ArchivesSeptember 2010Smart exempt from property tax: CA

Smart exempt from property tax: CA

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The Court of Appeals recently granted a petition by Smart Communications, Inc. to be exempt from payment of real property taxes for properties that are “directly and exclusively” used in its operations.{{more}}

In an Entry of Judgment dated Aug. 16, 2010 on the case of Smart versus the Central Board of Assessment Appeals, Local Board of Assessment Appeals of Surigao City, and City Assessor of Surigao City, the 22nd Division of the CA Cagayan de Oro City stated that Smart is “exempt from the payment of real property taxes to the City of Surigao for its properties which are actually, directly, and exclusively used in the operation of its franchise.”

The case was given a resolution on Nov. 26, 2008, and was declared final and executory on Dec. 22, 2008, after no petition was filed to the Supreme Court.

“The ruling clarifies that Smart is exempt from paying taxes on its machines and radios, equipment that are directly and exclusively used to operate cellular telecommunications services.

However, Smart will still be liable to pay tax on its other properties. Hopefully, this will be recognized by our local government unit partners, which we value. Providing nationwide cellular and broadband Internet services is part of nation building, and we are able to continue providing these with the LGUs’ support,” said Enrico Español, Smart’s chief legal counsel.

“The case is remanded to the CBAA for further proceedings pursuant to the ruling above and for determination of the nature of its real properties that are subject of the disputed assessment in this petition. The CBAA is also ordered to refund the amount of real property tax paid under protest by the petitioner in the event that if finds that the petitioner’s real properties are actually, directly and exclusively used in the operation of the petitioner’s franchise,” the CA ruling further stated.

Español said the ruling is based on Republic Act 7294, An act granting Smart a franchise “to establish, install, maintain, lease and operate integrated telecommunications/computer/electronic services, and stations throughout the Philippines for public domestic and international telecommunications, and for other purposes.”

Section 9 of RA 7294 states that “the grantee, its successors or assigns shall be liable to pay the same taxes on their real estate, buildings and personal property, exclusive of this franchise, as other persons or corporations which are now or hereafter may be required by law to pay.”

The 19th Division of the Cebu City Court of Appeals, in May 2008, likewise decided in favor of Smart, declaring it “exempt from the payment of real property taxes on its properties which are actually, directly and exclusively used in pursuit of its franchise.” The case was filed by Smart versus CBAA, Local Board of Assessment Appeals of San Carlos City, and City Assessor of San Carlos City.

However, Smart Communications has paid the City of Dumaguete over P200,000 for its taxes for the cell sites, towers and buildings.

Assistant City Treasurer Flor Pada said that other telecommunications companies are expected to pay their taxes soon. (PR)




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