PEOPLE OF THE PHILIPPINES AND BUREAU OF INTERNAL REVENUE, as represented by the Commissioner of Internal Revenue v. RAPPLER HOLDINGS CORPORATION and MARIA A. RESSA

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY ENBANC � -~-----� PEOPLE OF THE CTA EB CRIM. N0.126 PHILIPPINES, AND (CTA Crim. Case Nos. 0-679,0-680, BUREAU OF INTERNAL 0-681 and 0-682) REVENUE, as represented by the Commissioner of Internal Revenue, Petitioners, - versus - RAPPLER HOLDINGS CORPORATION and MARIA A. RESSA, Respondent. PEOPLE OF THE CTA EB SCA NO. 0001 PIDLIPPINES, Present: Petitioner, DEL ROSARIO, P.J., - versus- RJNGPTS-LIBAN, MANAHAN, COURT OF TAX BACORRO-VILLENA, APPEALS FIRST MODESTO-SAN PEDRO, DIVISION, RAPPLER REYES-FAJARDO, HOLDINGS CUI-DAVID, CORPORATION and FF:RRER-FLORES, and MARIA A. RESSA, ANGELES,JJ Respondents. ? romulgated: _o_Cl_O 2 20 x-- --- --- -- - -- ------ ---- - - ------ -- - --- --- - --- - ------------- - x i

RESOLUTION CTA EB Crim No. 126 and CTA EB SCA No. 0001 People of The Philippines vs. Rappler Holdings Corporation and Maria A. Ressa, People ofthe Philippines vs. Court of Tax Appeals, First Division, eta/. Page 2 of6 RESOLUTION FERRER-FLORES, J.: For resolution is the Motion for Reconsideration filed by petitioners People of the Philippines and Bureau of Internal Revenue (BIR), as represented by the Commissioner of Internal Revenue (CIR) on March 13, 2025, 1 with Comment/Opposition to the Motion for Reconsideration dated 12 March 2025 filed by Rappler Holdings Corporation (RHC) and Maria A. Ressa (collectively known as private respondents) on March 28, 2025. 2 Petitioners seek the reversal ofthis Court's Decision dated February 21, 2025 (assailed Decision), which denied the Verified Petition for Review (of the Resolution dated May 18, 2023, on the Civil Aspect) and the Verified Petition for Certiorari, which reads as follows: WHEREFORE, premises considered, the instant Verified Petition for Review (of the Resolution dated May 18, 2023, on the Civil Aspect) and Verified Petition for Certiorari are DENIED for lack of merit. The assailed Decision dated January 18, 2023 and the assailed Resolution dated May 18, 2023 rendered by the First Division of this Court in CTA Crim. Case Nos. 0-679,0-680, 0-681 and 0-632 are AFFIRMED. SO ORDERED. In its Motion for Reconsideration, petitioners reiterate the arguments they raised in their Verified Petitionfr;r Review in EB Crim No. 126. Petitioners conterd that this Court erred in sustaining the findings of the Court in Division, which held that Rappler Holdings Corporation (RHC) is not a dealer in securities. Petitioners claim that while RHC's primary purpose as outlined in its Articles of Incorporation shows clear limitation that it shall not act as a stockbroker or as a dealer in securities, the proviso cannot prevail over the actual performance of dealing in securities. They maintain that RHC sold Philippine Depositary Receipts (PDRs) to NBM Rappler, L.P. (NBM) and Omidyar Network Fvnd, L.L.C. (ON), which have Rappler, Inc. (RI) shares as underlyirg shares, a year after RHC's incorporation. Thus, petitioners st;Jl insist that RHC's issuance of the PDRs to NBM and ON were taxable as the t~:.>:mer gained profit from the said issuances., Rollo (EB Crim. No. 126)- Vol. 5. /d.

RESOLUTION CTA EB Crim No. 126 and CTA EB SCA No. 000 I People of The Philippines vs. Rappler Holdings Corporarion and Maria A. Ressa, People ofthe Philippines vs. Court of Tax Appeals, First Division, eta/. Page 3 of6 Petitioners also argue that this Court erred in ruling that there was no transfer of beneficial ownership in the issuance of the PDRs. Petitioners submit that since ON w1~ 5i ven the right to vote, it has beneficial ownership and "not a true PDR in th'o spiri~". Finally, petitioners claim that this Court erred in ruling that there can be no civil liability again>t respondents. Petitioners assert that PDRs gave the holder economic benefit such as financia: ~eturns through a pass-through arrangement, whereby any araount RHC .�eceives from Rl would pass-through entirely to the holders c(~hc PDR; hence, RHC must be subject to tax on the profit it realized from the issuance of the said PDRs and subject to the corresponding income tax and va:.ue-added tax (VAT). In their Comment/Opposition, private respondents submit that this Court should deny the Motion outright because it violates the constitutional rights against double jeop2rdy in adherence to the "finality-of-acquittal doctrine" that is, judgment of acquittal is final and unappealable. Private respondents also manifest that petitioners merely reiterated the same arguments which have already been extensively addressed by the Court in Division and the Court .r;;/1 Bane. They alco posit that this Court correctly found that RHC is net a d1:aler in securiries; hence, there is no sale of securities which could be the basis of aJy c'vil lial:-i1ity. LaEtly, private respondents oppose petitioners' cla;m that there was transfer of economic rights or beneficial ownership of RI shares sub:ect of a taxable event and maintain that RHC retained "full benefciai ownership" over the shares. Petitioners' Motim1jor Rcconside..-ot:'rm IS bereft of merit. A reading of ;xtiti 2.1cr~' l,.forio;< .:how~ �J:;Tt the arguments therein have already been co:1sidered by this Court in th~ assuilec' Decision. As aptly discuss"'d i'~ ':he :tssaiJed l)C'ci~ian, this Court agreed with the ruling of the Court in Division in finding that RHC is a holding company and not a dealer in securities. Evidence on record further shows that RHC is not involved in any habitual or reguiar purchase or resale of securities as issuance of the PDRs by RHC was done pursuant to a tegnimme business purpose, i.e. to raise capital for its subsidiary Rl, which is consistent with one of the purposes ofRHC as 8. hrJldint; compC~r-y. We sustain the findi..,gs ofth~ Court in Division that the issuance of PDRs to NBM and ON is not a sale of stock but an investment transaction.,

RESOLUTION CTA EB Crim No. 126 and CTA EB SCA No. 0001 People ofThe Philippines vs. Rappler Holdings Corporation and Maria A. Ressa, People ofthe Philippines vs. Court of Tax Appeals, First Division, eta/. Page 4 of6 Nothing in the PDR Investment Agreement and PDR Subscription Agreements would show that the foreign entities will become owners of the shares of stock of RI upon the issuance of PDRs. The PDR holders only retain the option to purchase the underlying shares of RI subject to certain conditions i.e.., that there is no law restricting foreign ownership in the business of the operating entity. This is consistent with RHC's Articles of Incorporation (AOI), which limits its purpose and does not include RHC to act as a dealer of securities or stockbroker. Finally, the PDRs were issued by RHC and were not purchased from RI and resold to NBM and ON; thus, its subscription is not considered dealing in securities as defined under NIRC of 1997, as amended, SRC and RR No. 6-2008. Accordingly, the Court En Bane finds no grave abuse of discretion when the Court in Division found that RHC is not a dealer in securities. Here, petitioners failed to indicate the specific transactions that would point to the fact that the issuance of PDRs by RHC to NBM and ON are considered purchase and sale of securities and not an investment, as fittingly found by the Court in Division and this Court; thus, there is no reason to rule otherwise. As regards petitioners' asseveration that this Court erred in ruling that there is no transfer of beneficial ownership in the issuance ofthe PDRs to ON, petitioners contend that this Court failed to consider the undertakings provided in the Investment Agreement granting ON the power to vote, which clearly demonstrates beneficial ownership, and that its waiver ofthe right does not alter the fact that it has beneficial ownership. Aside from the fact that ON waiv~d the alleged right to vote, it has already been amply discussed in the assailed Decision that the Court in Division, citing Philippine Stock Exchange (PSE) Circular for Brokers No. 2375-99 dated September 22, 1999, correctly held that for as long as the PDR remains unexercised by its holder, the holder has no right of ownership over the underlying shares and all such ownership rights pertain and belong to the issuer. Only when the PDR hold=r exercise5 the option to have the underlying shares delivered to hirniher th?.~: he/she become,, a shareholder. Finally, the Court finds no merit in petitioners' assertion that respondents remain to be civilly liable in view ofRHC's issuance of the PDR to NBM and ON. For petitioners, the alleged profit realized by RHC should be subject to tax in the total amount of Pl92,238,755.92, including interests and surcharges~

RESOLUTION CTA EB Crim No. 126 and CTA EB SCA No. 0001 People of The Philippines vs. Rappler Holdings Corporation and Maria A. Ressa, People ofthe Philippines vs. Court ofTax Appeals, First Division, et al. Page 5 of6 This Court already found that no civil liability attached to the case in view of the findings that the PDRs issued by RHC to NBM and ON are not one of a sale but an investment. Since RHC is not a dealer in securities and no beneficial ownership was transferred to the NBM and ON, there was no taxable event to speak of that could give rise to liability for income tax and VAT. Petitioners, thus, failed to establish that respondents are required to report any income in its returns, nor are they required to pay VAT or income tax for the issuance of the PDRs. All told, there is no reason to modify or reverse the disposition in the assailed Decision. WHEREFORE, premises considered, the instant Motion for Reconsideration is DENIED for lack of merit. SO ORDERED. co~C: FERRER-FL RES Associate Justic WE CONCUR: No part ROMAN G. DEL ROSARIO Presiding Justice On leave MA. BELEN M. RINGPIS-LIBAN Associate Justice /'~ � /--.~ CATHERINE T. MANAHAN Associate Justice

RESOLUTION CTA EB Crim No. 126 and CTA EB SCA No. 0001 People ofThe Philippines vs. Rappler Holdings Corporation and Maria A. Ressa, People ofthe Philippines vs. Court ofTax Appeals, First Division, eta/. Page 6 of6 ( (Inhibited) MARIA ROWENA MODESTO-SAN PEDRO Associate Justice ~ 9uyF.~-F~ (I reiterate Separate Concurring Opinion in the assailed Decision in CTA Crim Case Nos. 0-679 to 0-682) MARIAN IVY F. REYES-FAJARDO Associate Justice Afflu;i/W LANEE S. cui-D~VID Associate Justice (Inhibited) HENRYS. ANGELES Associate Justice