The local government of Makati City has lifted the closure order against carrier PLDT’s mobile telecommunications arm Smart Communications Inc. after the two parties entered into a compromise deal.
PLDT in a disclosure to the Philippine Stock Exchange said the Makati City government issued an order dated March 2 lifting the February 27 closure order against Smart, GMA News reported.
On Monday, the Makati City LGU shut down Smart’s headquarters in Barangay San Lorenzo on Ayala Avenue for allegedly violating Section 4A.01 of the Revised Makati Revenue Code or City Ordinance No. 2004-A-025 as it failed to settle its P3.2-billion franchise tax deficiency from January 2012 to December 2015 and for reportedly operating without a business permit since 2019.
On March 1, Smart said it has already submitted the documents requested by the Makati City government, the GMA News report said.
Earlier, Makati City ordered the closure of Smart headquarters for operating without a business permit since 2019.
The city government issued the closure order on Feb. 23 against the headquarters, located at 6799 Ayala Avenue in Barangay San Lorenzo, Makati City.
“You are hereby commanded to cease and desist from further operating your business establishment until such time compliance with the said ordinance is made,” stated the order.
The company said its legal and tax teams are in talks with the Makati City local government over the alleged P3.2 billion tax deficiencies and for operating without a business permit since 2019.
“Smart remains committed to complying with Makati City’s local tax ordinances, and with applicable national laws, in respect of local taxation,” the company said.
“Smart has filed the appropriate cases to resolve outstanding legal issues; these cases remain pending,” it added.
The company also assured the public that its services will remain available and accessible to its subscribers.
The local government said Smart “failed to settle or obtain any relief from the courts over its franchise tax deficiency worth over P3.2
billion covering the period January 2012 to December 2015.”
In 2016, the Office of the City Treasurer (OCT) launched an examination of the company’s tax payments and documents.
Makati City Administrator Claro Certeza said the city asked the company to submit a breakdown of paid revenues and business taxes for all of its branches nationwide but it refused to present documents.
Smart Communications filed a petition for review at the Makati Regional Trial Court (RTC) Branch 133 in 2019 seeking to nullify the OCT’s notice of assessment.
The RTC granted the Makati government’s motion for the production and inspection of Smart’s documents.
On May 31, 2019, Smart Communications opposed the city government’s motion and challenged the RTC’s decision before the Court of Tax Appeals (CTA).
However, the CTA denied the company’s petition and affirmed the RTC’s approval of the Makati government’s motion in 2022.
The telecommunications company said that the Makati City government has “no jurisdiction to audit the company’s financial statements and operations in other branches nationwide.
It insisted that the company has “submitted all records related to its operations within the city and paid the necessary taxes.”
The CTA affirmed the local government’s authority to investigate the company’s operations under the Local Government Code.
“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,” Certeza said in a press statement.