DIGITAL TECOMMUNICATIONS PHILS, INC. vs PROVIONCE OF PANGASINAN represented by RAMN A. CRISOSTOMO, PROV. TREASURER GR 152534, Feb.

23, 2007

FACTS: Respondent instituted a petition for mandamus, Collection of Sum of Money & Damages against DIGITEL. [14] RTCrendered a Decision in favor of respondent Province of Pangasinan, ordering DIGITEL to open its books, and records, among others. In ruling against the claimed exemption, the court a quo held that petitioner DIGITELs legislative franchise does not work to exempt the latter from payment of provincial franchise and real property taxes. It pointed out that Section 137 of the Local Government Code had already withdrawn any exemption granted to anyone; as such, the LGU may impose a tax on a business enjoying a franchise. DIG IT E L m aint a i ns th at t ax ex e mp t io n f ou n d i n th e f ra nc h is es of G lo b e, Sm ar t an d B e l l f in ds a p pl ic at i on t o DI G IT E L. As the controversy involves pure questions of law, this Petition for Review on Certiorari under Rule 45 of the Rules of Court.

ISSUES AND RULINGS: 1) WON, DIGITEL is entitled to the exemption from the payment of franchise tax in relation to the tax exemption provisions found in the legislative franchises of Globe and Smart? NO. The in-lieu-of-all-taxes clause/provision in the legislative franchises of Globe, Smart and Bell, among others, has now become functus officio, made inoperative for lack of a franchise tax. Therefore, taking into consideration the above, from 1 January 1996, petitioner DIGITEL ceased to be liable for national franchise tax and in its stead is imposed a 10% VAT in accordance with Section 108 of the Tax Code. 2) WON, DIGITELs real properties re exempt from real property taxes by virtue of the phrase exclusive of this franchise found in Section 5 of its legislative franchise, Republic Act No. 7678? YES. However, it is with the caveat that such exemption solely applies to those real properties actually, directly and exclusively used by the grantee in its franchise. WHEREFORE, petition is DENIED. RTCs decision AFFIRMED in so far as it finds petitioner DIGITEL liable for the payment of provincial franchise and real property taxes. However, the amount of taxes must be recomputed.