Bureau of Local Government Finance Opinion

March 5, 1998 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Ms. E. Clara Marie T. Beltran Bengson Narciso Cudala Pecson Bengson & Jimenez SOL Bldg., 112 Amorsolo St. Legaspi Village 1229 Makati City M a d a m : This refers to your letter dated October 29, 1997 in behalf of your client, the Manila Representative Office of Chiyoda Fire and Marine Insurance Co. Ltd. (Chiyoda for brevity) requesting this Bureau to direct the ICO-City Treasurer of Makati to refund the excess payments of local taxes made by said company. Representations are made that Chiyoda was granted by the Securities and Exchange Commission and by the Insurance Commission an authority to operate a Representative Office in the Philippines on July 31, 1991 and April 5, 1991, respectively, and was extended until April 3, 1998. Chiyoda, in applying for a Mayor's permit, was assessed by the ICO-City Treasurer of Makati for years 1991 to 1997 under Section 4.A.01(o) of Makati Municipal Ordinance No. 92-072. Said assessment was protested with the contention that the basis should be Section 4.A01(bb) thereof and that for the years 1991 and 1992, the right to assess has already prescribed. The assessment of community tax for 1992 was also protested by said company. Accordingly, Chiyoda paid under protest Seventy Nine Thousand Eight Hundred Nineteen and Fifty Centavos (P79,819.50) under Official Receipt No. 6621181 dated July 21, 1997. In a letter dated October 8, 1997, the ICO-City Treasurer of Makati gave due course to the protest and granted the refund of excess payment in the form of tax credit. However, Chiyoda claimed that the amount is substantial for purposes of exhausting the credit of the company, thus, it would take approximately more than ten (10) years to expend the same. Hence, Chiyoda finds that a tax refund would be more appropriate under the circumstances. In this connection, please be informed that as a rule, refunds of excess amounts of taxes paid to a local government are made in the form of tax credits. It is only in cases where the taxpayer concerned does not have any tax delinquencies nor will no longer have any future tax obligations that cash refunds may be allowed. Accordingly, in order to resolve the issue here involved, it is suggested that either the case be discussed directly with the ICO-City Treasurer of Makati, or that this Bureau be provided with the financial data or statement that will support your claim that it will take a period of ten years for the company to exhaust the tax credits granted by the city. cCSDTI Very truly yours, (SGD.) LORINDA M. CARLOS Executive Director