MANILA – The Court of Tax Appeals (CTA) has cleared online news publisher Maria Ressa and Rappler Holdings Corp. (RHC) in tax evasion charges arising from investments made by two foreign firms.

In its 90-page decision dated January 18, the CTA first division acquitted Ressa in four cases docketed as CTA Criminal Case 679 to 682 "for failure of the prosecution to prove their guilty beyond reasonable doubt."

The court added that the financial instruments known as Philippine Depositary Receipts (PDRs) used by Rappler to allow the investments by the United States-based venture capital firms North Base Media (NBM) and Omidyar Network (OM) did not automatically translate into ownership in the firm which would warrant the payment of taxes.

"There is nothing in the wordings of the PDR instruments and the PDR subscription agreements that would show that the foreign entities NBM and OM will become owners of the shares of stock of Rappler Inc. upon the issuance of the PDRs," it said.

Paragraph 4 of the PDR instrument stipulates that the ownership of the shares of stock of Rappler Inc. (RI) remains with the issuer RHC.

The court ruled tht under the deal entered into by Rappler, the PDR holder "only retains an option to purchase the underlying shares of RI subject to certain conditions e.g. that there is no law restricitng foreign ownership in the business of the operating entity,".

RHC issued PDRs to NBM in two tranches –the first PDR certificate on May 29,2015, relating 264,601 shares in RI and were put in escrow with the agent.

It issued the second PDR certififcate inn July 2015 in favor of NBM, relating to 11,764,117 underlying shares in RI.

The CTA said there is no legal basis in the imputed gain of RHC in the amount of PHP162,412,783 allegedly treated as trading income.

Meanwhile, Solicitor General Menardo Guevarra said they have yet to receive a formal copy of the ruling and will study the implications, if any, of the decision.

"(T)he OSG will surely discuss the matter with the BIR (Bureau of Internal Revenue) and the DOJ (Department of Justice) to determine if any further action is warranted," Guevarra said .

NBM and OM fund organizations in developing countries backing organizations in Indonesia, India, the UK, Mexico, Israel and Japan.

In 2021, NBM raised USD2.7 million for Vietcetera, a Vietnam-based digital media network .

NBM co-founder Sasa Vucinic, is Serbian journalist who co-founded the Media Development Investment Fund (MDIF) in 1995 originally with funding from businessman George Soros' Open Society Institute.

By 2012, the fund made over USD100 million in loans to media outfits in 200 projects in 30 countries with an estimated audience of 36 million receiving news from MDIF-funded media.

OM was put up in 2004 by eBay founder Pierre Omidyar and calls itself a "philanthropic investment firm". Among the organization's beneficiary was the Wikimedia Foundation which is the hosting non-profit platform for Wikipedia. (PNA)