The Philippines’ Court of Appeals (CA) yesterday has upheld the decision of the Securities and Exchange Commission (SEC) to revoke news website Rappler’s articles of registration.
However, according to CNN Philippines, the CA returned the case to the SEC. The former also asked the SEC to study the effect of foreign investor Omidyar Network’s donation of US$1.5 million to Rappler’s staff.
The CA did not decide on whether the website should cease its operation, according to Rappler.
The SEC revoked Rappler’s license in January of this year, citing Article XVI, section 11 of the 1987 Constitution which states that “ownership and management of mass media shall be limited to citizens of the Philippines.”
Omidyar Network is a fund created by eBay founder Pierre Omidyar which invested in Rappler in 2015, according to Rappler. The company invested using Philippine Depositary Receipts (PDRs), which are instruments that foreign companies can buy in order to invest in Filipino companies.
In February this year, Omidyar donated its PDRs to 14 Filipino managers of Rappler, according to the website. Said Omidyar’s Stephen King: “This donation completely eliminates the sole basis of the SEC ruling against Rappler Incorporated and Rappler Holdings Corporation.”
ABS-CBN News reported that the SEC maintained that the PDRs held by American fund Omidyar Network required Rappler to “seek approval of the [Omidyar] PDR Holders on corporate matters.”
Rappler maintained that Omidyar does not control the company.
But the CA said that “there was some control [of Rappler]” on the part of Omidyar, reported ABS-CBN. The CA cited that the PDRs held by the American firm stated that the right to vote is shared between the two companies.
Said the CA: “[U]nder a ‘zero’ foreign control standard, it would appear that this is tantamount to some foreign control.”
The CA also said that “a substantial compliance with the requirements of due process was observed by the SEC [in making the decision to revoke the license],” contrary to Rappler’s claim.
However, the CA said the SEC should give Rappler “reasonable time within which to correct or modify the objectionable portions of their articles of incorporation or amendment thereof.”
Francis Lim, Rappler’s lawyer, said that the company will take all legal actions necessary to have the issue resolved by the Supreme Court, reported the news website.
He said: “I’m glad that the Court of Appeals has ordered the SEC to conduct further proceedings to determine the legal effect of the donation of the PDRs to the Filipino staff of Rappler. What this means is that the SEC decision cannot be enforced or implemented until the issue is finally decided. Meanwhile, it’s business as usual for Rappler.”
President Rodrigo Duterte has a testy relationship with Rappler, going so far as to order the Malacañang Palace’s Internal House Affairs Office to ban its founder Maria Ressa and reporter Pia Ranada from entering the Palace.
Duterte even called Rappler “a fake news outlet” after it published a report that claimed his special assistant, Christopher “Bong” Go, allegedly got involved in the selection of suppliers of the Philippine Navy’s Combat Management System.