The City Government of Quezon City and the City Treasurer, Dr. Victor B. Enriga vs.

Bayantel
G.R. No. 162015, March 6, 2006
Facts:
Bayantel is a legislative franchise holder under Republic Act No. 3259 to establish and operate
radio stations for domestic telecommunications, radiophone, broadcasting and telecasting located
at Quezon City. Bayantel owned several real properties on which it maintained various
telecommunications facilities.
The real properties are:
1. Bayantels Head Office and Operations
2. Bayantels land, building and equipment; and Bayantels Exchange Center.
On January 7, 1999, Bayantel wrote the office of the City Assessor seeking the exclusion of its
real properties in the city from the roll of taxable real properties but this request was denied.
Bayantel interposed an appeal with the Local Board of Assessment Appeals (LBAA). On its firm
belief of its exempt status, Bayantel did not pay the real property taxes assessed against it by the
Quezon City government. The Quezon City Treasurer sent out notices of delinquency for the
total amount ofP43, 878,208.18, followed by the issuance of several warrants of levy against
Bayantels properties preparatory to their sale at a public auction set on July 30, 2002.
Issue: Whether Bayantels real properties in Quezon City are exempt from real property taxes
under its legislative franchise
Held: Yes, real properties in Quezon City are exempt from real property taxes under its
legislative franchise.
The power to tax is primarily vested in the Congress; however, in our jurisdiction, it may be
exercised by local legislative bodies, no longer merely be virtue of a valid delegation as before,
but pursuant to direct authority conferred by Section 5, Article X of the Constitution. Under the
latter, the exercise of the power may be subject to such guidelines and limitations as the
Congress may provide which, however, must be consistent with the basic policy of local
autonomy.
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.

Admittedly, Rep. Act No. 7633 was enacted subsequent to the LGC. Perfectly aware that the
LGC has already withdrawn Bayantels former exemption from realty taxes, Congress opted to
pass Rep. Act No. 7633 using, under Section 11 thereof, exactly the same defining phrase
exclusive of this franchise which was the basis for Bayantels exemption from realty taxes
prior to the LGC. In plain language, Section 11 of Rep. Act No. 7633 states that the grantee, its
successors or assigns shall be liable to pay the same taxes on their real estate, buildings and
personal property, exclusive of this franchise, as other persons or corporations are now or
hereafter may be required by law to pay. The Court views this subsequent piece of legislation as
an express and real intention on the part of Congress to once again remove from the LGCs
delegated taxing power, all of the franchisees (Bayantels) properties that are actually, directly
and exclusively used in the pursuit of its franchise.

Digital Telecommunications of the Philippines vs City Govt of Batangas et. al

G.R. No. 156040 December 11, 2000
Facts:
Petition for review on certiorari assailing the May 2, 2002 Order of the Regional Trial Court
(RTC) of Batangas Branch 8 in Civil Case NO. 5343 and the November 19, 2002 Order denying
the Motion for Reconsideration . The assailed orders of RTC of Batangas Branch 8 reversed the
March 28, 2001 Order of RTC of Batangas Branch 3. RTC Branch 8 thereby declared that under
its legislative franchise, the petitioner Digital Telecommunications Phils. Inc. is not exempt from
paying real property taxes assessed by the Batangas City government.
It appears that on February 17, 1994, Republic Act No. 7678 granted the petitioner a 25-year
franchise to install, operate and maintain telecommunications systems throughout the
Philippines.
In 1997, having installed telecommunications facilities in Batangas City , petitioner applied for a
permit to operate with the Mayors Office of Batangas City. Petitioners application for a permit
was denied because of a a discrepancy in the fees for clearances and due to non payment of
realty taxes.
Petitioner Digital Telecommunications refused to settle the unpaid realty taxes, claiming
exemption therefrom. Citing the first sentence of Section 5 of Republic Act No. 7678, petitioner
claims the phrase exclusive of this franchise exempts petitioner from realty tax on its real
properties used in its telecommunications business. When respondent threatened to close down
petitioners operations, petitioner paid realty taxes under protest but filed a complaint for
prohibition and mandamus with prayer for a temporary restraining order which was raffled to the
RTC of Batangas Branch 3.
The RTC of Batangas city Branch 3 subsequently issued an Order ruling that petitioners real
properties used in its telecommunications business are exempt from tax.
On May 2, 2002, the RTC of Batangas City Branch 8 issued an Order which dismissed the
amended complaint and ordered the petitioner Digital Telecommunications to pay the City of
Batangas the real estate taxes due. Petitioner filed a motion for reconsideration but was denied.
Issue: Whether or not petitioner is exempt from the realty tax under Section 5 of RA 7678.

Held:
This involves an interpretation of the phrase exclusive of this franchise in the first sentence of
Section 5 of RA 7678.
Sec. 5 of RA 7678 states Sec. 5 Tax Provisions. - The grantee shall be liable to pay the same taxes on its real
estate, buildings, and personal property exclusive of this franchise as other persons
or corporations are now or hereafter may be required by law to pay. In addition
thereto, the grantee shall pay to the Bureau of Internal Revenue each year, within
thirty (30) days after the audit and approval of the accounts, a franchise tax as may
be prescribed by law of all gross receipts of the telephone or other
telecommunications businesses transacted under this franchise by the grantee ;
Provided, that the grantee shall continue to be liable for income taxes payable under
Title II of the National Internal Revenue Code x x x
Petitioner interprets the phrase exclusive of this franchise to mean that its real properties that
are used in its telecommunications business shall not be subject to realty tax. Respondent
interprets the same phrase to mean that the term personal property shall not include petitioners
franchise, which is an intangible personal property.
On December 11, 2000, the Supreme Court denied the petition, and thereby affirmed the Orders
of the RTC of Batangas City Branch 8 finding Digital liable to pay for the real estate taxes due.
In so ruling, the Court held that the phrase exclusive of this franchise simply means that
petitioners franchise shall not be subject to the taxes imposed in the first sentence of Section 5.
The first sentence lists the properties that are subject to taxes, and the list excludes the franchise.
Petitioners gross receipts from its franchise, however, are subject to the franchise tax under the
second sentence of Section 5.
Thus, Section 5 can be divided into 3 parts: First is the first sentence which imposes taxes on real
and personal properties, excluding one property that is the franchise. This puts in parity the
franchisees and non franchisees in the taxation of real and personal properties. Second is the
second sentence which imposes the franchise tax, which is applicable solely to the franchisee.
And third is the proviso in the second sentence that imposes the income tax on the franchisee the
same income tax payable by non-franchisees.
The Court also held that tax exemptions must be clear and unequivocal on the basis of language
too plain to be mistaken. They cannot be extended by mere implication or inference. Any doubt
whether a tax exemption exists is resolved against the taxpayer.

Evangeline Aala et.al; vs. Globe Telecoms

CA- G.R. CV No. 78049
Facts:

Petitioners Evangeline Aala et.al alleged, among other things that they are the principal, students
and teachers of Solano National High school (SNHS); that they are all residents of Barangay
Quirino, Solano, Nueva Vizcaya, except for the teachers and students of the SNHS who are
considered transient to the said barangay where the Base Transceiver Station (BTS) or cell cite
antenna tower of Globe is constructed; on or about 20 of May, 2002, Globe immediately,
surreptitiously and suspiciously started to construct the BTS on 400 sq. lot, which is not in
accordance with existing laws, rules, and regulations; it appears that before that before
construction of BTS, it is required that several permits, clearances, certifications and consent be
first accomplished and granted by different government agencies concerned. Globe, through its
representatives, started the construction of its BTS which is still on-going without the required
permits, clearances, certification and consent; prior to construction, petitioners seasonably
registered their protest and opposition to the construction of cell site antenna, on the grounds of
security and safety concerns and it being a health hazard. Petitioners then prayed for the issuance
of a Writ of Preliminary Injunction to enjoin petitioners from further constructing the BTS.
Globe then filed an opposition to the plaintiffs prayer of a Writ of Preliminary Injunction.
The trial court ruled in favor of Globe Telecoms. The trial court found that the BTS constructed
is not within the scope of Environmental Impact Statement (EIS) System; hence, it is not
required for Globe to secure an Environmental Compliance certificate (ECC). That since the
BTS emits radio frequency radiation, which is classified as non-ionizing radiation, the World
Health Organization made it clear that it is inconclusive relative to cancer. That rendered
perceive health risks by the petitioner is unfounded, as there is no showing that defendant Globe
failed to observe the minimum safe distance prescribed by the Health Physicist who made an
actual inspection of the proposed cell site. An appeal was made by the petitioners.
Issue: Whether the appellants are entitled to the issuance of a Writ of Preliminary Injunction to
stop the construction of defendants BTS?
Held: No, the main action for injunction is distinct from the provisional or ancillary remedy of
preliminary injunction which cannot exist except only as part or in incident of an independent
action or proceeding. As a matter of course in an injunction, the auxiliary remedy of preliminary
injunction whether prohibitory or mandatory, may issue. Under the law, the main action for
injunction seeks a judgment embodying a final injunction which is distinct from, and should be
confused with, the provisional the provisional remedy of preliminary injunction, the sole object
of which is to preserve the status quo until the merits can be heard. From the forgoing, we sustain
the trial courts dismissal of the main action for injunction. Appellants were not entitled to writ of
preliminary injunction, much more to a judgment embodying a final injunction. Appellants failed
to prove that they are entitled to have the construction and installation of the appellees BTS in
Barangay Quirino complained of permanently or perpetually enjoined.

Globe Telecoms inc. vs National Telecommunication Commission

G.R. No. 143964 July 26, 2004
Facts:

The case arose when Smart initially filed the complaint against Globe before the National
Telecommunications Commission (NTC) for interconnection of Smart's and Globe's GSM
networks, particularly their respective SMS or texting services, which Globe allegedly refused in
bad faith, in violation of the mandate of Republic Act 7925, Executive Order No. 39 and their
respective implementing rules and regulations . Globe claimed Smart failed to comply with
certain conditions /documentation required for interconnection.
On July 19, 1999, the NTC issued the now assailed order. NTC held that since SMS falls
squarely within the definition of value-added service or enhanced-service given in NTC
Memorandum Circular No. 8-9-95, the implementation of SMS interconnection is mandatory
pursuant to Executive Order No. 59. NTC also declared that both Smart and Globe have been
providing SMS without authority from it, in violation of Section 420 (f) of MC No. 8-9-95 which
requires PTEs intending to provide value-added services to secure prior approval from NTC
through an administrative process. Thus, NTC directed Globe and Smart to secure the requisite
authority within 30 days, and imposed a fine in the amount of Two Hundred Pesos (P200.00)
from the date of violation and for every day during which such violation continues.
Globe filed a petition for certiorari and prohibition with the Court of Appeals, claiming : that
NTC acted without jurisdiction in finding that Globe lacked the authority to provide SMS,
because the matter was not raised as an issue before it. The order is a patent nullity as it imposed
an administrative penalty for an offense neither it nor Smart was charged nor heard on in
violation of their right to due process; the NTC treated it differently from other carriers providing
SMS , denying it equal protection of the law, viz; on the application of Isla Communications Co.,
Inc (Islacom) where NTC held that SMS is a deregulated special feature of the telephone
network which does not require prior approval from NTC.
On November 22, 1999, the CA affirmed in toto the NTC Order dated July 19, 1999.
Issue: Whether or not the NTC acted without jurisdiction?

Held: In a Decision dated July 26, 2004, the Supreme Court granted the petition, thereby Set
Aside the November 22, 1999 Decision of the Court of Appeals and the assailed Order of the
NTC dated July 19, 1999.
The Court held that NTC violated several cardinal primary rights due Globe in the promulgation
of the assailed Order. First, the NTC Order is not supported by substantial evidence. Neither does
it sufficiently explain the reasons for the decision rendered.
There is lack of clear basis for classifying SMS as value-added service (VAS), which requires
prior approval from NTC to operate, owing to NTC's failure to adopt clear rules and regulations
to that effect. The legal basis invoked by NTC in claiming that SMS is VAS has not been duly
established, with its dual classification of SMS as a special feature and a VAS and the varying
rules pertinent to each classification. The question of the proper legal classification of VAS is
uniquely technical. Owing to the dearth of substantive technical findings from the NTC on which
a judicial review may reasonably be premised, it is not opportunely proper for the Court to make

its own technical evaluation of VAS, especially in relation to SMS. This absence of substantial
evidence in support of the finding that SMS is VAS already renders reversible that portion of the
NTC Order.
Moreover, the Order does not explain why the NTC was according the VAS offerings of Globe
and Smart a different regulatory treatment from that of Islacom, which was not compelled to
suffer the same burdens as Globe and Smart. If an administrative agency decides inconsistently
with previous action, it is essential that it explains why a different result is warranted. Otherwise,
any inconsistent decision with absolutely nothing to support may be struck down as being
arbitrary and is a patent nullity.
Second, Globe and Smart were denied opportunity to present evidence on the issues relating to
the nature of VAS and the prior approval. Until the promulgation of the assailed Order, Globe
and Smart were never informed of the fact that their operation of SMS without prior authority
was at all an issue for consideration. Before NTC could penalize Globe and Smart for
unauthorized provision of SMS, it must first establish that SMS is VAS. But there was no express
rule or regulation on that question, by which Globe and Smart could establish that SMS was not
VAS, and , no such opportunity arose (for Globe and Smart to present evidence that SMS was
not VAS) simply because Globe and Smart were not aware that the question of their authority to
provide SMS was an issue at all.

RCPI vs Local Board of Assessment Appeals of the Province of South Cotabato

CA-G.R. SP No. 47446 March 29, 2000
Facts:
Petitioner RCPI was granted in 1957 a 50 year franchise to establish radio stations for domestic
telecommunications. In 1964, RCPIs franchise, particularly Section 14 was amended by RA no.
4054. In 1985, the municipal treasurer of Tupi assessed RCPI of real property tax for periods of
1981-1985 in the amount of P166, 180.00 with respect to its Brgy. Kablon based radio station
building, machinery shed, and tower with accessories.
RCPIs maintains that the amended Sec. 14 of its franchise unequivocally exempts it from paying
real prop tax for its subject properties. They being personal properties temporarily attached to the
soil, and that its franchise is a special law which prevails over the Real prop tax code and Civil
code which are general laws.
Issue: W/N RCPI is liable for real property tax
Held: No
While the tax exemption in favour of RCPI under Sec. 14 is limited in its character, with regards
to radio equipment, machinery and spare parts needed in connection with its business. RCPI
enjoys tax exemption which covers not only customs duties, tariffs and other export/import taxes
but also real and personal prop taxes.

Sec. 14 as amended clearly provides that the grantee shall pay the same taxes as are now or
may be hereinafter required by law on real estate, buildings and other personal property except
radio equipment, machinery and spare parts needed in connection with its business of the
grantee.
The third sentence of Sec. 14 provides that RCPI franchise tax shall be in lieu of any and all
taxes of any kind, nature and description levied, established or collected by any authority
whatsoever, municipal, provincial or national, from which taxes the grantee is hereby expressly
exempted.

RCPI vs. Provincial Assessor of South Cotabato

G.R. No. 144486, April 13, 2005
Facts:
In 1957, Republic Act No. 2036 granted RCPI a 50 year franchise. Section 14 of RA 2036, reads:
Sec. 14. In consideration of the franchise and rights hereby granted and any provision of law to
the contrary notwithstanding, the grantee shall pay the same taxes as are now or may hereafter be
required by law from other individuals, copartnerships, private, public or quasi-public
associations, corporations or joint stock companies, on real estate, buildings and other personal
property except radio equipment, machinery and spare parts needed in connection with the
business of the grantee, which shall be exempt from customs duties, tariffs and other taxes, as
well as those properties declared exempt in this section. In consideration of the franchise, a tax
equal to one and one-half per centum of all gross receipts from the business transacted under this
franchise by the grantee shall be paid to the Treasurer of the Philippines each year, within ten
days after the audit and approval of the accounts as prescribed in this Act. Said tax shall be in
lieu of any and all taxes of any kind, nature or description levied, established or collected by any
authority whatsoever, municipal, provincial or national, from which taxes the grantee is hereby
expressly exempted.
On 10 June 1985, the municipal treasurer of Tupi, South Cotabato assessed RCPI taxes from
1981 to 1985 in the amount ofP166, 810 as real property tax on its radio station building in
Barangay Kablon, as well as on its machinery shed, radio relay station tower and its accessories,
and generating sets.

RCPI protested the assessment before the Local Board of Assessment Appeals (LBAA). RCPI
claimed that all its assessed properties are personal properties and thus exempt from the real
property tax. Assuming that the assessed properties are real property, they are still exempt from
real property taxes. Section 3 of Presidential Decree No. 464 states that to be taxable, the
machinery should be attached to the real estate and essential for manufacturing, commercial,
mining, industrial, or agricultural purposes. RCPI claimed that the assessed properties are not
used for manufacturing, commercial, mining, industrial, or agricultural purposes. Besides, the
assessed properties are attached to a building on a lot not owned by RCPI.

Issues:
1.

Whether the tower, relay station building and machinery are exempt from tax.

2.
Whether the depreciation allowance is included in the computation of tax declarations and
assessment.
Held:
First issue: No. RCPIs radio relay station tower, radio station building, and machinery shed are
real properties and are thus subject to the real property tax
It is an elementary rule in taxation that exemptions are strictly construed against the taxpayer and
liberally in favor of the taxing authority. It is the taxpayers duty to justify the exemption by
words too plain to be mistaken and too categorical to be misinterpreted.
Section 14 states that in consideration of the franchise and rights hereby granted and any
provision of law to the contrary notwithstanding, the grantee shall pay the same taxes as are now
or may hereafter be required by law from other individuals, co-partnerships, private, public or
quasi-public associations, corporations or joint stock companies, on real estate, buildings and
other personal property. The clear language of Section 14 states that RCPI shall pay the real
estate tax.
Second Issue: Yes, under the Real Property Tax Code depreciation allowance applies only to
machinery and not to real property.