MANILA, Philippines — The Court of Appeals has ordered to restore the certificate of incorporation of the company that runs news website Rappler and its owner, Rappler Holdings Corp., voiding a 2022 ruling by the Securities and Exchange Commission that declared the company was not 100% Filipino-owned.
“The Securities and Exchange Commission is ordered to restore the Certificate of Incorporation of Rappler, Inc. and Rappler Holdings Corporation in its records and system and withdraw all its issuances and actions made pursuant to its illegal revocation of the same,” said the Court of Appeals Special 7th Division in a 48-page decision promulgated on July 23.
In a statement on Friday, Rappler said the appeals court’s decision was a “vindication after a tortuous eight years of harassment.”
“Rappler welcomes the Court of Appeals (CA) ruling that eliminates a long-standing threat to its corporate existence on account of a flawed ruling by the Securities and Exchange Commission (SEC). When the rule of law prevails, justice is served,” the statement read.
“The CA was unequivocal in its rejection of the SEC’s 2018 shutdown order, declaring it ‘illegal’ and a ‘grave abuse of discretion,'” the news organization added.
What went before
In 2018, the regulatory commission ordered to shut down Rappler for violating the constitutional prohibitions for mass media when it issued Philippine Depositary Receipts (PDRs) that gave Omidyar Network, a foreign entity, control over the media organization.
That same year, the Court of Appeals upheld the regulatory commision’s decision that the media organization allegedly violated the Constitution and foreign equity restrictions in mass media.
However, the court also asked the regulatory commission to evaluate the legal effect of the alleged donation of Omidyar Network of all its PDRs to Rappler staff.
In 2022, the regulatory commission ruled that Omidyar’s donation of PDRs “did not cure the violation by Rappler Inc. and Rappler Holdings Corporation” and upheld its revokation of Rappler’s certificates.
Grave abuse of discretion
On July 23, the appeals court ruled that the regulatory commission had committed grave abuse of discretion when it ruled that the donated PDRs did not waive Rappler’s alleged violation without actually studying the terms and conditions of the donation.
The decision noted that the regulatory commission did not conduct any hearing or receive any evidence from petitioners prior to making its ruling.
“Thus, it has no knowledge whatsoever of the terms of the donation, nor has it even reviewed the donation itself,” it added.
The regulatory commission “chose to ignore” the appeals court’s order and “‘evaluated’ the legal effect of Omidyar’s donation without even bothering to look at the donation itself,” the decision said.
“Worse, it actively avoided giving petitioners the opportunity to present the same. Such action is the height of grave abuse of discretion,” it added.
The regulatory commission also “intentionally shirked its responsibility, ignoring the directive of the CA 12th Division to ‘evaluate the terms and conditions of the alleged supervening donation.'”
“On this basis alone, the assailed Compliance and Order should be reversed and set aside,” the decision said.
On the PDRs. The appeals court also ruled that the PDRs by Omidyar did not amount to a constitutional violation.
“As law and jurisprudence stand, there is nothing prohibiting Filipinos from entering into PDR agreements, even if the underlying shares are mandated to be Filipino-owned,” the decision read.
“The only limitation, pursuant to the above-cited cases, is to issue shares of stock which are lacking in voting rights, the right to dispose or the right to receive dividends. Here, Rappler Holdings retained all these rights,” it added.
The facts point to Rappler being “currently wholly owned and managed by Filipinos, in compliance with the Constitutional mandate,” the decision said.
The news site considers the decision to be its “biggest case as a company,” according to its report on the decision on Friday.
‘Harassment’
The 2018 ruling by the regulatory commission turned out to be the first in a slew of cases filed against Rappler, which one of several prominent news organizations that earned the ire of the Duterte administration from 2016 to 2022.
Former President Rodrigo Duterte routinely vilified the media in public speeches during his six-year term. He once publicly blasted Rappler as a “fake news outlet” for reporting on a multibillion-peso Navy frigate acquisition project, ushered in the closure of ABS-CBN, the nation’s largest broadcaster, and issued threats against the Philippine Daily Inquirer.
Rappler said it was a “fact that the Duterte government used the SEC order to unleash its power to further harass us, our employees, our stakeholders, and our communities.”
“Banks refused to do business with us. Clients shied away from advertising with us. Government officials and agencies shut their doors on us. We were forced to close our Jakarta bureau, stop our expansion plans. Rappler couldn’t even open a bank account outside the Philippines,” the company said in its statement.
“We look forward to the speedy dismissal of our remaining two cases: the cyber libel case at the Supreme Court and the anti-dummy case at a Pasig court,” they added.
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