Clarification on the Issue of Real Property Tax Exemption/Taxability of Globe Telecommunications, Inc., (Globe, for brevity), in the light of the En Banc Decision of the Supreme Court in the Case Entitled "Digital Telecommunications Philippines, Inc., (Digitel) vs. City Government of Batangas, et al.," (G.R. No. 156040) promulgated on December 11, 2008, Reiterating the Supreme Court Decision in the Case of "RCPI vs. Provincial Assessor of South Cotabato," (G.R. No. 144486) Dated April 13, 2005

January 13, 2010 BLGF MEMORANDUM CIRCULAR NO. 001-10 TO : All Regional Directors for Local Government Finance; Provincial, City and Municipal Assessors and Treasurers; and Others Concerned SUBJECT : Clarification on the Issue of Real Property Tax Exemption/Taxability of Globe Telecommunications, Inc., (Globe, for brevity), in the light of the En Banc Decision of the Supreme Court in the Case Entitled "Digital Telecommunications Philippines, Inc., (Digitel) vs. City Government of Batangas, et al.," (G.R. No. 156040) promulgated on December 11, 2008, Reiterating the Supreme Court Decision in the Case of "RC PI vs. Provincial Asse ssor of South Cotabato," (G.R. No. 144486) Dated April 13, 2005 For the information and guidance of all concerned, quoted hereunder are the pertinent portions of the opinion/ruling rendered by this Bureau embodied under its letter dated October 6, 2009, in the light of the EN BANC Decision of the Supreme Court in the case entitled "DIGITAL Telecommunications Philippines, Inc. vs. City Government of Batangas, et al.," (G.R. No. 156040) promulgated on December 11, 2008, reiterating the Supreme Court Decision in the case of "RCPI vs. Provincial Assessor of South Cotabato," (G.R. No. 144486) dated April 13, 2005, to wit: aDATHC "xxx xxx xxx "The BLGF, under its Memorandum Circular No. 04-2006, issued on May 2, 2006, and subsequent opinions clarified that 'Globe is liable to pay real property tax on its radio station building, machinery shed, and radio relay station tower, while radio equipment, accessories and spare parts needed in the business are exempt therefrom,' on the basis of the case entitled 'RCPI vs. Provincial Assessor of South Cotabato, ' (G.R. No. 144486) promulgated on April 13, 2005. "xxx xxx xxx. "The interpretation of the phrase 'exclusive of this franchise' in the Bayantel and Digitel cases goes against the basic principle in construing tax exemptions. In PLDT vs. City of Davao, the Court held that 'tax exemptions should be granted only by clear and unequivocal provision of law on the basis of language too plain to be mistaken. They cannot be extended by mere implication or inference.' "Tax exemptions must be clear and unequivocal. A taxpayer claiming a tax exemption must point to a specific provision of law conferring on the taxpayer, in clear and plain terms, exemption from a common burden. Any doubt whether a tax exemption exists is resolved against the taxpayer." "With regard to RCPI case, the Court has this to say: "In Radio Communications of the Philippines, Inc. (RCPI) vs. Provincial Assessor of South Cotabato, the Court's First Division held that RCPI's radio relay station tower, radio station building, and machinery shed are real properties and are subject to real property tax. . . . ." "In RCPI, the Court emphasized that telecommunications companies which were granted legislative franchise are liable to realty tax. The intent to grant realty tax exemption cannot be discerned from Republic Act No. 4054 and neither from the legislative franchises of other telecommunications companies. Tax exemptions granted to one or more, but not to all, telecommunications companies similarly situated will violate the constitutional rule on uniformity of taxation." EaDATc "In its position paper, Globe likewise raised the following issues: '1. The Digitel case, is not yet final and executory because no entry of judgment has been made. '2. Granting Arguendo that Digitel case has become final and executory, the same is still not applicable to Globe as the latter is not similarly situated with Digitel. '3. Globe is not a party to the Digitel Case.' "xxx xxx xxx. "With regard to the issue that Globe and Digitel are not similarly situated and that GLOBE is not a party to the case of Digitel vs. City Government of Batangas, please be informed of the principle of stare decisis, where as explained the parties need not be real parties in interest to the case in order that they may be bound by the doctrine enunciated in a particular decision. This principle means that when the Supreme Court has once laid down a principle of law as applicable to certain state of facts, it will adhere to that principle and apply it to all future cases where the facts are substantially the same. This principle assures certainty and stability in the legal system ( Tung Chin Hui v. Rodriguez, 340 SCRA 765). "Quoted below are the respective franchises of GLOBE and DIGITEL: "RA 4540 (GLOBE's franchise): " Section 9(a). The grantee shall be liable to pay the same taxes on its real estate, buildings and personal property, exclusive of the franchise, as other persons or corporations are now or hereafter may be required by law to pay, 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 declared exempt in this section. (underlining supplied) "xxx xxx xxx." "RA 7678 (Digitel's franchise): "Section 5. Tax Provisions. The grantee shall be liable to pay the same taxes on its 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. . . . . "xxx xxx xxx." "Obviously, the above-quoted franchises use the same words with regard to the taxability of real properties, hence, indicate that the two companies are similarly situated with respect to that particular aspect. Thus, both are liable to pay real property taxes on their real properties. "Clearly, the Supreme Court EN BANC Decision in the case of Digitel vs. City Government of Batangas, provides in sum, the taxability of real properties of telecommunication companies similarly situated, including GLOBE. However, it is submitted that even without this decision, real properties of GLOBE will still be subject to real property taxes pursuant to its legislative franchise and jurisprudence, i.e. , RCPI vs. Provincial Assessor of South Cotabato, PLDT vs. City of Davao and earlier cases. In the case of Smart vs. City of Davao, the Court cited that Globe is exempt from the payment of local franchise tax and all other taxes of the same nature. Nowhere in the said decision did it categorically state that GLOBE is exempt from the payment of real property taxes. "In view of the foregoing, it is submitted that there is no conflict of opinion rendered as these opinions are themselves based on jurisprudence. Granting arguendo that there is a conflict, the opinions rendered by the DOJ may not carry the same binding effect as it contravenes prevailing jurisprudence on the matter. Jurisprudence will have to prevail because it establishes the contemporaneous legislative intent of the law. SADECI "In the light of all the foregoing, this Bureau, pursuant to Globe's legislative franchise, jurisprudence and based on the Supreme Court EN BANC Decision in the case of Digitel vs. City Government of Batangas, is reiterating its ruling rendered under its Memorandum Circular No. 14-2006 dated May 2, 2006, copy attached, on the basis of the Decision in the case of RCPI vs. South Cotabato, portion of which is quoted hereunder: "xxx xxx xxx. "In the light of all the foregoing, GLOBE is therefore liable to pay real property tax on its radio station buildings, machinery shed, and radio relay station tower, while radio equipment, accessories and spare parts needed in the business are exempt therefrom ." (Underlining supplied) "xxx xxx xxx." This Circular shall only be applicable to telecommunication companies with the same exemption provisions as that of RCPI and GLOBE in their franchises, otherwise, this Circular shall not apply. Likewise, BLGF Memorandum Circular No. 14-2006 dated May 2, 2006, is hereby maintained. The Provincial Assessors and Treasurers are hereby instructed to disseminate the contents of this Circular, including the attachments, to the Municipal Assessors and Treasurers within their respective jurisdiction. Please be guided accordingly. (SGD.) MA. PRESENTACION R. MONTESA Executive Director