CTA upholds ruling on scrutiny of Smart documents in tax case

THE Court of Tax Appeals (CTA) affirmed its decision allowing the Makati City government to inspect Smart Communication, Inc.’s documents over its alleged P3.25-billion tax deficiencies from 2012 to 2015.

In a 16-page decision on Aug. 15 and made public on Aug. 17, the CTA full court denied Smart’s petition due to lack of merit as it ruled a Makati Regional Trial Court (RTC) did not abuse its discretion in allowing the inspection of the company’s documents.

“In fine, no grave abuse of discretion was committed by Makati Regional Trial Court in granting the motion for production or inspection of documents,” according to the ruling penned by CTA Associate Justice Marian Ivy F. Reyes-Fajardo.

The tax court cited the Local Government Code, which provides that a “court of competent jurisdiction” may require a taxpayer to produce documents necessary for the issues of a disputed assessment.

“Rightly so, the issuance of the resolution granting the production or inspection of documents is well within the power and jurisdiction of RTC-Makati when all the requisites for filing said the motion was satisfied by respondent (Smart),” said the court.

In a separate dissenting opinion, Associate Justice Roman G. del Rosario argued that the Makati RTC abused its discretion in allowing Makati City to inspect Smart’s documents.

“To reiterate, in the proceedings before the RTC, the only evidence that the parties are allowed to present are those which will establish the existence or non-existence of the requisites that justify the action of respondent Makati City in issuing a presumptive assessment,” said Mr. Del Rosario.

He noted that the city treasurer of Makati issued a presumptive assessment of Smart’s alleged deficiency in local franchise taxes for 2012 to 2015.

The documents sought did not pertain to the validity of the treasurer’s assessment, but were only related to the gross receipts of the company during the said period, Mr. Del Rosario added.

Smart earlier asked for a temporary restraining order in its petition to the CTA but was denied due to lack of merit.

The telecommunications company, in its appeal, challenged the “relevancy” of producing documents, particularly the nationwide revenues and from other localities, adding the information was outside Makati City’s jurisdiction.

Makati City claimed the trial court did not commit an error as the documents sought are not confidential in nature.

“Courts, as arbiters and guardians of truth and justice, must not countenance any technical ploy to the detriment of an expeditious settlement of the case or to a fair, full and complete determination on its merits,” the CTA noted. — John Victor D. Ordoñez