“The arc of the moral universe is long, but it bends toward justice,” said Rappler CEO and Nobel Peace Prize winner Maria Ressa, who quoted Martin Luther King Jr. to describe the outcome of Rappler’s fight in its biggest case yet.
After a six-year battle, Rappler has finally won its case against the Securities and Exchange Commission (SEC), preventing the closure of the newsroom. The order was issued during the administration of former President Rodrigo Duterte. The Court of Appeals (CA) in its ruling dated July 23, 2024, granted Rappler’s motion and ordered the SEC to restore Rappler’s certificate of incorporation.
In 2018, the SEC under Duterte revoked Rappler’s certificate, arguing that Rappler’s issuance of Philippine Depositary Receipts (PDRs) to foreign investor Omidyar Network was unconstitutional. PDRs are financial instruments that allow investors to own shares in companies but do not give them ownership rights or voting rights on the board of directors, nor do they give them a say in the management of a company’s day-to-day operations.
In the course of the revocation, Omidyar donated the PDRs to Rappler’s Filipino managers, which prompted the CA to order the SEC to reconsider its order the same year. The CA said the donation addressed the concerns. However, the SEC upheld its order just before Duterte resigns from the presidency in 2022. This prompted Rappler to again seek the CA’s intervention.
Ressa recalled the difficulties Rappler faced due to the shutdown order. She said banks refused to do business with Rappler and customers shied away from advertising with the editorial team. Ressa added that Rappler was also forced to close its office in Jakarta, Indonesia, and could not even open a bank account outside the country.
“Immediately after the SEC revoked our operating license, we lost 49% of our advertising revenue within four months. We shouldn’t have survived 2018,” Ressa said during a press conference at the Rappler editorial office on Friday, August 9. But Rappler did it.
For Ressa and Rappler, the CA’s decision is nothing but a relief: “It is a relief after eight agonizing years of harassment. The CA clearly rejected the SEC’s 2018 closure order, declaring it ‘illegal’ and a ‘serious abuse of discretion.'”
“Well, I have been looking at things very objectively since day one. And I told Maria, Glenda (Glenda Gloria is Rappler’s editor-in-chief) and the rest of the team that I have no doubt that this day will come one day. And today it has come,” said Attorney Francis Lim, Rappler’s lead attorney. ACCRALAW represented Rappler in the SEC case.
Despite the SEC
To challenge the SEC’s closure order, Rappler filed a petition for certiorari, an appeal that allows review of the decision or order of another body or court. In this type of petition, the petitioner must prove that the court grossly abused its discretion or made an error in its decision or order.
In this case, the CA was convinced that the SEC committed a serious abuse of discretion. Judge Emily San Gaspar-Gito, who wrote the ruling, reiterated that the CA did not confirm the revocation of Rappler’s certificate in 2018, but ordered the SEC to examine whether the Omidyar donation had already remedied the so-called deficiency.
But instead of following the CA’s order and evaluating the donation itself, the SEC voided the donation itself, the appeals court said. The commission also did not give Rappler an opportunity to present evidence or participate in the alleged evaluation. In other words, the SEC disregarded the CA’s order.
“The SEC En Banc willfully shirked its responsibility and ignored the CA’s 12th Division’s order to ‘evaluate the terms of the alleged post-contribution donation.’ On that basis alone, the challenged compliance and order should be reversed and set aside,” the decision states. “The SEC En Banc’s decision actually goes far beyond a mere lack of understanding of the CA’s 12th Division’s decision. It shows willful disregard that even crosses the threshold of a serious abuse of discretion.”
Entirely owned by Filipinos
Duterte devoted part of his second State of the Union Address in 2017 to attacking Rappler. Deviating from the script, Duterte claimed the company was “fully owned” by Americans and even warned that it had allegedly violated the 1987 Constitution. In January 2018, using the same reasoning, the SEC revoked Rappler’s license based on alleged constitutional violations.
Rappler has always been 100% Filipino-owned, contrary to the SEC’s false claims. The CA’s decision has finally put an end to that claim and found that Rappler did not commit any violations when entering into the contract with Omidyar Network.
According to the appeals court, Rappler Holdings Corporation’s issuance of PDRs to Omidyar did not imply ownership of the foreign company. Instead, Omidyar merely received a “vesting right,” which refers to the right to buy the underlying shares. Under the law, a vesting right only allows the holder to buy shares if permitted under Philippine law. Since the Constitution requires that media outlets be wholly owned by Filipinos, Omidyar could not exercise his vesting right.
“Consequently, under the terms of the PDRs, Omidyar does not even receive a potential ownership right or option to become the owner of the shares of Rappler Holding…. Therefore, the terms of the PDRs clearly show that Rappler Holdings retains full ownership of the underlying shares,” the CA stated.
“The facts therefore demonstrate that Rappler Holdings, and by extension Rappler, is currently wholly owned and managed by Filipinos, in accordance with the constitutional mandate,” it added.
In the strongly worded ruling, the CA said it agreed that Rappler was given preferential treatment – a negative one. The court noted that a special panel was set up for the sole purpose of investigating Rappler’s PDRs, adding that evidence showed that the SEC made “best efforts” to revoke Rappler’s certificate.
“Like a bull seeing red, the SEC En Banc fought its way through statutes and case law to achieve its goal – the death of Rappler. The SEC En Banc violated the hierarchy of the courts and ignored procedures. Such actions have no place in a democratic state,” the decision states.
Victory not only for Rappler
Duterte has targeted Rappler for its critical reporting, particularly on the former president’s bloody drug war, which, among other things, cost thousands of lives. Rappler’s victory is also a victory for the Philippine press.
“The CA’s finding that the Securities and Exchange Commission grossly abused its discretion is a rebuke of the Duterte administration’s use of the law as a weapon against criticism, dissent and transparency,” the National Union of Journalists of the Philippines said. “May the justice achieved on this day be a sign of better days for other media workers who also face legal challenges related to their work.”
Rappler’s victory also had benefits for the economy, Lim said: “The decision … had a huge impact on the ability of our companies to raise capital and stay in business. But more importantly, the decision had an impact on press freedom and our democracy in general.”
The Duterte administration used PDRs as a tool to portray Rappler and ABS-CBN, another company targeted by the previous administration, as alleged tax evaders and foreign-owned companies. Lim had previously stated that the use of PDRs as a weapon has a chilling effect on investors and impacts the corporate sector.
When the Tax Appeals Court acquitted Rappler and its CEO Maria Ressa of tax evasion charges in 2023, it explained how local laws and regulations had evolved to enable companies to raise capital, such as through the use of PDRs.
If Ressa has learned one lesson from her and Rappler’s ordeal, it is that laws can be used as a weapon against dissidents: “The lesson I have learned is that it doesn’t matter if you follow the law if the people who implement the law decide to use it as a weapon. It doesn’t matter if you follow every single clause if there is no rule of law.”
Nevertheless, the Nobel Peace Prize winner said she never lost respect and trust in the courts because she always believed that there were good people in the judiciary. “There are good people in the government and we relied on that.”
Asked if the presidency had influenced the outcome of the case in any way, Lim replied: “I have not seen or sensed anything where President (Ferdinand) Marcos (Jr.) has tried to influence our courts, especially in this case… As for the former president, I would not like to comment, to say the least.”
Ressa also asked the attorney general not to appeal Rappler’s legal victory. Shortly after a Pasig City court acquitted Rappler in a tax evasion case, the Office of the Attorney General under Menardo Guevarra, former justice secretary under Duterte, filed a motion to overturn the court’s verdict. The Tax Court of Appeals had already dismissed the OSG’s appeal last month. Still pending before the CTA is the OSG’s other petition seeking to overturn the tax court’s decision in favor of Rappler.
“I appeal to the, I believe in this case, the Attorney General, right? Please stop appealing. We have been harassed for eight years,” Ressa said.
With the legal victory before the CA, the cases against Rappler and its CEO have been reduced to two: a cyber libel charge pending before the Supreme Court and an anti-dummy case pending before a Pasig City court. The cyber libel case is the most important as the case is already pending before the court of last resort after Ressa failed to secure an acquittal in the lower court or the CA. – Rappler.com
