Republic of the Philippines

CENTRAL BOARD OF ASSESSMENT APPEALS Manila

GMA NETWORK, INC.,

Petitioner-Appellant,

-versus-

CBAA CASE NO. M-31 (LBAA Case No.. 08-002)

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

-and-

ENGR. ENRIQUE F. BARROGA, in his capacity as CITY ASSESSOR OF COTABATO CITY,
Respondent-Appellee. x—————————————————x

R E S O L U T I O N

On December 18, 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 February 22, 2010 and was received by this Board on March

01, 2010.

Alleging that it received a copy of the assailed Decision on February 05,

2010, Petitioner-Appellant based its motion on the following ground:

THE HONORABLE OFFICE ERRED WHEN IT HELD THAT REPUBLIC ACT NO. 7252 DOES NOT CATEGORICALLY GRANT PETITIONER GMA EXEMPTION FROM REAL PROPERTY TAX.

Petitioner-Appellant GMA alleges:

The Honorable Office’s interpretation of the phrase “exclusive of this franchise” cannot prevail over the rulings in the Bayantel and Digitel cases.
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1. In the Assailed Decision, the Honorable Office held that petitioner GMA is not exempt from payment of real property tax by interpreting the phrase “exclusive of this franchise” to mean “not taking into account; excluding from consideration”1, “exclusive of”2 as “not including, not counting”3. Thus:

“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.”4

This is contrary to the Supreme Court’s pronouncement in the cases City Government of Quezon City v. Bayan Telecommunications, Inc. (March 6, 2006, 484 SCRA 169) (the “Bayantel Case”) and Digital Telecommunications Philippines, Inc. v. Province of Pangasinan (February 23, 2007, 516 SCRA 558) (the “Digitel Case”). In these cases, the Supreme Court held that the legislative intent expressed in the phrase “exclusive of this franchise” cannot be construed other than distinguishing between two (2) sets of properties, be they real or personal, owned by the franchisee, namely, (a) those actually, directly and exclusively used in its radio or telecommunications business, and (b) those properties which are not so used;

2. The Honorable Office even declared that the Supreme Court rulings in the Bayantel and Digitel cases practically changed the law by substituting the phrase “exclusive of” with another which says “NOT actually, directly and exclusively used in” and held that the conclusions of the Supreme Court in both the Bayantel and Digitel cases are based on false premises. The time-honored principle of stare decisis says that, “[i]t need not be stated that the Supreme Court, being the court of last resort, is the final arbiter of all legal question(s) properly brought before it and that its decision in any given case constitutes the law of that particular case. Once its judgment becomes final it is binding on all inferior courts, and hence beyond their power and authority to alter or modify”5;

3. In the case of Mangayao vs. De Guzman (G.R. No. L-24787 February 22, 1974)6, it was held that:

“It need not be stated that the Supreme Court, being the court of last resort, is the final arbiter of all legal question(s) properly brought before it and that its decision in any given case constitutes the law of that particular case. Once its judgment becomes final it is binding on all inferior courts, and hence beyond their power and authority to alter or modify”. (emphasis ours)

4. Moreover, Supreme Court decisions are not reviewable by any other agency, branch, department, or official of Government because the Supreme Court is supreme − the third great department of government entrusted exclusively with the judicial power to adjudicate with finality all justiciable disputes, public and private. Thus, in the case of In Re: Joaquin T. Borromeo7, it was held that:

“The sound, salutary and self-evident principle prevailing in this as in most jurisdictions, is that judgments of the highest tribunal of the land may not be reviewed by any other agency, branch, department, or official of Government. Once the Supreme Court has spoken, there the matter must rest. Its decision should not and cannot be appealed to or reviewed by any other entity, much less reversed or modified on the ground

1 Citing “Webster’s International Dictionary of the English Language Unabridged (1966 ed., p. 73)”. 2 Citing “Webster’s New World Dictionary, Warner Brooks Paperback Ed. (1990).
3 Reader’s Digest Encyclopedic Dictionary, First Edition (1994). 4 Page 15, Assailed Decision.
5 Mangayao vs. De Guzman (G.R. No. L-24787 February 22, 1974) citing Kabigting vs. Acting Director of Prisons, (G.R. No. L-15548, October 30, 1962).
6 Citing Kabigting vs. Acting Director of Prisons, (G.R. No. L-15548, October 30, 1962).
7 In Re Joaquin T. Borromeo, Rel. Cebu City Chapter of the Integrated Bar of the Philippines, A.M. No. 93-7-696-0, February 21, 1995).

that it is tainted by error in its findings of fact or conclusions of law, flawed in its logic or language, or otherwise erroneous in some other respect. This, on the indisputable and unshakable foundation of public policy, and constitutional and traditional principle.” (emphasis ours)

The Honorable Office’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. ———————————————–

5. In the Assailed Decision, the Honorable Office erroneously applied the principle of “stare decisis” when it ruled that:

“Incidentally, all the three (3) Supreme Court decisions (Bayantel, Digitel and RCPI) dealt with the said tax provisions of the franchises of the telecommunications companies. Applying, therefore, the doctrine of stare decisis, the Supreme Court’s decision in RCPI (April 13, 2005), being the earliest of the three, should prevail over the same court’s decisions in Bayantel (March 6, 2006) and Digitel (February23, 2007).”8

Well-settled is the rule that the doctrine of stare decisis applies only to cases involving substantially the same facts. Thus, in the case of DOTC vs. Cruz9, the Supreme Court held that:

“Mamaril is binding and applicable to the present case following the salutary doctrine of stare decisis et non quieta movere which means “to adhere to precedents, and not to unsettle things which are established.” (citation omitted) Under the doctrine, when the Supreme Court has once laid down a principle of law as applicable to a certain state of facts, it will adhere to that principle, and apply it to all future cases, where facts are substantially the same; regardless of whether the parties and property are the same.” (emphasis ours)

6. A perusal of the RCPI ruling would reveal that the same is not applicable to the instant case. In the said case, RCPI contends that the “in lieu of all taxes” clause in its amended franchise exempts it from paying all taxes other than the franchise tax. The Supreme Court held that “the ‘in lieu of all taxes’ clause in the third sentence of Section 14 of RCPI franchise (R.A. 2036, as amended by R.A. 4054), cannot negate the first sentence of the same Section 14, which imposes the real estate tax on RCPI.” In other words, the real estate tax in the franchise of RCPI is an exception to the ‘in lieu of all taxes” clause;

7. In addition, the ruling in the RCPI case, in saying that previous exemption granted to GLOBE is deemed revoked with respect to its radio station building, machinery shed and relay station tower, is premised on Section 11 of R.A. No. 7229 (GLOBE’s old legislative franchise), which in turn was entirely reenacted and adopted under Section 3 of R.A. No. 4540 (GLOBE’s new legislative franchise) which provides:

“Sec. 3. Section nine of the same Act is hereby amended to read as follows:

“Sec. 9(a) The Grantee shall be liable to pay the same taxes on its real estate, buildings, and personal property, exclusive of the franchise, as other persons or corporations are now or hereafter

8 Page 26, Assailed Decision.
9 G.R. No. 178256, July 23, 2008, citing Confederation of Sugar Producers Association, Inc. vs. Department of Agrarian Reform (DAR), G.R. No. 169514, March 30, 2007, 519 SCRA 582, 618.

may be required by law to pay, 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 declared exempt in this section.” (Underscoring supplied)

8. The above-stated provision of Globe’s new legislative franchise contains a qualification to the phrase “exclusive of the franchise” which states “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” (the “Qualification”) which qualification does not exist in petitioner GMA Network’s legislative franchise. The Supreme Court in the RCPI case found it necessary to define the subject “Tower” therein and state that it is not a radio equipment because of the above Qualification in the phrase “exclusive of this franchise” present in Globe’s legislative franchise. In the case of petitioner GMA’s franchise, all its real properties shall be exempt from payment of realty tax as long as it is being used actually, directly and exclusively in the pursuit of its franchise.

9. To demonstrate, we quote hereunder the legislative franchise of RCPI side by side with that of GMA:

Section 14 of RA 2036, as amended by Republic Act No. 4054 (RCPI’s franchise), reads:

“Sec. 14. In consideration of the franchise and rights hereby 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, co-partnerships, 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)”

On the other hand, Petitioner GMA’s franchise reads:

“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.”

10. In the later rulings in Bayantel (March 6, 2006) and Digitel (February 23, 2007), the Supreme Court enforced the “exclusive of this franchise” clause found in Bayantel’s, and Digitel’s franchises when it held that Bayantel and Digitel are exempt from realty taxes as long as the property is actually, directly and exclusively used in the pursuit of its franchise;

11. Based on the foregoing, the Honorable Office clearly erred when it ruled that petitioner GMA’s real properties are subject to real estate tax;

12. Premises considered, it is respectfully prayed that the Decision dated December 18, 2009 be RECONSIDERED and the subject properties be declare exempt from real property tax and excluded, cancelled or dropped from the roll of taxable properties.

In its decision of December 18, 2009 (the “Assailed Decision”) this

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

cases were based on false premises when the Court said that the phrase

“exclusive of this franchise” means that all properties of Bayantel and Digitel

that are actually, directly and exclusively used in the pursuit of their

respective franchises are exempt from payment of the real property tax.

We do not really have to dwell on this matter anymore since this was the

subject of a lengthy and exhaustive discussion in our decision of December

18, 2008.

In a similar case, GMA Network, Inc. vs. Ruby Fababeir in his capacity

as Provincial Treasurer of Romblon (CBAA Case No. V-29, August 13, 2009),

Petitioner GMA, in its Motion for Reconsideration in that case, said 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.” We

said then that this statement was too puerile that should not merit any further

comment. At any rate, we indulged said petitioner with the following

comments, thus:

“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 subject. 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.”

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).

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 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 facts and point at issue

as those in the Bayantel and Digitel cases. GMA says that the tax provisions in

RCPI’s legislative franchise is different from the tax provisions found in the

franchise of GMA in that RCPI’s tax provisions has a “qualification” which says

“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. In fact, this “qualification” is an

exemption from customs duties, tariffs, etc. on RCPI’s imported items. Such

“qualification” does not in anyway affect the fact that RCPI is liable to pay

realty taxes.

As earlier stated herein, the phrase “exclusive of this franchise” found in

the tax provisions of the franchises of Bayantel, Digitel and GMA qualifies the

phrase “personal property” and means “excluding this franchise.” The

phrase “personal property, exclusive of this franchise” simply means “personal

property, excluding this franchise.”

On the other hand, the phrase “other personal property” found in the ‘tax

provisions’ of RCPI’s franchise means that “personal property, other than the

franchise.” The first sentence of Section 14 of RCPI’s franchise should read,

thus:

“In consideration of the franchise and rights hereby 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 . . . on real estate, buildings and 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,

etc., 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 Third 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.

Petitioner GMA neglected to mention that, in Digital

Telecommunications Philippines, Inc. vs. City Government of Batangas (G.R.

No. 156040, December 11, 2008) (the “2008 Digitel Case”), the Supreme

Court en banc reversed the decisions rendered by its Second and Third

Divisions in the Bayantel and the earlier Digitel cases, respectively. Of course,

GMA would argue that the decision in the “2008 Digitel case” does not have a

retroactive effect pursuant to the Supreme Court decision in Co vs. Court of

Appeals (G.R. No. 100776, October 28, 1993), where it was held that “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.”

As also stated by GMA, the Supreme Court, 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), and Land Bank of the Philippines vs. De Leon (G.R. No.

143275, March 20, 2000), held that:

“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.”

In essence, the Supreme Court ruled that a retroactive application of a

Supreme Court decision adopting a new doctrine should not apply to parties

who had relied on the old doctrine and acted on the faith thereof for the

reason that a retroactive application of such a decision usually divests

rights that have already become vested or impairs the obligations of

contracts.

Such reason does not exist in the instant case. There is no showing that

GMA had acquired a vested right by relying on, and acting on the faith of, the

doctrine enunciated by the Supreme Court, either in the case of The City

Government of Quezon City vs. Bayan Telecommunications, Inc. (March 6,

2006, 484 SCRA 169) or in the case of Digital Communications Philippines,

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

Therefore, GMA does not possess any vested right which, by the retroactive

application of Supreme Court decision in Digital Communications Philippines,

Inc. vs. City Government of Batangas (G.R. No. 156040, December 11, 2008),

might be in danger of being divested from it (GMA).

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, May 14, 2010.

(Signed) CESAR S. GUTIERREZ
Chairman

(Signed)
ANGEL P. PALOMARES Member

(Signed) RAFAEL O. CORTES
Member