G.R. No. 162015.

 March 6, 2006. * Trampe, 250 SCRA 500 (1995): x x x. Although as a rule,

THE CITY GOVERNMENT OF QUEZON CITY, AND THE administrative remedies must first be exhausted before resort to
CITY TREASURER OF QUEZON CITY, DR. VICTOR B. judicial action can prosper, there is a well-settled exception in cases
ENRIGA, petitioners, vs. BAYAN where the controversy does not involve questions of fact but only of
law. x x x.
TELECOMMUNICATIONS, INC., respondent.
Taxation; Realty Tax; Franchises; Local Governments; While
Civil Procedure; Appeals; Prohibitions; One of the recognized Section 14 of Republic Act 3259 may be validly viewed as an implied
exceptions to the exhaustion-of-administrative remedies rule is when delegation of power to tax, the delegation under that provision, as
only legal issues are to be resolved.—Petitioners argue that Bayantel couched, is limited to impositions over properties of the franchisee
had failed to avail itself of the administrative remedies provided for which are not actually, directly and exclusively used in the pursuit of
_______________ its franchise.—The legislative intent expressed in the phrase
“exclusive of this franchise” cannot be construed other than
*
 SECOND DIVISION. distinguishing between two (2) sets of properties, be they real or
170 personal, owned by the franchisee, namely, (a) those actually,
directly and exclusively used in its radio or telecommunications
170 SUPREME business, and (b) those properties which are not so used. It is worthy
COURT REPORTS to note that the properties subject of the present controversy are only
ANNOTATED those which are admittedly falling under the first category. To the
mind of the Court, Section 14 of Rep. Act No. 3259 effectively
City Government of works to grant or delegate to local governments of Congress’
Quezon City vs. Bayan inherent power to tax the franchisee’s properties belonging to the
Telecommunications, Inc. second group of properties indicated above, that is, all properties
under the LGC, adding that the trial court erred in giving due which, “exclusive of this franchise,” are not actually and directly
course to Bayantel’s petition for prohibition. To petitioners, the used in the pursuit of its franchise. As may be recalled, the taxing
appeal mechanics under the LGC constitute Bayantel’s plain and power of local governments under both the 1935 and the 1973
speedy remedy in this case. The Court does not agree. With the Constitutions solely depended upon an enabling law. Absent such
reality that Bayantel’s real properties were already levied upon on enabling law, local government units were without authority to
account of its nonpayment of real estate taxes thereon, the Court impose and collect taxes on real properties within their
agrees with Bayantel that an appeal to the LBAA is not a speedy and 171
adequate remedy within the context of the aforequoted Section 2 of
Rule 65. This is not to mention of the auction sale of said properties VOL. 484, 171
already scheduled on July 30, 2002. Moreover, one of the recognized MARCH 6, 2006
exceptions to the exhaustion-of-administrative remedies rule is when, City Government of
as here, only legal issues are to be resolved. In fact, the Court, Quezon City vs. Bayan
cognizant of the nature of the questions presently involved, gave due Telecommunications, Inc.
course to the instant petition. As the Court has said in Ty vs.

1|Page
 respective territorial jurisdictions. While Section 14 of Rep. Act Same; Same; Same; Same; The power to tax is primarily
No. 3259 may be validly viewed as an implied delegation of power vested in the Congress; however, in our jurisdiction, it may be
to tax, the delegation under that provision, as couched, is limited to exercised by local legislative bodies, no longer merely by virtue of a
impositions over properties of the franchisee which are not actually, valid delegation as before, but pursuant to direct authority conferred
directly and exclusively used in the pursuit of its franchise. by Section 5, Article X of the Constitution.—Bayantel’s posture is
Necessarily, other properties of Bayantel directly used in the pursuit well-taken. While the system of local government taxation has
of its business are beyond the pale of the delegated taxing power of changed with the
local governments. In a very real sense, therefore, real properties of 172
Bayantel, save those exclusive of its franchise, are subject to realty
taxes. Ultimately, therefore, the inevitable result was that all realties 172 SUPREME
which are actually, directly and exclusively used in the operation of COURT REPORTS
its franchise are “exempted” from any property tax. Bayantel’s ANNOTATED
franchise being national in character, the “exemption” thus granted City Government of
under Section 14 of Rep. Act No. 3259 applies to all its real or Quezon City vs. Bayan
personal properties found anywhere within the Philippine
archipelago. Telecommunications, Inc.
Same; Same; Same; Same; The realty tax exemption onset of the 1987 Constitution, the power of local government
heretofore enjoyed by Bayantel under its original franchise, but units to tax is still limited. As we explained in Mactan Cebu
subsequently withdrawn by force of Section 234 of the Local International Airport Authority: The power to tax is primarily vested
Government Code, has been restored by Section 14 of Republic Act in the Congress; however, in our jurisdiction, it may be exercised by
No. 7633.—With the LGC’s taking effect on January 1, 1992, local legislative bodies, no longer merely by virtue of a valid
Bayantel’s “exemption” from real estate taxes for properties of delegation as before, but pursuant to direct authority conferred
whatever kind located within the Metro Manila area was, by force of by Section 5, Article X of the Constitution. Under the latter, the
Section 234 of the Code, expressly withdrawn. But, not long exercise of the power may be subject to such guidelines and
thereafter, however, or on July 20, 1992, Congress passed Rep. Act limitations as the Congress may provide which, however, must be
No. 7633 amending Bayantel’s original franchise. Worthy of note is consistent with the basic policy of local autonomy. (at p. 680;
that Section 11 of Rep. Act No. 7633 is a virtual reenacment of the Emphasis supplied.)
tax provision, i.e., Section 14, of Bayantel’s original franchise under Same; Same; Same; Same; The Supreme Court has upheld the
Rep. Act No. 3259. Stated otherwise, Section 14 of Rep. Act No. power of Congress to grant exemptions over the power of local
3259 which was deemed impliedly repealed by Section 234 of the government units to impose taxes.—In Philippine Long Distance
LGC was expressly revived under Section 14 of Rep. Act No. 7633. Telephone Company, Inc. (PLDT) vs. City of Davao, 363 SCRA 522
In concrete terms, the realty tax exemption heretofore enjoyed by (2001), this Court has upheld the power of Congress to grant
Bayantel under its original franchise, but subsequently withdrawn by exemptions over the power of local government units to impose
force of Section 234 of the LGC, has been restored by Section 14 of taxes. There, the Court wrote: Indeed, the grant of taxing powers to
Rep. Act No. 7633. local government units under the Constitution and the LGC does
not affect the power of Congress to grant exemptions to certain
persons, pursuant to a declared national policy. The legal effect of

2|Page
the constitutional grant to local governments simply means that in Respondent Bayan Telecommunications, Inc.  (Bayantel) is 3

interpreting statutory provisions on municipal taxing powers, doubts a legislative franchise holder under Republic Act (Rep. Act)
must be resolved in favor of municipal corporations. No. 3259  to establish and operate radio stations for domestic
4

telecommunications, radiophone, broadcasting and telecasting.

PETITION for review on certiorari of the decision and Of relevance to this controversy is the tax provision of Rep.
resolution of the Regional Trial Court, Br. 227, Quezon City. Act No. 3259, embodied in Section 14 thereof, which reads:
SECTION 14. (a) The grantee shall be liable to pay the same taxes
The facts are stated in the opinion of the Court. on its real estate, buildings and personal property, exclusive of the
     The City Attorney for petitioners. franchise, as other persons or corporations are now or hereafter may
     De Mesa, Zaballero & Partners for respondent. be required by law to pay. (b) The grantee shall further pay to the
Treasurer of the Philippines each year, within ten days after the audit
GARCIA, J.: and approval of the accounts as prescribed in this Act, one and one-
half per centum of all gross receipts from the busi-
Before the Court, on pure questions of law, is this petition for _______________
review on certiorari under Rule 45 of the Rules of Court to 1
 Penned by then Judge Vicente Q. Roxas, now Associate Justice of the Court of
nullify and set aside the following issuances of the Regional Appeals; Rollo, pp. 46-71.
Trial Court (RTC) of Quezon City, Branch 227, in its Civil 2
 Rollo, p. 72.
Case No. Q-02-47292, to wit: 3
 Formerly named International Communications Corporation.
173
4
 “An Act Granting the International Communications Corporation a Franchise
to Establish Radio Stations for Domestic Telecommunications, Radiophone,
VOL. 484, MARCH 6, 173 Broadcasting and Telecasting.” Approved on June 17, 1961.
2006 This franchise was later extended with the enactment of Republic Act No. 4905
on June 17, 1967, stating that: “SEC. 4. This franchise shall continue for a period of
City Government of Quezon twenty-five years from the date the first of said stations shall be placed in operation,
City vs. Bayan and is granted upon the express condition that the same shall be void unless the
construction of said station be begun within two years from the date of the approval
Telecommunications, Inc. of this amendatory Act and be completed within four years from said date.”

174
1. 1)Decision  dated June 6, 2003, declaring
1

respondent Bayan Telecommunications, Inc. 174 SUPREME COURT

exempt from real estate taxation on its real REPORTS
properties located in Quezon City; and ANNOTATED
2. 2)Order  dated December 30, 2003, denying
2
City Government of Quezon
petitioners’ motion for reconsideration. City vs. Bayan
Telecommunications, Inc.
The facts: ness transacted under this franchise by the said grantee (Emphasis
supplied).

3|Page
On January 1, 1992, Rep. Act No. 7160, otherwise known as VOL. 484, MARCH 6, 175
the “Local Government Code of 1991” (LGC), took effect. 2006
Section 232 of the Code grants local government units within City Government of Quezon
the Metro Manila Area the power to levy tax on real properties, City vs. Bayan
thus:
Telecommunications, Inc.
SEC. 232. Power to Levy Real Property Tax.—A province or city or
a municipality within the Metropolitan Manila Area may levy an phone or other telecommunications businesses transacted under
annual ad valorem tax on real property such as land, building, this franchise by the grantee, its successors or assigns and the said
machinery and other improvements not hereinafter specifically percentage shall be in lieu of all taxes on this franchise or earnings
exempted. thereof. Provided, That the grantee, its successors or assigns shall
continue to be liable for income taxes payable under Title II of the
Complementing the aforequoted provision is the second National Internal Revenue Code . . . . x x x. [Emphasis supplied]
paragraph of Section 234 of the same Code which withdrew
It is undisputed that within the territorial boundary of Quezon
any exemption from realty tax heretofore granted to or enjoyed
City, Bayantel owned several real properties on which it
by all persons, natural or juridical, to wit:
maintained various telecommunications facilities. These real
SEC. 234. Exemptions from Real Property Tax.—The following are
exempted from payment of the real property tax:
properties, as hereunder described, are covered by the
x x x      x x x      x x x following tax declarations:
Except as provided herein, any exemption from payment of real
property tax previously granted to, or enjoyed by, all persons, 1. (a)Tax Declaration Nos. D-096-04071, D-096-
whether natural or juridical, including government-owned-or- 04074, D-096-04072 and D-096-04073
controlled corporations is hereby withdrawn upon effectivity of this pertaining to Bayantel’s Head Office and
Code (Emphasis supplied). Operations Center in Roosevelt St., San
Francisco del Monte, Quezon City allegedly
On July 20, 1992, barely few months after the LGC took effect,
the nerve center of petitioner’s
Congress enacted Rep. Act No. 7633, amending Bayantel’s
telecommunications franchise operations, said
original franchise. The amendatory law (Rep. Act No. 7633)
Operation Center housing mainly petitioner’s
contained the following tax provision:
SEC. 11. The grantee, its successors or assigns shall be liable to pay Network Operations Group and switching,
the same taxes on their real estate, buildings and personal transmission and related equipment;
property, exclusive of this franchise, as other persons or 2. (b)Tax Declaration Nos. D-124-01013, D-124-
corporations are now or hereafter may be required by law to pay. In 00939, D-124-00920 and D-124-00941
addition thereto, the grantee, its successors or assigns shall pay a covering Bayantel’s land, building and
franchise tax equivalent to three percent (3%) of all gross receipts of equipment in Maginhawa St., Barangay East
the tele- Teacher’s Village, Quezon City which houses
175 telecommunications facilities; and

4|Page
 3. (c)Tax Declaration Nos. D-011-10809, D-011- whether natural or juridical, including government owned or
10810, D-011-10811, and D-011-11540 controlled corporations, except local water districts, cooperatives
referring to Bayantel’s Exchange Center duly registered under RA 6938, non-stock and non-profit hospitals
located in Proj. 8, Brgy. Bahay Toro, Tandang and educational institutions, business enterprises certified by the
Board of Investments (BOI) as pioneer or non-pioneer for a period of
Sora, Quezon City which houses the Network
six (6) and four (4) years, respectively, . . . are hereby withdrawn
Operations Group and cover switching, effective upon approval of this Code (Emphasis supplied).
transmission and other related equipment.
Conformably with the City’s Revenue Code, new tax
In 1993, the government of Quezon City, pursuant to the taxing declarations for Bayantel’s real properties in Quezon City were
power vested on local government units by Section 5, Article X issued by the City Assessor and were received by Bayantel on
of the 1987 Constitution, infra, in relation to Section 232 of the August 13, 1998, except one (Tax Declaration No. 124-01013)
LGC, supra, enacted City Ordinance No. SP-91, S-93, which was received on July 14, 1999.
otherwise known as the Quezon City Revenue Meanwhile, on March 16, 1995, Rep. Act No.
Code (QCRC),  imposing, under Section 5 thereof, a real
5
7925,  otherwise known as the “Public Telecommunications
6

property tax on all real properties in Quezon City, and, Policy Act of the Philippines,” envisaged to level the playing
reiterating in field among telecommunications companies, took effect.
_______________ Section 23 of the Act provides:
SEC. 23. Equality of Treatment in the Telecommunications Industry.
 This took effect on July 1, 1993.
5
—Any advantage, favor, privilege, exemption, or immunity granted
176 under existing franchises, or may hereafter be granted, shall ipso
176 SUPREME COURT facto become part of previously granted telecommunications
franchises and shall be accorded immediately and unconditionally to
REPORTS the grantees of such franchises: Provided, however, That the
ANNOTATED foregoing shall neither apply to nor affect provisions of
City Government of Quezon telecommunications franchises concerning territory covered by the
City vs. Bayan franchise, the life
_______________
Telecommunications, Inc.
its Section 6, the withdrawal of exemption from real property 6
 Entitled “An Act to Promote and Govern the Development of Philippine
tax under Section 234 of the LGC, supra. Furthermore, much Telecommunications and the Delivery of Public Telecommunication Services.”
like the LGC, the QCRC, under its Section 230, withdrew tax 177
exemption privileges in general, as follows: VOL. 484, MARCH 6, 177
SEC. 230. Withdrawal of Tax Exemption Privileges.—Unless
otherwise provided in this Code, tax exemptions or
2006
incentives granted to, or presently enjoyed by all persons, City Government of Quezon

5|Page
 City vs. Bayan properties and buildings of petitioner [now, respondent Bayantel]
Telecommunications, Inc. which have been admitted to be used in the operation of petitioner’s
franchise described in the following tax declarations are hereby
span of the franchise, or the type of service authorized by the
DECLARED exempt from real estate taxation:
franchise.
178
On January 7, 1999, Bayantel wrote the office of the City
178 SUPREME COURT
Assessor seeking the exclusion of its real properties in the city
from the roll of taxable real properties. With its request having
REPORTS
been denied, Bayantel interposed an appeal with the Local ANNOTATED
Board of Assessment Appeals (LBAA). And, evidently on its City Government of Quezon
firm belief of its exempt status, Bayantel did not pay the real City vs. Bayan
property taxes assessed against it by the Quezon City Telecommunications, Inc.
government.
On account thereof, the Quezon City Treasurer sent out 1. (1)Tax Declaration No. D-096-04071—
notices of delinquency for the total amount of P43,878,208.18, 2. (2)Tax Declaration No. D-096-04074—
followed by the issuance of several warrants of levy against 3. (3)Tax Declaration No. D-124-01013—
Bayantel’s properties preparatory to their sale at a public 4. (4)Tax Declaration No. D-011-10810—
auction set on July 30, 2002. 5. (5)Tax Declaration No. D-011-10811—
6. (6)Tax Declaration No. D-011-10809—
Threatened with the imminent loss of its properties,
7. (7)Tax Declaration No. D-124-00941—
Bayantel immediately withdrew its appeal with the LBAA and 8. (8)Tax Declaration No. D-124-00940—
instead filed with the RTC of Quezon City a petition for 9. (9)Tax Declaration No. D-124-00939—
prohibition with an urgent application for a temporary 10. (10)Tax Declaration No. D-096-04072—
restraining order (TRO) and/or writ of preliminary injunction, 11. (11)Tax Declaration No. D-096-04073—
thereat docketed as Civil Case No. Q-02-47292, which was 12. (12)Tax Declaration No. D-011-11540—
raffled to Branch 227 of the court.
On July 29, 2002, or in the eve of the public auction The preliminary prohibitory injunction issued in the August 20,
scheduled the following day, the lower court issued a TRO, 2002 Order of this Court is hereby made permanent. Since this is a
followed, after due hearing, by a writ of preliminary resolution of a purely legal issue, there is no pronouncement as to
injunction via its order of August 20, 2002. costs.
And, having heard the parties on the merits, the same court SO ORDERED.”
came out with its challenged Decision of June 6, 2003, the Their motion for reconsideration having been denied by the
dispositive portion of which reads: court in its Order dated December 30, 2003, petitioners
“WHEREFORE, premises considered, pursuant to the enabling elevated the case directly to this Court on pure questions of
franchise under Section 11 of Republic Act No. 7633, the real estate law, ascribing to the lower court the following errors:
6|Page
 1. I.[I]n declaring the real properties of As we see it, the errors assigned may ultimately be reduced to
respondent exempt from real property taxes two (2) basic issues, namely:
notwithstanding the fact that the tax exemption
granted to Bayantel in its original franchise had 1. 1.Whether or not Bayantel’s real properties in
been withdrawn by the [LGC] and that the said Quezon City are exempt from real property
exemption was not restored by the enactment taxes under its legislative franchise; and
of RA 7633. 2. 2.Whether or not Bayantel is required to
2. II.[In] declaring the real properties of exhaust administrative remedies before seeking
respondent exempt from real property taxes judicial relief with the trial court.
notwithstanding the enactment of the [QCRC]
which withdrew the tax exemption which may We shall first address the second issue, the same being
have been granted by RA 7633. procedural in nature.
3. III.[In] declaring the real properties of Petitioners argue that Bayantel had failed to avail itself of
respondent exempt from real property taxes the administrative remedies provided for under the LGC,
notwithstanding the vague and ambiguous adding that the trial court erred in giving due course to
grant of tax exemption provided under Section Bayantel’s petition for prohibition. To petitioners, the appeal
11 of RA 7633. mechanics under the LGC constitute Bayantel’s plain and
4. IV.[In] declaring the real properties of speedy remedy in this case.
respondent exempt from real property taxes The Court does not agree.
notwithstanding the fact that [it] had failed Petitions for prohibition are governed by the following
provision of Rule 65 of the Rules of Court:
179 SEC. 2. Petition for prohibition.—When the proceedings of any
VOL. 484, MARCH 6, 179 tribunal, . . . are without or in excess of its or his jurisdiction, or with
2006 grave abuse of discretion amounting to lack or excess of jurisdiction,
and there is no appeal or any other plain, speedy, and adequate
City Government of Quezon
remedy in the ordinary course of law, a person aggrieved thereby
City vs. Bayan may file a verified petition in the proper court, alleging the facts with
Telecommunications, Inc. certainty and praying that judgment be rendered commanding the
respondent to desist from further proceedings in the action or matter
1. to exhaust administrative remedies in its claim specified therein, or otherwise, granting such incidental reliefs as law
for real property tax exemption. (Words in and justice may require.
bracket added.) With the reality that Bayantel’s real properties were already
levied upon on account of its nonpayment of real estate taxes

7|Page
thereon, the Court agrees with Bayantel that an appeal to the This brings the Court to the more weighty question of
LBAA is not a speedy and adequate remedy within the whether or not Bayantel’s real properties in Quezon City are,
180 under its franchise, exempt from real property tax.
180 SUPREME COURT The lower court resolved the issue in the affirmative,
REPORTS basically owing to the phrase “exclusive of this franchise”
ANNOTATED found in Section 11 of Bayantel’s amended franchise, Rep. Act
City Government of Quezon No. 7633. To petitioners, however, the language of Section 11
City vs. Bayan of Rep. Act No. 7633 is neither clear nor unequivocal. The
Telecommunications, Inc. elabo-
_______________
context of the aforequoted Section 2 of Rule 65. This is not to
mention of the auction sale of said properties already scheduled 7
 250 SCRA 500 (1995).
on July 30, 2002.
181
Moreover, one of the recognized exceptions to the
VOL. 484, MARCH 6, 181
exhaustion-of-administrative remedies rule is when, as here,
only legal issues are to be resolved. In fact, the Court, 2006
cognizant of the nature of the questions presently involved, City Government of Quezon
gave due course to the instant petition. As the Court has said City vs. Bayan
in Ty vs. Trampe: 7 Telecommunications, Inc.
x x x. Although as a rule, administrative remedies must first be rate and extensive discussion devoted by the trial court on the
exhausted before resort to judicial action can prosper, there is a well- meaning and import of said phrase, they add, suggests as much.
settled exception in cases where the controversy does not involve It is petitioners’ thesis that Bayantel was in no time given
questions of fact but only of law. x x x. any express exemption from the payment of real property tax
Lest it be overlooked, an appeal to the LBAA, to be properly under its amendatory franchise.
considered, required prior payment under protest of the amount There seems to be no issue as to Bayantel’s exemption from
of P43,878,208.18, a figure which, in the light of the then real estate taxes by virtue of the term “exclusive of the
prevailing Asian financial crisis, may have been difficult to franchise” qualifying the phrase “same taxes on its real estate,
raise up. Given this reality, an appeal to the LBAA may not be buildings and personal property,” found in Section 14, supra,
considered as a plain, speedy and adequate remedy. It is thus of its franchise, Rep. Act No. 3259, as originally granted.
understandable why Bayantel opted to withdraw its earlier The legislative intent expressed in the phrase “exclusive of
appeal with the LBAA and, instead, filed its petition for this franchise” cannot be construed other than distinguishing
prohibition with urgent application for injunctive relief in Civil between two (2) sets of properties, be they real or personal,
Case No. Q-02-47292. The remedy availed of by Bayantel owned by the franchisee, namely, (a) those actually, directly
under Section 2, Rule 65 of the Rules of Court must be upheld. and exclusively used in its radio or telecommunications

8|Page
business, and (b) those properties which are not so used. It is which are actually, directly and exclusively used in the
worthy to note that the properties subject of the present operation of its franchise are “exempted” from any property
controversy are only those which are admittedly falling under tax.
the first category. Bayantel’s franchise being national in character, the
To the mind of the Court, Section 14 of Rep. Act No. 3259 “exemption” thus granted under Section 14 of Rep. Act No.
effectively works to grant or delegate to local governments of 3259 applies to all its real or personal properties found
Congress’ inherent power to tax the franchisee’s properties anywhere within the Philippine archipelago.
belonging to the second group of properties indicated above, However, with the LGC’s taking effect on January 1, 1992,
that is, all properties which, “exclusive of this franchise,” are Bayantel’s “exemption” from real estate taxes for properties of
not actually and directly used in the pursuit of its franchise. As whatever kind located within the Metro Manila area was, by
may be recalled, the taxing power of local governments under force of Section 234 of the Code, supra, expressly withdrawn.
both the 1935 and the 1973 Constitutions solely depended upon But, not long thereafter, however, or on July 20, 1992,
an enabling law. Absent such enabling law, local government Congress passed Rep. Act No. 7633 amending Bayantel’s
units were without authority to impose and collect taxes on real original franchise. Worthy of note is that Section 11 of Rep.
properties within their respective territorial jurisdictions. While Act No. 7633 is a virtual reenacment of the tax provision, i.e.,
Section 14 of Rep. Act No. 3259 may be validly viewed as an Section 14, supra, of Bayantel’s original franchise under Rep.
implied delegation of power to tax, the delegation under that Act No. 3259. Stated otherwise, Section 14 of Rep. Act No.
provision, as couched, is limited to impositions over properties 3259 which was deemed impliedly repealed by Section 234 of
of the franchisee which are not actually, directly and the LGC was expressly revived under Section 14 of Rep. Act
exclusively used in the pursuit of its franchise. Necessarily, No. 7633. In concrete terms, the realty tax exemption
other properties of Bayantel directly heretofore enjoyed by Bayantel under its original franchise, but
182 subsequently withdrawn by force of Section 234 of the LGC,
182 SUPREME COURT has been restored by Section 14 of Rep. Act No. 7633.
REPORTS The Court has taken stock of the fact that by virtue of
ANNOTATED Section 5, Article X of the 1987 Constitution,  local 8

City Government of Quezon governments

_______________
City vs. Bayan
Telecommunications, Inc. 8
 Sec. 5. Each local government unit shall have the power to create its own
used in the pursuit of its business are beyond the pale of the sources of revenues and to levy taxes . . . subject to such guidelines and
limitations as the Congress may provide, consistent with the basic policy of
delegated taxing power of local governments. In a very real local autonomy. x x x. Mactan Cebu International Airport Authority vs.
sense, therefore, real properties of Bayantel, save Marcos, 261 SCRA 667 (1996), per then Associate Justice, now retired Chief
those exclusive of its franchise, are subject to realty taxes. Justice Hilario G. Davide, Jr., ponente.
Ultimately, therefore, the inevitable result was that all realties 183

9|Page
VOL. 484, MARCH 6, 183 subject to such guidelines and limitations as the Congress may
2006 provide which, however, must be consistent with the basic policy of
local autonomy. (at p. 680; Emphasis supplied.)
City Government of Quezon
City vs. Bayan _______________
Telecommunications, Inc. 9
 SEC. 232. Power to Levy Real Property Tax.—A province or city or
are empowered to levy taxes. And pursuant to this municipality within the Metropolitan Manila Area may levy an annual ad
constitutional empowerment, juxtaposed with Section 232  of 9 valorem tax on real property such as land, building, machinery, and other
the LGC, the Quezon City government enacted in 1993 its improvement not hereinafter specifically exempted.
10
 See Footnote #8, supra.
local Revenue Code, imposing real property tax on all real
properties found within its territorial jurisdiction. And as earlier 184
stated, the City’s Revenue Code, just like the LGC, expressly 184 SUPREME COURT
withdrew, under Section 230 thereof, supra, all tax exemption REPORTS
privileges in general. ANNOTATED
This thus raises the question of whether or not the City Government of Quezon
City’s Revenue Code pursuant to which the city treasurer of City vs. Bayan
Quezon City levied real property taxes against Bayantel’s real Telecommunications, Inc.
properties located within the City effectively withdrew the tax
Clearly then, while a new slant on the subject of local taxation
exemption enjoyed by Bayantel under its franchise, as
now prevails in the sense that the former doctrine of local
amended.
government units’ delegated power to tax had been effectively
Bayantel answers the poser in the negative arguing that
modified with Article X, Section 5 of the 1987 Constitution
once again it is only “liable to pay the same taxes, as any other
now in place, .the basic doctrine on local taxation remains
persons or corporations on all its real or personal
essentially the same. For as the Court stressed in Mac-tan, “the
properties, exclusive of its franchise.”
power to tax is [still] primarily vested in the Congress.”
Bayantel’s posture is well-taken. While the system of local
This new perspective is best articulated by Fr. Joaquin G.
government taxation has changed with the onset of the 1987
Bernas, S.J., himself a Commissioner of the 1986
Constitution, the power of local government units to tax is still
Constitutional Commission which crafted the 1987
limited. As we explained in Mactan Cebu International Airport
Constitution, thus:
Authority: 10

“What is the effect of Section 5 on the fiscal position of municipal

The power to tax is primarily vested in the Congress; however, in our corporations? Section 5 does not change the doctrine that
jurisdiction, it may be exercised by local legislative bodies, no municipal corporations do not possess inherent powers of
longer merely be virtue of a valid delegation as before, but pursuant taxation. What it does is to confer municipal corporations a
to direct authority conferred by Section 5, Article X of the general power to levy taxes and otherwise create sources of
Constitution. Under the latter, the exercise of the power may be revenue. They no longer have to wait for a statutory grant of these

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powers. The power of the legislative authority relative to the fiscal city or municipality within the Metropolitan Manila Area may
powers of local governments has been reduced to the authority to levy an annual ad valorem tax on real property such as land,
impose limitations on municipal powers. Moreover, these limitations building, machinery, and other improvement not  hereinafter
must be “consistent with the basic policy of local autonomy.” The specifically exempted.” Under this law, the Legislature
important legal effect of Section 5 is thus to reverse the principle highlighted its power to thereafter exempt certain realties from
that doubts are resolved against municipal
the taxing power of local government units. An interpretation
corporations. Henceforth, in interpreting statutory provisions on
municipal fiscal powers, doubts will be resolved in favor of denying Congress such power to exempt would reduce the
municipal corporations. It is understood, however, that taxes phrase “not hereinafter specifically exempted” as a pure jargon,
imposed by local government must be for a public purpose, uniform without meaning whatsoever. Needless to state, such absurd
within a locality, must not be confiscatory, and must be within the situation is unacceptable.
jurisdiction of the local unit to pass.”  (Emphasis supplied.)
11
For sure, in Philippine Long Distance Telephone Company,
Inc. (PLDT) vs. City of Davao,  this Court has upheld the
13

In net effect, the controversy presently before the Court power of Congress to grant exemptions over the power of local
involves, at bottom, a clash between the inherent taxing power government units to impose taxes. There, the Court wrote:
of the legislature, which necessarily includes the power to Indeed, the grant of taxing powers to local government units
exempt, and the local government’s delegated power to tax under the Constitution and the LGC does not affect the power of
under the aegis of the 1987 Constitution. Congress to grant exemptions to certain persons, pursuant to a
_______________ declared national policy. The legal effect of the constitutional grant
to local governments simply means that in interpreting statutory
 Bernas, The Constitution of the Republic of the Philippines, a
11

Commentary, Vol. 11, 1988 ed., p. 381.

provisions on municipal taxing powers, doubts must be resolved in
favor of municipal corporations. (Emphasis supplied.)
185
VOL. 484, MARCH 6, 185 As we see it, then, the issue in this case no longer dwells on
2006 whether Congress has the power to exempt Bayantel’s proper-
_______________
City Government of Quezon
City vs. Bayan  Section 6, Quezon City Revenue Code, quoted in Petitioners’
12

Memorandum; Rollo, p. 323.

Telecommunications, Inc.  363 SCRA 522 (2001), per Associate Justice Vicente V.
13

Now to go back to the Quezon City Revenue Code which Mendoza, ponente.

imposed real estate taxes on all real properties within the city’s
186
territory and removed exemptions theretofore “previously
granted to, or presently enjoyed by all persons, whether natural
186 SUPREME COURT
or juridical ….,”  there can really be no dispute that the power
12
REPORTS
of the Quezon City Government to tax is limited by Section ANNOTATED
232 of the LGC which expressly provides that “a province or City Government of Quezon

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 City vs. Bayan VOL. 484, MARCH 6, 187
Telecommunications, Inc. 2006
ties from realty taxes by its enactment of Rep. Act No. 7633 United Kimberly-Clark
which amended Bayantel’s original franchise. The more Employees Union-Philippine
decisive question turns on whether Congress actually did Transport General Workers’
exempt Bayantel’s properties at all by virtue of Section 11 Organization vs. Kimberly-
of Rep. Act No. 7633. Clark Phils., Inc.
Admittedly, Rep. Act No. 7633 was enacted subsequent to The power to tax is no longer vested exclusively on Congress.
the LGC. Perfectly aware that the LGC has already withdrawn (National Power Corporation vs. City of Cabanatuan, 401
Bayantel’s former exemption from realty taxes, Congress opted SCRA 259 [2003])
to pass Rep. Act No. 7633 using, under Section 11 thereof, Section 193 of the Local Government Code is indicative of
exactly the same defining phrase “exclusive of this franchise” the legislative intent to vest broad taxing powers upon local
which was the basis for Bayantel’s exemption from realty taxes government units and to limit exemptions from local taxation
prior to the LGC. In plain language, Section 11 of Rep. Act No. to entities specifically provided. (Philippine Rural Electric
7633 states that “the grantee, its successors or assigns shall be Cooperatives Association, Inc. vs. The Secretary, Department
liable to pay the same taxes on their real estate, buildings and of Interior and Local Government, 403 SCRA 558 [2003])
personal property, exclusive of this franchise, as other persons
or corporations are now or hereafter may be required by law to ——o0o——
pay.” The Court views this subsequent piece of legislation as
an express and real intention on the part of Congress to © Copyright 2021 Central Book Supply, Inc. All rights
once again remove from the LGC’s delegated taxing power, reserved.
all of the franchisee’s (Bayantel’s) properties that are actually,
directly and exclusively used in the pursuit of its franchise.
WHEREFORE, the petition is DENIED.
No pronouncement as to costs.
SO ORDERED.
     Puno (Chairperson), Sandoval-Gutierrez, Corona and 
Azcuna, JJ., concur.
Petition denied.
Notes.—Any exemption from the payment of a tax must be
clearly stated in the language of the law. (Commissioner of
Internal Revenue vs. Court of Appeals, 329 SCRA 237 [2000])
187

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