Case Digest (G.R. No. 149179) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
In Philippine Long Distance Telephone Company, Inc. (PLDT) v. City of Bacolod, PLDT, the grantee of a legislative franchise under Act No. 3436 as amended by Republic Act No. 7082 (approved August 3, 1991), sought to render local and international telecommunications services while paying a franchise tax of three percent of its gross receipts “in lieu of all taxes.” On January 1, 1992, the Local Government Code (Republic Act No. 7160) took effect, granting cities power under Sections 137 and 151 to impose local franchise taxes and withdrawing all existing tax exemptions by Section 193. On March 16, 1995, the Public Telecommunications Policy Act (Republic Act No. 7925) introduced a “most-favored-treatment” clause in Section 23, declaring that any privilege or exemption granted under existing or future telecommunications franchises would extend immediately to all grantees. Invoking its authority under the Local Government Code, the City of Bacolod assessed and collected local franch Case Digest (G.R. No. 149179) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- PLDT’s Legislative Franchise and the Local Government Code
- PLDT holds a legislative franchise under Act No. 3436, as amended by Republic Act No. 7082 (consolidated August 24, 1991), which includes Section 12’s “in-lieu-of-all-taxes” clause requiring PLDT to pay a franchise tax of 3% of gross receipts in lieu of all other taxes.
- Republic Act No. 7160 (Local Government Code), effective January 1, 1992, grants cities the power to impose a local franchise tax under Section 137 (up to 0.5% of gross receipts) in relation to Section 151, and Section 193 withdraws all tax exemptions not expressly preserved.
- Public Telecommunications Policy Act and BLGF Ruling
- Republic Act No. 7925 (Public Telecommunications Policy Act), effective March 16, 1995, contains Section 23’s “most-favored-treatment” clause, providing that any advantage or exemption granted to one franchisee ipso facto applies to all existing franchise holders, subject to certain limitations.
- In August 1995, the City of Bacolod assessed PLDT for local franchise tax; PLDT paid from 1994 to Q3 1998 (total P2,770,696.37). On June 2, 1998, the Department of Finance’s Bureau of Local Government Finance (BLGF) ruled that as of March 16, 1995, PLDT was exempt from local franchise and business taxes under Sections 137 and 143 of the LGC, but remained liable for taxes from January 1, 1992 to March 15, 1995. PLDT ceased payments from Q4 1998 onward.
- City of Bacolod Proceedings and RTC Petition
- In 1999, PLDT’s application for its Mayor’s Permit was withheld pending payment of P358,258.30 for Q4 1998 and P1,424,578.10 for 1999. PLDT protested to the City Legal Officer, who denied the protest on March 26, 1999.
- On May 14, 1999, PLDT filed Civil Case No. 99-10786 in the RTC of Bacolod, praying for:
- Declaration of exemption from local franchise and business taxes;
- Prohibition against further assessments and collections;
- Issuance of the 1999 Mayor’s Permit; and
- Refund of P2,770,696.37 with interest. The RTC dismissed the petition on July 23, 2001.
- Supreme Court Appeal
- PLDT filed a petition for review on certiorari (Rule 45), alleging:
- Erroneous application of LGC Section 137;
- Failure to recognize PLDT’s exemption under RA 7082 and Section 23 of RA 7925;
- Improper disregard of the BLGF ruling; and
- Erroneous dismissal of the petition.
- The sole question before the Court: whether Section 23 of RA 7925 exempts PLDT from the local franchise tax imposed by the City of Bacolod.
Issues:
- Primary Issue
- Does Section 23 of Republic Act No. 7925 operate to exempt PLDT from the payment of local franchise tax imposed by the City of Bacolod?
- Is PLDT entitled to injunctive relief, issuance of the Mayor’s Permit, and refund based on that exemption?
- Subsidiary Issues
- Whether Section 137 of the Local Government Code remains operative despite the enactment of RA 7925.
- Whether the BLGF ruling has binding effect or persuasive weight in judicial proceedings.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)