Press Release
August 25, 2010


Upon the initiative of Senator Franklin Drilon, chairman of the Senate Finance Committee, the Bangko Sentral ng Pilipinas (BSP) has agreed to remit to the national government a total of P9.312 billion in back remittance of dividends.

In a meeting last Monday, August 23, Drilon was able to resolve the dispute between the Commission on Audit (COA) and the BSP as to how the net earnings of the country's central monetary authority will be calculated. As a result of that agreement, the COA and the BSP agreed to an interpretation which would enable the government to collect P9.312 billion more in dividends that covered 2003-2006.

"This will significantly reduce the budget shortfall and will help in the President's program of improving the economy without imposing new or additional taxes," Drilon said.

As such, additional back dividends for 2007, 2008 and 2009 will be recomputed, Drilon said.

Drilon has filed Senate Resolution 66 in a bid to stop the abuses of state executives enjoying excessive perks, reduce government expenses and increase revenues by looking at sources such as unremitted dividends due the state coffers.

In a letter to Drilon on August 24, BSP Governor Amando Tetangco said they have come up with a resolution that it will remit the amount by next year.

In calculating BSP's net profit, Tetangco said that while Republic Act 7656 entitled An Act Requiring Government-owned and Controlled Corporations to Declare Dividends to the National Government covers GOCCs, the law does not apply to BSP since it is "an independent central monetary authority [which] enjoys fiscal and administrative autonomy, in accordance with Section 20, Article XII of the Constitution."

Tetangco said the applicable law shall be Republic Act No. 7653 or the New Central Bank Act. The BSP said that while other GOCCs are required to remit 50% of their income, the BSP remits 75% of its yearly income in compliance with its charter.

Last week, Drilon cited a November 2008 letter from the Commission on Audit(COA) that indicated that the BSP had some P16.5 billion in unremitted dividends to the national government from 2003-2006. The amount the senator was referring was subject of an appeal the BSP filed before COA.

The BSP, however, argued that that the allowance and reserves for "bad and doubtful accounts" shall be deducted by the state auditor in its calculation of net profits.

"In addition, providing reserves for foreign exchange rate fluctuations shall also be recognized, consistent with the past and best practices among central banks and inherent in the function of the BSP to manage and maintain the international reserves of the country to meet any foreseeable net demands for foreign currencies..." Tetangco wrote.

Provisions for "fidelity losses and currency and gold insurance" for 2003, BSP said, shall be considered in the calculation of net profits for dividend declaration.

BSP's capital reserve for property insurance, security plant complex rehabilitation, fidelity losses, medical benefit fund and directors'/officers' liability fund shall not be deducted in calculating net profits, Tetangco added.

The agreed principles will be the guide in calculating BSP's dividends to the remitted to the national government.


* Press Release by Public Relations and Information Bureau (PRIB)
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