CITY HALL COLLECTS P42M FROM PECO: But syndicated estafa case pushes through

By Francis Allan L. Angelo

The Iloilo City government will use the P42 million it collected from Panay Electric Co., the former power distributor in the city, for the salary increase of casual employees and allowances of teachers and the police.

A press statement from the City Hall cited Mayor Jerry P. Treñas as saying that they were able to collect P42 million from PECO representing the interest on its real property taxes.

The City Treasurer’s Office confirmed it already received the collectibles.

“The Local Board of Assessment Appeal (LBAA) decided in favor of the City Government. The P42-million payment was made during auction sale of their commercial machinery on June 30, 2021, following court’s denial of their application for injunction that attempted to block the said schedule,” City Treasurer Jinny Hermano was quoted as saying in the press statement.

Treñas said the payment will cover the P100 increase in the daily salaries of casual workers of City Hall and augment the assistance to teachers and police.

“With the payment of PECO of the interest for real property taxes, we will appropriate the same for the allowances of teachers and the PNP and increase the daily salary of our casuals from P400 to P500 a day,” Treñas said.

The city government, however, pushed through with the filing of a syndicated estafa case against PECO, this time for purported non-remittance of franchise taxes collected from power consumers in 2019 and 2020.

The case was filed with the Iloilo City Prosecutor’s Office Monday in a bid to collect more than P51 million from PECO plus taxes and penalty charges.

But in a statement, PECO disputed the city hall’s claims on the supposed unremitted franchise taxes.

The distribution utility said it remitted P10,520,697.92 million each on April 17, July 20, and October 18, 2019; and P11.061 million on January 17, 2020.

PECO said it ceased to pay the franchise tax since the second quarter of 2020 for the following reasons:

-a court case was filed to determine the propriety of the imposition of franchise tax against PECO;

-the Mayor’s office cancelled the business permit of PECO due to lack of franchise; and

-PECO already stopped operating the distribution utility of Iloilo City and billing customers (including franchise tax) since March 2020.

PECO lost its congressional franchise to MORE Electric and Power Corp. which started operating in February 2020.

“Since that time, it has been MORE that is billing and collecting from customers for electricity consumption, including charges for franchise tax,” PECO said.

The Iloilo City Legal Office has demanded PECO to pay its unpaid franchise taxes to the city for the last three quarters of 2019.

In a letter addressed to PECO president Luis Miguel Cacho, chief executive officer Mariano Cacho, and its other executive officers and members of the Board dated June 16, 2021, City Legal Office (CLO) chief Atty. Edgardo Gil noted PECO’s “continued refusal to remit/pay to the Iloilo City Government the Franchise Taxes you have collected as part of the billed monthly electricity charges from Jan. 1, 2019 to Dec. 31.”

“In particular, despite having already paid the 1st quarter payments for the said tax, you refused to remit/pay to the City the 2nd, 3rd, and 4th quarter payments amounting to P51,425,406.37, excluding legal interest and other charges.”

Based on tax order of payment of the Iloilo City Examination and Inspection Division, the tax due is P33,175,520.12 while the penalty amounted to P18,247,086.13.

Gil noted in the demand letter that the collected 2019 Franchise Tax payments are still in PECO’s control and possession without any legal authority to do so and that its continued failure to pay/remit the same to the city constitutes the crime of syndicated estafa.

P.D. No. 1689 defines syndicated estafa as acts of estafa committed under Articles 315 and 316 of the Act No. 3815 (Revised Penal Code), “by a syndicate consisting of five or more persons formed with the intention of carrying out the unlawful or illegal act, transaction, enterprise or scheme, and the defraudation results in the misappropriation of money contributed by stockholders, or members of rural banks, cooperative, ‘samahang nayon(s)’, or farmers association, or of funds solicited by corporations/associations from the general public.”

Gil stressed that “failure to pay the Franchise Taxes upon demand is tantamount to appropriating the same for one’s personal use and constitutes the crimes of syndicates estate.”