Manila: The city government of Makati, Manila’s financial district, padlocked Smart Communications Inc.'s headquarters on Monday (February 27, 2023) over a claimed 3.2 billion pesos ($57.84 million) in unpaid taxes — and four years of operating without a valid business authorisation issued by the city government.

Smart also refused to disclose the needed breakdown of revenues and company taxes paid in all of its branches nationally, according to the Makati City government.

Smart Communications, one of the Philippines’ largest phone operators, is a mobile phone pioneer in the Asian country.

It operates as a wireless communications, mobile commerce, and satellite communication services.

Smart is a wholly-owned wireless communications and digital services subsidiary of PLDT, Inc., the Philippines' largest telecommunications operator.

Review sought

The carrier filed a review petition with the Makati Regional Trial Court (RTC) in 2018, seeking to discard the Office of City Treasurer's “Notice of Assessment”, which claimed that the company owed the city government billions of pesos in franchise tax.

In general, a franchise tax is a kind of tax imposed on businesses or corporations chartered within a jurisdiction.

The relevant authority charges this tax for the right of the business or corporation to exist as a legal entity and to do business within a particular jurisdiction.

Smart argued that Makati has no jurisdiction to audit the company’s financial statements and operations in other branches nationwide.

On February 23, 2023, Smart issued a statement: “Smart has filed the appropriate cases to resolve outstanding legal issues; these cases remain pending. Our legal and tax teams continue to be in touch with the Makati LGU (local government unit) on the matters at hand. We assure the public that our services remain available and accessible to our subscribers.”