Acquittal correct but Ressa’s tirade misplaced

“Her being a journalist does not give her a license to tarnish the reputations of people and entities.

On 18 January 2023, the Court of Tax Appeals rendered a decision acquitting Maria Ressa, who heads the online news outlet Rappler, of tax evasion charges.

The tax evasion charges against Ressa, as the head of Rappler, were filed by the Bureau of International Revenue. The latter alleged that Rappler did not pay the corresponding tax imposable on the proceeds of a sale of depositary receipts to foreign investors. The legal theory of the BIR is that Rappler received income from the said sale hence, the same is taxable. Under the law, income received by any individual or entity coming from within and outside the Philippines is taxable income.

The legal issue in the cases against Ressa and Rappler is simply: Were the proceeds received by Rappler out of its sale of depositary receipts to foreign firms classified as income or capital?

If the proceeds are income, it’s taxable, if capital, it’s not taxable.

In the separate concurring opinion of Court Tax Appeals Justice Ivy Reyes-Fajardo, citing the case of Chamber of Real Estate and Builders’ Association Inc. v. The Honorable Executive Secretary Alberto Romulo, et al., the difference between income and capital is explained, thus:

“Income means all the wealth which flows into the taxpayer other than a mere return of capital. Capital is a fund or property existing at one distinct point in time while income denotes a flow of wealth during a definite period of time. Income is the gain derived and severed from the capital. xxx “

In that foregoing legal issue, the appellate tax court ruled that what Rappler received from its sale of depositary receipts to the foreign firms was capital, and not income. The sale between Rappler and the former was an investment transaction. The foreign companies were infusing capital into Rappler, hence the latter cannot be said to have received income out of the said transaction. This ruling of the appeals court is in accord with the evidence and law.

Another legal question is: Was Rappler dealing in the sale of securities when it sold depositary receipts to the two foreign entities, and if it was, is it liable to be taxed as such dealer?
The Court of Tax Appeals ruled on the negative. Rappler Holding Company is not a dealer in securities. Hereunder is the pertinent portion of that ruling in the same aforesaid concurring separate decision, to wit:

“RHC (Rappler Holdings Company) was incorporated as a holding company and was registered with the Bureau of Internal Revenue as an entity engaged in financial holding company activities. xxx”

Clearly, therefore, Rappler Holdings Company is not registered as a dealer in securities. While the Philippine Depositary Receipts is classified as a security, its one-time issuance of it does not make the issuer, in this case, Rappler Holdings Company, a dealer of securities.

In the same concurring separate opinion appears the following:

“A PDR is an equity derivative since its value is dependent on the underlying equity. It is classified as a security. xxx” “Also, even if PDR is classified as a security, the sale thereof is not trading income since RHC is not a “dealer in securities. xxx”

Again, this ruling of the appellate court is supported by law and jurisprudence.

The issue of whether or not the foreign firms became owners and has control over the management because of their investment to Rappler, by way of the depositary receipts, which ownership and control are constitutionally prohibited, was not touched upon as it was irrelevant in resolving the tax liability of Rappler and Ressa. That constitutional issue, this writer was informed, is pending before the Court of Appeals.

While this lawyer agrees with the decision of the Court of Appeals on the acquittal of Maria Ressa, the latter’s reaction and tirade against the previous administration of former President Rodrigo Roa Duterte is grossly misplaced as it is laced with vicious propaganda against her imagined “oppressor”, even dragging the freedom of the press as being violated.

In her emotional outburst before the media following her acquittal, she was quoted as saying:

“Today, facts win. Truth wins. Justice wins.”

“These charges as you know we’re politically motivated, they were a brazen abuse of power and means to stop journalists from doing their jobs.”

“These cases were capital markets, where rule of law and press freedom meet. So this acquittal is not just for Rappler. It is for every Filipino who has ever been unjustly accused.”

She must be entertaining the thought that her being a Nobel prize winner could shield her from her false and reckless protestations and accusations.

Her tax evasion charge was not politically motivated. The BIR pursued a legal theory that it thought to be correct. The Court of Tax Appeals decided otherwise.

Her cyber libel case was instituted by a private citizen whose reputation she and Rappler wronged. Her conviction is pending appeal.

Her criminal prosecution is anchored on what she and Rappler did, which were perceived to be violations of law. Her being a journalist does not give her a license to tarnish the reputations of people and entities which is a violation thatcannot be protected by her invocation of freedom of the press and speech.

Her acquittal and conviction only demonstrate that the rule of law in this country is observed and robust, contrary to her and her allies’ false and misleading narratives.


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