply legalese has not yet caught up with the digital world.
As to ownership of corporations, the Supreme Court established in 2007 that ownership is demonstrated by the power to control certain important decisions. This control is exercised by their voting rights. The holders of the shares with voting rights are the owners of the company. These are the holders of a class of shares called ‘ordinary shares’. Other classes of shares such as ‘preference shares’ do not have voting rights. The SC adopted the classical and universal definition of equity ownership. By this decision the SC basically made it clear that PDRs do not carry voting rights and thus the owners have no control over a company. They are therefore not considered as having ownership of the company.
The SEC embedded this decision in their own book of rules when in November 2012 they publicised their Rules on Foreign Ownership. In this same publication they indicated that all issuance of PDRs must have SEC pre-approval.
Deemed interest:
This brings me to the cliche of substance over form. The Philippines has an overbearing interest in legalistic forms and often overlooks the substance. When it comes to chasing down the assets in legal proceedings, there is a term called “deemed interest”. Crooks are always one step ahead of the law, and so they park ill-gotten wealth in various ways — in trust funds, in nominee accounts, in family member names, etc. Based on various circumstances the courts decide the person who is the subject of investigation is deemed to have interest in an asset not in his name. He is considered the beneficial owner. For example, the money in the accounts of the daughter of Janet Napoles may be deemed as belonging to Janet if the girl has no evidentiary basis of capability of acquiring those sums of money.
It is from this angle that we should view the Rappler PDR case. Are the investors deemed to be shareholders by virtue either of their control over the company, or the intention of the issuers? Proving intent, however, is extremely difficult in both criminal and civil courts. It’s all circumstantial.
In the 2007 decision mentioned, the SC did touch on the matter of ‘deemed interest’ but they fell short of defining the scope. That is understandable given the fact ‘deemed interest’ is circumstantial and needs to be determined on a case-to-case basis. Having said that, the importance of ‘deemed interest’ is clearly demonstrated in some recent developments — the US now has a law that defines this gray area, and in the aftermath of the Panama Papers (under international pressures) the Cayman Islands now requires all beneficial interests to be registered. Bet you Imee Marcos will never open a Cayman Island trust account now.
SEC action:
Are we to say that the SEC’s ruling on Rappler is a slap in their own face since PDRs are pre-approved by them in the first place? Not the least, because their supervisory function is purely to ensure securities processes and requirements are complied with. Theirs is not to pour over the documentary legal details which would have made a supervisory role untenable and contracting parties relinquish accountability.
After I had this article drafted out I came across the SEC’s en blanc report on their decision of the case. It is heartening to see technocrats doing their fine work. Their 19 page report showed they had seriously looked deep into the issues. Note that they zoomed in exactly on the 3 aspects that I mentioned — ‘media’, ‘ownership’ and ‘intent’. I believe that this report has great juridical significance and should be given the opportunity for a national discourse. This can only happen if Rappler bring the case all the way to the SC. Failing which, economic players will have to grope in the gray areas.
These are the pointers on the SEC report :
- Media is a term open for interpretation due to changing world environment. The SEC came to the conclusion that Rappler is a media.
- While observing the 2007 SC ruling on ‘ownership’ of corporations solely attributable to ordinary share holders, SEC raised various relevant laws to maintain that they (SEC) are the authority to define ‘ownership’.
- They took issue with the PDRs held by Omidyar Network contending that the restrictive clause of changes to company articles and bye-laws allows foreigners to control the company.
- Control over company equates to ownership.
- Intent is irrelevant when there is already commission.
Other PDRs:
There are many other PDRs traded in the PSEI, notably ABS-CNN and GMA. Who knows how many other PDRs have been issued by private limited corporations. In the light of the Rappler case, the SEC needs to investigate the whole inventory.
American Depository Receipts (ADRs):
Many Philippines companies, including listed ones, issue ADRs. These are traded in stock exchanges or over-the-counters in the US. The ADRs are tacked to blocks of shares. ADRs are issued in US$ so American investors can invest in Filipino equities in their local currency. These ought to be fully investigated, too.
Restrictive loan covenants:
In relation to the restrictive clause in the Rappler PDR that SEC objected to, they interpreted that as tantamount to the ceding of ownership to the security holders. The SEC made it out to sound like that is exceptional and a big red flag.
Everyone should breathe easy. There is nothing sinister here.
Every wholesale loan (big numbers), debentures, syndicated loans, etc, and many financial ventures, carry restrictive clauses in one form or another. Rappler’s case involved merely the bye-laws, many covenants are much worse than that. Case in point – Sri Lanka had to give up ownership of their Hambantota port to the Chinese on their failure to repay loans. These are known as Restrictive Loan Covenants and they are absolutely common, and in fact, mandatory. Big structured deals often involve many parties, and each party wants to be protected in certain particular ways. All these worked its way into the loan covenant clauses.
Suppressing press freedom and democracy:
The Solicitor General Calida was the one who called upon the SEC to investigate into Rappler’s ownership. The Solgen has been extremely hard-working beyond the call of duty. Nowhere in Book 4, Title III, Chapter 12 of the 1987 Administrative Code where his functions are enshrined, does it cover this intrusion into SEC affairs. If only he is equally diligent in other more serious areas calling out for action, like investigate into claims that the president’s son is a drug lord.
However the president tries to distance himself from the Rappler case, there is no hiding what is obviously a naked persecution of press freedom. His rants and threats against ABS-CNN and the Inquirer are all too obvious for comfort. One thing I will give the president though, at least for Rappler, ABS-CNN and Inquirer, he is taking the legal route. As he said so, he could have marched into Rappler with the soldiers had he wanted to demolish them. Again, it is the intent that matters. Hiding behind the cloak of legal process is just a different way of killing the same troublesome cat.
For some suspicious reasons, there is a seeming rush to railroad a federalism program and other dictatorial moves in the past few weeks. It is becoming more apparent that a power grab by some interest groups and power extension is in motion. In the grand scheme of things, killing off a troublesome media is part of the template. It is the timing that indicates the action against Rappler is not about foreign ownership. The intent is obnoxiously clear.
Looking at recent developments, the extension of Martial Law in Mindanao makes absolute sense now. In fact, it is a stroke of genius, a great strategic move. This is a Chemrock Theory – concentrate military hardware and personnel in Mindanao, bog down AFP boots in Mindanao and take their eyes off other parts of the country. Result – Military adventurism is unlikely as the pro-Duterte group rapes the Legislative and the Constitution. This isn’t too far-fetched a theory, and the horror, if it were true, is that Marawi and its people were sacrificed for it.
Opening Pandora’s box:
That PDRs are engineered to get past foreign ownership laws is the open secret in corporate boardrooms in Philippines Inc. Rappler just got careless. It is obvious to me Rappler does indeed have a case to answer. Was there intent to circumvent the no-foreign ownership law? Intent is easier said than proven in the courts. That’s why SEC attempts to checkmate Rappler with the reservation that intent is irrelevant when there is already commission. The SEC has shown earnesty in their investigation as demonstrated in their well written report, in sheer contrast to idiotic trashes we see coming off Congressional hearings, DOJ and PNP investigations. Now that the SEC has made their decision, the challenge and the right thing to do, is to open the Pandora’s box and investigate the other PDRs, ADRs, and all debt instruments in the country having Restrictive Loan Convenants. Only then can there be better assurance the country’s zero and 60-40 foreign ownership laws are observed. After all, this is what the Solgen wanted in the first place. Bring the investigation to its logical conclusion, damn the economic consequences as erring investors run for cover.
The Society of Honor by Joe America 
Chemrock, thank you for easing the strain on my brain as I tried to think this one through. Do you think that Rappler is about to disappear from view?
Hi Mariner, you’ve been awol for a while.
Will Rappler disappear from view? I’m afraid you have to ask a Little Duterte in the Solicitor General’s office. He has the power to tell the Supreme Court to get lost when they requested for data on the EJK investigations.
I can’t tell you what will happen to Rappler in Philippines, but I can tell you how other countries will treat the case.
Laws are established and Agency regulations are formulated. Within this environment businessmen goes about doing what they need to do. And that’s what Rappler did. Because the 2007 established the basis of recognising ‘ownership’. So what they did broke no laws at the time. The SEC is free, and in fact, it is their mandate, from time to time to determine certain changes to the established legal framework, because the business world is dynamic and circumstances change. So now they have decided that the definition of ‘ownership’ needs to be redefined. They have every right to want this but it can be challenged in courts and we have a new ruling. That then becomes the new regulations of the day.
In countries with more civilised legal process, the case will go to court for a new determination of what constitutes ‘media’ and ‘ownership’. If the SEC version is adopted, Rappler needs to resolve the problem with the PDR holders. No criminal case is to be preferred against Rappler.
Rappler faces civil action by the PDR holders, so things need to be renegotiated. This can be done by inserting ‘riders’ to the PDRs to negate the offensive clause. (Rappler’s vain attempt to appease the SEC by obtaining a non-notorised affidavit from the PDR holders to declare that they will not exercise the offensive clause is a joke (Sabtang should be laughing. The immaturity of Rappler’s legal advisors is mind-boggling).
Oscar Franklin Tan (see Francis’ comment below) talks about the PDRs of ABS-CNN and Inquirer as a sort of template to be used so such security issues will not run foul of the law. This is’nt the way financial world moves because each funding situation has it’s inherent differences. To make it into a format with iron clad assurance of its legality requires legislation. The legislature is often 10 years behind financial innovation.
Not enough outrage.
But investigations and raids don’t care about timing.
The crackdown on dilapidated jeeps happened not because of timing, I mean they would if they would not could.
No dilapidated vehicle would run if the LTO did not renew their registrations.
How does this connect to Rappler’s case? Some one complained and he is the one who speaks at SONAs, that is why SEC acted, tgen the NBI gets in after the fact.
http://bworldonline.com/what-is-a-pdr/
What is a PDR — this strange acronym for what has kicked at the shin, the 1987 Constitution Section 11, Article XVI that insists, “The ownership and management of mass media shall be limited to citizens of the Philippines, or to corporations, cooperatives or associations, wholly owned and managed by such citizens.”
There are at least three high-profile media corporations namely ABS-CBN, GMA, and Rappler that have used Philippine Depository Receipts (PDRs) to obtain foreign investment, even at the expense of recognizing the constitutional prohibition of foreign ownership in the industry of mass media (Lorenzo E. Delgado, editor-in-chief, The Bedan Review, January 2018: “Philippine Depositary Receipts: Mass Media’s Existing or Emerging Loophole To Constitutionally Mandated Full Filipino Ownership?”) PDRs are financial instruments that foreign funds can buy into, allowing media and other Filipino firms that must keep foreign ownership at 40%, to raise funds globally (Ibid.).”
PDRs are not new, perhaps copied from one of the most common types of Deposit Receipts (DRs) — the American Depository Receipt (ADR), which has been offering companies, investors and traders global investment opportunities since the 1920s. These are negotiable (transferable) certificates, traded on the local (US Stock Exchanges) but with underlying other security, usually in the form of equity, that is issued by a foreign publicly listed company (Investopedia: Jan. 10). There are also global depositary receipts (GDRs) — the European DRs and international DRs, denominated in dollars or in euros, traded on the stock exchange of the investor’s country as certificates/receipts rather than the actual equity share, which is deposited in a foreign bank (Ibid.).
The ADR (or the PDR) likens to a financial derivative evolved from an original equity investment, and may be traded as a derivative at its level, while it is also an option bought by the investor to be exercised when and if the investor wants to convert to the underlying equity itself.
The Philippine Stock Exchange affirms that “a Philippine Depositary Receipt (PDR) is a security which grants the holder the right to the delivery of sale of the underlying share (as cited in the Bedan Review, op. cit.). A PDR consists of a deposit price and an option price, which is considered as payment when the buyer opts to convert said PDRs to a corporation’s share. PDRs are not evidences or statements nor certificates of ownership of a corporation. However, each PDR represents a share, even in a restricted company, and when bought by a foreign entity, gives the buyer the right to all the dividends due the shares of stock acquired (Ibid.).
SyCipLaw advised Mercury Media Holdings Ltd. in the special block purchase of P2.3 million PDRs issued by ABS-CBN Holdings Corporation from Marathon Asset Management LLP at the Philippine Stock Exchange in May 2013 (www.syciplaw.com, June 14, 2013).
Lawyers specified that “under existing Philippine law, the Underlying Shares may not be owned by, or registered in the name of, non-Philippine nationals. In the event of exercise of the right of delivery of the Underlying Share by a PDR holder that is not a Philippine national, the Underlying Share will be sold by an eligible broker in the open market to a qualified person, and the proceeds of the sale will be paid to or to the order of the PDR holder (Ibid.).
In 2015, Rappler, Inc. (RI) and Rappler Holdings (RH, owns RI) filed SEC 10-1 Notice of Application for Confirmation Exempt Transactions reporting some 20 million PDRs issued to NBM Rappler and Omidyar Network Fund LLC variously (www.sec.gov.ph).
In December 2016, the SEC received a letter from the Solicitor General asking for an investigation into the Rappler PDRs “for any possible contravention of the 1987 Constitution (Ibid.).” The SEC investigation focused on the covenant between Rappler and the NBM/Omidyar PDRs (called the ON PDRs) that said that RH/RI will “not without prior good faith discussion with ON PDR holders and without the approval of at least 2/3 of ON PDR Holders alter, modify or otherwise change the Company (RH/RI) Articles of Incorporation or By-Laws or take any other action where such alteration, modification or action will prejudice the rights in relation to the ON PDRs (see SEC Commission en banc Decision Jan.11 re Rappler, Inc. and Rappler Holdings Corporation, SP case No. 08-17 001, @sec.gov.ph).
The SEC found “Rappler, Inc., and Rappler Holdings Corporation, a mass media entity, and its alter ego violating the constitutional and statutory Foreign equity Restrictions in Mass Media enforceable through laws and rules within the mandate of the Constitution (Ibid.).” The Omidyar PDRs were declared null and void pursuant to Sec. 17.2 of the Securities Regulation Code (SRC) for being a fraudulent transaction under the ambit of Sec 16.1 of the SRC. The certificates of registration of Rappler, Inc. and Rappler Holdings were revoked for selling control to foreigners (Ibid.).
It may not be fair to cast aspersions on the motivations of Rappler, a known media fighter for truth and righteousness, nor would it be thinkable that the esteemed and respected SEC would allow itself to be used as a political tool to persecute Rappler for its frequent tirades against the incumbent administration.
In fact the SEC must be commended for firmly upholding their interpretation of the law without fear or favor, and indirectly but loudly affirming that everyone, even the ruling powers-that-be must always observe the rule of law. Yet something there is, that tells us that perhaps this PDR thing is more basic than the ethereal love of country condensing in ugly politics.
Let us look at the imbroglio wrought by these PDRs without the indignation on the implied political attack on press freedom that Rappler so represented: on the purely finance and accounting side for practitioners and participants in the stock and financial markets — does not the creativeness and exuberance for newfangled finance schemes mimicked from foreign markets often bring us, with our less developed markets, to convoluted ramifications of unforeseen risks and trouble?
The PDRs are different from the ADRs, GDRs, and DRs of the world.
First of all, mass media companies here in the Philippines really must observe the all-Filipino rule for mass media in the Constitution. No ifs or buts, no indirect or backdoor sneaking in and around this.
And what must not be forgotten in finance is never to invest or offer something which you do not fully understand, unless, as the SEC implied — do you precisely want to skirt the attendant issues?
Mocha Uson says the CIA owns Rappler?
http://opinion.inquirer.net/101420/does-the-cia-own-rappler
http://opinion.inquirer.net/110453/sec-must-clarify-rappler-kill-order
SEC must clarify Rappler ‘kill order’
Oscar Franklin Tan
SINGAPORE — Blame bizarre legal drafting for the Securities and Exchange Commission (SEC) revocation of Rappler’s certificates of incorporation.
Readers ask me as someone who taught constitutional law. But I am also an international mergers and acquisitions lawyer taking the chartered financial analyst level 3.
My students reshared my past columns on Philippine depositary receipts (PDRs), financial instruments Rappler used in a “deceptive scheme to circumvent the Constitution,” in the SEC’s words (“Of PDRs and ‘foreign ownership’ of PH media,” Rappler, 26/7/2017; “Does the CIA own Rappler?” 6/2/2017).
Out of professional integrity, I must clarify to them that I would have written differently had it been disclosed that Rappler’s PDRs do not follow the template set since 1999 by ABS-CBN and GMA, and that Rappler was already meeting the SEC to defend its PDRs at the time I wrote my July 2017 piece.
Our Constitution limits “ownership and management” of mass media to Filipinos. Genuine PDRs raise capital by giving financial returns but not ownership and management.
I cannot sell an ABS-CBN share to a foreigner. But he may pay me P34 now in exchange for its future dividends and price increases.
The contract’s defining characteristic is it is solely between us. The foreigner is a stranger to ABS-CBN. I still own and vote the share; he only gets future income.
But not in PDRs Rappler sold to Omidyar Network in 2015. These prohibit Rappler shareholders from changing its articles of incorporation or bylaws, or raising money to pay taxes, without two-thirds of PDR holders’ approval.
Suddenly, the foreigner indirectly votes. This link contradicts the essential separation between company and PDR holder.
“It is not a true PDR in the spirit,” concluded BDO Capital president Eduardo Francisco, who has seen more corporate structures than most lawyers.
The SEC may choose to factor these negative covenants or veto rights in gauging some management or control, a subjective, contextual analysis in law and audit around the world. Control is not based solely on who elects the board of directors.
Finally, the SEC clearly never approved the PDRs in 2015. Rappler sent a simple notice that it had less than 20 investors, an exemption from registration (Sec. 10.1(k), Securities Regulation Code). The SEC counted investors, not approved a complex contract.
But the SEC must clarify that Rappler’s blunder sows no uncertainty over everyone else’s contracts.
First, it must clarify its “piercing the corporate veil” critique.
Rappler created a second corporation, Rappler Holdings, to issue PDRs. This is actually what makes PDRs work, what separates the PDR holder—and ownership and management—from Rappler.
In fact, the SEC order upheld a second set of Rappler PDRs to North Base Media that also used two corporations but no vetoes.
The SEC must explicitly reaffirm the standard ABS-CBN and GMA PDRs, which also use two corporations.
Second, the SEC’s “zero-percent control” theory cannot invalidate standard veto rights in loans and joint ventures.
Veto rights rarely intend to grant control. If ABS-CBN borrows from a foreign bank, the bank asks to veto further loans which may strain its finances. This is to protect repayment, not control it.
Lastly, the SEC should reconsider its framework that in “a violation of special laws, intent is immaterial.”
Intent is inherent in a fraud charge. We cannot equally punish hiding information and bad typos and honest mistakes.
Was it a nefarious scheme? Likely, Rappler was a startup with no legal budget that tweaked complex financial contracts with no idea what it was doing.
One hopes Rappler can still revise or cancel its PDRs after a severe SEC scolding. We must reassure other internet startups, which may make mistakes out of ignorance.
Most importantly, we must reassure foreign investors by ending all talk of criminal prosecution under the Anti-Dummy Law.
I disfavor rewriting corporate law using human rights law. But under both, no one should go to jail over bizarre legal drafting.
—————————————–
Having read—or at least quickly skimmed through some articles regarding this issue—it is patently clear that Rappler is at fault.
Yet—the question that I wish for lawyers to clarify is whether the punishment is proportional to the violation? If it is not proportional, then it is evidently clear that this is a case of state harassment; the analogy that comes to mind: a man deciding to beat up his neighbor for the ostensible reason of littering on his lawn, when in fact said man was violent because he actually has a vendetta against his neighbor.
I think I’ve heard elsewhere that in other circumstances, the SEC would have simply invalidated the Omidyar PDRs, Rappler would have paid a fine and everything would be fine. I’m no lawyer or legal expert though, so I’m nor sure how true this is.
Also—regarding media in general—I saw one post floating around, that talked about how we should be careful about painting all these blunders and hardships of the media (not just Rappler PDR issues, but also: the shutting down of TV5’s Interaksyon, the Philippine Daily Inquirer being sold off, CNN PH cutting back on employees, etc.) as all “attacks on freedom of expression” because in some of these cases, the state isn’t doing anything directly.
I do disagree with that post and its sentiment, because it only shows how all the more vulnerable media is nowadays. If all these local media outlets are finding it difficult to make money, they aren’t alone—about every major media outlet abroad is experiencing the same thing: digital technology is killing professional media and no one really knows the answer to how professional media can be profitable in the 21st Century. Which should put Rappler’s PDR issues in a certain light; unlike some arrogant bloggers who claim all the majesty (and more) of professional media—but shirk from the full responsibility, the “noblesse oblige” of professional media to report all news—media outlets like Rappler have to report on everything under the sun, not just what makes the administration look good. A journalist ain’t a goddamned pundit—he or she has to report everything to best of his abilities: from “important” national matters i.e. an EO that a President just signed and rallies led by opposition groups, to things far more mundane i.e. who’s winning the UAAP finals, an honest taxi driver returning valuables, a province/city/barangay with a “weird” local ordinance, a court case that may seem like a bore to most people—but may end up setting a precedent for huge things. That takes money—which is hard when I can get news for free online.
In short, the media is already a sick man to begin with—and the administration isn’t doing anyone favours by raising threats against it. Threats which—even if unfulfilled or just plain laway—may hinder things such as fundraising operations. This is all the equivalent of a sick man being beaten up by a thug.
Looking at this from a broader perspective, I think that the supporters of the administration are being awfully myopic (I was too—an optimist who thought that the harsh anti-administration rhetoric was unjustified in the sense that what was solely or primarily needed more was negotiating with the Dutertist forces in good faith, in the name of preserving common progress i.e. on economic matters—until Con-Ass showed me just how much of a boiling frog I was) by rehashing the mistakes/gray areas of the “other” camp (Dengvaxia, Rappler, etc.) when in fact, from a strictly utilitarian perspective (which they cannot say they don’t subscribe to—given that their entire justification of Duterte’s harsh measures was that the needs of the many outweigh the needs of the few) of things: all the blunders of the “yellows” (even assuming that these are all true, a hundred percent) are chump change compared to the disgusting provisions that have arisen in all the proposing and drafting: restricting freedom of speech to “responsible” speech only, abolishing an Ombudsman that is already weak compared to similar institutions in the region i.e. Indonesia’s equivalent, removing the justification for People Power by replacing an elegant “all sovereignty derives the people” formulation with a disgustingly pedestrian restriction of “only via suffrage” that utterly exemplifies an ignorant “rote” and legalistic understanding of democracy, among other things. At least one of these is a red flag.
Myopia.
Francis, I was not mistaken in admiring your brain power.
Now I also admire your eye sight.
Btw, Print is dead, Long live Print!
Oscar Franklin Tan is one of the sober minds in Philippines. I read and respect his contributions. I agree with most of the aspects he mentioned, one of which I touched on in my response to Ancient Mariner’s comment above.
Francis when you put your way with words and logic to economics, it makes for interesting read. Glad you are one of those who sees the light.
chemrock,
Where is your reply to the Ancient Mariner?
Never mind.
Great mind 🙂
Chemrock indeed has a great mind!
The Philippine Media to MATURE open up to foreign investors !!! I am ignorant about PDR in relation to ownership of Rappler. Isn’t CNN Philippines run by foreigners? What is the difference between Rappler and CNN? I do not know. Like what I said I am ignorant of their corporate and ownership structure.
If Rappler is closed who are the worms out of Pandora? They are 50-year-olds, have access to internet and read Rappler.
“Rappler? Closed? Are they like Amazon or eBay? Do they have good to sell at reasonable price?”
“Noooo, Rappler is an on-line internet news about Philippines. They can only be accessed if you have internet. If you can afford 15,000.00/month internet!”
“Aaaaah, never heard of it. I do not have internet. Talk radio works fine with me. My Fish wrappings are good source of old news. What is the fuss about Rappler?”
“Tell everyone Rappler is closed by SEC because of trump up charges”
“Why?”
“Because they are critical of Duterte! Duterte wanted it closed!”
“Why Rappler hate Duterte? He took care of those 13,500 public charges isn’t that good?”
“NO! IT IS NOT GOOD! They were killed without trial! You think it is right?”
“Hmmm … No, it is not. I’ll check my fellow fish vendors if they have heard of Rappler”
“Please do. Spread the word.”
“I love Duterte. I voted for Duterte so are my friends and the rest of 75% of Filipinos. How long “Rappler been hiding out of existence?”
“It has been there for a very long time”
“So, to repeal and replace the killing of 13,500 public charges what Rappler has to offer?”
“RULE-OF-LAW”
“Heard that before. RULE-OF-LAW. Like EJK thru Affidavit?”
“No comment. Whatever. Your fish is outrageously expensive!”
(The Fish Vendor mustered in her English…)
“It is expensive because 1) We cannot fish in Scarborough shoals and in South Philippine Sea; 2) over-fishing because of Philippine Population explosion; 3) fish are dwindling in supply; 4) the warming weather”
Me scratching my head.
Majority of the Filipinos have not heard of Rappler.
It is internet access only.
Internet is expensive, therefore, no access.
If ever they have access it is not reader friendly.
Hahaha
Sabtang, Rappler should have a print edition and you can be resident comic with your own Manga page where you can let you funny, sarcastic, satirical, creative juices run wild. Create you own character, may I suggest a Filimon, sure to make Pokemon cringe. The wet market vendors will love it. Your Fish seller will love it because after reading he can use it to wrap the fish you buy.
SB…You could not have been more wrong …
Those vendors get the Rappler news straight from the mouth of the highest troll available, the one eating Chips and bits and bytes ”the highly awarded Mocha” through the free Fakebook…
http://www.philstar.com/headlines/2015/03/20/1435536/facebook-offers-free-internet-access-phl
http://newsbytes.ph/2015/07/08/globe-reveals-3-ways-to-access-facebook-without-charges/
🙂
Globe offers free Facebook MOBILE access !!! For P500.00 pesos/month that is $10.00/month !!! Even with the free Facebook access subscribers still not going to Rappler Facebook site.
Let us analyze Filipino internet usage. Half of internet users are 24 older the other half are 24 younger out of 120,000,000 mobile subscriptions. 95% are prepaid! That is what they say. 60million out of 95million prepaid users have mobile internet subscription. 50million subscribed to the SLOWEST INTERNET SPEED !!!
Globe offers internetP1,700/month or $34.00/month at 5mbps. Aha! ha! ha! In the US you can get 20mbps at $20.00 !!!
Internet users 4 hours on mobile. 6 hours on Desktop (stats did not say if they are using T1 connection in their office). I guess they are using their office internet because on weekends commenters in JoeAm’s website slow down to a crawl and spike during workdays. 6 hours on internet during workdays? Mama Mia !!! That is lost productivity !!!
48million of subscribers visit Social Media. 29million ON LINE SHOPPING? Really? OR, JUST BROWSING? Never ever buy Philippine on-line shopping. Because you cannot return it. If they deliver your neighbors steal the deliveries. If you complain “Hello, I did not receive my order”. You hear at the end of the line “click” and long silence. Sorry. On-line buyers in the Philippines have no protection. That is why Filipinos still go to the mall to shop while malls in the U.S. are closing down.
15million use online gaming? THAT IS UNDERCOUNTED. MAYBE MORE THAN THAT. I see them playing games on buses, plane, boats and train. They play while walking. They play while driving.
There are 50million active Facebook accoun ts in the Philippines! UNDERCOUNTED !!!!
It is not mentioned in the stats if Filipinos ever go to news website. Why bother? at 5mbs and ALL OF THEM ARE GRAPHICS INTENSIVE !!! SLoooooWWWW !!! Buffer … Buffer …. wait … wait …. naaah, never mind. Who cares about the news. Why not go to your nearest suki barbero or unfurl that newspaper that wrapped your tuna. Better that way.
Considering all of the above statistics assuming it is reliable, therefore, NOBODY HEARD OF RAPPLER !!!
Would soldiers coup for the unheard Rappler? Yes, they will. They will coup because they are not there to question the order. They are there to follow thru the order of coup BECAUSE THEY ARE ZOMBIES !!!
Soldiering is not democracy. Soldiering is dictatorial. Trillanes was in the wrong profession but soldiering is a path to politics. Example: Ramos, Honasan, Biazon, Trillanes and others. It is DACA. Defferred Action for Coup Arrivals.
SOURCE: https://www.rappler.com/brandrap/profile-internet-users-ph
Dominguez says the rights of the a Filipinos were violated, I thought they want the ownership provisions in the constitution amended?
http://www.philstar.com/headlines/2018/01/22/1780216/dominguez-rappler-case-not-about-press-freedom
” What happened to online news outfit Rappler is not about press freedom but about violating the rights of Filipinos from undue influence by foreign media” .. Dominguez
To do this they need to go learn from their Chinese lords …. how to tie the knots on internet.
Agree in a way … It is about PDR. Their attack on Rappler is sneaky. It reeks of fermented fish. The rights of Filipinos are not violated. Rappler violated the law! Rappler knows better … on the other hand … maybe not. Or, they know but wanted easy way out. Remember and always be reminded Rappler is run by Filipinos.
Very enlightening! Covers grounds related to RAPPLER which is as or far more important. And I agree that the Pandora’s Box be opened to see and investigate other skeletons — not just Rappler’s then quickly close the Box again. The Administration should act fair and square, that is.
If readers can catch the drift in this article, they should watch out for the Restrictive Loan Convenant Clauses in the Chinese loans for the Build Build Build projects.
Aah, yes. Please do not bother me with the Big Fish, when there are small ones to fry. Sorry to bring that topic again, but this brings to mind the treatment of the Drug Addicts versus the Drug Lords.
Aha! Ha! Ha! Mr. herrera if they do selective audit of SALN Duterte can too on Rappler. Rappler knows that. Erap once said “weder-weder lang yan”. “Its depends”.
Erap is right. It depends on which side of the fence they are in. Philippine Media slip are showing. They are biased and selective. The table has turned against them.
Once again, thank you. You are able to make sense of an otherwise complicated issue, rendered even more complex by the flood of blogs claiming to explain but really only defending one position or another. I agree with all the points you raised, except possibly one: your thought on having the military in Marawi. I figure it does not matter where the military is. Given how much care the President has bestowed on the armed forces, I think they would support him no matter what. And this is scary.
Thank you Themistocles for visiting. If we are reasonable man, I guess there is congruence of thought.
Yes, indeed, the mood of the military is being watched closely. Whither they stand, that is the question.
I wish they can be like their Malaysian counterparts. The Malaysian PM is fighting for his political life. Corrupt through his ears. Like his father decades ago (who caused terrible racial riots in the country), he is playing the religious and race cards to garner Muslim and Malay support for his weakening party UMNO. This has given rise to the Arabisation of Malaysia, emboldened clerics and other ultras. The link shows how the Malaysian Armed Forces Vets stood up lambasted destabilisers in the country. There is another Vet a retired Major who made a damning attack on the PM, but I can’t locat that article – that one is really good.
http://malaysiandigest.com/features/718023-veterans-come-out-to-set-the-record-straight-that-non-malays-fought-for-malaysia-too.html
PDRs, ADRs and other Debt Instruments are legalized blackmail tools like S.A.N.L. It is not outrageous. It is awesome. I told them about SANL becoming political blackmail tools and they ignored me. They have PDRs, ADRs and other Debt Instruments NOW IT IS MY TURN TO IGNORE THEM.
Sorry, Rappler. You ignore me. I ignore you. Because of their arrogance of ignorance. Goodbye.
out of topic but worth the laughs
HITLER’s SCHOOLS’ ALUMNI ASSOCIATIONS TO GIVE HIM AWARD
Cites example of UST in the Philippines
1:33PM January 22, 2018
BERLIN, Germany – It was announced today by the Alumni Associations of the Volksschule in Fischlham and the Realschule in Steyr, both schools in Germany attended by Adolf P. Hitler that they have decided to award a plaque of recognition to their notorious alumnus .
“We were inspired by the acts of the UST Alumni Association in the Philippines, ” said Volksschule Alumni President Wanker Fuchs. “Their logic was impeccable: being an alumnus and having served in government is enough basis for an award.” “We have set aside history and truth and morals.”
(continued next post)
(continuation)
“Since Adolf is a German and he is an alumnus and served in government as well, we decided to give him an award.” he explained.
Rudolf Von Krap, the Alumni President of Realschule, added: “ The fact that our associations are in dire need of funding and our officers need jobs has nothing to do with this award.”
PS Okay, satire news yan… baka may pumatol na hunghang dyan…yung hindi maka-intindi kung ano ang satire…
http://business.inquirer.net/244546/misconception-on-pdrs lol
Whether or not Rappler’s PDR is in violation of the press foreign ownership law should be a legal question. The Philippines unfortunately now lacks credible,uncompromised, and functioning judicial and regulatory processes and institutions that can fairly, fully and finally resolve the issue without the public or the business community suspecting that any resulting decisions, rulings, or actions are primarily guided by pressure and intimidation from this government. It is no surprise that Rappler and other corporations which are vulnerable on this issue to being closed down because they have incurred the displeasure of the regime are better off claiming political persecution instead of relying on litigation given the toxic environment they operate in.
Give it up Rappler. You lost. Duterte wins. Close shop. Fold down. Resurrect with another name. Simple.
Mocha got the last laugh.
I’m not really that worried about what happened to Rappler. Former presidents, from Marcos to PNoy, attacked news orgs in different levels. I’m more concerned of the other thing:
“This is a Chemrock Theory – concentrate military hardware and personnel in Mindanao, bog down AFP boots in Mindanao and take their eyes off other parts of the country. Result – Military adventurism is unlikely as the pro-Duterte group RAPES the Legislative and the Constitution.”
All caps on “rapes” is mine. I believe that the military leadership is more professional now than many years ago and will stay neutral as long as the 3 branches of govt will remain functioning and independent.
I will need to watch and listen and ponder during the upcoming probe on Bong Go’s alleged involvement with a certain military procurement fiasco before I can honestly proclaim an unshaken belief in PH military leadership. Lorenzana had been straightforward and principled in my assessment till the Bong Go expose’. Something does not feel right and does not make sense in that scenario. I would also like for the probers to look into Go’s SALN. Did the Palace release it yet? According to PRD, he is a billionaire. I am sure a lot of PH citizens are curious about the provenance of his wealth as I am.
http://newsinfo.inquirer.net/915575/saln-of-duterte-cabinet-released-mark-villar-is-lone-billionaire
Sec. Lorenzana is making a calculated move against the Bong Go issue. I still see him as a professional soldier who is more loyal to the Constitution than to his boss when the time comes. He is in politics now so I guess somewhere along the way there will be few compromises just to keep his job AND I want him to keep his job. Billionaire Bong Go will face a senate investigation soon. The people are watching.
I agree with both you – there is more professionalism in AFP, and Juana — the Bongo incident is a cause for concern on Lorenzana’s position.
But I disagree that AFP ‘will stay neutral’. The military must never take any political sides. The military must always be for the Constitution. So far, Lorenzana has not stepped into the fray as far as the meddling of the Constitution is concerned. I’m watching him closely on this one.
One of the worms out of the box is Rappler is just “human” squirming thru legal gobbledygook by CIRCUMVENTING THE LAW !!! Absolutely UNETHICAL !!! Baaad !!!
CAUGHT. CHARGED. GUILTY AS CHARGED !!!
For Rappler to get back their tainted “credibility” must admit-&-confess like most criminals in the Philippines they admit-&-confess.
Next, go to Sunday talk & TV Radio, accuse Duterte Administration for targeting Rappler because of their anti-Duterte views without mentioning Rappler’s unethical practices.
Mentioning “targeting Rappler” means Rappler knew out there who are doing Rappler practices but Rappler not writing about it. Now, that is UNETHICAL non-REPORTING of what they knew when they knew it.
Guilty?
NBI found probable cause, but it is for libel.
http://newsinfo.inquirer.net/962731/nbi-finds-probable-cause-to-sue-rappler
Philippines is really really one big fat joke. The stupidity is simply unbelievable.
Libel is not a crime, it is tort, meaning it is a civil case.
Keng has every right to sue Rappler if he feels that he has been defamed. But it has nothing to do with NBI. What in the name of GOD should NBI cause an investigation into the matter?
The fact that what Rappler printed is false (I don’t know the case, but it’s immaterial here) is not enough. Keng has to proved he has been ‘injured’ — such as monetary losses, hounded by press, life put in danger, etc.
The punishment for libel is compensation for damages. As far as assessment for damages goes, a shady character is unlikely to get much. I don’t know who is Keng. A person with great reputation can exact his pound of flesh with a hefty compensation.
*******
The big fat joke is obese. Consider:
1. Keng is objecting to a “libelous” report published by Rappler in May 2012.
1.1. The statute of limitations for libel is 1 year, and six months for slander.
2. NBI has classified the “libelous” report as a cybercrime.
2.1. The NBI Cybercrime chief received Keng’s complaint in October 2017.
2.1. The Cybercrime law was passed in September 2012 — 4 months after the “libelous” report was published.
2.2. Criminal laws are not retroactive.
*****
1.1 Is new knowledg to me. Thanks.
2. So NBI like SEC are writing their own laws.
2.2 There was another case where the retroactive doctrine was pushed aside — I can’t quite recall the case. Karl – help.
http://saklawph.com/retroactivity/
The examples are not familiar, I will try again.
But as far as cyber libel is concerned.
In a later text message to reporters, Te clarified that online contents posted prior to the issuance of the SC ruling, including the period of the temporary restraining order (TRO), are not yet covered by the law.
“There was a TRO so it didn’t take effect at that time. There can be no retroactive application of penalties because of the prohibition against ‘ex post facto’ laws,” he said.
*******
Karl, thanks.
The Rappler-Keng case does not fall into any of the exceptions.
Keng’s lawyers are trying to go around the retroactive obstacle by forwarding the theory of “continuous publication” because Rappler is an online medium.
If this theory is given credence, it will be dangerous because media archives can be digitized and made available on the Internet.
I agree with Te.
*****
Ridiculous. Back editions of newspapers are available in libraries. But the method is consistent with the other persecutions, like the Sereno impeachment. Make stuff up and get a house panel or judge to agree to it.
Yes that would be opening the Pandora’s box.
Btw the link with SC spokesperson Te quotes can be found below.
http://www.gmanetwork.com/news/scitech/technology/348945/internet-libel-in-cybercrime-law-constitutional-sc/story/
This is not about retroactivity, it’s about (a) single-publication rule or (b) continuous-publication rule. It will be interesting to see where Philippines will stand on this. But unfortunately, an objective determination is unlikely in a judiciary gone to the dogs.
(b) is from British courts. It has not addressed changes in information distribution in the new digital world. Continuous refers to the state where each time someone reprints, copy, cut and past, clicks onto an old web news, it is reprinted. So something that some published in 2001 which was non libelious at the time, can suddenly be libelious in 2018.
(a) is from US courts. Single means the first time the article is posted, that’s it. Its considered published that one time. Many US states that this stand. ts a way to protect publishes of contents in the digital world.
Weder weder will Philippines go?
The NBI is like saying that Keng read it way after the law was passed.
Theories needs to be proven, it is vert easy to say that Keng never reas that report.
All I get are wild guesses.
“Philippine Internet Freedom Alliance said that “all criminal laws are not allowed to retroact.”
Eduarte disputed this, saying that due to the theory of continuous publication, it can be assumed that Keng only saw the article after the enactment of the law.
“Even if it was posted in 2012, it can still be seen at the time they filed a complaint, or at the time the law was passed, so our presumption as far as our investigation is concerned, they still violated the cybercrime law,” Eduarte said in Filipino.
Tonson for his part, said, “That’s one grey area that shall be decided by the court.”
The May 2012 Rappler article included Keng’s side of the story.
“In a Monday, May 28 phone interview with Keng, who said he was in China, the businessman admitted owning a suburban with plate number ZWK 111. He insisted, contrary to LTO documents, that his vehicle was not the one found to be used by Corona in 2011,” read the report.
The complaint is now at the fact-finding level at the NBI.
Timing
Eduarte said Keng filed the complaint in 2017. The Cybercrime Division received it October the same year.
“What I can surmise is probably he was informed of the possible libelous statements only last October or any period within that,” Eduarte said.”
https://www.rappler.com/nation/194036-nbi-rappler-cyber-libel-retroactive
NBI is telling all web crawlers bits not to crawl the web.
NBI is outlawing internet archiving.
NBI is saying that after a certain period everything must be purged.
Disisalatanansens.
https://www.rappler.com/nation/194345-ressa-santos-cyber-libel-case-endanger-press
Oh, my! My! My! My! If I were 50 years old and a Filipino I would have had heart attack reading Philippine News assuming I know libel is not crime and tort is civil.
“What in the name of GOD should NBI cause an investigation into the matter?” – CHEMROCK
Please excuse NBI attorneys … they have not practiced their law for a very very very long long time. The NBI attorneys-agent are there to type witness accounts, sign, seal and notarize.
As to Philippine media? They do not practice journalism. They parrot NBI not analyze. Philippine journalists function is correct grammars, correct spellings, when to use indefinite articles in a sentence, make sure the verb agrees with the subject and when to use etcetera in a sentence what comments need to be deleted and moderated, who are to be banned and blocked from commenting.
I recommend and I SUGGEST TO THOSE WHO ARE IN-THE-KNOW AND EXTREMELY EDUCATED TO TAKE ONE PILL FOR HEART, ONE PILL FOR HEADACHE, ONE PILL FOR BLOOD PRESSURE BEFORE READING PHILIPPINE NEWSPAPERS if you do not, Philippine Newspapers cannot be sued for readers pre-existing condition.
The trouble with Rappler (and other cases) is the perception of legal insecurity in the Philippines.
The rules are indeed very “weder-weder” and prone to different kinds of interpretations – written in English but interpreted by people whose logic is sometimes far from what the language intended.
Probably Filipinos might have to learn the hard way that NOBODY really NEEDS their country in the worldwide scheme of things (the Chinese need some islands and minerals yes), and can go elsewhere where rules are predictable / less personal – and less of a form of legal kotong / coercion.
Even if I am a gambler (an analogy to different kinds of investors) do I go where I can play and have a chance of winning or losing… or do I go where half of the players are given tips by cameras installed by management and I am not allowed to leave when I have just won?
Or am I even such a sucker to play in a place where I am held up on the way to the toilet, or maybe on the way outside or just outside, by thugs tipped of by management itself.. please.
A casino run by someone like the guy above – yes.. tough but honorable for sure..
A casino run by someone like the guy below?
I would rather play cards with Jabba the Hutt, or give the Ring to Gollum.
The bully Speaker thinks like he is Marlon Brando in The Godfather but talks like Chris Tucker in Rush Hour. He talks tooooo much with nonsense and making threats as a joke. I will avoid his casino or playing with him at all cost.
Sa pagmumukha na lang — says my wife. I do not disagree. Gambling is such a serious business, we cannot leave the management to an unprincipled, brainless whisy-washy man.
It is obvious BELLIGERENCE is in thread-like chain of nucleotides among Filipinos. I suspected it from the beginning. Now I see the mirror has turned towards Rappler and they see Binay Family, Tony Tiu, Renato Corona, Trillanes and those that just do not accept the RULE-OF-LAW.
See, Rule-of-Law depends on whose side they are on. Rappler is belligerent like those that I mentioned, here: https://www.rappler.com/nation/193687-rappler-registration-revoked
either they are ignorant, feign ignorance or just simply cannot accept the fact they circumvented the law. In this link you can find their comments in YouTube video. I see Raissa. I see other zombies and loonies.
It is Rappler and the rest of the Philippine Media’s OPED screaming resign! Resign! Resign to all crooks-in-the-government yet they never did. Now it is time for us to sing a simple tune: GIVE IT UP, RAPPLER! ADMIT IT!
Instead, the Philippine Media and ICJ circled their wagon and scream THIS IS AN ATTACK OF THE FREEDOM OF THE PRESS !!!
Say what, again? THAT THE PHILIPPINE PRESS HAS IMPUNITY?
Wasn’t Rappler, Philippine Press and ICJ screamed about Duterte IMPUNITY? Look who is now?
Oh, poor CD&E. I pity the 55million $2.00/day working class commoners. They are now fooled by A&B living in bedroom and gated communities.
Yes, Virginia, In the U.S. we do have working class neighborhood where people work all day long. And those living in bedroom communities they sleep all night long. And the gated communities? They neither work nor sleep, THEY PARTY ALL DAY LONG these are care-less people. People who just do not care.
Most interesting insight. Thanks.
*******
SECOND ATTEMPT
1. I think it is clear that the SEC undertaking and decision was at the instigation of Duterte. Clearly, the intention is to silence Rappler.
2. The pertinent constitutional provision is found in Article XVI – General Provisions. Section 11 Paragraph 1 states: “The ownership and management of mass media shall be limited to citizens of the Philippines, or to corporations, cooperatives or associations, wholly-owned and managed by such citizens.”
3. It is also clear to me — and I agree with Chemrock — that Rappler is “mass media.”
4. But it is unclear to me whether the issue is “ownership” or “management” or “ownership and management.”
4.1. Chemrock seems to think it is “ownership.” See the “pointers on the SEC report” in the article.
4.2. Mel Sta. Maria thinks it is management. ”Second, a careful examination of the SEC decision shows no categorical statement that there was a direct violation of the “ownership” requirement under the Constitution. However, the reasoning seems to be along the lines of a circumvention of the “management” requirement.”
4.3. Oscar Franklin Tan does not say explicitly. ”Suddenly, the foreigner indirectly votes. This link contradicts the essential separation between company and PDR holder.”
4.4. Raul Palabrica says it is management. ”According to SEC, these provisions show that Omidyar exercises some degree of control in the management of Rappler, and therefore contrary to the constitutional provision that the management of mass media companies should be totally in Filipino hands.”
5. The other pertinent constitutional provision is found in subparagraph 3 of Paragraph 2. It states: “The participation of foreign investors in the governing body of entities in such industry shall be limited to their proportionate share in the capital thereof, and all the executive and managing officers of such entities must be citizens of the Philippines.”
5.1. This subparagraph directly circumvents if not directly contradicts Paragraph 1. I think this contradiction is the original sin. And PDRs were conceived to foster the sin.
5.2. It is unclear what the condition “participation of foreign investors in the governing body of entities shall be limited to their proportionate share in the capital thereof” pertains to. However, from the second part of the provision, it clearly is not the citizenship of “management.” But could it be participation in the governance of management? Or just “profits/losses?”
6. I think the constitutional provisions are badly conceived and badly written.
6.1. It is unfortunate that legal language is ambiguous and does not have the clarity of computer logic. The use of “and/or” seems to be frowned upon in legal jargon.
6.2. Under Boolean logic, “ownership and management” is an AND condition and not an OR condition. This means that “ownership” and “management” are separate conditions and both must be TRUE for the SEC charge to be valid.
*****
Your attempt at Disambiguation is appreciated.
Leaving politics aside, it is a fertile ground for the best legal minds to sort it out. And I do mean someone like Soreno or Carpio, not some dickheads.
1. Agreed.
2. Nobody disagrees with this. Note it says “wholly-owned AND managed”. Definition of management required — board only? or all managerial positions?
3. Yes I did not cover management. There is passive and active ownership. I think in other corporates where 60-40 applies, management is not an issue. But for media, it is critical. I’m not talking of operational or financial management, but the editorial aspects. That is why the issue of PDR in the context of a govt wanting to make sure foreigners do not meddle in local affairs is really stupid. The trolls’ question of CIA is truly stupid. If a foreign entity wants to meddle in Philippines affair and congnisant of the laws, they simply throw a few million bucks to the owners, no need for PDR. Then they control editorial functions discreetly. How you gonna catch Ressa receiving instructions from CIA what to write? You will need a master spy for that.
5. These are passive investors. All foreigners who purchase PSEI equities are such investors. But foreigners who put in such passive investments in private corporations without involvement in executive management — well a fool and his money are soon parted.
No country is ever 100% open economy. Most would want to control certain key industries for security reasons, that’s understandable.
There is no equity in charging someone under an ambiguous framework. Strengthen the legalities, allow Rappler to rectify the post-fact wrongs, and move on. Rappler and the investors need to resolve their problem.
This is precisely the kind of stuff that COUNTRY or POLITICAL risks are all about to foreign investors. The want clear good laws, fair and objective judiciary, business friendly govt. If Omidyar Network comes out burnt, Philippines’ business risk goes up the index chart. Foreign loans cost more in future.
The AND in Boolean Logic edgar wrote about:
– Peter kills John, no premeditation — not a First Degree Murder
– Peter does not kill John, but with premeditation shove John to the swimming pool in a Pool Party — not a First Degree Murder (Peter may be a kill-joy of the party)
However, if Peter kills John and with premeditation then Peter commits First Degree Murder.
*******
SECOND ATTEMPT
There is no need to read this. I just want to record my thoughts.
1. The Raul Pabrica op-ed quotes the restrictive clause of the Omidyar PDR agreement:
“12.2 The Issuer undertakes to cause the Company from the date hereof and while the ON PDRs [Omidyar PDRs] are outstanding: x x x
“1.2.2.2 not to, without prior good faith discussion with ON PDR Holders and without the approval of the PDR Holders holding at least two thirds (2/3s) of all issued and outstanding PDRs, alter, modify or otherwise change the Company Articles of Incorporation or By-Laws or take any other action where such alteration, modification, change or action will prejudice the rights in relation to the ON PDRs;”
2. As Chemrock notes, the clause “requires shareholders to obtain the approval of investors for any changes in Rappler’s Articles of Association and by-laws.”
2.1. As PDRs do not grant ownership, the clause may be said to grant Omidyar “veto power” over any proposed change. If this is correct, then the issue is about “management” and not “ownership.”
2.2. In effect, the PDR gives Omidyar, not control of management, but an indirect voice – or “indirect vote,” to use Oscar Tan’s term — in management. Not the “citizenship” of management, not the (daily) “operations” of management, but the “governance” of management as it pertains to the articles and by-laws of incorporation.
2.3. Therefore, Duterte is wrong in claiming that Rappler is “fully owned by Americans.”
2.4. Furthermore, SEC is wrong in claiming the clause allows foreigners to control the company. According to one legal definition, the power of control involves (a) direction, (b) management, and (c) oversight and/or restriction over the affairs of a business. Omidyar’s power is confined to restriction – the power to approve or disapprove proposed changes (in the specified areas) coming from Rappler.
2.4.1. I will grant that Rappler made an error in granting the power of restriction.
2.5. Lastly, SEC cannot maintain they have the authority to define “ownership.” There must be a legal definition of ownership. And by definition, PDRs do not grant ownership.
*****
In “normal” times i.e. a reasonable leadership, it would have been right to put Rappler under scrutiny and let itself have the right to defend itself. But the timing, of course, is rattling, what with a lot of machinations and chicanery involved in this otherwise self-serving government of fire and steel, and cloaks and daggers, where online demagogues are competing for the attention of the Old Man President.
Rightly said. One short paragraph to frame my long article.
When the dust settles over Rapplers shuttered remains, whether or not its closure by the SEC was Duterte motivated or not becomes a moot point. That it is just another and the latest EJK perpetrated not by the PNP, not by Duterte’s minions in congress with de Lima and soon Sereno as their victims, and the only interesting aspect with Rappler is the legal possibility that it might be self-inflicted and the SEC may have a case for its closure ruling. I happen to disagree with the latter as the use of depositary receipts is a well established internationally accepted practice where foreign ownership and management is not permitted by host countries. But then again we are talking about the new Philippines where extralegal processes and presidential preferences trump the rule of law and its equal application. At the end of the day, one of the few remaining sources of independent and credible news reporting will have been silenced and the last obstacles to establishing legal dictatorship will gave been eliminated or intimidated. This monumental fact may be lost to those who quibble that Rappller may have cut legal corners in relying on established depository receipt financing and its legal counsel to stay within the law. When the country’s legal and judicial is coming apart, it seems to me this concern, and other worries about how the SEC ruling will unleash legal chaos in how businesses are conducted, are totally misplaced.
Your last sentence is a truism.
When the dust is settled, Rappler is bound to close. Who can go against the will of the dark lord.
After Rappler the questions is WHO’S NEXT?
My bet is VERA FILES.
Pinoy Ako Blog. Vera Files. Raissa Robles. Not sequentially. Efforts to suppress or demean are underway on all three.
“VERA Files is a nonstock, nonprofit independent media organization registered with the Securities and Exchange Commission (Company Registration No. CN200808072). Founded in March 2008, it is published by veteran Filipino journalists taking a deeper look into current Philippine issues. Vera is Latin for “true.” ”
Here: http://verafiles.org/about
Don’t think so. VERA Files true to their name is upfront than sneaky Rappler. Again, nobody heard of VERA Files. I just heard of it just now from you and JoeAm. I am now addicted to VERA.
Thank you guys!
Caliphman, “…how the SEC ruling will unleash legal chaos in how businesses are conducted, are totally misplaced”.
ABSOLUTELY, Caliphman! It is totally misplaced! If they think it is misplaced, they should shutter SEC and do away with SALN and COA that audit SALNs.
The Philippine Journalists are just equally corrupt as those corrupt they are covering.
Thanks Chemrock, a well presented, well argued & factual outline of what is going on with Rappler.
The really interesting thing is that the SEC may find it impossible to shutdown any online media company. I’m sure that a backup site elsewhere in the world ( beyond the law of the Philippines ) can be set up.
There would be a certain irony in this as this is what cranky Benigno did with his “Get Real Philippines” did years ago. He started out as an Australian based website. And was also beyond the law of the Philippines.
And of course there is the SC route, which one hopes, needs to make a ruling on this SEC mess before it’s decision can be implemented. Or perhaps that normal usual way of doing things is a bit optimistic ?
If China can block Google from their country Philippines can do so … errr … on the other hand … do Filipinos have know how to block a website coming thru from another country like China did? Blocking Rappler in Philippines beamed from another country would become a fudder for noisy ignorant Philippine Media.
Anyways, who cares? I do not! Filipinos do not read Rappler. They do not even know if it ever existed at all. They wrote articles like Veritas during and after Marcos days more like literary contest they just pulled the plug and disconnected from the EDSA revolutionaries. Eventually, they folded. Packed their bags and left.
Pseudo-journalists and Pekeng-peryodistas lost their connection with the Filipinos. Like what these pekeng-peryodistas alluded that Filipinos are not educated why in the world they write their articles like a thesis? Write it like they are writing for Manny Pacquiao to understand.
Thanks Bill
You are right of course. Rappler in another form can always set up elsewhere unless the country ‘progresses’ to the China level and shut down internet sites altogether. So what is the fuss all about? Except to flex some muscles.
Sabtang’s point is well taken. The intellectual sites, actually I should down play that some notches, those intelligent sites (less in the cloud sounding) are not reaching the lower rungs of society. But Sabtang assumes organisers of such sites are unaware of this fact. Of course they do. They serve a purpose in dishing out different perspective of views than the admin’s to those who wish a better understand. To those that wish to receive nor want to listen to other views or could’nt care less, they can be reached by advocates via other means, whatever they may be.
Thanks, chemp! Another good read.
What I noticed about the Philippines is everyone loves to start their own organization, invariably placing themselves as CEO or Chairmen of the Board (or board members). Too many chiefs not enough indians kinda deal. Nothing wrong with that per se I suppose, but connected to your article, when these fly-by-night, drunken organization ideas, do actually get formed , they get “officialized” via some SEC documentation, which then gets framed on the wall, and shown to every non-Filipino visitor as some sort of “official” blessing by the gov’t and/or the powers that be over there.
Just my personal experience with the SEC over there, now the https://en.wikipedia.org/wiki/U.S._Securities_and_Exchange_Commission over here (totally different), it’s Wall Street, finance, corporate stuff, so drunken organization ideas (excuse to drink with group) don’t usually file SEC status here.
So that’s one issue, but more to the point of your article… Do a lot of Filipinos actually read Rappler? I read it because it’s the only Philippine newspaper i notice that doesn’t freeze my computer (with all sorts of pop-ups and ads, or just generally slow) , and they do seem to write for American audience. Is Rappler being targeted because it’s making the current administration look bad around the world , or because there’s a fear that Rappler may influence the Filipino mind?
I don’t think most or many Filipinos read Rappler, chemp (i could be wrong). So who reads Rappler outside of the Philippines is the question? If the audience is the Filipino diaspora, aren’t they pro-DU30?
As for the logistics of media nowadays, Bill Oz is correct, just base Rappler off shore, get free-lancers (essentially Rappler staff, just w/out the Rappler logos) and they still could report. chemp, I appreciate the whole SEC/PDR component to all this (new wrinkles to the brain), but what is the actual issue vis-a-vis freedom of the press? Either Rappler closes said loop-hole, pays fines… and stays there; or it doesn’t and takes its act off-shore, ala Bill’s idea. But is there a bigger free press issue at play? I get that the press/journalists are under attack over there, but this Rappler case seems to me Rappler specific, am I wrong, chemp?
Lance in the three years I have been learning, watching and reading about the Philippines, Rappler has played the role of ‘witnessing’ & reporting what happens.
It writes in English, not Filipino, and a times a very sophisticated type of English. So that excludes a large percentage of the less educated Filipino population. But iit’s role is not to be the media of choice of that part of the population.
Rather it is one of the media of choice for the mainly tertiary educated people in the Philippines and for people outside the Philippines who want or need to know what’s really honestly going on. That is a very important role indeed.
And the attempt to close Rappler down by the SEC in Manila on behalf of the Dutters mob, is seen for what it really is : an attempted censorship of the information flow just like in all other fascist inclined governments worldwide.
Somebody mentioned the Great Internet Wall of China. Yep, it exists and the Chinese government spends billions of Yuan on employing many many thousands of ‘net censors’. But the idea that the Philippines would waste government revenue o a Filipino lookalike, is absurd & laughable.
And yes the fact that unlike the Enquirer, it does not have the pop ups etc. that slow down computers etc… Is a great bonus…
Agree completely, on all points.
Bill, Joe, et al.
On possible “censorship” angle I agree , Rappler does have an anti-DU30 bent (totally understandable) but why take the scenic route when a gov’t (any gov’t for that matter) can just as easily coop the free press and/or information flow via all sorts of gov’t powers (Great Internet Wall, etc.), for example the American https://en.wikipedia.org/wiki/Office_of_Censorship#Censorship_of_the_atomic_bomb whose most successful coverage (or non coverage depending which side of censorship you view it from 😉 ) was the Manhattan Project.
Government, via state sovereignty whether thru imminent domain or national security (or “offensive” to the state/religion) , democracy or fascist , do have the power to censor (sure, it’s looked down upon even among English speaking nations, but hey we’ve played the censorship game ourselves), my point…
the SEC route to affect censorship on Rappler just seems overly technical, why not use more direct means? but more to my first point above, does the SEC really carry weight in the Philippines, I mean every group/organization over there seems with SEC documentation , is it just a certification mill of sorts?
“the SEC route to affect censorship on Rappler…”
I agree re your last para.
It’s public knowledge Duterte is peeved with ABS-CNN, Inquirer and Rappler — the 3 media that’s been hitting him hard. The reality is these media is merely dishing out Truths – of course I agree with Sabtang they are not all angels, there may be agendas. But hey, I’m pro-truth and pro anyone who is in the front line pushing out forces of thuggery and democracy killers. Duterte is taking every thing personal and he is V for vendatta kinda guy. ABS-CNN gripe is actually personnal.
I wrote long ago about Little Duterte’s. Notice how many Little Dutertes there are now? Each one trying to outdoor their lordship to show their capabilities. They second guess their boss’s steps and act. This Rappler move was the Solgen’s initiative. He has scored lots of brownie points from the boss for this one.
Another recent case. That Matin Dino character, sacked from his post in Subic Bay Metropolitan Authority and re-instated as Asec in DILG. And his first initiative? Actually it’s a copy-cat initiative. He implemented round 2 of the Register your neighbourhood drug user policy. Btw, this character was the one who stood down his candidature that allowed Duterte to replace him at the last moment to run in the 2016 election as a substitute. Been gnawning in my brain all this while — how can a candidate for a mayor by replaced by a candidate for president? I read Comelec regulations do not permit this, but how was it he got away with it without protests?
Lance
On the trivia — too many heads, certificates on walls. Like fish in water Filipinos, but foreigners see it all to clearly. This goes back to what I said, Filipinos go for form over substance. And oh, those certs on wall — walk into 711 or Minishop etc and you see all those certs like licence plates hanging on walls. Funny to us but we can’t criticicise, that’s the way it is there. In Singapore there is only one requirement to display something in public lobbies — banks need to display their financial statements for all to see. Even that, one can argue who really reads the fine print, but the idea behind it is display integrity.
The SEC handles 2 levels of functions — (1) the mundane corporate registration and governance matters, (2) real hardcore high level jobs in overseeing the securities industry. In most countries these 2 functions are split into 2 agencies.
Who reads Rappler — point also per Sabtang. Totally agree. My view as indicated in reply to Bill above. Also on offshore-based Rappler.
Lance I did’t deal with the bigger issue of Freedom of speech. That’s for some other smarter guys here to pen.
Looks like Rappler just needs to hire the best Filipino law firm over there. But this censorship issue is what interests me, chemp. Granted states have the power to censor (by definition, the power to protect the majority). But with the advent of social media the notion of “free press” is now more than ever before, FREE.
I’m reading this right now,
http://www.benmezrich.com/books/the-37th-parallel/
About a guy from California who moves to Colorado, with a good job and family (and kids) , just to follow the UFO reportings (from cattle mutilations to actual flying objects to close encounters), my point…
it doesn’t have to be about UFOs , just have the passion to chase down a lead or a story and compile it, report on it, etc. Joe, any chance you could do a WHAT IF… all press in the Philippines were censored (and/or coopted) , what can the regular Filipino do using Twitter, fb, blogging, etc. to chase down stories and report ’em.
At the heart of the book above (about Chuck Zukowski) is his penchant for skepticism, no faith in the gov’t nor in main stream media, that i think is the essence between the relationship of Americans & their media/ Filipinos & their media— healthy skepticism. So a blog about healthy skepticism with post-old style media converting to citizen reporting.
IMHO that would be the best follow up to this article.
Yes.