City to condone PLDT penalties

Considering the length of time for litigation and payment already made in escrow in favor of the city, the City Council committee on laws, ordinances, public accountability and good government believes it is "fair and equitable" to condone the interest and surcharges imposed upon Philippine Long Distance Telecommunications amounting to over P34 million.

In its report, the committee pointed out that if it would not condone PLDT's interest and surcharges and opt to litigate, a lot of time would be consumed from waiting for a resolution of a case.

The committee also took into consideration the P41,392,939.97 that PLDT already deposited in escrow in favor of the city government as the franchise tax from 1996 to 2003.

Along with this, the committee believes that the Commission on Audit "may not have accurately comprehended the real issue" when the latter was made to comment on the matter.

An endorsement from lawyer Roy Ursal, Regional Legal Adjudication Director states, "this office opts not to render any comment regarding the subject request since to do so would pre-empt any audit action the Commission may do in consequence of the said proposed ordinance by the Sangguniang Panlungsod."

Ursal added, "COA Memorandum No. 92-778 dated 31 August 1992 is relevant for the resolution of the subject request. Based on said COA Memorandum, the circumstances that would warrant the granting of tax exemption or relief are not present. Likewise, attention is invited to paragraphs (a) and (b), Article 282 of the Rules and Regulations implementing R.A. 7160 which provide similar guidelines on the grant of tax exemptions and relief by local government units."

COA then refused to issue a black and white comment on the issue that may preempt any audit action in the future.

The committee said the proposed ordinances seeking to condone PLDT's interest and surcharges do not dwell on tax exemption or relief by a local government unit and that the threshold issue involved is waiver of surcharges or interest.

"In the instant case, it cannot be said that the telecommunication companies, including PLDT, were remiss in their tax obligation or willfully refused to pay the franchise tax due them for the period of 1996 to 2003," the committee said.

The committee further stated another justification to condone the interest and surcharges that is the pending case between PLDT and the city government from which the interests and surcharges "mounted and rose". The early termination of the existing case would reportedly work to the advantage of the two entities.

"Time, money, effort, and goodwill will be saved and would be worth the condonation. Nobody takes undue advantage over the other," the committee said.

Early on, Mayor Tomas Osmeña said the penalty has to be condoned otherwise the city cannot spend the P41 million that PLDT paid as a compromise in 2003. The city and PLDT reportedly agreed to condone the penalties first.

The Local Government Code states that "local government units may, through ordinances duly approved, grant tax exemptions, incentives or reliefs under such terms and conditions as they may deem necessary." - Joeberth M. Ocao