COA finds PICCI in violation of Dividend Law for refusing to turnover income to nat’l gov’t » Manila Bulletin News

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COA finds PICCI in violation of Dividend Law for refusing to turnover income to nat’l gov’t

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By Ben Rosario

The Commission on Audit chided officials of the Philippine International Convention Center Inc. for refusing to turnover to the national government some P150.32 million it earned in 2017.

Commission on Audit (MANILA BULLETIN)

Commission on Audit (MANILA BULLETIN)

In the 2018 annual audit report for PICCI, COA said the non-remittance of the income is a violation of the Revised Implementing Rules and Regulations of Republic Act No. 7656, otherwise known as the Dividend Law.

State auditors made this observation after reviewing the 2017 financial statement of the firm that revealed that it had a comprehensive income of P299.395 million for the year.

The PICCI Board of Directors then approved a resolution for the declaration of a P229.581 million cash dividends in favor of the Bangko Sentral ng Pilipinas and distribution of dividends to the BSP.

Asked for an explanation, the PICCI declared that it remits earnings to BSP, being its parent company.

According to PICCI, it is not covered by the provisions of the Dividend D Law because its annual budget is approved by and given by the BSP, not from the General Appropriations Act.

However, state auditors insisted that under RA 7656, PICCI is covered by provisions of the Dividend Law because it is owned by the National Government “directly or through its instrumentalities.”

“IN view of the above provision of the law, the PICCI is owned by the NG through one of its instrumentalities, the BSP, since the required capitalization of BSP in the amount of PHP 50.000 billion was fully subscribed by the Government of the Republic of the Philippines.

Citing PICCI’s 2017 Annual Income Tax return, auditors said the national government should have earned P150,327,174 in dividends from the firm.

“Therefore, although the PICCI declared cash dividends, the remittance to the BSP and not directly to the NG is a violation of the provisions of the Revised IRR of RA No. 7656” audit examiners said.

Reacting to the audit observation the PICCI insisted that it is not covered by the Dividends Law because PICCI is a creation of the BSP in compliance with Presidential Decree No. 520.

“Under the rules of statutory construction, a special law is not repealed or amended by a general law.  PD no. 520, a special law, is not deemed impliedly repealed or amended by the Dividends Law,” the PICCI stressed.

The BSP-run firm’s management also pointed out that if dividends were to be directly given to the national government, the latter may then be considered a stockholder of PICCI.

In a rejoinder, COA noted that there is “no explicit or written authority” to exempt PICCI from coverage of RA 7656.

“Moreover, the PICCI dividend declared and remitted to the BSP was still recognized as Deferred Income by the latter pending the response of the DOF (Department of Finance) to the query of the BSP whether PICCI is covered by the Dividend Law,” the audit agency said.

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