The Court of Appeals ordered the Securities and Exchange Commission to respond to the petition of online news website Rappler, which filed an appeal to block the state regulator’s order revoking its articles of registration.
The 13th Divison of the appellate court directed the SEC on Feb. 7 to file its comment within 10 days from receipt of notice, after which Rappler will have five days to file its reply.
The CA also ordered both parties to inform the appellate court on whether the same issue is pending or has been filed in the CA as well as other courts.
“The parties are required to promptly notify this court of any other cases or proceedings involving the same parties and issues in the court or other courts within 5 days from knowledge thereof….” the CA said.
On Jan. 11, the SEC has ordered the revocation of registration of the online news portal for alleged violation of the Foreign Equity Restrictions in Mass Media enshrined in the 1987 Constitution, and enforceable through the Mass Media Law, Anti-Dummy Law, and the Foreign Investment Act.
Rappler, however, cried harassment over the closure order.
The decision stemmed from Philippine Depositary Receipts, worth over $1 million which Rappler sold to US-based Omildyar Network Fund LLC.
The PDR contains a provision wherein Rappler “is required to seek approval of the [Omidyar] PDR Holders on corporate matters.”
“[Rappler] stockholders must have prior discussion with and approval of at least 2/3 of the PDR Holders, which means that Rappler is at the very least under obligation to consult with Omidyar Network. The SEC said that the stockholder has become, in effect, subservient to the holder
“It is neither 100% control by the Filipino stockholders, nor is it 0% control by the foreigner PDR holders,” the SEC decision stated.
According to the SEC, the Foreign Equity Restriction mandates that anything less than 100 percent Filipino control is a violation and anything more than 0 percent foreign control is a violation.
But in is petition, Rappler argued the subject PDRs “[do] not confer upon Omidyar control, much less ownership and management.”
“There was no finding whatsoever that Omidyar actually exercised control over Rappler, which finding was the basis for the revocation of the certificates of incorporation… the SEC en banc could not possibly deny that Rappler and RHC ‘have all-Filipino shareholders, directors and officers…’” the petition said.
Rappler also insisted that the state regulator had applied a different procedure in the case, thus depriving Rappler due process and the right to equal protection of laws.
Rappler’s case has been raffled to Associate Justice Rafael Santos.
The other members of the division handling the petition are Associate Justices Socorro Inting and Apolinario Bruselas.