MANILA, Philippines – The Court of Tax Appeals (CTA) has decided to proceed with the trial of Rappler CEO Maria Ressa over 4 counts of alleged tax violations after the First Division denied the journalist’s motion to quash.
“Let this case be set for pre-trial on March 13, 2019 at 8:30 a.m. Parties are hereby notified to submit their respective pretrial briefs at least five (5) days before the date of pre-trial,” says the resolution dated February 7, and signed by Presiding Justice Roman Del Rosario, and Associate Justices Esperanza Fabon-Victorino and Catherine Manahan.
The 4 cases involve Rappler Holding’s Philippine Depositary Receipts (PDR) issued to foreign investor Omidyar, which the Department of Justice (DOJ) said constituted taxable income that the news company did not declare in its taxes.
Ressa is facing one count of tax evasion and 3 counts of violation of Section 255 of the Tax Code or failure to supply correct information in the Income Tax Return (ITR) for 2015, and Value Added Tax (VAT) returns for the 3rd and 4th quarters of 2015.
Ressa filed a motion to quash on the basis of violation of due process because the DOJ proceeded to file the charges in the CTA even before it could resolve her appeal.
“The arguments relative to the pending determination of the motion for reconsideration have been rendered moot as the plaintiff already submitted the Resolution of Asst. State Prosecutor, Atty. Zenamar J.L. Machacon-Caparros to this Court on January 24, 2019 denying the said motion for reconsideration. This Resolution was dated November 29,2018,” said the CTA.
The CTA also said that a pending administrative case on the tax liability of Rappler and Ressa cannot stop them from proceeding with the trial.
Defend it in court
Ressa also argued before the CTA her main defense that PDRs are financial mechanisms that do not generate taxable income. Ressa said the DOJ was mistaken for classifying Rappler, a news organization, as a dealer in securities.
“The issue of whether or not the accused is considered a 'dealer in securities' is a matter which can be ventilated by the presentation of evidence during trial,” said the CTA.
According to the DOJ, Rappler generated taxable income worth P162,412,783.67 ($3.1 million), and acquired tax deficiencies worth P70.5 million ($1.3 million).
Ressa is charged for a 5th count at the Pasig Regional Trial Court (RTC) because the DOJ chose to file the last case there separately. Ressa has also posted bail at the Pasig RTC.
Ressa has a 6th charge at the Manila Regional Trial Court (RTC), where she recently posted a P100,000 bail for cyber libel after her February 13 arrest.
As of February 15, Ressa has paid a total of P364,000 (almost US$7,000) in bail for all her 6 charges.
A 7th complaint is pending before DOJ prosecutors for alleged violation of the anti-dummy law, still related to the PDR.
In January 2018, the Securities and Exchange Commission (SEC) ordered the revocation of Rappler’s license, saying that the PDR amounted to foreign ownership, which is prohibited for media companies under the Constitution.
The Court of Appeals rejected the revocation, saying Omidyar’s donation of the PDRs to Rappler’s managers already cured the matter.
The CA then remanded the case to the SEC for review. (READ: DOCUMENT: Court of Appeals' full decision on Rappler's SEC case)