AS the Securities and Exchange Commission (SEC) revokes the Certificate of Incorporation of Rappler, Inc., the corporation behind the online news organization Rappler, people from both the media industry and government sector, especially from the opposition side cried foul and claiming for alleged suppression of press freedom. There are groups who called for support for Rappler and issuing statements that they are in solidarity with Rappler for whatever it is fighting for now. But not all media workers and even common tao think the way Rappler’s supporters do.
The issue here is plain and simple. The SEC ruled that Rappler, Inc. violates the 1987 Constitution. The state regulator said the social media news network has engaged in “deceptive scheme” to skirt foreign equity restrictions in mass media.
The provision of Section 11 (par.1), Article XVI of the 1987 Constitution is very clear:
“SECTION 11. (1) 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.”
Dean Cesar L. Villanueva in his book Philippine Corporate Law writes: “Although the constitutional provision governing mass media does not expressly include the place of incorporation test, the same shall be deemed included under the same principle governing exploitation of natural resources. In fact, the ancillary control test for mass media under the Constitution is actually more stringent than in other defined areas, since it requires not only 100% Filipino ownership of the capital stock of the corporation, but also 100%-Filipino management of the entity.”
Meaning, anything less than 100% Filipino ownership or control is a violation. Conversely, anything more than exactly Zero% foreign ownership or control is also a violation.
In an interview with Rissa Hontiveros, Rappler CEO Maria Ressa said they don’t violate the law.
Per record, Rappler Holdings own 98.84% of Rappler Inc. In year 2015, foreign businessman Pierre Omidyar through his company Omidyar Network invests in Rappler by buying Philippine Depositary Receipts (PRDs). In layman’s term, it is like a patient that was infused of a foreign blood, making the blood that flows through the patient’s vein as not 100% Filipino blood, but with a mixture of Filipino and foreign blood.
Rappler keeps on denying that it violates the law. Ressa said that the shares for the PDRs are not owned by them; that Omidyar, the investor, gets nothing from the company. Take note that Rappler is a regular business, a stock corporation and so also Omidyar. Even an ordinary citizen would hardly believe that an investor will get nothing out of his investment in a profiting company.
Also in 2015, Rappler published in its news site that “Rappler is the first and only media startup in the Philippines to join broadcasting network giants ABS-CBN and GMA in offering Philippine Depositary Receipts or PDRs to international investors. 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.”
But Rappler’s case is not in equal footing as ABS-CBN and GMA. The two broadcasts networks are publicly listed companies where their stocks are traded in the Philippine Stocks Exchange. SEC chairperson Teresita Herbosa said that there’s no need now to review the PDRs issued by both ABS-CBN and GMA as theirs are being offered to the public the companies being publicly listed. Said PDRs have already been submitted for SEC’s evaluation prior to being acquired by the third parties because they were being offered for sale to the public. Rappler did not submit theirs to SEC. They only submitted a notice of exemption, SEC said.
The typical PDR is a security that grants the holder the right to the delivery or sale of the underlying shares of stock, and is usually not an evidence of ownership of a corporation.
According to the Philippine Stock Exchange (PSE), PDRs listed and traded in the exchange are not considered as “evidence or statements nor certificates of ownership of a corporation”.
But as SEC investigators found out, the PDRs issued by Rappler Holdings to Omidyar imposes conditions on the part of the company (Rappler, Inc.) making it so obvious that Omidyar do not just invest in the company thru its PDRs issued by the Rappler, Inc.’s holding company (RHC), but for the Omidyar to have control over the company.
Now, where does freedom ends…? It ends when you violate the constitution that guarantees the freedom of the press and of expression. It is so easy to claim that press freedom is being curtailed, that there is a grave threat to press freedom.. that Rappler is being attacked because of its negative releases against the current administration.
Rappler also cries for due process. But Rappler remains online and it is business as usual. They were given time to respond to the investigation that in one instance, Ressa even askd the Commision an extended time to file their reply to the Show Cause Order issued to them; and they have given enough time to answer the inquiry. Is that not part of due process? They are now given 15 days to appeal the SEC resolution to the Court of Appeals. Legal remedies are still available.
Their reporters are still covering even the Malacañang events. Their releases are still being published in their website. So where is curtailment of press freedom there?
So, it is quite simple. The issue here is not the exercise of press freedom, it’s purely on the business side of Rappler. The corporate structure must conform to the state regulations. The SEC resolution has nothing to do with Rappler’s journalistic practice whatsoever.
Ethical and responsible journalism are not confined only to getting the comments of both sides of the stories. Being responsible transcends to keeping your business legal and upright. Transparency must be realized not only to the public sector and other news subjects. Calls for transparency include all stakeholders, including ourselves. Let’s fact check our own yard first before fact checking others.|
The Online Edition of Pahayagang BALIKAS 