SC upholds SLTC refund entitlement

The Supreme Court recently ruled that the South Luzon Tollway Corporation — now known as SMC SLEX Inc. — will be refunded more than P20.5 million in cash from the city government of Makati for the erroneously collected business tax in 2011.

In a resolution issued by the SC’s third division and made public last 16 January affirmed the decision issued by the Court of Tax Appeals en banc, full court, on 11 March 2020 as it also dismissed the petition filed by the Makati City government and its treasurer.

The SC also ruled that the claim for refund made by the SLTC was seasonably filed within the two-year mandated period.

“The non-presentation of the BOI Certificate of Registration at the time of payment of the local business tax was not fatal to respondent’s (SLTC) case. It does not constitute a waiver to recover the tax erroneously collected and paid,” said the SC.

On the cash payment of the refund sought by the SLTC, the SC cited the Revised Makati Revenue Code which provides that any recovery of erroneously or illegally collected tax can be done through refund or credit.

“As correctly pointed out by the CTA En Banc, the use of the disjunctive ‘or’ expresses an alternative or choice; it signifies dissociation and independence of one thing from other things enumerated,” it said. “That said, respondent is entitled to be refunded of the P20,585,603.19 it paid to petitioners (Makati City), in cash, contrary to petitioners’ asseveration that respondent may only avail of a tax credit.”

“Indeed, the taxpayer expects fair dealing from the Government, and the latter has the duty to refund without any unreasonable delay what it has erroneously collected,” it added.

To recall, South Luzon Tollway Corporation used to hold office in Makati City until 2011 when it transferred its offices to Calamba City in Laguna.
The SLTC on 3 August 2011, applied for a certificate of business retirement with Makati City. The firm was assessed more than P20.5 million in local business tax from 1 January to 30 September 2011 and the tax was paid by the firm on 31 January 2012.

On 13 December 2013, the SLTC asked the Makati City government to refund the P20.5 million taxes it paid as it pointed out that it was a registered as a pioneer enterprise with the Board of Investments on 3 March 2010 and was therefore exempt from paying said tax for six years, or from 3 March 2010 to 3 March 2016. It submitted its BOI Certificate of Registration.

When the Makati City government did not reply to the request, the SLTC filed a petition with the Calamba City regional trial court on 3 February 2014 with pleas to declare it exempt from local business tax and for refund of the amount it paid for the 2011 taxes.

The RTC on 6 January 2017, ruled in favor of SLTC as it confirmed the latter’s tax-exempt status and ordered the refund of the taxes paid.
When Makati City’s motion for reconsideration was denied by the RTC, the local government elevated the case to the CTA which, on 9 May 2018, through its first division affirmed the trial court’s ruling except on the payment of attorney’s fees of P10,000.

CTA’s first division said that the Makati City government erroneously collected the amount and that the payment made by the SLTC should be refunded in cash.

The appeal of Makati before the CTA’s en banc was denied and also junked the local government’s claim that if the taxes were found to be erroneously or illegally collected, SLTC could only be granted tax credits. It elevated the case to the SC.


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