COA's view on bid to condone PLDT's P34M tax fines sought

The city council recently referred to the Commission on Audit for more study a proposed ordinance condoning the accrued tax penalties of the Philippine Long Distance Telephone Company to the city government, amounting to P34-million.

The council's committee on laws, headed by councilor Edgardo Labella, reported in last Wednesday's regular session that the proposed measure be referred first to the COA to make sure that any grant of tax privileges to all businesses follows COA regulations.

PLDT has already settled in three payments its franchise tax dues to the city government from 1996 to 2003 amounting to P41.9 million but the city council has not approved an ordinance yet to condone the firm's franchise tax penalties due to the city.

The city's legislative body wanted to be sure it is doing the right steps toward approving the proposed condonation measure despite provisions of a certain law and previous rulings of the Supreme Court allowing such.

While Section 192, Chapter Five of the 1991 Local Government Code authorizes the city to grant tax privileges through an ordinance, the approval of the proposed measure should have a stronger justification because the amount to be condoned is so huge, said the committee report.

There is a pending case at the Regional Trial Court the city government filed against PLDT since 2003 for collection of the firm's tax penalties, which has since ballooned to P34-million including interests and surcharges.

The council said this case should now be concluded to save time, money, effort and goodwill between the city and PLDT, and the approval of this ordinance would pave the way for an amicable settlement. PLDT's Rogelio Quevedo already informed the city that once this ordinance is approved, the firm would go for an amicable settlement of the pending case in court.

Councilor Jocelyn Pesquera, budget and finance committee chair, said the city council could also refer its actions to three SC rulings in the past upholding the authority of local governments to collect franchise tax from PLDT.

Pesquera said the high court already ruled in 2003 that Davao City could collect franchise tax from PLDT, then it came out with a similar decision last July 15 favoring Bacolod City. Last August 16, the Third Division of the Supreme Court also denied PLDT's plea for exemption from payment of franchise tax. - Cristina C. Birondo