SEC cites foreign ownership violation in Rappler shutdown order


Posted at Jun 29 2022 10:35 AM | Updated as of Jun 29 2022 03:59 PM

Nobel Prize laureate and Rappler CEO Maria Ressa speaks during a press conference at the Palacio del Gobernador in Manila on February 24, 2022. George Calvelo, ABS-CBN News
Nobel Prize laureate and Rappler CEO Maria Ressa speaks during a press conference at the Palacio del Gobernador in Manila on February 24, 2022. George Calvelo, ABS-CBN News

MANILA - The Securities and Exchange Commission on Wednesday said it has ordered the revocation of the certificates of incorporation of news site Rappler due to violation of constitutional and statutory restrictions on foreign ownership on mass media.

Nobel Peace Prize laureate Maria Ressa on Wednesday said the SEC ordered the shutdown of Rappler.

In a statement, the SEC said the revocation applies to Rappler Inc and Rappler Holdings Corp (RHC) which are behind the news website.

The SEC cited its earlier decision which questioned Rappler's Philippine Depositary Receipts (PDRs) which it said violates the foreign ownership restriction in mass media.

PDRs allows foreign entities to invest but not control companies in the country. The SEC said Rappler's PDRs have questionable provisions.

"The PDRs included a provisions requiring the Filipino stockholders of Rappler to seek the approval of Omidyar Network on fundamental corporate matters, a violation of the absolute constitutional statutory prohibition on foreign control of mass media," the SEC said.

"Accordingly, the SEC revoked the certificates of incorporation of Rappler, being the mass media entity that sold control to foreigners, and of RHC, being an alter ego that existed for no other purpose aside from effecting a scheme aimed at masking the former's Constitutional violation," it added.

It said in 2018 it has declared PDRs as void "for being fraudulent transaction" pursuant to Section 71.2 of R.A. No. 8799 or the Securities Regulation Code.

The SEC said Omidyar Network, which holds Rappler PDRs, earlier announced its intent to donate it to the Filipino staff of Rappler. The Court of Appeals ordered the SEC to evaluate the donation.

Rappler appealed the SEC decision with the CA. The CA however affirmed the SEC's decision in 2019 while the Supreme Court issued a resolution declaring the case closed in September 2019.

The findings on the evaluation of the donation, meanwhile, was released by the SEC on Feb. 17, 2021.

"After careful study of all the pleadings and arguments of the parties, the special panel concluded that the purported donation of the PDRs to the staff of Rappler neither created nor transferred any right in favor of the donees which would mitigate or cure the violation already committed," the SEC said.

It added that Rappler and RCH filed a motion for reconsideration in March 2021 with the SEC and their counter-manifestation with the CA. The CA noted these documents in June 2022, the SEC said.

In line with recent document released by the CA and its repeated affirmations, the SEC said it issued the revocation order on June 28, 2022.

"With the latest resolution issued by the CA, which noted the compliance of the Commission and the counter-manifestation of Rappler and RHC, the instant order is now warranted considering that the appellate court's 2018 decision has already attained finality," it said.

"The contentions raised by Rappler and RHC have been squarely and adequately addressed by the SEC and the CA in their respective decisions, resolutions and orders, including the latest issuance from the Commission. In this light, the latest order issued by the Commission En Banc merely puts in effect its earlier decision and those of the Court of Appeals," it added.

Ressa said Rappler would appeal the recent decision.

“We are entitled to appeal this decision and will do so, especially since the proceedings were highly irregular," the news organization said in a separate statement. 


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