In it, the government appears to say that the P5 billion that the Supreme Court (SC) ordered to be held in escrow by the banks has already been remitted to the Bureau of Internal Revenue (BIR).

“The Bureau of Treasury [BTr], as the withholding agent, withheld the 20-percent final tax. The amount withheld was remitted by the BTr to the BIR for and in the name of the bondholders,” the government’s comment on the PEACea bonds petition says.

BIR Commissioner Kim Henares declined to confirm this or elaborate on it.

The government said the Supreme Court order, which instructed the Treasury to hand the P5 billion over to the banks pending a final decision, could not be implemented because it was received a day after the Treasury paid off the bonds.

“On October 19, 2011, at about 9 o’clock in the morning, respondents national treasurer and the BTR received copies of the resolution and TRO [temporary restraining order],” the government’s petition says.

“On October 18, 2011, the date of maturity of the PEACe bonds, respondents national treasurer and BTr effected settlement of the bonds and paid out the redemption proceeds net of 20-percent final withholding tax.’’

Francis Lim, lawyer of the eight banks, last week said his clients may ask the court to cite the government in contempt for failing to comply with the escrow order.

But the government may have a point. While SC Spokesman Midas Marquez made the announcement on the afternoon October 18, he didn’t have the official order and even mistakenly said it wasn’t a temporary-restraining order.

Most of the rest of the comment reiterates previous government statements that the tax exemption was erroneous.

It said if there was a breach of contract, it was not the government in breach but the Rizal Commercial Bank Corp. and CODE-NGO, the civil society group that pushed for the bonds and made P1.8 billion in the process. abs-cbnNEWS.com