SORSOGON CITY -- Electric cooperatives (ECs) nationwide are now being pressed by local government units for payment of their real property taxes (RPT) following the issuance of a ruling by the Supreme Court, which declared sub-stations and other coop assets as taxable.
In an interview Monday, Edwin Garcia, general manager of Sorsogon I Electric Cooperative (SORECO I) based in Irosin, Sorsogon, said LGUs had already levied them and were demanding payment. The power cooperative has a PHP30-million outstanding arrears in RPT, he noted.
According to him, this is the reason electric cooperatives had filed a petition with the energy Regulatory Commission (ERC), through the Philippine Rural Electric Cooperatives Association (Philreca), last October 2018 for an authority to pass on RPT payments to their member-consumers.
“It’s a big burden on the part of ECs since we are not allowed to generate profit, we are non-profit that’s why we don’t have surplus funds for tax payments, so we are appealing to the ERC to grant the petition,” he added.
However, the ERC suspended the initial hearing on the petition scheduled last March 14 for the establishment of jurisdiction.
This, after advocacy groups held a rally on the hearing day in front of the ERC main office to express their opposition to the petition filed in behalf of its 121 member-distribution utilities nationwide.
The ERC had also scheduled on that day the public consultation for Luzon stakeholders. Public consultation for Mindanao was set on March 22 and April 2 for the Visayas stakeholders.
Philreca wanted ERC to adopt the rules formulated by the petitioner for the “pass-through of real property tax” as it argued that ECs have no surplus funds to which they could charge the RPT payments.
The petitioner stressed that adopting the rules is “valid and timely considering the fact that local government units (LGUs) had assessed and collected RPT payments from ECs”.
It pointed out that the Supreme Court had already ruled that ECs are not exempted from paying RPTs as enunciated in the case of “Manila Electric Company vs. The City Assessor and the City Treasurer of Lucena City”.
The SC ruling stated that transformers, electric posts, transmission lines, insulators and electric meters are not exempted from RPT under the Local Government Code.
However, organizations behind the Malinis at Murang Kuryente (MMK) Campaign rallied in front of the ERC office to urge the Commission to reject the proposal of Philreca.
"All property owners pay amilyar (real property taxes) on what they own. Why do we also have to pay for what the coops own?” MMK convenor Gerry Arances pointed out.
“Already, electric consumers are bearing the brunt of many ECs’ violation of system loss caps, mismanagement of financial liabilities, and the costly Power Supply Agreements (PSAs) with dirty energy generation companies. Meanwhile, many ECs are guilty of long and frequent interruptions in their respective franchises and failure to electrify areas within them,” Arances stressed.
The group had filed a motion on behalf of its members and consumers nationwide for the ERC to dismiss the petition.
“In previous years, consumers have always been one with ECs to be recognized as tax-exempt just like any other cooperative, since they are supposed to be people's enterprises owned by the consumers they serve,” said Dr. Clint Pacana, convenor of the Mindanao Coalition of Power Consumers (MCPC) and president of the Institute for Power Sector Economics (IPSE).
In a press release, Pacana explained that in filing the petition, Philreca abandoned consumer groups that were calling for the exemption of cooperatives from paying for real property tax.
“While the consumers fight it out for their tax exemption, ECs want the easy way of passing on the burden to their supposed owners -- the unfortunate consumers. We hope there is no collusion among local officials, ECs, and other distribution utilities for this,” Pacana added. (PNA)
