G.R. No. 248840 , July 05, 2021
New Vision Satellite Network, Inc., Petitioner, vs. The Provincial Government of Cagayan, represented by Honorable Governor Alvaro T. Antonio, and Emilia L. Iringan in her capacity as Provincial Treasurer, Respondent.

FACTS

Petitioner New Vision Satellite Network, Inc. (New Vision) is a corporation holding a Certificate of Authority from the National Telecommunications Commission (NTC) to operate a Cable Television System (CATV) in Ballesteros and Abulug, Cagayan. The Sangguniang Panlalawigan of Cagayan enacted Provincial Ordinance No. 2013-8-008 (Provincial Revenue Code), which imposed a franchise tax on businesses enjoying a franchise, including CATV operations (Section 57(e)), and an annual permit fee for such businesses (Section 108(c)). Pursuant to this, the Provincial Treasurer sent demand letters to New Vision for unpaid taxes and fees from 2001 to 2014. Instead of paying, New Vision filed a Petition for Certiorari and Prohibition with the Regional Trial Court (RTC), seeking to declare Sections 57(e) and 108(c) null and void. New Vision argued that the impositions were ultra vires, oppressive, and contrary to law, and that its NTC Certificate of Authority was not a legislative franchise subject to local franchise tax. The RTC dismissed the petition for failure to exhaust administrative remedies under Section 195 of the Local Government Code (LGC). The Court of Appeals affirmed the RTC’s dismissal. New Vision elevated the case to the Supreme Court, reiterating its arguments and claiming it had held dialogues with provincial officials, thereby exhausting administrative remedies.

ISSUE

1. Procedural: Whether petitioner failed to exhaust administrative remedies under Section 187 of the Local Government Code.
2. Substantive: Whether the Certificate of Authority issued by the NTC for the operation and maintenance of a CATV system is a franchise subjecting petitioner to local franchise tax.

RULING

The Supreme Court denied the petition, affirming the Court of Appeals.
1. On the procedural issue: The Court ruled that petitioner failed to exhaust administrative remedies. Section 187 of the LGC mandates that any question on the legality or constitutionality of a tax ordinance must be appealed to the Secretary of Justice within 30 days from its effectivity. Petitioner did not file such an appeal but instead directly filed a petition with the RTC. The alleged dialogues with provincial officials regarding a different, older ordinance (No. 2005-07) did not constitute compliance with the mandatory appeal process under Section 187 for the challenged ordinance (No. 2013-8-008).
2. On the substantive issue: The Court ruled that the NTC Certificate of Authority is a franchise for the purpose of imposing local franchise tax. Citing Section 137 of the LGC, which allows provinces to tax businesses enjoying a franchise, the Court distinguished between a legislative franchise (granted by Congress) and an administrative franchise (granted by an administrative agency like the NTC). The Court held that an administrative franchise, such as the Certificate of Authority to operate a CATV system, is still a franchise because it is a special privilege conferred by the government to operate a public utility, involving a delegation of sovereign power. Therefore, petitioner is subject to the local franchise tax under Section 57(e) of the Provincial Revenue Code and the annual permit fee under Section 108(c). The Court directed New Vision to pay the franchise tax and governor’s permit fee to the Provincial Government of Cagayan.