By Gabriela Baron
The Makati City Government on Monday, Feb. 27, issued a closure against Smart Communications Inc., citing failure to secure a business permit in 2019.
According to the local government, 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.
“When businesses in Makati choose to operate without a valid business permit, they are essentially operating outside the law,” Makati City Administrator Claro Certeza said.
“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 added.
In an order of desistance/closure dated Feb. 23, the City said Smart’s headquarters, located along Ayala Ave. in Brgy. San Lorenzo, violated Section 4A.01 of the Revised Makati Revenue Code or City Ordinance No. 2004-A-025.
“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 Communications Inc. owed the city government over P3.2 billion in franchise tax over the four-year period.
Certeza said the city government requested Smart to submit a breakdown of revenues and business taxes paid in all branches nationwide, but the telecommunications giant refused to present the documents.
In 2018, Smart filed a petition for review before the Makati Regional Trial Court Branch 133 to seek the nullification of the Office of City Treasurer’s Notice of Assessment, which states that the telecommunications giant did not pay the franchise tax.
During the trial, the City Government of Makati filed a motion for production and inspection of documents, which the court granted.
However, on May 31, 2019, Smart filed a comment/opposition against Makati’s motion and challenged the court’s decision before the Court of Tax Appeals (CTA).
In 2022, CTA denied Smart’s petition and affirmed the decision of the Makati RTC Branch 155.
Smart argued that the city 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 the necessary taxes.
The CTA, however, said Makati has the authority to investigate Smart’s entire operations under the Local Government Code. Smart has yet to elevate the case to the Supreme Court.
Makati Mayor Abby Binay reminded all businesses in Makati to comply with the laws and obtain the necessary permits before operating in the city.
“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,” said Mayor Abby.
In 2022, the city’s Business Permits and Licensing Office shut down 191 business establishments due to lack of business permits.
