By: Francis Allan L. Angelo
Panay Electric Co. (PECO) saved its assets from being auctioned by the Iloilo City government after paying its P134.9-million real property tax arrears early this week.
With the settlement (with exception of more or less P40 million in penalties and interests) comes the possibility of City Hall issuing a business permit to PECO, a document it failed to secure in the past two years because of its tax woes.
The payment is also part of PECO’s agreement with City Hall that is seen to put to rest the tax dispute.
Under the agreement, the full and final payment of PECO represented all its past and present real property tax liability from 2006 until 2019, excluding interests and penalties under the Subject Tax Declaration.
The P134.9-million payment includes P59,829,652.53 for the first assessment, which is the subject of Local Board of Assessment Appeals (LBAA) Case No. 2017-01; and P75,093,482.60 which constitutes the payment of real property obligations of PECO under the second LBBA case docketed as LBAA Case No. 2019-01.
Since the payment excludes the propriety and the amounts computed for the interests and penalties imposed and accruing on the LBAA Case No. 2017-01 amounting to around P40 million, City Legal Officer Edgardo Gil said they will continue to litigate the issue of the propriety of the imposition of penalties relative to above-mentioned case.
The issue shall remain and be determined with finality by the LBAA.
NO EFFECT
What’s the implication of these latest developments to PECO’s dispute with rival firm MORE Electric and Power Corp of tycoon Enrique Razon?
Nothing, according to MORE Power president and chief operating officer Roel Castro.
Castro said the good thing about PECO’s decision to settle its unpaid taxes is that the city government now has additional funds for public services and projects.
“It’s a good thing that PECO settled that. Debt is debt, and it should be paid. That will redound to more services and projects for the residents of Iloilo City,” Castro said.
MORE Power earlier signified its intention to join the public auction of PECO assets if the latter failed to settle its tax arrears with City Hall. The assets include poles and substations, which are necessary to distributing electricity in the city.
The Razon-led firm is poised to take over power distribution services in Iloilo City after securing its congressional franchise in February 2019. It also lodged an expropriation case against PECO, which is now pending with the Iloilo Regional Trial Court Branch 35.
MORE Power is awaiting the actual issuance of the writ of possession from the court after satisfying the basic requirements of expropriation like depositing more than P480 million as compensation for PECO’s assets.
But the expropriation case has been suspended due to the ongoing legal tussle over MORE Power’s congressional franchise, Republic Act 11212.
Norman Tabud, head of the Iloilo City Business Permits and Licensing Office, said PECO can now renew its business permit for 2020 after settling its tax arrears.
But Tabud said they will require a clearance from the City Treasurer’s Office before they can issue a new business permit.
For Mr. Castro, the renewal of PECO’s business permit will not affect MORE Power’s expropriation case.
“The local government unit can issue business permits based on basic requirements like tax clearances. The congressional franchise to distribute power is not among the requirements. What is clear is that PECO lacks a franchise to distribute electricity and MORE Power is the legitimate distributor by virtue of RA 11212,” Castro said.
Castro added that PECO was only allowed to operate by the Energy Regulatory Commission through a provisional certificate of public convenience and necessity because of MORE Power’s congressional franchise.
“The ERC issued the CPCN to PECO because of the transition period provision of RA 11212. Basically, PECO’s lifeline is MORE Power and its congressional franchise. And PECO wants to kill this franchise which is a form of economic suicide on its part. What is clear is that PECO’s franchise has expired and MORE Power is the legitimate power distributor of Iloilo City,” Castro said.
The MORE Power executive added that he is still hoping that RTC Branch 35 will resume hearing the expropriation case after the Supreme Court en banc issued a temporary restraining order (TRO) against the ruling of a Mandaluyong City RTC invalidating portions of RA 11212.
“The consumers are waiting for developments and certainty and MORE Power is more than prepared to come in and operate. I hope the court will respect the TRO from the SC.”
