Aquino stops LGU tax collection on power firm

LUCENA CITY, Philippines—President Benigno Aquino has issued an executive order stopping officials of Quezon province from collecting alleged unpaid taxes from the operator of a coal-fired plant in Pagbilao town, drawing an appeal from provincial officials for reconsideration.

Mr. Aquino issued last Feb. 28 Executive Order No. 27 that reduced and condoned real property taxes allegedly owed by power firm Team Energy (TE) to the provincial government and local government of Pagbilao for operating a 735-megawatt coal plant in the town.

Local government officials of Quezon appealed to Mr. Aquino to withdraw the EO.

A TE official, however, said the EO referred to tax liabilities owed by the National Power Corp. and Power Sector Assets and Liabilities Management, not TE.

Greggy Romualdez, vice president for external affairs of TE, said his company is “a responsible corporate entity that has an excellent track record of paying all its rightful tax obligations in a timely manner.”

“We have every intention of keeping it that way,” he said in the statement.

Some mayors of Quezon towns, however, said their fight to collect the taxes isn’t over.

Catanauan Mayor Ramon Orfanel said he would call for an emergency meeting of the Quezon Mayors’ League, which he heads.

Mr. Aquino’s EO effectively stopped a plan by the Quezon provincial government to auction off pieces of property owned by TE supposedly today.

The TE plant is in Isla Grande in Pagbilao facing the Tayabas Bay.

Mr. Aquino said he could not allow LGUs to collect back taxes from independent power producers because it would “threaten the financial stability of the government and the stability of energy prices.”

The President said the forcible collection of taxes by the local government could also increase power costs.

The governments of Quezon province and Pagbilao town, TE and national government officials went through several negotiations on how to settle the unpaid taxes.

The Supreme Court, in a ruling in January 2010, ruled in favor of the collection of the taxes by the Quezon and Pagbilao governments.

In December last year, the Quezon provincial government and Pagbilao issued a final notice of delinquency to TE in a bid to collect the taxes that have ballooned to P6.1 billion as a result of penalties and interests.