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Philippine journalist cleared of tax evasion; press freedom hailed

THE PHILIPPINE Court of Tax Appeals on Wednesday acquitted Rappler Holdings Corp. and its founder of tax evasion in a ruling hailed as a win for press freedom.

In an 80-page decision, the court’s First Division ruled government prosecutors had failed to prove the guilt of the news website and Filipino journalist Maria Ressa beyond reasonable doubt.

“No civil liability may be adjudged against the accused as the alleged unpaid tax obligations have not been factually and legally established and proven,” according to the ruling written by Associate Justice Jean Marie Bacorro-Villena.

The Bureau of Internal Revenue under ex-President Rodrigo R. Duterte and Department of Justice (DoJ) accused Ms. Ressa and her company of evading taxes by failing to declare Philippine depositary receipts it sold to foreign investment firms North Base Media and Omidyar Network Fund LLC in their income tax returns in 2015.

The government alleged that Rappler had earned P162.41 million in income from the receipts.

Ms. Ressa and Rappler denied the charges, saying the transactions involved legitimate financial mechanisms that did not generate taxable income.

The tax court said the holder of the depositary receipts only retained an option to buy the underlying shares of Rappler subject to certain conditions. “There is no law restricting foreign ownership in the business of the operating entity.”

A Philippine depositary receipt is a security that gives its holder the right to the sale of the underlying shares of stock, according to the Philippine Stock Exchange. It is not evidence or certificates of ownership in a company.

The court agreed, noting that Rappler had not gained taxable income from the receipts. Under the country’s Tax Code, income tax may be imposed on ventures that yield profit.

“Today facts win, truth wins, justice wins,” Ms. Ressa, a Nobel Peace laureate, told reporters after the verdict, based on a livestreamed YouTube video. “This victory is not just for Rappler. It’s for every Filipino who has ever been unjustly accused.”

“These charges were politically motivated, they were incredible to us, a brazen abuse of power and meant to stop journalists from doing their jobs,” she said. “These cases are where capital markets, rule of law and press freedom meet.”

Ms. Ressa, who founded Rappler, has been the target of legal action by the government under Mr. Duterte.

In July, the Court of Appeals convicted her and a former Rappler researcher of cyber-libel over a 2012 article that claimed a businessman had been involved in human trafficking, murder and drug smuggling.

Her lawyer has said they would bring the case to the Philippine Supreme Court.

Last year, the Securities and Exchange Commission upheld Rappler’s closure for allegedly violating restrictions on foreign ownership in mass media.

PRESS FREEDOMSenator Ana Theresia N. Hontiveros-Baraquel said the dismissal of the tax charges is an important victory for the free press in the Philippines.

“In a democracy, truth-telling and sharing independent views is not a crime, even if it irks and annoys the powers that be,” she said in a statement.

In a statement posted on its website, Rappler said the decision saw past the harassment against media organizations in the Philippines and decided objectively.

“We thank the court for this just decision and for recognizing that the fraudulent, false and flimsy charges made by the Bureau of Internal Revenue do not have any basis in fact,” it said. “An adverse decision would have had far-reaching repercussions on both the press and the capital markets,” it added.

Bayan Muna Chairman and former Party-list Rep. Neri J. Colmenares said Ms. Ressa’s acquittal was a victory for press freedom, even if the struggle against fake news, communist-tagging and repression continues.

“Let this serve as a reminder that dictatorships will never succeed,” he said in a statement. “We must not let our guard down as fascists who are intolerant of dissent are again occupying key positions in the Marcos administration, itching to ram their kind of thinking on the populace.”

The former ruling Liberal Party also hailed the tax court’s ruling. “Truly, when truth wins, justice prevails,” it said in an e-mailed statement.

“The firing line against attacks on media freedom, civic space and democracy has always been strong, but this decision and recent others like it by courts unafraid to uphold the rule of law are well-received,” says Ibon Foundation in a statement.

“The Marcos administration is also served notice that the forces resisting autocracy and authoritarianism are many, broad and unbowed.”

Wednesday’s acquittal is not the end of Ms. Ressa and Rappler’s legal battles because they still face three active court cases.

These are Rappler’s appeal against the corporate regulator’s 2022 closure order, an appeal by Ms. Ressa and former Rappler journalist Reynaldo Santos, Jr. against convictions for cyber libel and another tax case against Rappler and its founder. 

President Ferdinand R. Marcos, Jr. in September said he would not interfere in Ms. Ressa’s cases, citing the separation of powers between the Executive and Judiciary. — John Victor D. Ordoñez and Beatriz Marie D. Cruz

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