Quezon City v. Bayan Telecommunications
REITERATIONFacts
The Antecedents: Respondent Bayan Telecommunications, Inc. (Bayantel), a legislative franchise holder under Republic Act (Rep. Act) No. 3259, owned real properties in Quezon City used for its telecommunications operations. Section 14 of Rep. Act No. 3259 originally exempted properties used in its franchise from real estate taxes, while requiring payment of other taxes and a franchise tax on gross receipts. Procedural History: The Local Government Code of 1991 (LGC), effective January 1, 1992, withdrew all previously granted tax exemptions. Subsequently, Congress enacted Rep. Act No. 7633 on July 20, 1992, amending Bayantel's franchise. Section 11 of Rep. Act No. 7633 reenacted the tax provision of the original franchise, using the phrase "exclusive of this franchise." In 1993, Quezon City enacted its Revenue Code (QCRC), also withdrawing tax exemptions. Bayantel sought exclusion from real property tax assessments, which was denied. Consequently, Quezon City Treasurer issued notices of delinquency and warrants of levy. Bayantel filed a petition for prohibition with a TRO and preliminary injunction with the RTC, which issued a TRO and later a permanent injunction, declaring Bayantel's properties exempt from real estate taxation. The RTC denied the motion for reconsideration. The Petition: Petitioners, the City Government and City Treasurer of Quezon City, filed a petition for review on certiorari, assailing the RTC's decision and order, arguing that Bayantel's real properties are not exempt from real property taxes due to the withdrawal of exemptions by the LGC and QCRC, and that Rep. Act No. 7633 did not restore such exemptions.
Issue(s)
Whether Bayantel is required to exhaust administrative remedies before seeking judicial relief. Whether Bayantel's real properties in Quezon City are exempt from real property taxes under its franchise. Whether the Quezon City Revenue Code effectively withdrew the tax exemption enjoyed by Bayantel under its franchise, as amended.
Ruling
The petition is DENIED. The Regional Trial Court's decision declaring Bayantel's real properties exempt from real estate taxation is AFFIRMED.
Ratio Decidendi
On the exhaustion of administrative remedies: The Court ruled that Bayantel was not required to exhaust administrative remedies. A petition for prohibition under Rule 65 of the Rules of Court is proper when there is no appeal or any other plain, speedy, and adequate remedy in the ordinary course of law. Given that Bayantel's properties were already levied upon and scheduled for auction sale, an appeal to the Local Board of Assessment Appeals (LBAA) was not considered a speedy and adequate remedy. Furthermore, the Court noted that the case involved purely legal issues, which is a recognized exception to the exhaustion of administrative remedies rule. The substantial amount of taxes assessed also presented a practical difficulty for Bayantel to pay under protest, further justifying the resort to judicial action. On the exemption from real property taxes: The Court affirmed the RTC's decision that Bayantel's real properties used in its operations are exempt from real estate taxes. While the Local Government Code of 1991 (LGC) withdrew existing tax exemptions, Congress subsequently enacted Rep. Act No. 7633, which amended Bayantel's franchise. Section 11 of Rep. Act No. 7633 reenacted the tax provision of the original franchise (Rep. Act No. 3259), using the phrase "exclusive of this franchise." The Court interpreted this as a clear intention by Congress to restore the exemption for properties directly and exclusively used in the pursuit of Bayantel's franchise. This reenactment effectively revived the exemption that was deemed implicitly repealed by the LGC. The Court emphasized that the power to tax is primarily vested in Congress, which includes the power to grant exemptions, and this power is not diminished by the LGC's grant of taxing powers to local government units. On the effect of the Quezon City Revenue Code: The Court held that the Quezon City Revenue Code (QCRC) did not effectively withdraw the tax exemption enjoyed by Bayantel. While the QCRC, like the LGC, withdrew tax exemptions, the taxing power of local government units is limited by Section 232 of the LGC, which explicitly states that they may levy taxes on real property "not hereinafter specifically exempted." This phrase indicates that Congress retains the power to exempt certain realties from local taxation. The Court cited Philippine Long Distance Telephone Company, Inc. (PLDT) vs. City of Davao to support the principle that the grant of taxing powers to local government units does not affect Congress's power to grant exemptions pursuant to a declared national policy. Therefore, Rep. Act No. 7633, enacted subsequent to the LGC and QCRC, and using the same language that previously granted exemption, was deemed an express legislative intent to exempt Bayantel's operational properties from real property tax.
Main Doctrine
The power of Congress to grant tax exemptions, even after the Local Government Code of 1991 (LGC) withdrew existing exemptions, can be exercised through subsequent amendatory legislation, thereby restoring such exemptions for properties directly and exclusively used in the franchisee's business. Local government units' taxing power, while constitutionally granted, is limited by Congress's power to exempt.