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Monday, March 27, 2006
P34M write-off
By GingGing A. Campaña
Sun.Star Staff Reporter
CEBU City Hall may soon use the P41.3 million that the Philippine Long Distance Telephone Co. (PLDT) deposited in escrow for its franchise tax, now that the City Council is likely to condone the company’s penalties.
Condoning the P34-million surcharges of PLDT and other telecommunications firms—for their delay in paying their franchise taxes—will be “fair and equitable” for both the City Government and the company, said the City Council committee on laws and good government.
Besides, the committee said, it cannot be said that the telecom firms “were remiss in their tax obligation or willfully refused to pay that franchise tax due from them from 1996 to 2003.”
The delay was caused only by conflicting views as to whether or not telecom companies are required to pay franchise tax to local government units (LGU), said Councilor Edgardo Labella, chairman of the committee, in his report last Wednesday.
He said that it was only in 2003 that the Supreme Court, in the case of PLDT versus City of Davao, upheld the view that LGUs can collect franchise taxes from such firms.
Write-off
With the decision, Labella said, there can no longer be any doubt on the power of the LGUs to impose such a tax on these companies.
The committee on laws was tasked to review a proposed ordinance condoning PLDT’s P34 million in surcharges, for its delay in paying P42 million in franchise taxes in the last eight years.
Also considered was another proposed measure exempting from surcharges and interests the telecommunication companies covered by franchise taxes for 1996 and 2003.
The council is due to deliberate in the next session on the proposals drafted by Councilor Jose Daluz.
Following the High Court’s decision on the case between Davao City and PLDT, the company then paid Cebu City P41.3 million, representing the principal tax due.
Condition
The money was deposited in escrow and the City can only spend it after the company’s penalties are condoned.
The committee on laws observed that “one justification for the condonation of the P34 million is the fact that the interests and surcharges mounted because of the pending case between Cebu City and PLDT” in the Regional Trial Court Branch 12.
Labella said the early termination of the case would eventually work to the advantage of both parties.
Litigation takes time, considering that aside from awaiting the termination of the case in the lower court, our judicial system provides a mechanism of appeals and judicial system of review all the way up to the Supreme Court, he pointed out.
“Time, money, effort and goodwill be saved and would be worth the condonation. Nobody takes undue advantage over the other,” Labella said.
For Bisaya stories from Cebu. Click here. (March 27, 2006 issue)
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