MANILA - The Securities and Exchange Commission (SEC) has been directed to respond to the petition of embattled online news website Rappler, which sought redress from the Court of Appeals (CA) to block the state regulator’s order revoking its articles of registration.
Through its 13th Division, the appellate court ordered the SEC on February 7 to file its comment within 10 days from notice, after which Rappler will have 5 days to file its reply.
The CA also ordered both parties to declare whether any other proceeding involving the same issue is pending or has been filed in the appellate court as well as other courts.
“The parties are required to promptly notify this court of any other cases or proceedings involving the same parties and issues in the court or other courts within 5 days from knowledge thereof….” the CA said.
The SEC ordered the revocation of Rappler’s registration in a decision issued on January 11 for violation of the Foreign Equity Restrictions in Mass Media enshrined in the 1987 Constitution, and enforceable through the Mass Media Law, Anti-Dummy Law, and the Foreign Investment Act.
The decision stemmed from Philippine Depositary Receipts (PDRs), worth over $1-million, Rappler sold to US-based Omildyar Netowrk Fund LLC, which contain a provision wherein Rappler “is required to seek approval of the [Omidyar] PDR Holders on corporate matters.”
“[Rappler] stockholders must have prior discussion with and approval of at least 2/3 of the PDR Holders, meaning Rappler is at the very least under obligation to consult with Omidyar Network. The stockholder has become, in effect, subservient to the holder
“It is neither 100% control by the Filipino stockholders, nor is it 0% control by the foreigner PDR holders,” the SEC decision stated.
The SEC explained that the Foreign Equity Restriction mandates that anything less than 100 percent Filipino control is a violation and anything more than 0 percent foreign control is a violation.
In its petition, Rappler argued the subject PDRs “[do] not confer upon Omidyar control, much less ownership and management.”
“There was no finding whatsoever that Omidyar actually exercised control over Rappler, which finding was the basis for the revocation of the certificates of incorporation… the SEC en banc could not possibly deny that Rappler and RHC ‘have all-Filipino shareholders, directors and officers…’” the petition stated.
The news platform also insisted that the state regulator applied a different procedure in its case, thus depriving it of due process and the right to equal protection of laws.
Rappler’s case has been raffled to Associate Justice Rafael Santos; the other members of the division handling the petition are Associate Justices Socorro Inting and Apolinario Bruselas.