It’s final: SC says gov’t must return tax on PEACe bonds

Liza Reyes, ABS-CBN News, Jan 19 2017

The Supreme Court (SC) has junked with finality the government’s appeal to stop the return of nearly P5 billion in withholding taxes it charged on anti-poverty bonds and pay interest for failure to comply promptly with the court’s earlier ruling.

The high court denied the government’s second motion for reconsideration filed by the Office of the Solicitor General for lack of merit.

It said no further pleadings will be entertained.

In August 2016, the Supreme Court ordered the Bureau of Treasury to pay P4,966,207,796 plus a six percent interest per annum from October 2011.

“It is a strong message that the government should not change rules midway to the prejudice of investors in our country,” said Francis Lim, a lawyer for the banks.

Former President Gloria Arroyo’s administration raised P10.17 billion from the issuance of 10-year Poverty Eradication and Alleviation Certificates (PEACe) bonds in 2001 and sold them at a discount to non-profit group CODE NGO.

The bonds were later resold, mostly to banks and insurance companies.

The bonds attracted investor interest due to representation that it was exempted from the 20 percent final withholding tax.

But the BIR lifted the exemption days before the bonds matured in October 2011.