The Securities and Exchange Commission (SEC) has affirmed its order revoking the incorporation papers of online news organisation Rappler, Inc. and Rappler Holdings Corporation (RHC) for violating the restrictions on foreign ownership in mass media.
In a statement, Rappler said it will appeal the SEC decision as it finds the proceedings “highly irregular.”
In January 2018, the SEC revoked the certificates of incorporation of Rappler and RHC for violating the constitutional and statutory foreign equity restrictions in mass media when it issued Philippine Depositary Receipts (PDRs) that granted Omidyar Network, a foreign entity, control over the media organization.
The PDRs included a provision requiring the Filipino stockholders of Rappler to seek the approval of Omidyar Network on fundamental corporate matters, a violation of the absolute constitutional and statutory prohibition on foreign control of mass media.
Rappler appealed SEC’s decision before the Court of Appeals.
The CA, in a decision dated July 26, 2018, affirmed the SEC findings. However it also directed the SEC to conduct an evaluation of the legal effect of the alleged supervening donation by Omidyar Network of the PDRs to the staff of Rappler.
The SEC upheld its earlier decision in a ruling issued Tuesday, June 28, 2022.
It also noted that the donation of PDR shares by Omidyar to Rappler’s staff will not cure the violation because the PDR is void for having an object that is contrary to the law.
“Considering that the donation is void for being contrary to the law and public policy, the same cannot be ratified for the purpose of curing a violation of the Constitution and the law that was already committed by Rappler and RHC,” SEC said in its order.
“In fact no amount of effort can salvage the legal existence of Rappler and RHC by virtue of the fact that the infirmity that tainted their Certificates of Incorporation is based on contract that are void for being contrary to he Constitution and the laws,” it added.
Because of the gravity of the violation, SEC said the penalty of revocation was meted out.
“Public interest will be served if the revocation of the Certificate of Incorporation of Rappler and RHC is sustained because it will implement the policy of respecting and fully complying with the provisions of the Constitution, to which every Filipino owes allegiance,” the SEC said.
“The same will underscore the policy that any violation of the Constitution especially by grantees of a State franchise, will not be taken lightly,” it added.