DIGITAL TELECOMMUNICATIONS, INC. vs. CITY GOVERNMENT OF BATANGAS- Real Property Tax

FACTS:

Petitioner was granted a 25-year franchise to install telecommunications systems under a law which states that “The grantee shall be liable to pay the same taxes on its real estate, buildings, and personal property exclusive of this franchise x x x.” As they were not being issued a Mayor’s permit, Petitioner paid the Real Property Tax under protest arguing that the phrase “exclusive of this franchise” means that only the real properties not used in furtherance of its franchise are subject to Real Property Tax while those real properties which are used in its telecommunications business are exempt from Real Property Tax.

ISSUE:

Are Petitioner’s real properties used in its telecommunications business exempt from Real Property Tax?

HELD:

NO. Petitioner’s real properties, whether or not used in its telecommunications business, are subject to Real Property Tax. The phrase “exclusive of this franchise” qualifies the term “personal property.” This means that Petitioner’s legislative franchise, which is an intangible personal property, shall not be subject to taxes. This is to put franchise grantees in parity with non-franchisees as the latter obviously do not have franchises which may potentially be subject to realty tax. There is nothing in the first sentence of Section 5 which expressly or even impliedly exempts Petitioner from Real Property Tax. Petitioner’s reliance on the BLGF’s opinion stating that real properties owned by telecommunications companies are exempt from Real Property Tax is without basis as the BLGF has no authority to rule on claims for exemption from Real Property Tax.