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DA issues initial estimate of 450,000 MT in sugar imports

A vendor places sugar in plastic bags for sale. — PHILIPPINE STAR/EDD GUMBAN

THE Department of Agriculture (DA) is considering sugar imports of as much as 450,000 metric tons (MT) following an order from the President to maintain a two-month buffer stock of the commodity.

Rex C. Estoperez, DA deputy spokesman, said on Wednesday in response to a question about sugar import plans: “Our information is that 450,000 metric tons needs to be imported (because the) President ordered a buffer stock good for two months. We’ll update you on what the procurement plan is.”

It was unclear whether Mr. Estoperez meant the buffer stock will be built up solely from imports. If so, the sugar reserve will diverge from the practice of the National Food Authority (NFA), which is tasked with maintaining a rice buffer stock of at least 15 days.

The NFA maintains its rice reserve solely from palay (unmilled rice) purchased from domestic farmers.

President Ferdinand R. Marcos, Jr., said that the government must maintain a two-month buffer stock of sugar to keep price volatility in check.

The Sugar Regulatory Administration (SRA) has also said that it will recommend to Mr. Marcos the sale of 80,000 bags of sugar confiscated from smugglers at DA-operated Kadiwa stores.

Mr. Estoperez said such a sale will require inter-agency approval.

“It has to be cleared first by the Department of Finance, because the Bureau of Customs is under the (DoF). We need to check the seizure order and (the sale needs) to be cleared again by the SRA,” Mr. Estoperez said.

He said that the proposed Kadiwa sugar price is P70 per kilo.

According to the DA’s price monitoring as of Wednesday, refined sugar sells at retail for P87-P110 per kilo.

Pablo Luis S. Azcona, a member of the SRA board, said that selling the confiscated sugar at Kadiwa stores will not affect the farmgate price of sugar.

“80,000 bags, more or less, is the same amount of sugar that one small mill can produce in one week. I think it is not significant enough to affect the farmgate price,” he said.

Separately, planters’ federations said on Wednesday that they signed a memorandum of agreement to form a coalition.

In a statement on Wednesday, Enrique D. Rojas of the National Federation of Sugarcane Planters, Aurelio Gerardo J. Valderrama, Jr. of the Confederation of Sugar Producers Association and Danilo A. Abelita of the Panay Federation of Sugarcane Farmers established the coalition, to be known as the “Sugar Council.”

The council, whose members will account for the majority of sugar production nationwide, will be the venue for discussing policy recommendations to the government that will help “ensure the continued viability of the sugar industry.” — Ashley Erika O. Jose

US CHIPS law not expected to rule out foreign production

STOCK PHOTO

THE head of the US Semiconductor Industry Association (SIA) is exploring the Philippines as a hub, noting that a recent US law encouraging tech companies to re-shore their operations will not rule out overseas production.

SIA President John Neuffer met with Board of Investments (BoI) Managing Head Ceferino S. Rodolfo on Jan. 16 to discuss the investment landscape after the US passed the CHIPS Act last year.

The CHIPS Act offers $500 million in incentives for producing microchips in the US.

“While the CHIPS Act aims to increase the capacity of the US semiconductor industry, we recognize that we cannot do it all in the US. And that’s where countries like the Philippines have an opportunity,” Mr. Neuffer said.

“Rather than reshoring all manufacturing activities, it is more of rebalancing the supply chain. The pandemic has forced global businesses to rethink their supply chain strategies and consider diversification of suppliers to mitigate disruptions in their business operations,” he added.

SIA accounts for 99% of the US semiconductor industry in terms of revenue and also counts among its members two-thirds of non-US chip companies. SIA members operating in the Philippines include Analog Devices, Onsemi, and Texas Instruments.

According to the BoI, the majority of industrial parts and components are still sourced from Southeast and East Asia.

Mr. Rodolfo said that the Philippines is ready to accommodate semiconductor investors from the US.

“We, in the Philippine government… promote partnerships and enhancing local capacities and competencies in semiconductor manufacturing to deepen the country’s role in the global semiconductor supply chain and be able to further support US companies in their endeavors under the CHIPS Act,” Mr. Rodolfo said.

At the end of November, the Philippines exported $45.63 billion worth of electronics products, or 62.36% of the total, according to the BoI. — Revin Mikhael D. Ochave

Marcos says cybersecurity upgrades to accompany digitalization push

PIXABAY

PRESIDENT Ferdinand R. Marcos, Jr. promised a corresponding effort to upgrade cybersecurity alongside his government’s push to digitalize the bureaucracy, the Palace said in a statement.

“Security has become a huge issue… that’s what we are trying to design now, a cybersecurity system for sensitive information,” he was quoted as saying in an open forum at the World Economic Forum by the Presidential Communications Office.

He told an open forum at the Swiss mountain resort of Davos that the government needs to do more to improve internet connectivity.  

“Connectivity in the Philippines is still pretty low. And it’s unfortunate because… consumers (live) every facet of their lives through the internet,” Mr. Marcos said, adding that the government is lagging the people in going online.

The Philippines’ ranking in the Digital Quality of Life Index 2022 dropped seven places to 55th out of 117 countries. It recorded lower scores in internet connection affordability, quality, and stability, as well as cybersecurity.

Local governments have stepped in to establish internet connectivity infrastructure in the regions, according to Mr. Marcos.

“Local governments, and some agencies within the National Government, (have taken) the initiative and started their own systems,” he said. “So, this has now got to be consolidated and put together.”

“And that’s where we are right now: forming the databases for the government, forming the databases that can be used by the national ID.”

Mr. Marcos said the Philippines welcomes any assistance from overseas in improving its digitalization initiatives.

Before the Davos conference, Mr. Marcos issued an order to fast-track the digitalization of the national identification (ID) system.

The order was issued after a meeting with the Private Sector Advisory Council, where one of the agenda items was the Philippine Statistics Authority’s plan to pursue public-private partnership for its Digital PhilID App, which will serve as a digital alternative to the national ID. — Kyle Aristophere T. Atienza

Growth in November bulk prices eases to nine-month low

PHILIPPINE STAR/ MICHAEL VARCAS

GROWTH in the bulk prices of general goods eased to a nine-month low in November as supply stabilized.

According to preliminary data from the Philippine Statistics Authority (PSA), the general wholesale price index (GWPI) rose 7.2% year on year in November from 7.6% a month earlier. In November 2021, the GWPI rose 4.2%.

The November indicator was the lowest since the 5.6% reported in February 2022.

General Wholesale Price Index in the Philippines

In the 11 months to November, GWPI was 7.4%, accelerating from 3% a year earlier.

In an e-mail, Security Bank Corp. Chief Economist Robert Dan J. Roces said that the GWPI was impacted by lower global commodity costs and improved supply, as well as a peso recovery in November.

“Moreover, the decrease in the mineral fuels commodity has a significant impact on the GWPI with it being a major component of the index. Other commodities that may have slowed the GWPI include industrial inputs and consumer goods where inventories may have been higher in the lead-up to the peak consumption season in December,” he added.

Among eight categories of commodity, five posted declines. Price growth in mineral fuels, lubricants and related materials eased to 25.9% from 28.6% in October. Other categories where price growth eased were chemicals including animal and vegetable oils and fats (2.5% in November from 3.4% in October), and food (12.3% from 12.9%).

On the other hand, price growth in miscellaneous manufactured articles accelerated to 3.8% in November from 3.3% in October. Price growth in manufactured goods classified chiefly by materials and machinery transport equipment commodities was unchanged at 4.2% and 1.2%, respectively.

The peso hit lows in October to the P59 level against the dollar. The peso recovered the P56 level, ending November at P56.56.

In a Viber message, Asian Institute of Management Economist John Paolo R. Rivera said GWPI reflected the reduced supply constraints on manufactured goods in the later part of the year. He added that growth in the GWPI would have been lower if not for the high demand during the holidays.

Luzon outpaced national GWPI growth with 7.4% in November, slowing from the 7.8% posted in October. The year-earlier price growth for the region was 4.3%.

November marked the lowest growth in GWPI since the 5.9% posted in February.

Mr. Rivera said Luzon GWPI reflects the island’s highly urbanized and industrialized nature, leading to higher demand compared with the Visayas and Mindanao.

Meanwhile, price growth in the Visayas and Mindanao eased to 6.5% and 4.8%, respectively in November from 6.6% and 4.9% in October.

The Visayas reading was the lowest since the 6.2% logged in August. Year-earlier GWPI growth came in at 1.4%.

Mindanao’s GWPI increase was the lowest since the 4% reading in September 2022. The year-earlier GWPI rise was 5%.

Mr. Roces warns of volatile prices in the coming months due to changes in supply and a post-holiday slowdown in demand.

“Price increases will slow down if supply constraints are addressed particularly in (agricultural) production,” Mr. Rivera said, adding that he sees the GWPI in the last month of 2022 picking up due to seasonal factors. — Bernadette Therese M. Gadon

Iodized salt law blamed for decline in PHL output

PHILIPPINE STAR/EDD GUMBAN

THE long-term decline in domestic salt production has been blamed by Senators on a 1995 law promoting iodization, which they said opened the door to competition from imports.

“It is clear that since the passage of the ASIN (An Act for Salt Iodization Nationwide) law, local production of salt deteriorated further while imports of salt increased,” Majority Leader Emmanuel Joel J. Villanueva said at a hearing of the Senate during the agriculture and food committee hearing on Wednesday.

Republic Act 8172 sought to promote the use of iodized salt to address micronutrient malnutrition, particularly iodine deficiency disorders.

Senator Cynthia A. Villar, who chairs the committee, called salt “a dying local industry” due to imports of 850,000 metric tons (MT) a year, or 93% of the salt requirement, mainly from Australia and China.

Gerard Khonghun, president of the Philippine Association of Salt Industry Networks (PhilASIN), added that not all imported salt is iodized, particularly the shipments from Australia.

“The law demanded that local salt be iodized, and now you’re going to import salt that is not iodized? What kind of joke is this?” Ms. Villar said, adding that domestic producers could have continued as before while requiring domestic manufacturers to iodize. The law, she added, “created a bigger problem for the Philippines.”

Government agencies like the departments of Trade and Industry and Science and Technology should have introduced training and equipment to help salt producers iodize, Ms. Villar said. 

Citing data from PhilASIN, Ms. Villar said that the Philippines produced less than 60,000 MT of salt from the 2,100 hectares of salt beds.

“In the 1960s and 1970s, we produced 240,000 MT of salt. Today, we only produce 42,000 MT of salt, which is 7% of demand,” she said. “42,000 MT is just 15% of what we were producing before. What happened?”

The committee was also trying to sort out which agency was in charge of overseeing the salt industry.

“Apparently, no one in the government is in charge of the salt,” Senator Maria Lourdes Nancy S. Binay said.

“The findings are that nobody is interested in the salt industry,” Ms. Villar said. “They said that it’s (under) DENR but DENR will just give the permit to use the shoreline.”

“Since it’s a kind of food then the DA should be concerned about the salt but you all keep pointing at each other when asked who’s in charge of the salt industry,” she added. “I would like to believe it’s the DA.”

Bureau of Fisheries and Aquatic Resources Officer-in-Charge Director Demosthenes R. Escoto said salt regulation was first budgeted for in 2022 from economic recovery stimulus funds.

“In 2023, we have a P100-million budget that was allocated for the salt development program, but everything started only from the 2022 Bayanihan funds,” he said, noting that the funds are directly downloaded from the DA to various regional directors. — Alyssa Nicole O. Tan

PCCI warns of brand exodus if luxury tax passes

PIXABAY

THE proposed tax on luxury goods risks the departure from the Philippine market of luxury-goods brands, possibly undermining the Philippines’ appeal as a shopping destination, the Philippine Chamber of Commerce and Industry (PCCI) said.

PCCI President George T. Barcelon said on the sidelines of an event in Taguig City on Wednesday that the government should have “reasonable” rules on which luxury goods will be taxed.

“They have to put some criteria (that) are within reason,” Mr. Barcelon noted, pointing to the role of luxury shopping as a draw for visitors in places like Singapore and Hong Kong.

“When some of these luxury brands find that it is not so attractive here, they may just pull out from the country. We need them also (for) the tourist business.”

Mr. Barcelon said the proposed luxury tax should be timebound.

“Whatever is helpful in the meantime to address the challenges that we are facing (but the luxury tax) cannot be in perpetuity. There must be a timeline… These are abnormal times (because the) government deficit is a major concern,” Mr. Barcelon said.

Albay Rep. Jose Ma. Clemente S. Salceda has said that the House Committee on Ways and Means is studying a plan to impose more taxes on wristwatches, bags, beverages, paintings, cars selling for more than P5 million, and residential property worth more than P100 million.

Under the Tax Code, a 20% tax is collected on jewelry, perfume, and yachts. — Revin Mikhael D. Ochave 

PPA sees monitoring system reducing logistics costs

REUTERS

THE Philippine Ports Authority (PPA) said its upcoming Trusted Operator Program-Container Registry and Monitoring System, or TOP-CRMS, will help reduce logistics costs by eliminating the container deposits charged by shipping lines to truckers, brokers, and forwarders.

The monitoring system, which has attracted a backlash, will also cut costs incurred by truckers on the road by helping them anticipate unavailable yard slots when they return empty containers, PPA General Manager Jay Daniel R. Santiago said at a briefing on Wednesday.

TOP-CRMS, a P900-million PPA digitalization project, is expected to be implemented within the first half of the year, according to Mr. Santiago.

“There are still certain regulatory and legal compliances that we need to undertake,” he said.

In July, Transportation Secretary Jaime J. Bautista urged the PPA to work towards reducing the cost of shipping and travel.

According to Mr. Santiago, port charges account for only 2-5% of total logistics costs.

All other charges such as freight charges of shipping lines, trucking charges, container handling charges of private container yards, and warehousing costs are “not regulated,” he said.

“We can only do so much in terms of minimizing or regulating the regulated charges. But we are not immune to the need to lower logistics costs, which is why we are working to reduce the incremental costs in the logistics chain.”

Using TOP-CRMS, the PPA is proposing to “eliminate the container deposit and replace it with container deposit insurance,” Mr. Santiago noted.

He said that container deposits charged by shipping lines range from P10,000 to P30,000 for dry containers and up to P180,000 for refrigerated containers. Container deposits are required by shipping lines to ensure that their containers are returned undamaged.

With TOP-CRMS, Mr. Santiago said, such amounts will be reduced to a P980 container monitoring fee, inclusive of container deposit insurance for missing or damaged containers.

The monitoring system also hopes to address the problems encountered by truckers when returning empty containers.

Shipping lines give truckers between three and five days to return empty containers, and charge them for exceeding five days, according to Mr. Santiago.

Truckers are also charged P1,000 to schedule the return of the empty containers, he added.

Truckers are sometimes advised by shipping lines to return their containers to a specific container yard only to be informed that there is no more space, Mr. Santiago added.

“So the trucker will either wait, or risk fines for parking or staying on the road even during the truck ban,” he said.

Such costs are ultimately passed on to the consumer, according to the PPA chief.

With TOP-CRMS, the PPA will accredit or designate yards for empty containers.

“Initially, the PPA has designated one yard in Bulacan, which is a minimum of 10 hectares expandable to 18. We have also identified yards in Laguna. We are willing to accredit or designate yards within the port area… provided that they commit to a certain number of slots that they will make available for the system, and they have to be integrated into our system including their CCTVs to monitor the condition of each container for damage or dispute assessment and resolution purposes,” Mr. Santiago said.

Under the proposal, truckers returning empty containers will pay P900 per lodgement. Before the release of the containers, they will pay another P3,408 in handling fees.

“Any PPA-accredited empty container yard cannot refuse acceptance because all of the available slots will be seen on a dashboard. They will have no reason to reject acceptance,” Mr. Santiago said. — Arjay L. Balinbin

Protectionism shields bulk of PHL diet from imports — PIDS

PHILSTAR FILE PHOTO/CC0 PUBLIC DOMAIN

THE bulk of the Philippine diet enjoys protection from import competition, according to the Philippine Institute for Development Studies (PIDS), a government think tank.

“The food groups that contribute most to the Filipinos’ energy, protein, and micronutrient intake — including rice, cereals, fish, meat, and poultry — are all produced under high levels of trade protection against cheaper imports,” PIDS said in a statement, citing a study by senior research fellow Roehlano M. Briones.

The study said that the government should liberalize trade instead of offering subsidies to improve food affordability.

“Prior to the pandemic, the nutritional status of Filipino children was already a serious concern. Adding to the recent rounds of food inflation, these economic shocks are likely to have an adverse impact on food consumption and nutrient intake at the household level, leading to worsening nutritional status,” Mr. Briones said.

He said that the government should “aggressively” pursue liberalization measures to improve affordability.

“The sooner the government dismantles high tariffs and overly strict (and often arbitrary) application of sanitary and phytosanitary standards on these major consumer goods, the more affordable these items become, especially to the poor,” he added.

The study recommended improving value chain productivity in order to boost competitiveness against cheap imports and raise the incomes of food producers, processors, and distributors.

“Productivity improvements by lowering production and logistics costs tend to make food more affordable. Identifying the right investments and suitable actors along the value chain to realize these productivity improvements poses a real challenge to agro-industrial policy; however, the potential benefits are too large to ignore this approach to food policy,” Mr. Briones added. — Luisa Maria Jacinta C. Jocson

House panel estimates luxury tax will generate P12.4B a year

PHILSTAR FILE PHOTO

THE House Committee on Ways and Means said it expects its proposed luxury tax to raise at least P12.4 billion a year.

“I’m looking at a short list of additional items… Basically, the aim is to find some way to tax the rich consistent with the constitutional principle of progressivity in taxation. For now, my short list will generate P12.4 billion at least,” Albay Rep. Jose Ma. Clemente S. Salceda, the committee chairman, said on Wednesday.

His initial shortlist includes high-end watches, cars selling for more than P5 million, private jets, residential property valued at more than P100 million per unit, beverages above P20,000 per bottle, and leather goods selling for more than P50,000.

Mr. Salceda said the mechanism will be the amendment of Section 150 of the National Internal Revenue Code, which currently taxes jewelry, perfume, and yachts. He is also looking to increase the tax rate to 25% or 30% from 20%.

The main target of the amendment is “non-essential goods whose prices are beyond the reach of the bulk of consumers, and which are not significant or important inputs to other value-adding industries,” Mr. Salceda said.

Mr. Salceda added that the luxury car tax will form part of the automotive excise tax, while the tax on high-end residential property “will be on top of the value-added tax and other taxes on its sale.”

He said the committee is also considering taxing club shares, jacuzzis, fur, boats, and antiques.

Mr. Salceda said the resulting revenue could be “funneled into the country’s creative sectors, particularly our own creators of luxury items,” saying that the Philippines should be “more than just a part of the whole assembly of luxury goods.” — Beatriz Marie D. Cruz

Philippines cedes tax revenue under global minimum tax rules

To expedite the revival of the economy from the pandemic and restore its trajectory towards upper middle-income status, the government has eased restrictions on foreign investment by amending foreign ownership rules for public services and retail. While the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law reduced our regular corporate income tax (CIT) rate to 25%, the Philippines still has one of the highest CIT rates in Southeast Asia. CREATE also rationalized the tax incentives granted to registered business enterprises (RBEs), allowing them to enjoy up to 17 years of income tax holidays (ITH), a 5% special corporate income tax, or enhanced deductions, among other fiscal incentives. However, these fiscal incentives may not look as enticing as before for large multinational enterprises (MNEs) considering investment in the Philippines. This article hopes to explain why.

The OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting published the Global Anti-Base Erosion (GloBE) Model Rules on Dec. 20, 2021. GloBE Rules introduce a coordinated system of taxation to ensure that large MNEs pay a minimum level of tax on the income they earn in every jurisdiction in which they operate. A top-up tax will be imposed on their profits should their jurisdictional effective tax rate (ETR) fall below the minimum rate. The 70-page GloBE Rules provide for a global minimum tax rate of 15% for MNEs with a turnover of more than 750 million euros. Ultimate Parent Entities (UPEs) such as pension funds, government, international and non-profit organizations as well as investment funds and real-estate investment vehicles are excluded from the scope of the GloBE Rules. Transitional safe harbor rules and a regulatory framework for the development of a potential permanent safe harbor were also published on Dec. 20, 2022.

Simply put, GloBE Rules are two interlocking rules — the Income Inclusion Rule (IIR) and the Undertaxed Payment Rule (UTPR). IIR requires the immediate parent entity to pay the top-up tax with respect to the low-taxed income of a constituent entity (an entity of the MNE Group in a country where the ETR is below the minimum rate). Otherwise, the UTPR will deny deductions or require an equivalent adjustment on the UPE level to the extent that the low-taxed income of a constituent entity is not subject to tax under IIR. The determination of whether a top-up tax is required, either through the IIR or the UTPR, is based on a complex calculation of the ETR for a specific jurisdiction. In computing the jurisdiction ETR, the GloBE Rules provide for modified deferred tax calculations for the timing differences, the treatment of losses, and an elective substance-based carve-out that may reduce the profits subject to top-up tax. Carve-outs are based on the level of payroll and the carrying value of certain tangible assets within a jurisdiction.

Based on the above rule, however, there may be instances when a certain jurisdiction will not be able to collect the top-up tax on the income earned by a constituent entity operating in its jurisdiction if the immediate parent or the UPE of the MNE is established in a different country. Hence, the GloBE Rules also introduced a Domestic Top-up Tax. Countries can now impose a specific tax in their own jurisdiction to increase the ETR on certain profits, excluding those that are subject to substance-based carve-outs, to the 15% global minimum ETR. It will allow a jurisdiction to ensure that the tax is collected therein and will not be ceded to another jurisdiction under either the IIR or the UTPR. If the low-tax jurisdictions adopt this domestic top-up tax, it will reduce the complexity of the GloBE Rules and will achieve the primordial goal of the Pillar 2 project which is leveling the playing field for tax competition. Participating countries must have enacted the appropriate domestic legislation in 2022 since the plan is for the IIR to be effective in 2023 while the UTPR can come into effect in 2024.

To briefly illustrate, let’s consider an RBE enjoying ITH in the Philippines. Its immediate parent is a Singapore entity and the group is ultimately owned by a Japanese company. Both Japan and Singapore and other neighboring countries are currently adjusting their laws to account for the possible effect of the GloBE Rules. However, to date, the Philippines has not yet signed on to this two-pillar solution (including Pillar 2) which aims to address tax challenges arising from the digitalization of the economy (BEPS 2.0). Hence, since the Philippine RBE will be effectively paying 0% ETR to our government, the Singapore or Japanese company, through IIR or UTPR respectively, will pay a top-up tax in their respective jurisdictions to meet the 15% global minimum ETR. This will be a certain revenue loss to the Philippine government as it cedes taxing rights on the low-taxed income of this RBE. Moreover, from a group ETR perspective, MNEs will be paying this global minimum tax rate which dilutes their tax savings in the Philippines.

Though the potential uncollected taxes are as clear as daylight, our policy makers may also see this as only a time-bound setback. RBEs may only enjoy up to 17 years of tax incentives. Afterwards, they will be subject to the 25% regular CIT, which is much higher than the 15% global minimum tax. Other than the contribution of CIT to our gross domestic product, the Philippine government may have also considered other factors in not yet joining BEPS 2.0. The danger of losing the jobs created by foreign investors who may pull out their investments if they lose their tax incentives, and the requirement to abandon unilateral digital service tax (which is a pending bill in the Congress) may have restricted our government from being part of this Inclusive Framework. Nonetheless, these is all mere speculation on my part. I assume that a thorough and detailed impact assessment of this two-pillar solution must have been discussed by our economic managers and policy makers. I eagerly await how things evolve as more countries sign on to the framework.

The views or opinions expressed in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general information purposes only, and should not be used as a substitute for specific advice.

 

Mac Kerwin Visda is a manager at the Tax Services department of Isla Lipana & Co., the Philippine member firm of the PwC network.

mac.kerwin.visda@pwc.com

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 FREEDOM
Senator 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

DoJ junks murder raps vs cops in 2021 activist raid

PHILIPPINE STAR/WALTER BOLLOZOS

PHILIPPINE government prosecutors have cleared 17 cops in connection with the murder of a labor activist in a series of police raids where nine activists died in March 2021.

In a resolution dated Jan. 16, a panel of Department of Justice (DoJ) prosecutors found no probable cause against the police officers for the death of Emmanuel Asuncion.

“We lament the demise of Emmanuel Asuncion,” Senior Assistant State Prosecutor Rodan G. Parrocha said. “However, the complainant and the evidence she submitted failed to discharge the obligation to prove the existence of a crime and identify the perpetrators,” he added, referring to the wife of the slain labor activist.

The court said Liezel Asuncion had failed to see the faces of the cops who allegedly killed her husband.

The police raids were based on 24 search warrants issued by trial courts in Manila and Quezon City.

In 2021, an inter-agency task force of the DoJ formed 15 teams that probed extralegal killings and human rights violations in the Philippines.

Last year, the National Bureau of Investigation (NBI) filed a murder complaint against the 17 policemen allegedly involved in the raids and the killings of the other activists.

“There is no justice,” Renato M. Reyes, Jr., secretary general of Bagong Alyansang Makabayan tweeted in Filipino late Monday.

Defend Southern Tagalog in a separate statement said the acquittal reinforces the severe human rights violations by the government of ex-President Rodrigo R. Duterte.

“Asuncion’s killing serves as an example of how the people are deprived of great civic leaders and how the right to organize has been twisted and supplanted by the Philippine government,” it said.

Human rights abuses continued in the first six months of President Ferdinand R. Marcos, Jr.’s rule, Human Rights Watch said in a report last week.

The Philippines has accepted 200 recommendations from member-states of the United Nations Human Rights Council, including investigating extralegal killings and protecting journalists and activists.

Justice Secretary Jesus Crispin C. Remulla has said the government does not sanction attacks, harassment or intimidation of activists.

He said an inter-agency task force on extralegal killings had investigated at least 17,000 police officers.

The UN Human Rights Committee has said the Philippines should comply with international human rights mechanisms.

The Philippine Commission on Human Rights has said the government of Mr. Duterte had encouraged a culture of impunity by hindering independent inquiries and failing to prosecute erring cops involved in the government’s anti-illegal drug campaign. — John Victor D. Ordoñez

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