Telecoms firm may not get refund for taxes paid to Manila city gov’t

The Manila City government is not inclined to grant Smart Communication Inc.’s bid for a refund of recently paid retroactive real property taxes  amounting to around P40 million.

The telecommunications giant had sent a letter to the City Treasurer’s Office seeking a full refund of P39,903,215.68 it paid in July.

The amount represented real property taxes for tower machinery installed in the city since 2001, such as microwave radios, antenna discs, rectifiers, feeders, air-conditioning units and generator sets.

Telecoms companies have not been paying taxes on machineries to Manila until a city council inquiry in March prompted them to secure permits before building cell sites and to pay the corresponding taxes.

Smart said it paid the retroactive taxes in July “under protest” and cited their franchise, a Supreme Court decision and a city ordinance to back claims that they should be exempt from paying the taxes.

But city legal officer Renato de la Cruz said Smart’s demand for a refund was “technically defective. If they made the payment under protest, this should have been declared in the receipt. That is provided for under the local tax code.”

De la Cruz added that upon review, the Supreme Court jurisprudence Smart cited did not apply to them.

Mayor Alfredo Lim earlier said that the city ordinance exempting Smart from paying taxes on machinery and the local franchise tax was “unconstitutional.”

One of those who opposed the ordinance, Councilor DJ Bagatsing, urged Smart and the local government to “just let the payments be” if the telecommunications giant was sincere with its corporate social responsibilities.

“This would allow the former to improve on its goodwill while, at the same time, provide the latter funding for pro-poor and educational programs,” he said.

Bagatsing added that the amount was “just a drop in the bucket for Smart, one of the country’s top corporations, which earned about P30 billion in profits just last year.”

On the other hand, Councilor Joel Chua, one of those who helped draft the ordinance, said Smart had a technical right to protest the decade-long retroactive payment.

He cited Section 194 of the Local Government Code that said “local taxes, fees or charges shall be assessed within five years from the date they became due. No action for the collection of such charges, whether administrative or judicial, shall be instituted after the expiration of such period.”