Quezon City Govt vs BayanTel Corp franchise, Rep. Act No. 7633.
To petitioners, however, the
language of Section 11 of Rep. Act No. 7633 is neither clear FACTS nor unequivocal. The elaborate and extensive discussion Respondent Bayan Telecommunications, Inc. devoted by the trial court on the meaning and import of said (Bayantel) is a legislative franchise holder under Republic Act phrase, they add, suggests as much. It is petitioners thesis (R.A.) No. 3259 (1961) to establish and operate radio that Bayantel was in no time given any express exemption stations for domestic telecommunications, radiophone, from the payment of real property tax under its amendatory broadcasting and telecasting. Section 14 (a) of R.A. No. franchise. 3259 states: “The grantee shall be liable to pay the same taxes on its real estate, buildings and personal property, There seems to be no issue as to Bayantels exclusive of the franchise, xxx”. exemption from real estate taxes by virtue of the term exclusive of the franchise qualifying the phrase same taxes In 1992, R.A. No. 7160, otherwise known as the on its real estate, buildings and personal property, found in “Local Government Code of 1991” (LGC) took effect. Section 14, supra, of its franchise, Rep. Act No. 3259, as Section 232 of the Code grants local government units within originally granted. the Metro Manila Area the power to levy tax on real properties. Barely few months after the LGC took effect, The legislative intent expressed in the phrase Congress enacted R.A. No. 7633, amending Bayantel’s exclusive of this franchise cannot be construed other than original franchise. The Section 11 of the amendatory distinguishing between two (2) sets of properties, be they contained the following tax provision: “The grantee, its real or personal, owned by the franchisee, namely, successors or assigns shall be liable to pay the same taxes (a) those actually, directly and exclusively used on their real estate, buildings and personal in its radio or telecommunications business, and property, exclusive of this franchise, xxx“. In 1993, the (b) those properties which are not so used. government of Quezon City enacted an ordinance otherwise known as the Quezon City Revenue Code withdrawing tax It is worthy to note that the properties subject of exemption privileges. the present controversy are only those which are admittedly falling under the first category. On January 7, 1999, Bayantel wrote the office of the City Assessor seeking the exclusion of its real properties but To the mind of the Court, Section 14 of Rep. Act the request having been denied, Bayantel interposed an No. 3259 effectively works to grant or delegate to local appeal with the Local Board of Assessment Appeals (LBAA). governments of Congress inherent power to tax the And, evidently on its firm belief of its exempt status, franchisees properties belonging to the second group of Bayantel did not pay the real property taxes assessed against properties indicated above, that is, all properties which, it by the Quezon City government. exclusive of this franchise, are not actually and directly used in the pursuit of its franchise. On account thereof, the Quezon City Treasurer sent out notices of delinquency for the total amount of As may be recalled, the taxing power of local P43,878,208.18, followed by the issuance of several warrants governments under both the 1935 and the 1973 of levy against Bayantels properties preparatory to their sale Constitutions solely depended upon an enabling law. at a public auction set on July 30, 2002. Absent such enabling law, local government units were without authority to impose and collect taxes on real Threatened with the imminent loss of its properties within their respective territorial jurisdictions. properties, Bayantel immediately withdrew its appeal with the LBAA and instead filed with the RTC of Quezon City a While Section 14 of Rep. Act No. 3259 may be petition for prohibition with an urgent application for a validly viewed as an implied delegation of power to tax, the temporary restraining order (TRO) and/or writ of preliminary delegation under that provision, as couched, is limited to injunction, thereat docketed as Civil Case No. Q-02-47292, impositions over properties of the franchisee which are not which was raffled to Branch 227 of the court. actually, directly and exclusively used in the pursuit of its franchise. Necessarily, other properties of Bayantel directly used in the pursuit of its business are beyond the pale of the ISSUE delegated taxing power of local governments. In a very real Whether or not Bayantels real properties in Quezon City are, sense, therefore, real properties of Bayantel, save those under its franchise, exempt from real property tax. exclusive of its franchise, are subject to realty taxes. Ultimately, therefore, the inevitable result was that all RULING realties which are actually, directly and exclusively used in the operation of its franchise are exempted from The lower court resolved the issue in the any property tax. affirmative, basically owing to the phrase exclusive of this franchise found in Section 11 of Bayantels amended Bayantels franchise being national in character, the exemption thus granted under Section 14 of Rep. Act No. longer dwells on whether Congress has the power to exempt 3259 applies to all its real or personal properties found Bayantels properties from realty taxes by its enactment of anywhere within the Philippine archipelago. Rep. Act No. 7633 which amended Bayantels original franchise. The more decisive question turns on Section 14 of Rep. Act No. 3259 which was whether Congress actually did exempt Bayantels deemed impliedly repealed by Section 234 of the LGC was properties at all by virtue of Section 11 of Rep. Act expressly revived under Section 14 of Rep. Act No. 7633. In No. 7633. concrete terms, the realty tax exemption heretofore enjoyed by Bayantel under its original franchise, but subsequently Admittedly, Rep. Act No. 7633 was enacted withdrawn by force of Section 234 of the LGC, has been subsequent to the LGC. Perfectly aware that the LGC has restored by Section 14 of Rep. Act No. 7633. already withdrawn Bayantels former exemption from realty taxes, Congress opted to pass Rep. Act No. 7633 using, The Court has taken stock of the fact that by under Section 11 thereof, exactly the same defining phrase virtue of Section 5, Article X of the 1987 Constitution,local exclusive of this franchise which was the basis for governments are empowered to levy taxes. And pursuant to Bayantels exemption from realty taxes prior to the LGC. this constitutional empowerment, juxtaposed with Section 232 of the LGC, the Quezon City government enacted in In plain language, Section 11 of Rep. Act No. 1993 its local Revenue Code, imposing real property tax on 7633 states that the grantee, its successors or assigns shall all real properties found within its territorial jurisdiction. And be liable to pay the same taxes on their real estate, buildings as earlier stated, the City’s Revenue Code, just like the LGC, and personal property, exclusive of this franchise, as other expressly withdrew, under Section 230 thereof, supra, all tax persons or corporations are now or hereafter may be exemption privileges in general. required by law to pay. The Court views this subsequent piece of legislation as an express and real intention on The Quezon City Revenue Code which imposed the part of Congress to once again remove from the real estate taxes on all real properties within the citys LGCs delegated taxing power, all of the franchisees territory and removed exemptions theretofore previously (Bayantels) properties that are actually, directly and granted to, or presently enjoyed by all persons, whether exclusively used in the pursuit of its franchise. natural or juridical ., there can really be no dispute that the power of the Quezon City Government to tax is limited by Section 232 of the LGC which expressly provides that a province or city or municipality within the Metropolitan Manila Area may levy an annual ad valorem tax on real property such as land, building, machinery, and other improvement not hereinafter specifically exempted. Under this law, the Legislature highlighted its power to thereafter exempt certain realties from the taxing power of local government units. An interpretation denying Congress such power to exempt would reduce the phrase not hereinafter specifically exempted as a pure jargon, without meaning whatsoever. Needless to state, such absurd situation is unacceptable.
For sure, in Philippine Long Distance Telephone
Company, Inc. (PLDT) vs. City of Davao, this Court has upheld the power of Congress to grant exemptions over the power of local government units to impose taxes. There, the Court wrote:
Indeed, the grant of taxing powers to local
government units under the Constitution and the LGC does not affect the power of Congress to grant exemptions to certain persons, pursuant to a declared national policy. The legal effect of the constitutional grant to local governments simply means that in interpreting statutory provisions on municipal taxing powers, doubts must be resolved in favor of municipal corporations. (Emphasis supplied.)
New Mexico Citizens For Clean Air and Water Pueblo of San Juan v. Espanola Mercantile Company, Inc., Doing Business As Espanola Transit Mix Co., 72 F.3d 830, 10th Cir. (1996)