DAVAO CITY—The city government has closed one of the biggest car distributors in Davao because of unsettled business tax liabilities.
Kar Asia Inc., the distributor of Mitsubishi vehicles here, has pending tax obligations with the city from 2011 to 2013, Assistant City Administrator Lawyer Tristan Dwight Domingo said.
Domingo did not disclose Kar Asia’s total pending obligation for the three-year period.
He said that in those years, the local government and the management of Kar Asia had different computations of the firm’s tax payments, with the car distributor contesting the city’s reckoning.
“Initially they tried to contest, they tried to refuse to pay these tax obligations to the city,” he said. “According to them, the amount we have required them to pay is not the actual amount, so they are contesting it.”
Domingo said the city already informed Kar Asia that based on the city’s revenue code, they should be paying under protest, but have refused to do so.
Under the revenue code, if the company pays under protest, they should pay the amount the city requires them to pay. However, the city cannot touch the funds until the issue is settled.
“Unfortunately, they did not want to go into the process, so we were forced to close their establishment,” Domingo said.
He said Kar Asia has reached out to the city to convince them their computation is right based on their records. Domingo, however, clarified the city has not seen the documents the firm needs to present to prove their claim.
For the years 2014 to 2016, Kar Asia claimed “they are consigning (their taxes) to the court.”
“One remedy under the Civil Code of the Philippines is that a debtor can pay in the court if the creditor refuses to receive their payment, that is their remedy,” Domingo said.
The city has refused to receive the firm’s payment because it does not include the penalties and surcharges, he added. Under the law, if a debtor pays his debt, penalties and surcharges would be subtracted first from the amount paid.
Domingo said the city is willing to sit down with Kar Asia to settle the discrepancies of their tax obligation, but clarified the city “will not compromise on their actual bill.”