Tollways liable for local tax, court says

by Orland L. Mauricio

[ manilastandardtoday.com ] July 18, 2011

Toll plazas along the North Luzon Expressway from Balintawak to Sta. Ines (in Pampanga are considered branches or sales outlets of the Manila North Tollways Corporation and are therefore subject to payment of local business taxes and other fees under the National Building Code.

In a July 7, 2011-decision, Malolos City Judge Wilfredo T. Nieves of the Regional Trial Court – Branch 84, ruled that the tollways operator has no tax exemption privilege under its Supplemental Toll Operation Agreement with the government and ordered the company to pay taxes and other fees to the municipality of Guiguinto.

The STOA is a 1988-agreement executed by and between MNTC and the Phillippine National Construction Corp., whose legislative franchise to operate NLEX expired May 1, 2007. The agreement also included the Toll Regulatory Board, apparently to represent the government and the latter’s imprimatur to the contract.

The court ruling was a result of two civil complaints filed last February 2 and 9, 2009 by MNTC seeking to prevent Guiguinto from collecting permit fees under the National Building Code amounting to P2,283,474.20; unpaid mayor’s permit and other regulatory fees in the amount of P33,498.30 from January 2004 to January 2008; and business taxes and deficiencies for the year 2005 to 2007 in the amount of P67,443,765.93.

The tax assessments were contained in two notices sent by Guiguinto to MNTC on September 12 and October 14, 2008. In answer, MNTC wrote two protest letters contesting the assessments of back taxes but these were denied by Guiguinto which threatened to collect the unpaid taxes or close the MNTC offices in the town.

Guiguinto Mayor Isagani Pascual hailed the RTC ruling as a long, overdue verdict to assert the autonomy and right of municipalities hosting NLEX offices and toll gates to collect local business taxes and other fees under the Local Government Code.

Nieves dismissed MNTC’s claim that the NLEX service centers in Sta. Rita and Tabang, Guiguinto that sell transponders or Easy Tags, accept payments for loads, and cash payments from millions of motorists passing thru the two toll plazas and issue toll receipts are not “its branches or sales outlets conducting business within Guiguinto” but mere support facilities.

“MNTC wants the Court to believe that the big volume of its sales due to the millions of motorists passing thru its Sta. Rita and Tabang toll plaza are recorded only in its principal office in Caloocan City(Balintawak) where they are supposed to pay their business tax,” Nieves said.

The RTC ruling came on the heels of the reopening last July 11 of the third NLEX toll plaza in Barangay Tabe, also in Guiguinto. The Tabe Toll plaza had been closed for several years since Metro Pacific Tollways Corporation acquired the MNTC from the Lopez Group.

The court also declared that MNTC is not exempt from paying local business taxes by virtue of the STOA. “A cursory perusal of the STOA fails to show any provision exempting plaintiff from the payment of taxes, much less local business taxes. Neither was plaintiff able to present proof that it was granted the legislative grace of tax exemption.”

The Court decision also set aside the opinion offered by the Bureau of Local Government Finance, an office under the Department of Finance that oversees the fiscal and financial affairs of local government units.

“We are reviewing decision and there are ongoing discussions between Tollways Association of the Philippines, DOF, LGUs regarding proper allocation of local business tax,” said Marlene Ochoa, vice president for corporate communication of MNTC. MNTC has 15days from July 7 to contest the ruling.

Guiguinto legal counsel Edwin Cerezo said the Nieves ruling is a welcome development for other towns and cities along the north expressway route to assert their power to tax the NLEX toll plazas they are hosting.

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Tax bureau offers fresh amnesty

Friday, 10 September 2010 00:00 [ manilatimes.net ]

BY KATRINA MENNEN A. VALDEZ REPORTER

THE Aquino administration has offered to waive surcharges on deficiencies of erring taxpayers in a fresh amnesty aimed at plugging the government’s budget deficit this year. Bureau of Internal Revenue (BIR) Commissioner Kim Jacinto-Henares said the agency will waive the surcharges against erring individual and corporate taxpayers provided that they would settle on or before October 29.

“We are willing to forgo surcharges when these erring taxpayers would come forward and amend their respective income tax returns [ITR] until October 29,” Jacinto-Henares said.

Under the abatement program, those who would voluntarily surrender and pay their rightful taxes by providing their amended ITRs would no longer be slapped with surcharges, the BIR chief said.

“Without the abatement program, those who would come to us and finally pay the right taxes, which already became due and demandable are being charged with 25 percent surcharges, while those who are caught by the BIR would be slapped with 50 percent surcharges,” she said.

These surcharges are on top of the 20-percent legal interest that the BIR imposes, which will not be waived under the abatement program.

“But in order to avail of the abatement program these erring taxpayers shall pay in lump sum,” the BIR chief said.

Under the program, taxpayers may settle any delinquent account or assessment by paying an amount equal to 100 percent of the basic tax assessed.

The program includes one-time transactions such as estate tax, donor’s tax, capital gains tax, final withholding tax, expanded withholding tax and documentary stamp tax on the transfer, sale, exchange, or disposition of assets.

However, taxpayers may only avail of the program and avoid criminal prosecution if they have yet to receive a letter of authority from the BIR.

Otherwise, they will not be exempt from paying surcharges, penalties and other charges, not to mention facing a criminal case.

The letter of authority is an official document that empowers a revenue officer to examine and scrutinize a taxpayer’s book of accounts and other accounting records to determine the latter’s correct liabilities.

The issuance of a letter of authority to a taxpayer signals the start of the audit process.

Finance Secretary Cesar Purisima said they have yet to publish a notice on the abatement program.

“There are a lot of erring taxpayers who want to finally pay their respective amount of taxes but are hesitant because of the penalties being imposed by the government. Hence, this is one way of meeting them halfway,” he said.

The government, however, will not waive the legal interest since the erring taxpayers already enjoyed their earnings in the past.

The last time the government offered a similar abatement program was in September 2006.

During that period the government raised P3 billion.

“Of course, we would continually file tax evasion cases every week. The only difference is that these people should not wait until they are discovered by the BIR. Otherwise, they would have to bear the civil and criminal consequences,” Purisima said.

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