IN A move denounced as an attack on press freedom, the government stripped the online news website Rappler of its certificate of incorporation for allegedly violating the restrictions on foreign ownership in mass media and the Anti-Dummy Law.
than to effect a deceptive scheme to circumvent the Constitution,” the SEC said in a 29-page decision released Jan. 15.
Rappler allegedly violated constitutional restrictions on ownership and control of mass media entities when it sold Philippine depository receipts to Delaware-based Omidyar Network, a fund created by eBay founder and entrepreneur Pierre Omidyar.
The SEC said the sale contained “repugnant” provisions including the need for Rappler to obtain the consent of 2/3 of PDR holders on corporate actions.
This provision, the SEC said, has made Rappler “subservient” to the PDR holder, which is a violation of the constitution.
“Where mass media is concerned no control whatsoever maybe granted. 100-percent Filipino control means zero-percent foreign control. Control is any influence over corporate policy and not limited to ownership of stock,” SEC said.
Aside from revoking Rappler’s articles of incorporation, the SEC also declared void the Omidyr PDR for being a fraudulent transaction under the Securities Regulation Code.
PDR are instruments that give foreign investors a passive economic interest in Philippine company, a source told Manila Standard.
“But unlike the PDRs issued by other media entities, the so-called PDRs issued by Rappler don’t function that way and effectively give veto power over Rappler’s corporate actions to a foreign entity,” the source added.
Rappler said that they will continue to operate as it files the necessary motions for reconsideration with the courts to contest the SEC order.
“We intend to not only contest this through all legal processes available to us, but also to fight for our freedom to do journalism and for your right to be heard through an independent platform like Rappler,” they added.
In his State of the Nation Address on July 25, 2017, President Rodrigo Duterte threatened to investigate the ownership of Rappler, which has been critical of his administration, claiming that the news portal is “fully owned” by Americans.
Rappler denounced the SEC move as “pure and simple harassment” and said it has always acted in good faith.
“Now the Commission is accusing us of violating the Constitution, a serious charge considering how, as a company imbued with public interest, we have consistently been transparent and above-board in our practices. Every year since we incorporated in 2012, we have dutifully complied with all SEC regulations and submitted all requirements even at the risk of exposing our corporate data to irresponsible hands with an agenda. Transparency, we believe, is the best proof of good faith and good conduct,” Rappler said in a statement.
Senate Minority Leader Franklin Drilon said the SEC decision was “worrisome” but declined further comment until he read the resolution.
Another opposition senator, Risa Hontiveros, called the move “pure harassment and a clear attack on press freedom.”
“I urge the public and all media practitioners to defend press freedom and the right to speak truth to power,” she added.
Senator Grace Poe said the alleged violations of Rappler should first be studied but hoped this was not a move to silence any group or organization.
Palace spokesman Harry Roque, at one time a human rights lawyer, said the news outfit may appeal the SEC’s decision until it becomes final and executory.
Roque insisted, however, that “Rappler has to comply” with the constitutional prohibition on foreign ownership of media outfits.
“We respect the SEC decision that Rappler contravenes the strict requirements of the law that the ownership and the management of mass media entities must be wholly-owned by Filipinos,” said Roque.
The National Union of Journalists of the Philippines and the Foreign Correspondents Association of the Philippines expressed concern over SEC’s decision, and called on all Filipino journalists “to unite and resist every and all attempts to silence us.”
“The SEC has apparently decided to reject Rappler’s contention that its foreign investors merely placed money in the outfit but do not own it, which it issued after President Rodrigo Duerte, in his state of the nation address last year, threatened to have its ownership investigated,” The NUJP said in a statement.
“It was but one of many threats Duterte has made against media critical of him and his governance, such as the Philippine Daily Inquirer and broadcast network ABS-CBN, whose franchise renewal he threatened to block,” they added.
“The NUJP declares it full support to Rappler and all other independent media outfits that the state has threatened and may threaten to shut down.”
FOCAP called the SEC move as an attempt to kill the online news site and said it would have a chilling effect on media organizations in the Philippines.
“Journalists must be able to work independently in an environment free from intimidation and harassment. An assault against journalists is an assault against democracy,” Focap said.
But administration officials defended the SEC decision.
Calida, who had sought the investigation of Rappler, applauded the SEC decision.
“This decision demonstrates that even influential media outfits cannot skirt the restrictions set forth in the Constitution,” Calida said in a statement.
“Rappler is free to seek redress before our courts. The OSG is ready to defend the sound decision of the SEC in any forum,” he added.
“This is not about press freedom. This is about violation of laws. Let’s make that clear,” Communications Assistant Secretary Ramon Cualoping said in a Facebook post.
“Press freedom is very much alive in the Philippines,” Cualoping said. “Just ask the Malacañang Press Corps and other journalists.”
Assistant Secretary Margaux “Mocha” Uson called the news outlet’s suspension “good news” and criticized Rappler’s alleged anti-administration bias.
She also said she disagreed with the notion that publc officials must have good relations with media, because some news organizations were simply out to topple the government.
Rappler was registered with the SEC on July 25, 2011 primarily to operate as news, information and social network services company. Its parent firm Rappler Holdings Corp. owns 98.84 percent of the company.
In 2015 Rappler Holdings issued Philippine Depository Receipts to Omidyar.
Several large media firms have issued PDRs to foreign entities, including ABS-CBN Inc. and GMA Network Inc. in a bid to raise funds.