Doral Financial Corp. has vowed to appeal a court decision in favor of Puerto Rico concerning $229 million in taxes.
On Wednesday the Court of Appeals of Puerto Rico ruled that the Puerto Rico Treasury owed Doral nothing.
“We intend to appeal immediately to the Supreme Court of Puerto Rico,” said Doral’s counsel, Matthew McGill, attorney at Gibson, Dunn & Crutcher. “The decision of the court of appeals seriously degrades the rule of law by empowering the government to disregard contracts on little more than a whim.”
Puerto Rico Secretary of Justice César Miranda saw things differently. “Although we value the presence of the banking institutions in Puerto Rico and their role in our economic development, their actions must be within the parameters of the law. From day one we have defended the fact that the so-called reimbursement of $229 million claimed by Doral was never truly based on applicable law. The evidence presented by the commonwealth proved this. We are very pleased that we succeeded in defending the interests of the people of Puerto Rico against the absolutely illegal claim brought by Doral.”
The evidence presented at the trial showed that Doral did not make any tax overpayment, according to the Puerto Rico Department of Justice.
Puerto Rico Secretary of the Treasury Juan Zaragoza said, “This has been a very tough battle, but we were always committed to our moral and legal obligation to defend the people of Puerto Rico against this inappropriate disbursement of $229 million of public funds.”
The sum at issue, $229 million, is equal to 2.4% of Puerto Rico’s approved General Fund budget for this fiscal year.
Commenting on Puerto Rico’s court victory, Evercore director of municipal research Howard Cure said, “Any relief for the commonwealth is a positive but they have so many problems at this point, I don’t know if it will be a game changer.”
Standard & Poor’s managing director and chief Puerto Rico analyst David Hitchcock also minimized the decision’s impact. He said when a lower court ruled against Puerto Rico, S&P did not change Puerto Rico’s rating and now that the higher court has ruled for Puerto Rico it will still not change the rating.
On May 14, 2014 then Secretary of the Treasury Melba Acosta Febo declared a March 2012 agreement with Doral to be void. Doral sued. In October the San Juan Superior Court ruled that Doral’s claim was legitimate. Wednesday’s decision by the Court of Appeals overturns that court’s ruling.
