CA affirms SEC ruling vs Rappler, holding firm
Credit to Author: Tempo Desk| Date: Mon, 11 Mar 2019 05:58:51 +0000
The Court of Appeals has affirmed its decision that dismissed the petition against the ruling of the Securities and Exchange Commission which cancelled the business registration of online news outfit Rappler and its holding company, Rappler Holdings Corp., for violation of the foreign equity restrictions in mass media under the Constitution.
In a 25-page resolution written by Associate Justice Rafael Antonio M. Santos, the CA ruled:
“In summary, a motion for reconsideration grounded on arguments already submitted to the court and found to be without merit may be denied summarily, as it would be a useless ritual for this Court to reiterate itself.
“Here, petitioners (Rappler and RHC) did not raise any new matter or issue in its Motion. Accordingly, this Court finds no cogent justification to reconsider its Decision dated 26 July 2018.”
The CA said that contrary to the claims of Rappler and RHC, the SEC did not violate the right to due process of RHC in revoking the firm’s business registration.
“While there is no denying that a full compliance with the procedure under the 2016 SEC Rules was not observed by the SEC, a substantial compliance with the requirements of procedural due process was clearly accorded to the petitioners. Therefore, the Court maintains that the assailed SEC en banc decision cannot be annulled on the ground that petitioners were denied due process,” it said.
At the same time, the CA maintained that Rappler is a mass media entity covered by the ban on foreign ownership under the Constitution as well as by the requirement of 100 percent Filipino ownership in terms of both right to receive dividends and right to vote under the full beneficial ownership test.
The CA said that “Rappler cannot credibly claim that it is not engaged in the business of mass media through its own actions and actuations.”
Among other things, the CA said: “…it has been held that the best proof of the purpose of a corporation is its articles of incorporation and by-laws. The Articles of Incorporation dated 25 July 2011 and Amended Articles of Incorporation dated 16 April 2014 of Rappler states that its primary purpose is ‘to design, develop, establish, market, sell, maintain, support, distribute, customize, sell, resell and/or operate news, information, and social network services xxx via web, Internet, mobile, and other delivery formats xxx.’”
“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 shared,” it explained.
The CA did not resolve the issue on whether or not the supervening donation made by Omidyar Network of all its Philippine Depository Receipts to Rappler’s staff effectively cured the defect in RHC’s registration. (Rey Panaligan)