SC asks BIR to explain defiance to PEACe bonds TRO

The Supreme Court has asked the Bureau of Internal Revenue (BIR) to explain why it should not be held in contempt for failing to comply with a court order restraining the tax collection for Poverty Eradication and Alleviation Certificates or PEACe bonds. "The BIR is being required to show cause why it should not be held in contempt and they are being asked to comply with the TRO being issued by the court," said Court Administrator Jose Midas Marquez, who is also the SC spokesman, at a briefing on Tuesday. Last Oct. 18, the court issued a temporary restraining order (TRO) against BIR Ruling No. 370-2011, which imposed tax on the 10-year government bonds. The court also ordered eight of the country's major banks — Banco de Oro, Bank of Commerce, Philippine National Bank, China Bank, Metrobank, Philippine Bank of Communication, Philippine Veterans Bank, and Planters Development Bank – to hold in escrow a 20-percent final withholding tax. The remaining 80 percent of the controversial bonds should be released to investors, the court said. Caucus of Development NGO Networks (CODE-NGO) bought the bonds on Oct. 16, 2001 through Rizal Commercial Banking Corp. (RCBC) at the discounted rate of P10.17 billion and at 12.75 percent interest. It then sold the bonds for P1.83 billion. Since then, the bonds have already been resold, mostly to banks and insurance companies. The 10-year bonds matured last October 18 and thus became redeemable. The BIR earlier insisted it did not violate the SC ruling when it went ahead with the collection of final withholding tax on the PEACe bonds. The government said the SC TRO could not be implemented because it was received a day after the Treasury paid off the bonds. - Mark D. Merueñas/KBK, GMA News