CA orders SEC to restore Rappler certificate of incorporation

The Court of Appeals (CA) has ordered the Securities and Exchange Commission (SEC) to restore the certificates of incorporation of Rappler Inc. and Rappler Holdings Corporation (RHC), saying that the media outfit is wholly owned and managed by Filipinos.

In a 48-page decision promulgated on July 23, the CA Special 7th Division granted the petition filed by Rappler, and reversed and set aside the SEC's revocation of its certificate.

"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," it said.

JUST IN: CA orders the Securities and Exchange Commission to restore the certificate of incorporation of Rappler Inc. and Rappler Holdings Corporation.

In 2018, the SEC revoked the certificates for supposedly violating the foreign ownership restrictions @gmanews @gmanewsbreaking pic.twitter.com/jPlS86zRXe

— Joahna Lei Casilao (@joahnacasilao) August 9, 2024

In 2018, the SEC revoked the certificates of Rappler and RHC for supposedly violating the foreign ownership restrictions on mass media companies.

SEC found Rappler liable for violating the constitutional and statutory foreign equity restrictions in mass media when it issued Philippine Depositary Receipts (PDRs) to Omidyar Network, a foreign entity.

A PDR is a security that grants the holder the right to the delivery or sale of the underlying shares of stock and is usually not evidence of ownership of a corporation.

In June 2022, the SEC affirmed the revocation of the certificates of incorporation of the two companies, which effectively shutdown Rappler.

This prompted Rappler to file the present petition before the CA.

According to the appellate court, the SEC issued the assailed order and compliance with grave abuse of discretion amounting to lack or excess of jurisdiction.

The Special 7th Division said the SEC went against the clear directive of the CA 12th Division to evaluate the terms and conditions of the donation.

"It is also important to consider that the SEC En Banc did not conduct any hearing or receive any evidence from petitioners to rule on the issue at hand. Thus, it has no knowledge whatsoever of the terms of the donation, nor has it even reviewed the donation itself," it said.

The decision was penned by Associate Justice Emily San Gaspar-Gito, with Associate Justices Ramon Cruz and Raymond Joseph Javier concurring.

No foreign control

Meanwhile, the court said that there was no ground to revoke Rappler's certificates as there is no foreign control over the organization.

"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 CA said.

The CA said that the terms of the PDRs clearly show that Rapper Holdings retained full ownership and underlying shares.

It also found that Rappler Holdings retained "full beneficial ownership" as it retained its voting rights, the right to receive dividends, and the right to sell the underlying shares.

'Like a bull seeing red'

Meanwhile, the CA said that the SEC En Banc and the SEC Special Panel that handled the Rappler case "bent over backward" to justify the revocation of the certificates.

"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," it said.

"These actions have no place in a democratic state," it added.

When sought for comment, the SEC said it has yet to receive an official copy of the decision.

'Torturous' years

In a press briefing, Rappler CEO Maria Ressa welcomed the decision, saying the media organization is vindicated after eight "torturous years."

"It's a vindication after a tortuous eight years of harassment. Eight years. The CA was unequivocal in its rejection of the SEC’s 2018 shutdown order, declaring it 'illegal'—that's its quote—and a 'grave abuse of discretion,'" Ressa said.

Asked about the SEC's legal options, lawyer Francis Lim, who represents Rappler in the case, said that the SEC may still raise the matter to the Supreme Court (SC).

"I won't be surprised if the SEC will take this all the way to the SC, which is the final arbiter of our cases," Lim said.

"I don't want to preempt the SC but as a lawyer, again looking at it objectively, I don't see any reason why the SC would reverse it," he added.

Other cases

According to Ressa, the Rappler camp has a remaining cyber libel case before the SC and an anti-dummy case at a Pasig court.

In 2022, the Court of Appeals upheld the Manila Regional Trial Court's decision in 2020 to convict Ressa and former Rappler researcher Rey Santos Jr. of cyber libel, prompting them to file a petition before the SC.

If found guilty, Ressa will serve jail time for cyber libel.

"I hope the world turns right side up. Let me give the courts the respect we have given them through the last eight years. The faith we have had and continue, right?" Ressa said.

Meanwhile, Ressa stressed that press freedom is up to journalists and the civil society.

"It's like we were in hell, now we’re in purgatory. It is far from perfect. What's press freedom? It's actually up to us. The journalists who are here, the civil society who demand better information," she said.

She issued the remark when asked about the future of press freedom in the country.

No filters

Ressa also said that she wanted questions to not be filtered by the Marcos administration and other leaders in power.

"Just like our questions aren’t filtered here, don’t filter the questions. Answer the questions. You’re an expert. You’re a leader, right? Lead. The world needs leaders," Ressa said.

Aside from this, Ressa said that she also wanted greater access to information, stressing that "journalists are not the enemy."

Lastly, the Rappler chief pushed for the decriminalization of libel.

"This is one of the few countries in the world where libel is a criminal act, where journalists can go to jail," Ressa said.

In May 2023, the Court of Tax Appeals (CTA) affirmed its acquittal of Ressa and RHC of four tax evasion charges. The CTA also later affirmed Ressa and RHC’s acquittal in their fifth tax case. — VDV, GMA Integrated News