THE Court of Appeals has denied Rappler's plea to reverse the Securities and Exchange Commission's (SEC) ruling that revoked Rappler's business registration, but it has also ordered the SEC look into Rappler's case anew.
"Wherefore, the petition is denied. However, the Securities and Exchange Commission is hereby directed to conduct an evaluation of the legal effect of the alleged supervening donation made by Omidyar network of all its Philippines Depositary Receipts to the Staff of Rappler Inc. Accordingly, this case is remanded to the Securities and Exchange Commission for this purpose," the dispositive portion of the ruling penned by Associate Justice Apolinario Bruselas Jr. states.
In the decision, the CA did not agree on one of Rappler's contentions that the SEC ruling should be junked as Rappler is not engaged in the business of mass media, which is subject to nationality restrictions under Section 11 Article XVI of the Constitution.
The said article provides that the ownership and management of mass media shall be limited to Filipino citizens.
Rappler is alleged of violating the said article of the constitution as it has forged an agreement with foreign investors. The SEC said that this constitutes foreign control.
According to the CA, "in any case, Rappler cannot credibly claim that it is not engaged in the business of mass media through its own actions and actuations."
It said that although presidential decree 1018 defined mass media as either print media or broadcast media, Republic Act 9211 defines mass media to include electronic media, thus Rappler is considered as a mass media entity.
Rappler argued that the issuance of Rappler Holdings Inc. of Philippine Depositary Receipts (PDRs) Instrument to NBM and Omidyar- foreign companies is designed to address potential issues on compliance with the foreign equity restriction applicable to mass media entities.
Rappler stated that part of its goal is to expand its operation globally it sought advice on how to properly or legally structure its business amd secure investments which would not control Rappler but provide funding to its business.
The result of this is the issuance of PDRs to NBM and Omidyar.
But according to the CA, "since the constitutional provision limits both ownership and management of mass media to Filipinos, the concept of control comes into play. In the case of mass media, no foreign control is permissible."
The CA emphasized that in the existing jurisprudence in the Gamboa case, there are many ways by which control of a corporation can be attained regardless of ownership of shares or stocks.
"Indeed the capacity to control a corporation may also exist without owning shares of stock or voting rights in that corporation through corporate-control enhancing mechanisms that limit the voting powers or reduce the voting shares of a shareholder."
On the claim of Rappler that it was denied due process, the CA held that "although the Court agrees with petitioners' contention that the administrative procedure under 2016 SEC Rules was not observed to the letter by the SEC in this case, the same does not, by itself, amount to a violation of procedural due process."
Rappler argued that they cannot be held liable for violation of Article XVI Section 11 of the Constitution as the act complained of which is control by Omidyar of Rappler never occurred.
In Rappler's reply affidavit it said that Omidyar has already waived its negative foreign control rights over Rappler. It has also donated all the Omidyar PDR to Rappler staff.
The CA said this is a new development and should be investigated by the SEC.
"In view of the donation made by the Omidyar of all the Omidyar PDR to Rappler staff, the negative foreign control found objectionable by the SEC appears to have been permanently removed."
The CA held that the recent development may warrant a re-examination of the sanction of the revocation of Rappler's certificate of registration.
"Moreover, the SEC in the past had pursued a policy that revocation of the certification of registration should be the last resort," it noted.
Associate Justices Rafael Antonio Santos and Germano Francisco Legaspi concurred with the decision. (VoxPop Philippines)
