Rappler wants P133.8 million tax evasion case dropped

MANILA, Philippines — Rappler is asking the Department of Justice (DOJ) to dismiss the P133.8-million tax evasion charge against the online news outfit.

Through its president Maria Ressa, Rappler Holdings Corp. (RHC) presented yesterday a counter-affidavit before investigating assistant state prosecutor Zenamar Machacon-Caparros, denying allegations in the complaint filed by the Bureau of Internal Revenue (BIR) last March.

The company specifically denied violating the National Internal Revenue Code (NIRC) by willful attempt to evade or defeat tax and for deliberate failure to supply correct and accurate information in its annual income tax return (ITR) and value added tax (VAT) returns for 2015.

Rappler belied the allegation of BIR that RHC acted as dealer in securities when it purchased common shares from Rappler Inc. and later sold Philippine Depositary Receipts (PDRs) to two foreign firms.

“Complainants’ theory is factually and, per our lawyers, legally baseless. RHC is not a dealer in security. We understand the elements of tax evasion are not present, specifically: (a) willfulness (b) the illegality of the means employed, and (c) the goal was to profit from the transaction and evade the corresponding taxes due,” read the eight-page answer.

“We adequately disclosed our PDR and subscription transactions in our reports to and filing with the SEC (Securities and Exchange Commission) and BIR. We could not be accused of misrepresentation in our tax returns because there was no reason for us to conclude that the claimed ties were due,” Rappler stressed.

Ressa, who personally appeared before the DOJ, branded the tax evasion charge as “harassment” and “selective prosecution” on the part of the BIR.

“They asked for our books three days before they filed the charges. This is another instance where you have a case of political harassment because we’re journalists trying to do our jobs. I appeal again to the BIR, their job is to investigate before filing charges,” she told reporters in an interview after the hearing.

“The complainants’ treatment of us is selective justice, and will have a chilling effect on PDR issuers. Clearly, at most, the taxability of PDRs is a novel and difficult question of law, which cannot give rise to a criminal prosecution, as this negates willfulness,” Ressa added.

With the submission of Rappler’s answer, the prosecutor required the BIR to submit its comment in the next hearing set for May 21.

BIR filed the complaint with the DOJ after its probe showed that RHC purchased common shares from Rappler Inc. worth P19,245,975. Then, it issued and sold PDRs to two foreign firms worth P181,658,758.67.

The bureau said RHC used the same common shares it purchased from Rappler Inc. as the underlying share of the PDRs for profit and transmitted economic rights to the PDR holders.

However, the annual ITR and VAT returns for 2015, according to the BIR, do not reflect any IT and VAT from the PDR transaction.

The foreign owners of Rappler have reportedly donated their shares to local stockholders in compliance with a constitutional requirement.

Apart from the tax evasion charge, Rappler is also facing a separate cyber libel case before the DOJ filed by the National Bureau of Investigation and businessman Wilfredo Keng.

The respondents have been accused of committing libel under Section 4, paragraph (c), sub-paragraph (4) of Republic Act 10175, the Cybercrime Prevention Act of 2012.

The complaint filed by Keng for a violation of the Cybercrime Law stemmed from the article “CJ using SUVs of ‘controversial’ businessmen” that Rappler published on May 29, 2012.

Rappler reported that the late former chief justice Renato Corona, who was then facing an impeachment trial, had been using a black SUV whose plate number was allegedly issued to Keng.