DOJ junks Ressa, Rappler Holdings’ plea to reconsider tax fraud indictment

Mike Navallo, ABS-CBN News

Posted at Jan 16 2019 10:04 PM

The DOJ is standing by its earlier decision indicting journalist Maria Ressa and her company, Rappler Holdings Corp. (RHC), over tax evasion charges. File/Mark Demayo, ABS-CBN News

MANILA—The Department of Justice is standing by its earlier decision indicting journalist Maria Ressa and her company, Rappler Holdings Corp. (RHC), over tax evasion charges.

Assistant state prosecutor Zenamar Machacon-Caparros denied the separate motions for reconsideration filed by Ressa and RHC over her October 2, 2018, resolution recommending the filing of 5 cases against the two — 4 before the Court of Tax Appeals and 1 before the Pasig City regional trial court.

In a resolution dated November 29, 2018, but which was made available to the media only on Wednesday, Machacon-Caparros rejected Ressa and RHC’s argument that RHC was being mislabeled as a “dealer in securities” whose sale of Philippine depositary receipts (PDRs) are subject to tax.

A PDR is a security that grants the holder the right to buy the underlying shares of stock of a corporation but is not considered evidence of ownership.

“We are, however, standing by our conviction that in so far as the subject securities and the related transactional activities are concerned, movant RHC is deemed to have dealer status within the contemplation of the Tax Code,” Machacon-Caparros said.

The prosecutor explained that the volume and frequency of the securities transactions were sufficient to result in RHC being considered a dealer in securities.

RHC purchased about 119 million common shares from Rappler Inc., the company which owns news website Rappler, from 2014 to 2015 and against these shares, issued PDRs to NBM Rappler and Omidyar Network Fund LLC.

The DOJ said RHC’s profits from such a transaction, amounting to P162.5 million, is taxable under the Tax Code, equivalent to about P108 million in taxes.

Machacon-Caparros said “it is the substance and not the form that determines taxability, so to speak.”

“In this instance, the subject transactions are in substance buying and selling and/or dispositions of securities – by a dealer, which respondents have clearly and deliberately failed to acknowledge for taxation,” she added.

Ressa is being sued in her capacity as president of RHC.

In December, the Pasig court issued an arrest warrant against Ressa, who immediately posted bail.

She has likewise posted bail for 4 cases pending before the CTA.

In a separate resolution dated December 6, 2018, Machacon-Caparros also denied accountant Noel Baladiang’s motion for reconsideration over his indictment for certifying RHC’s financial statements despite the non-disclosure of its purchase of Rappler, Inc.’s shares.