Commissioner of Internal Revenue v. ABS-CBN Broadcasting Corp.

FOURTH DIVISION [CA-G.R. SP No. 44092. January 29, 1999.] COMMISSIONER OF INTERNAL REVENUE , petitioner , vs . ABS-CBN BROADCASTING CORPORATION , respondent . D E C I S I O N CARPIO MORALES , J p : This is a petition for review of the April 8, 1997 Decision of the Court of Tax Appeals (CTA) in C.T.A. Case No. 5060, "ABS-CBN Broadcasting Corporation, Petitioner, versus Commissioner of Internal Revenue, Respondent." The present petition was, by Resolution dated May 21, 1997, denied due course and dismissed for being defective in form and substance, it having failed to comply with Supreme Court Circular Nos. 28-91, 19-91 and 1-95. On June 3, 1997, respondent, ABS-CBN Broadcasting Corp., filed a Motion to Dismiss the petition on the following grounds: "1. THE PETITIONER VIOLATES SUPREME COURT CIRCULAR 28-91 (Circular Against Forum Shopping) 2. THE PETITIONER FAILED TO COMPLY WITH REVISED SUPREME COURT CIRCULAR 1-92 (Circular on Appeals from Court of Tax Appeals and Other Quasi-Judicial Bodes)". which motion was noted in light of the Resolution of May 21, 1997 dismissing the petition. On June 13, 1997, petitioner who received on May 29, 1997 this Court's May 21, 1997 Resolution of dismissal filed a Motion for Reconsideration thereof, proffering that its non-compliance with the Supreme Court circulars was due to inadvertence brought about by the pressure of the heavy workload of the Office of the Solicitor General (OSG). And petitioner complied with the Supreme Court circulars. llcd In its Motion to Dismiss the present petition, respondent alleged that petitioner's attestation to the absence of any case in another forum dwelling on matters subject of the present petition is incorrect because records of the CTA reveal that a motion for reconsideration of the CTA's decision which sought a relief similar to that sought in the present petition was earlier filed and, therefore, petitioner blatantly engaged in forum shopping. Petitioner counters in its Opposition that the motion for reconsideration filed on its behalf with the CTA was prepared by the legal division of the BIR, without consultation with the OSG which was unaware of it when it filed before this Court the present petition. We note petitioner's compliance with the Supreme Court circulars and, in the interest of justice, hereby reinstate the petition. The petition is, however, bereft of merit. Respondent was, before the issuance of P.D. 576-A, operating under a legislative franchise to engage in the business of operating and maintaining radio and television stations as well as broadcasting and television programs through radio and television airwaves. P.D. 576-A was later passed terminating franchises to operate radio or television broadcasting systems effective December 31, 1981. And in a decision by the CTA in Republic Broadcasting System, Inc . v . Commissioner of Internal Revenue (CTA Case No. 4630, July 27, 1993), which was affirmed by this Court in " CIR v . Republic Broadcasting System, Inc . and CTA (CA-G.R. SP No. 32831, September 19, 1994), it was held that P . D . 576-A repealed the legislative franchises issued to radio and television broadcasting systems . (The Court of Appeals' decision was elevated to the Supreme Court on a petition for review which was dismissed, however, for failure to the OSG to comply with the therein stated Supreme Court Resolution of February 6, 1995. Thus, invoking the Republic Broadcasting case, respondent filed with the office of petitioner a claim for refund of the franchise taxes it paid within the period from January 1991, to wit: television franchise tax P180,224,722.18 radio franchise tax P6,226,727.45 Total P114,451,449.63 and franchise taxes of P10,256,031.00 for the last quarter of 1993. Petitioner failed to act on respondent' claim for refund, however hence, respondent filed a judicial claim for refund at the CTA. The CTA ruled in favor respondent, holding that PD 576-A terminated all existing television and radio franchises as of December 31, 1981, and accordingly ordered petitioner to refund to respondent, after some claims were disallowed, the amount of P101,696,631.11 representing payment of franchises taxes made during the 4th quarter of 1991 up to the 3rd quarter of 1993. Hence, the present petition, petitioner maintaining that P.D. 576-A did not effectively revoke existing franchises but merely regulated ownership and operation of radio and television broadcasting system and that respondent's permit/license to operate issued by the National Television Communications and the Secretary of Transportation and Communications in 1986 "effectively took the place of [respondent's] former franchise such that any tax obligations which may have arisen by virtue of the said former franchise were ipso facto assumed by respondent under the present privilege unless otherwise expressly provided by law." The petition fails. Respondent was, before the issuance of P.D. 576-A on November 11, 1974, operating under a legislative franchise . With the enactment, however, of P.D. 576-A (REGULATING THE OWNERSHIP AND OPERATION OF RADIO AND TELEVISION STATIONS AND FOR OTHER PURPOSES) the pertinent portion of which provides: "SECTION 6. All franchises, grants licenses, permits, certificates or other forms of authority to operate radio or television broadcasting systems shall terminate on December 31, 1981 . Thereafter, irrespective of any franchise, grant, license, permit, certificate or other forms of authority to operate granted by any office, agency or person, no radio or television station shall be authorized to operate without the authority of the Board of Communications and the Secretary of Public Works and Communications or their successors who have the right and authority to assign to qualified parties frequencies, channels or other means of identifying broadcasting system; Provided, however , That any conflict over, or disagreement with, a decision of the aforementioned authorities may be appealed finally to the Office of the President within fifteen (15) days from the date of the decision is received by the party in interest." (Emphasis supplied). respondent's franchise was clearly terminated. Petitioner's argument that although P.D. 576-A revoked the legislative franchise granted to respondent, the same was nevertheless restored when in 1986 the National Telecommunications Commission and the Secretary of Transportation and Communications issued it authority or license to operate which took the place of its franchise is bereft of merit. The following ruling of this Court in the Republic Broadcasting case, supra , which was cited by the CTA in its questioned decision, is instructive: We agree with the findings of the respondent CTA that P . D . 576-A terminated all existing franchises including that of the petitioner as of December 31, 1981 and that the franchise of respondent RBS was not revived until it accepted the new Congressional franchise granted to it (R.A. No. 7252) o n March 20, 1992 . Petitioner's contention that respondent RBS should still be liable for franchise taxes for the third and fourth quarters of 1987 for the reason that at that time respondent RBS continued to operate by virtue of administrative licenses and permits is erroneous because it blatantly disregards the significant distinction between a legislative franchise and licenses/permits issued by an administrative agency , such as the National Telecommunications Commission (NTC). Thus, as correctly pointed out by the respondent CTA: " A 'franchise' is a right or privilege granted by the sovereignty to one or more parties to do some act or acts , which they could not do without this grant from the sovereign powers; a privilege which emanates from the sovereign power of the state or government; a branch of the sovereign power of the state, subsisting in a person or corporation by grant from the state." (17 Words and Phrases 471, 482, 469). " A 'license' on the other hand, confers no right or estate nor vested interest, nor does its constitute a binding contract between the parties , but it is a mere leave to be enjoyed as matter of indulgence at the will of the party granting it. It is no sense a contract between the state and the licensee, but is a mere personal permit, neither transferable nor vendible (25 Words and Phrases 150, 174)." Consequently, the following finding of the respondent CTA clearly becomes ineluctable: " Respondent's argument that the authority or license issued by the Board of Communications and the Secretary of Public Works and Communications should be considered as franchise does not hold water . A license is a license and a franchise, a franchise. This Court cannot see two sides of a coin at a time. There has to be a demarcation line to this effect. A franchise is a vested right protected by the Constitution while a license is a mere personal privilege and is revocable. (Decision, pp. 8-9)." (pp. 134-135. rollo ; likewise cited by CTA in its Decision, pp. 7-8, Annex A to Petition, pp. 24-25, rollo ), Emphasis supplied). By the way, on March 30, 1995, with the passage of R.A. 7966 entitled "AN ACT GRANTING THE ABS-CBN BROADCASTING CORPORATION A FRANCHISE TO CONSTRUCT, INSTALL, OPERATE AND MAINTAIN TELEVISION AND RADIO BROADCASTING STATIONS IN THE PHILIPPINES, AND FOR OTHER PURPOSES", respondent was again granted a legislative franchise. WHEREFORE, finding no tenable ground to reverse the decision of the Court of Tax Appeals, the same is hereby AFFIRMED and the petition for review is accordingly DISMISSED. SO ORDERED. Rasul and Abesamis, JJ . , concur.