INEC, LC ordered to submit memoranda Court wants to know if it has jurisdiction
AFTER hearing the arguments of both counsels of the Ilocos Norte Electric Cooperative (INEC) and the Laoag City government on the declaratory relief with regards to the franchise tax issue, Regional Trial Court (RTC) Branch 12 Judge Charles A. Aguilar has ordered both parties to submit their respective memoranda within 15 days for the court to analyze if it has primary jurisdiction to hear the case. The said memoranda would amplify both positions to indicate if the court has jurisdiction on the matter since INEC has not only sought declaratory relief bit has also asked the court to issue a preliminary injunction in temporarily halting the collection of franchise tax of the city government while the case is being heard. INEC counsel Emil Doloroso said they welcome the court order and that they would submit their memoranda until October 31. According to the INEC lawyer, the cooperative will state its position summarizing the events that transpired on the franchise tax issue and whether or not the power distribution utility would continue to pay the franchise tax to both the city and provincial governments. In explaining their position, Doloroso stressed that under the EPIRA law, the local government shall only collect franchise tax based on the distribution charges and excluding the generation and transmission charges. In view of this stand, INEC said the city government has been charging them above the standard franchise tax level and the coop has in fact overpaid its franchise tax obligations to the said local government unit. Records show that INEC has already paid P5.1 million in franchise taxes to the city government as of July 31, 2006, which is more than what the cooperative believe they should have paid. The city government has levied a P19 million franchise tax to the coop from 1993-2005. The difference in the computation started when INEC and the city government used different formulas and has different interpretation of the term “gross receipts.” INEC computed its franchise tax based on the EPIRA law while the city government did its computation from the Local Government Code. Earlier the Bureau of Local Government Finance (BLGF) attempted to settle the row by stating in a memorandum that, “gross receipts of electric cooperative shall refer to the total customers’ bill excluding generation charge, transmission charge, system loss, universal charges and reinvestment finds.” This prompted INEC to go to court to settle the issue once and for all. Doloroso however maintained that either party may later appeal the decision of the RTC hearing the case, adding that INEC would automatically appeal its case to the Court of Tax Appeals in case the decision would favor the city government. He also explained that though the Court of Tax Appeals does not have jurisdiction on the matter, Republic Act 9382 states that any cases on tax issues decided by an RTC may be appealed to the tax court. Meanwhile, the provincial government is also now demanding INEC to pay its franchise tax. The Ilocos Times learned that the power distribution utility earlier temporarily stopped its franchise tax payment to the provincial government after encountering the same problem they did with the city government. INEC Board President Lorenzo Rey Ruiz and General Manager Romillas C. Pascual replied to the demand letter of Ilocos Norte Governor Ferdinand R. Marcos Jr. asking that the payment be held in abeyance while they wait for the decision of the court on the issue. The INEC officials also explained in the said letter that the case they filed in court to settle the issue does not mean they are being confrontational but rather a solution to settle conflicting positions on the issue. Dominic B. dela Cruz
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