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Court rejects MVP plea, orders Smart to open books in P3.25B tax evasion case filed by Mayor Binay

Makati Mayor Abby Binay wants bilyonaryo Manny V. Pangilinan to pay
P3.25 billion in unpaid franchise taxes of Smart Communications Inc.

Makati Mayor Abby Binay wants bilyonaryo Manny V. Pangilinan to pay P3.25 billion in unpaid franchise taxes of Smart Communications Inc.

Binay recently scored a major victory after the Court of Tax Appeals (CTA) denied the petition of Smart assailing the June and August 2019 resolutions of presiding Judge Augusto Jose Y. Arreza (Branch 133 of the Regional Trial Court of Makati City) that compelled it to open its books to the city’s tax men, including all revenues generated nationwide.

In a 13-page decision, Associate Justice Jean Marie Bacorro-Villena wrote: “After careful review of the petition and arguments presented by both parties, this Court finds no grave abuse of discretion on the part of the public respondent and/or the RTC. The Court does not perceive any injury of such magnitude if the assailed resolutions are allowed to stand.”

The decision was concurred by Associate Justices Juanito C. Castaneda Jr. and Cielito Mindaro-Grulla.

PLDT-Smart’s legal team claimed this was “improper” and tantamount to giving Makati a second audit (in relation to its franchise tax payments for the years 2012 to 2015).

PLDT-Smart also challenged the need to provide Makati with data on its nationwide revenues, revenues from other localities, and for the taxable periods of 2012 and 2013 that were outside Makati City’s territorial jurisdiction.

But Makati countered that Smart itself moved that its tax assessment should be based on its nationwide revenues. Makati said Smart did not give a breakdown of its gross sales and receipts of its branches and it noted that documents were not confidential in nature.

The CTA disagreed with Smart: “The grant of the motion for production of documents will not expose petitioner to a re-auditing (by respondent Makati City).”

“The relevancy found by the lower court to warrant the production of the subject documents are only for the purposes of discovery. The actual relevancy of a piece of evidence or its relevancy for the purpose of admissibility is, however, a wholly different matter.” “Relevancy of the latter kind can only be determined after the court has been given an opportunity to appreciate the evidence presented before it. At this juncture, it is impossible either for this Court or the lower court to determine the materiality of the subject documents prior to their production,” it added.

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