MANILA, Philippines – No jurisdiction.
This, along with violation of due process, are what Rappler Holdings Corporation (RHC) and its president Maria Ressa are citing as basis for the dismissal of a tax case filed by the government against them.
In a motion to quash filed before Pasig Regional Trial Court (RTC) Branch 265 on Tuesday, December 4, RHC and Ressa asked the court to void the charges, if not remand investigation to the Department of Justice (DOJ) – or at least suspend proceedings while they avail of appeal remedies.
The motion was filed a day after Ressa posted bail of P60,000. She is scheduled to be arraigned on Friday, December 7.
Rappler and Ressa have been charged at the Pasig RTC with violation of Section 255 of the tax code, or supposed failure to supply correct information in their Value Added Tax (VAT) return for the 2nd quarter of tax year 2015.
This is only one of the 5 tax cases filed against them. The other 4, which stemmed from the same issue in the same year of 2015, are filed before the Court of Tax Appeals.
The motion to quash reads: “Certainly, given that the Accused have been deprived of due process as there was obvious haste and lack of objectivity and neutrality of the government through the Bureau of Internal Revenue (BIR) and the DOJ in affording protection to the Accused herein, this information should be quashed as this is a clear case of persecution rather than prosecution.”
Interviewed on Thursday, December 6, Justice Secretary Menardo Guevarra said: “I have to trust that the BIR followed the proper procedure before filing the criminal complaint.”
Rappler argued that its right to due process was violated when the DOJ filed the charges even before they could resolve the appeal.
The motion pointed out that the DOJ filed the charges before the Pasig RTC on November 14, when the department served a copy of its indictment to Rappler only a day after, on November 15.
“It is clear that Accused RHC and Maria Ressa were deprived of their right to a full preliminary investigation, which we respectfully submit is a constitutional requirement for this Honorable Court to acquire jurisdiction over the offense charge,” said the motion.
Rappler and Ressa claim that the DOJ should resolve their motion for reconsideration first, before they file the charges.
Guevarra had earlier said that filing charges immediately after the indictment is standard operating procedure or SOP, “but it does not preclude the filing of an MR and/or petition for review with the DOJ.”
It was the BIR that filed the complaint before the DOJ, which state prosecutors then deemed to be valid for the filing of charges in court.
RHC said that the BIR sent a letter of authority to the company on March 5, and filed the complaint “within three days.”
“BIR immediately caused the filing of the criminal complaint against Accused RHC and Maria Ressa with the DOJ without even conducting any administrative investigation or field audit,” said the motion.
The pleading also pointed out that the company only received a notice of informal conference from the BIR on November 19. Rappler said that under the BIR’s own rules, a criminal complaint can only be filed after a preliminary investigation, letter of authority, and formal investigation which includes examining books of accounts and accounting records.
“It is respectfully submitted that the Accused RHC and Maria Ressa should not stand for trial for this case as the filing of the information is premature and the conditions precedent to its filing have not been complied with,” Rappler said.
Lack of jurisdiction?
The DOJ indicted Rappler and Ressa with 5 charges of tax violations. The other 4 cases filed before the Court of Tax Appeals (CTA) are for failure to supply correct information in the VAT returns for the 3rd and 4th quarters of 2015, failure to file an Income Tax Return (ITR) for 2015, and evading tax for 2015.
The charge in Pasig involves an amount less than P1 million, or P294,258 ($5,608). All in all, the 5 charges involve tax evasion allegedly worth P162,412,783.67 ($3,095).
The DOJ said that because the CTA has exclusive jurisdiction over tax cases above the P1-million mark, the 5th case should be filed before a lower court.
Rappler and Ressa called this an unnecessary splitting of information. The motion said all charges come from one transactional activity, and therefore should be tackled as one case.
“Public policy is firmly set against unnecessary multiplicity of suits. Undoubtedly, the re-litigation of the same issues merely burdens the courts and the taxpayers, creates uneasiness and confusion, and wastes valuable time and energy that could be devoted to worthier cases,” the motion said.
Asked on Thursday why the prosecutors filed a case with a different court, Guevarra said “it has something to do probably with jurisdiction.”
Rappler and Ressa again repeated their original arguments that the company could not be faulted for not paying tax because it is not a dealer in securities.
The BIR and the DOJ allege that by issuing Philippine Depositary Receipts (PDRs) to foreign investors, Rappler has become a securities dealer and generated a taxable activity for which it must pay taxes.
Section 22(U) of the tax code defines a dealer of securities as one that is “regularly engaged in the purchase of securities and resale thereof.”
“The Information does not contain any allegation that RHC was ‘regularly engaged in the purchase of securities and resale’ or ‘buys securities and re-sells them to customers,’” Rappler said, pointing out that issuing PDRs is “totally different from buying and reselling securities under our law.”
Rappler and Ressa asked the court to take judicial notice of the instances when the Duterte administration had filed different cases against the company. The Securities and Exchange Commission earlier ordered the closure of Rappler over the same PDR issue, but the Court of Appeals (CA) stopped that from happening, saying that the supposed defect had been cured.
“As Accused Maria Ressa has not since ceased to report unbiased news even if it is against this administration, it is clear that all the recent actuations of the DOJ with respect to the handling of this case are intended to curtain Freedom of the Press,” said the motion.