DOE optimistic on investments after SC ruling on Malampaya tax case
Garin said the SC's ruling provides clarity and stability for current and prospective investors in the energy industry.
'We're happy that the issue has been resolved because it gives stability and security to the exploration of our investors. So it will encourage more,' she told reporters on the sidelines of an event in Sorsogon City over the weekend.
The SC recently ruled in favor of Shell Exploration B.V., PNOC Exploration Corp., and Chevron Malampaya LLC, stating that the government's share in the Malampaya project already includes the contractors' income tax payments from 2002 to 2009.
The decision stemmed from a Commission on Audit (COA) claim that P53 billion was improperly deducted from the state's share of project revenues. COA argued that no law explicitly authorized the deduction of contractors' income taxes from the government's share.
In its ruling, the SC said that while contractors are not exempt from paying income tax, the government assumes the liability as part of its contractual obligations under the service agreement. It added that 'tax assumption is not tax exemption.'
The Court also emphasized that while COA has a mandate to protect public funds, the government must also honor the terms of agreements it voluntarily entered into.
Malampaya supplies around 20 percent of Luzon's power requirements and is located about 50 kilometers off Northwest Palawan within the Philippines' exclusive economic zone.
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DOE optimistic on investments after SC ruling on Malampaya tax case
Energy Secretary Sharon Garin on Monday welcomed the Supreme Court's (SC) decision clearing Malampaya contractors of a P53-billion income tax liability, saying the ruling will boost investor confidence in the country's petroleum and gas exploration sector. Garin said the SC's ruling provides clarity and stability for current and prospective investors in the energy industry. 'We're happy that the issue has been resolved because it gives stability and security to the exploration of our investors. So it will encourage more,' she told reporters on the sidelines of an event in Sorsogon City over the weekend. The SC recently ruled in favor of Shell Exploration B.V., PNOC Exploration Corp., and Chevron Malampaya LLC, stating that the government's share in the Malampaya project already includes the contractors' income tax payments from 2002 to 2009. The decision stemmed from a Commission on Audit (COA) claim that P53 billion was improperly deducted from the state's share of project revenues. COA argued that no law explicitly authorized the deduction of contractors' income taxes from the government's share. In its ruling, the SC said that while contractors are not exempt from paying income tax, the government assumes the liability as part of its contractual obligations under the service agreement. It added that 'tax assumption is not tax exemption.' The Court also emphasized that while COA has a mandate to protect public funds, the government must also honor the terms of agreements it voluntarily entered into. Malampaya supplies around 20 percent of Luzon's power requirements and is located about 50 kilometers off Northwest Palawan within the Philippines' exclusive economic zone.
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