Globe gives "final" P7M to Cebu City

CEBU, Philippines - Globe Telecom turned over to Cebu City Hall yesterday the amount of P7 million representing their final contribution to the city as agreed in a memorandum of agreement (MOA) signed in 2009.

In the MOA which expires this year, Globe agreed to pay the City P7 million per year as full payment of any real property and franchise taxes assessed by the City Government.

Globe Telecom started paying the P7 million in 2009.

They also paid P21 million upon signing the MOA on the same year. The initial P21 million represents the Globe’s payment in full of the real property and franchise tax assessed by the city government for the year 2006, 2007 and 2008.

In total, Globe Telecom has paid the city P42 million since 2006 as contribution or incentive to their host community but not necessarily admitting that the company is taxable.

“Globe believes and takes the position that it is exempt or not liable for the payment of local real property and franchise taxes, because of the provisions of its congressional franchise expressly exempting it from said taxes,” the MOA reads.

By claiming its exemption from paying taxes, Globe cited Department of Finance-Bureau of Local Government Finance Resolution dated February 24, 1998, the Department of Justice Opinion-Letter No. 24 addressed to the Department of the Interior Local Government dated May 18, 2007 and the DOJ Opinion-Letter No. 65 addressed to the Secretary of Finance date September 18, 2008.

The City Government, however, also stands by its position that Globe Telecom which operates in Cebu City is liable for payment of franchise and real property taxes as provided in Section 34 and Section 106 of the Cebu City Omnibus Tax Code.

“To avoid litigation and improve business relations, the parties, each without necessarily admitting the other’s position, have agreed to enter into this agreement by way of settling amicably their differences.

City Administrator Jose Marie Poblete said that since the MOA expires this year, another agreement is expected to be entered into before the year ends. — (FREEMAN)