Real Property tax exemption of Liberty Broadcasting Network, Inc. (LBNI)

August 10, 1999 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION MEMORANDUM FOR : Usec. Lily K. Gruba SUBJECT : Real Property tax exemption of Liberty Broadcasting Network, Inc. (LBNI) FROM : OIC-Exec. Dir. A. M. Magsino This pertains to the attached letter of Mr. Edgardo B. Quiogue, Senior Vice President, Liberty Broadcasting Network, Inc. (LBNI), requesting assistance concerning the letter dated November 9, 1998 of this Bureau, upholding the claim of LBNI for exemption from the payment of real property taxes on its real properties which are used in the operation of its franchise, in the same way that other telecommunication companies were considered exempt under the letters dated October 12, 1990 and the 1st Indorsements dated February 7, 1984, January 19, 1995 and February 14, 1995, all of the DOF, copies attached. The abovementioned request of Mr. Quiogue was prompted by the letter to LBNI dated April 8, 1999 of the City Assessor of Antipolo, the pertinent portion of which is quoted hereunder: "We would like to reiterate that this office finds no sufficient legal and factual basis to hold that PILTEL or DIGITEL, or your company, pursuant to the ' ipso facto ' or most favored treatment clause in your respective franchises, shall be subject only to taxes on your real estate, buildings and personal property not used in connection with the conduct of your business under your franchise." The abovementioned letter of this Bureau concerning LBNI's exemption from payment of real property taxes specifically made reference to the " ipso facto " or most favored treatment clause stipulated under Section 4 of LBNI's franchise (R.A. No. 4154), which clause is also found under Section 23 of R.A. No. 7925 or the Public Telecommunications Act of the Philippines. cAECST Moreover, the abovementioned stand of this Bureau is in line with the attached copy of the September 5, 1981 Resolution of the Office of the President clarifying that the phrase "exclusive of this franchise" found in Section 7 of R.A. No. 3662 (RETELCO's franchise, which is similarly found under Section 5 of LBNI's franchise) has been construed to mean as excluding real estate, buildings and personal property . . . directly used in the operation of its franchise, for which the latter is not subject to real estate tax as other corporations are now or hereafter may be required by law to pay." Furthermore, this Bureau has taken particular consideration of the clarification under the March 12, 1996 letter of the Office of the President, copy also attached, which, pursuant to the abovecited Section 23 of R.A. No. 7925 (which contained the " ipso facto " clause), categorically enumerated the tax liabilities of telecommunication companies. The said enumeration has, in effect, made specific exception from real property taxes those real properties of such companies that are used in the conduct of its business under its franchise. In view of all the foregoing, attached is the proposed action on the said request of LBNI for assistance concerning the stand BLGF has taken under the aforementioned November 9, 1998 letter, for your clearance and/or further instructions. EaDATc (SGD.) ANGELINA M. MAGSINO OIC-Executive Director