G.R. No. 149179 - PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, INC., VS. CITY OF BACOLOD, FLORENTINO T. GUANCO, IN HIS CAPACITY AS THE CITY TREASURER OF BACOLOD CITY, AND ANTONIO G. LACZI, IN HIS CAPACITY AS THE CITY LEGAL OFFICER OF BACOLOD CITY.D E C I S I O N - Supreme Court E-Library

Ruling

Accordingly, PLDT shall be exempt from the payment of franchise and business taxes imposable by LGUs under Sections 137 and 143, respectively, of the LGC [Local Government Code], upon the effectivity of RA 7925 on March 16, 1995. However, PLDT shall be liable to pay the franchise and business taxes on its gross receipts realized from January 1, 1992 up to March 15, 1995, during which period PLDT was not enjoying the 'most favored clause' proviso of RA 7025 [sic]. [3] Invoking the aforequoted ruling, PLDT then stopped paying local franchise and business taxes to Bacolod City starting the fourth quarter of 1998. The controversy came to a head-on when, sometime in 1999, PLDT applied for the issuance of a Mayor's Permit but the City of Bacolod withheld issuance thereof pending PLDT's payment of its franchise tax liability in the following amounts: (1) P358,258.30 for the fourth quarter of 1998; and (b) P1,424,578.10 for the year 1999, all in the aggregate amount of P1,782,836.40, excluding surcharges and interest, about which PLDT was duly informed by the City Treasurer via a 5 th Indorsement dated March 16, 1999 for PLDT's "appropriate action". [4] In time, PLDT filed a protest [5] with the Office of the City Legal Officer, questioning the assessment and at the same time asking for a refund of the local franchise taxes it paid in 1997 until the third quarter of 1998. In a reply-letter dated March 26, 1999, [6] City Legal Officer Antonio G. Laczi denied the protest and ordered PLDT to pay the questioned assessment. Hence, on May 14, 1999, in the Regional Trial Court at Bacolod City, PLDT filed its petition [7] in Civil Case No. 99-10786, therein praying for a judgment declaring it as exempt from the payment of local franchise and business taxes; ordering the respondent City to henceforth cease and desist from assessing and collecting said taxes; directing the City to issue the Mayor's Permit for the year 1999; and requiring it to refund the amount of P2,770,606.37, allegedly representing overpaid franchise taxes for the years 1997 and 1998 with interest until fully paid. In time, the respondent City filed its Answer/Comment to the petition, [8] basically maintaining that Section 137 of the Local Government Code remains as the operative law despite the enactment of the Public Telecommunications Policy Act of the Philippines (Rep. Act No. 7925), and accordingly prayed for the dismissal of the petition. In the ensuing pre-trial conference, the parties manifested that they would not present any testimonial evidence, and merely requested for time to file their respective memoranda, to which the trial court acceded. Eventually, in the herein assailed decision dated July 23, 2001, [9] the trial court dismissed PLDT's petition, thus: WHEREFORE, premises considered, the petition should be, as it is hereby DISMISSED. No costs. SO ORDERED.