Unpaid taxes lead to La Union power plant takeover

BAUANG, La Union – The provincial government has taken over the 225-megawatt power plant of the Bauang Private Power Corp. (BPPC) in Barangay Payocpoc here after the Supreme Court (SC) resolved with finality that the company has to pay P1.866 billion in taxes on its buildings and equipment.

The BPPC plant, with an assessed value of P57 billion, was declared a property of the provincial government after it was auctioned last Feb. 1 at the provincial capitol in San Fernando City.

Provincial treasurer Francis Estigoy told The STAR that the power plant was automatically sold to the provincial government because not a single bidder took part in the public auction.

“After the SC decision, we completed all the legal procedures in order to collect the taxes on their (BPPC’s) equipment and buildings. However, the negotiations bogged down that’s why we resorted to a public auction to collect some P1.866 billion in taxes and penalties,” he said.

Estigoy said the provincial government decided to auction the power plant after Gov. Manuel Ortega disagreed with the BPPC’s request to pay only 10 percent of the total tax assessment.    

“They (BPPC) wrote us in September that they were negotiating to pay only 10 percent (of the) assessment but the governor disagreed because it was so very low and we already won at the SC at 80 percent assessment level,” he said.

He said the BPPC’s request for 10-percent assessment level was based on payments made by several power plants to the National Power Corp. (Napocor).

The 10 percent level is a special assessment accorded to government-owned and controlled corporations.

On June 20 last year, the SC’s Third Division resolved with finality the Oct. 4, 2006 decision of the First Division denying BPPC’s petition challenging the assessment made by the Central Board of Assessment Appeals.

“The Court resolves to deny for lack of merit petitioner’s motion. No further pleadings shall be entertained in this case. Let the entry of judgment be made in due course,” the decision stated.

Estigoy said BPPC’s legal counsel, represented by the Puno and Puno Law Office, wrote the provincial government last week to prevent it from taking over the power plant because there is a pending injunction issued by the Bauang regional trial court. 

However, Estigoy said the injunction is only for the warrant of levy, which was issued on Nov. 16, 2000, while the SC decision covers the non-payment of taxes and penalties since the BBPC began operating in 1995.

BPPC officials here could not comment on the case because their head office in Manila is the once handling the matter.

Estigoy said the BPPC had not bother to pay the taxes on its equipment and buildings since 1995 as it insisted that Napocor was the one responsible for it.

The power plant of the BPPC, a sister company of the Lopez-owned Meralco, was built under a build-operate-and transfer scheme with a 15-year contract with the Napocor which expired in 2010.

The BPPC was given a one-year redemption period and to settle amicably the unpaid taxes and penalties.