DOJ denies harassment in P108 million tax raps vs Rappler

MANILA, Philippines — The Department of Justice (DOJ) has stood firm in its indictment of Rappler Holdings Corp. (RHC) and its top executives for alleged evasion of taxes worth P108.4 million.

Justice Secretary Menardo Guevarra has also denied the allegation of RHC that the tax evasion case filed before the Court of Tax Appeals (CTA) last week was “a clear form of continuing intimidation and harassment” against the holding firm’s online news outfit Rappler because of its critical reports on the Duterte administration.

Guevarra belied the insinuation of Rappler that the case was “an attempt to silence journalists,” saying the complaint filed by the Bureau of Internal Revenue (BIR) was based solely on records, evidence and answer submitted by the respondents.

“No one, and absolutely no one, much less from Malacañang, has interfered with state prosecutors in the resolution of the Rappler tax evasion case,” Guevarra stressed in a statement yesterday.

“The duty of state prosecutors is to determine the existence of probable cause only and they have found the evidence and arguments of the BIR sufficient and cogent enough to establish a probable violation of our tax laws,” the DOJ chief pointed out.

Guevarra said the administration does not resort to harassment of media outfits that are critical of President Duterte because it respects freedom of the press.

“The government has always respected press freedom and tolerated all unfounded criticisms against it, including cries of alleged harassment, even when there is none,” he said.

The DOJ said Rappler should answer the case that is now with the CTA, adding that the holding firm still “has all the legal remedies at its disposal.”

Apart from filing of motion for reconsideration and petition for review before the DOJ, RHC may also file a petition before the Court of Appeals to question the indictment.

Rappler, in a statement, claimed that the tax evasion case did not come as a surprise “considering how the Duterte administration has been treating Rappler for its independent and fearless reporting.”

Rappler’s lawyer Francis Lim has likewise reiterated their denial of the tax evasion charges.

“Let me reiterate that Rappler Holdings has not evaded the payment of any tax obligations in relation to its sale of Philippine Depositary Receipts (PDRs) to two foreign entities in 2015,” he explained.

Lim warned that the filing of the case against RHC “will have a chilling effect on those who have raised and will raise capital through the issuance of PDRs and is a blow to the development of our already laggard capital markets.”

In its resolution released on Nov. 9, the DOJ found probable cause to indict RHC, its president Maria Ressa and accountant Noel Baladiang, for tax evasion over the sale of its PDRs to two foreign firms in 2015.

The panel of investigators led by Assistant State Prosecutor Zenmar Machacon-Caparros has found after preliminary investigation that respondents are criminally liable for violations of the National Internal Revenue Code (NIRC) through “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 BIR alleged in its complaint last March that RHC did not pay P133 million in income and value-added taxes over the sale of P181.67 million worth of PDRs to Omidyar Network Find LLC and NBM Rappler LP.

RHC allegedly gained P162.5 million from the transaction, which it failed to disclose in its tax return.

But while the DOJ found basis in the complaint, it lowered the liability of RHC to P108,458,948.67 in taxes with interest and surcharge.

The DOJ 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.

The resolution said RHC’s profits from such a transaction are taxable under the NIRC.