Iloilo LGU seeking P90-M realty taxes from Peco

By Lenie Lectura -November 7, 2019
from Business Mirror

The Iloilo City government said Wednesday that Panay Electric Co. (Peco) needs to settle P90 million worth of unpaid real-estate taxes to the city government before it can renew its business permit.

Norman Tabud, head of the city government’s Business Permits and Licensing Office, said in a letter that Peco did not secure a business license to operate in 2019, in violation of the city’s Tax Revenue Code. It did this because the City Treasurer’s Office flagged its failure to pay an assessed P90 million in real-estate taxes, including penalty.

“Peco had failed to secure a business permit to operate since last year [2018] because of an instruction from the City Treasurer’s Office to hold in abeyance the issuance of the permit pending the company’s payment of its realty tax obligations,” Tabud said.

Such violations could affect Peco’s temporary Certificate of Public Convenience and Necessity (CPCN) from the Energy Regulatory Commission (ERC), which requires all distribution utilities to comply with all legal requirements for any business to operate in any area, Tabud pointed out.

Peco’s temporary CPCN is valid for two years to ensure uninterrupted supply of electricity in Iloilo City until More Electric and Power Corp. (MEPC), the legislative franchisee, has established and can fully operate its own distribution system.

Tabud explained that Peco’s obligations arose from a new ruling from the City Treasurer that the lot on which Peco’s aged electricity poles are located are also taxable real estate.

However, according to Tabud, Peco has contested the City Treasurer’s ruling in a case filed with the Iloilo City Regional Trial Court. The case remains pending. “We must note that the amount owed by Peco to the city is now more than P90 million since the penalties are piling up,” Tabud said. “For Peco to be issued a business permit renewal, they have to settle first their real property tax as a matter of procedure pursuant to our local revenue code.” Peco is already facing investigation by the ERC because of a complaint filed by Iloilo City Mayor Jerry Treñas.

Treñas has asked the Office of the President to direct the ERC to address the mounting complaints against the threat to public safety by “inadequately maintained lines, power outages and hazardous electric posts” owned by Peco.

Under ERC Resolution 5, Series of 2008, any distribution utility granted a CPCN to operate a distribution system in any area must comply with standards set under the Philippine Grid Code and the Philippine Distribution Code, especially those that concern public safety. Based on the report of Bureau of Fire Protection to City Hall, nine incidents of fire were recorded from October 19 to 21 that involved PECO’s electricity poles.

Peco explains

Peco was not able to provide comments on alleged unpaid taxes.

However, it explained on Wednesday that the widespread power outage came at a time when power distributorship in Iloilo is being contested by MEPC. “The blackout happened because of factors beyond the control of Peco and yet MORE Power conveniently used the incident to show us in a bad light by conveniently overlooking the facts,” Peco Head of Public Engagement and Government Affairs Marcelo Cacho said.

He observed that the recent power problems in Iloilo have been met with suspicion as talks of sabotage are going around among industry insiders.

“First of all, we must clarify that Peco is a power distributor and not a power generator,” Cacho stressed. “We only distribute the power that is generated by the NGCP (National Grid Corp. of the Philippines).”

“NGCP did not restore power after 30 minutes,” Cacho stressed. “In fact, we were checking for updates from the NGCP, but nothing came. They only advised us that we can already restore power 11 hours after the power outage started. It was NGCP and not our supplier who held back the clearance to restore because they had to stabilize the supply of the grid,” explained Cacho.

“The statements issued by MORE Power are not based on actual facts but rather an attempt to do black propaganda against us, most probably to hide the fact that they have no experience in power distribution at all and are currently incapable of serving Iloilo,” Cacho stated.