CA junks Rappler plea vs. SEC ruling

Rappler claims that the constitutional limitations on foreign investments does not apply to it since it is not a mass media entity as defined by a 1976 law, Presidential Decree No. 1018, limiting the ownership and management of mass media to citizens of the Philippines. (File Photo: Rappler/Facebook)

MANILA — The Court of Appeals (CA) turned down the appeal of online news website Rappler and its holding company, Rappler Holdings Corporation (RHC), against the Securities and Exchange Commission’s (SEC) move to revoke its business registration for violating the Constitution and foreign equity restrictions in mass media.

In a 25-page resolution penned by Associate Justice Rafael Antonio Santos dated February 21 and released to media Monday, the CA’s Former 12th Division said it saw no merit on the motion for partial reconsideration filed by Rappler on the case.

Associate Justices Apolinario D. Bruselas and Germano D. Legaspi concurred in the decision.

“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 did not raise any new matter or issue in its motion. Accordingly, this court finds no cogent justification to reconsider its motion decision dated July 26,” the CA said.

The CA, however, said it would not preempt the evaluation and the subsequent finding and conclusion of the SEC which will investigate the legal effect of the alleged donation of foreign funds by Omidyar into Rappler’s operations.

Rappler claims that the constitutional limitations on foreign investments does not apply to it since it is not a mass media entity as defined by a 1976 law, Presidential Decree No. 1018, limiting the ownership and management of mass media to citizens of the Philippines.

Contrary to the firm’s claim, the CA said that Rappler is a media entity, since under a later law, Republic Act No. 9211 “the definition of mass media was expanded to include electronic media such as the internet”.

This definition of mass media was used by the SEC, the CA pointed out.

The appellate court said that Rapper itself in a case before the Supreme Court asserted that it is a mass media entity.

The case involved the firm’s petition seeking to be allowed access to live coverage of the 2016 presidential and vice-presidential debates.

In this case, the CA explained “the Supreme Court agreed with Rappler and ruled that it is an online mass media entity and should be granted equal right with traditional forms of mass media to broadcast the debates via online live streaming,”

“The actions and actuations of Rappler, militate against its claim that it is not engaged in the business of mass media and thus, not covered by the foreign equity restriction applicable to mass media entities,” the CA added.

The CA said that applying the full beneficial ownership test, Rappler cannot claim to be 100-percent Filipino owned.

“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 (in its agreement) Omidyar Network is granted the power to direct the voting on the Rappler shares,” the CA said.

“(T)he grant of control to a foreign entity over a mass media entity, regardless of the actual exercise of such foreign control, is already considered a violation,” the court added.