Shooting the Messenger: Is Rappler Foreign-Owned and What Does the Revocation Mean?


Rappler said it themselves: they never thought this day would come.

But it has. In a 29-page decision, the Securities and Exchange Commission (SEC) en banc revoked Rappler’s license to operate after it voided a foreign investment by Omidyar Network.

Rappler says it is holding the line, and will continue operating as they prepare to take the matter even up to the Supreme Court.

But what is really up with Rappler’s composition, are they really foreign owned?

“Rappler remains 100% Filipino-owned,” Rappler said in July after President Rodrigo Duterte himself announced in no less than his state of the nation address that Americans own Rappler.


What is in contention here? It is something called PDRs or Philippine Depository Receipts.

Legal expert Oscar Franklin Tan defines a PDR as “a  financial instrument whose value is tied to the price of and dividends from shares in a company that the PDRs reference.

Tan added: “However, PDRs do not grant ownership over these shares.”

So, what is written in the Constitution?

Article XVI, Section 11(1) of the Constitution, which reads: “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.”

Tan said: “The key word is ownership.”

If PDRs do not grant ownership, and ownership by a foreign entity is what’s prohibited, then what’s the matter with Rappler’s PDR?


The SEC decision takes note particularly of Rappler’s agreement with Omidyar Network (ON). It quotes from the agreement: “The issuer undertakes not to, without prior good faith discussion with ON PDR Holders and without the approval of PDR Holders holding at least 2/3s of all issued and outstanding PDRs alter, modify or otherwise change the company articles of incorporation or By-laws or take any other acton where such alteration, moficiation, change or action will prejudice the rights in relation to the ON PDRs.”

Saying that “anything less than 100% Filipino control is a violation,” the SEC en banc said the clause on prior discussion and approval of the PDR holder means “Rappler is at the very least under obligation to consult with Omidyar Network.”

“100% Filipino control means 0% foreign control. Control is any influence over corporate policy, and not limited to ownership of stock,” said the SEC.

Why Rappler?

As Rappler took note, PDRs are already a “template” for several media networks. They mention ABS-CBN and GMA having PDRs as well.

Rappler also said that their contracts, which contain the questioned clause, were “submitted to and accepted by the SEC in 2015.”

“Now the Commission is accusing us of violating the Constitution, a serious charge considering how, as a company imbued with public interest, we have consistently been transparent and above-board in our practices,” Rappler said in a statement.

Lawyer Marnie Tonson of the Philippine Internet Freedom Alliance or PIFA noted that the SEC could have ordered Rappler to divest. He said the revocation of registration was too extreme a punishment at this case.

Rappler CEO Maria Ressa also said that in many instances, SEC orders companies it flags to fix their papers “then it’s business as usual.”

“This kind of draconian punishment is the first time, it certainly shows that kind of political nature that makes it a press freedom issue,” Ressa said.

She added: “They didn’t give us due process, the en banc ordered to shut us down without giving us an opportunity to respond to what the special panel found. We didn’t get that chance, it wasn’t a normal process,” Ressa said.

Tonson also expressed fear that the SEC decision might put many companies susceptible to a similar harsh punishment, only because the SEC chose to take this route with Rappler.

“Dapat ipakita ng Estado na hindi nitong pakay na supilin ang malayang pamamahayag at gumamit sila ng akmang regulasyon. Sakto lang dapat, hindi lubos ang restriksyon sa pamamahayag,” Tonson said.

Press Freedom

Rappler says this is both a constitutional case and a press freedom case.

Media groups have slammed the SEC decision, calling it an affront to press freedom.

Rappler, of course, is known for its reporting critical of the Duterte administration. They are one of the news organizations that reported aggressively on extrajudicial killings, and on the social media propaganda machine that undermines democracy.


“This is pure and simple harassment, the seeming coup de grace to the relentless and malicious attacks against us since 2016,” Rappler said.

In 2017, Philippine Daily Inquirer, who the President also rants against, sold majority shares to Duterte donor Ramon Ang. The Inquirer did this while the government evicted its owners from a long-disputed real estate property Mile Long.

Duterte has also threatened that he will not renew the franchise of ABS-CBN, another media organization whose reporting the President does not like.

“As it does so, the NUJP declares its full support to Rappler and all other independent media outfits that the state has threatened and may threaten to shut down. We call on all Filipino journalists to unite and resist every and all attempts to silence us,” said the National Union of Journalists of the Philippines (NUJP).


[Entry 247, The SubSelfie Blog]

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