Dominguez: Rappler case not about press freedom

DAVAO CITY  , Philippines  —  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, according to Finance Secretary Carlos Dominguez III.

“(Rappler people) were the ones who violated the rights of the Filipinos to be protected from foreign media,” Dominguez said during the annual homecoming of the Ateneo de Davao University High School Class of 1961 the other night at the Marco Polo Hotel.

Barely two weeks ago, the Securities and Exchange Commission (SEC) revoked Rappler’s license to do business, a decision that covers both the parent company Rappler Holdings Corp. and Rappler Inc., the media entity itself.

In canceling Rappler’s registration through a 29-page decision dated Jan. 11, the SEC said the company used “deception” to circumvent the constitutional provision mandating 100-percent Filipino ownership of mass media, by accepting over $1 million (around P50 million) from a foreign investor in Philippine depository receipts (PDRs).

Foreign entities are allowed to buy into private corporations for financial returns, without exercising any control in the company through PDRs as financial instruments.

Dominguez said the law mandating 100-percent Filipino ownership of mass media is meant to protect Filipinos from the influence of foreign media.

“Why did the framers put that in the Constitution? That is to protect the Filipinos,” Dominguez emphasized.

The SEC also referred to the Department of Justice for appropriate action after it canceled Rapper’s certificate of incorporation.

The SEC ruling was signed by chairperson Teresita Herbosa, commissioners Antonieta Ibe, Ephyro Luis Amatong and Emilio Aquino while the fourth commissioner, Blas James Viterbo, did not take part in the final decision.

The SEC stressed that Rappler was liable for violating SEC rules by engaging in a fraudulent transaction and circumventing constitutional restrictions on foreign ownership.

The SEC accused Rappler of having “intentionally created an elaborate scheme” to justify the receipt of over $1 million from foreign investor Omidyar Network (ON) which is owned by eBay founder Pierre Omidyar.

The SEC alleged that Rappler is a “mass media entity that sold control to foreigners,” and it undertook a “deceptive scheme to circumvent the Constitution” – and it did so even if the Constitution prohibits foreign ownership in Philippine media institutions.

Meanwhile, Rappler claimed it is owned and managed by Filipinos who founded the news website in 2012, led by journalist Maria Ressa.

Rappler has said it would question the decision of the SEC before the Supreme Court.

SEC ready to defend decision

The SEC, however, said it is ready to defend in court its decision against Rappler, believing it can easily thwart whatever legal argument to be raised by Rappler’s lawyers.

In an interview Friday night on the sidelines of the Annual Reception for the Banking Community at the Bangko Sentral ng Pilipinas, SEC chair Herbosa said the law is very clear.

“The answers are all found in the decision… Just focus on the provision which requires prior approval of Omidyar on practically all major corporate actions,” Herbosa said.

Rappler legal counsel Francis Lim, a known corporate lawyer, however, said that if there was indeed a violation, Rappler was not given time to cure it.

“The penalty is too severe,” he said.

But SEC lawyers said the penalty of cancelation of license is what was stated in Presidential Decree 1018 or the Mass Media Law.

The SEC said Rappler violated the Constitution because where mass media is concerned, no control whatsoever may be granted to foreign investors.

“One hundred-percent Filipino control means zero foreign control. Control is any influence over corporate policy and not limited to ownership of stock,” the SEC said.

But in its explanation to the SEC, Rappler said all its stockholders are Filipinos and that any economic benefits derived by foreign holders from the Omidyar PDRs are mere “distributions” and not strictly “dividends.”

The SEC did not accept Rappler’s defense because of the clause that specifies the need to get approval of at least two-thirds of PDR holders.

“It does not matter what capacity or device gives the foreigner control as stockholder or holder or otherwise; there must be none. It does not matter if control is only available in certain occasions; there must be no occasion,” the SEC said.

Rappler, which has published articles critical of the Duterte administration, argued that the whole investigation on the company is a blatant attack on press freedom.

Herbosa, an appointee of former president Benigno Aquino III and whose term ends in March, denied this, saying that the SEC merely fulfilled its job as corporate regulator.

Corporate issue vs press freedom

For Sen. Panfilo Lacson, the legal woes of Rappler and the issue of press freedom must be clearly distinguished from each other for the public’s appreciation of the case.

Lacson yesterday said he prefers to wait for the final ruling of the SEC or the Court of Appeals, if the Rappler case reaches the courts, before making any definitive judgment on the matter.

“One issue is on corporation law — that’s legal. The other issue is whether (Rappler’s) freedom of the press is impinged? Those should be separate,” Lacson told radio station dzBB.

The senator believes the SEC would not order the revocation of the registration of Rappler, perceived to be critical of the Duterte administration, over its alleged partial foreign ownership without any basis.

He, however, maintained he has yet to fully study the arguments and documents presented by both the SEC and the online news outfit on the matter.

“Does the SEC have basis (in its order)? If none, and (Rappler is closed down) because (it is) critical of the administration, that’s really bad… But if there’s basis under the Corporation Code or the Constitution, then that must be resolved and not mixed with the issue of freedom of the press,” Lacson said.

Senate President Pro Tempore Ralph Recto had earlier said “a noisy press is the soundtrack of democracy.”

He said that for democracy to thrive, a free and untrammelled press is essential and to put a muzzle on independent reporting is to limit the exchange of ideas essential to good governance.

“Citizens, whether they blog to their community or broadcast to the country, should not be deprived of this most cherished of rights that our heroes fought for so that we, their descendants, may enjoy it,” Recto said.

“We need an uncowed media to tell truth to power, to hold rulers accountable, to right the wrongs, to ask the important questions, to improve policy, ‘to comfort the afflicted, and afflict the comfortable’,” he said.

The senator warned that freedom of the press is wasted if solely used to praise.

“For government officials, dealing with the press is an occupational hazard. But better a pesky, cantankerous, annoying press than one that is silenced,” Recto said. – With Iris Gonzales, Paolo Romero