Quezon City vs. Bayantel G.R. No. 162015 March 6, 2006 Local Taxation


BAYANTEL is a legislative franchise holder under RA 3259 to establish and operate radio stations for domestic telecommunications, radiophone, broadcasting and telecasting. On January 1, 2992, RA 7160 of the “Local Government Code of 1991” took effect. Section 232 of the Code grants local government units within the Metro Manila area the power to levy tax on real properties. Section 234 of the same Code withdrew any exemption from realty tax granted to all persons, natural or juridical.

On July 20, 1992, few months after the LGC took effect, Congress enacted RA 7633, amending Bayantel’s original franchise. In 1993, the Quezon City government enacted the Quezon City Revenue Code imposing real property tax on all real properties in Quezon City.



What is the extent of the Power of Local Taxation?



The power to tax is primarily vested in the Congress; however, it may be exercised by local legislative bodies pursuant to direct authority conferred by Section 5, Article X of the Constitution. Under the latter, the exercise of the power may be subject to such guidelines and limitations as Congress may provide.

Since RA 7633 amended Bayantel’s original franchise and granted it real property tax exemption from its real properties that is directly used in its operations, the Quezon City government cannot levy real property taxes on the real properties of Bayantel that are in Quezon City area.

For sure, in Philippine Long Distance Telephone Company, Inc. (PLDT) vs. City of Davao, this Court has upheld the power of Congress to grant exemptions over the power of local government units to impose taxes. There, the Court wrote:

Indeed, the grant of taxing powers to 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 the constitutional grant to local governments simply means that in interpreting statutory provisions on municipal taxing powers, doubts must be resolved in favor of municipal corporations.

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