Omidyar Network donates investment to Rappler's Filipino managers

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Updated to include the statement of Rappler CEO Maria Ressa.

Metro Manila (CNN Philippines, February 28) — Rappler's foreign investor Omidyar Network announces it is donating its $1.5-million (around ₱78 million) investment to the media agency's 14 Filipino managers, in a move to resolve foreign ownership issues.

"This completely eliminates the basis of the unwarranted SEC (Securities and Exchange Commission) ruling," Stephen King, Omidyar's Head of Global Governance and Citizen Engagement, said in a statement Wednesday.

The investment will be split equally among senior managers Jennifer V. Chua, Marie Fel D. Dalafu, Stacy Lynne M. de Jesus, Lilibeth Socorro L. Frondoso, Glenda M. Gloria, Dominic Gabriel L. Go, Miriam Grace A. Go, Natashya Marianne L. Gutierrez, Maria Rosario F. Hofileña, Gemma B. Mendoza, Pauline Gel C. Occeñola, Libertad G. Pascual, Maria A. Ressa, and Anne Louise B. Yosuico.

"We...strongly believe that the company should be allowed to continue operating unhindered in the Philippines," King said.

Omidyar Network, owned by eBay founder Pierre Omidyar, however clarified it is not "cutting ties" with Rappler.

The move, it said, will remove the "barriers put in place" by the government when the SEC revoked the licenses of Rappler Inc. and Rappler Holdings Corporation in January for violating foreign ownership restrictions.

Rappler CEO Maria Ressa welcomed Omidyar's decision.

"This generous act proves Rappler is, as it has always been, Filipino owned and controlled," she said, adding the government now has a chance to prove the ruling was not politically motivated.

The SEC issued the ruling due to a provision in the Philippine Depositary Receipt (PDR) agreement of Rappler with Omidyar, ceding control to a foreign company.

A PDR is a financial instrument companies resort to in order to secure foreign investments.

READ: SEC cancels Rappler's license to do business

No wrongdoing

The donation, however, should not be interpreted as an admission of wrongdoing, both companies said.

"I would never admit that we were wrong because our position has always been that we created Rappler to be independent," Ressa said.

She likewise junked the idea of dissolving the current company and reorganizing a new one.

The SEC has said that Rappler could simply start another company without the problematic PDRs and avoid a legal battle altogether. The new company would even be allowed to keep the Rappler name.

Ressa, however, said this would be tantamount to "relenting" to a decision she felt was "unwarranted." She also cast doubt on whether the SEC would honor its word and approve Rappler's application when the time came.

"Words are cheap and officials say a lot of things," she said.

Time's up?

SEC Chair Teresita Herbosa on Wednesday said they will study the donation as Rappler's case is pending before the Court of Appeals (CA).

However, she explained that it would be up to the court to decide whether the donation could be enough ground for the case to be continued, dismissed, withdrawn, or rendered moot and academic.

"As party appellee, the SEC will respond or give its position on such development as may be ordered by the CA," she said.

Under SEC rules, companies are allowed one year to cure any violations to foreign ownership restrictions. Omidyar Network invested in Rappler in October 2015.

Ressa, however, said Rappler was never given a curing period — or at least never informed of when the curing period would be.

In a statement Wednesday, Presidential Spokesperson Harry Roque said to wait for the SEC's decision on this development.

He said Omidyar's actions does not remove the fact that Rappler breached the Constitution.

"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 said. "Rappler's defense of infringement of press freedom is merely a ploy to distract from the real issue, as resolved by the SEC that the former is a foreign entity."

Rappler's woes

On January 29, Rappler filed a petition before the CA questioning the revocation of their certificates of incorporation. It said contrary to the decision of the SEC, the agreement between Rappler and Omidyar does not constitute "control."

Rappler had decried the decision as "pure and simple harassment," and an attack on press freedom. It said the ruling was "first of its kind in history — both for the Commission and for Philippine media."

Malacañang said it had no hand in the SEC decision. Rappler, however, slammed the decision as one with "obvious political interference."

RELATED: Rappler sees Malacañang hand in license revocation

Herbosa then challenged critics to prove that the ruling was politically motivated.

READ: SEC chair to critics: Prove politics behind decision to revoke Rappler's license

Recently, Pia Ranada, Rappler's Malacañang reporter, was barred from covering events held at the Palace. It was later expanded to prevent her from entering the entire Malacañang complex.

READ:  Rappler barred from covering Malacañang events

Presidential Spokesperson Harry Roque said Ranada was banned because of the SEC ruling, and that pending the CA ruling, Rappler's license is deemed revoked.

READ: Pia Ranada's defense of Rappler 'fake news' offended Duterte - Roque

CNN Philippines correspondent Claire Jiao, multiplatform writer Regine Cabato, and senior digital producer Pia Garcia contributed to this report.