GLIMMER OF HOPE | Rappler CEO Maria Ressa calls her acquittal on tax evasion charges on Wednesday a “ray of light, hope” amid a slew of legal battles, including the appeal of her cyberlibel conviction in 2020. The Court of Tax Appeals ruled that state prosecutors failed to prove Rappler dodged payment of income taxes in a 2015 stock rights sale to foreign investors. (Photo by NIÑO JESUS ORBETA / Philippine Daily Inquirer)
MANILA, Philippines — Nobel laureate Maria Ressa and her news site Rappler were acquitted of tax evasion charges on Wednesday, in a ruling that media watchdogs and human rights groups praised as a rare victory for press freedom and for “every Filipino who has ever been unjustly accused” by the government.
“Today, facts win. Truth wins,” a teary-eyed Ressa told reporters outside the Court of Tax Appeals (CTA) after its decision dismissing four charges that she and her online media company had dodged being taxed in a 2015 stock rights sale to foreign investors.
Ressa was awarded the Nobel Peace Prize alongside a Russian journalist in 2021 as head of Rappler, one of the media outfits openly attacked by then President Rodrigo Duterte mainly for its critical reportage on his deadly war on drugs.
In its 81-page decision written by Associate Justice Catherine Manahan, the CTA’s First Division said state prosecutors failed to prove beyond reasonable doubt that Ressa and Rappler had evaded income taxes.
Associate Justices Jean Marie Bacorro-Villena and Marian Ivy Reyes-Fajardo concurred in the ruling, which cleared Ressa and Rappler on three counts of willful failure to supply the correct information and a count of tax evasion under the National Internal Revenue Code (NIRC).
In November 2018, the Department of Justice (DOJ), headed then by Secretary Menardo Guevarra under the Duterte administration, alleged that Rappler gained nearly P162.5 million when it issued Philippine depositary receipts (PDRs) to investors in 2015 but “failed” to declare the earnings in its tax return.
A PDR is a financial instrument that gives its holder, in consideration of the payment of a certain price, the right to “own” the stocks of a company and to receive dividends or interest. But the title over the stocks remains with the company.
Based on a complaint by the Bureau of Internal Revenue, the DOJ accused Rappler of evading tax payments when it raised its capital through a partnership with North Base Media (NBM) and Omidyar Network.
‘No gain, income realized’
But the CTA said it found no legal basis in the prosecution’s allegation of an “imputed gain” by Rappler, concluding that the elements of crime under the NIRC did not exist.
“As discussed, no gain or income was realized by the accused in the subject transactions,” the court said. It added that there was nothing in Rappler’s PDRs and subscription agreements that would show that NBM and Omidyar would become owners of the shares of stocks upon the issuance of the PDRs.
“In sum, since accused is not required to pay the income tax and VAT (value-added tax) on the PDR transactions for the taxable year 2015, the elements of Sections 254 and 255 of the 1997 NIRC, as amended, are rendered nugatory and without legal support,” it said.
The DOJ said it respected the decision of the court.
Inspiration
Ressa said the acquittal on the “politically motivated” charges was not just for herself or her organization: “It is for every Filipino who has ever been unjustly accused. It is also a ray of light, hope.”
Media rights advocates congratulated her on the legal victory, calling it a repudiation of the government’s vindictiveness against its critics.
The National Union of Journalists of the Philippines said it took inspiration from the ruling in the face of many other legal battles facing Filipino journalists, from libel to accusations of terrorism.
It cited the case of Tacloban-based community journalist Frenchie Mae Cumpio, who remains in jail on charges of illegal possession of firearms and explosives.
Human Rights Watch senior researcher Carlos Conde challenged President Marcos to “take stock of the acquittal and to ensure that journalists in the Philippines [can do] their jobs without fear.”
Leni: Truth prevailed
Former Vice President Leni Robredo tweeted a brief message to Ressa: “Truth and light prevailed today. To more ahead!”
Sen. Risa Hontiveros said the acquittal of Ressa and Rappler was an “important win for free and defiant journalism 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.
The Canadian and Dutch governments, cochairs to the Media Freedom Coalition, called the acquittal an “important and positive step toward upholding rule of law and media freedom.”
“Any measure that undermines the independence and freedom of the press must be strictly scrutinized with the highest standards of law and human rights,” the embassies of Canada and the Netherlands in Manila said in a joint statement.
Cyberlibel conviction
Ressa, 59, has been fighting a string of government lawsuits since 2018 which she has described as part of a pattern of harassment.
She is currently on bail as she appeals a six-year prison sentence handed down on her and Reynaldo Santos, a former Rappler researcher, in 2020 for a libel conviction.
The two were found guilty of cyberlibel in connection with a May 2012 Rappler report on businessman Wilfredo Keng.
Ressa’s lawyer, Theodore Te, said the case would be elevated to the Supreme Court after the Court of Appeals (CA) upheld the conviction last year.
A Manila court had sentenced Ressa and Santos to six months and a day to six years in prison in a decision affirmed by the appellate court in July 2022. The CA also extended their prison time to up to six years, eight months, and 20 days.
Ressa is facing another case for alleged violation of Section 255 of the tax code—concerning the value-added tax return for the second quarter of 2015—in a Pasig City court.
The government also accused her of violating the anti-dummy law, in a separate case filed in Pasig, over PDRs issued to foreign investors in 2015.
The Philippines ranked 147 out of 180 countries in the 2022 World Press Freedom Index, and the Committee to Protect Journalists placed the Philippines seventh in the world in its 2021 impunity index, which tracks the deaths of media members whose killers go free.
In October, radio journalist Percival “Percy Lapid” Mabasa, was shot dead, the latest among the scores of Filipino media practitioners killed in the past decade.