Iloilo City’s former power distributor, Panay Electric Company (PECO), has refuted the claim that the city government is seeking a refund of P51.42 million in franchise taxes.
“The truth of the matter is that Iloilo City is seeking to assess and collect a franchise tax, the propriety of which is still subject of a court case with RTC (Regional Trial Court) Iloilo,” PECO said in a statement.
PECO filed a petition for declaratory relief “to seek a declaration from the court as to its duty and/or liability to pay franchise tax vis-à-vis the Iloilo City government’s right to impose the same—given the fact that PECO no longer holds any franchise from which a franchise tax can be based.”
“While the [City Treasurer’s Office] is demanding that PECO should pay franchise tax, the Mayor’s Office cancelled and revoked the business permit of PECO on the basis that the city records do not show that PECO holds a legislative franchise.”
Mayor Jerry P. Treñas earlier said that he feels very sad that PECO continues to refuse to remit franchise taxes collected from the electric consumers from April to December 2019.
The city mayor warned that the city will be compelled to take measures, including, but not limited, to the filing of a criminal complaint against all the executive officers and members of the board of PECO for syndicated estafa.
Citing three reasons, PECO stressed that its officials could not be held liable for syndicated estafa or any crime for that matter on account of the issue involving the franchise tax.
PECO noted that the issue of propriety of the imposition of franchise tax against PECO is still pending with RTC Iloilo.
“Pending such resolution, PECO could not be accused of non-payment or non-remittance. In fact, RTC Iloilo even issued a writ of preliminary injunction to enjoin the parties to await its resolution of the case,” it explained.
PECO also pointed out that it’s not collecting on behalf of the city so there is nothing to remit to the city government.
“The city had already been paid the franchise tax and the franchise tax fees indicated in the monthly electric bills are monies owed to PECO due to its advance payment of the franchise tax,” it said.
PECO insisted that it already paid the 2019 franchise tax and the first quarter 2020 franchise tax.
“For the succeeding quarters of 2020, PECO was no longer operating the distribution facilities and the Mayor’s office has already cancelled its business permit, making it impossible for PECO to operate and collect payments,” it said.
Meanwhile, PECO disclosed that Iloilo City chief legal officer Edgardo Gil has written PECO chairman Mariano Cacho to remit the franchise tax collected from January 2019 to December 2020 in order to boost the city’s COVID19 pandemic response program.
It said the claims of Gil are “absolutely false.”
“In January 2019, April 2019, July 2019 and October 2019, PECO paid the entire 2019 franchise tax due to the Iloilo City Government in the amount of P42, 086, 751.68.”
“In January 2020, PECO said they also paid the first quarterly installment of the 2020 franchise tax in the amount of P11, 058, 840.08.”
PECO said all these payments are evidenced by the official receipts issued by the Treasurer’s office.
The city’s former power distributor explained that it no longer paid the other quarterly installments for the 2020 franchise tax because the Mayor’s office cancelled PECO’s business permit due to lack of franchise.
This prompted PECO to seek a clarification via a petition for declaratory relief from the RTC Iloilo as to its obligation to pay such franchise tax.
“PECO found it incongruent to pay franchise tax to the city and yet not be recognized as having a franchise by the City itself. In addition, since March 2020, PECO was no longer operating the distribution utility of Iloilo City nor billing consumers,” it said.
Gil said any further delay in the payment of the franchise tax despite the tax directive that the utility received from the city government would cause “grave, irreparable damage.”
But for PECO, there’s no delay in payment of the franchise tax as the entire 2019 franchise tax has already been paid in 2019 while the 2020 franchise tax was being paid until such time as the Mayor’s Office cancelled the business permit of PECO due to lack of franchise, and it ceased operating the distribution utility of Iloilo City and billing customers.
Likewise, PECO added that they could not be accused of delay in the payment of the franchise tax since the propriety of such assessment is still being litigated with the RTC Iloilo.
Notably, RTC Iloilo issued a writ of preliminary injunction to enjoin the city from proceeding with the scheduled auction sale intended to collect franchise tax.IMT
