DOJ files 5 tax evasion cases vs Rappler Holdings, Maria Ressa

Mike Navallo, ABS-CBN News

Posted at Nov 29 2018 08:30 PM | Updated as of Nov 30 2018 04:31 PM

MANILA (UPDATE) - The Department of Justice has filed 5 separate tax evasion cases against Rappler Holdings Corporation (RHC) and its president Maria Ressa before a Pasig court and the Court of Tax Appeals.

RHC is the holding company of Rappler Inc., owner of news website Rappler, which has faced several legal challenges, including government's revocation of its license to operate in January, and a cyber libel complaint. 

One case for failure to file value-added tax (VAT) return under Section 255 of the Tax Code was filed against RHC and Ressa before the Pasig City Regional Trial Court on November 14, 2018, which Rappler’s lawyers found out only on Thursday.

That case involves the VAT return for the second quarter of 2015, when RHC supposedly owed the BIR P294,258.58 in tax deficiencies after it allegedly earned P2.45 million in taxable income due to the sale of Philippine depositary receipts (PDRs) to NBM Rappler LP.

According to Rappler, 4 other cases were filed before the CTA on November 26 and 28.

Quoting DOJ Prosecutor General Richard Anthony Fadullon, Rappler said 3 of the charges were for alleged failure to file VAT returns for the 3rd and 4th quarter and income tax return for 2015, in violation of Section 255 of the Tax Code.

The fourth one was for alleged violation of section 254 of the Tax Code (attempt to evade payment of taxes).

Section 254 of the Tax Code is punishable by fines of up to P100,000 and between 2 to 4 years imprisonment.

Section 255, on the other hand, punishes acts such as failure to file tax returns or the failure to pay, withhold or remit taxes to the government, with up to 10 years imprisonment and a fine of at least P10,000.

These penalties will be imposed on the responsible officers of companies impleaded in the complaints, if found guilty. 

If found liable, the company could also be ordered to pay fines ranging from P50,000 to P100,000.

Ressa, who is being sued in her capacity as RHC president, faces possible arrest should the Pasig court and CTA find probable cause.

The DOJ recommended bail of P60,000 each in the 4 cases (for violation of section 255 of the Tax Code) and P24,000 in another case (for violation of section 254 of the Tax Code).

Dealer in securities?

In all of these cases, the DOJ characterized RHC as a “dealer in securities.”

In a resolution dated October 2, Assistant State Prosecutor Zenamar Macachon-Caparros said RHC acted as a middleman in buying Rappler Inc’s shares for the purpose of underwriting PDRs for resale to interested buyers.

RHC purchased around 119 million common shares from Rappler Inc from 2014 to 2015 and against these shares issued PDRs to NBM Rappler and Omidyar Network Fund LLC.

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

Rappler maintained it is not a dealer in securities and never hid any transactions from the BIR.

Harassment

In a statement, Ressa said the tax cases were clearly harassment.

“These cases are part of government’s desperate efforts to harass and silence independent media such as Rappler. We continue to tell the story of the nation. These cases will not intimidate nor distract us from holding public officials to account through our stories,” she said.

Rappler's counsel Atty. Francis Lim, in a statement, said "there was undue haste in filing the tax cases in court as the period for asking the DOJ to reconsider its decision has not yet expired."

"This is a right granted to the respondents by the DOJ rules. In fact, one of the cases was filed even before respondents received a copy of the DOJ decision. This is a patent violation of our clients’ constitutional right to due process," he said.

Aside from the tax cases, Rappler is also facing a cyberlibel complaint before the DOJ.

The Securities and Exchange Commission had also revoked Rappler Inc’s license to operate in January over the same sale of PDRs.

The SEC said the language in the Omidyar PDR gave the foreign corporation some form of control, which is prohibited under the Constitution.

On Rappler's plea, the Court of Appeals (CA) agreed that the sale of the PDRs was tantamount to giving foreigners control but gave Rappler reasonable time to correct the transaction.

The CA also asked the SEC to determine the legal effect of Omidyar’s subsequent donation of its PDRs to Rappler’s staff.