“The arc of the moral universe is long, but it bends toward justice,” said Rappler CEO and Nobel Peace Prize laureate Maria Ressa, who quoted Martin Luther King Jr. to describe the outcome of Rappler’s battle against its biggest case so far.
After six years of battle, Rappler has finally won its case against the Securities and Exchange Commission (SEC), preventing the newsroom’s shutdown. The order was issued during former president Rodrigo Duterte’s time. The Court of Appeals (CA), in its July 23, 2024 ruling, granted Rappler’s petition and ordered the SEC to restore Rappler’s certificate of incorporation.
In 2018, the Duterte-time SEC revoked Rappler’s certificate, claiming that Rappler’s issuance of Philippine Depositary Receipts (PDRs) to foreign investor Omidyar Network was unconstitutional. PDRs are financial instruments that allow investors to participate in business, but do not grant holders ownership rights or voting rights in the board, nor a say in the management of a company’s day-to-day operations.
Amid the revocation, Omidyar donated the PDRs to Rappler’s Filipino managers, which led the CA in the same year to order the SEC to reevaluate its order. The CA said the donation had removed the concern. The SEC, however, upheld its order just before Duterte stepped down from the presidency in 2022. This prompted Rappler to seek the CA’s intervention once again.
Ressa recalled Rappler’s struggles brought about by the shutdown order. She said banks refused to engage in business with Rappler and clients shied away from advertising with the newsroom. Ressa added that Rappler was also forced to close its Jakarta, Indonesia bureau and could not even open a bank account outside the country.
“Right after the SEC revoked our license to operate, within four months, we dropped 49% of our advertising revenue. We shouldn’t have survived 2018,” Ressa said during a press conference inside the Rappler newsroom on Friday, August 9. But Rappler did.
The CA decision, for both Ressa and Rappler, is nothing but vindication: “It’s a vindication after a tortuous eight years of harassment. The CA was unequivocal in its rejection of the SEC’s 2018 shutdown order, declaring it ‘illegal’ and a ‘grave abuse of discretion.'”
“Well, I had been looking at things very objectively from day one. And I was telling Maria, Glenda (Glenda Gloria is Rappler’s executive editor), and the rest of the team, I had no doubt that one day, this day will come. And it has come today,” lawyer Francis Lim, Rappler’s lead counsel, said. ACCRALAW represented Rappler in the SEC case.
To challenge the SEC’s closure order, Rappler filed a petition for certiorari, a legal remedy used to review the ruling or order of another body or court. In this kind of petition, the petitioner must prove that the court had committed grave abuse of discretion or erred in its decision or order.
In this case, the CA was convinced that the SEC committed grave abuse of discretion. Associate Justice Emily San Gaspar-Gito, who penned the ruling, reiterated that the CA did not affirm the revocation of Rappler’s certificate in 2018, but rather ordered the SEC to evaluate whether the Omidyar donation had already cured the so-called defect.
But instead of following the CA’s order and evaluating the donation itself, the SEC voided the donation itself, the appellate court said. The commission also failed to provide Rappler a chance to submit evidence or participate in the supposed evaluation. In other words, the SEC defied the CA’s directive.
“The SEC En Banc intentionally shirked its responsibility, ignoring the directive of the CA 12th Division to ‘evaluate the terms and conditions of the alleged supervening donation.’ On this basis alone, the assailed compliance and order should be reversed and set aside,” the ruling read. “Verily, the SEC En Banc’s ruling goes well beyond mere failure to understand the CA 12th Division’s ruling, it displays willful defiance that exceeds even the threshold of grave abuse of discretion.”
Duterte dedicated a portion of his time during his second State of the Nation Address in 2017 to attack Rappler. Going off-script, Duterte claimed that the company is “fully owned” by Americans, even warning that it allegedly violated the 1987 Constitution. Fast forward to January 2018, the SEC went with the same argument in revoking Rappler’s license on the basis of alleged constitutional violations.
Rappler has always been 100% Filipino-owned — contrary to the SEC’s false claims. The CA decision has finally put an end to this contention and ruled that Rappler did not commit any violation when it entered into a deal with Omidyar Network.
According to the appellate court, Rappler Holdings Corporation’s issuance of PDRs to Omidyar did not grant the foreign entity ownership. Instead, Omidyar was only given an “exercise right,” which refers to the right to purchase underlying shares. Under the law, an exercise right allows the holder to buy shares only when allowed by Philippine laws. Because the Constitution requires media to be wholly owned by Filipinos, Omidyar was unable to utilize its exercise right.
“Consequently, under the terms of the PDRs, Omidyar is not even given a potential ownership right, or the option to become an owner of Rappler Holding’s shares…. Therefore, the terms of the PDRs clearly show that Rappler Holdings retained full ownership of the underlying shares,” the CA explained.
“Therefore, the facts show that Rappler Holdings, and by extension Rappler, are currently wholly owned and managed by Filipinos, in compliance with the Constitutional mandate,” it added.
In the strongly-worded ruling, the CA said it agreed that Rappler was accorded preferential treatment – a negative one. The court noted that a special panel was created just for the purpose of investigating Rappler’s PDRs, adding that evidence showed that the SEC “bent over backward” to stand with the revocation of Rappler’s certificate.
“Like a bull seeing red, the SEC En Banc plowed through law and jurisprudence to reach its mark – the death of Rappler. The SEC En Banc violated the hierarchy of courts and ignored procedure. These actions have no place in a democratic state,” the decision said.
Duterte has targeted Rappler because of its critical reporting, especially of the former president’s bloody drug war that claimed thousands of lives, among others. Rappler’s victory is also a win for the Philippine press.
“The CA’s finding that the Securities and Exchange Commission commited grave abuse of discretion is a rebuke of the Duterte administration’s weaponization of the law against criticism, dissent, and transparency,” the National Union of Journalists of the Philippines said. “May the justice achieved on this day signal better days ahead for other media workers also facing legal challenges related to their work.”
Rappler’s victory also has benefits for the business sector, Lim said: “[The] decision… has had a tremendous impact on the ability of our corporations to raise capital and to stay in business. But more importantly, on the impact of the decision on press freedom and our democracy in general.”
The Duterte administration used PDRs as a tool to portray Rappler and ABS-CBN, another entity targeted by the previous government, as being alleged tax evaders and foreign-owned. Lim earlier said that the weaponization of PDRs created a chilling effect on investors, impacting the business sector.
When the Court of Tax Appeals acquitted Rappler and its CEO Maria Ressa of tax evasion in 2023, it explained how local laws and regulations had evolved to allow businesses to raise capital, like the use of PDRs.
If there’s a lesson that Ressa has learned from her and Rappler’s ordeals, it is that laws can be weaponized and be used against dissenters: “The lesson I learned is it doesn’t matter if you follow the law, if the people who implement the law decide to weaponize it. It doesn’t matter if you follow every single clause, if rule of law does not exist.”
Despite this, the Nobel Peace Prize laureate said she has never lost respect for, and faith in, the courts because she has always believed that there are good people in the judiciary. “There are good people in government, and we have banked on that.”
When asked if the presidency had influenced the case’s outcome in any way, Lim responded: “I have not seen or felt anything where President [Ferdinand] Marcos [Jr.] has tried to influence our courts of law, especially in this case… As to the former president, I don’t want to comment, to say the least.”
Ressa also asked the Solicitor General to refrain from appealing the legal victory of Rappler. Shortly after a Pasig City court acquitted Rappler in a tax evasion case, the Office of the Solicitor General under Menardo Guevarra, former Duterte-time justice secretary, sought a reversal of the court’s ruling. The Court of Tax Appeals already junked the OSG’s appeal last month. Still pending with the CTA is the OSG’s other petition that seeks to nullify the tax court’s decision in favor of Rappler.
“I appeal to the, I think in that case, the Solicitor General, right? Please stop appealing. We’ve had eight years of harassment,” Ressa said.
The legal victory at the CA has whittled down the cases against Rappler and its CEO 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 crucial because the case is already at the court of last resort after Ressa failed to secure acquittal in both the lower court and the CA. – Rappler.com
