Rappler asks CA to nullify SEC order revoking its license to operate

January 29, 2018

Online news website Rappler asked the Court of Appeals Monday to nullify a decision of the Securities and Exchange (SEC) revoking its certificate of incorporation  for allegedly violating the restriction on foreign ownership in mass media.

In a 70-page petition filed through lawyer Francisco Ed Lim, Rappler said it was incorporated on July 25, 2011, and owned by Filipino citizens or corporations wholly owned and managed by Filipinos.

Petitioners Rappler Inc. and its holding company -- Rappler Holdings Corporation (RHC) -- accused SEC of violating its constitutional right to due process and equal protection of the laws in issuing its resolution last January 22, 2017 voiding the Philippine Depositary Receipts (PDR) being held by Omidyar Network and revoking its certificate of incorporation.

Rappler said on August 2, 2017 it received a show cause order saying a special panel was formed but it was not clear whether it was conducting an investigation or an administrative proceeding.

The petitioner argued the special panel has no authority to adjudge Rappler or RHC administratively liable and to impose administrative sanctions

The petitioners said while the special panel was conducting an investigation, a reading of the show cause order served upon them had made a finding they were liable under various laws, particularly  foreign equity restrictions under Article XVI, Section 11 (1) of the Constitution.

“The Special Panel recommended the imposition of revocation on Rappler and RHC directly to the Commission en banc. No formal charge was filed against Rappler and RHC as required by the SEC Rules,” the petitioners added.

Rappler said there was also no formal administrative action filed against Rappler and RHC before the SEC.

Rappler said there is no basis for the SEC to revoke its certificate by voiding the Omidyar PDR.

"The Omidyar PDR does not confer upon Omidyar control, much less ownership and management, over Rappler. As such, the SEC has no basis to declare void the Omidyar PDR," petitioners asserted.

Rappler said  it cannot be covered by Presidential Decree No. 1018 or the implementing law of the ban on foreign ownership in media entities under Article 16, Section 11 (1) of the 1987 Constitution simply because it "is not engaged in the business of mass media."

It stressed that the "mass media" as contemplated in the deliberations of the constitutional commission covered only print and broadcast media and that the SEC erred in classifying it as part of this category based only on the outfit's previous statement claiming it to be "mass media. DMS