By Arjay L. Balinbin, Reporter
THE Court of Appeals (CA) has denied the petition of online news site Rappler.com to reverse the decision of the Securities and Exchange Commission (SEC) revoking its incorporation papers for failing to meet the constitutional limits on foreign ownership.
Dated July 26, the court’s 72-page decision also directed the Securities and Exchange Commission to conduct an evaluation of the legal effect of the alleged supervening donation made by Omidyar Network of all its Philippine Depositary Receipts (PDRs) to the Staff of Rappler, Inc.”
The SEC, according to the CA, “does not dispute that the issuance of PDRs is not illegal per se.”
“As noted by petitioners, other corporations like ABS-CBN, GMA and Globe have issued PDRs in the past and the same were allowed by the SEC. Further, the SEC also reviewed the North Base Media PDR and found nothing illegal or irregular in its terms,” the CA also said.
In SEC’s decision on Jan. 11, it declared “void” the PDRs issued by Rappler to Omidyar pursuant to Section 71.2 of the Securities Regulation Code for being a “fraudulent” transaction.
The SEC said: “The restriction of foreign equity prevents any scheme to transfer rights attached to equity — even in the guise of an equity derivative. The (Omidyar) PDR requirement of ‘prior discussion’ and ‘approval of 2/3’ was a grant of more than 0% control to foreigners; control no less than 100% reserved to Filipinos.”
In a statement, as posted on Rappler.com on Friday, July 27, Rappler CEO and Executive Editor Maria A. Ressa said that it is still “business as usual for Rappler.”
Ms. Ressa noted that the appellate court has “sided” with her company on “three key issues.”
She said: “First, that the SEC’s revocation of our certificate of incorporation is wrong. Omidyar never exercised its right to the allegedly questionable clause in its Philippine Depositary Receipt (PDR) and later even waived its right under that clause, according to the CA. Second, that the SEC failed to apply its own rules and practices to Rappler. Worse, the SEC went against the mandate of the law by not giving Rappler an opportunity to amend or correct any perceived error before revoking its certificate of incorporation.”
“Third, that the SEC needs to reinvestigate the case, given Omidyar’s donation of its PDRs to Rappler’s staff last February 19.”
“We are here for the long haul — with you, inspired and reinvigorated by the mission of journalism,” Ms. Ressa also said.
For his part, Presidential Spokesperson Harry L. Roque, Jr. said the CA’s decision “supports the Palace stance that this case does not involve press freedom, but the regulatory powers of the SEC.”
He also said that the decision affirms that the SEC “was correct to revoke Rappler’s registration based on its previous investigation.”
“We are confident that the SEC will be able to resolve the case with the same competence and objectivity as before,” Mr. Roque added.