November 21 - December 04, 2005

Despite gratuitous permit from DENR
SP still demands tax from dam contractors

The Sangguniang Panlalawigan (SP) glossed over the special mineral extraction permit (SMEP), a type of gratuitous permit from the Department of Environment and Natural Resources (DENR) and issued by DENR Sec. Michael Defensor, presented by Toyo Construction Co. Ltd. as the SP members reiterated their earlier demand for the foreign firm to pay local taxes for extracting sand gravel at the Padsan River.

In a dialogue between the SP and representatives from the foreign firm and the Department of Public Works and Highways (DPWH) during an SP regular session, engineer Glenn Reyes of the DPWH-1st Ilocos Norte Engineering District (INED) and project engineer, explained in behalf of Toyo, that the Japanese firm holds a gratuitous permit issued by Defensor himself, which was meant to exempt the said construction company from paying local taxes.

According to Reyes, the SMEP has been issued by the national government as a result of the Philippine-Japanese cooperation. A Japanese lending firm serves as the lead lending institution for the Sabo Dam project.

Reyes added that Toyo, which is extracting gravel and sand from the river, is not actually transferring the said minerals to other locations but serve as filling materials for the project. The project is just adjacent the Padsan River.

The SP members however cited the devolution of the power of government which enabled local government units to implement their own rules as mandated under the Local Government Code as they rejected Reyes’ explanation saying the exchange and agreement was only between the national government and the Japanese and the LGU concerned was not consulted.

Under Section 138 of the Local Government Code, which pertains to tax on sand and gravel permits, SP member Da Vinci M. Crisostomo explained that a gratuitous permit is granted if the implementing agency is an office of the government. He added that private contractors are not included.

The lawmaker from Batac underscored that tax exemptions should pass through the provincial board as it is only the SP which can grant local tax exemptions.

Crisostomo also clarified that although there is no actual transfer of sand and gravel from the site, such activity is still considered as quarrying.

“Even though there is no transfer, it is still considered quarrying. It doesn’t make any difference. Not even the exchange of notes, whatever exchange of notes not bounded by the provincial government would merit as tax exemption is only applicable through ordinances approved by the SP,” Crisostomo elucidated.

Vice Governor Windell D. Chua, the SP’s presiding officer, also scored the national government for its failure to coordinate with the LGU concerned with regards to the special permit.

SP member Mariano V. Marcos II, meanwhile, said that the refusal of Toyo to pay its dues could be described as a “protocol violation” as he maintained that the Japanese firm must follow the local revenue imposition.

The Ilocos Times learned that despite the demand letters sent by the provincial government, Toyo did not even bother to reply prompting the SP to summon them to explain their side.

The SP members also said that although the Sabo Dam project would benefit the whole province, the Japanese firm should still follow what is mandated by local laws—to pay local taxes as this had been included in the project’s cost.

In a separate interview, Reyes said that if the SP would continue demanding payment from Toyo, the Japanese firm may in turn ask the national government to pay the taxes.

Reyes further divulged that Toyo’s refusal to pay the local taxes is due to an earlier commitment made by the provincial government to shoulder P25 million of the cost of the right-of-way project which as of the present the latter has not done.

Leilanie G. Adriano

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