CA orders Meralco to pay franchise taxes to Muntinlupa

MANILA, Philippines - The Manila Electric Co. (Meralco) must pay the Muntinlupa City government franchise taxes for operating in the city, according to a decision by the Court of Appeals (CA).

The CA ruled that when Muntinlupa passed its Revenue Code, Ordinance 93-95, its Section 25 – which imposed a franchise tax on public utilities – violated Local Government Code provision that only cities and provinces can impose franchise taxes. At the time Muntinlupa passed the ordinance in 1992, it was a municipality.

“It is our view that although the ordinance was void when first passed, the legality of its provision was cured by the enactment of Republic Act 7926, which converted Muntinlupa into a highly urbanized city,” read the CA decision.

The CA said the assessment of Meralco’s franchise tax should be computed starting from March 1, 1995, when RA 7926 was enacted. Muntinlupa has been demanding that Meralco pay the franchise tax starting 1992.

The CA reversed the decision of the Pasig regional trial court declaring the implementation of Ordinance 93-95 as void.

Meralco vice president Anthony Rosete said they have filed a motion for partial reconsideration, questioning the CA’s ruling that the enactment of RA 7926 cured the defective municipal ordinance.

Rosete said this “is contrary to earlier decisions” of the CA and prevailing decisions of the Supreme Court on the same issue.

Muntinlupa welcomed the CA decision. City public information chief Omar Acosta said though the decision is not yet final, “at least it upheld our right to collect the taxes.”