Rappler asks CA to void SEC revocation

FILE: Rappler added that the penalty imposed by SEC was too severe and grossly disproportionate to the alleged penalty. (Photo: Rappler.com)

MANILA — Online news website Rappler on Monday filed a petition before the Court of Appeals seeking to stop the implemetation of the Securities and Exchange Commission (SEC) decision revoking the certificate of incorporation of Rappler Inc. and Rappler Holdings Corporation (RHC) allegedly for violating the Constitution and foreign equity restrictions in mass media.

In a 70-page petition for review, through Angara Abello Concepcion Regala & Cruz (ACCRA), lawyer Francis Lim represented the company, asking the appellate court to set aside the SEC en banc decision dated Jan. 11, 2018, noting that it violated Rappler’s constitutional right to due process.

They alleged that the SEC came up with the revocation order in the absence of formal charge, which was supposed to be required in the commission’s rules.

“There was also no formal administrative action filed against Rappler and RHC before the SEC. Without an administrative action, surely, no administrative action, including the suspension or revocation of the corporation’s franchise, could have been imposed by the SEC,” read the petition.

“Since no administrative charge was instituted against Rappler and RHC, they were not provided with sufficient notice of the formal charge against them (because none was issued) and the opportunity to be heard,” it stressed.

Rappler also said that the SEC erred in canceling Rappler’s certificate of incorporation and voiding the Omidyar Philippine Depository Receipts (PDRs).

“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 claimed.

“At most, Clause 12.2.2 of the Omidyar PDR is in the nature of a negative covenant put into place to protect the interest of Omidyar, as investor. This is why Omidyar’s approval is confined only to acts that may prejudice its rights under the Omidyar PDR,” they added.

Petitioner pointed out that the SEC has no finding that Omidyar had actually exercised control of the media outfit.

Rappler added that the penalty imposed by SEC was too severe and grossly disproportionate to the alleged penalty.

The SEC earlier cancelled the registration of Rappler, Inc., the mass media entity that “sold control” to foreigners, and Rappler Holdings Corporation being its alter ego, “existing for no other purpose than to effect a deceptive scheme to circumvent the Constitution.”

It cited foreign equity restriction in the Constitution, Presidential Decree and the Securities Regulation Code that provide that “the ownership and management of mass media shall be limited to citizens of the Philippines, or to corporations or associations wholly owned and managed by such citizens.”

The SEC En Banc also declared Omidyar Philippine Depository Receipts (PDR) void for “being a fraudulent transaction within the ambit of Section 26.1 of the Securities Regulation Code.”

In October 2015, Rappler Holdings Corp. issued 7,217,257 PDRs covering shares of Rappler Inc. designated as ON PDRs because they were sold to Omidyar Network Fund LLC, a foreign juridical entity.

Rappler Holdings publicly reported that it received an investment from Omidyar Network LLC.

It also issued PDRs covering shares of Rappler Inc. to NBM Rappler L.P., a foreign juridical entity. NBM Rappler L.P. was founded and co-owned by North Base Media Ltd., a foreign juridical entity.