CA denies Rappler’s motion on SEC ruling
THE COURT of Appeals (CA) has denied for lack of merit the motion for partial reconsideration by Rappler, Inc. and Rappler Holdings Corp. (RHC) on their case with the Securities and Exchange Commission (SEC) over the alleged violation of foreign equity restriction by Rappler and its holding company.
In a 25-page resolution promulgated Feb. 21, the court’s former special 12th division said it found no compelling reason to reverse its previous ruling appealed by Rappler and RHC.
“The arguments raised by petitioners are essentially the same as those that have already been discussed and were exhaustively passed upon in this Court’s Decision dated 26 July 2018,” it said.
The CA held that Rappler, as a “mass media” entity, should be wholly-owned and managed by Filipinos, in accordance with the Constitution.
It should thus comply with the foreign equity restriction wherein the “right to receive dividends and right to vote must be retained by Filipino shareholders who own 100% of shares with voting rights, in compliance with the Full Beneficial Ownership Test,” the appellate court said.
“Therefore, applying the Full Beneficial Ownership Test, RHC cannot claim that it fully owns the Rappler shares since it does not exclusively exercise the right to vote on the Rappler shares. By virtue of clause 12.2.2, Omidyar Network is granted the power to direct the voting on the Rappler shares,” the CA ruled.
“Considering that clause 12.2.2 in the Omidyar PDRs (Philippine Depository Receipts) already granted Omidyar Network with control over corporate policies and affairs of a mass media entity, which must be wholly-owned and managed by Filipinos, the actual exercise by Omidyar Network of said control is irrelevant since a violation of the nationality requirement under the Constitution and pertinent laws was already committed,” the CA added.
The case stemmed from the SEC en banc decision in January 2018 which revoked Rappler’s certificate of incorporation for “existing for no other purpose than to effect a deceptive scheme to circumvent the Constitution” and declared void Omidyar’s PDRs for being a “fraudulent transaction.”
The CA said there is no violation of right to due process on the part of Rappler as the petitioners were sufficiently notified of the charge against them and were given the opportunity to defend themselves.
The court also reiterated that it remanded the case to the SEC and directed the commission to conduct an evaluation of the legal effect of Omidyar Network’s donation of its PDRs to the staff of Rappler.