The Court of Appeals has upheld the judgment of a regional trial court that nullified a local ordinance requiring telecommunications companies to pay annual tower fee.
In a 16-page decision, the CA’s 7th Division Associate Justice Stephen Cruz denied the petition filed by Mayor Alfredo Remigio of San Mateo, Isabela seeking to reverse and set aside the order of the RTC that granted Smart Communications’s petition for certiorari and declared null and void Municipal Ordinance No. 2005-491.
“The order of the [RTC], dated May 8, 2014[,] which declared as null and void Municipal Ordinance No. 2005-491 is hereby affirmed,” the appellate court decision dated February 13, 2015 ruled.
“We understand that the municipality is merely creating its source of revenue based on its delegated power to tax businesses within its jurisdiction pursuant to the LGC,” the CA noted.
However, “in this case, the San Mateo LGU assessed taxes on the telecommunications tower which, by itself, is not a business but merely an adjunct to Smart’s main operations as a telecommunications service provider, thus, making the imposition improper.”
Associate Justices Fernanda Lampas Peralta and Ramon Paul Hernando concurred with the ruling.
On June 27, 2005, the local government of San Mateo enacted the ordinance entitled “An Ordinance Imposing Regulatory Fee known as Annual/Tower Fee for the Operation of All Citizens Ban (CB), Very High Frequency (VHF), Ultra High Frequency (UHF) and Cellular Sites/Relay Stations Within the Municipality” pursuant to its power under Section 186 of Republic Act (R.A.) No. 7160 or the Local Government Code of 1991 (LGC) to levy other taxes, fees or charges within its jurisdiction.
After public hearings and publications in a newspaper, the ordinance came into effect and Notices of Assessment were sent to Smart and other affected businesses in the municipality, which required the telecom to pay tower fee worth P200,000 per year.
Smart sought injunctive reliefs, among others, with the RTC, which granted the petition and junked the ordinance, prompting the LGU to seek redress with the appellate tribunal.
But the appellate court ruled that the ordinance lacked reasonable justification.
“Evidently, for having lacked any reasonable justification, the annual tax of P200,000 imposed on Smart is deemed factually or legally infirm,” the CA stressed.