‘Rappler is Filipino’: CA voids 2018 Rappler shutdown, restores rights

MANILA, Philippines – Rappler has won its biggest case as a company, as the Court of Appeals (CA) has voided the 2018 shutdown order of the Duterte-time Securities and Exchange Commission (SEC), restoring its certificate of incorporation and eliminating risks of its offices being shuttered.

“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 CA Special 7th Division in a strongly worded decision promulgated on July 23.

“The facts show that Rappler Holdings, and by extension Rappler, are currently wholly owned and managed by Filipinos, in compliance with the Constitutional mandate,” the decision added.

The SEC revoked Rappler’s certificate in January 2018, saying that the Philippine Depositary Receipts (PDRs) — a financial instrument — issued to foreign investor Omidyar was unconstitutional. A month after, Omidyar donated the PDRs to Rappler’s Filipino managers, which led the CA in the same year to ask the SEC to reevaluate its decision, believing the donation had removed the problem. Instead, the SEC upheld its order just before former president Rodrigo Duterte stepped down from the presidency in 2022. As all of this was happening, Rappler was battling the SEC in the CA and was at risk of being shut down.

According to the CA’s latest decision, Rappler was being “accorded preferential treatment – a negative one” by the SEC.

“Like a bull seeing red, the SEC En Banc plowed through law and jurisprudence to reach its mark – the death of Rappler. The SEC En Banc violated the hierarchy of courts and ignored procedure. These actions have no place in a democratic state,” said the decision penned by Associate Justice Emily San Gaspar-Gito, with concurrences from Associate Justices Ramon Cruz and Raymond Joseph Javier.

The ruling

The CA reiterated that Omidyar’s donation has removed the problem.

“As thoroughly discussed, the execution of the Waiver has already eliminated any and all Constitutional violations committed by petitioners.”

That the SEC did not take this into consideration when they were ordered to reevaluate their decision in 2018 was grave abuse of discretion on their part, said the appellate court. “Relying on its interpretation of the word ‘evaluate,’ the SEC EN Banc then proceeded to resolve the issue in isolation, without allowing petitioners to submit evidence or participate in the so-called ‘evaluation.”

It added: “SEC En Banc chose to ignore its order and evaluated the legal effect of Omidyar’s donation without even bothering to look at the donation itself. Worse, it actively avoided giving petitioners the opportunity to present the same,” said the CA.

“SEC En Banc’s ruling goes well beyond mere failure to understand the CA 12th Division’s ruling, it displays willful defiance that exceeds even the threshold of grave abuse of discretion,” the decision added.

‘Rappler is wholly-Filipino’

The SEC took issue with the terms of Omidyar’s PDR with Rappler, ruling that it gave foreigners control of a media company which is supposed to be wholly Filipino-owned.

The CA said that Omidyar’s PDR did not amount to ownership. The agreement allowed the PDR holder to buy shares on one condition — “if the holder is permitted by Philippine laws to hold shares.” Since Omidyar is not constitutionally allowed to buy shares, the CA said the agreement prevented that from happening.

“The terms of the PDRs clearly show that Rappler Holdings retained full ownership of the underlying shares,” said the CA.

“Consequently, under the terms of the PDRs, Omidyar is not even given a potential ownership right, or the option to become an owner of Rappler Holding’s shares. Instead…the only option of a non-Filipino PDR holder is to sell or transfer the PDRs to another holder,” the decision added.

Freedom of the press

As Rappler was battling for its corporate existence for the last six years since 2018, supporters of the Duterte government tried to frame it as a pure corporate issue not related to press freedom. This CA decision dedicated the last 7 pages of its 48-page decision to freedom of the press.

For the CA, the 1987 Constitution’s limits on foreign ownership was not a “narrow” vision, and should not be used to trample on the free press. “This Court does not agree with the SEC En Ban’s draconian interpretation that mere violation of the same, at any point in time, and even if such violation was cured, should warrant the obliteration of a mass media entity,” said the CA.

The CA pointed out that PDRs are regular financial instruments and that “there is also no law or regulation directly prohibiting the issuance of PDRs by mass media companies or even public utilities.”

The Constitution, the CA said, “is far more complex…” in that it envisioned the free press as a key player in the free marketplace of ideas. “Clearly, the framers of the Constitution sought to enable a multitude of mass media entities to function, owned by a variety of persons and corporations. This was to ensure the birth of a marketplace of ideas, which was non-existent in darker days,” said the decision.

Rappler’s latest legal victory brought down its cases down to two: the cyberlibel conviction being appealed by CEO and Nobel peace prize winner Maria Ressa in the Supreme Court and one remaining anti-dummy case pending in a Pasig City court.

The anti-dummy case was an offshoot of this SEC case, in which the Duterte-time Department of Justice theorized that the PDRs amounted to taxable income which was not rightfully declared. The twin tax cases of this anti-dummy case were all dismissed in 2023. – Rappler.com