The Finance Department on Monday blamed previous administrations for the additional tax burden being paid under the Duterte administration because of failed court cases.
“The government is liquid at this point, but paying for these pecuniary claims will mean setting aside for such possible court-ordered payments huge amounts of taxpayers’ money that should otherwise be used to augment the budget for the Duterte administration’s accelerated spending over the next six years on infrastructure, human capital and social protection for the poor and other vulnerable sector,” it said.
“Every time I sign a check for some mistake that has been made in the past, my hands almost bleed,” Finance Secretary Carlos Dominguez III said.
The agency said it was racing for the likelihood of unprogrammed payments to private companies that dragged the government into court to collect tens of billions of pesos worth of claims from bungled public-private partnerships dating as far back as the 1990s.
These included controversial ventures such as the Poverty Eradication and Alleviation Certificates bonds and the Ninoy Aquino International Airport Terminal 3 operation.
It said the Duterte administration faced the unenviable task of paying”•literally”•for the “sins of the past” administrations, courtesy of previous and possibly future court rulings favoring contractors or concessionaires that presumably have scores to settle with the state.
It said the government would likely have to cough up P5 billion to pay RCBC Capital for the amount the Bureau of Treasury kept back as final withholding tax”•as ruled by the Bureau of Internal Revenue “•when these 10-year zero coupon PEACe bonds were ssued during the past Arroyo administration.
This is because the Supreme Court ruled that RCBC Capital was entitled to rely on a much earlier position issued by the Bureau of Internal Revenue in 2001, which stated that the PEACe bonds were not deposit substitutes, and thus not subject to the 20-percent FWT.
The BTr sold these notes with a 10-year tenor in October 2001 through a public auction that was won by RCBC on behalf of the Caucus of Development NGO Network.
It said in the case of the NAIA 3 project which got entangled in one legal dispute after another as an offshoot of the financial troubles that had buffeted the winning bidder Philippine International Air Terminals Co., the SC ruled on April 19 that the government must pay the contractor $326.93 million in just compensation.
The Supreme Court nullified the Piatco contracts but ruled that just compensation was incidental because of the structures already built by Pitaco before the deal was voided.
The high tribunal also directed the government to pay Piatco an extra amount equivalent to a 12-percent legal interest from September 2006 to June 2013 plus six-percent interest from July 2013 up to the time the government will have made full payment.
The Treasury also transferred some P20 billion to the Department of Transportation (for payment to PIATCO’s just compensation for the NAIA 3 project as directed by the SC.
The department said it was ow looking at other cases that might similarly give the Duterte administration financial headaches in the near future.
Finance Secretary Carlos Dominguez III said he directed the BIR to review all tax-related issuances in the past to preclude potential legal challenges in the future that could cost taxpayers billions of pesos more in payments to claimant-contractors.
“I think there are more cases of similar nature which will come up soon. So I asked the BIR to please review all the issuances so that we avoid burdening the public by collecting taxes that are not fair, that we are going to lose in court anyway and that we are going to burden our taxpayers by paying penalties and interest,” Dominguez said.
Maynilad Water Services Inc. and Manila Water Co. filed separate arbitration cases against the Metropolitan Waterworks and Sewerage System before the ICC International Court of Arbitration in Singapore in 2013 for MWSS’ inaction that year on their toll rate hike petitions, as provided for in their concession agreements that were both forged with the then-Ramos administration in 1997.