Code-NGO gets P8 M from Palace

MANILA, Philippines - A controversial caucus of non-government organizations (NGOs) received P8 million starting last year from an agency under the Office of the President.

The National Anti-Poverty Commission (NAPC) confirmed yesterday that it gave not just P2 million but P8 million to the officers of the Caucus of Development NGO Networks (Code-NGO) for poverty alleviation purposes.

“I think we gave them P8 million to organize CSO (civil society organizations) participation for BUB (bottom-up budgeting) in 40 towns,” NAPC Secretary Joel Rocamora said in a text message.

This confirms TheSTAR Vic Agustin’s Oct. 14 Money-Go-Round column, where he wrote that Code-NGO received P2 million from NAPC that is “enough to cover its legal expenses it had incurred so far to defend itself against Bureau of Internal Revenue (BIR) Commissioner Kim Henares’ suing the group for alleged tax liability in connection with the P10-billion PEACe bonds issue.”

The first tranche was released to Code-NGO in the last quarter of 2012, but Rocamora did not specify the exact amount of the releases and if the entire P8 million had been disbursed.

In 2011, Malacañang backed BIR’s move to impose the 20-percent final withholding tax on the yield and discounts of government’s Poverty Eradication and Alleviation Certificates or PEACe bonds.

Presidential spokesman Edwin Lacierda said that the PEACe bonds “were given in the past administration.”

However, the Arroyo administration reportedly did not collect the taxes from Code-NGO, a network of 12 national and regional development NGOs with more than 1,600 affiliated organizations nationwide.

Lacierda said the general rule is that all treasury issuances are subject to the 20-percent withholding tax, and that the government would let the judiciary decide on the issue after the BIR filed the case in court.

“What we are upholding is the general rule – all treasury issuances are subject to 20 percent withholding tax and this is a regulation that banks are fully aware of,” Lacierda added.

The bonds matured in October 2011 and thus became redeemable. The Bureau of Treasury will have to pay bondholders a total of P35 billion, including P24.3 billion in interest income or discount.

In BIR Ruling No. 370-2011, the bureau imposed tax on the PEACe bonds and directed the Bureau of Treasury to withhold the final tax from the payments on the PEACe bonds’ face value.

The government, through the Bureau of the Treasury, issued the bonds through an auction in October 2001 during the presidency of Gloria Macapagal-Arroyo.

Through its agent Rizal Commercial Banking Corp. (RCBC), Code-NGO purchased the bonds for P10.169 billion.

RCBC was able to sell the bonds in the secondary market for P11.995 billion. It then remitted the profit of P1.826 billion to Code-NGO.

The group paid its agent and financial advisers a fee from the profit. Excluding the fees, Code-NGO made a profit of P1.486 billion.