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Philippine Long Distance Telephone Company, Inc. vs. Province of Laguna, et al.
G.R. No. 151899 August 16, 2005
GARCIA, J.:
Facts: PLDT is a holder of a legislative franchise under Act No. 3436, as amended, to render local and international telecommunications services. The terms and conditions of its franchise were later consolidated under Republic Act No. 7082, Section 12 of which embodies the so-called “in-lieu-of-all taxes” clause, whereunder PLDT shall pay a franchise tax equivalent to 3% of all its gross receipts, which franchise tax shall be “in lieu of all taxes”.
Thereafter, the Local Government Code took effect. Section 137 of the Code, in relation to Section 151 thereof, grants provinces and other local government units the power to impose local franchise tax on businesses enjoying a franchise. Invoking its authority, the Province of Laguna, through its local legislative assembly, enacted a provincial ordinance imposing a franchise tax upon all businesses enjoying a franchise, which includes PLDT. In compliance with the ordinance, PLDT paid the Province of Laguna its local franchise tax liability for the year 1998 in the amount of P1,081,212.10.
Prior thereto, Congress enacted the Public Telecommunications Policy Act of the Philippines. Then, the Department of Finance, thru its Bureau of Local Government Finance (BLGF), issued a ruling to the effect that PLDT, among other telecommunication companies, became exempt from local franchise tax. Accordingly, PLDT shall be exempt from the payment of franchise and business taxes imposable by LGUs under Sections 137 and 143, respectively of the Local Government Code, upon the effectivity of RA 7925. However, PLDT shall be liable to pay the franchise and business taxes on its gross receipts during the period that PLDT was not enjoying the ‘most favored clause’ provision of RA 7025.
PLDT then refused to pay the Province of Laguna its local franchise tax liability for the following year and it
G.R. No. 151899 August 16, 2005
GARCIA, J.:
Facts: PLDT is a holder of a legislative franchise under Act No. 3436, as amended, to render local and international telecommunications services. The terms and conditions of its franchise were later consolidated under Republic Act No. 7082, Section 12 of which embodies the so-called “in-lieu-of-all taxes” clause, whereunder PLDT shall pay a franchise tax equivalent to 3% of all its gross receipts, which franchise tax shall be “in lieu of all taxes”.
Thereafter, the Local Government Code took effect. Section 137 of the Code, in relation to Section 151 thereof, grants provinces and other local government units the power to impose local franchise tax on businesses enjoying a franchise. Invoking its authority, the Province of Laguna, through its local legislative assembly, enacted a provincial ordinance imposing a franchise tax upon all businesses enjoying a franchise, which includes PLDT. In compliance with the ordinance, PLDT paid the Province of Laguna its local franchise tax liability for the year 1998 in the amount of P1,081,212.10.
Prior thereto, Congress enacted the Public Telecommunications Policy Act of the Philippines. Then, the Department of Finance, thru its Bureau of Local Government Finance (BLGF), issued a ruling to the effect that PLDT, among other telecommunication companies, became exempt from local franchise tax. Accordingly, PLDT shall be exempt from the payment of franchise and business taxes imposable by LGUs under Sections 137 and 143, respectively of the Local Government Code, upon the effectivity of RA 7925. However, PLDT shall be liable to pay the franchise and business taxes on its gross receipts during the period that PLDT was not enjoying the ‘most favored clause’ provision of RA 7025.
PLDT then refused to pay the Province of Laguna its local franchise tax liability for the following year and it