The Court of Tax Appeals (CTA) has affirmed a Makati court’s decision turning down the local government’s assessment worth PHP65.73 million against holdings firm for alleged deficiency taxes and charges from 2011 to 2013.

In its 18-page decision written by Associate Justice Ma. Belen M. Ringpis-Liban dated February 10 and published online Thursday, the tax court’s Third Division denied for lack of merit the petition for review filed by the Makati City government against DMCI Holdings Inc. and affirmed the Sept. 5, 2019 decision of the Makati Regional Trial Court (RTC) Branch 146 on the case.

The CTA ruled that DMCI Holdings “cannot be considered as a bank or other financial institution” under the provision of the Revised Makati Revenue Code (RMRC) cited by the city in subjecting it to taxes.

DMCI Holdings declared its business was to hold shares of stock in its affiliates and subsidiaries primarily for the purpose of controlling the latter.

The city government had claimed that the firm, in its business permits and license, applied as a “holding company”, was classified as such and that as a holding company, it is subject to provision 3A.02(h) of the RMRC.

The city claimed that under the RMRC, a holding company need not be a service contractor nor an operator or owner of banks and other financial institutions to be subject to the tax under the said provision.

Ruling against the Makati City government, the tax court said the power of local government units (LGUs) arises from provisions of the Local Government Code which set limits on the taxing powers of LGUs.

Under the Local Government Code, a holding company “must fall under the purview of banks and financial institutions”.

“Otherwise, it is not taxable under the said provisions,” it added.

Associate Justices Erlinda P. Uy and Maria Rowena Modesto-San Pedro concurred in the decision. (PNA)