DOJ indicts Rappler for tax evasion

The Department of Justice (DOJ) yesterday said there is probable cause to indict Rappler Holdings Corp. (RHC), its president Maria Ressa and its public accountant for an alleged P108.4-million tax evasion case.

The DOJ-National Prosecution Service (NPS) Assistant State Prosecutor Zenamar Machacon-Caparros issued a resolution last Oct. 2 stating that RHC, Ressa and its accountant Noel Baladiang violated provisions of the National Internal Revenue Code or Tax Code.

The DOJ said that the respondents failed to pay P91,320,480.99 including surcharge and interest and value added tax (VAT) of P17,138,467.68 or a total of P108,458,948.67.

The DOJ cited in a statement the respondents’ “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 Bureau of Internal Revenue (BIR) mentioned in its complaint that RHC, Ressa and RHC treasurer James Bitanga allegedly did not reflect in RHC’s 2015 tax returns the total gain of almost P162.5 million that it realized from its issuance of Philippine Depositary Receipts (PDR) to North Base Media (NBM) Rappler and Omidyar Network Find LLC (Omidyar).

The BIR alleged that on several dates, between years 2014 to 2015, RHC purchased a total of 119,434,438 common shares from Rappler Inc. at one peso per share. RHC then issued PDRs against most of the Rappler Inc. (RI) shares that it held to NBM Rappler and Omidyar.

The subscription price for the PDR was P181.6 million. RHC allegedly gained close to P162.5 million from the transaction, which it failed to declare in its tax return.

The BIR also reportedly accused Baladiang of violating Section 257 of the Tax Code for having certified the financial statements of RHC despite the corporation’s failure to disclose its purchase of RI shares.

Caparros mentioned in the resolution that in buying RI shares for the purpose of underwriting PDRs for resale to interested buyers, RHC 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 added.

“Ressa, as RHC president, should be held to account for such violation because Section 253 of the Tax Code makes a corporate president, among other officers, personally liable for such infraction by the corporation,” Caparros added.

The DOJ gave little credence to Ressa’s defense that the nondeclaration of such gain was neither intentional nor willful, holding that a defense of lack of criminal intent is better ventilated during the trial proper.

Caparros also dismissed the complaint raised against Bitanga upon Ressa’s certification that Bitanga was an inactive and normal treasurer who did not participate in the management and operations of RHC.