Why is Francis Lim defending Rappler

The honour of defending Rappler in court against the Securities and Exchange Commission (SEC) belongs to prominent corporate lawyer Francis Lim.

Lim, former president of the Philippine Stock Exchange and now president of the Shareholders Association of the Philippines (SharePhil), has agreed to serve as the legal counsel of beleaguered online media company Rappler.

Press freedom

When I asked him why he decided to take the case when it seems a difficult one, Lim told me that he believes in fighting the bigger battle, which is to defend press freedom.

But he also knows it’s going to be a difficult fight.

Well at the very least, Rappler had enough sense to get another lawyer. Lim said Rappler’s lawyer for the controversial Omidyar transaction was the SyCip Salazar Hernandez & Gatmaitan law office.

The SEC ruled that Rappler violated the Constitution because one of Rappler’s Philippine Depository Receipts (PDRs) contained a provision that gave veto powers to a foreign investor.

PDRs are instruments that give foreign investors a passive economic interest in a Philippine company.

On Oct. 2, 2015, Rappler Holdings Corp., the parent company of Rappler Inc. issued 7,217,257 PDRs covering shares of Rappler Inc. to a foreign company, Omidyar Network LLC, in exchange for over a million dollars.

Omidyar is a company owned by eBay founder Pierre Omidyar.

Upon investigation, the SEC found that the Omidyar PDRs contain a provision wherein the company is required the seek approval of Omidyar PDR holders on corporate matters.

Thus, the SEC revoked Rappler’s certificate of incorporation, saying the provision violated the Constitution.

Lim argues the penalty slapped on the online news site was too severe.

Veto powers

He also believes that veto powers or control, assuming these exist, do not necessarily constitute ownership.

In its decision, the SEC said Rappler’s stockholders have become, in effect, subservient to the PDR holders.

“It is neither 100 percent control by the Filipino stockholders, nor is it zero percent control by the foreigner PDR holders,” the SEC said in its decision.

The SEC maintained that this violated the Constitution because where mass media is concerned, no control whatsoever may be granted to foreign investors.

But again, Lim stressed that control does not necessarily mean ownership.

And this, he would have to argue in court.

ACCRA versus ACCRA

It’s now going to be a showdown between ACCRA Law-trained lawyers. On the one hand is Lim, a senior partner at ACCRA or the Angara Abello Concepcion Regala & Cruz Law Offices.

On the other side, of course is the feisty SEC chairperson Teresita Herbosa, who was also a senior partner at ACCRA before she joined government.

ACCRA Law is one of the country’s most influential law firms. It has also served as the training ground of some of the best legal minds the country has.

With the Rappler case, the two senior partners will be pitted against each other.

No love lost

But for Lim, it’s nothing personal. He said Rappler has the Constitutional right to have a lawyer and he believes in fighting for press freedom.

Herbosa, too, sees nothing wrong with it.

“We’re not friends,” she told me as a matter of fact when I asked her how she feels about Lim’s decision to accept the Rappler case.

On the sidelines of the annual reception for the banking community hosted by the Bangko Sentral ng Pilipinas last Friday, Herbosa said many are indeed attacking the SEC for its decision.

She maintains that the SEC has an airtight case against Rappler which has nothing to do with press freedom.

It’s now up to Lim to prove otherwise.

Lucio Tan’s haunted house (Part II)

Speaking of last Friday’s bankers’ night, I had a nice chat with taipan Lucio Tan, who was among those who came early at the glittering Fort San Antonio Abad in Manila.

Kapitan arrived with his friend and fellow banker, CTBC Bank vice chairman William Go.

In between bites of hors d’oeuvres, I asked him about his famed white house in Baguio that is believes to be haunted. He always successfully dodges questions on his other businesses so I just focused on the “haunted house.”

When I first wrote about this so-called Laperal House around Christmas time last year, I received quite a number of letters. A lot of readers said they were surprised to hear that Tan owned the house. They also wanted to know if it was indeed haunted.

So once and for all, I thought I’d hear it straight from him.

“Why did you buy it?” I asked.

He said he knew about the ghosts, but that did not stop him from buying it.

“Why?” I pressed.

Tan smiled sheepishly. “It’s memorable.”

Turning serious, I asked him what he plans to do with it, but Tan gave no clue.

He joked, “if you want it, you can have it, but you have to sleep there.”

“But there are ghosts,” I said in jest, indulging him.

“The ghosts are friendly if you are good,” Tan said. And then he burst out laughing.

Iris Gonzales’s e-mail address is [email protected].