Why did the SEC revoke Rappler's registration?

Why did the SEC revoke Rappler’s registration?

The SEC revoked the registration of Rappler as a Philippine corporation because it disobeyed the rules on foreign participation in media companies.

This is a summary of the SEC case. I’ll write another article with my opinion later.

Summary

Under the 1987 Constitution and several Philippine laws, a media company must be owned and controlled 100% by Filipinos. If a media company gave foreigners control of more than 0% of the company, then the media company violates the law on control restrictions. This was what happened to Rappler.

Rappler’s Board of Directors and shareholders are 100% Filipino.

In 2013 and 2014, Rappler got commitments from foreign investors. In December 2014, Rappler needed to legalize the receipt of foreign money. But it could not issue shares of stock or seats at its board. It spun off a new corporation called Rappler Holdings for the purpose of issuing Philippine Depositary Receipts (PDRs). The PDRs are derivative instruments that derive their value from equity.

Rappler Holdings bought the shares of Rappler in 2015 and then issued PDRs to North Base Madia and Omidyar Network.

There is nothing wrong with issuance of PDRs. And the SEC found nothing wrong with the PDRs issued to North Base Media. The problem lies with the PDRs issued to the Omidyar Network, or what Rappler called the “ON PDRs.”

The ON PDRs had provisions that granted a measure of control over BOTH Rappler Holdings and Rappler Inc.  The provisions included a condition that Rappler and Rappler Holdings cannot alter, modify, or change their Articles of Incorporation and Corporate By-Laws without discussion with ON PDR holders, AND obtaining the approval of at least two-thirds of all issued PDRs.

Philippine foreign equity restrictions require that Filipino control should be 100%. If foreigner get greater than 0% control over the company, then there is a violation of Philippine law on ownership and control of a media corporation.

With the provisions on the ON PDR’s, there was definitely more than 0% control of foreigners. This is a violation of Philippine law on media companies.

As stated by the SEC,

“It is neither 100% control by the Filipino stockholders, nor is it 0% control  by the foreigner PDR holders.”

The SEC said that control isn’t just about ownership of stock. The Securities Regulation Code (SRC) has a very broad definition of control which goes beyond ownership of shares. In the case of PDRs, they are derivative instruments covered by the SRC, so the law’s provisions govern any transaction in connection to PDRs. And the SEC found that Rappler has control issues.

The SEC said that it does not matter when the foreigner exercises  control, or in what instances the foreigner would step in. What matters is that there be none.

“It does not matter if control is available only in certain occasions; there must be no occasion.”

Rappler’s defense

Rappler defended itself, saying that that the PDR provisions are not enough to be considered as “control” of the corporation. Also, it said that “control” is actually defined as ownership of shares, not simply management control. On this, the SEC declared that ANY control is “control.”

One of Rappler’s defenses is that it is not a media company. It stated that what it does is not part of mass media. The SEC threw this defense out the door. In the first place, what it does has been considered by legislators as part of mass media since the tobacco law was passed in 2003. In the second and third place, Rappler had been outing itself publicly as a mass media firm in legal terms and in its press releases.

Rappler also submitted in December 22, 2017 a piece of paper saying that the holders of the PDR are waiving their rights to the control provision of the PDR. The piece of paper was ignored because it was not even authenticated.

What the SEC did

In the end, there was enough basis for the SEC to conclude that Rappler issued the PDRs to illegally skirt the strict ownership and control requirements of Philippine law.  Because of this, the ON PDRs were declared void and Rappler’s Certificate of Registration with the SEC was revoked.

Note that PDRs are not evidence of foreign ownership. It is the contractual provisions in the PDR that will determine foreign control and/or ownership. In Rappler’s case, the PDRs granted its investors some control.

Our law prohibits ANY control.

And that was why Rappler’s registration was revoked.

For the text of the SEC Rappler decision, click HERE.

The Philippine Government and Facebook to create the Luzon Bypass Infrastructure

The Philippine government partnered with Facebook to build a new Internet infrastructure project. The Department of Information and Communications Technology (DICT) , the Bases Conversion and Development Authority (BCDA), and Facebook launched a project called the Luzon Bypass Infrastructure. It is essentially a landing party agreement.

Together, they will build a high-speed broadband infrastructure to boost the speed, affordability, and accessibility of broadband Internet in the country. It should be online by the end of 2019.  The planned Luzon Bypass Infrastructure will have ‘a spectrum equivalent to at least two million Mbps.’

This alone is near the combined capacity of Globe and PLDT (around 2.3 million Mbps).

They call it the Strategic Engagement and Collaboration to Undertake a Reliable and Efficient Government Internet, or in short, SECURE GovNet. It took about a year of negotiations, but the agreement has been signed, and is now in the works.

What is the project exactly?

Facebook will build a submarine cable system connecting the USA and Asia to the Philippines. It will construct a submarine cable system that connects to a cable station on the east coast of Luzon (in Baler, Aurora). Facebook will also construct another cable system from the Asian continent to a cable station on Luzon west coast (at Poro Point, La Union).

The government shall construct the Luzon Bypass Infrastructure, which  will connect both cable stations to each other. The BCDA will construct the 250-kilometer terrestrial cable network. The DICT will build the government Internet connections and manage it. The plan is to build a broadband system for use in public areas with speeds at up to 100Mbps (free public wifi program) and develop the government’s other connectivity programs.

The land-based bypass infrastructure will allow Facebook to connect the USA with Asia without having to construct cables in the typhoon and earthquake-prone Luzon Strait (the body of water between the Philippines and China).

BCDA will build the Luzon Bypass Infrastructure to connect the Baler and Poro Point cable stations

What’s in it for Facebook and the Philippines?

A lot. This is a HUGE project, and it will be the most direct information highway from the US to Asia. It will skip large distances and middlemen. In terms of costs, this would save Facebook from payment of so many charges.

It is also a safer route. The Luzon Strait is notorious for multiple submarine cable breakdowns. Immediate repairs can be hard or expensive because of the harsh seas and typhoons that would affect the area. By going through a land route through Luzon, the dangers of the Luzon Strait are avoided. This arrangement also gives Facebook greater security in the event that China decides to rock the status quo and disrupt navigation in the South China/West Philippine Sea. Facebook would not be afraid of being cut off because its cable system would bypass the Luzon Strait (which would be where a blockade would be made).

In return for being allowed to use the Luzon Bypass, Facebook will reserve at least 2 million Mbps for Philippine use. That’s 2 terabytes per second (note that the COMBINED capacity of Globe and PLDT is 2.3 terabytes). The Luzon Bypass Infrastructure will connect to other government IT infrastructure.

There is sure to also be an ex-deal here where Facebook would be made available free for use. A huge third world population like the Philippines getting free Facebook access would mean a lot of advertising revenue for Facebook. The benefit it gets for its partnership with the Philippine government will be lucrative in the long run.

Is the arrangement unfair or one-sided?

Free or inexpensive high-speed Internet will benefit all of us. It will allow us to connect faster and will help the economy. The Land Bypass Infrastructure will benefits both parties. The Philippines has one of the slowest and most expensive Internet markets in the world. This will improve Internet speed and increase availability throughout the country. It will support government programs to deliver free Wifi in public places and improve online government services. It will pressure companies to provide better Internet speeds and availability to their clients.

The Luzon Bypass will also give an alternative to cable systems that use the Luzon Strait. It can service other companies who may want to connect to the Philippines instead of using the Luzon Strait cable systems.

Facebook is obviously doing this for itself, but the Philippines will definitely benefit from this arrangement. This might spell trouble for other telecommunications companies. They may complain that this project makes the government a competitor in their industry.  It makes one wonder if this was among the reasons why the former head of the DICT recently “resigned.”

You can read the official press release and watch the project launch presentation HERE.

Is stalking or cyber-stalking punishable with imprisonment?

Is stalking or cyber-stalking punishable with imprisonment?

The Anti-Violence Against Women and Children (Anti-VAWC) Act of 2004 punishes stalking with prision mayor (6 years and 1 day, to 12 years imprisonment), with a fine of at least P100,000.00. Cyber-stalking raises this penalty a degree higher – reclusion temporal (12 years and 1 day to 20 years imprisonment).

But the Anti-VAWC Act ONLY punishes stalkers and cyber-stalkers who violate its provisions. The other law that can be used to prosecute stalking is unjust vexation (or cyber-unjust vexation) under the Revised Penal Code. There is no punishment for the usual harmless stalking that most people do using social media sites like Facebook or Instagram. Let me run through the difference.

What is stalking?

Stalking is defined in law this way.

Stalking” refers to an intentional act committed by a person who, knowingly and without lawful justification follows the woman or her child or places the woman or her child under surveillance directly or indirectly or a combination thereof. – Republic Act No. 9262, also known as The Anti-VAWC Act

A person commits stalking by following a woman or child around, or placing them under surveillance. Cyber-stalking is doing the same, either with GPS or by following the posts or pictures of the person.

Stalking is committed only against women and children, and not men.

But doesn’t this describe what potential suitors and admirers do before they court a woman? Does the law discourage courtship? Can a woman use this law to punish any suitor who isn’t her crush? No.

When is stalking punished?

The law punishes stalking and cyber-stalking only in a few disturbing instances. The law punishes stalking and cyber-stalking if it is done with the intent to cause “substantial emotional or psychological distress to the woman or her child.” That means that if one’s intent is different, then the stalking is legal. And if you are later found out, you’ll just be labeled “creepy” if the girl does not have a crush on you.

Covertly stalking a person is legal. There is obviously no intent there to cause any form of distress. In fact, the person there is actually hiding from the woman and keeping her from finding out his presence to avoid disturbing her in any way.

Criminally punishable stalking

The kind of stalking which the law punishes is the hurtful kind. It is the one where the woman feels helpless, frustrated, or afraid.

There, the person very clearly shows himself to the woman or child. He makes it known to her that he is watching her and keeping tabs on her every move. The person makes his presence felt in as many ways as he can. He can do this also in cyber-space when he comments on photos or posts pictures of the woman. If banned from her social media network, he makes an effort to reach out to her or her friends just to make his presence felt.

He does this this dominate a woman and control her actions through the fear or anguish because of his presence in her life.

Under the Anti-VAWC Law, it is punished if it is committed by a person against his wife, former wife, or against a woman with whom he has or had a sexual or dating relationship with, or with whom he has a child with.

If there is no present or previous relationship between them, then stalking and cyber-stalking can still be punished, but this time with unjust vexation or cyber-unjust vexation (which is is punished a degree higher).

Many women and men are not aware of the difference. Let’s have some examples.

Scenarios

Charles courted Ivy, but did not succeed. Busted. But he has an undying love for her and wants to keep courting her. He gets her schedule and follows her looking for the things she likes, her hobbies, volunteer work, etc., and tried to position himself in ways to see her and interact more with her. He goes online and “LIKES” her pictures and posts and makes witty remarks in an attempt to make her smile and remember him in a favorable way.

Is the stalking here criminally punishable even if she does not like him and is only responding out of politeness or friendship? No, this is not punishable. There is no dating relationship and no “substantial emotional or psychological distress to the woman.” For distress to be substantial, a person should distinctly feel fear, frustration, emotional pain, or anguish because of contact with that person.

Another example.

Roy likes Ana. They had drunk sex one time and he courted her after. She didn’t like him though. Busted. He did not like the outcome, so he forces his presence on her all the time. He walls her in, and prevents other people from courting her, intimidating her friends so they won’t go near her as much, and isolates her as much as he could.  Ana feels his presence all the time. It is imposing because he has shut down her social life by being present all the time like a great wall (guys call this “binabakod“).

The stalking here can be criminally punishable if she feels so isolated that it becomes a source of great emotional distress for her. If they never had sex though, then the stalking here is not punishable under the Anti-VAWC law. It can be punished with unjust vexation under the Revised Penal Code.

There are many other examples we can talk about, but we should remember the basic rules for stalking or cyber-stalking to be considered criminally punishable under the Anti-VAWC Act:

  1. Stalking can only be committed by any person against his wife, former wife, or against a woman he has or had a sexual or dating relationship with, or with whom he has a common child.
  2. Stalking and cyber-stalking if it is done with the intent to cause “substantial emotional or psychological distress to the woman or her child. For there to be intent, the stalking must be openly done and felt by the woman.

Lastly, if only the last of these elements are present, stalking can still be punishable in a lesser way under a different law, like unjust vexation under the Revised Penal Code.

When to downgrade a Philippine work visa

When to downgrade a Philippine work visa

When should you downgrade a Philippine work visa? Why should it be downgraded? What happens if it is not downgraded? We explore the answer to these questions below.

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Downgrade description on the BI website

Foreign nationals who want to change their status to a temporary visitor or tourist (9a) visa should have their visa downgraded.

Companies terminating a foreign national’s employment usually downgrade his visa status to a 9a visa. This gives the alien some time to fix his affairs.

Visa downgrade issues

Once the Bureau of Immigration approves the downgrade application, it will not allow the foreign national to work in any capacity in the Philippines.

If the BI inspects and discovers that a company allowed a foreigner to work after the downgrade, it can punish both company and foreigner into trouble. This violates the Immigration Act. The BI does not do this often, though.

Some companies won’t downgrade the visa of their employees. Instead, they will have them leave on or before the last day of their contract and let the work visa expire abroad. There are consequences to this, depending on the type of work visa. 

There are many issues on downgrading. Many companies consult immigration lawyers to make sure that they get the proper legal advice.

When and why we downgrade a work visa

A foreigner may only work in the Philippines if he has a work visa or a special work permit (this is different from the Alien Employment Permit or AEP). The company files a downgrade application to a temporary visitor’s (9a) visa when the foreign national is resigning or has resigned from the company.

Companies should submit downgrade applications several days before termination of the foreigner’s employment. It ends any employer-employee relationship between them. Companies do this to avoid any liability or legal complications if the foreigner were to overstay or commit a crime or other violation.

When the BI approves the downgrade, it terminates the working relationship between the foreigner and the company. In fact, the BI cancels the foreigner’s alien certificate of registration or ACR I-Card, thus “downgrading” his status from an alien with the privilege to work here, to a mere temporary visitor who cannot. If the foreigner keeps working for the company, he violates the legal requirement for a work visa or permit. This is a legal violation.  The BI will penalize both if discovered.

Under the newly implemented regulation, companies should now downgrade their foreign employees before employment termination, and before leaving the country for good. For more details, please see this link.

Other issues

Some BI-accredited agencies suggest that the company apply for a downgrade while the employee will still be working for the company. This exposes both the company and the foreigner to penalties for violation of immigration laws if the BI downgrades the visa while the foreigner still works there. If the BI discovers this arrangement, there will be consequences.

At this point, because of the new regulation (see update above), the BI should put in place a remedy for those companies who need their foreigners employees to the last minute. In the past, the procedure was to secure an emigration clearance certificate for a foreigner leaving for good. The company surrenders the ACR I-Card and the BI issues a clearance for the foreigner to leave on a certain date. But this procedure has been changed. Once I know of the new procedure, I will post about it.

Another reason to apply for a visa downgrade is for changes in employment. When a foreigner gets a work visa, it is only connected with the company that applied for it. If he wanted to change go to a different company, he would have to change his visa status from that of a work visa to a temporary visitor’s visa (9a). After that, his new company would be able to file a new application for a work visa.

One can only convert to a work visa from a 9a visa.

Normally, when a foreigner changes his employment from one company to another, he should leave the country and come back with a temporary visitor’s (9a) visa. But instead of leaving, the employee could opt to downgrade his visa. This will convert his visa status to 9a without having to leave the country.

Who files the visa downgrade?

The company usually files the visa downgrade application. Payment for downgrading depends on the agreement between the employer and employee. Some companies pay for it, others don’t.

Some companies won’t even file a downgrading application. In such cases, the BI now allows the foreign employee to file the downgrade. Be ready for additional documentary requirements. It would be best to consult a lawyer on this as the policy changes from time to time.

Effect of not downgrading?

At this point, we have to differentiate between the kinds of work visas. The effect of not downgrading depends on the work visa issued.

The first effect involves issuance of an exit clearance – known better as the emigration clearance certificate (ECC). This is a clearance from the BI which declares a foreigner to have no outstanding obligations to the Philippines. It  allows the person to leave.

Only the work visas covered under section 9 of the Immigration Act (such as 9d and 9g visas) are required to secure a clearance.

The RHQ and ROHQ visas are exempted from all BI clearances. Hence, there is no effect if these visas expire while the foreign national is abroad. The 47a2 visa is a special visa that also does not require downgrading. However, the BI has required some 47a2 visa holders to secure an ECC. Check with an immigration lawyer if you need this or not.

If a foreign national with a section 9 visa does not secure an ECC, he is considered to have an expired work visa if he is abroad when his visa expires. Technically, he cannot obtain another visa until he has his expired visa canceled.

This can be a problem considering that the only way to have a visa canceled is to have the BI in the Philippines cancel it. This cannot be done abroad. It can only be done in the Philippines. But the foreign national will not be given a visa to go to the Philippines to cancel it.

Remedies when you don’t downgrade

If the foreign national is covered under the Balikbayan Law or is from a country whose citizens are allowed visa-free entry into the Philippines, they will usually be allowed to enter the country without securing a visa. When they enter, their status will be equivalent to that of a 9a visa. This overrides their previous visa, hence, there is no need to downgrade.

A restricted foreign national will apply for a visa in the Philippine embassy. If the embassy notices the expired visa, it will not issue him another unless he secures clearance from the BI. 

The remedy is to send notice to the BI that the foreigner has left the country for good and to apply for cancellation of the visa and the ACR I-Card. The BI will run a clearance check before cancellation.  During the check, it will determine if there are fines or charges that need to be paid. When both documents are canceled, the foreign national may now apply for a new visa. Lawyers can do this for their clients.

This is a basic rundown of when and why to downgrade. Some problems are on a case-to-case basis, so it may be wise to consult with a lawyer.

Cyber-libel against public figures like Trillanes

Trillanes filed a case against PCOO ASec. Mocha Uson for three counts of cyber-libel for falsely spreading information about him. One of the charges was for writing online that he had hidden wealth in off-shore bank accounts. But the law in this case isn’t just between Trillanes and Mocha. It involves any person who speaks against Trillanes or any other public personality. Can cyber-libel be filed against them too?

What is cyber-libel?

Cyber-libel is actually just libel that is committed using a computer network. The penalty of cyber-libel is much higher because of the ease and speed that it can be committed.

Libel is defined under Article 353 of the Revised Penal Code. There are two types of libel – (1) libel through written means, and (2) slander, which is essentially libel by use of spoken words.  The Supreme Court summed up the law this way:

Under Article 353 of the Revised Penal Code of the Philippines, libel is defined as a public and malicious imputation of a crime, or of a vice or defect, real or imaginary, or any act, omission, condition, status or circumstance tending to discredit or cause the dishonor or contempt of a natural or juridical person, or to blacken the memory of one who is dead. Thus, the elements of libel are: (a) imputation of a discreditable act or condition to another; (b) publication of the imputation; (c) identity of the person defamed; and, (d) existence of malice. – Supreme Court

You commit libel when you say or write something that discredits another, or attributes some unfavorable condition, which  would affect the way that people would see or interact with that person. That thing you say or write has to be published or publicized in some way. It should clearly identify the person defamed. And lastly, publishing or publicizing must have been done maliciously.

What matters is the presence of malice in publishing or in publicizing those things about the other person.

Libel for politicians and public figures

The Supreme Court removed all the fangs of the libel law and made it into a harmless paper tiger, at least when applied to public officers and public figures. Politicians and other public personalities can threaten to file libel, but it’s just a lot of posturing with no teeth. The cases will probably be dismissed for as long as the other person can show some basis for what they said or wrote. In these cases, the truth is a defense.

The biggest difference between libel against public figures and against private persons deals with the presumption of malice. In libel against private persons, malice is presumed by mere fact of publication. In libel against public figures, malice is NOT presumed.

Our libel laws are criminal in nature. That means that they may abridge freedom of speech or freedom of the press. What would happen if the media or social media were under threat of libel all the time? It would silence people. It would silence our ability to determine or demand accountability for corruption and wrongful acts. In the words of Benjamin Franklin “Whoever would overthrow the liberty of a nation must begin by subduing the freeness of speech.” That is why malice is not presumed.

The Supreme Court made sure that this will never happen. In jurisprudence, public officers and public personalities may only win a libel case if it is shown that the writer knew that what he had written was false, or if he had been “recklessly indifferent to its truth or falsity.” This means that the writer would be completely protected against libel if he KNEW he was lying, or was foolishly thinking that he was telling the truth despite contradicting facts staring him in the face. What was written should be clearly false or, if true, should have been written in a way that is clearly malicious.

Our Supreme Court also clarified that a public figure includes any public official (one who works for the government), a famous or notorious person in the community, or one who thrusts himself into some public controversy to influence its resolution (“nakiki-sawsaw”). As an example:

Thus, for example, Jerry Falwell is a public figure and, as a famous case holds, he is barred from recovering against a magazine that portrays him as having had sex with his mother. Movie stars and famous athletes also qualify as public figures. – cited by the Supreme Court

False speech against public figures is very hard to successfully prosecute because public figures are not protected from libel except in very extreme circumstances. It is very hard to prove those circumstances.

For example, how would the normal person on the street or in Facebook know if the information he got from another about the public figure is false? He is not required to research. If he reads it in a source he considers reputable, then any case filed against him would be dismissed.

Media companies, on the other hand, are required to diligently research what it reports. They just can’t report that there is an killing quota for drug pushers without really checking if this is true (that’s an example of something written recklessly indifferent to truth or falsity).

Why are public figures not covered completely by libel laws? First of all, let’s talk about public officers. It is a basic principle that public office is a public trust and that ALL our public officers are accountable to the public. We have an interest not just in their work, but also in their lives. We can write about them, talk about them, and reveal things about them that may have an effect on their office. These include pictures.

For other public figures, the principle is different. They shed their privacy by going into the public eye. By shedding their privacy, they have prepared themselves for invasions of privacy which include defamatory statements made because of their acts or perceptions of their acts.

Don’t be afraid to criticize

We should practice our freedoms so that they would not be taken away. This isn’t just about Trillanes. It is about all public figures. We are free to criticize them, their work, their beliefs, and anything else we don’t like about them. Just make sure you’re not making malicious statements. The Supreme Court defined malicious speech that which is written to injure the reputation of the person defamed.

Malice connotes ill will or spite and speaks not in response to duty but merely to injure the reputation of the person defamed, and implies an intention to do ulterior and unjustifiable harm. It is present when it is shown that the author of the libelous remarks made such remarks with knowledge that it was false or with reckless disregard as to the truth or falsity thereof. – Supreme Court

As long as you don’t make malicious accusations or make remarks you know to be  false, your speech is protected.

From Atty. Katrina Legarda - What you can do in police searches.

From Atty. Katrina Legarda – What you can do in police searches.

This is a great post from Atty. Katrina Legarda on the rights of a person in police searches. She posted it in reference to police searches that happened in Katipunan establishments.

We can apply this not just to police operations in Katipunan, but to similar operations anywhere. I note that Atty. Legarda’s post is consistent with current SC decisions and constitutional law principles. But it is impressive how she distills everything into something very easy to understand and remember. We should share this as it may come in handy one day. It is not just for students. Anyone can benefit from this knowledge.

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REPOSTING FROM ATTY. KATRINA LEGARDA

Re reports of police searches that happened in Katipunan establishments.

REMINDERS TO STUDENTS:

1. If the police say they have coordinated with the establishments, then they can search those establishments, but said ‘coordination’ doesn’t extend to the patrons of these places.

If the owners of the establishment are concerned re possible illegal contrabands, they or their representative should be the one to conduct the search on the belongings of their patrons. It cannot be and should not be the representatives of the State (police) that will do it for them.

2. You can refuse the ‘search’ of the police. Police can only conduct a search if they have a valid search warrant. The warrant, if they have one, must specify what the police are looking for, and the place where the search is to be conducted. A blanket warrant (meaning: all encompassing warrant) is not allowed.

3. If you feel that refusing the search is to your disadvantage, you can open your bag but allow ‘visual search’ only. And make sure that another civilian person witnesses the entire process. Don’t allow the police to touch your things.

4. If you are a MINOR (17 y.o. and below), insist that an adult be present during the search. Call a friend, a parent, a relative, a teacher. Don’t allow the police to intimidate you.

5. The police should not touch you. Bawal kapkapan ang tao ng walang pahintulot.

6. In all these, be cordial, respectful and calm in dealing with the police. Remember that they are only following the instructions of their higher ups; remind them that you are familiar with your rights, and you know the parameters of searches with and without warrants

The P1,000.00 budget of the CHR will never be passed.

The CHR statement on the P1,000.00 budget appropriated by the House of Representatives

On September 12, 2017, Congress voted to give the Commission on Human Rights (CHR) a budget of P1,000.00. There is no need to panic. This part of the law will never be passed. And if it is passed, the matter will be brought to the Supreme Court and we can expect that act to be junked.

We can expect a lower budget for the CHR. But for the budget to go down to P1,000.00? It won’t happen. Let’s all breathe, be calm, and find out why:

The CHR has a mandate in the Constitution.

The CHR is an independent office created by the 1987 Constitution. Its functions are mandated by the Constitution. Its personnel and projects are recognized by the Constitution. It was created to expose and do something about any abuses of our government against its people. It was made independent because the drafters of the Constitution recognized a need to ensure that it would always be present to speak out. It isn’t run by donations by private persons. It is run with government funds.

The CHR is NOT a mere creation of the Legislature. Congress cannot just do away with it as it pleases. The reason that its existence is set in stone in the constitution is to ensure that it cannot be legislated away. Congress cannot just completely take away its funding. It is required by the constitution to fund the CHR. Those words are not explicit in the Constitution. You have to read between the lines to see it.

Even the House of Representatives knew that if they did not appropriate any money for the CHR, the law would consider their act illegal. That’s why they decided to put in P1,000.00, not zero. But that’s not even enough for the operations of a skeleton crew.

President Duterte requested a budget of P678 million pesos for the CHR for 2018 (this year’s budget is P749 million). It was the House of Representatives that lowered the budget drastically to P1,000.00. This is not final. The bill would still be transmitted to the Senate. The budget will be rehashed there. After that, it can be taken up again in the bicameral committee. The P1,000.00 budget is far from final.

The CHR is not a mere creation of Creation of the Legislature. Congress cannot just do away with it as it pleases.

So let’s be clear about one thing before we move on. The funding of the CHR can definitely be cut. The only question is with regard to how much funding the Legislature can cut back.

No reduction of salary and benefits, and security of tenure

The CHR has a Chairman and four (4) members. They have security of tenure. They will be paid no matter what. Their salaries and benefits cannot be decreased during their tenure. Congress can legislate their salary, but any change in salary would take effect after their tenure.

The CHR also has other personnel. Some are contractual, while others are plantilla. The budget would also have to consider the salaries of persons with plantilla positions. They have security of tenure as well. The salary standardization law governs their salary and benefits. Those personnel that are contractual may have a problem with their tenure, but if the contracts have already been approved for 2018, then they have a right be paid until the end of their contract.

A P1,000.00 budget will not be enough to pay them. That would make the appropriation unconstitutional. This is basic. It’s not explicit in the law, but it is a basic principle in government.

The CHR has other functions mandated by law and needs funding to execute them

Paying CHR officers and personnel is not enough. They can’t do much unless they are given the funds for executing their functions. Otherwise, they’ll  just stay in their seats and talk among themselves while waiting for their salaries. It would be a big waste of government resources to allow them to do nothing, and you can’t get rid of them because of their security of tenure.

The CHR has functions mandated by the Constitution and special laws. A P1,000.00 budget cannot sustain those functions

The CHR has several functions mandated by the Constitution. A budget of P1,000.00 is not enough to to sustain those functions. And on top of those, the Legislature had also given the CHR other responsibilities as found in special laws, like the Magna Carta for Women, the Anti-Enforced Disappearance Law, and the Anti-Torture Law.

We should also remember that the CHR would have to pay for its electricity, utility, and maintenance bills, office supplies, gasoline, etc.

The CHR cannot execute its constitutionally mandated tasks and the added responsibilities given to it by special laws without a reasonable budget to work with. The President had already recommended a budget of P678 million. I do not understand the logic of the Congressmen in reducing that recommendation to P1,000.00. I do suspect that they did it in attempt to impress the president.

In the end, I am confident that the Senate and Bicameral Committee would do a better job when the bill reaches them.

But note that the Legislature may decide what to fund and what not to fund.  They can determine what activities are useless and useful. The CHR can’t change or juggle these appropriations. It can use savings in those areas to augment their other projects. But remember what happened with PNoy and the DAP? The CHR can’t cut their appropriation to “save” for their other projects. That’s illegal.

Your congressmen are there because a majority voted for them

A lot of people worry about the CHR funding removal. They believe that the Congressmen were flexing their muscles in a power-tripping exercise. People say that the Administration wants to send a clear message – that they can do ANYTHING. People say that this is a well-planned effort which includes the filing of impeachment complaints against Andy Bautista (COMELEC) and Justice Sereno (SC). People believe that this is the way to make Duterte just like Marcos and allow him to rule the country for years to come.

I don’t know how true this is. I won’t even go there. But whatever happens, it was not possible without our own participation (or non-participation).

I do know this. Our congressmen are there because a majority voted them into office. Congressmen only have three (3) years to serve, and election year is coming. They need to suck up to get major support for their campaigns so that you would vote them again.

election year is coming…

One last thing. It’s not just the CHR with a P1,000.00 budget

There are three government offices whose budgets were decreased to P1,000.00. Congress decreased their budget because these three agencies allegedly performed very poorly. The two other agencies I refer to are the Energy Regulatory Board (ERC) and the National Commission on Indigenous Peoples (NCIP).

Unlike the CHR, the ERC and the NCIP are creations of the Legislature. Hence Congress can juggle their budget and personnel at will. These personnel are still entitled to their salaries, benefits, and tenure, but they can be placed into other agencies. So it is possible for those agencies to have a P1,000.00 budget since the people can be shifted around, and their functions legislated elsewhere .

That’s not true with regard to the CHR. The government cannot just juggle their employment because they are independent.

And that’s why I’m not so concerned about the CHR. I’m more concerned about the people who voted the congressmen. And I’m a lot more concerned about the NCIP. But that’s for another article.

It's not Uber yet: LTFRB lacks basis for fines against Uber and Grab

It’s not Uber yet: LTFRB lacks basis for fines against Uber and Grab

In the past few weeks, we saw Uber and Grab get fined P5,000,000.00 each. The LTFRB hit them with this fine because they disobeyed an order to suspend acceptance of applications for private cars to join their transportation app network and become a TNVS (transportation network vehicle service).

About two weeks ago, Uber was again hit with a penalty – this time a 30-day suspension. But in the late afternoon of Friday, the LTRFB issued a new order. This time, it was informing Uber that it could cut short its suspension upon payment of the amount of P190,000,000.00 penalty. Uber had 19 more days’ suspension – so that’s a penalty of P10,000,000.00 per day including weekends, holidays, and stormy days.

Here is a question several lawyers are asking while scratching their heads:

How in the world did they come up with these fines? From what existing law or issuance? Uber’s all-new, revised, converted penalty of P190,000,000.00 has  no legal basis or precedent either in administrative law or criminal law. Nothing in our law books ever allowed a converted penal sanction.

After weeks of reading going through literally (yes, literally) every department issuance since 2012 to the present, I can tell everyone that I cannot find any legal ground for the penalty imposed on Grab and Uber. I also went through several circulars issued between 2003-2005. In fact, I wanted to go as far back as 1997, but no such regulations were available, and I found out after much searching and cross-referencing that the particular 1997 department order I was looking for did not contain anything that could serve as the basis for those ridiculously large amounts.

Let’s talk about the basis for the punishment. Right now, Uber and Grab are considered by the LTFRB as common carriers.

Is there a legal basis for punishing common carriers? YES, there is. Is there a structure or schedule of penalty fees or description of other penalties other than fines? YES, there is. Has this schedule of penalties been properly published in the newspapers and in the Office of the National Administrative Register (ONAR)? YES, it has. And in fact, there are multiple schedules of penalties, all of which have been published in the ONAR. Are the penalties against Uber and Grab in accordance with these penalties? NO, they are not. Are the penalties against Uber and Grab published in the ONAR? NO, they are not.

What does this mean?

It means that there is absolutely no legal basis for those penalties.

The only legal bases for LTRFB penalties will show you a range between P5,000.00 for the first offense, P10,000.00 for a second offense, and P15,000.00 for a third offense. There are also other penalties in the amounts of P50,000.00, P75,000.00, P100,000.00, and P200,000.00 for various offenses. And that’s about it. Any who doubt me can research this for themselves. I’ll even make it easier by providing three links:

 

(1) The LTO website where you will find Joint Administrative Order No. 2014-01 entitled, “Revised schedule of fines and penalties for violations of laws, rules and regulations Governing Land Transportations”

(2) The LTFRB website also where you will find the same JAO, Joint Administrative Order No. 2014-01 entitled, “Revised schedule of fines and penalties for violations of laws, rules and regulations Governing Land Transportations”

(3) The official list of LTFRB fines and penalties published in previous issuances.

 

People might note that these penalties were published before Uber and Grab placed themselves under LTFRB regulation. That is true, but these provisions apply to common carriers. If they are considered common carriers, then these provisions apply.

People may also note that there seems to be no punishment for what Uber and Grab did. If you are one of those people, then CONGRATULATIONS!!! You now know exactly why the penalty has no legal basis. It is because there is no monetary penalty provided at all in any law or issuance governing Uber and Grab.

Uber and Grab cannot be penalized with those ridiculous amounts. It was something the LTFRB all of a sudden made up and imposed on them. You’ll note in the interviews of two particular LTFRB officials after imposing those fines that they cited no legal basis in coming up with it. Not even their Order gives the legal provisions they used as the basis for the fines.

With regard to the P190,000,000.00 fine against Uber, an official who was interviewed also did not give any legal basis for the penalty, but admitted instead that the amount was based on how much money Uber was allegedly making. Hello??? There is no law in the Philippines on common carriers that give penalties that are dependent on how much money a company is making. Neither is there any rule or regulation to that effect.

If a rule or regulation imposing a penalty is not published in the ONAR, it cannot be imposed on anyone.

Under the Philippine law a penalty may only be imposed if it is written in a law. If the law requires an administrative agency to prescribe implementing rules, regulations, and penalties, then the Administrative Code provides that a person may only be penalized under those rules and regulations if it has been published in the ONAR at the UP Law Center. In the case of the LTRFB, ALL of those it regulates are governed by implementing rules and regulations. This means that there is NO PENALTY that can be imposed on any regulated persons UNTIL the implementing rule is published in the ONAR.

In the case of Uber and Grab, there is no such law or implementing rule published in the ONAR. Hence, this punishment is outside the law. It is illegal and arbitrary.

Laws and implementing rules and regulations give notice to all parties as to what each others’ obligations and rights are, as well as any penalties when one violates those rights. If there is no law or regulation, then there can be no penalty imposed on a person because none of the parties would be properly informed. In legalspeak, this is called a denial of due process.

We must realize that regulation is not just for the benefit of the commuter. It is also for the benefit of the app owner, the small business owner who owns the cars, the drivers, and even the government.

In case of the government, it keeps the officials from becoming corrupt or abusive. By providing standards or set amounts for penalties, a lot of discretion is taken away from a government official which would remove much temptation to profit by giving lower or higher penalties to those he favors or disfavors, depending on the circumstances. It is for the benefit of the commuter because the government can regulate the service provider to ensure their safety and convenience. It protects the app and business owners by ensuring that they know what are allowed and not allowed, so their actions may be guided accordingly.

Without those rules, the government can act however it wishes and destroy an industry to favor another.

Does the LTRFB really know what it is doing? Or worse… does it know exactly what it is doing and maliciously punishing Uber and Grab with the intent of running their business to the ground? We hear reputable media outlets citing LTFRB Chief Martin Delgra say that he wants more taxis on Metro Manila roads despite knowing the abuses of taxi drivers, and in face of the admission of the taxi lobby that these abuses are prevalent. It is hard not to put these incidences together without scratching your head after.

Uber Driver

The Unconstitutional Punishment of Uber Philippines

The punishment issued against Uber Philippines is unconstitutional. It is highly oppressive because it punishes not just Uber itself, but its partners, none of whom are at fault in any way. It tramples on the rights of innocent parties. The punishment is not reasonable in that it harms those who are not even part of this controversy. It robs people of the constitutionally protected right to make a living.

What happened?

More than a year back, the LTFRB sent Uber and Grab a suspension order to stop accrediting drivers for their respective apps. This was because the LTFRB couldn’t figure out how to regulate them properly because the technology and their business model is far beyond their understanding. But a year later, the government agency still had not figured out what to do about the transportation network companies (TNC). In the meantime, both companies ignored the very unreasonable order and continued to accredit vehicles under their app.

The LTFRB decided that Uber and Grab should stop all operations because they violated the suspension order. But because of public outcry, they decided instead to allow Uber and Grab to just pay a fine of five million pesos each, and gave a condition that they would not any more applications until the LTFRB figured things out for itself in an unspecified period which could be any time between three days and three decades.

But Uber decided to violate this condition. It admitted to accrediting new applications.

Because of this, the LTFRB ordered Uber to stop all operations of its app. Uber filed a Motion for Reconsideration. But on the same day, the LTFRB came out with one of the fastest decisions ever made in the Philippine legal world when it denied the motion within a few hours after its filing.

What’s the status?


Uber has stopped operations. The suspension lasts for a month. And along with the stoppage of operations of Uber, we also have the stoppage of operations of its partner transportation network vehicles (TNVS).

The TNVS cannot operate without the Uber  app. That’s one of the restrictions of a TNVS franchise. So without the app, the TNVS cannot do business. They cannot earn.

What’s wrong with the punishment? Isn’t this the fault of Uber?

I think that this is not the fault of Uber. But other people can debate me, and they have valid points. So let’s not talk about whether or not Uber is at fault. Let’s assume that there is fault.

Let’s talk about the punishment that the LTFRB imposed not just on Uber, but on all other business owners who need the Uber  app to work.

The punishment goes against constitutional limits on the exercise of the LTFRB’s police power.

What are the constitutional limits of the LTFRB’s exercise of police power?

LTFRB has the power to punish those who violate its rules and regulations. The power to punish is part of what lawyers know as “police power.” It is the power of the government to regulate behavior and enforce order for the good of its people.

The Supreme Court declared that the exercise of the state’s police power is valid only if the following requirements are met: (1) the interests of the public require its exercise and (2) the means employed are reasonably necessary for the accomplishment of the purpose and not unduly oppressive upon individuals.

Let’s take the first requirement. Do the interests of the public require the stoppage of the Uber  app? No. It is the opposite – the app should be allowed to function because the riding public has need for it. It also reduces traffic because commuters who have cars would use Uber instead. Most people use the car pooling service, which means that people could share a car instead of taking separate taxis or cars. The app allows people to be picked up with certainty, instead of having to beg and negotiate with taxis to bring them to their destinations during rush hour.

The app also assures the government that it would get its share of income tax and percentage tax payments by providing a paper trail. A taxi company would not give that assurance. Even the taxi lobby admit that drivers negotiate terms of payment different from that in its meter all the time. How much of that will the government receive? Probably none. And how many time’s have you ridden on a taxi which did not issue you a receipt when you ask for one? I’ve ridden several. The BIR will not get any of that money. They won’t  have a paper trail to track it.

More importantly, the small business owners who quit their jobs, used their savings, or just took control of their destiny by making a car purchase so they could change their lives, etc., — these people need the Uber  app to earn enough to pay off their loans and mortgages.

The LTFRB is wrong in punishing Uber  with complete stoppage of the app because it does not benefit the public in any way. The only benefit is to the taxi companies who are probably rejoicing at this turn of events.

This suspension can cause drivers and car owners to lose their earning capacity for a month. They would need to find work that they would not be able to leave. They may miss payments on their cars. They may just decide to quit because they saw that the powers that be will make this life for them uncertain

As we can see, the government and the public (except taxi companies) lose if Uber is punished this way. The punishment is against public interest. On that point alone, the punishment can already be considered unconstitutional.

But let’s go deeper.

THE PUNISHMENT OVERSTEPS CONSTITUTIONAL LIMITS ON THE EXERCISE OF THE LTFRB’S POLICE POWER.

The second requirement of police power is that it should be exercised in a way that is “reasonably necessary” to accomplish the objective of the regulation and that it should not be “oppressive to individuals.”

Will the suspension accomplish the objective of regulation?

The objective of the regulation is to ensure the riding safety of the public. Now tell me… will suspension of a service that is more convenient and much safer than taxis accomplish the objective of ensuring riding safety? Hello?!

 “…not unduly oppressive upon individuals.”

The suspension should not be oppressive to individuals. But when the LTFRB suspends Uber, it completely removes the earning capacity of thousands of small business owners.

In the course of my encounters with Uber drivers, I’ve met OFWs who decided to use their earnings to take out a loan for a car and drive it as a TNVS instead of going back to the middle east. Their families were quite happy to have fathers again. How about the former security guard that drives now? He works more hours, but is happier because he’s learning how to be a businessman, not just an employee, and he’ll soon make enough to take out another loan for a new car. What happens to them? How many dreams will this LTFRB punishment trample on?

Don’t you think that’s oppressive? The small people are ultimately the ones being punished. Within a month, Uber will be back on its feet. How about them? The small people?

I realized that when people talk about Uber, they only think about the company, not the drivers and business owners who depend on the network. They are quick to condemn it and say that Uber deserved the suspension. Well, how about those that depend on the Uber  app for livelihood? The government allowed them to earn a livelihood, but without any fault on their part, the government takes it away. And about the riders who rely on the convenience, service, and safety of Uber?

Only the guilty should be punished.

People say, so what? It’s part of business? Collateral damage? They could afford a car, so they’re better off than beggars? They’ll survive?

In the first place, if the punishment is correct and suitable for the offense, these people should not even have to worry.

That is the biggest reason why the LTFRB’s suspension order is unconstitutional. It punishes the innocent. It punishes those who are only part of the case because they are dependent of Uber’s app. They cannot work without Uber’s app because that’s one of the requirements of the LTFRB itself for them to work as a TNVS.

It is a principle of law and an orderly society that only the guilty should be punished. The punishment should be narrowly tailored to ensure that no others would be hurt. The LTFRB has other options to punish Uber. It could impose another large fine, for example.

The LTFRB might say that under the regulations on TNCs and TNVS, the punishment stated is removal of accreditation. And that’s exactly what they are doing.

The LTFRB is correct in this. But that’s why I’ve always been saying that the regulation cannot be done under the current law. The punishment there is suitable for a DIFFERENT economic and business model, not what Uber and Grab have. The regulations are not up to date with technology. I’ll write about this another day because that issue is even more complex than this.

Anyway, as shown before, the LTFRB can fine Uber.

But the LTFRB also needs to sit down, think, and make a jurisdiction check. It should determine if it has the proper background and capability to regulate an app, or if it should defer to the real government agency that handles information technology – the Department of Information and Communication Technology (DICT).

The LTFRB forgets that an app is not a common carrier. It just has the same function as a bulletin board service. Otherwise, it should start regulating my condo bulletin board for the “Van for Hire” posters I see there.

By suspending operations, the government is taking the livelihood of small business owners without any proceeding.

Wait? Isn’t that in the constitution? Yes it is, but it’s worded in legalese. What we usually hear is, “No person shall be deprived of property without due process of law.”

The Supreme Court declared a number of times that the right to engage in a profession, to work, or to earn a living is a property right, and is protected by that provision in the constitution.

Under the law, the government can only take away the right to earn a living if there is a case made specifically against the person. The person should have notice, be called to a hearing, and be given the opportunity to explain or justify why he should be allowed to keep his right to earn.

The LTFRB allowed existing Uber TNVS to earn their livelihood. That much is clear. Have any proceedings been filed against EACH of the TNVS before their means of livelihood was taken away? No.

Then that means that their livelihood cannot be taken away by the government. YES, it’s that simple.

When the LTFRB takes away the Uber app, that is the effect.

But wait! The TNC and TNVS regulation allows the LTFRB to remove Uber’s accreditation. That means that the TNVS under Uber are already put on notice that anything that happens to their app company would have an effect on them, right?  No. The relationship between the LTFRB, the app owner, and the car owner are different and separate from each other.

The agreement between Uber is separate from the agreement between the small business owners who own the TNVS. That means that the TNVS deserve the usual requirements of due process before they can be stripped of their right to earn. The LTFRB cannot just remove Uber because they themselves had already created a class of persons dependent on it. Suspending Uber would mean suspending these class of persons. In the legal world, that’s illegal. It’s unconstitutional.

And this is exactly why the Uber app should not be regulated by the LTFRB. It won’t fit into any box the LTFRB can competently regulate. It is a completely different animal from another world. A different box should be designed to house it. That requires either a new law, or a different regulatory body.

Order to Leave

“Order to Leave” in your visa downgrade

Did you receive an Order to Leave when you got your visa downgrade?

Many tend to panic when they receive an Order to Leave in their visa downgrade or when they update their stay (if they overstay). But let’s not panic. An order to leave will not blacklist a foreigner when he or she leaves the Philippines. There are some instances that will trigger it.

This article prepares you for those instances so you will not be blindsided.

What will trigger an Order to Leave?

There are types of visas which will automatically trigger an Order to Leave when they are downgraded. And there are circumstances that will trigger this Order as well. For as long as the visa holder falls into these categories, once he or she files an application to update his visa or to downgrade it, there will always be an Order to Leave that will be issued automatically.

The list include:

(1)  Section 9f/Student visa holders;

(2) Non-immigrant visa holders whose total or cumulative period of stay within the country exceeds 5 years;

(3) Where there is a badge of fraud or fact that casts suspicion on the applicant’s visa [Badge  of fraud examples: Insufficient explanation in downgrading from Temporary Resident Visa (TRV) by marriage; Derogatory information provided by employer when downgrading from a 9g visa, etc.]

(4) 47a2 Special Non-immigrant visa holders

Can the Order to Leave be lifted?

The Order to Leave may be lifted. But this is not always the case. It would still depend on the discretion of the Bureau of Immigration.

The foreign national may file a letter with the Office of the Commissioner requesting for reconsideration (MR) from the order to leave under numbers (2) and (3) on valid and exceptional grounds, and upon payment of the MR fee. You can attach evidence to support your MR in your letter.

There is normally no MR available to holders of student visas (9f). But there are occasions when an MR is granted, but these are few and far in between.

The Bureau of Immigration has allowed non-immigrant foreign nationals whose stay in the country exceeds 5 years to stay (after filing a MR) on the ground that they are applying for a different visa status (i.e., immigrant visa, retirement visa, etc.), to take care of his minor child with an unemployed spouse, etc. The grounds are reviewed and are approved on a case-to-case basis.

What to do when issued an Order to Leave?

If you are issued an Order to Leave, you have the option to file an MR to lift it or to actually leave the country.

Most people would rather file the MR because it costs much less. However, if your reasons to stay in the country are not justifiable in the MR, you have to leave.

For those foreigners who are considered unrestricted foreign nationals in Philippine law, this is no problem. Many do what is known as a “visa run.” They leave the Philippines for one or two days and then come back right after. I know one client who just went to Hongkong for lunch and came back to Manila for a dinner meeting at a hotel near the airport.

For a list of the countries whose citizens are considered unrestricted foreign nationals, click here.

If you are not one of those nationalities, then you must apply for a visa in the Philippine Embassy. You can enter the country again after your visa is issued.

Note that in either case, the foreigner may still be asked to present an exit flight ticket to the immigration officer upon port entry.

Order to Leave vs Deportation

The Order to Leave should not to be confused with deportation. The effect is not the same, and it will not put the foreign national on the immigration blacklist.

The BI has no choice on issuing Orders to Leave. This  is because of the strict requirements of the Philippine Immigration Act of 1940, a very restrictive law which was issued before globalization was en vogue (it was enacted before World War II).

47a2 visas and Orders to Leave

A small reminder should be made to holders of Special Non-Immigrant 47a2 visas, commonly known as PEZA visas. Current regulations do not normally allow holders of these visas to change their status to another non-immigrant status without departing from the country.  If they stay beyond expiration of their 47a2 visa, they will have to update their stay with the bureau, but they will not be downgraded. However, the BI now allows visa downgrade of 47a2 visas, however, they will still be issued an order to leave.

 

Why do we need to file a visa downgrade anyway?

Philippine law allows conversion of visas ONLY from a temporary visitor’s (9a) visa. If a foreign national has a different visa status, he will be required to downgrade his visa to a 9a visa before he could convert to another. For example, if a person has a student visa, he should downgrade first to a 9a visa before he can apply for a work visa or an immigrant visa. Conversions to other visa types are allowed whether one enters under tourist, business, or balikbayan 9a visas.

Click here for a discussion on visa downgrading