Meralco seeks BIR guidelines on withholding tax for refund

Power distributor Manila Electric Co. (Meralco) is urging the Bureau of Internal Revenue (BIR) to release the revenue memorandum order (RMO) that would serve as the company’s implementing guidelines on the withholding tax for customers under its Phase IV refund program.

Meralco is scheduled to pay a total of P5.5 billion under Phase IV of its P30-billion refund program.

In a statement, Meralco’s Refund Management Task Force head Leonardo Mabale said that once the company has incorporated the RMO guidelines in the refund process, it can start releasing letters to its customers in August for Phase IV-A and in September for Phase IV-B.

"Some pre-processing activities are necessary, but should the actual implementation be delayed, Meralco assures that the refund is retroactive to July 2005 for those belonging to Phase IV-A. We hope to be on schedule for Phase IV-B," Mabale added.

Customers will have to select which refund option they prefer – whether through post-dated checks or credit-to-future bills with cash option.

Depending on their choice, customers will then be asked to submit the documents required. One of these is the BIR Certificate of Registration, which indicates the customer’s tax identification number (TIN)).

Mabale said it is important that all the documents submitted are in order to avoid delays in the release of the refund. Since the average refund amount of customers under Phase IV is much bigger than those under Phases I to III, Meralco should ensure that the refund will be given to the person or entity entitled to it.

Meanwhile, the transfer and reclassification of all government accounts from Phase IV-B to Phase IV-A increased the gross refund amount under Phase IV-A from P2.2 billion to P3.3 billion.

A total of 1,447 government services (active and terminated status) were reclassified. This modification from the original proposal increased the refund outlays for 2005 and 2006. Meralco, however, will no longer appeal this order, Mabale said.

On the other hand, the requirement to publish in the newspapers the refund details of unclaimed terminated accounts of Phases I to III will be very costly to implement, he added.

Meralco intends to propose to the Energy Regulatory Commission (ERC) alternative options on how to inform the customers of these terminated accounts of their unclaimed refund, Mabale pointed out.

By next month, Meralco intends to implement the final phase of its P30-billion refund program for its customers.

Previously, the Court of Appeals junked Meralco’s plea for a reversal of an earlier court order that stopped the power firm’s tariff increase of 17 centavos per kilowatthour (kwh) that started in June 2003.

The increase was integrated in its tariff unbundling petition which the ERC approved. The tariff hike includes an 8.65-centavo per kwh hike in its basic distribution rates, which was its first since 1994. It was implemented for 18 months before it was ordered stopped.

Meralco elevated the case to the Supreme Court last March.

Meralco posted a net loss of P2.7 billion in 2004 largely due to provisioning and said it could have posted a hefty P4-billion net income sans these provisions.