February 25, 2018, 12:46 am
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Spawning the specter of censorship

In arguing the case of an online news site whose parent holding company’s registration has been recently revoked by the Securities and Exchange Commission (SEC) on the basis of constitutional violations, many of those who’ve hopped on and ridden on the bandwagon have been evoking fears of widespread media control and censorship. 

Such defensive tack, led no less by principals in the controversy, is understandable and should indeed be applied whenever the Fourth Estate is attacked or threatened. As we surrender to creeping authoritarianism, where the democratic branches of our government either lie fallen or, like rotten sap, solidified as rubber-stamps, or perhaps, are facing serious challenges to their independence, private institutions that remain and protect our diminishing democracy are becoming more and more important as official government agencies fail.

Whether these private institutions have for the most part been politically partisan and biased is not half as important as their role in a threatened democracy where debate and critical thinking might be the final bastions of democratic principles gasping their last breath. In a democracy, it is both the debate and the discourse that are important. 

Rubber-stamp congresses and a rubber-stamp media exist and might indeed dominate and rule over a subservient constituency effectively and efficiently. Dictatorships continue to exist all over the globe. The world is still full of despots in one form or another.

That said, allow us to revisit the SEC decision in revoking the registration of a holding company that has been an investment vehicle for an online news site. The SEC’s decision is founded on a strict constitutional provision that remains unchallenged even by the investment holding company and the media organization which is its effective subsidiary. What is curious is how the arguments have leaped over the basic facts and have extrapolated well into prospective nightmares that evoke the worst that the public has experienced under a previous dictatorship that once ruled albeit one that is gradually resurrecting under the Duterte administrations strongman tactics.

While admittedly we also fear that these nightmares have a basis in our current reality, the specific accusations of the SEC and the definitive language of the constitution are likewise part of the reality that cannot be denied or buried by fears.

One of the most prevalent falsehoods that many foreign and some local media outfits have fallen for mostly due to fears is the issue of media shutdowns.

To this day, no medium has been shut down. No print, broadcast or cyberspace portal has been silenced.  Criticism of the Duterte administration continues unmitigated and Philippine media remains one of the planet’s most hyperactive and hyper-critical. 

Still so much falsehoods and bias abound. There is another spin in play.

Note the deliberate slant towards questions of equity ownership in the controversy as opposed to the dual constitutional requisites of 100 percent equity ownership on one end and 100 percent management control on the other end that has been the substance of the defensive tack taken against the SEC decision deliberately blindsiding a gullible audience.

Supreme Court jurisprudence established after extended debates on the foreign ownership and management control requirements on media, advertising and telecommunications companies had posited a qualitative difference between ownership, which is determined through a simple qualitative measure like the number of shares, and management control, which is measured both quantitatively and qualitatively through voting rights, approval powers and independence as well as subservience impositions with side-letter agreements, creditor-debtor relationships and, contract-annotated degrees of independence and autonomy.

The difference becomes critical where media, in seeking funding outside the traditional debt and equity boilerplates, resort to tapping foreign funds while still maintaining compliance with the Constitution. 

In the watershed Philippine Long Distance and Telephone Company (PLDT) case, jurisprudence shows that the intent of the law holds management control as paramount. In the current controversy the very existence of a side-letter agreement mandating depository receipt holder approvals dilutes the 100 percent management control requirement of the Constitution.

Through depository receipts holding companies may indeed maintain full Filipino ownership but when the company at the moment of its incorporation surrenders to a contract that waters down the more critical 100 percent management control requirement, this substantially weakens 100 percent absolute ownership rights.

Belatedly waiving approval rights by the depository receipt holder cannot be considered a cure because the depository receipt holder should not even have the right to waive a power illegally granted in the first place. An entity cannot waive an illegally granted power.

While press freedom is a paramount value in a democracy, more so is the Constitution, and above both, the most important is the truth. Not just a half truth like the focus on equity requisites within a medium’s capital structure, but also the other half which mandates total 100 percent management control whether at question are incorporator’s limits or the clerical approvals for a box of paper clips.
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