THE SUPREME COURT (SC) has upheld a Court of Appeals (CA) decision that cleared the Power Sector Assets and Liabilities Management Corp. (PSALM) of business tax liability for assets it bought from the National Power Corp. (Napocor).
In an 18-page decision dated March 15 and made public on July 18, the court said the law does not require PSALM to pay local business tax for the assets since Napocor’s power generation function ended after the Electric Power Industry Reform Act took effect in June 2001.
“There is also no contractual obligation, as in a deed of transfer, for PSALM’s liability for the said assessments,” according to the ruling penned by Associate Justice Rodil V. Zalameda.
“There was never any claim that PSALM exercised Napocor’s power generation function to justify PSALM’s assumption of [its] supposed liability for local business tax.”
Napocor sued Sual, Pangasinan in 2010 after its municipal treasurer assessed it of local business taxes for 2006 to 2009. The treasurer also filed a complaint against PSALM, demanding taxes on the properties it had acquired from Napocor.
The appellate court in 2016 ruled the lawsuit against PSALM was baseless, adding that it was not liable for business taxes. — John Victor D. Ordoñez