(Eagle News) – Malacanang said that the donation of a US-based investment firm to controversial online news site Rappler of its investments amounting to $1.5 million would “not remove the fact that Rappler breached the Constitution.”
In a statement, Presidential Spokesperson Harry Roque said this “act” by Omidyar Network in donating the Philippine Depository Receipts (PDRs) that Rappler had earlier issued to the foreign firm was “nothing but a circumvention of the law.”
He said that Rappler still had violated the law on the constitutional ban on foreign control and ownership of Philippine media operating in the country.
“Omidyar Network’s reported donation of its Philippine Depositary Receipts (PDRs) to its Filipino managers does not remove the fact that Rappler breached the Constitution,” Roque said.
“This latest act is nothing but a circumvention of the law, which restricts ownership of media entities in the country to 100 percent Filipino-owned,” he noted.
The Palace spokesperson said that “Rappler’s defense of infringement of press freedom is merely a ploy to distract from the real issue, as resolved by the Securities and Exchange Commission (SEC) that the former is a foreign entity.”
-Omidyar wants continuous operation of Rappler –
Omidyar Network, a US based investment firm, said it decided to donate the PDRs issued to them by Rappler back to the news site’s managers, to address the SEC ruling that had revoked Rappler’s certificates of incorporation for violating the constitutional ban on foreign control and ownership of media in the Philippines.
“The donation completely eliminates the sole basis of the SEC ruling against Rappler Inc. and Rappler Holdings Corporation. We therefore strongly believe that the companies should be allowed to continue operating unhindered in the Philippines,” the Omidyar statement read.
“Omidyar Network’s only objective has always been to enable the ongoing growth and success of these companies, and to support their dedicated journalists in providing independent, impartial, and credible news,” it added.
Rappler’s chief executive officer Maria Ressa said she is welcoming and accepting the donation, describing it as a “generous act.”
“This generous act proves that Rappler is, as it has always been, Filipino-owned and -controlled,” she said.
Ressa and the 13 other Rappler managers who would receive the PDR donations were Rappler acting managing editor Chay Hofileña, managing editor Glenda Gloria (who is on sabbatical leave), news head Miriam Grace Go, Jennifer Chua, Marie Fel Dalafu, Stacy Lynne de Jesus, Lilibeth Frondoso, Dominic Gabriel Go, Natashya Gutierrez, Gemma Mendoza, Pauline Gel Occeñola, Libertad Pascual and Anne Louise Yosuico.
-Rappler “not conceding SEC is right” –
But Ressa stresses that their acceptance of the donation does not mean it is accepting that Rappler had committed any violation.
“We are not conceding that the SEC is right,” she said.
“We are up against the vast power of government and the SEC made the call and we challenged it at the Court of Appeals. We are not dissolving Rappler because we believe that we have always been 100-percent, Filipino-owned and the journalists control Rappler,” she added.
The Securities and Exchange Commission (SEC) earlier said it had revoked the incorporation certificates of Rappler and Rappler Holdings Corp because they violated a provision in the Philippine constitution reserving media ownership to Filipinos.
“(Both are) existing for no other purpose than to effect a deceptive scheme to circumvent the constitution,” the SEC said in a January 11 ruling posted on its website Monday.
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.”
-Securities fraud –
It accused Rappler of committing what may be considered “a species of Securities Fraud” when it circumvented the foreign equity restrictions enshrined in the Constitution through a sale of securities to foreign entities, the Omidyar Network and North Base Media.
In its investigation, the SEC found that Rappler and its holdings company, Rappler Holdings Corporation, issued Philippine Depository Receipts (PDR) to the foreign entities North Base Media (NBM) thru NBM Rappler, LP, and Omidyar Network.
The investigation showed a certificate of Registration of Expanded Limited Partnership, issued in the Cayman Islands to NBM Rappler, L.P.
The SEC investigation also found a certification of partnership interest issued in the Cayman Islands to NBM Rappler, LP, as well as a Certificate of Formation issued in Wilmington. Delaware, USA to Omidyar Network Fund LLC.
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.
SEC said Rappler also violated Section 1 of the Commonwealth ACT 108, or the Anti-Dummy Act, which penalizes any citizen of the Philippines who allows his name or citizenship to be used for the purpose of evading constitutional or legal provisions whoch require Philippine or any other specific citizenship as a requisite for the enjoyment of a right, franchise or privilege.
“This may include a situation where a person allows disqualified foreigners to obtain a derivative that grants a measure of control over corporate matters, especially where the Constitution is very clear that there must be no foreign control whatsoever,” the SEC noted in its ruling.
“Anything less than one hundred percent (100%) Filipino control, as stockholder or through any other means, is a violation,” it explained.
(Eagle News Service)