Press Release
March 14, 2014

(Guest speaker at De La Salle University's First Business Law Conference
sponsored by Ley La Salle on 14 March 2014, at De La Salle Manila)

I am happy that after making an epic journey from my house in Quezon City to Manila, I have been able to arrive safely, but only after navigating the most catastrophic office trip in the world, which sometimes features traffic smashups, the worst floods to hit the planet after the flood of Noah and his ark, sinkholes, holdups, pickpockets, and just plain street crimes. I risked all these, just to be able to join you at this first business law conference, for which I congratulate the officers and members of Ley La Salle.

Internet as an Enterprise Platform

We have all seen how the Internet and the Web have introduced new ways of interacting, organizing, and doing business. The book entitled Cyber Law, third edition, written by seven professors from various American schools, including Harvard, makes this observation:

The Internet means advances in productivity, speed, and knowledge. It is the fastest, most cost efficient way to reach the widest possible audience. . . . It makes it possible for businesses to deliver targeted aids to users, based on their searches. The net effect of these technologies is nothing short of an information revolution where there is now almost universal access to both free information and free tools to disseminate information.

In the last few years, the Internet has made possible new and different business models. These new models are businesses that exist only in, and only because of, the Internet, include such companies as Google, Facebook, Craigslist, and Instagram.

One reason for the successful growth of the Internet ecosystem is that it offers free sites supported by a third-party advertising revenue model. Ley La Salle is correct in identifying as a focus of dialogue the interaction of Internet technology, law, and business. The effect of the Internet on the Philippine economy is staggering, if we consider the following factors:

  • Consumers who make their purchases online.

  • Ecommerce companies, which provide jobs which with a multiplier effect, and hence produce other jobs in the economy.

  • Internet-related small businesses.

  • Online advertising spending. La Salle is one of the major universities that has responded to this structural change and different skills set demanded by the Internet. According to the same book, the following are Internet-created industries that provide new jobs:

  • Internet service providers

  • Web-hosting services

  • Hardware and software producers

  • Search engines

  • Content developers

  • Information technology consulting

  • Advertising networks, and

  • Web design

2012 Cybercrime Prevention Act

For the past decade, Philippine government has had to wrestle with certain phenomena produced by the Internet. The Internet is "on" all the time. It is wide open, insecure, and easy to penetrate or disrupt. The Internet has a relatively anonymous nature, making it easier to deceive others. It has been said wisely: "Increased creativity means more possibilities for good and bad outcomes."

As a factual matter, as in countries all over the world, technology and business practices have been running faster than legal responses and developments. Initially, in any country, businesses were taken aback because they were operating in a legal vacuum and initially they had no legal guidance. For example, initially in the United States, there were no laws regulating behavioural advertising. As a result, as in the Philippines, government has relied on industry self-regulation. But Internet businesses have been challenged in court, particularly in the 2014 case of Disini v. Secretary of Justice, where the Philippine Supreme Court upheld some but rejected other provisions of the 2012 Cybercrime Prevention Act.

The problem with the cybercrime decision of the Supreme Court is that almost by definition, the Internet can only be managed by a loose regulatory arrangement. In effect, the Internet is a global connection of interconnected computers. It has been described as: "truly a peer-to-peer (p2p) system with many distributed nodes and no central point of control architecture."

As a constitutional law student, I have to emphasize that the structure of the Internet is by definition hostile to any desire to control, direct, manage, or supervise, whether that desire comes from the government, or from other interest groups. Experience has shown us that attempts to control the Internet will invariably fail. We should be instructed by the failed efforts of China to regulate political content, the efforts of America to regulate Internet gambling, or the efforts of Australia to regulate certain speech. By its very nature, the Internet will always resist such controls.

Internet Libel

In the United States, from which we inherited the common law system as part of our mixed law system, digital media law no longer imposes strict liability upon libel defendants. In the 1971 case of Time, Inc. v. Pape, the US Supreme Court created a "zone of protection" for errors of fact that occurs in publication. In that case, the Supreme Court ruled that plaintiffs suing for defamation regarding a matter of public concern, must prove negligence or malice on the part of the defendant, as well as the falsity of the defendant's statements.

Within this context, let us see very briefly how libel laws apply to traditional media defendants versus non-traditional or nonmedia defendants in a period in which our economy is producing digital media products.

Our Supreme Court has upheld the constitutionality of the legal provision prohibiting and penalizing online libel. This Supreme Court ruling raises many questions. Here are some questions:

1. Are bloggers and podcasters entitled to the same level of Free Speech Protection in libel cases? In a libel case in the state of Georgia, the appellate court convicted of libel a blogger using a "news" format but with a clearly biased agenda.

2. Should bloggers and podcasters bear the same type of liability as traditional media for defamatory statements?

I have advocated the decriminalization of libel, in the sense that libel should no longer be punished by imprisonment, but simply by requiring the defendant to pay damages. The question is: How much in damages can be awarded to a plaintiff? In the 2009 case of Orix Capital v. Super Futures Equities, the court in Texas awarded $2.5 million in compensatory damages, and $10 million in punitive damages.

I humbly disagree with the ruling of our Supreme Court on digital libel, because it might precipitate libel suits related to posts on Twitter, Facebook, and Craigslist. A tweet is limited to 140 characters, and you might think that it would be difficult to commit libel with this limitation. But in a court in the United Kingdom, the plaintiff won a libel case, because a British politician posted a twitter.

A "Safe Harbor" Provision

Because of the dangers to free speech posed by the recent Supreme Court decision upholding online libel, I have filed a new bill in the Senate entitled "Magna Carta of Internet Freedom," which was written by crowdsourcing in the Internet. In the light of the recent Supreme Court decision, I highly recommend that the Congress should protect online service providers from liability for the posts made by their users. This is called the "Safe Harbor Provision," under the US Communications Decency Act.

Under Section 230, operators of "interactive computer services" are free from liability for the defamatory comments made by their users. Section 230 provides: "No provider or user of an interactive computer service shall be tried as the publisher or speaker of any information provided by another information content provider."

However, we have to restudy the "Safe Harbor Provision," because it can be abused. The provision exempts the website from liability, while its operators shield posters by means of coding that allows people to post anonymously. Thus, the courts might use the Safe Harbor Provision to dismiss complaints for invasion of privacy, misappropriation of trade secrets, cyberstalking, and negligence.

"Pay-for-Stay" in Napoles Case

Because of the prestige enjoyed by De La Salle University, please allow me to touch on the current controversy concerning the amount that the government is paying to provide safety and security to Janet Napoles. This personality apparently enjoys a rock-star status because of allegations that she committed the crime of plunder in the P10 billion pork barrel scam.

Napoles has stubbornly insisted on the right to remain silent during Senate public hearings on the scandal. Since Napoles refuses to cooperate, it appears that there is no substantial reason for the government to pay so much money just for one individual, when it does not provide the same services for all other prisoners facing criminal charges and denied the right to bail.

Accordingly, I humbly propose that President Aquino should save public funds by allowing detention prisoners to pay for their stay. The first legal basis is the President's ordinance power, under which he could issue a memorandum order concerning a particular office of the government. The second legal basis is the President's residual powers, as provided for by the Administrative Code.

The President has the power to compel a detention prisoner to make a choice between ordinary stay in jail at government expense, or stay in an enhanced facility at the prisoner's own expense. In the United States, this is called the "Pay-for-Stay" program. The American courts have upheld "Pay-for-Stay" programs in such states as Texas, California, New York, Illinois, Tennessee, Ohio, and Pennsylvania.

In the United States, "Pay-for-Stay" programs have been questioned in court. The most famous of these American decisions is the 2000 case of Tillman v. Correctional Facility, decided by the US Court of Appeals. The American appellate court upheld the system of charging inmates for enhanced room and board, under the following rulings of constitutional law:

  • "Pay-for-Stay" does not constitute cruel and unusual punishment, so long as the inability to pay the fees did not affect the subject prisoner's access to needed services.

  • The program does not impose Excessive Fines, since the fees charged to the prisoner were not fines, but they were rehabilitative rather than punitive in nature.

  • There was no denial of Due Process, because the American system provided a prisoner grievance procedure.

  • There was no violation of Equal Protection under the so-called "rational basis review," where it is shown that there is a rational relationship between the end sought to be gained, and the means employed.

The landmark case of Tillman teaches us that there should be judicial deference to executive administrative practices. In other words, the judiciary should grant a wide latitude in applying the President's constitutional power to control the executive department. In fact, the U.S. Court of Appeals in the Tillman decision indicates, that even if Tillman's constitutional rights have been violated, the Court might still find that the violation was outweighed by the state's interest in "sparing the taxpayers the cost of imprisonment."

Philippine state interest consists in the promotion of the truth about the pork barrel scandal. If Napoles as a person in interest refuses to cooperate by providing information which she apparently possesses about the scam, there is no acceptable reason why government should single her out for special treatment among the more than 70,000 detention prisoners in the country. In fact, the very discrimination in her favour is what constitutes a violation of the Equal Protection Clause.

The PNP is apparently spending excessive public funds to detain Napoles as compared to an ordinary detention prisoner. Compare these two kinds of detainees in terms of their periodic expenses, as follows:

  • Napoles daily - P5,000; ordinary prisoner - P54

  • Napoles monthly - P150,000; ordinary prisoner - P1,612

  • Napoles yearly - P1.8 million; ordinary prisoner - P20,000

The PNP should immediately bill Napoles under a Cost Recovery Program if she wishes to avail of protection for her security and safety, then the obvious legal remedy is for her to apply to the Witness Protection Program administered by the Department of Justice.

In the end, the Napoles case constitutes one more example of the interaction of technology, business, and law in our networked environment. It remains for Ley La Salle to ensure that in this case justice is done.

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