Bureau of Local Government Finance Opinion

August 18, 2015 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Mr. Pyung Jong Yu Regional Managing Director and General Manager HANJIN HEAVY INDUSTRIES & CONSTRUCTION CO., LTD 12th Floor, 1128 University Parkway North Bonifacio, Global City Taguig, Metro Manila Sir : This refers to your letter dated June 16, 2015 requesting opinion on the authority of Taguig City to impose business tax on Hanjin Heavy Industries & Construction Co., Inc. and EEI Corporation (Hanjin-EEI) Joint Venture. CAIHTE It is represented that Hanjin-EEI Joint Venture was formed for the purpose of undertaking the construction of Manila International Container Terminal Berth 6 Project. Before the start of the construction, the Joint Venture had its liaison office located in Taguig City for purposes of bidding. When the project was awarded to the Joint Venture, its operation was conducted in Manila where the project is located. The principal place of business of Hanjin has been in Taguig since 2011 and EEI in Quezon City. In 2014, the project was already completed and the Joint Venture was applying for retirement of business from Taguig and Manila. However, the City Treasurer's Office of Taguig wrote a letter to the Joint Venture dated June 2, 2015, forwarding a copy of the Notice of Assessment dated May 15, 2015, demanding payment of Php11,258,109.56 representing business tax deficiency for the years 2008-2014. In connection with your request, this Bureau referred your letter to the City Treasurer of Taguig under a 1st Indorsement dated June 26, 2015 requesting his continent and/or appropriate action on the matter. The City of Taguig under its letter dated August 7, 2015, copy enclosed, thru the OIC-City Legal Officer Atty. GRACE U. FONACIER informed this Bureau that " . . . the legal remedy of a taxpayer who intends to challenge the assessment on the retirement of its business permit in the City of Taguig is to pay the whole amount indicated in the assessment with an annotation in the receipt 'Payment under Protest' and to formalize and file the written protest within sixty (60) days from receipt of assessment. If the decision on the protest is not favourable to the taxpayer, the taxpayer could raise the issue before the courts. . . . " In view thereof, Hanjin-EEI Joint Venture may confer with concerned officials of Taguig City or file a written protest contesting the assessment pursuant to Section 195 of the Local Government Code (LGC) of 1991, which provide: "Section 195. Protest on Assessment . When the local treasurer or his duly authorized representative finds that correct taxes, fees, or charges have not been paid, he shall issue a notice of assessment stating the nature of the tax, fee or charge, the amount of deficiency, the surcharges, interest and penalties. Within sixty (60) days from the receipt of the notice of assessment, the taxpayer may file a written protest with the local treasurer contesting the assessment; otherwise, the assessment shall become final and executory. The local treasurer shall decide the protest within sixty (60) days from the time of its filing. If the local treasurer finds the protest to be wholly or partly meritorious, he shall issue a notice canceling wholly or partially the assessment. However, if the local treasurer finds the assessment to be wholly or partly correct, he shall deny the protest wholly or partly with a notice to the taxpayer. The taxpayer shall have thirty (30) days from the receipt of the denial of the period or from the lapse of the sixty-day period prescribed herein within which to appeal with a court of competent jurisdiction otherwise the assessment becomes conclusive and unappealable." EcTCAD We hope this will help clarify matters. Very truly yours, (SGD.) SALVADOR M. DEL CASTILLO OIC-Executive Director