Manila city hall to appeal DoJ order on Smart tax break

MANILA, Philippines—Manila Mayor Alfredo Lim is set to appeal Justice Secretary Leila de Lima’s decision to dismiss their petition to declare as unconstitutional an ordinance exempting Smart Communications Inc. from paying certain local taxes.

Lim, through city legal officer Renato de la Cruz, filed a petition with the Department of Justice (DoJ) in May to declare as unconstitutional and illegal Manila Ordinance No. 8229, which exempted Smart Communications Inc. from real property taxes on tower machinery and equipment and the local franchise tax.

The ordinance was passed in April by the Manila council while Lim was in the United States.

But De Lima’s four-page order, received by the city legal office last week, simply argued that the issue was not under the DoJ’s jurisdiction, De la Cruz said.

“Because the assailed ordinance is not a tax ordinance or revenue measure, the Secretary of Justice has no jurisdiction to entertain the instant appeal questioning its validity and constitutionality,” De Lima said in her order, explaining that the ordinance did not levy taxes but only granted a tax exemption.

The same order stated that the debate over the validity of the ordinance was “moot and academic” anyway since Smart had paid P39,903,215.68 in retroactive taxes last July.

But in August, the telecommunications giant sent a letter to the city treasurer seeking to be refunded the payment, alleging that they had paid under protest.

De la Cruz had pointed out that since the firm did not indicate that the taxes were under protest upon payment, based on the procedures in the local tax code, the right to a refund was considered waived.

Smart has yet to contest De La Cruz’s argument.