Court stops Ifugao LGU from closing down Magat power plant

BAYOMBONG, Nueva Vizcaya, Philippines –The Court of Appeals (CA) has issued a temporary restraining order (TRO) against an Ifugao town government’s moves to close one of the country’s major power plants, whose Filipino-Norwegian operator has an ongoing tax dispute with the LGU involving an amount of more than P400 million.

In a resolution dated July 5, the CA granted the SN Aboitiz Power (SNAP) consortium’s request for a TRO against the Alfonso Lista local government unit (LGU) after finding that “grave and irreparable damage to the public interest” will result if the town makes good its threat to close SNAP’s Magat hydroelectric plant located along the disputed boundary of Alfonso Lista (Ifugao) and Ramon, Isabela.

The case between SNAP-Magat and Alfonso Lista came about as a result of a dispute over the collection of local business taxes amounting to over P400 million. The Alfonso Lista threatened to use its power under the Local Government Code to close the power facility if the firm continued to ignore demands for payments of taxes.

In its resolution, the CA ruled that the closure of the Magat plant would prejudice the public interest, citing the fact that the plant generally supplies bulk of the power needs of the entire Luzon grid.

The 60-day TRO also restrains Alfonso Lista from levying local business taxes on the firm which had claimed exemption due to pioneer industry status granted by the Board of Investments (BOI), and from withholding a mayor’s permit from SNAP-Magat.

The Court is now hearing SNAP-Magat’s petition for a longer preliminary injunction.

The Appellate court’s decision virtually overturned a previous ruling by a lower court denying SNAP-Magat its earlier application for a TRO and a writ of preliminary injunction, prompting the firm to file an appeal with the higher court.

Earlier, the Ifugao Regional Trial Court (RTC)-Branch 15 denied SNAP’s TRO application, saying that the firm failed to justify why it should not pay the taxes being charged by the town government, where the firm’s power generation facility is partly located.

Lawyer Lito Salatan, counsel for the town, said that the RTC found more weight in the town’s arguments that the firm was mandated to pay real property and business taxes for conducting business there.

The firm, he said, failed to present proof of its being a registered entity with the BOI, which granted them a six-year tax holiday.

In a previous interview, Salatan said that the town “would use all legal remedies to make them pay, including closing down the SNAP’s (power plant).”

SNAP-Magat’s business permit issued by Alfonso Lista had lapsed on March 15, and its renewal had been put on hold after the firm questioned the town’s imposition of some P400 million and P10 million real property and business taxes for the past two years.

The three-decade-old Magat Hydroelectric and Irrigation Plant, whose power generation component was sold by the national government to SNAP for US$530 million in 2006, generates at least 350 MW of electric power to the Luzon grid.