NextGen Day

MANILA, Philippines — The Court of Tax Appeals (CTA) en banc dismissed a petition brought by the National Grid Corporation of the Philippines (NGCP) challenging the city treasurer of Tacloban City’s shortfall contractor’s tax assessment of PHP2.02 million for the year 2009.

Instead, in a March 3 decision, the CTA en banc upheld its 2019 decision and refused NGCP’s plea for review.

In 2009, Tacloban Municipal Treasurer Zosima A. Cordao demanded that NGCP pay PHP29.49 million under city ordinance 2007-10-67, which covered the years 2001 to 2009, for NGCP’s PHP1.565 billion transactions with the Leyte II Electric Cooperative Inc. (Leyeco II). The city treasurer’s assessment for the year 2009 was reduced to PHP2.02 in 2010.

In response to the LGU’s assessment claims, NGCP stated that under its legislative franchise, Republic Act No. 9511, the company is tax-exempt upon payment of a 3% franchise tax on all gross receipts from its operations. The statute also stated that the franchise tax would take the place of income tax, as well as any and all other taxes and charges.

The Tacloban City government, on the other hand, claims that NGCP’s tax exemption under its franchise does not cover the city government’s contractor’s tax, which is imposed as part of its local taxing power.

The CTA ruled against NGCP, saying the company had belatedly failed to substantiate its assertion that it had paid the 3% franchise fee, which served as an exemption from all other taxes.

“To benefit from the national and local tax exemption set forth (for NGCP) in R.A. 9511, proof of petitioner’s (NGCP) earlier payment of the 3% franchise tax based on gross receipts is required.” In contrast, failing to show much earlier payment of the required 3% franchise tax would result in the petitioner (NGCP) losing its national and local tax exemption, according to the tax court.

When NGCP produced a BIR certification dated Sept. 4, 2018 showing the BIR received PHP1.055 billion from NGCP, the CTA dismissed its belated claim that it had demonstrated it had paid its franchise taxes for 2009.

When the case was still with the Tacloban regional trial court, it claimed NGCP “may have received (the) BIR certification (before) and presented it as evidence in the proceedings.” “Neither the petitioner (NGCP) nor the respondent (NGCP) moved for a reopening of the case or a fresh trial to admit the stated certification once it was received.”

“Petitioner (NGCP) chose to belatedly enclose the BIR certification for the first time in its motion for reconsideration only after the judgment delivered by the (tax) court in division proven adverse to its case.” “As a result, the court may not review the document at this time,” the court stated.

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