“May the free press win in all these cases”
Rappler Holdings Corporation and its president Maria Ressa have been acquitted by the Court of Tax Appeals for three counts of failure to file tax returns and one count of tax evasion.
The cases stemmed from a complaint by the Bureau of Internal Revenue and the Department of Justice filed on November 26 and 28 alleging that Rappler evaded tax payments when it raised capital through its partnership with foreign investors North Base Media and Omidyar Network.
This involved the issuance to the two entities of Philippine Depositary Receipts or PDRs financial instruments.
On January 18, 2023, the Court of Tax Appeals acquitted Rappler Holdings Corp. (RHC) and its chief executive officer, Nobel Peace Prize winner Maria Ressa, of the P70.228-million tax evasion charges filed by the Duterte administration.
In an 80-page decision promulgated on Wednesday, Jan. 18, the CTA’s First Division acquitted Ressa and RHC of four cases of violation of the National Internal Revenue Code.
In a decision, the CTA ruled that “accused Rappler Holdings and Maria A. Ressa are acquitted, for the failure of the prosecution to prove their guilt beyond reasonable doubt.”
“No civil liability may be adjudged against the accused as the alleged unpaid tax obligations have not been factually and legally established and proven,” the CTA also ruled.
With its decision, the CTA ordered the cancellation of the bail bonds posted by the accused and “ordered released to them upon presentation of proper documents, in accordance with the usual accounting rules and regulations.”
The case involved the Philippine Depository Receipts issued by news outfit Rappler headed by Ressa to NBM Rappler L.P. and Omidyar Network (ON) of eBay founder and entrepreneur Pierre Omidyar.
“There is nothing in the wordings of the PDR Instruments and the PDR Subscription Agreements, that would show that the foreign entities NBM and ON will become owners of the shares of stock of RI (Rappler) upon issuance of the PDRs,” the CTA pointed out.
“Paragraph 4 of the PDR Instrument, stipulates that the ownership of the shares of stock of RI remains with the issuer RHC,” the tax court said. In sum, since accused is not required to pay the income tax and VAT (value added tax) on the PDR transactions for the taxable year 2015, the elements of Sections 254 and 255 of the 1997 NIRC (National Internal Revenue Code), as amended, are rendered nugatory and without legal support. The plaintiff, therefore failed to prove the guilt of the accused beyond reasonable doubt,” the CTA declared.
It pointed out the PDR holder “only retains an option to purchase the underlying shares of RI subject to certain conditions — that there is no law restricting foreign ownership in the business of the operating entity.”
Under the NIRC, Section 254 concerns the attempt to evade or defeat tax, while, Section 255 is on the failure to file return, supply correct and accurate information, pay tax, withhold and remit tax, and refund excess taxes withheld on compensation.
All the above requisites are not present for the income tax liability to attach to accused RHC’s PDR transactions with NBM and ON. Neither is it liable for VAT (value added tax) as it is not a dealer in securities,” it pointed out.
The decision was written by Associate Justice Catherine Triunfante Manahan with the concurrence of Associate Justices Jean Bacorro-Villena and Marian Ivy Reyes-Fajardo of the court’s first division.
Ressa mentioned others who are still waiting for verdicts in their cases such as community journalist Frenchie Mae Cumpio, 21 when she was arrested in Tacloban City, Leyte, in February 2020, and former senator and justice secretary Leila de Lima, arrested under the presidency of Rodrigo Duterte.
The acquittal comes four years after the previous Duterte government filed the cases against Ressa and Rappler.
The International Center for Journalists says the tax evasion case acquittal shows it’s possible for President Ferdinand Marcos Jr. to ‘hit reset’ on media repression. The National Union of Journalists of the Philippines welcomes the acquittal and called the verdict “a win for journalists and the rule of law.”
“The cases against Maria and Rappler illustrate the increasing use of the law for reprisal against and for intimidation against journalists and civil society,” the group said.
As of January 18, 2023, there were at least three cases being tried in court against Rappler, Maria Ressa, and a former researcher including Rappler’s pending petition before the Court of Appeals for a temporary restraining order against the Securities and Exchange Commission to stop it from implementing its decision reaffirming its January 2018 closure order against Rappler.
Pending also is petition for review filed with the Supreme Court after the Court of Appeals on October 10, 2022 denied the motion for reconsideration previously filed by Rappler CEO Maria Ressa and former researcher Reynaldo Santos Jr over the court’s affirmation of their June 2020 conviction.
Finally, there is the ongoing tax case against Ressa and RHC at the Pasig Regional Trial Court Branch 157 that is due for promulgation in June 2023.
May the free press win in all these cases.
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