GMCR INC.; SMART COMMUNICATIONS, INC.; INT’L COMMUNICATIONS CORP.; ISLA COMMUNICATIONS CO., INC., vs. BELL COMMUNICATIONS PHILS., INC.; THE NATIONAL TELECOMMUNICATIONS COMMISSION AND HON. SIMEON KINTANARGR 16496April 30, 1997----------------------------------------------------------------------------------------------------

FACTS: Bell Telecommunications (BellTel) filed before the National Telecommunications Commission (NTC) an application for a Certificate of Public Convenience and Necessity (CPCN) to procure, install, operate and maintain Nationwide Integrated Telecommunications Services (NITS) and a Provisional Authority (PA) to effect such. During such application, BellTel has not been given a legislative franchise to engage in the telecoms service which made in unable to participate in the deliberations for service area assignments for local exchange carrier service (LEC) where the petitioners above participated in. Subsequently, RA 7692 was enacted granting BellTel a congressional franchise.

On 12 July 1994, BellTel filed a second application for a certificate of public convenience, proposing to install 2.6 million telephone lines in 10 years and to provide a 100% digital local exchange network (NTC Case 94-229). It also moved for the withdrawal of the first application, without prejudice, which was granted by the NTC. BellTel’s application (2nd ) was opposed by various telecommunication companies. BellTel’s application was referred to the Common Carriers Authorization Department (CCAD), which found BellTel’s proposal technically feasible and BellTel to be financially capable. The two deputy commissioners of the NTC signified their approval of the CCAD recommendation. The working draft was prepared by the legal department, was initialed by the two deputy commissioners, but was not signed by NTC Commissioner Simeon Kintanar.

The petitioners questioned the validity of the PA because according to them it is the prevailing policy and procedure in the NTC that the Commissioner has the exclusive authority to sign, validate and promulgate any and all orders, resolutions and decisions of the NTC and only his vote counts. BellTel filed two motions to resolve the application and the issuance of the PA but the NTC did not act on it. In that relation, the petitioners filed an Opposition. Commissioner Kintanar issued an Order setting said motions for hearing but did not resolve said motions. However, no hearing was conducted and it was rescheduled.

BellTel filed a motion to promulgate, after previously filing two urgent ex-parte motion to resolve application, which was not acted upon by the NTC. On 4 July 1995, the NTC denied the motion in an order signed solely by Commissioner Kintanar. On 17 July 1995, BellTel filed a petition for certiorari, mandamus and prohibition against NTC before the Supreme Court. The Court referred the case to the Court of Appeals pursuant to Paragraph 1, Section 9 of BP 129. The Court of Appeals granted BellTel’s position. Hence, the petitions for review by the opposing telecommunication companies and Commissioner Kintanar.

Issue: Whether the vote of the Chairman of the Commission is sufficient to legally render an NTC order, resolution or decision.

Held: Having been organized under Executive Order 146 as a three-man commission, the NTC is a collegial body and was a collegial body even during the time it was acting as a one-man regime. NTC is a collegial body requiring a majority vote out of three members of the commission in order to validly decides a case or any incident therein. The vote alone of the chairman of the Commission, absent the required concurring vote coming from the rest of the membership of the commission to at least arrive at a majority decision, is not sufficient to legally render an NTC order, resolution or decision. EO 546, which created the NTC under the Ministries of Public Works and of Transportation and Communication, does not specifically provide that the NTC is not a collegiate body nor did it mention that NTC should meet En Banc in deciding its case or quasi-judicial functions. However, this does not militate against the collegial nature of the NTC because the Rules of Procedure and Practice applied by the NTC in its proceedings states that in cases heard by the Board En Banc, the resolution or order should be reached with the concurrence of at least two regular members after deliberation and consultation. NTC Circulars 1-1-93, 3-1-93 and the Order of Kintanar, declaring the NTC as a single entity or non-collegial entity, are contrary to law and thus are null and void.

SMART COMMUNICATIONS, INC. and PILIPINO TELECOMMUNICATION CORPORATION vs. NATIONAL TELECOMMUNICATIONS COMMISSIONGR 151908August 12, 2003

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FACTS: On 16 June 2000, the NTC issued Memorandum Circular 13-6-2000, promulgating rules and regulations on the billing of telecommunications services; which includes provisions pertaining to the use and sale of pre-paid cards and unit of billing for cellular mobile telephone service (CMTS). A second memorandum was issued addressed to all cellular mobile telephone service (CMTS) operators, which contained measures to minimize if not totally eliminate the incidents of stealing cellular phone units.

SMART filed a petition to nullify the memorandum regarding the billing and Islacom and Piltel alleged that the NTC has no jurisdiction to regulate the sale of consumer goods such as prepaid call cards since the jurisdiction belongs to the DOTC under the Consumer Act of the Philippines. It further alleged that Billing memo is oppressive, confiscatory and violative of the constitutional prohibition against deprivation of property without due process of law and that such memo will impair the viability of the prepaid cellular service by unduly prolonging the validity and expiration of the prepaid SIM and call cards and the requirement in the memo that the identification of prepaid buyers and call balance announcement are unreasonable thus praying for the nullification of the Billing Circular.

The lower court granted the issuance of the injunction. NTC moved for reconsideration, but was denied. NTC thereafter filed a special civil action for certiorari and probation before the Court of Appeals. The appellate court granted the petition and dismissed the companies’ complaint without prejudice to the referral of their grievances with the NTC. Hence, the petition for review with the Supreme Court.

Issue: Whether a party should have exhausted administrative remedies before it filed the case in court.

Held: No, the parties need not exhaust administrative remedies. A party need not exhaust administrative remedies before going to Court, when questioning the validity or constitutionality of a rule or regulation issued by an administrative agency. The principle only applies when the act of the agency was performed pursuant to its

quasi-judicial function, and not when the assailed and pertained to its rule-making or quasi-legislative power. The quasi-legislative function or rule-making power of an administrative agency is different from its quasi-judicial or administrative ad judicatory power. The first is the product of a delegated legislative power to create new and additional legal provisions that have the effect of law. It must be in accordance with the Constitution and other requirements by the law. The second involves the power to hear and determine questions of fact to which the legislative policy is to apply and to decide in accordance with the standards lay down by the law itself in enforcing and administering the same law.Since the issuance by the NTC of the two circulars was pursuant to its rule-making power, the petitioners were justified in invoking the judicial power of the RTC to assail the constitutionality and validity of said circulars.

PLDT vs. THE NATIONAL TELECOMMUNICATIONS COMMISSION AND CELLCOM, INC., EXPRESS TELECOMMUNICATIONS CO., INC (ETCI)GR 88404October 18, 1990---------------------------------------------------------------------------------------------------

Facts: On 22 June 1958, RA 2090 was enacted granting Felix Alberto & Co. (later ETCI) a franchise to establish radio stations for domestic and transoceanic telecommunications. On 13 May 1987, ETCI filed an application with the NTC for the issuance of a certificate of public convenience and necessity to operate, etc. a Cellular Mobile Telephone System and an alpha numeric paging system in Metro Manila and in the Southern Luzon regions, with a prayer for provisional authority to operate within Metro Manila. PLDT filed an opposition with a motion to dismiss. On 12 November 1987, NTC overruled PLDT’s opposition and declared RA 2090 should be liberally construed so as to include the operation of a cellular mobile telephone service as part of services of the franchise. On 12 December 1988, NTC granted ETCI provisional authority to install, operate, and maintain a cellular mobile telephone service initially in Metro Manila subject to the terms and conditions set forth in its order, including an interconnection agreement to be entered with PLDT.

PLDT filed an Opposition with a Motion to Dismiss alleging that ETCI is not authorized under its franchise to a nationwide operation, that ETCI lacks the technical and financial capability to pursue such operation, PLDT has a pending application for the same services sought by ETCI and as such the “prior operator” or “protection of investment” doctrine must apply to its case and that the PA if granted, will result in a harmful and needless duplication.

NTC overruled the opposition of PLDT and declared that RA 9020 shall be liberally construed as to include the services applied for by ETCI included in that franchise. PLDT filed a motion for reconsideration but to no avail. NTC later on issued a PA granting the operation applied for ETCI regarding Phase A of its project in Metro Manila subject to some conditions including an interconnection agreement with PLDT.

PLDT filed a Motion To Set Aside the Order alleging that the interconnection was violative of the due process and that the order granting PA to ETCI was jurisdictionally and procedurally infirm. NTC

denied reconsideration and set the date for hearing for continuation of the main proceedings.

The Supreme Court issued a Temporary Restraining Order enjoining NTC to cease and desist from all or any of its on-going proceedings and ETCI from continuing with any of its projects as granted in the issued PA by the NTC. The motion filed by ETCI to lift the TRO was denied.

Issues:

1. Whether the provisional authority was properly granted.

Held: The provisional authority granted by the NTC (which is the regulatory agency of the National Government over all telecommunications entities) has a definite expiry period of 18 months unless sooner renewed; may be revoked, amended or revised by the NTC; covers one of four phases; limited to Metro Manila only; and does not authorize the installation and operation of an alphanumeric paging system. It was further issued after due hearing, with PLDT attending and granted after a prima facie showing that ETCI had the necessary legal, financial and technical capabilities; and that public interest, convenience and necessity so demanded. Provisional authority would be meaningless if the grantee were not allowed to operate, as its lifetime is limited and may be revoked by the NTC at any time in accordance with law.

2. Whether ETCI’s franchise includes operation of cellular mobile telephone system (CMTS)

Held: The NTC construed the technical term “radiotelephony” liberally as to include the operation of a cellular mobile telephone system. The construction given by an administrative agency possessed of the necessary special knowledge, expertise and experience and deserves great weight and respect. It can only be set aside by judicial intervention on proof of gross abuse of discretion, fraud or error of law.

3. Whether PLDT can refuse interconnection with ETCI.

Held: The NTC merely exercised its delegated authority to regulate the use of telecommunication networks when it decreed interconnection. PLDT cannot refuse interconnection as such is mandated under RA 6949 or the Municipal Telephone Act of 1989. What interconnection seeks to accomplish is to enable the system to reach out to the greatest number of people possible in line with

governmental policies. With the broader reach, public interest and convenience will be better served. Public need, public interest, and the common good are the decisive, if not the ultimate, considerations. To these public and national interests, public utility companies must yield.

The NTC order does not deprive PLDT due process as it allows the parties themselves to discuss and agree upon the specific terms and conditions of the interconnection agreement instead of the NTC itself laying down the standards of interconnection which it can very well impose.

 

PHILIPPINE COMMUNICATIONS SATELLITE CORP., vs. GLOBE TELECOM, INC.May 25, 2004GR 147324---------------------------------------------------------------------------------------------------

Facts: Several years back before 1991, Globe has been engaged in the coordination of the provision of various communication facilities for the US military bases in Pampanga and Zambales. The said communication facilities were installed and configured for the exclusive use of the US Defense Communications Agency (USDCA), and for security reasons, were operated only by its personnel or those of American companies contracted by it to operate said facilities. The USDCA contracted with said American companies, and the latter, in turn, contracted with Globe for the use of the communication facilities. Globe, on the other hand, contracted with local service providers such as the Philippine Communications Satellite Corporation (Philcomsat) for the provision of the communication facilities.

In 1991, Globe and Philcomsat entered into a contract wherein the latter obliged itself to establish, operate and provide an earth station in Zambales which will last for 5 years. Globe in turn, promised to pay rentals for each leased circuit. At that time, both parties knew that the US military bases which is the basis for the occupancy of the military base in Zambales is to expire in the same year according to our Constitution which states that the military bases, troops and facilities shall not be allowed in the Philippines unless a new treaty is signed which will allow the same. Despite that, Philcomsat built the earth station as agreed with Globe. Thereafter, the Senate of the Philippines did not concur in a new treaty, which will extend the term of use by the US military troops in their presently occupied bases.

Due to that event, Globe professed its intention to discontinue the use of the earth station with Philcomsat. It contented a part in their agreement that neither party shall be held liable or deemed to be in default for any failure to perform its obligation under this Agreement if such failure results directly or indirectly from force majeure or fortuitous event. Force majeure according to their contact include circumstances beyond the control of the party involved including, but not limited to, any law, order, regulation, direction or request of the

Government of the Philippines, strikes or other labor difficulties, insurrection riots, national emergencies, war, acts of public enemies, fire, floods, typhoons or other catastrophes or acts of God. However, there is also a stipulation in that same agreement regarding the payment after discontinuance of service, which binds Globe to pay rentals for a particular period. Despite of several demands to pay were sent to Globe by Philcomsat, the former did not pay any.

Philcomsat then filed a complaint praying for the payment of all money claims against Globe. Globe in return insist on its defense of force majeure in non-payment of the rentals.

The RTC ruled in favor of Philcomsat but the amount it prayed for was not granted precisely and it affirmed the defense of Globe regarding the issue of force majeure. Both parties appealed to the CA. Since affirmed the decision of the RTC but ordered Globe to pay rentals from the actual time of use until the time the US military vacated the bases in the month of December 1992. Both parties appealed the case to the Supreme Court.

Issues: 1) Whether the termination of the RP-US Military Bases Agreement constitutes force majeure which would exempt Globe from complying with its obligation to pay rentals; 2) whether Globe is liable to pay rentals under the Agreement for the month of December 1992; and 3) whether Philcomsat is entitled to attorney’s fees and exemplary damages.

Held: As to the first issue, the SC ruled in favor of Globe as the termination of the RP-US Military Bases Agreement is a force majeure. Contrary to the position of Philcomsat that such event is not unforeseeable, but were possibilities known to it and Globe at the time they entered into the Agreement, such events cannot exempt Globe from performing its obligation of paying rentals for the entire five-year term thereof, the court held that Article 1174, which exempts an obligor from liability on account of fortuitous events or force majeure, refers not only to events that are unforeseeable, but also to those which are foreseeable, but inevitable. The events which the parties included in the enumeration of what force majeure is as to their contract does not have the effect of expanding the force majeure enumerated in the Civil Code. Furthermore, under Article 1306 of the Civil Code, parties to a contract may establish such stipulations, clauses, terms and conditions as they may deem fit, as long as the same do not run counter to the law, morals, good customs, public order or public policy.

Regarding the second issue, Globe should not be made to pay the rentals for December of 1992. The aforementioned events made impossible the continuation of the Agreement until the end of its five-year term without fault on the part of either party. The Court of Appeals was thus correct in ruling that the happening of such fortuitous events rendered Globe exempt from payment of rentals for the remainder of the term of the Agreement. Moreover, it would be unjust to require Globe to continue paying rentals even though Philcomsat cannot be compelled to perform its corresponding obligation under the Agreement.

Finally, in resolving the third issue, the court affirmed the findings of the CA in not awarding Philcomsat attorney’s fees and exemplary damages. Exemplary damages may be awarded in cases involving contracts or quasi-contracts, if the erring party acted in a wanton, fraudulent, reckless, oppressive or malevolent manner. In the present case, it was not shown that Globe acted wantonly or oppressively in not heeding Philcomsat’s demands for payment of rentals. It was established during the trial of the case before the trial court that Globe had valid grounds for refusing to comply with its contractual obligations after 1992.

RADIO COMMUNICATIONS OF THE PHILIPPINES, INC. (RCPI), petitioner, vs. PROVINCIAL ASSESOR OF SOUTH COTABATO, PROVINCIAL TREASURER OF SOUTH COTABATO, MUNICIPAL ASSESSOR OF TUPI, SOUTH COTABATO, and MUNICIPAL TREASURER OF TUPI, SOUTH COTABATO, respondents.

[G.R. No. 144486. 

April 13, 2005]

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FACTS: In 1957, Republic Act No. 2036 (“RA 2036”)[3] granted RCPI a fifty-year franchise. Section 14 of RA 2036, as amended by Republic Act No. 4054 (“RA 4054”) in 1964, 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, 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)

On 10 June 1985, the municipal treasurer of Tupi, South Cotabato assessed RCPI real property taxes from 1981 to 1985.[4] The municipal treasurer demanded that RCPI pay P166, 810 as real property tax on its radio station building in Barangay Kablon, as well as on its machinery shed, radio relay station tower and its accessories, and generating sets. RCPI protested the assessment before the Local Board of Assessment Appeals (“LBAA”).[6] RCPI claimed that all its assessed properties are personal properties and thus exempt from the real property tax. RCPI claimed that the assessed properties are not used for manufacturing, commercial, mining, industrial, or agricultural purposes.   Besides, the assessed properties are attached to a building on a lot not owned by RCPI. RCPI also pointed out that its franchise exempts RCPI from “paying any and all taxes of any kind, nature or description in exchange for its payment of tax equal to one and one-half per cent on all gross receipts from the business conducted under its franchise.”  RCPI further claimed that any deviation from its franchise would violate the non-impairment of contract clause of the Constitution. In its Decision[7] dated 19 May 1995, the LBAA of Koronadal, South Cotabato affirmed the notices of assessment as valid and consistent with the law.  The properties covered by Tax Declaration Nos. 7639, 7640, 7641 and 7642 are real properties for purposes of real property taxation under PD 464. RCPI appealed to the CBAA. In its Decision[10] dated 7 November 1996, the CBAA dismissed RCPI’s appeal.  The CBAA held that RCPI’s liability for the franchise tax does not exempt RCPI from the real property tax.  Under RCPI’s franchise, only personal properties such as radio equipment, machinery and spare parts are exempt from customs duties, tariffs and other taxes.  The CBAA ruled that RCPI was liable for the real property tax on the assessed properties.  RCPI could also not invoke the non-impairment of contract clause since no legal right of RCPI was violated. RCPI filed its petition for review of the CBAA ruling before the appellate court. RCPI is not liable for real property tax on the generating sets, and on its radio relay station tower and its accessories consisting of two units of UHF communication equipment, power distribution unit boar, and battery charger, which are actually varying types of radio equipment. Hence, this petition.

Issue: Whether or not RCPI is liable to pay Real Property Tax?

Held: Respondents assert that RCPI not only changed its arguments, RCPI also made incorrect arguments.  RCPI earlier maintained that its radio relay station tower, radio station building, and machinery shed are personal properties and are thus not subject to the real property tax.   RCPI now argues that its radio relay station tower, radio station building, and machinery shed are tax-exempt because of the “in lieu of

all taxes” clause in its franchise, which exempts RCPI from the real estate tax.

RCPI contends that the “in lieu of all taxes” clause in its amended franchise exempts it from paying all taxes other than franchise tax.  It is thus no longer necessary to determine whether the tower, relay station building, and machinery shed are radio equipment for purposes of exemption from the real estate tax.

As found by the appellate court, RCPI’s radio relay station tower, radio station building, and machinery shed are real properties and are thus subject to the real property tax.   Section 14 of RA 2036, as amended by RA 4054, states that “[i]n 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 x.”[19] The clear language of Section 14 states that RCPI shall pay the real estate tax.

The “in lieu of all taxes” clause in Section 14 of RA 2036, as amended by RA 4054, cannot exempt RCPI from the real estate tax because the same Section 14 expressly states that RCPI “shall pay the same taxes x x x on real estate, buildings x x x.”  The “in lieu of all taxes” clause in the third sentence of Section 14 cannot negate the first sentence of the same Section 14, which imposes the real estate tax on RCPI.  The Court must give effect to both provisions of the same Section 14.  This means that the real estate tax is an exception to the “in lieu of all taxes” clause.

RCPI cannot also invoke the equality of treatment clause under Section 23 of Republic Act No.  7925.[22] The franchises of Smart,[23] Islacom,[24]

TeleTech,[25] Bell,[26] Major Telecoms,[27] Island Country,[28] and IslaTel,[29]

all expressly declare that the franchisee shall pay the real estate tax, using words similar to Section 14 of RA 2036, as amended.  The provisions of these subsequent telecommunication franchises imposing the real estate tax on franchisees only confirm that RCPI is subject to the real estate tax.  Otherwise, RCPI will stick out like a sore thumb, being the only telecommunications company exempt from the real estate tax, in mockery of the spirit of equality of treatment that RCPI is invoking, not to mention the violation of the constitutional rule on uniformity of taxation.

It is an elementary rule in taxation that exemptions are strictly construed against the taxpayer and liberally in favor of the taxing authority.  It is the taxpayer’s duty to justify the exemption by words too plain to be mistaken and too categorical to be misinterpreted.

REPUBLIC OF THE PHILIPPINES, REPRESENTED BY ENERGY REGULATORY BOARD petitioner, vs. MANILA ELECTRIC COMPANY, respondent.

[G.R. No. 141314. November 15, 2002]---------------------------------------------------------------------------------------------------

Facts: On December 23, 1993, MERALCO filed with the ERB an application for the revision of its rate schedules. The application reflected an average increase of 21 centavos per kilowatt-hour (kwh) in its distribution charge. The application also included a prayer for provisional approval of the increase pursuant to Section 16(c) of the Public Service Act and Section 8 of Executive Order No. 172.

On January 28, 1994, the ERB issued an Order granting a provisional increase of P0.184 per kwh, subject to the following condition:

“In the event, however, that the Board finds, after hearing and submission by the Commission on Audit of an audit report on the books and records of the applicant that the latter is entitled to a lesser increase in rates, all excess amounts collected from the applicant’s customers as a result of this Order shall either be refunded to them or correspondingly credited in their favor for application to electric bills covering future consumptions.”

On February 11, 1997, the COA submitted its Audit Report SAO No. 95-07 (the “COA Report”) which contained, among others, the recommendation not to include income taxes paid by MERALCO as part of its operating expenses for purposes of rate determination and the use of the net average investment method for the computation of the proportionate value of the properties used by MERALCO during the test year for the determination of the rate base. The ERB held that income tax should not be treated as operating expense as this should be “borne by the stockholders who are recipients of the income or profits

realized from the operation of their business” hence, should not be passed on to the consumers. On appeal, the Court of Appeals set aside the ERB decision insofar as it directed the reduction of the MERALCO rates by an average of P0.167 per kwh and the refund of such amount to MERALCO’s customers beginning February 1994 and until its billing cycle beginning February 1998. The regulation of rates to be charged by public utilities is founded upon the police powers of the State and statutes prescribing rules for the control and regulation of public utilities are a valid exercise thereof.

Issue: Whether or not the State exercises its Police Power in regulating rates for public use.

Held: In regulating rates charged by public utilities, the State protects the public against arbitrary and excessive rates while maintaining the efficiency and quality of services rendered. However, the power to regulate rates does not give the State the right to prescribe rates, which are so low as to deprive the public utility of a reasonable return on investment. Thus, the rates prescribed by the State must be one that yields a fair return on the public utility upon the value of the property performing the service and one that is reasonable to the public for the services rendered. The fixing of just and reasonable rates involves a balancing of the investor and the consumer interests. It is a settled rule that the goal of rate-making is to arrive at a just and reasonable rate for both the public utility and the public, which avails of the former’s products and services. However, what is a just and reasonable rate cannot be fixed by any immutable method or formula. Hence, it has been held that no public utility has a vested right to any particular method of valuation.

Accordingly, with respect to a determination of the proper method to be used in the valuation of property and equipment used by a public utility for rate-making purposes, the administrative agency is not bound to apply any one particular formula or method simply because the same method has been previously used and applied. In fact, nowhere in the previous decisions cited by MERALCO, which applied the trending method, did the Court rule that the same should be the only method to be applied in all instances. Thus, the burden is upon the oppositor, MERALCO, to prove that the rates fixed by the ERB are unreasonable or otherwise confiscatory as to merit the reversal of the ERB. In the instant cases, MERALCO was unable to discharge this burden.

WHEREFORE, in view of the foregoing, the instant petitions are GRANTED and the decision of the Court of Appeals in C.A. G.R. SP No. 46888 is REVERSED. Respondent MERALCO is authorized to adopt a

rate adjustment in the amount of P0.017 per kilowatt-hour, effective with respect to MERALCO’s billing cycles beginning February 1994. Further, in accordance with the decision of the ERB dated February 16, 1998, the excess average amount of P0.167 per kilowatt-hour starting with the applicant’s billing cycles beginning February 1998 is ordered to be refunded to MERALCO’s customers or correspondingly credited in their favor for future consumption.

CASES

BELLTEL VS. NTC GR16496 APRIL 30, 1997

REPUBLIC VS. MERALCO GR141314 NOVEMBER 15, 2002

RCPI VS. PROV.OF SOUTH COT. GR144486 APRIL 13, 2005

SMART VS. NTC GR151908 AUGUST 12, 2003

PLDT VS. NTC GR88404 OCTOBER 18,1990

CITY GOVERNMENT OF QUEZON CITYVS. BAYANTEL GR162015 MARCH 6,2006

PHILCOMSAT VS. GLOBETEL GR147324 AUGUST 25,2004

AALA VS. GLOBETEL

THE CITY GOVERNMENT OF QUEZON CITY, AND THE CITY TREASURER OF QUEZON CITY, DR. VICTOR B. ENRIGA, vs. BAYAN TELECOMMUNICATIONS, INC.,

G.R. No. 162015 March 6, 2006

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Facts: Respondent Bayan Telecommunications, Inc.3 (Bayantel) is a legislative franchise holder under Republic Act (Rep. Act) No. 32594 to establish and operate radio stations for domestic telecommunications, radiophone, broadcasting and telecasting.

On July 20, 1992, barely few months after the LGC took effect, Congress enacted Rep. Act No. 7633, amending Bayantel�s original franchise. The amendatory law (Rep. Act No. 7633) contained the following tax provision:

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. It is undisputed that within the territorial boundary of Quezon City, Bayantel owned several real properties on which it maintained various telecommunications facilities.

In 1993, the government of Quezon City, pursuant to the taxing power vested on local government units by Section 5, Article X of the 1987 Constitution, infra, in relation to Section 232 of the LGC, supra, enacted City Ordinance No. SP-91, S-93, otherwise known as the Quezon City Revenue Code (QCRC),5 imposing, under Section 5 thereof, a real property tax on all real properties in Quezon City, and, reiterating in its Section 6, the withdrawal of exemption from real property tax under Section 234 of the LGC, On January 7, 1999, Bayantel wrote the office of the City Assessor seeking the exclusion of its real properties in the city from the roll of taxable real properties. With its request having been denied, Bayantel interposed an appeal with the Local Board of Assessment Appeals (LBAA). And, evidently on its firm belief of its exempt status, Bayantel did not pay the real property taxes assessed against it by the Quezon City government.

On account thereof, the Quezon City Treasurer sent out notices of delinquency for the total amount of P43,878,208.18, followed by the issuance of several warrants of levy against Bayantel�s properties preparatory to their sale at a public auction set on July 30, 2002.

Threatened with the imminent loss of its properties, Bayantel immediately withdrew its appeal with the LBAA and instead filed with the RTC of Quezon City a petition for prohibition with an urgent application for a temporary restraining order (TRO) and/or writ of preliminary injunction

Issue: Whether or not Bayantel’s real properties in Quezon City are, under its franchise, exempt from real property tax.

Held: The power to tax is primarily vested in the Congress; however, in our jurisdiction, it may be exercised by local legislative bodies, no longer merely be virtue of a valid delegation as before, but 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 the Congress may provide which, however, must be consistent with the basic policy of local autonomy.

In net effect, the controversy presently before the Court involves, at bottom, a clash between the inherent taxing power of the legislature,

which necessarily includes the power to exempt, and the local government�s delegated power to tax under the aegis of the 1987 Constitution.

Now to go back to the Quezon City Revenue Code which imposed real estate taxes on all real properties within the city�s territory and removed exemptions theretofore "previously granted to, or presently enjoyed by all persons, whether natural or juridical �.,"12 there can really be no dispute that the power of the Quezon City Government to tax is limited by Section 232 of the LGC which expressly provides that "a province or city or municipality within the Metropolitan Manila Area may levy an annual ad valorem tax on real property such as land, building, machinery, and other improvement not hereinafter specifically exempted." Under this law, the Legislature highlighted its power to thereafter exempt certain realties from the taxing power of local government units. An interpretation denying Congress such power to exempt would reduce the phrase "not hereinafter specifically exempted" as a pure jargon, without meaning whatsoever. Needless to state, such absurd situation is unacceptable.

As we see it, then, the issue in this case no longer dwells on whether Congress has the power to exempt Bayantel�s properties from realty taxes by its enactment of Rep. Act No. 7633 which amended Bayantel�s original franchise. The more decisive question turns on whether Congress actually did exempt Bayantel�s properties at all by virtue of Section 11 of Rep. Act No. 7633.

Admittedly, Rep. Act No. 7633 was enacted subsequent to the LGC. Perfectly aware that the LGC has already withdrawn Bayantel�s former exemption from realty taxes, Congress opted to pass Rep. Act No. 7633 using, under Section 11 thereof, exactly the same defining phrase "exclusive of this franchise" which was the basis for Bayantel�s exemption from realty taxes prior to the LGC. In plain language, Section 11 of Rep. Act No. 7633 states that "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." The Court views this subsequent piece of legislation as an express and real intention on the part of Congress to once again remove from the LGC�s delegated taxing power, all of the franchisee�s (Bayantel�s) properties that are actually, directly and exclusively used in the pursuit of its franchise.

Aala v. Globe TelecomCA - GR No. 78049--------------------------------------------------------------------------------------

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Facts: Petitioners Elizabeth Aala, et.al. are the principal, teachers and

students of Solano National High School located at Barangay Quirino,

Solano, Nueva Vizcaya. They are all permanent residents of Brgy

Quirino except for the teachers and students of the school who are

considered transients to said barangay where the cellsite antenna

tower of Globe is being constructed. Petitioners seasonably registered

their protest and opposition to the construction of the said cell site

antenna on the grounds of security and safety concerns and it being a

health hazard. They presented their witness, Dr. Felixberto Ayahao,

who finished Otalaryngology, head and neck surgery. The latter

claimed that non-ionizing radiation could cause biological effects in the

individual. On the other hand, an amicus curiae, Dr. Agnes Peralta,

Director of Health Devices and Technology of DOH, claimed, among

others, that if a person is at the minimum safe distance or beyond,

there is no harmful effect. The DOH press release stated also that Sec.

Manuel Dayrit declared that present transmitters could cause cancer.

The WHO has also issued a statement that present scientific

knowledge does not prove that radiation from cellular phone

transmitters could cause cancer.

Issue: Whether or not the proposed cellsite will prejudice the health,

safety, and security concerns of the petitioners and stakeholders.

Held: This tribunal has to admit that it does not have the resources

and competence to rule on the issue. The best that the Court can do is

to sustain the present stand of Bureau of Health Device and

Technology under DOH, that the radiation emitted by cellsite antennas

is not hazardous to human health if the minimum safe distance is

observed.

We, therefore agree with the trial court finding that while the

rights of the appellants to safe and healthy environment enshrined

under Sec.15 and 16 of 1987 Constitution is recognized “ the failure of

the petitioners to substantiate their allegations of health, safety and

security risks rendered their petition for injunction for without basis.

We admire their vigilance especially in the light of the findings of

the WHO that there are gaps in the knowledge that have been

identified for further research to make better assess health risk.