RISKY TOLLWAY Motorists pass by the RFID lanes of the NLEx Connector ramp in Manila. —Grig C. Montegrande
MANILA, Philippines — The Court of Tax Appeals (CTA) has ordered the Valenzuela City government to refund P3.81 million in taxes erroneously collected from North Luzon Expressway Corp. (NLEx) for revenues it generated from highway signs and billboards from 2012 to 2019.
In its Nov. 18 decision, the court’s Second Division partially found merit in NLEx Corp.’s petition to review the March 2023 decision of the Caloocan City Regional Trial Court (RTC) that denied the company’s business tax refund claim.
Also impleaded in the case were Valenzuela City Treasurer Adelia Soriano and Ulysses Gallego, the officer in charge of the city’s business permit and licensing office.
They were both tagged as the city officials who supposedly conducted the tax assessment on the signs the company maintained on the expressway.
No jurisdiction
While the tax appellate court reversed the lower court’s ruling and asserted that NLEx Corp. was “entitled” to a tax refund for the signage services and corresponding interest, it excluded the refund for other charges not considered local taxes, citing Republic Act No. 1125 or the CTA’s charter.
“The ‘other charges’ are mere regulatory fees and not taxes; hence, the court has no jurisdiction to rule on the refundability of the same,” the CTA said in a decision penned by Associate Justice Corazon Ferrer-Flores.
This meant that only P3,814,290.27 “representing signage services, surcharge and interest, and tax credited” were allowed for tax returns from the original total of P3,841,779.85 in tax collections that NLEx Corp. had claimed from the city government.
In granting the local business tax refund, the tax court noted that the tollway operator’s “advertising installations” in Valenzuela City do not operate as “branch, sales outlet or warehouse,” where financial transactions are conducted.
Instead, activities for the sales and booking of revenue for financial transactions of the signs and billboards are handled at the NLEx’s main office in Balintawak, Caloocan City.
“Evidently, any and all [local business taxes] due thereon should accrue to Caloocan City where its principal office is located, in accordance with Section 150 of the Local Government Code of 1991,” said the CTA.
It noted that city officials could not present evidence to prove otherwise.