Republic of the Philippines

CENTRAL BOARD OF ASSESSMENT APPEALS Manila

GMA NETWORK, INC.,

Petitioner-Appellant,

CBAA CASE NO. M-27 -versus-

THE LOCAL BOARD OF ASSESSMENT APPEALS OF THE CITY OF ZAMBOANGA,
Appellee,

-and-

SOLEDA L. LI, in her capacity as CITY TREASURER OF THE CITY OF ZAMBOANGA,
Respondent-Appellee. x———————————————-x

R E S O L U T I O N

On August 13, 2009, this Board rendered a Decision in the above-

entitled case dismissing the appeal for lack of merit.

Not satisfied, Petitioner-Appellant GMA Network, Inc. moved for a

reconsideration of said decision. The motion was posted at the SM Mall of Asia

Postal Station on September 14, 2009 and was received by this Board on

September 25, 2009.

Alleging that it received a copy of the questioned Decision on August 28,

2009, Petitioner-Appellant based its motion on the following grounds:

A

THE HONORABLE BOARD ERRED WHEN IT DENIED THE INSTANT PETITION BY HOLDING THAT REPUBLIC ACT NO. 7252 DOES NOT CATEGORICALLY GRANT PETITIONER GMA EXEMPTION FROM REAL PROPERTY TAX.
B

THE HONORABLE BOARD ERRED WHEN IT DENIED THE INSTANT PETITION BASED ON THE SUPREME COURT RULING IN THE CASE ENTITLED “DIGITAL TELECOMMUNICATIONS PHILIPPINES, INC. VS. CITY GOVERNMENT OF BATANGAS, G.R. No. 156040, DECEMBER 11, 2008.

In City Government of Quezon City v. Bayan Telecommunications, Inc.

(March 6, 2006, 484 SCRA 169) and Digital Telecommunications Philippines,

Inc. v. Province of Pangasinan (February 23, 2007, 516 SCRA 558), the

Supreme Court ruled that the phrase “exclusive of this franchise” means that

all of the real properties of Bayan Telecommunications, Inc. (“Bayantel”) and

Digital Telecommunications Philippines, Inc. (“Digitel”) “that are actually,

directly and exclusively used in the pursuit of their respective franchises are

exempt from realty taxes.”

In its decision of August 13, 2009 (the “Assailed Decision”) this Board

stated that the Supreme Court’s conclusions in the Bayantel and Digitel cases

were based on false premises because the phrase “exclusive of this franchise”

did not give Bayantel or Digitel any tax exemptions. Such phrase is just a

qualification of, or a limitation on, the phrase “personal property”. “Exclusive of”

actually means “not including” and, therefore, “exclusive of this franchise”

means “not including this franchise”. The first sentence of the tax

provisions of Bayantel and Digitel’s legislative franchises should read as

follows:

“The grantee, its successors or assigns shall be liable to pay the same taxes on their real estate, buildings, and personal property, not including this franchise, as other persons or corporations are now or hereafter may be required by law to pay.”

Anent the first ground, Petitioner GMA says that Our “interpretation is

absurd as it adheres to the view that only the franchise itself is exempt

from real property tax, which is incorrect because the franchise itself is

not, and cannot be, subject to real property tax.” This statement is too

puerile that should not merit any further comment. But, since petitioner brought

this up, the least that this Board could do is indulge said petitioner.

The first sentence of Section 8 of R.A. 7252 (GMA’s legislative

franchise) reads as follows:

“SECTION 8. Tax Provisions. − The grantee, its successors or assigns shall be liable to pay the same taxes on their 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. . .”

As petitioner suggests, We shall confine the discussion to the matter of

the real property tax. Only real properties are the subjects of the real property

tax; the franchise and other personal properties are not. So, if the phrase “and

personal property, exclusive of this franchise” is truncated or deleted from the

above-quoted ‘Tax Provisions’, the same tax provision would read as follows:

“SECTION 8. Tax Provisions. − The grantee, its successors or assigns shall be liable to pay the same taxes on their real estate, buildings as other persons or corporations are now or hereafter may be required by law to pay. . .”

It is very clear then that the ‘tax provisions’ in the franchises of Bayantel

and Digitel, as well as that of petitioner, do not even allude to an exemption

from payment of the real property tax.

Petitioner-Appellant says that Our interpretation is contrary to, and

cannot prevail over, the Supreme Court’s own interpretation of the same

phrase. Petitioner GMA could not, however, say that this Board’s interpretation

of the phrase “exclusive of this franchise” is incorrect because such

interpretation is absolutely correct as borne out by the Supreme Court’s

decision en banc in Digital Telecommunications Philippines, Inc. vs. City

Government of Batangas, et al. (G.R. No. 156040, December 11, 2008).

But GMA insists that this Board has no business disturbing the Supreme

Court decisions in Quezon City vs. Bayantel and Digitel vs. Pangasinan cases

since such judgments had become final and are, therefore, “binding on all

inferior courts and beyond their power and authority to alter or modify,” citing

Mangayao vs. De Guzoman (G.R. No. L-24787 February 22, 1974).

However, if we were to follow the line of thinking of Petitioner GMA, we

would be doing an INJUSTICE knowing fully well that the decisions in the

Quezon City vs. Bayantel and Digitel vs. Pangasinan cases were against the

law and, therefore, incorrect.

Petitioner GMA states that this Board’s “reliance in the case of RCPI vs.

Provincial Assessor of South Cotabato (G.R. No. 144486, 13 April 2005) in

declaring petitioner’s real properties as taxable is misplaced” and that this

Board “erroneously applied the principle of stare decisis” when it ruled that the

Supreme Court’s decision in the RCPI case should prevail over the Court’s

decisions in Bayantel and Digitel cases, given that the RCPI decision was

rendered earlier (April 13, 2005) than those in Bayantel (March 6, 2006) and

Digitel (February 23, 2007).

The RCPI case may not have exactly the same point at issue as those in

the Bayantel and Digitel cases. However, the franchises of Bayantel, Digitel,

GMA and RCPI have substantially the same ‘tax provisions’, thus:

Section 11 of RA 7633, amending RA 3259 (BAYANTEL’s Franchise):

“SEC. 11. The grantee, its successors or assigns shall be liable to pay the same taxes on their 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. In addition thereto, the grantee, its successors or assigns shall pay a franchise tax equivalent to three percent (3%) of all gross receipts of the telephone or other telecommunications businesses transacted under this franchise by the grantee, its successors or assigns and the said percentage shall be in lieu of all taxes on this franchise or earnings thereof. Provided, That the grantee, its successors or assigns shall continue to be liable for income taxes payable under Title II of the National Internal Revenue Code x x x.” (Emphasis supplied)

Section 5 of Rep. Act No. 7678 (DIGITEL’S Franchise):

“SECTION 5. Tax Provisions. – 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. In addition thereto, the grantee shall pay to the Bureau of Internal Revenue each year, within thirty (30) days after the audit and approval of the accounts, a franchise tax as may be prescribed by law of all gross receipts of the telephone or other telecommunications businesses transacted under this franchise by the grantee: Provided, That the grantee shall continue to be liable for income tax payable under Title II of the National Internal Revenue Code pursuant to Section 2 of Executive Order No. 72 unless the later enactment is amended or repealed, in which case the amendment or repeal shall be applicable thereto x x x.” (Emphasis supplied)

Section 8 of RA 7252 (GMA’s Franchise):

“SECTION 8. Tax Provisions. – The grantee, its successors or assigns shall be liable to pay the same taxes on their 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. In addition thereto, the grantee, its successors or assigns shall pay a franchise tax equivalent to three percent (3%) of all gross receipts of the radio/television business transacted under this franchise by the grantee, its successors or assigns and the said percentage shall be in lieu of all taxes on this franchise or earnings thereof: Provided, That the grantee, its successors or assigns shall continue to be liable for income taxes payable under Title II of the National Internal Revenue Code pursuant to Section 2 of Executive Order No. 72 unless the latter enactment is amended or repealed, in which case the amendment or repeal shall be applicable thereto.” (Emphasis supplied)

Section 14 of RA 2036, as amended by RA 4054 (RCPI’S Franchise):

“Sec. 14. In consideration of the franchise and rights granted and any provision of law to the contrary notwithstanding, the grantee shall pay the same taxes as are now or may hereafter be required by law from other individuals, copartnerships, private, public or quasi-public associations, corporations or joint stock companies, on real estate, buildings and other personal property except radio equipment, machinery and spare parts needed in connection with the business of the grantee, which shall be exempt from customs duties, tariffs and other taxes, as well as those properties declared exempt in this section. In consideration of the franchise, a tax equal to one and one-half per centum of all gross receipts from the business transacted under this franchise by the grantee shall be paid to the Treasurer of the Philippines each year, within ten days after the audit and approval of the accounts as prescribed in this Act. Said tax shall be in lieu of any and all taxes of any kind, nature or description levied, established or collected by any authority whatsoever, municipal, provincial or national, from which taxes the grantee is hereby expressly exempted. (Emphasis supplied)

As earlier stated herein, the phrase “personal property, exclusive of this

franchise” found in the tax provisions of the franchises of Bayantel, Digitel and

GMA means “personal property, not including this franchise.” On the other

hand, the phrase “other personal property” found in the ‘tax provision’ of

RCPI’s franchise means “personal property, other than the franchise.” As in

the case of Bayantel or Digitel or GMA, RCPI shall pay the same taxes as are

now or may hereafter be required by law from other individuals, . . ., on real

estate, buildings and personal property, excluding the franchise itself. This

point was not at issue in the RCPI case because it is too obvious to belabor.

The decisions rendered by the Second and Third Divisions of the

Supreme Court in the Bayantel and Digitel cases, respectively, could not have

modified or reversed the decision of the First Division of the Court in the RCPI

case since, under Article VIII, Sec. 4(3) of The 1987 Constitution of the

Republic of the Philippines, it is provided that “. . . no doctrine or principle of

law laid down by the court in a decision rendered en banc or in division

may be modified or reversed except by the court sitting en banc.” Under

the principle of stare decisis, the decision rendered by the First Division of the

Supreme Court in the RCPI case should prevail over those rendered by the

Second and Third Divisions of the Court in the Bayantel and Digitel cases,

respectively.

As to the second ground, Petitioner-Appellant GMA argues:

1. That the ruling of the Supreme Court en banc in the case of Digital Telecommunications Philippines, Inc. vs. City Government of Batangas (the “2008 Digitel Case”) does not apply in the instant appeal, stating that “Well-settled is the rule that when a doctrine is overruled and a different view is adopted, the new doctrine should be applied prospectively and should not apply to parties who had relied on the old doctrine and acted on the faith thereof” citing the case of Co vs. Court of Appeals (G.R. No. 100776 October 28, 1993), where it was held that:

“Decisions of this Court, although in themselves not laws, are nevertheless evidence of what the laws mean, and this is the reason why under Article 8 of the New Civil Code, “Judicial decisions applying or interpreting the laws or the Constitution shall form a part of the legal system . . . “The interpretation upon a law by this Court constitutes, in a way, a part of the law as of the date that law was originally passed, since this Court’s construction merely establishes the contemporaneous legislative intent that the law thus construed intends to effectuate. The settled rule supported by numerous authorities is a restatement of the legal maxim legis interpretation legis vim obtinet” − the interpretation placed upon the written law by a competent court has the force of law. xxx. It is true that the doctrine was overruled in the Mapa case in 1967, but when a doctrine of this Court is overruled and a different view is adopted, the new doctrine should be applied prospectively, and should not apply to parties who had relied on, the old doctrine and acted on the faith thereof. xxx..” (emphasis ours)

2. That, likewise, in the cases of Spouses Benzonan vs. Court of Appeals (G.R. No. 97973, January 27, 1992), Development Bank of the Philippines vs. Court of Appeals (G.R. No. 97998, January 27, 1992), it was held that:

“As noted by the respondent court, the 1988 case of Belisario reversed the previous rulings of this Court enunciated in Monge, et al. v. Angeles, et al., 101 Phil. 563 [1957] and Tupas vs. Damasco, et al., 132 SCRA 593 [1984] to the effect that the five year period of repurchase should be counted from the date of conveyance or foreclosure sale. The petitioners, however, urge that Belisario should only be applied prospectively or after 1988 since it established a new doctrine.

xxx xxx xxx

But while our decisions form part of the laws of the land, they are also subject to Article 4 of the Civil Code which provides that “laws shall be no retroactive effect unless the contrary is provided.” This is expressed in the familiar legal maxim lex propicit non respicit, the law looks forward not backward. The rationale against retroactivity is easy to perceive. The retroactive application of a law usually divests rights that have already become vested or impairs the obligations of contracts and hence, is unconstitutional (Francisco v. Certeza, 3 SCRA 565 [1961]).

The same consideration underlies our rulings giving only prospective effect to decisions enunciating new doctrines. Thus, we emphasized in People v. Jabinal, 55 SCRA 607 [1974] “. . . when a doctrine of this Court is overruled and a different view is adopted, the new doctrine should be applied prospectively and should not apply to parties who had relied on the old doctrine and acted on the faith thereof.” (emphasis ours)

3. That a retroactive application of the 2008 Digitel ruling will result in denial of substantive due process as it results in deprivation of property rights. In the case of ABS-CBA Broadcasting Corp. vs. Court of Tax Appeals, G.R. No. L-52306, October 12, 1981, its was held that :

“In fact, in the United States, from where Sec. 24 (b) was patterned, it has been held that the Commissioner of Collector is precluded from adopting a position inconsistent with one previously taken where injustice would result therefrom, or where there has been a misrepresentation to the taxpayer.”

4. That, premises considered, it is respectfully prayed that: (a) the Decision dated August 13, 2009 be REVERSED and SET ASIDE; and (b) judgment be rendered ordering the REFUND of Php15,960.51 corresponding to the erroneous collection of real property taxes on petitioner GMA’s real property in Zamboanga City for the period 2006 to 2007 with interest thereon at 12 percent (12%) per annum from 1 February 2008..

As quoted by petitioner GMA, “the retroactive application of a law

usually divests rights that have already become vested or impairs the

obligations of contracts and hence, is unconstitutional (Francisco v. Certeza, 3

SCRA 565 [1961])” and “when a doctrine of this Court is overruled and a

different view is adopted, the new doctrine should be applied prospectively,

and should not apply to parties who had relied on the old doctrine and acted

on the faith thereof (Co vs. Court of Appeals, G.R. No. 100776 October 28,

1993).”

The above pronouncements of the Supreme Court presuppose a

situation where a party, by relying on the old doctrine and acting on the faith

thereof, shall have acquired a substantive right and that such right would be

impaired if the new doctrine were applied. In the instant case, We do not think

petitioner GMA acquired any right by relying on the doctrine enunciated in the

Quezon City vs. Bayantel and Digitel vs. Pangasinan cases and acting on the

faith thereof.

Articles 4 and 8 of the New Civil Code of the Philippines provide, thus:

“Art. 4. Laws shall have no retroactive effect, unless the contrary is provided.”

“Art. 8. Judicial decisions applying or interpreting the laws or the Constitution shall form a part of the legal system of the Philippines.”

In general, laws are prospective, not retroactive. Judicial Decisions,

strictly speaking, are not laws but have the effect of laws. And, like laws, they

have no retroactive effect. A Judicial Decision, however, may be given a

retroactive effect if only to prevent the execution of an unjust previous

decision.

In his Civil Code of the Philippines, Annotated, 4th Edition 1965, Vol.

One, pp.30-31, 32, Prof. Ricardo L. Paras commented under Article 8 thereof,

as follows:

“Are Judicial Decisions Laws?

“While it is true that judicial decisions which apply or interpret the Constitution or the laws are part of the legal system of the Philippines (Art. 8, new Civil Code), still they are NOT laws, for if this were so, the courts would be allowed to legislate contrary to the principle of separation of powers. Indeed, the Courts exist for stating what the law is, not for giving it. (Jus dicere, non jus dare.)” (Emphasis supplied)

xxx xxx xxx

“While the Court has jurisdiction over the case, any error of law or fact committed by the trial court is curable by appeal. After the judgment has become final, the issues that were litigated in the case are no longer debatable by the parties in subsequent proceedings, whether erroneously decided or not (Floretin v. Galera, L-17419, June 30, 162). However, the fact that a decision has become final does NOT prevent a modification thereof, because even with the finality of judgment, when its execution becomes IMPOSSIBLE or UNJUST, it may be modified or altered to harmonize with justice and the facts. (Ronquillo et al. v. Marasigan, L-11621, May 31, 1962, cited in Prof. Edgardo L. Paras’s comments on Art. 8, Civil Code of the Philippines, Fourth Edition, p. 32). (Emphasis supplied)

WHEREFORE, premises considered, the instant Motion for

Reconsideration is hereby DENIED.

SO ORDERED.

Manila, Philippines, March 1, 2010.

(Signed) CESAR S. GUTIERREZ
Chairman

(Signed)
ANGEL P. PALOMARES Member

(Signed) RAFAEL O. CORTES
Member