PAY UP OR ELSE…: Iloilo City asks ex-power distributor to settle P51-M franchise tax for 2019

By Jennifer P. Rendon

Adversity continues to hound Panay Electric Company (PECO), Iloilo City’s erstwhile electric power distributor.

From losing its franchise, PECO is now being asked to settle its purported unpaid franchise taxes to the city in the last three quarters of 2019.

The amount involved: P51.4 million, according to the Iloilo City Legal Office.

In a June 16, 2021 letter addressed to PECO president Luis Miguel Cacho, chief executive officer Mariano Cacho, and its other executive officers and members of the Board dated, 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,” the demand letter added.

Based on the tax order of payment issued by 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.

He also 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.”

Gil told PECO executives that the taxes they “willfully withheld” from the city government could have been used to augment COVID-19 efforts like hiring of additional personnel who will respond to the pandemic.

The money could have also been used to pay the salaries of casual employees of City Hall, “and the people of Iloilo will no doubt experience grave and irreparable damage if this are not paid,” the legal officer added.

And another advice from Gil: 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.

“However, in order to avoid embarrassment and expenses of litigation, I again suggest that you discuss with the Office of the City Treasurer possible settlement upon prior appointment by phone,” Gil said.

The demand letter came on the heels of a recent legal move by City Hall.

Gil, representing the City of Iloilo and City Treasurer Jinny Hermano, also 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 (City Hall) 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 case aims to stop City Hall from collecting taxes from the former distribution utility.

This latest PECO debacle came more than a year after Congress declined to renew its franchise and extend by another 25 years its almost century-old hold on Iloilo City’s power distribution business.

Daily Guardian is still trying to get PECO’s comment on the demand letter.