G.R. No.

162015
The City Government of Quezon City v. Bayan Telecommunications Inc.

Facts:
Bayan Telecommunications, Inc. is a legislative franchise holder under Republic Act (Rep. Act)
No. 3259 granting such a right to establish and operate radio stations for domestic
telecommunications, radiophone, broadcasting and telecasting.
An excerpt from the tax provision of the act states that:
SECTION 14. (a) The grantee shall be liable to pay the same taxes on its real estate, buildings
and personal property, exclusive of the franchise, as other persons or corporations are now or
hereafter may be required by law to pay....
This was repealed by the subsequent enactment of the Local Government Code, Republic Act
No. 7160, which was followed by local government of Quezon City, granting to the local
government units the power to levy taxes upon real estate properties within its territory, it also
withdrew all prior tax exemptions enjoyed and given as a privilege. Not long after, Bayantels
original franchise was amended by an act passed by Congress re-enacting the tax provisions on
the original franchise.
On the belief that they are exempted of such real estate tax liabilities, Bayantel wanted to
remove its properties from the list of taxable real estate properties, they did not pay such taxes
and was further or held as delinquent.
Issue:
Whether or not Bayantels real properties in Quezon City are, under its franchise, exempt from
real property tax.
Ruling:
The phrase exclusive of this franchise cannot be construed other than the act of distinguishing
the properties of the franchisee, be it real or personal, between those used directly and
exclusively for the operation of the franchise, and those that are not.
The power to levy taxes upon the properties of the franchisee vested to the LGUs was limited by
to the properties that were exclusively used in pursuit of the franchise; all real properties are
therefore taxable with the exception of those that fall into such category.
Bayantel is therefore not exempt from real property tax.