PECO willing to settle P90-M tax liability

By: Jennifer P. Rendon 

Panay Electric Co. (PECO) expressed willingness to pay its tax obligations to Iloilo City amid reports that it has yet to secure a business permit due to its tax woes.

Norman Tabud, head of Iloilo City’s Business Permits and Licensing Office (BPLO), confirmed that they have yet to issue PECO a business license to operate in 2019.

“They have applied for a business license but we have deferred the issuance pending the recommendation from the City Treasurers Office,” Tabud said.

The deferment came after PECO’s “failure” to pay P90 million in real estate taxes, including additional penalties, since March 2019.

Thus, the decision to hold in abeyance the issuance of the business permit until PECO settles its tax obligations.

Tabud did not comment further if the case will affect PECO’s provisional Certificate of Public Convenience and Necessity (CPCN) from the Energy Regulatory Commission, which requires all distribution utilities to comply with all legal and business requirements of their franchise areas.

Marcelo Cacho, PECO Head of Public Engagement and Government Affairs, said that they are willing to pay their tax obligations.

However, the company brought the issue to court to clarify if they must pay the 10-year retroactive real property taxes.

Cacho said PECO is good with the idea of paying a 5-year retroactive real property tax.

“We asked the court to determine the amount that we should pay,” he said.

In the meantime, since the BPLO will not accept its business license fees, Cacho said they have consigned the amount with the court.

PECO is operating under a two-year temporary CPCN issued by the ERC allowing the company to continue distribution operations in Iloilo City.

Tabud said the real estate tax obligations owed by PECO to the city government arose from a new ruling by the City Treasurer that the lots on which PECO’s distribution poles are located are also taxable real estates.

In a memorandum to the Iloilo City BPLO dated March 12, 2019, City Treasurer Jinny Hermano noted that under Section 252 of Tax Ordinance No. 2007-016 (Local Revenue Code), all businesses can only secure business permits to operate if they have paid taxes.

Tabud noted that PECO had paid its other business taxes arising from its operation.

PECO contested the City Treasurer’s ruling in a case filed with the Iloilo City Regional Trial Court, thus the standoff on whether the city government could stop PECO from operating until it secures its business permit.

PECO is already facing investigation by the ERC because of a complaint filed by Iloilo City Mayor Jerry Treñas regarding pole fires believed to be caused by old transformers or overloaded lines.

Under ERC Resolution No. 5, Series of 2008, any distribution utility granted a CPCN to operate a distribution system in any area must comply with standards set by the Philippine Grid Code and the Philippine Distribution Code, especially those that concern public safety.

ERC had requested the Bureau of Fire Protection (BFP) to provide a report on the pole fire incidents.