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One Hundred Ways to Skin a Cat

There’s this hallowed chestnut in law which says that “what cannot be done directly cannot be done indirectly.”  (It sounds more impressive in Latin, I can assure you, but we won’t get into that.)  It’s an all-purpose phrase which guards against plots to circumvent prohibitions in law.  Now let’s put that chestnut to work.

Article XVI, section 11 of the Constitution says:  “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.”  The Framers put the provision there to prevent foreigners from using mass media to influence and manipulate public opinion.  The terms are absolute:  Philippine mass media must be 100 per cent Filipino-owned and managed.  This is one of the more innocuous provisions of the Constitution, I think, but as one of the so-called “economic” provisions, it was included in the hit list of those pushing for Charter change as needing to be done away with altogether.  So far, all attempts to re-write the Constitution have failed, so while section 11 remains intact, the government has found it a most useful tool to menace freedom of the press.

It’s all over the news, ironically.  The Securities and Exchange Commission revoked last January 11 the certificate of registration of Rappler, the online news service that has become the go-to site for Filipinos who want straight, impartial and accurate reporting.  This makes Rappler the enemy of many, but because of the Bill of Rights, which says that no law shall be passed abridging the freedom of the press, Rappler, along with broadsheets and broadcast news, was untouchable.  Not that the Bill of Rights stopped people from trying to anyway, and just because something is untouchable doesn’t foreclose flinging knives at its back.

Rappler, like most mass media, is organized as a corporation under the name Rappler Inc.  Because of the constitutional prohibition, it is 100 per cent Filipino-owned and managed.  An entity named Rappler Holdings Corporation owns 98.84 of Rappler, Inc.  Both Rapplers had directors and officers in common, operate from the same office and are represented by their President-in-common, the embattled Maria Ressa.  At some point in its life, apparently, Rappler Inc. needed an infusion of cash and so it looked for investors, including foreign ones.  But because of the constitutional prohibition, Rappler Inc. could not outright sell shares to foreigners, so Rappler Holdings was formed, to which majority of Rappler Inc. was sold, who in turn issued what are called “Philippine Depositary Receipts” (PDRs)—basically securities—and sold to investors, including Omidyar Network, a limited-liability company registered in Delaware. So far, so good.  Rappler’s problems began because Rappler Holdings’ agreement with Omidyar contained an unusual clause which essentially said that Rappler cannot alter, modify or change its articles of incorporation or by-laws or perform any act which would prejudice the rights of Omidyar, without discussing it first with Omidyar and obtaining approval of 2/3 of PDR holders.  This special arrangement, the SEC found, was tantamount to Rappler ceding control to Omidyar, in violation of the Constitution and anti-dummy and securities laws.

On paper, the revocation of Rappler’s certificate of registration appears to be no more than the enforcement of relevant laws.  You violate a law, you face the consequences. To a reasonable person, that might sound fair and aboveboard, and legally it is.  However.  Rappler is not one of your cookie-cutter corporations—it is a major news company that has been publishing stories that do not cast the Duterte administration in a flattering light.  The President himself has been critical of the company; his problem was that he could not directly go after Rappler or any news organization for that matter.

The Bill of Rights guarantee of press freedom has four aspects:  freedom from prior restraint; freedom from subsequent punishment; freedom of access to information; and freedom of dissemination.  Government cannot enact or enforce laws that contravene these without running afoul of the Constitution; certainly, the Duterte government knew better than that and so it set about discovering Rappler’s weak spot, and it found one in Rappler’s corporate structure.  Very slick, if I may say so myself.  Yet it hasn’t been lost on the observant that the investigation into Rappler as a juridical—as opposed to a news entity—person was initiated by a letter from the Office of the Solicitor General, who would cite its supposed duty to protect the Constitution to shield it from accusations that it and the SEC were motivated politically in revoking Rappler’s registration.

People should be made to see that what happened to Rappler is not simply the enforcement of foreign equity restrictions and corporate laws.  It is something more sinister.  Consider news broadcasts.  These have home TV stations organized as corporate entities not unlike Rappler, but unlike online sources like Rappler, they require a franchise which only Congress can give.  Congress can simply revoke or refuse to renew a franchise and the TV station—and broadcast news—will vanish into the ether.  Imagine the leverage that gives.

What cannot be done directly can, after all, be done indirectly. G

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