G.R. No. 180200 - Digital Telecommunications Philippines, Inc. vs. Cantos

Digital Telecommunications Philippines, Inc. (petitioner) was granted a legislative franchise on February 17, 1994, under Republic Act No. 7678 to install, operate, and maintain telecommunications systems nationwide.
In seeking the renewal of its Mayor’s Permit in Balayan, Batangas, petitioner was informed by then-Mayor Benjamin E. Martinez, Jr. that its business operations would be restrained if it failed to pay the assessed real property taxes by October 5, 1998.

Issuance of the Cease and Desist Order and RTC Decision (Civil Case No. 3514)

After petitioner’s failure to pay the assessed taxes, the Chief of the Permit and License Division, Mr. Francisco P. Martinez, issued a Cease and Desist Order on October 6, 1998, enjoining the further operation of petitioner’s business.
Petitioner filed a case for annulment of the Cease and Desist Order before the Regional Trial Court (RTC) of Balayan, Batangas (Civil Case No. 3514).
On July 15, 1999, RTC Branch IX ruled in favor of petitioner, declaring the issuance of the order as without legal basis and establishing that only properties not used in furtherance of its franchise were subject to real property taxes.
The RTC interpreted Section 5 of RA 7678 – emphasizing that the exemption applied solely to properties actually used in connection with the operation of its franchise.

Subsequent Tax Collection Actions and the Petition for Indirect Contempt/Prohibition (Civil Case No. 4051)

In June 2002, as Provincial Treasurer, respondent Jessie E. Cantos issued seven Warrants of Levy on petitioner’s properties in various municipalities in Batangas, asserting that those properties were delinquent in the payment of real property taxes.
Despite petitioner’s letter on July 1, 2002, requesting the lifting of the Warrants and invoking the earlier favorable RTC decision (Civil Case No. 3514), the Warrants remained effective.
Consequently, petitioner filed a Petition for Indirect Contempt and Prohibition with a prayer for a Writ of Preliminary Injunction and/or Temporary Restraining Order on July 5, 2002 (Civil Case No. 4051).
Petitioner argued that respondent, by proceeding with the public auction of its property (which occurred even after a TRO was granted on July 25, 2002), was in blatant defiance of the court’s order as well as the tax exemption declared in the RTC decision.

The RTC initially granted a TRO; however, respondent maintained that he had already proceeded with the auction sale upon service of the TRO.
Petitioner filed subsequent motions (including a Very Urgent Manifestation and Motion to annul the auction) asserting that respondent was bound by the earlier RTC decision as well as principles of res judicata and estoppel.
On July 7, 2003, the RTC dismissed petitioner’s Petition for Indirect Contempt and Prohibition on the ground that respondent was not a party to Civil Case No. 3514 and that the tax exemption issue was extraneous to the scope of an indirect contempt proceeding.
Petitioner’s Motion for Reconsideration was denied in a September 17, 2004, resolution, and the appeal to the Court of Appeals (CA) was subsequently dismissed on July 24, 2007.
The CA further ruled, via a Resolution dated October 11, 2007, that petitioner’s claim for exemption could not be collaterally presented in an indirect contempt case and that the proper remedy was an independent action for annulment of sale.

The contention that the dismissal by the RTC, which amounted to an acquittal, should not bar a review appeal under the doctrine of double jeopardy.
The argument that respondent, although not a party to Civil Case No. 3514, should be held accountable for disobedience of its decision.
The claim that the tax exemption issue should have been resolved within the indirect contempt proceeding.
The position that filing an independent action for annulment of the sale was not the appropriate remedy given the existing final rulings.

Petitioner maintained that rulings in related cases (such as Digital Telecommunications Philippines, Inc. v. Province of Pangasinan and The City Government of Quezon City v. Bayan Telecommunications, Inc.) supported its claim that properties used in furtherance of its franchise were exempt from real property tax.

Whether the dismissal of the indirect contempt charge against respondent by the RTC—a dismissal equated to an acquittal—bars petitioner's further appeal under the principle of double jeopardy.
Whether respondent, not being a party to Civil Case No. 3514, can be held in contempt for allegedly disobeying the decision that granted petitioner tax exemption for properties used in its franchise operation.
Whether petitioner’s claim for exemption from real property taxes can be raised and resolved within a proceeding for indirect contempt and prohibition.
Whether the proper remedy for petitioner’s dispute is resorting to an independent action for annulment of the auction sale versus a proceeding for indirect contempt.