‘Dirty Harry’ dashes hopes of Philippine telecom firms for tax breaks in Manila

MANILA, Philippines – Not so fast!

Manila Mayor Alfredo Lim recently threw a monkey wrench at a proposal to grant local tax breaks to Philippine telecommunication companies tax breaks in his city.

Lim, also dubbed in the local media as ‘Dirty Harry’ due to his two-fisted, no-nonsense style of governance, filed a petition seeking to overturn a recent ordinance granting local tax exemptions to Smart Communications Inc.

As a result, Manila’s executive and legislative branches are now at loggerheads over the proposal which seeks to grant tax breaks to all telecommunications companies.

Acting as Lim’s counsel, city legal officer Renato de la Cruz filed the declaratory relief petition with the Manila Regional Trial Courts late Wednesday afternoon, citing the city council and vice mayor Francisco “Isko Moreno” Domagoso as respondents.

The petition asks the courts to declare the recently passed ordinance as “illegal and unconstitutional,” De la Cruz explained in an interview.

In April, the city council, with the approval of presiding officer and then acting mayor Domagoso, had passed an ordinance exempting Smart from paying real property tax on machinery as well as the local franchise tax.

The author of the ordinance, Councilor Maria Sheilah Lacuna-Pangan said in a previous interview that they were granting the telecom firm’s requests for tax breaks based on its legislative franchise, which exempted it from local taxes, and based on the fact that the company has been investing in many socio-economic projects to the city.

But Lim disagrees. “According to the Local Government Code, you can’t exempt telecommunications companies from real property taxes,” De la Cruz pointed out. He added that previous Supreme Court decisions did not affirm local tax exemptions for legislative franchises.

De la Cruz added that Lim disapproved of and would disregard the ordinance and continue to ask Smart to pay the local taxes.

He further criticized the city council for passing the ordinance too fast, while Lim was vacationing in the United States. “They did not even give him the chance to approve or disapprove it,” De la Cruz said.

Soon after Smart’s tax relief was granted, Globe Telecommunications applied for the same privilege, and a draft ordinance to grant the telecommunications giant the same tax relief has been filed with the city council.

Globe also cited its legislative franchise in seeking the exemption, and has offered to pay P2 million a year to Manila in lieu of the local taxes.

De la Cruz revealed that Sun Cellular has also sought for the same tax break.

“It’s ironic that just when the city government needs funds, they decide to grant tax exemptions. We don’t know the motive of the city council for doing this,” De la Cruz said.

Sheriff is back in town: Manila Mayor Alfredo Lim tells local telecommunications firms to pay up, or get out