Case Digest (G.R. No. 222442) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
In Philippine Long Distance Telephone Company, Inc. (PLDT) versus City of Davao and Adelaida B. Barcelona (City Treasurer), PLDT applied in January 1999 for a Mayor’s Permit to operate its Davao Metro Exchange. The City of Davao conditioned the permit on payment of a local franchise tax of ₱3,681,985.72 covering the first to fourth quarters of 1999. On May 31, 1999, PLDT protested the assessment and sought refund of franchise taxes paid in 1997 and the first three quarters of 1998, relying on Republic Act No. 7082 and Republic Act No. 7925. Respondent Treasurer denied the protest by letter dated September 27, 1999, invoking Ordinance No. 230, as amended, which imposes a 0.75% franchise tax on gross receipts “notwithstanding any exemption.” PLDT then filed a petition in the Regional Trial Court (RTC), Branch 13, Davao City, on November 3, 1999, under Articles 195 and 196 of the Local Government Code (R.A. 7160), seeking reversal of the Treasurer’s denial and a refund of ₱2,580,82 Case Digest (G.R. No. 222442) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Permit Application and Tax Assessment
- January 1999: Philippine Long Distance Telephone Company, Inc. (PLDT) applied for a Mayor’s Permit to operate its Davao Metro Exchange. The City of Davao withheld action pending payment of local franchise tax amounting to ₱3,681,985.72 for the first to fourth quarters of 1999.
- May 31, 1999: PLDT protested the assessment and requested a refund of franchise taxes paid for 1997 and the first to third quarters of 1998, relying on a Bureau of Local Government Finance (BLGF) opinion (June 2, 1998) interpreting Section 12 of R.A. 7082 and Section 23 of R.A. 7925 as granting exemption from local franchise and business taxes.
- Administrative Denial and Judicial Proceedings
- September 27, 1999: City Treasurer Adelaida B. Barcelona denied PLDT’s protest and refund claim, citing City Ordinance No. 230, Series of 1991 (as amended by Ordinance No. 519, S. 1992), which imposes a franchise tax of 0.75% of gross annual receipts “notwithstanding any exemption granted by any law.”
- November 3, 1999: PLDT filed a petition under Articles 195–196 of the Local Government Code (LGC) with the Regional Trial Court (RTC), Branch 13, Davao City, seeking reversal of the Treasurer’s denial and refund of ₱2,580,829.23 paid in 1998. The RTC denied the petition, holding that:
- Sections 137 and 193 of the LGC authorize local franchise taxes and withdraw existing exemptions, respectively;
- R.A. 7925 Section 23 did not restore any exemption; and
- The BLGF opinion is not binding on local authorities or courts.
- PLDT elevated the case to the Supreme Court via a petition for review on certiorari under Rule 45.
Issues:
- Scope of Exemption under R.A. 7925
- Whether PLDT’s franchise, as implicitly amended by Section 23 of R.A. 7925 (“equality of treatment” clause), restores exemption from local franchise and business taxes.
- Whether exemptions granted to subsequent telecommunications franchisees (e.g., Globe, Smart) ipso facto extend to PLDT.
- Interaction with the Local Government Code and BLGF Opinion
- Whether Sections 137 (franchise tax) and 193 (withdrawal of exemptions) of the LGC preclude application of any exemption under R.A. 7925.
- Whether the BLGF’s legal opinion on tax exemptions is binding upon local government units and courts.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)