Mayor mulls criminal charges vs PECO

By Jennifer P. Rendon and Joseph B.A. Marzan

The refusal of former Iloilo City electric power distributor Panay Electric Company (PECO) to pay its franchise taxes has made Mayor Jerry Treñas “very sad.”

Treñas is apparently so disheartened by PECO’s move that he hinted of hauling them to court.

In a statement Wednesday afternoon, Treñas said that “PECO continues to refuse to remit franchise taxes collected from the electric consumers from the 2nd, 3rd, and 4th quarters of 2020 to the city government amounting to more than P51-M plus taxes and penalty charges.”

These franchise taxes were collected from consumers in 2019 and payable in 2020.

Based on City Hall records, PECO only remitted the taxes in the first quarter of 2020, or about the same time that MORE Electric and Power Corporation took over the power distributorship in Iloilo City.

“The city will be compelled to take such 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 which crime is a nonbailable offense,” Treñas said.

He added that the city is compelled to protect its interests especially during a pandemic like COVID-19.

 

DEMAND

More than a week ago, 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.

“I strongly recommend that Panay Electric Company remit the aforementioned amount within five (5) days from receipt of this letter, otherwise the City has no choice other than to immediately file the necessary case for the criminal case of syndicated estafa,” Gil said.

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.”

Even earlier, Gil already insinuated that the demand letter is just but an initial step in the filing of a criminal case against the PECO executives and members of the Board.

 

COURT CASE

This development came after Gil, representing the City of Iloilo and City Treasurer Jinny Hermano, filed an Omnibus Motion asking the Regional Trial Court Branch 31 to Dissolve the Writ of Preliminary Injunction and Dismiss the Instant Petition filed by PECO against the respondents for failure to satisfy three jurisprudential requirements for the issuance of a Writ for Preliminary Injunction:

1) that it must show a clear and unmistakable right to the main relief prayed for in the complaint;

2) that there is an urgent need for the writ to prevent irreparable injury to the applicant; and

3) no other ordinary, speedy, and adequate remedy exists to prevent the infliction of irreparable injury.

The Iloilo City Public Information Office on Tuesday told reporters that PECO recently lost its petition for a Writ of Preliminary Injunction against the city government to stop the latter from demanding payment of the said taxes.

In a radio interview, the mayor said that the charges may be filed today, July 1.

“We have to protect the interests of the city. Consumers have already paid these to them, and they are supposed to remit it to the city. Actually, they have already paid the 1st quarter but they haven’t paid the 2nd, 3rd, and 4th, and that is really a clear obligation that they took from the consumers, a clear legal obligation to remit to the city government. They owe the consumers, they also owe the city, so they have to pay the city,” said the mayor in a radio interview.

Under Section 151 of Republic Act No. 7160 (Local Government Code of 1991), cities may impose taxes on businesses enjoying a franchise, at a rate exceeding half of 1 percent of the gross annual receipts for the previous calendar year based on the incoming or realized receipts, within its territorial jurisdiction.

The National Electrification Commission on January 19, 1994 extended PECO’s legislative franchise under Rep. Act No. 5360 for 25 years, and the said franchise thus expired in 2019.

PECO re-applied for a new legislative franchise in 2019 but was junked by the House of Representatives’ Committee on Legislative Franchises.

President Rodrigo Duterte approved Rep. Act No. 11212 on Feb. 14, 2019, granting a legislative franchise to a new power player, MORE Electric and Power Corporation, who took over operations of the city’s power lines between February and March 2020.

PECO previously challenged MORE’s legitimacy to operate, but the former’s legal efforts had been upheld up to the Supreme Court, the most recent being its decision promulgated on May 26, 2021, which upheld R.A. No. 11212.