SEMIRARA Mining and Power Corp. (Semirara) has won in its legal battle with the local government of Calaca in Batangas over a tax dispute.
This came after the Second Division of the Court of Tax Appeals (CTA) nullified and set aside the Notice of Assessment issued by the Municipal Treasurer of the Municipality of Calaca, Batangas to Semirara for “lack of legal and factual bases.”
At the same time, CAT reversed the ruling of the Makati City Regional Trial Court (RTC) Branch 137 favoring the Municipality of Calaca in its tax claim amounting to P66.6 million.
“Accordingly, the assailed decision of the Regional Trial Court of Makati City, Branch 148 in Civil Case 07-180 is hereby reversed and set aside,” the CAT said in its decision.
Semirara filed a complaint before the Makati RTC on February 26, 2007, appealing the tax assessment of the Municipality of Calaca for alleged deficiency in business tax amounting to P66.6 million covering the calendar years 2003, 2004 and 2005.
The Municipality of Calaca maintained that Semirara is liable for said business taxes due to its coal sales to the National Power Corp. (NPC) and is doing business as shown by the existence of an office, adding that the situs (the place to which, for purposes of legal jurisdiction or taxation, a property belongs) of taxation is in Calaca, Batangas.
But Semirara said there was no legal basis for the assessment since there is no situs of taxation in the Municipality of Calaca in accordance with the Local Government Code.
Semirara pointed out that since it does not maintain any branch or sales office in Calaca, it is not subject to business tax.
In a decision rendered by the Makati RTC on May 28, 2014, it denied the instant appeal of Semirara, making it liable for business tax for the portion of its coal sales consummated at Calaca, Batangas.
The local court, however, directed the Municipality of Calaca to make a re-assessment to conform with the proper sales allocation in accordance with Article 243 (b) of the Implementing Rules and Regulations (IRR) of the Local Government Code.
The court also said that the local government’s assessment should only be based on the portion of the coal sales which were consummated in Calaca, Batangas.
In turn, Semirara filed a Motion for Reconsideration with the trial court and eventually a Petition for Review with the Court of Tax Appeals.
On Thursday, Semirara said it received a copy of the CTA decision dated November 24, 2015.
The CTA, in its decision, said coal sales were consummated at Semirara pier in Caluya, Antique and that it has no branch office in Calaca, Bantangas.
This only shows that the situs of taxation for the sale of coal by Semirara to NPC is in Caluya, Antique, and not in Calaca, Batangas.