CTA Case No. 4630 (Decision)

HEPlJBl.lC OF THE PHTLTPPJNES COUHT liF TA X APPEALS UtiEZUN CITY REPIJ BL1C BHOAOCASTING SYSTEI'I. I NC.� Petitioner, - versus - C.T. A. CASE NO. 4 630 COHMIS S ION ~R OF INTERNAL RE VENUE, Res p onde n t. X- - - - - - - - - Y. D E c; _L I 0 This ca se involv es a ques tion o� whether or not a d o mr-> st.ic cqrroration, e ng aged in the busin ess of r ad io and te l.evision broadcasting by virtu e of a mere permit a nd /o r license, is liable f or a franch ise tax. The fact s are undisputed. Respondent Commissione r of Internal Re venue is sued two assr:-ss rn F:> n t: n otices , both dated June 18 , 1990 agai n st: petitioner, a co rporation or{:lani. z.e rl and existing undrr and by virtue of the laws of the Ph i J i p r i n es f rn - dp :f"' c i e n cy ft� a nell i se ta x for the t h i r�d a nd fourl: h quarters of 1 9B7 , deta:ils of wh ic h are s h o wn b P J. 1,w: 7 -H~ ~ ')

DECISION - C.T . A. CASE NO. 4630. - 2- 1987 ..De.fici enc y Franchise.._. T?~. Gross Taxable Recei pts p 3,520, 165.90 Tax Due: --��--- __! ~ Q.~_';?..'? '3 !...Jt~ 5~ p 3,661 , 165.75 3~ 915, 291. 43 Deficiency 2,745, 874.30 Add : Sur char ge < 25~ ) -��������- ____! ~, _QQ9.�... QQ Int erest (50~> from ~ :=]~~~~? ~~~~-~--� -~ 1/ 2 1/87 to 5/ 15/90 Compromise penal ty f.()UJlJ'H.__ QUARTER; p 4,598,549.77 Gross Taxable Receipts __ 1~1. 4~9, 52 Tax Due: p 4,793,0'39.39 5~ 1,198,274.85 3~ 2,815, 945.89 Deficien cy Add: Surcharqe <25~> e.____ ........ .15, OOQ. OQ _ 8-'--~-~~L3,~Q,_ _!_~ Interest (50~> from 1/ 2 1187 to 6/15/90 CompromisP penalt y The ass ess me nts totalling P16, 159, 65 1 .61 were p rotested by petitioner on July 2, 1990 alleging that they ha ve n o basis in law s ince petitioner at that time wa s not ~ ubj ect to th e franchise tax und er t he Tax Code. On Jun e 2 1 , 1 '391, respondent issued hi s final deci sio n dated M~y 6, 1 991 denyinq petitioner's prot es t. Hen ce, this petition for review. ,..., . ) t' { 1-

DECISION - C.T.A. CASE NO. 4fi30. -3- Petition er, in its Memorandum, states that it was a grantee of a legislative franchise under Republic Act <R. A. > No. 513 <1950 >, as amended by R.A. No. 982 <1954> and R.A. No. 5351 <1968> to construct, maintain and operate stations :for radio and television broadcasting. It contends that the :franchise was existing and operative unti l its t ermi nation e:ffective December 31, 1 98 1 as mandated by Presidential Decree <P. D. > No. 576-A, the pertinent provisions o:f which read as :follows : " SECTION 1 . No radio station or television c h a nneJ may obta i n a :franchise unless it has su f ficiency CCif'i tal on the basis of eq u ity for its operation for at least one < 1 > year , including purchase of equipment. XXX XXX XXX SECTION 6. All :franchises, grants, licenses, permits, certificates or other :forms of authority to operate radio or tele vision br o ad c a sting syste ms ~hall terminate on Decl?mber 31 ' � 1981. Thereaft.P r , i rr i? Spl?ctive of a ny franchise, grant , lj c ensl?, p e rmit, certificate or other f or ms of authori. ty to o pera te qranted by any office, aqe n c y or person, no radio or �televi s ion station sh all be authori z Pd t~ operate wi thout the authority o f the Board of Cnmmunicati on s and the S <=w rf?tary of Publ i c Works and Comm un icatinnR o r th~?ir s u c ce ssors who h ave th e r jq ht. nnd a ut.h o r]ty to assign to qualified p Ar t i e s, frequen~je s , channels or other mPRn s of identifying b roa d c asting sys tems; Pr0vide d , hiJwever, that any conf l i c t over, o r djsaqree>me n t with , a d e cision of th e aforement i on e d aut h or i ties

DECIS ION - C.T.A. CASE NU. 4630. - 'i - may bF.? appealed fi nally to the Office of the President within fifteen (15> days from the date the decision is received by the party in interest." <Underscoring supplied> Petitioner aver s that during the period from January 1, 19B2 up to July 31, 1992 , it continued to operate its radio and television broadcasting stations by virtue of mere permits and/or licenses issued on a yearly basis by the National Telecommuni cations Commission <NTC> and that i t only obt ained a franchise thro ugh the enact ment of R. A. No. 7252 which took effect on August 1, 1992. Further, petitioner notes that: "Th us , to insist that peti ticmer continued to be a franchise holder notwithstanding P. D. 576-A and prior to the pa ssag e of R. A. 7252 as hereinbefore me nt ioned would be an illogical proposition . If the franchise of petitioner, as argued by respondent, was not terminated hy P. D. 576 - A, then there would have been no need for petitioner to apply for a new franchise and for Congress to pass a law granting the same unto pe i tioner. The f;:wt that R. A. 7252 was passed into J <=! W plainly demonst. rat. es that prior to its enactment in 1992, petitioner was not a hold e r o� any franchise tn operate its broadcas ting stations. It is precise l y for the aforesaid reason that pet.ition Pr was not subje c t t o the franch ise t ax frnm 19 8 2 to July 1992, for Section 11 7 as herei nbefore quoted, expressly imposeR a franchise tax only 'in respect to all franchises , upon the gross r eceipts from t h e business covered by the law g rr)n t i nq the franchise Since peti t.i r>n r:>r had rt=>;;u:;ed to operate under a franch i sr> as of Decem her 3 1, 1981, no IJ Rsi. tlt rrt=> fflr exists from that date un ti. l ~J ') 0 I ~- 'I

DECISION - C.T.A. CASE NO. 4&30. - 5- .J uly 31, 1'392 for the imposition of the franchise tax against petitioner ." <Memorandum for Petitioner , p. 8, C. T. A. Hecords, p. 104> Respondent, on the other hand , advanced the following arguments to su pport hi s assessments . Firstly, he claims that although Section 6 of P.O. No. 576 ~ A re vok ~d the earliPr franchise granted to petitioner, "n eve1 � t he le ss, such franchi se wa s subse qu e n tly t�estored or reinstated by wa y of a corres pond ing a u thority or l icense duly issued by the Board of Communications and the Secretary of Publ ic Works and Communication s ". <Answer, p. 4, C. T. A. Records, p. 36 > It is the contention of the resp ondent that the authority or license issued in favor of th e petitioner to o k the place of a franchise maid nq it po ssi ble fo r th e p etitioner to eng age in brn~dcRstinq operations uninter ruptedly considering th<:1t. Section .1 of the Decree expre ssl y provides for a requir e ment in obtaining a franchise and therefore , the co rresponding franchise tax s h ould be att ac he d against the petitioner . Secondly, rPs po nd . nt's only witness, Gorqonia Ching made th e follow i nq sta temPo t s at the witness stand, to wit: "xx x XXX XXX IJ. You Rt~ ted awhi .l.e ago Mada m Wi tness , that you conducted an investiga ion

DECISION - C.T.A. CASE NO. 4630. - 6- on Republic Broadcasting System and you recommended an assessment for the deficiency franc hise tax for the second semester of 1987. May we know. the basis of your r ec ommendation, Mad::Jm Witn ess ? A. Th e basis o f my re co mmend a tion on the deficiency f ranchise tax for the second semes ter 1987 was because as pr.e sc r i be> d hy Executi v e Order 72 all fr an c h i se> hold e rs are taxab le und er fran c h i.se t ax . XXX XXX XXX Q. In your second memorandum Madam Witness , you r e iterated this time th at t he Republ ic Broadcasting System is l i a ble for deficiency franchise t ax for the second semester of 1987. May we know your basi s, Madam Wi tne>ss? A. XXX <P>er ExPc utive Order No. 72, it says that Sectjo n 3 of Executive Order No. 72 stat es that t he pertinPnt provision of the charters of fra nchise grantees and all other laws , orders, issuances, rules and r egulations or parts thereof inc onsi stent wit h this executive order are hereby repealed or modified a ccordingly. xxx XXX XXX xxx. " <D irect Exa mJn <'ltio n, T. S. N. October 15, 1992, pp. 9 , 12 - 14) "x xx XXX XXX Q. Hav p y ou examined the :former .fran c hise of Republic Broadcasting Syst e m? A. Fo r wr->r? Wh ::J t d o you me a n by former fr a nc hjse? Q. Th r:> f anchj s <=? of the co mpany up o n whi ch you ba s e d th e franr;hise tax? 7 ') . ,. l � ....

DECI SION - C.T. A. CASE NO. 4630. -7- A. Because we just started the year 1987 whi ch the E.O. No. 72 begin its effectiv ity, only July 1987." XXX XXX xxx. " <Cross Examination , T. S. N. October 22, 1992 , pp. 5 - 6> Respondent's wit ness is of the opinion that E.O. No. 72 repealed P.D. No. 5 76- A. Her testimony however is bereft of any explanation as to its relevance to the alleged existence of petitioner's franch ise except perhaps to forward a theory th~t since P. D. No. 576 - A, which repealed the franchise o� the peti t.ioner, was subsequently repealed, the said franchis e i s deeme d revived. And thirdly, respondent contended that P. D. No. 576 - A did not ex pressly repeal petitioner's existing franchise. lie argued that the Decree "was promulgated merely for the purposes of regulation and avoidance o� monopol y i n own ers hip and operation of radio and television s tation s as expressly provided in its preamble. " <Memorandum for Respondent, p. 5, C. T. A. Records , p. 1 26> Neither did it " gra nt petit. i o ne.r t ax exemption ". <Ibid., p. 9 , Ibid., p . 130 > The sol e issue b e fore this Court is wh ether or not petitioner is li a ble for franchise tax under Sect ion 117 of the T x Code, as amended, for the r-~ ') ~ � ' \ .l!....

DECISION - C.T.A. CASE NO. ~630. -8 - third a nd fourt h quarters of 1 987 amounting to ?16,159,651.61 inclusive of increments . Prior to the pr o mulgation o:f P. D. No. 576-A, the controlling law on radio and television oper ation was Act No. 3846, as amended. It provides among others that : " SECTION 1. No person, firm, company, associ ati o n or corporation shall construct, install, establish , or operate a radio transmitting station or a radio receiving station used for commercial purposes or a radio broadcasting station, without having first obtained a :franchise therefor from the Congress o:f the Philippines xxx. SECTION 2. The construction or installation of any station shall not be begun, unless a p ermit therefor has been granted by the Secretary of Commerce and I ndustry. No station shall be operated except under and in accordance 'With the provisions of a license issued there:for by the Secretary of Commerce and Industry xxx" The Act, as amended, required a person, :firm, comp any , associatio n, or corporat i on to :first secure the following a > a franch ise from Congress; b > a permi t to con s tr u c t or install a station :from the Secretary of Co mm e rce a nd Industry; and a> a lic e nse to operate a stat ion fro m the Secretary o:f Commerce and Industry, before the same could operate a radio broadcasting sta tion. A "franchise " is a right or privilege gra nted by the so v er ei~ nty tn one or more par ies to do some �) r , 7 ..) �)

DECI S ION - C.T.A. CASE NO . 4630. - 9- act or acts, which the y could not do without this grant from the sovereign power; a privilege which emanates from t he sov e reign po wer o:f the state or government ; a branch of the sovereign power o:f the state, subsis ti ng in a person or corporation by grant :from the state. <Words and Phrases, Vol. 17, pp. 471 , 482, 469 ) A "license" on the other hand, con:fers no right or e s tate nor ves t e d interest, nor does it const itute a binding c ontract between the parties, but i t is a mer e l eave to be enjoye d as matter o:f indulgence at the wi l l of the party granting it. It is in no sense a contract bet ween the state and the licensee, but is a me re p e rsona l permit, neither .. transferable n o r vendibl e (Word s and Phrases, Vol. 25 , pp. 150 , 1 711 ). Responde n t's a rgume nt tha t the authority or licen s e i ss u ed b y the Bo a r d of Communica tions and the Secretary o f Public Works and Communications should be co n si d er ed as franc h ise does not hold water. A lic e ns e is a license and a :fra n chise , a fran c hise , thi s Court cannot see two sides o f a coin at a time. T here h i3a to be a d e marcation line to this effec t. A fr~nc h is e i s a vested right pro t e ted by the Co n s t itu ti o n wh i l e a 1 i cense is a m re pe r sona l p r i v ile e and s r e v ocabl e . In a 7 ') 't \ _l �

DECISION - C.T.A. CASE NO. 4630. - 10 - franchis e , the rights , privileges and obligations of both the contracting p arties <the franchise holder and the state > are we ll defined and serves as the contract between them. Such matters like extent of operation, area of responsibilities, franchise tax to be paid , to the state, and tax exemption privileges are recited . I t is clear that the promulgation o:f P. D. No. 576-A termin ated all existi ng :franchises including the petitioner's. The question is: Was the petitioner given a new franchise? The Secretary of Justice, in h is opinion dated June 20 , 1 991, has made this st at ement : "W e h�::? l ieve t h at E. 0. No. 5 46 <which is a law i r~ sued p urs uant to P . D. No. 1416, as amendPd , granting the then President c ontinu ing a u t hority to reorganize the admi.nist rrt t i. ve structure of the national governme nt) is one law which authorizes an administra t ive agency, the NTC, to issue authorizat.i.ons for the operation o:f radio and tel ev ision broadcasting systems wi 1;. hg ut nPed __of.. _a __ _ . p r.::.:V~.r::. :f:f'C!D.f!h:i.:.?~.�.�ued l;l y (::ongress . " <Op inion No. 98, , p. 6, C . T. A. Recor d s , p. 23 ) <Underscoring supplied) In the case of Albano v. Reyes <175 SCRA 264>, the Su p reme Court h eld that : "FranchiRes issued by Congress are not required be fore each and every publ ic utility m:=t y nper Rte. Thu s , the law ha s q r a nted ce rtain administrati ve agencies t he power to gr a nt licenses for or to a u t h ori z P the operation of c ertain public u t i i t i _s. X XX � ..

DECI!:JDN - C.T.A. CA SE NU. 4630. -� 11 - Th a t the Co n stit uti o n p ro vides in Ar t. XI T. Ser: . 11 that the issuance o:f a franchi s e , c~rtificate or o ther :form o:f authorizAtion for th e operation o:f a publi c utility shal l be subject to amendm e nt , a]tPration or repeal by CongrPs s dfJes nnt necessarily imply, a s petition o=> r p osil :"> , th"it o n l y C:o ngress ha s t hr.? pfJ wrr� tfJ o r :=t n t s u c h au thorization. Our str.~ t- 11t.P. b ooks are rep l.r.?te with law s grRnt"nq specified agencies in the E x ecutiv e nrRnch t h e power to issu e su c h authori? 'l ti.o n for cer t ain cJ asses o:f p u b 1 i c \) t. i l i t i '"' s . " A.l thouqh P. D. No. 5'76 - A terminated all existing :franch ises as of December 3 1, 1981 and vested unto the President t h e pow er to issue franchises in his l egislative c apacit y, it did not abolish the requir e me nt imposG d in Se ctio n 1 of Act No. 3846, as amP.n ded . Cont~ r"l ry t 0 n ? spo nd ent ' s view, Section 1 of P. D. No. 5 '7 6 A mere ly provid es for a requirement be:f ore one may obtai n a :franc hi se but is silent as to a p r ior fra n c h ise being required before one may op erate a bro :=tdc astinq s ta t ion. E. 0. No. 546 how eve r, rendered the requirement unn ecessa ry ior it aut h or i zed an administrative age n c y of the e x ecu ti ve branch of government to i ss u e ce rtif ic a t es of p ubl ic convenience for the opera t io n of rommu ni catio n s utili ties. A person or firm may tllen? :fore opP r at e communica tions and brn<=ldc ns tinq f a r_; .L l i t i ~, 8 by ITI PJ I? ce r t. i f i cates of

DEf: l!>HJN -- C.T.A . CASE NU. 4630 . - 12 - pu b l ic conveni ~"> nce , penni ts or 1 icen s es without a n eed of a pr ior franc hi se . As to the appl icability of E . 0. No. 72, this Court finds th;-}t il. did nnt:. repeal P.D . No. 576- A. Th ere can h. e n c' impl i P d r�e peal in this case for there lies no in c-., n s ist. e n cy/co ntradiction nor simil <-J r su b .i Prt� mi=! f-. b ='l t. o speak of. The sta �t ut e prov irles : " ~~ EC TlnN 1.. Sectio n 1 2 7 of th e as National Internal Reve n ue Code , read amendP.ci, �i -> h ere by fu rther amended to as follow s : ' SF. C TlUN 22'1 <n ow Sectio n 11 7> . Tax on t "ranch i sP.s . An 1' provision of qpn rora l or s p Pc ial law to t h e co nt r'lr � nr:.t .\.-i.t- h s ta n ding, there s h 't.l] he l evied, ar::s~:>ssl? d and co ll prt n rf jn rPsper:: t to all franr-:: 11 i c; pr:; , up on the::> qross recei p+ s f rnm tt n bu s iness covered by the l a w qrant-. inn lhe fra n c-hise , a t<'lx i. n ac cor rl <-Jn,-,., with th e sc h edule p r esc-r i hrd herPunrl>:>r: ( a ) I. n e l t? c t-. ~- .i c u t: i 1. i t i e s , c i t y qas "lnd water su pplir:> s Two (2%) pet- ce n t: <b > 1ln tPlephone and/or telegraph systems , and radio broadcasting statjnns . Th ree <3% ) per ce nt <r-� > I l n n I IJ Pr franr:: h is ~=>s . . . . Five ( 5% ) pnt� c-en t_ s h r~ ll f:iJ P thP rP tu r n with, till=' t. ::,x rlue therenn t.o, Commi ~~r; i.oner of Internr~l Reve nuP or hi. s rluly authorized rr.>prp r-n n1- ::tt i VP in r1 r:: rordr.tn ce wi t . h thP pr nv ision s of SP r::tio n 1 ~2 of ~ his Cn d P , ;:~nd t-. he r P t _\ rn s hr~ll hP 73 7

DEC I!; I O N C . T . A. C A ~> E tHI. .ilf:,:JU. - 13 - s ub j r>ct. to Rll dit by t h e Bureau o :f In t�.r- J" n a l H ~=>vP n P P, a n y p ro v i sion of any ~~ t s ti n q l a w to t h e con trary n n t� w i t� II s t� ~ n rl j n q . ' S fT T TO N 2 . A n y p r~ v i s i~ n o f g e n e r a l or R Jl "' <-:: i :-}1 l8 w tn 1- h F? co n t ra ry not wi th s l- n nrl inq , a]_ 1 qrs nt e:>e:> s of fr~nr� h i n~s s h "l I 1 b e s ub j ec t to the in c ome ta x 1 ~v i P d un dPr Tit l e I I o f t h e N a t io n al I n tern ;>l R evenu P Cod e , a s a mF? nd e d . " Th er e i n n o d o ub t t h at. t he law merel y ame nded th e Ta'~ CndP. t o m Fl I: F? t h e tax rate un i f o r m to f ra n c hi se hn l. rl e r s , to s ub j e c t the ta x re tu r n to a u d it , a n d t o h o Ld fra n c hi se holders l i a b l e fo r c o r po r a te i 11 r: n me t a x a me nrf i nq th e " i n J ieu o f a l l ta xes " prov i s io n c o mmo n i n mo s t f r anc h ises i n s o far a s e xe mp t inq h o l der s fr o m i n co me tax . T his Co u r t c an n ot re a d i. n to t.h r:> l.~w so me t hin q that i s clear l y n ot t h en~ . PP.t it-i o ner a h ly di s cu s s e d in its Memo r and u m I h ~~ t : " 1!\) r f n r �r> ;"111 i.�npl ie d r e pe a l i s d ee me d to r i �- t , i f. mu s t-. he s uffici e ntly P :3 t;:'lh] i -~ h P d th::tt t h e s t atu t e o r s tatu to ry pro v i si~ n s r:: on cer n e d de a l with th e sa me s u hi ect ma t. t.e r <1 n d t h a t th e l a t t e r b e i rrern n��.i l ab J e a nd in c on s i a t<? nt w i th t he f o r me r : ' I t. h a s h ~=>~=> rt th F? const. <=1 nt ho l d i nq of ~I ds Cn u r t:-. t h at r P f1 P als by i mr l i r;:'l . io n ~1� ~ n ~ ~ f a vor ~ d a n d wi 1 n n t h r.> sn rl r:> cl at- n ri un P , � s i t. b<-" m;-'1n l r :-;1: t h<~' l: h<=> J r:> ld s laturP so i n 1: P n d n ri . ~: 1 1r. h a rf n r t-. 1 i n P q o e . s s fa r b <'lc k a~ � ' ll ni b :�d S rt 1:P B v. R P y Pn, <1 l' l! lR d oc i .-;in fl. 1t jR n e C~=' RS<=Iry 1. 11 P P hP f r_, r f' r;r Jr -h <'l re p~=> <-i l i c: cte emnrl t f) f' .. i :-1 t ' h "'! t�. i t . b e s h o wn t- h a t- t h n nr prnvis i o n s 738

T> EC 1 S 11lN - C. T. A. CA S E NU . 4G::JO. - 14 - dea l wit h t h e s8me sub j ec t ma t ter .a nd thrtt th o:;� l::.~tter be i n co n s i s t e !."l.:t. _with i" h~? formPr. There mu s t be a s h o wirHl of rpp ugnancy clea r a nd con�;i. nr~; nn :.in c h :=t r aci"er . The 1 anqu :::Jq ~"? usr:>d in the lat. t. er s t a t ut e must be such 8S to rPn d e r i t i.rrc:>r.nnr::ll8.ble wit h wh at had been formr::> t' I y enaci: Prl . An inronsis t .ency t h at fAlls short of th 8t sta n da rd doe~ n o t suffir:�e . Wh ut is nPP d e d i s a mn� lifPst indi.c8tion of the legis18 +.i v e pnrpose to repeal.' <V i ll P q <ls v s . S ub i .d o, 4 1 SC RA 196; Vi l leonn vs . E n ri l e , 50 SCRA 10; Ve lu n t�. n vs . Chie� , Phil. Co nst.n huJ.ary, 1 57 SC RA 1 5 3; Un derAs orin q su ppl ied> App I y i ng t. h e r~fore qu o ted cr i t er ia to t h e in str:lllt. C"'lse , i t '<:~nnot h e d e n ie d th a t P. D . 576 -- A 8nd E . 0 . 72 do no t dea l wi th t h e sa me subjer;t rn"ltter . E. 0. 72 , o n o ne h a nd, p~=>rtaj ns to the ne w ta x rate s tr u cture i mp osa b le o n f r anc h ise operat o rs an d thP wit h rlr8 wa l of i n c ome tax exP mpt innR gra n tPrl u po n the l a tter. On the othPr h and , P . D. 576- A deals s p ecific"llly wi t h the reg ulation o� ownership a n d o p e r a t i on of r adio and t. e .l ev i si.nn str~tio n s by t e rminating fra n chlseG covering t h e s a me as of Decem b er 31 , 1 981 . T h e principle of i mpliPd repPal , t h erefore, c annot be ap plied to t h e instant c ase o n a ccount o� th e a pparr::>nt d ifferen ce in subject matter of the statutes he r ei n c oncerned. Mor e o v F?r, P . D. 576- A and E. 0 . 7 2 are not i. rreconci l ab l P. wi t h e8c h o t h er. S uffice it t o say t h at t he passage o � E. 0. 72 did n ot i n ~ ny m8 nn er ha v e t h e ef f ect of r estorin a o r revivi n q t h e f ra nchise of p etitio n Qr whi h was terminated by P.O. "i7F. - fl. " <Mernoranrl tJ m f!J� P<~t. itioner , pp. 14 - l 'S ; C.'J'. fl . Rern ds , pp ll'J - 11 1 ) P . D. No. possible t h e th e n Pre s i r '""'" t ' s rl �� c � i �e to rr=>v j PW and r8nt_rol mass medj a.

DECISION - C .T.A . CASE NO. 1 G30. - 15 - clauses are t o monopoly in ownersh i p and operation o:f r u d i o and television st ations and to regulate th e samP. Th e r e wa s no c o n f lict b et wee n the objects of the st <J tu t e and the tPrmination of :franchises. Th E' latte r was a means to accomplish the :fo r mer . 1n fact , by term in ating the existing franchis e s a -t-. t hat. t i me , the President , under mar tial 1 a w ru l P. , was able t o hav e complete control over the media of bro a d c- a s ting . Furthermore , this is not a claim :for tax exemption but rather :for tax imposition in which case the tax provision shou ld be interpreted in case of doubt agai n st the taxing a uthor ity because burden s are not to bl? imp o sed b e yo nd what the st.atut P S 1::-x p rPP :=r J y and c l�?ar 1 y i rn p or t ( Commj sai oner of In ternal He vc=- flue v. Court of Appeals, 204 SCRA 182; RPpub I -: v . In f. p r mP d iat�> App ella te Court, 1 9 6 SC RJ\ :n 5 : Co n n� .i n R i oner of In �t ern a l Revenue v. Fi. re men 'R Fund TtHIUI- ancP Company. e �t a l . , 148 SC RA 315 ; Commisaionr r of I n ternal Re venue v. La Tondena . Inc., 5 SC RA G65 ; 'H;::mila Ra i lro ad Company v. CollPct.or of Cus t:omn, 52 Ph i. l. 950 ; Lu zon Str->vPdor i nq Go. v. T r i n i rl ~ d, 4 j Phi 1. 80 3) . S P c t in n 117 of the T '1 X Co d e js t ha t t h e �. mpos i � i.nn of ;:'lpply onl y to 74 J

- DECI~;HIN C.T.A. CASE NO. 4630. -- 16 - " x xx <T >h e re s hall be l evied, a s se s sed a nd coll ec ted ;i.n r _espect. tg_____?l! franchi ses , u p on the gross r e ceipts from th r-:> bu s i n -?ss co v ere d .. by_ . the.... la w . grar1t.ing the fr anchise xxx. " <Undersc oring supplied> Pursu::tn t. to thi s pt- o v is i o n of la w, i t follows that i f thP pr:>ti t.-. i. o n Pr h :::~:2 n o fr a nchise, i t could not be subj e8l to f r 8n ~ h ise t a x. WHERF:FOH F , in vi E' \~ of al l the forego i ng, r es pond e n t ' s d �- ri.Ri fJn is SE T ASI DE. The d eficiency fran ch i s e t ax a.ssess me n t s in the total am oun t of P16, 15 9,651. 5 1 inc lu s iv e o f increments for the third and f o urth qu ar t e rs of 1 9 87 is hereby CANCELLED. No pron oun c ement as to c o s t . S O OROETH-: 1). Qu ezo n Ci~y . ME?trn l'l::=mi J a, Ju .l y 2 7 , 1993. ~.. ~Q.. ~ ERNE STO D. ACOSTA PrE?si ding Judge WE CONC{JH: /t&EIK. rmiiOA 1\ ss o r.:i.R P Judq e (diss e n ti ng ) UAM ON 0. n F: VE YRA Assor.iilt <=> ltJ dCl <? 74 :

DF.Cl SHJN - C.T.A. CASE NO . J16::JO. -� 17 - I hereby certify th~t this decisio n was reached aft er due r.on s u.lt at i on Rrnonq t.h l? members of the C o u rt c>f Tax Appea l ::' i. n a cc ord nee wi �th Se ction 1 3 , Art j c le V ( I T" 0 f !�. he C n nat. i t uti on. ~-� Q,Q~ ERNESTO D. ACOSTA Presi d ing Judqe Court of T ax Ap pea l s 742