Maria Ressa, chief executive officer of Rappler, has been convicted of libel and sentenced to jail.
The decision by the Manila Trial Court has been called a major blow to press freedom in an Asian bastion of democracy.
The court found Ressa and former reporter Reynaldo Santos Jr. guilty of libeling a wealthy businessman.
Rappler's story on May 29, 2012, cited an unspecified intelligence report linking him to a murder, drug dealing, human trafficking and smuggling.
The site's lawyers disputed any malice and said the time limit for filing the libel complaint had passed.
"The decision for me is devastating because it essentially says that Rappler, that we are wrong," Ressa said in a news conference after the ruling.
Her voice cracking, she vowed that "we will keep fighting" and appealed to journalists and Filipinos to continue fighting for their rights "and hold power to account."
Ressa was sentenced to up to six years but was not immediately taken into custody. She posted bail for the case last year, and her lawyer, Theodore Te, said they will appeal the verdict.
"The verdict against Maria Ressa highlights the ability of the Philippines' abusive leader to manipulate the laws to go after critical, well-respected media voices whatever the ultimate cost to the country," said Phil Robertson of Human Rights Watch, adding the verdict was "a frontal assault on freedom of the press that is critical to protect and preserve Philippines democracy."
President Rodrigo Duterte and other Philippine officials have said the criminal complaints against Ressa and Rappler were not a press freedom issue but a part of normal judicial procedures arising from their alleged violations of the law.
Businessman Wilfredo Keng dismissed the allegations in the 2012 story as baseless and false and said Rappler refused to take down the story online and publish his side of the story. He provided government certifications in court to show that he has no criminal record and sought 50 million pesos ($1 million) in damages, but the court awarded a much smaller fine.
Rappler's lawyers said the story was based on an intelligence report and that the one-year period under Philippine penal law when a libel complaint can be filed had ended when Keng filed a lawsuit in 2017, five years after the story was published online.
A cybercrime law, which Rappler allegedly violated, was also enacted in September 2012 or four months after the story written by Santos was published. Rappler's lawyers said Philippine penal laws cannot be retroactively applied. Rappler, however, acknowledged that it updated the story in February 2014 to correct a misspelled word but said it did not make any other changes.
The Department of Justice, which brought the libel charges to court, contended that by updating the story, Rappler effectively republished the story online in 2014, an argument dismissed by the news site's lawyers.
The Department of Justice cited another law to say that a complaint can be filed under the 2012 cybercrime law for up to 12 years, countering Rappler's argument that Keng's complaint was invalid due to being outside the one-year deadline for libel.
If the Manila court upholds the Justice Department's position, journalists and media agencies can be sued up to 12 years after publishing a story. As Rappler's chief executive officer, Ressa faces seven other criminal complaints in relation to legal issues hounding her news agency, including an allegation that it violated a constitutional ban on media agencies receiving foreign investment funds.
Ressa, who has worked for CNN and was one of Time magazine's Persons of the Year in 2018, has accused the government of abusing its power and of using the law to muzzle dissent.
Many news outlets in the Philippines and beyond have criticized Duterte's policies, including his signature anti-drug campaign that has left thousands of mostly poor drug suspects dead. Duterte has openly lambasted journalists and news sites who report critically about him.
—JIM GOMEZ and AARON FAVILA with Kiko Rosario