Mayor Lim takes Isko Moreno, council to court over tax breaks

MANILA, Philippines—Officials of the Manila City government seem to be at loggerheads with one another following the granting of tax breaks to a telecom company.

On Wednesday, Mayor Alfredo Lim filed a petition with the Manila Regional Trial Court with Vice Mayor Francisco “Isko Moreno” Domagoso and the city council as respondents.

Lim’s lawyer, city legal officer Renato de la Cruz, said the petition asked the court to declare as illegal and unconstitutional a recently passed ordinance that exempts Smart from paying franchise and real property taxes on its telecommunications equipment at cell sites within Manila.

In April, the city council, with then acting mayor Domagoso as the presiding officer, approved the ordinance.

The author of the ordinance, Councilor Maria Sheilah Lacuna-Pangan, earlier said that telecom firms were entitled to tax breaks.

“According to their franchises, when they pay [taxes] to the national government, they should be exempted from certain taxes imposed by local governments,” she said.

Her opinion, however, clashes with Lim’s.

“According to the Local Government Code, you can’t exempt telecommunications companies from real property taxes,” De la Cruz pointed out.

He said that Lim would ask Smart to continue paying taxes to the city government.

At the same time, De la Cruz criticized the city council for approving the ordinance while Lim was on vacation in the United States.

“They did not even give him the chance to approve or disapprove it,” he said.

Soon after the ordinance was approved, Globe Telecom applied for the same privilege and a draft ordinance to grant the telecommunications giant the same tax relief was also authored by Pangan.

De la Cruz added that Sun Cellular had filed a similar application.

“It’s ironic that just when the city government needs funds, they decide to grant tax exemptions. We don’t know the motive of the city council for doing this,” he said.

In his petition, Lim warned that the ordinance would deprive the city of revenues.

“It is reasonably foreseen that other businesses similarly situated as Smart would follow suit, further worsening the budget deficit the city is presently experiencing, if Ordinance No. 8229 would stand and be implemented,” he said.

He added that the ordinance was “unfair, partial and discriminatory.”

“Why should a tax exemption be granted to an entity that earns so much from its operations within the city? Why to that entity alone? Indeed, why even grant an exemption?” Lim observed.

He also said that Domagoso “committed grave abuse of discretion” when he signed the ordinance as acting mayor and enacted it on April 26.