GR 156040; (December, 2008) (Digest)
G.R. No. 156040, December 11, 2008.
Digital Telecommunications Philippines, Inc., petitioner, vs. City Government of Batangas represented by Hon. Angelito Dondon A. Dimacuha, Batangas City Mayor, Mr. Benjamin S. Pargas, Batangas City Treasurer, and Atty. Teodulfo A. Dequito, Batangas City Legal Officer, respondents.
FACTS
Petitioner Digital Telecommunications Philippines, Inc. (Digitel) was granted a 25-year legislative franchise under Republic Act No. 7678 (RA 7678). Section 5 of RA 7678 states: “The grantee shall be liable to pay the same taxes on its real estate, buildings, and personal property exclusive of this franchise as other persons or corporations are now or hereafter may be required by law to pay.” Respondent City Government of Batangas refused to issue a Mayor’s Permit to petitioner for its telecommunications operations without payment of real property taxes. Petitioner claimed exemption, citing the phrase “exclusive of this franchise” in Section 5 of RA 7678, a Letter-Opinion from the Bureau of Local Government Finance (BLGF), and a letter from the Office of the President. Petitioner paid realty taxes under protest and filed a complaint. The Regional Trial Court, Branch 3 (RTC-Branch 3) ruled that petitioner’s real properties used in its franchise operation were exempt from real property tax. Upon motion for reconsideration, the case was re-raffled to RTC-Branch 8, which reversed the decision, declaring petitioner not exempt and ordering payment of realty taxes.
ISSUE
Whether, under the first sentence of Section 5 of RA 7678, petitioner’s real properties used in its telecommunications business are exempt from the real property tax.
RULING
The Supreme Court ruled that petitioner is NOT exempt from paying real property tax on its real properties used in its telecommunications business. The phrase “exclusive of this franchise” in Section 5 of RA 7678 qualifies only the term “personal property” immediately preceding it. This means the franchise itself, which is an intangible personal property, is excluded from the taxable personal properties listed. The franchise is not subject to the same taxes imposed on other personal property. The first sentence of Section 5 makes the grantee liable to pay taxes on its real estate, buildings, and personal property (excluding the franchise itself) just like other taxpayers. There is no express grant of tax exemption for real property. Tax exemptions must be clear and unequivocal. The Court affirmed the Order of RTC-Branch 8.