Case Digest (G.R. No. 152769)
Facts:
Quezon City and the City Treasurer of Quezon City v. ABS-CBN Broadcasting Corporation, G.R. No. 166408, October 06, 2008, Supreme Court Third Division, Reyes, J., writing for the Court.Petitioner Quezon City enacted the Quezon City Revenue Code of 1993 (Ordinance No. SP‑91, S‑93) imposing a local franchise tax under Section 31. On March 30, 1995 (effectivity May 3, 1995), Congress granted ABS‑CBN Broadcasting Corporation a legislative franchise under R.A. No. 7966, whose Section 8 required ABS‑CBN to pay a 3% franchise tax and stated that the percentage tax would be "in lieu of all taxes on this franchise or earnings thereof," but expressly preserved income tax liability.
After R.A. No. 7966 took effect, ABS‑CBN continued to pay the local franchise tax under protest and paid a total of P19,944,672.66 on various dates (1995–1997). On January 29, 1997 ABS‑CBN filed a written claim for refund (P14,233,582.29 for 1996 and the first quarter of 1997) and, after receiving no response, filed suit on June 25, 1997 in the Regional Trial Court (RTC), Quezon City seeking a declaration that the imposition and collection of Quezon City's local franchise tax after May 3, 1995 was invalid and praying for a refund of P19,944,672.66; a supplemental complaint (Aug. 13, 1997) added taxes paid for the third quarter of 1997 and later payments.
The City defended on grounds that (a) the phrase "in lieu of all taxes" in R.A. No. 7966 did not override constitutional and LGC provisions protecting local revenue and did not expressly exempt the local franchise tax; (b) taxes collectible by local governments are distinct and accrue exclusively to them under the Constitution and the Local Government Code (LGC); and (c) Section 193 of the LGC had withdrawn certain tax exemptions. The City also argued that ABS‑CBN failed to comply with the LGC requirement of a prior written claim for refund.
On January 20, 1999 the RTC rendered judgment in favor of ABS‑CBN, declaring the imposition and collection of local franchise taxes under Quezon City Ordinance No. SP‑91, S‑93 after R.A. No. 7966's effectivity invalid and ordering refund of all payments made after May 3, 1995. The RTC relied on the "in lieu of all taxes" clause in Section 8 of R.A. No. 7966, the rule that tax exemptions in special laws must be respected against later general local tax measures (citing Province of Misamis Oriental v. CEPALCO), and the doctrine against impairment of legislative franchises.
Quezon City moved for reconsideration which was denied, and appealed to the Court of Appeals (CA). On September 1, 2004 the CA dismissed the City's appeal for being ...(Subscriber-Only)
Issues:
- Whether the phrase "in lieu of all taxes" in Section 8 of R.A. No. 7966 exempts ABS‑CBN from payment of the local franchise tax imposed by Quezon City.
- Whether the petitioners raised factual and legal issues before the Court of Appeals such that dismissal of their ap...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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