The Philippines sent a delegation to Paris where the arbitration court is based and held a hearing last month.
The Philippine government has initiated moves to ask the international arbitration court to dismiss the petition for arbitration filed by SGS, saying the government and the company had earlier agreed to resolve the dispute in the Philippines.
According to the source, the court is expected to come out with a decision in the next two to four months.
"If we lose jurisdiction, we will have to make our case before the arbitration court," said the source. "If we win it, then SGS will have to file their case here."
The government has been insisting that it had every intention of honoring its contract with SGS but the Switzerland-based company still filed a petition asking the International Centre for the Settlement of Investment Disputes to intervene and help settle the conflict.
To date, the Philippine government owes SGS at least P6.48 billion for services rendered but the company has not been paid because Congress has not made the necessary allocation in the General Appropriations Act.
According to the source, SGS still bills the Philippine government which is powerless to settle its arrears without Congressional clearance. Congress, on the other hand, has not settled the issue of actual billing amount because of alleged discrepancies in the final numbers.
Congress is investigating earlier claims that the government owes only P1.563 billion, way below SGS’s claim which stood at P6.48 billion as of July last year.
Finance Secretary Jose Isidro Camacho has repeatedly said that the Philippine government has full jurisdiction over the case and it is prepared to resolve the conflict as soon as possible. "Our policy is to honor the obligation," he said. "We have every intention of resolving this expeditiously.
However, the Department of Budget and Management said the 2003 budget has made no provision for the P6 billion that the government still owes SGS for preshipment inspection services that it provided from September 1998 to March 2000.
Thus far, SGS has agreed to the government’s proposal to settle the debt in several installments over several years.
SGS billed the Philippine government an equivalent of P6.48 for services rendered from September 1998 to March 2000. After reviewing the billing, the government said it was willing to pay P6.05 billion without question. Government wanted to deduct P117.5 million from the final bill while conducting further reviews on other claims worth P314 million.