QUEZON CITY, Philippines (Eagle News) — The Securities and Exchange Commission is ready to defend its decision cancelling the registration of online news site, Rappler.
“Having issued the decision after much deliberation and pursuant to law and due process, I will certainly defend it to the hilt,” SEC Chairperson Teresita Herbosa said in an interview.
She said the decision is by virtue of the provisions of the Constitution prohibiting foreign ownership of media in the Philippines.
“What was approved was the issuance of PDRs as an exempt transaction, not the validity of any of its provisions,” SEC Chair Teresita Herbosa said on Tuesday referring to the Philippine Depository Receipts issued by Rappler to foreign entities Omidyar Network and North Base Media.
In 2015, Rappler Holdings Corporation issued 264,601 PDRs to NBM Rappler, LP on May 29, 2015; another 11,767,117 PDRs to NBM Rappler, LP on July 29, 2015; and more than 7 million PDRs (7,217,257 PDRs) to Omidyar Network Fund LLC.
The SEC on Monday, January 15 released to the media a ruling ordering the revocation of the certificates of incorporation of Rappler over questions on foreign ownership.
The ruling said that the online news site “acted with deceit in a scheme to justify the grant of control and also financial returns, to foreign investors when they sold the Omidyar Network Philippine Depositary Receipts.”
The SEC cited the Foreign Equity Restriction enshrined in the Philippine Constitution that bars any form of ownership or control by foreign entities of Philippine mass media.
“The Foreign Restriction is very clear. Anything less than one hundred percent (100%) Filipino control is a violation. Conversely, anything more than exactly Zero Percent (0%) foreign control is a violation,” the SEC decision read.
The Foreign Equity Restriction is found in Article XVI Section 11(1) of the Constitution which provided that: “The ownership and management of mass media shall be limited to citizens of the Philippines, or to corporations, cooperatives or associations, wholly-owned and managed by such citizens.”
The SEC also cited Section 2 of the Presidential Decree 1018, Limiting the Ownership and Management of Mass Media to Citizens of the Philippines.
It also cited the 2015 Implementing Rules and Regulations of the Securities Regulation Code, in its ruling, clarifying that “control” is not equated “with either ownership of stock or with management as director or officer.”