DOJ finds probable cause to indict Rappler and its president Maria Ressa for tax evasion

(File photo) Maria Ressa (C), the CEO and editor of online portal Rappler, speaks during a protest on press freedom along with fellow journalists in Manila on January 19, 2018. –  (Photo by TED ALJIBE / AFP)

 

(Eagle News) – The Department of Justice’s National Prosecution Service has found probable cause to indict Rappler Holdings Corporation (RHC), its president Maria Ressa, and its accountant for tax evasion based on a complaint filed by the Bureau of Internal Revenue.

The BIR complaint arose from Rappler’s failure to reflect in its 2015 tax returns “the total gains of almost P162.5 million which it realized from its issuance of Philippine Depository Receipts (PDR) to NBM Rappler L.P. and Omidyar Network Fund LLC,” according to a press statement of DOJ Undersecretary Markk Perete released Friday, Nov. 9.

NBM Rappler and Omidyar Network are two foreign investors which put money into Rappler between the years 2014 and 2015.

In a resolution, Assistant State Prosecutor Zenamar J.L. Machacon-Caparros upheld the complaint filed by the BIR against Rappler and Ressa for “willful attempt to evade or defeat tax and willful failure to supply correct and accurate information under Sections 254 and 255, respectively, of the Tax Code.”

The resolution cited in the DOJ release was dated Oct. 2, 2018. It was issued almost four months after the case was submitted for resolution.

In its complaint, the BIR alleged that on various dates from 2014 to 2015, Rappler Holdings Corporation (RHC) purchased a total of 119,434,438 common shares from Rappler, Inc. at one peso per share.

“RHC thereafter issued PDRs against most of the RI shares that it held to NBM Rappler and Omidyar. The subscription price for said PDRs was P181.6M. RHC allegedly gained close to P162.5M from the transaction, which it failed to declare in its tax return,” DOJ Undersecretary Perete said.

“In her resolution, Caparros ruled that in buying RI shares for the purpose of underwriting PDR’s for resale to interested buyers, RHC (Rappler Holdings Corporation) acted as a middleman whose profits were taxable under the Tax Code.”

“By not declaring such profits in its returns, the RHC has violated the Tax Code,” the DOJ statement from Perete said.

“Caparros ruled that Ressa, as RHC president, should be held to account such violation because Section 253 of the Tax Code makes a corporate president, among other officers, personally liable for such infraction by the corporation,” said the DOJ Undersecretary’s statement.

The DOJ prosecutor also “brushed aside Ressa’s defense that the non-declaration of such gain was neither intentional nor willful, holding that a defense of lack of criminal intent is better ventilated during the trial proper,” Perete said.

He explained that a PDR is a security which grants the holder the right to the delivery or sale of the underlying shares of stock.

“It derives its value from an underlying asset. As such, its value depends on the value of its underlying asset – which is the shares of stock of a corporation,” he said in a statement.

Aside from Ressa, the BIR also accused Rappler Holdings’ accountant Noel Baladiang of having violated Section 257 of the Tax Code for having certified the financial statements of RHC despite said corporation’s failure to disclose its purchase of RI shares.

Caparros, however, dismissed the complaint against RHC treasurer James Bitanga upon Ressa’s certification that he was an inactive and nominal treasurer who did not participate in the management and operations of Rappler Holdings.

 (with a report from Moira Encina, Eagle News Service)