Respondent Bayan Telecommunications, Inc. (Bayantel) is a legislative franchise holder under Republic Act (R.A.) No. 3259 (1961) to establish and operate radio stations for domestic telecommunications, radiophone, broadcasting and telecasting. Section 14 (a) of R.A. No. 3259 states: “The grantee shall be liable to pay the same taxes on its real estate, buildings and personal property, exclusive of the franchise, xxx”. In 1992, R.A. No. 7160, otherwise known as the “Local Government Code of 1991” (LGC) took effect. Section 232 of the Code grants local government units within the Metro Manila Area the power to levy tax on real properties. Barely few months after the LGC took effect, Congress enacted R.A. No. 7633, amending Bayantel’s original franchise. The Section 11 of the amendatory contained the following tax provision: “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, xxx“. In 1993, the government of Quezon City enacted an ordinance otherwise known as the Quezon City Revenue Code withdrawing tax exemption privileges.
Whether or not Bayantel’s real properties in Quezon City are exempt from real property taxes under its franchise.
YES. A clash between the inherent taxing power of the legislature, which necessarily includes the power to exempt, and the local government’s delegated power to tax under the aegis of the 1987 Constitution must be ruled in favor of the former. The grant of taxing powers to LGUs 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.
The legislative intent expressed in the phrase “exclusive of this franchise” cannot be construed other than distinguishing between two (2) sets of properties, be they real or personal, owned by the franchisee, namely, (a) those actually, directly and exclusively used in its radio or telecommunications business, and (b) those properties which are not so used. It is worthy to note that the properties subject of the present controversy are only those which are admittedly falling under the first category.
Since R. A. No. 7633 was enacted subsequent to the LGC, perfectly aware that the LGC has already withdrawn Bayantel’s former exemption from realty taxes, the Congress using, Section 11 thereof with exactly the same defining phrase “exclusive of this franchise” is the basis for Bayantel’s exemption from realty taxes prior to the LGC. In plain language, 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 LGC’s delegated taxing power, all of the franchisee’s (Bayantel’s) properties that are actually, directly and exclusively used in the pursuit of its franchise.