THE city government of Makati yesterday padlocked the headquarters of PLDT’s wireless unit Smart Communications Inc. for operating without a business permit since 2019 and for failing to settle P3.2 billion in taxes.
Smart, in a statement, said it “remains committed to complying with Makati City’s local tax ordinances, and with applicable national laws, in respect of local taxation.”
“Smart has filed the appropriate cases to resolve outstanding legal issues; these cases remain pending. Our legal and tax teams continue to be in touch with the Makati LGU on the matters at hand,” it also said.
It assured its over 70 million mobile subscribers that its services will remain available and accessible.
Makati said Smart failed to settle or obtain any relief from the courts over its P3.2-billion franchise tax deficiency from January 2012 to December 2015.
“When businesses in Makati choose to operate without a valid business permit, they are essentially operating outside the law. This is unacceptable, and I want to make it clear that we will not tolerate this kind of behavior, whether you are a big or small company,” Makati City Administrator Claro Certeza said after the closure order dated February 23 was posted at the main entrance door of Smart’s headquarters at No. 6799 Ayala Avenue in Barangay San Lorenzo.
“You are hereby commanded to cease and desist from further operating your business establishment until such time compliance with the said ordinance is made,” the order read.
The case stemmed from an examination launched by the Office of the City Treasurer in 2016, which concluded that Smart owed the city government over P3.2 billion in franchise tax over the four-year period.
Certeza said the city had requested Smart to submit a breakdown of revenues and business taxes paid in all branches nationwide, but the company declined their request and refused to present documents.
In 2018, he said, Smart lodged a petition for review before Branch 133 of the Makati City Regional Trial Court seeking the nullification of the city treasurer’s notice of assessment of its franchise tax liability.
During trial, the court granted the city government’s request for Smart to produce and allow the inspection of the documents but Smart in May 2019 challenged Makati’s motion and the court’s decision before the Court of Tax Appeals (CTA).
Last year, the CTA junked Smart’s petition and upheld the RTC ruling as the tax court said the city government has the authority to investigate Smart’s entire operations under the Local Government Code.
The telecommunications giant, which has yet to elevate the case to the Supreme Court, argued that the city government has no jurisdiction to audit the company’s financial statements and operations in other branches nationwide, adding that it had submitted all records related to its operations within the city and paid taxes.
Makati Mayor Abigail Binay, in a statement, said while the city government will continue to uphold the highest quality and safety standards for businesses operating in the city, businesses should also comply with the laws and obtain permits before operating.
“I am committed to making sure all businesses are operating legally. It is important for businesses to know that we take these matters seriously and will take action when necessary,” Binay said.
Last year, the city’s Business Permits and Licensing Office shut down 191 business establishments due to lack of business permits. — With Myla Iglesias
