H.30 Maceda Vs Macaraig GR No. 88291 06081993 PDF

8/31/2016 G.R.No.
88291
TodayisWednesday,August31,2016
RepublicofthePhilippines
SUPREMECOURT
Manila
ENBANC
G.R.No.88291June8,1993
ERNESTOM.MACEDA,petitioner,
vs.
HON.CATALINOMACARAIG,JR.,inhiscapacityasExecutiveSecretary,OfficeofthePresident,HON.
VICENTEJAYME,ETC.,ETAL.,respondents.
Angara,Abello,Concepcion&CruzforrespondentPilipinasShellPetroleumCorporation.
SiguionReyna,Montecillo&OngsiakoforCaltex.
NOCON,J.:
Justlikelightningwhichdoesstrikethesameplacetwiceinsomeinstances,thismatterofindirecttaxexemption
oftheprivaterespondentNationalPowerCorporation(NPC)isbroughttothisCourtasecondtime.Unfazedby
theDecisionWepromulgatedonMay31,19911petitionerErnestoMacedaasksthisCourttoreconsidersaidDecision.
LestWebecriticizedfordenyingdueprocesstothepetitioner.Wehavedecidedtotakeasecondlookattheissues.Inthe
process, a hearing was held on July 9, 1992 where all parties presented their respective arguments. Etched in this Court's
mindaretheparadoxicalclaimsbybothpetitionerandprivaterespondentsthattheirrespectivepositionsareforthebenefit
oftheFilipinopeople.
AChronologicalreviewoftherelevantNPClaws,speciallywithrespecttoitstaxexemptionprovisions,attherisk
ofbeingrepetitiousis,therefore,inorder.
On November 3, 1936, Commonwealth Act No. 120 was enacted creating the National Power Corporation, a
public corporation, mainly to develop hydraulic power from all water sources in the Philippines. 2 The sum of
P250,000.00 was appropriated out of the funds in the Philippine Treasury for the purpose of organizing the NPC and
conductingitspreliminarywork.3ThemainsourceoffundsfortheNPCwastheflotationofbondsinthecapitalmarkets 4
andthesebonds
. . . issued under the authority of this Act shall be exempt from the payment of all taxes by the
CommonwealthofthePhilippines,orbyanyauthority,branch,divisionorpoliticalsubdivisionthereof
andsubjecttotheprovisionsoftheActofCongress,approvedMarch24,1934,otherwiseknownas
theTydingsMcDuffleLaw,whichfactsshallbestateduponthefaceofsaidbonds.....5
On June 24, 1938, C.A. No. 344 was enacted increasing to P550,000.00 the funds needed for the initial
operationsoftheNPCandreiteratingtheprovisionoftheflotationofbondsassoonasthefirstconstructionofany
hydraulic power project was to be decided by the NPC Board. 6 The provision on tax exemption in relation to the
issuanceoftheNPCbondswasneitheramendednordeleted.
OnSeptember30,1939,C.A.No.495wasenactedremovingtheprovisiononthepaymentofthebond'sprincipal
andinterestin"goldcoins"butaddingthatpaymentcouldbemadeinUnitedStatesdollars.7The provision on tax
exemptioninrelationtotheissuanceoftheNPCbondswasneitheramendednordeleted.
On June 4, 1949, Republic Act No. 357 was enacted authorizing the President of the Philippines to guarantee,
absolutelyandunconditionally,asprimaryobligor,thepaymentofanyandallNPCloans.8He was also authorized
tocontractonbehalfoftheNPCwiththeInternationalBankforReconstructionandDevelopment(IBRD)forNPCloansfor
the accomplishment of NPC's corporate objectives 9 and for the reconstruction and development of the economy of the
country.10Itwasexpresslystatedthat:
Anysuchloanorloansshallbeexemptfromtaxes,duties,fees,imposts,charges,contributionsand
restrictionsoftheRepublicofthePhilippines,itsprovinces,citiesandmunicipalities.11
Onthesamedate,R.A.No.358wasenactedexpresslyauthorizingtheNPC,forthefirsttime,toincurothertypes
of indebtedness, aside from indebtedness incurred by flotation of bonds. 12 As to the pertinent tax exemption
provision,thelawstatedasfollows:
To facilitate payment of its indebtedness, the National Power Corporation shall be exempt from all
taxes,duties,fees,imposts,charges,andrestrictionsoftheRepublicofthePhilippines,itsprovinces,
citiesandmunicipalities.13
OnJuly10,1952,R.A.No.813wasenactedamendingR.A.No.357inthat,asidefromtheIBRD,thePresidentof
the Philippines was authorized to negotiate, contract and guarantee loans with the ExportImport Bank of of
Washigton, D.C., U.S.A., or any other international financial institution. 14 The tax provision for repayment of these
loans,asstatedinR.A.No.357,wasnotamended.
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OnJune2,1954,R.A.No.987wasenactedspecificallytowithdrawNPC'staxexemptionforrealestatetaxes.As
enacted,thelawstatesasfollows:
To facilitate payment of its indebtedness, the National Power Corporation shall be exempt from all
taxes, except real property tax, and from all duties, fees, imposts, charges, and restrictions of the
RepublicofthePhilippines,itsprovinces,cities,andmunicipalities.15
OnSeptember8,1955,R.A.No.1397wasenacteddirectingthattheNPCprojectstobefundedbytheincreased
indebtedness 16 should bear the National Economic Council's stamp of approval. The tax exemption provision related to
thepaymentofthistotalindebtednesswasnotamendednordeleted.
OnJune13,1958,R.A.No.2055wasenactedincreasingthetotalamountofforeignloansNPCwasauthorizedto
incurtoUS$100,000,000.00fromtheUS$50,000,000.00ceilinginR.A.No.357. 17The tax provision related to the
repaymentoftheseloanswasnotamendednordeleted.
OnJune13,1958,R.A.No.2058wasenactingfixingthecorporatelifeofNPCtoDecember31,2000. 18All laws

orprovisionsoflawsandexecutiveorderscontrarytosaidR.A.No.2058wereexpresslyrepealed.19
On June 18, 1960, R.A. No 2641 was enacted converting the NPC from a public corporation into a stock
corporationwithanauthorizedcapitalstockofP100,000,000.00dividedinto1,000.000shareshavingaparvalue
of P100.00 each, with said capital stock wholly subscribed to by the Government. 20 No tax exemption was
incorporatedinsaidAct.
On June 17, 1961, R.A. No. 3043 was enacted increasing the abovementioned authorized capital stock to
P250,000,000.00withtheincreasetobewhollysubscribedbytheGovernment.21Notaxprovisionwasincorporated
insaidAct.
OnJune17,1967,R.A.No4897wasenacted.NPC'scapitalstockwasincreasedagaintoP300,000,000.00,the
increasetobewhollysubscribedbytheGovernment.NotaxprovisionwasincorporatedinsaidAct.22
OnSeptember10,1971,R.A.No.6395wasenactedrevisingthecharteroftheNPC,C.A.No.120,asamended.
Declaredasprimaryobjectivesofthenationwere:
Declaration of Policy. Congress hereby declares that (1) the comprehensive development,
utilization and conservation of Philippine water resources for all beneficial uses, including power
generation,and(2)thetotalelectrificationofthePhilippinesthroughthedevelopmentofpowerfrom
all sources to meet the needs of industrial development and dispersal and the needs of rural
electrificationareprimaryobjectivesofthenationwhichshallbepursuedcoordinatelyandsupported
byallinstrumentalitiesandagenciesofthegovernment,includingthefinancialinstitutions.23
Section 4 of C.A. No. 120, was renumbered as Section 8, and divided into sections 8 (a) (Authority to incur
DomesticIndebtedness)andSection8(b)(AuthoritytoIncurForeignLoans).
AstotheissuanceofbondsbytheNPC,ParagraphNo.3ofSection8(a),statesasfollows:
The bonds issued under the authority of this subsection shall be exempt from the payment of all
taxes by the Republic of the Philippines, or by any authority, branch, division or political subdivision
thereofwhichfactsshallbestateduponthefaceofsaidbonds....24
AstotheforeignloanstheNPCwasauthorizedtocontract,ParagraphNo.5,Section8(b),statesasfollows:
The loans, credits and indebtedness contracted under this subsection and the payment of the
principal, interest and other charges thereon, as well as the importation of machinery, equipment,
materials and supplies by the Corporation, paid from the proceeds of any loan, credit or
indebtedeness incurred under this Act, shall also be exempt from all taxes, fees, imposts, other
chargesandrestrictions,includingimportrestrictions,bytheRepublicofthePhilippines,oranyofits
agenciesandpoliticalsubdivisions.25
Anewsectionwasaddedtothecharter,nowknownasSection13,R.A.No.6395,whichdeclaresthenonprofit
characterandtaxexemptionsofNPCasfollows:
TheCorporationshallbenonprofitandshalldevoteallitsreturnsfromitscapitalinvestment,aswell
as excess revenues from its operation, for expansion. To enable the Corporation to pay its
indebtedness and obligations and in furtherance and effective implementation of the policy
enunciatedinSectiononeofthisAct,theCorporationisherebydeclaredexempt:
(a)Fromthepaymentofalltaxes,duties,fees,imposts,chargescostsandservicefeesinanycourt
oradministrativeproceedingsinwhichitmaybeaparty,restrictionsanddutiestotheRepublicofthe
Philippines, its provinces, cities, and municipalities and other government agencies and
instrumentalities
(b)Fromallincometaxes,franchisetaxesandrealtytaxestobepaidtotheNationalGovernment,its
provinces,cities,municipalitiesandothergovernmentagenciesandinstrumentalities
(c)Fromallimportduties,compensatingtaxesandadvancedsalestax,andwharfagefeesonimport
offoreigngoodsrequiredforitsoperationsandprojectsand
(d)Fromalltaxes,duties,fees,impostsandallotherchargesitsprovinces,cities,municipalitiesand
othergovernmentagenciesandinstrumentalities,onallpetroleumproductsusedbytheCorporation
inthegeneration,transmission,utilization,andsaleofelectricpower.26
On November 7, 1972, Presidential Decree No. 40 was issued declaring that the electrification of the entire
countrywasoneoftheprimaryconcernsofthecountry.Andinconnectionwiththis,itwasspecificallystated
that:
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The setting up of transmission line grids and the construction of associated generation facilities in
Luzon,Mindanaoandmajorislandsofthecountry,includingtheVisayas,shallbetheresponsibilityof
theNationalPowerCorporation(NPC)astheauthorizedimplementingagencyoftheState.27
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ItistheultimateobjectiveoftheStatefortheNPCtoownandoperateasasingleintegratedsystem
allgeneratingfacilitiessupplyingelectricpowertotheentireareaembracedbyanygridsetupbythe
NPC.28
OnJanuary22,1974,P.D.No.380wasissuedgivingextrapowerstotheNPCtoenableittofulfillitsroleunder
aforesaid P.D. No. 40. Its authorized capital stock was raised to P2,000,000,000.00, 29 its total domestic
indebtednesswaspeggedatamaximumofP3,000,000,000.00atanyonetime, 30andtheNPCwasauthorizedtoborrowa
totalofUS$1,000,000,000.0031inforeignloans.
Therelevanttaxexemptionprovisionfortheseforeignloansstatesasfollows:
materials, supplies and services, by the Corporation, paid from the proceeds of any loan, credit or
indebtedness incurred under this Act, shall also be exempt from all direct and indirect taxes, fees,
imposts, other charges and restrictions, including import restrictions previously and presently
imposed, and to be imposed by the Republic of the Philippines, or any of its agencies and political
subdivisions.32(Emphasissupplied)
Section13(a)and13(d)ofR.A.No6395wereamendedtoreadasfollows:
(a)Fromthepaymentofalltaxes,duties,fees,imposts,chargesandrestrictionstotheRepublicof
the Philippines, its provinces, cities, municipalities and other government agencies and
instrumentalitiesincludingthetaxes,duties,fees,impostsandotherchargesprovidedforunderthe
TariffandCustomsCodeofthePhilippines,RepublicActNumberedNineteenHundredThirtySeven,
as amended, and as further amended by Presidential Decree No. 34 dated October 27, 1972, and
Presidential Decree No. 69, dated November 24, 1972, and costs and service fees in any court or
administrativeproceedingsinwhichitmaybeaparty
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(d) From all taxes, duties, fees, imposts, and all other charges imposed directly or indirectly by the
Republic of the Philippines, its provinces, cities, municipalities and other government agencies and
instrumentalities,onallpetroleumproductsusedbytheCorporationinthegeneration,transmission,
utilizationandsaleofelectricpower.33(Emphasissupplied)
OnFebruary26,1970,P.D.No.395wasissuedremovingcertainrestrictionsintheNPC'ssaleofelectricitytoits
differentcustomers.34Notaxexemptionprovisionwasamended,deletedoradded.
On July 31, 1975, P.D. No. 758 was issued directing that P200,000,000.00 would be appropriated annually to
cover the unpaid subscription of the Government in the NPC authorized capital stock, which amount would be
taken from taxes accruing to the General Funds of the Government, proceeds from loans, issuance of bonds,
treasurybillsornotestobeissuedbytheSecretaryofFinanceforthisparticularpurpose.35
OnMay27,1976P.D.No.938wasissued
(I)n view of the accelerated expansion programs for generation and transmission facilities which
includes nuclear power generation, the present capitalization of National Power Corporation (NPC)
andtheceilingsfordomesticandforeignborrowingsaredeemedinsufficient36
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(I)ntheapplicationofthetaxexemptionprovisionsoftheRevisedCharter,thenonprofitcharacterof
NPC has not been fully utilized because of restrictive interpretation of the taxing agencies of the
governmentonsaidprovisions37
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(I)n order to effect the accelerated expansion program and attain the declared objective of total
electrification of the country, further amendments of certain sections of Republic Act No. 6395, as
amendedbyPresidentialDecreesNos.380,395and758,havebecomeimperative38
ThusNPC'scapitalstockwasraisedtoP8,000,000,000.00, 39 the total domestic indebtedness ceiling was increased

to P12,000,000,000.00, 40 the total foreign loan ceiling was raised to US$4,000,000,000.00 41 and Section 13 of R.A. No.
6395,wasamendedtoreadasfollows:
TheCorporationshallbenonprofitandshalldevoteallitsreturnsfromitscapitalinvestmentaswell
as excess revenues from its operation, for expansion. To enable the Corporation to pay to its
enunciated in Section one of this Act, the Corporation, including its subsidiaries, is hereby declared
exemptfromthepaymentofallformsoftaxes,duties,fees,impostsaswellascostsandservicefees
includingfilingfees,appealbonds,supersedeasbonds,inanycourtoradministrativeproceedings.42
II
Ontheotherhand,thepertinenttaxlawsinvolvedinthiscontroversyareP.D.Nos.882,1177,1931andExecutive
OrderNo.93(S'86).
OnJanuary30,1976,P.D.No.882wasissuedwithdrawingthetaxexemptionofNPCwithregardtoimportsas
follows:
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WHEREAS,importationsbycertaingovernmentagencies,includinggovernmentownedorcontrolled
corporation,areexemptfromthepaymentofcustomsdutiesandcompensatingtaxand
WHEREAS, in order to reduce foreign exchange spending and to protect domestic industries, it is
necessarytorestrictandregulatesuchtaxfreeimportations.
NOWTHEREFORE,I,FERDINANDE.MARCOS,PresidentofthePhilippines,byvirtueofthepowers
vestedinmebytheConstitution,anddoherebydecreeandorderthefollowing:
Sec. 1. All importations of any government agency, including governmentowned or controlled

corporationswhichareexemptfromthepaymentofcustomsdutiesandinternalrevenuetaxes,shall
besubjecttothepriorapprovalofanInterAgencyCommitteewhichshallinsurecompliancewiththe
followingconditions:
(a) That no such article of local manufacture are available in sufficient quantity and comparable
qualityatreasonableprices
(b)Thatthearticlestobeimportedaredirectlyandactuallyneededandwillbeusedexclusivelyby
thegranteeoftheexemptionforitsoperationsandprojectsorintheconductofitsfunctionsand
(c) The shipping documents covering the importation are in the name of the grantee to whom the
goodsshallbedelivereddirectlybycustomsauthorities.
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Sec. 3. The Committee shall have the power to regulate and control the taxfree importation of
government agencies in accordance with the conditions set forth in Section 1 hereof and the
regulations to be promulgated to implement the provisions of this Decree. Provided, however, That
any government agency or governmentowned or controlled corporation, or any local manufacturer
orbusinessfirmadverselyaffectedbyanydecisionorrulingoftheInterAgencyCommitteemayfile
anappealwiththeOfficeofthePresidentwithintendaysfromthedateofnoticethereof.....
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Sec.6.....Section13ofRepublicActNo.6395....andallsimilarprovisionsofallgeneraland
speciallawsanddecreesareherebyamendedaccordingly.
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OnJuly30,1977,P.D.1177wasissuedasitwas
. . . declared the policy of the State to formulate and implement a National Budget that is an
instrumentofnationaldevelopment,reflectiveofnationalobjectives,strategiesandplans.Thebudget
shallbesupportiveofandconsistentwiththesocioeconomicdevelopmentplanandshallbeoriented
towardstheachievementofexplicitobjectivesandexpectedresults,toensurethatfundsareutilized
and operations are conducted effectively, economically and efficiently. The national budget shall be
formulatedwithinacontextofaregionalizedgovernmentstructureandofthetotalityofrevenuesand
other receipts, expenditures and borrowings of all levels of governmentowned or controlled
corporations.Thebudgetshalllikewisebepreparedwithinthecontextofthenationallongtermplan
andofalongtermbudgetprogram.43
Inlinewithsuchpolicy,thelawdecreedthat
Allunitsofgovernment,includinggovernmentownedorcontrolledcorporations,shallpayincometaxes,customs
duties and other taxes and fees are imposed under revenues laws: provided, that organizations otherwise
exemptedbylawfromthepaymentofsuchtaxes/dutiesmayaskforasubsidyfromtheGeneralFundintheexact
amountoftaxes/dutiesdue:provided,further,thataprocedureshallbeestablishedbytheSecretaryofFinance
andtheCommissioneroftheBudget,wherebysuchsubsidiesshallautomaticallybeconsideredasbothrevenue
andexpenditureoftheGeneralFund.44
Thelawalsodeclaredthat
[A]ll laws, decrees, executive orders, rules and regulations or parts thereof which are inconsistent
withtheprovisionsoftheDecreeareherebyrepealedand/ormodifiedaccordingly.45
On July 11, 1984, most likely due to the economic morass the Government found itself in after the Aquino
assassination,P.D.No.1931wasissuedtoreiteratethat:
WHEREAS,PresidentialDecreeNo.1177hasalreadyexpresslyrepealedthegrantoftaxprivileges
toanygovernmentownedorcontrolledcorporationandallotherunitsofgovernment46
andsincetherewasa
...needforgovernmentownedorcontrolledcorporationsandallotherunitsofgovernmentenjoying
taxprivilegestoshareintherequirementsofdevelopment,fiscalorotherwise,bypayingtheduties,
taxesandotherchargesduefromthem.47
itwasdecreedthat:
Sec.1.Theprovisionsofspecialongenerallawtothecontrarynotwithstanding,allexemptionsfrom
the payment of duties, taxes, fees, imposts and other charges heretofore granted in favor of
governmentownedorcontrolledcorporationsincludingtheirsubsidiaries,areherebywithdrawn.
Sec.2.ThePresidentofthePhilippinesand/ortheMinisterofFinance,upontherecommendationof
theFiscalIncentivesReviewBoardcreatedunderPresidentialDecreeNo.776,isherebyempowered
torestore,partiallyortotally,theexemptionswithdrawnbySection1above,anyapplicabletaxand
duty,takingintoaccount,amongothers,anyorallofthefollowing:
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1)Theeffectontherelativepricelevels
2)Therelativecontributionofthecorporationtotherevenuegenerationeffort
3)Thenatureoftheactivityinwhichthecorporationisengagedinor
4)Ingeneralthegreaternationalinteresttobeserved.
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Sec.5.TheprovisionsofPresidentialDecreeNo.1177aswellasallotherlaws,decrees,executive
orders, administrative orders, rules, regulations or parts thereof which are inconsistent with this
Decreeareherebyrepealed,amendedormodifiedaccordingly.
OnDecember17,1986,E.O.No.93(S'86)wasissuedwithaviewtocorrectpresidentialrestorationorgrantof
taxexemptiontoothergovernmentandprivateentitieswithoutbenefitofreviewbytheFiscalIncentivesReview
Board,towit:
WHEREAS,PresidentialDecreeNos.1931and1955issuedonJune11,1984andOctober14,1984,
respectively,withdrewthetaxanddutyexemptionprivileges,includingthepreferentialtaxtreatment,
ofgovernmentandprivateentitieswithcertainexceptions,inorderthattherequirementsofnational
economicdevelopment,intermsoffiscalsandotherresources,maybemetmoreadequately
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WHEREAS, in addition to those tax and duty exemption privileges were restored by the Fiscal
IncentivesReviewBoard(FIRB),anumberofaffectedentities,governmentandprivate,hadtheirtax
anddutyexemptionprivilegesrestoredorgrantedbyPresidentialactionwithoutbenefitorreviewby
theFiscalIncentivesReviewBoard(FIRB)
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Sinceitwasdecidedthat:
[A]ssistance to government and private entities may be better provided where necessary by explicit
subsidy and budgetary support rather than tax and duty exemption privileges if only to improve the
fiscalmonitoringaspectsofgovernmentoperations.
Itwasthusorderedthat:
Sec.1.TheProvisionsofanygeneralorspeciallawtothecontrarynotwithstanding,alltaxandduty
incentivesgrantedtogovernmentandprivateentitiesareherebywithdrawn,except:
a)thosecoveredbythenonimpairmentclauseoftheConstitution
b)thoseconferredbyeffectiveinternationagreementtowhichtheGovernmentoftheRepublicofthe
Philippinesisasignatory
c)thoseenjoyedbyenterprisesregisteredwith:
(i)theBoardofInvestmentpursuanttoPresidentialDecreeNo.1789,asamended
(ii) the Export Processing Zone Authority, pursuant to Presidential Decree No. 66 as
amended
(iii) the Philippine Veterans Investment Development Corporation Industrial Authority

pursuanttoPresidentialDecreeNo.538,wasamended.
d)thoseenjoyedbythecopperminingindustrypursuanttotheprovisionsofLetterofInstructionsNo.
1416
e)thoseconferredunderthefourbasiccodesnamely:
(i)theTariffandCustomsCode,asamended
(ii)theNationalInternalRevenueCode,asamended
(iii)theLocalTaxCode,asamended
(iv)theRealPropertyTaxCode,asamended
f) those approved by the President upon the recommendation of the Fiscal Incentives
ReviewBoard.
Sec.2.TheFiscalIncentivesReviewBoardcreatedunderPresidentialDecreeNo.776,asamended,
isherebyauthorizedto:
a)restoretaxand/ordutyexemptionswithdrawnhereunderinwholeorinpart
b)revisethescopeandcoverageoftaxand/ordutyexemptionthatmayberestored
c)imposeconditionsfortherestorationoftaxand/ordutyexemption
d)prescribethedateofperiodofeffectivityoftherestorationoftaxand/ordutyexemption
e)formulateandsubmittothePresidentforapproval,acompletesystemforthegrantofsubsidiesto
deservingbeneficiaries,inlieuoforincombinationwiththerestorationoftaxanddutyexemptionsor
preferentialtreatmentintaxation,indicatingthesourceoffundingtherefor,eligiblebeneficiariesand
thetermsandconditionsforthegrantthereoftakingintoconsiderationtheinternationalcommitment
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ofthePhilippinesandthenecessaryprecautionssuchthatthegrantofsubsidiesdoesnotbecome
thebasisforcountervailingaction.
Sec.3.Inthedischargeofitsauthorityhereunder,theFiscalIncentivesReviewBoardshalltakeinto
accountanyorallofthefollowingconsiderations:
a)theeffectonrelativepricelevels
b)relativecontributionofthebeneficiarytotherevenuegenerationeffort
c)natureoftheactivitythebeneficiaryisengagedand
d)ingeneral,thegreaternationalinteresttobeserved.
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Sec. 5. All laws, orders, issuances, rules and regulations or parts thereof inconsistent with this
ExecutiveOrderareherebyrepealedormodifiedaccordingly.
E.O.No.93(S'86)wasdecreedtobeeffective 48 upon the promulgation of the rules and regulations, to be issued by

theMinistryofFinance.49SaidrulesandregulationswerepromulgatedandpublishedintheOfficialGazette
onFebruary23,1987.Thesebecameeffectiveonthe15thdayafterpromulgation 50intheOfficialGasetter, 51 which 15th
daywasMarch10,1987.
III
Now to some definitions. We refer to the very simplistic approach that all wouldbe lawyers, learn in their
TAXATIONIcourse,whichfroconvenientreference,isasfollows:
ClassificationsorkindsofTaxes:
AccordingtoPersonswhopayorwhobeartheburden:
a.DirectTaxthewherethepersonsupposedtopaythetaxreallypaysit.WITHOUTtransferring
theburdentosomeoneelse.
Examples: Individual income tax, corporate income tax, transfer taxes (estate tax, donor's tax),
residencetax,immigrationtax
b. Indirect Tax that where the tax is imposed upon goods BEFORE reaching the consumer who
ultimatelypaysforit,notasatax,butasapartofthepurchaseprice.
Examples:theinternalrevenueindirecttaxes(specifictax,percentagetaxes,(VAT)andthetariffand
customsindirecttaxes(importduties,specialimporttaxandotherdues)52
IV
Tosimplymatter,theissuesraisedbypetitionerinhismotionforreconsiderationcanbereducedtothefollowing:
(1)WhatkindoftaxexemptionprivilegesdidNPChave?
(2)Forwhatperiodsintimeweretheseprivilegesbeingenjoyed?
(3)Iftherearetaxestobepaid,whoshallpayforthesetaxes?
PetitionercontendsthatP.D.No.938repealedtheindirecttaxexemptionofNPCasthephrase"allformsoftaxes
etc.," in its section 10, amending Section 13, R.A. No. 6395, as amended by P.D. No. 380, does not expressly
include"indirecttaxes."
Hispointisnotwelltaken.
AchronologicalreviewoftheNPClawswillshowthatithasbeenthelawmaker'sintentionthattheNPCwastobe
completelytaxexemptfromallformsoftaxesdirectandindirect.
NPC's tax exemptions at first applied to the bonds it was authorized to float to finance its operations upon its
creationbyvirtueofC.A.No.120.
When the NPC was authorized to contract with the IBRD for foreign financing, any loans obtained were to be
completelytaxexempt.
AftertheNPCwasauthorizedtoborrowfromothersourcesoffundsasideissuanceofbondsitwasagain
specificallyexemptedfromalltypesoftaxes"tofacilitatepaymentofitsindebtedness."Evenwhentheceilingsfor
domestic and foreign borrowings were periodically increased, the tax exemption privileges of the NPC were
maintained.
NPC'staxexemptionfromrealestatetaxeswas,however,specificallywithdrawnbyRep.ActNo.987,asabove
stated.Theexemptionwas,however,restoredbyR.A.No.6395.
Section 13, R.A. No. 6395, was very comprehensive in its enumeration of the tax exemptions allowed NPC. Its
section 13(d) is the starting point of this bone of contention among the parties. For easy reference, it is
reproducedasfollows:
[T]heCorporationisherebydeclaredexempt:
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(d) From all taxes, duties, fees, imposts and all other charges imposed by the Republic of the
Philippines,itsprovinces,cities,municipalitiesandothergovernmentagenciesandinstrumentalities,
on all petroleum products used by the Corporation in the generation, transmission, utilization, and
saleofelectricpower.
P.D.No.380addedphrase"directlyorindirectly"tosaidSection13(d),whichnowreadsasfollows:
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(d) From all taxes, duties, fees, imposts, and all other charges imposed directly or indirectly by the
Republic of the Philippines, its provinces, cities, municipalities and other government agencies and
instrumentalities,onallpetroleumproductsusedbytheCorporationinthegeneration,transmission,
utilizationandsaleofelectricpower.(Emphasissupplied)
ThencameP.D.No.938whichamendedSec.13(a),(b),(c)and(d)intooneverysimpleparagraphasfollows:
TheCorporationshallbenonprofitandshalldevoteallitsreturnsfromitscapitalinvestmentaswell
as excess revenues from its operation, for expansion. To enable the Corporation to pay its
enunciated in Section one of this Act, the Corporation, including its subsidiaries, is hereby declared
exempt from the payment of ALL FORMS OF taxes, duties, fees, imposts as well as costs and
service fees including filing fees, appeal bonds, supersedeas bonds, in any court or administrative
proceedings.(Emphasissupplied)
PetitionerremindsUsthat:
[I]tmustbeborneinmindthatPresidentialDecreeNos.380
and938wereissuedbyoneman,actingassuchtheExecutiveandLegislative.53
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[S]incebothpresidentialdecreesweremadebythesameperson,itwouldhavebeenveryeasyfor
himtoretainthesameorsimilarlanguageusedinP.D.No.380P.D.No.938ifhisintentionwereto
preservetheindirecttaxexemptionofNPC.54
Actually, P.D. No. 938 attests to the ingenuousness of then President Marcos no matter what his fault were. It
shouldbenotedthatsection13,R.A.No.6395,providedfortaxexemptionsforthefollowingitems:
13(a):courtoradministrativeproceedings
13(b):income,franchise,realtytaxes
13(c):importofforeigngoodsrequiredforitsoperationsandprojects
13(d):petroleumproductsusedingenerationofelectricpower.
P.D.No.938lumpedup13(b),13(c),and13(d)intothephrase"ALLFORMSOFTAXES,ETC.,",included13(a)
underthe"aswellas"clauseandaddedPNOCsubsidiariesasqualifiedfortaxexemptions.
ThisistheonlyconclusiononecanarriveatifhehasreadalltheNPClawsintheorderofenactmentorissuance
as narrated above in part I hereof. President Marcos must have considered all the NPC statutes from C.A. No.
120uptoitslatestamendments,P.D.No.380,P.D.No.395andP.D.No.759,ANDcameup 55withaverysimple
Section13,R.A.No.6395,asamendedbyP.D.No.938.
OnecommonthemeinalltheselawsisthattheNPCmustbeenabletopayitsindebtedness 56which, as of P.D.

No.938,wasP12Billionintotaldomesticindebtedness,atanyonetime,andU$4Billionintotalforeignloansatanyone
time.TheNPCmustbeandhastobeexemptfromallformsoftaxesifthisgoalistobeachieved.
By virtue of P.D. No. 938 NPC's capital stock was raised to P8 Billion. It must be remembered that to pay the
governmentshareinitscapitalstockP.D.No.758wasissuedmandatingthatP200Millionwouldbeappropriated
annually to cover the said unpaid subscription of the Government in NPC's authorized capital stock. And
significantlyoneofthesourcesofthisannualappropriationofP200millionisTAXMONEYaccruingtotheGeneral
FundoftheGovernment.ItdoesnotstandtoreasonthenthatformerPresidentMarcoswouldorderP200Million
tobetakenpartiallyortotallyfromtaxmoneytobeusedtopaytheGovernmentsubscriptionintheNPC,onone
hand,andthenordertheNPCtopayallitsindirecttaxes,ontheother.
TheaboveconclusionthatthenPresidentMarcoslumpedupSections13(b),13(c)and(d)intothephrase"All
FORMSOF"issupportedbythefactthathedidnotdothesameforthetaxexemptionprovisionfortheforeign
loanstobeincurred.
ThetaxexemptiononforeignloansfoundinSection8(b),R.A.No.6395,readsasfollows:
materialsandsuppliesbytheCorporation,paidfromtheproceedsofanyloan,creditorindebtedness
incurred under this Act, shall also be exempt from all taxes, fees, imposts, other charges and
restrictions,includingimportrestrictions,bytheRepublicofthePhilippines,oranyofitsagenciesand
politicalsubdivisions.57
ThesamewasamendedbyP.D.No.380asfollows:
The loans, credits and indebtedness contracted this subsection and the payment of the principal,
interest and other charges thereon, as well as the importation of machinery, equipment, materials,
suppliesandservices,bytheCorporation,paidfromtheproceedsofanyloan,creditorindebtedness
incurred under this Act, shall also be exempt from all direct and indirect taxes, fees, imposts, other
charges and restrictions, including import restrictions previously and presently imposed, and to be
8/31/2016 G.R.No.88291
imposed by the Republic of the Philippines, or any of its agencies and political subdivisions. 58
(Emphasissupplied)
P.D. No. 938 did not amend the same 59 and so the tax exemption provision in Section 8 (b), R.A. No. 6395, as
amendedbyP.D.No.380,stillstands.SincethesubjectmatterofthisparticularSection8(b)hadtodoonlywithloansand
machinery imported, paid for from the proceeds of these foreign loans, THERE WAS NO OTHER SUBJECT MATTER TO
LUMPITUPWITH,andso,thetaxexemptionstoodasiswiththeexpressmentionof"direct
andindirect"taxexemptions.Andthis"directandindirect"taxexemptionprivilegeextendedto"taxes,fees,imposts,other
charges...tobeimposed"inthefuturesurely,anindicationthatthelawmakerswantedtheNPCtobeexemptfromALL
FORMSoftaxesdirectandindirect.
Itiscrystalclear,therefore,thatNPChadbeengrantedtaxexemptionprivilegesforbothdirectandindirecttaxes
underP.D.No.938.
VI
Five (5) years on into the now discredited New Society, the Government decided to rationalize government
receipts and expenditures by formulating and implementing a National Budget. 60 The NPC, being a government
owned and controlled corporation had to be shed off its tax exemption status privileges under P.D. No. 1177. It was,
however,allowedtoaskforasubsidyfromtheGeneralFundintheexactamountoftaxes/dutiesdue.
Actually, much earlier, P.D. No. 882 had already repealed NPC's taxfree importation privileges. It allowed,
however,NPCtoappealsaidrepealwiththeOfficeofthePresidentandtoavailoftaxfreeimportationprivileges
underitsSection1,subjecttothepriorapprovalofanInterAgencyCommittedcreatedbyvirtueofsaidP.D.No.
882. It is presumed that the NPC, being the special creation of the State, was allowed to continue its taxfree
importations.
This Court notes that petitioner brought to the attention of this Court, the matter of the abolition of NPC's tax
exemptionprivilegesbyP.D.No.1177 61onlyinhisCommonReply/CommenttoprivateRespondents'"Opposition"and
"Comment"toMotionforReconsideration,four(4)monthsAFTERthemotionforReconsiderationhadbeenfiled.Duringoral
argumentsheardonJuly9,1992,heproceededtodiscussthistaxexemptionwithdrawalasexplainedbythenSecretaryof
JusticeVicenteAbadSantosinopinionNo.133(S'77). 62Acarefulperusalofpetitioner'ssenateBlueRibbonCommittee
Report No. 474, the basis of the petition at bar, fails to yield any mention of said P.D. No. 1177's effect on NPC's tax
exemption privileges. 63 Applying by analogy Pulido vs. Pablo, 64 the court declares that the matter of P.D. No. 1177
abolishingNPC'staxexemptionprivilegeswasnotseasonablyinvoked65bythepetitioner.
Bethatasitmay,theCourtstillhastodiscusstheeffectofP.D.No.1177ontheNPCtaxexemptionprivilegesas
thisstatutehasbeenreiteratedtwiceinP.D.No.1931.Theexpressrepealoftaxprivilegesofanygovernment
ownedorcontrolledcorporation(GOCC).NPCincluded,wasreiteratedinthefourthwhereasclauseofP.D.No.
1931's preamble. The subsidy provided for in Section 23, P.D. No. 1177, being inconsistent with Section 2, P.D.
No. 1931, was deemed repealed as the Fiscal Incentives Revenue Board was tasked with recommending the
partialortotalrestorationoftaxexemptionswithdrawnbySection1,P.D.No.1931.
TherecordsbeforeUsdonotindicatewhetherornotNPCaskedforthesubsidycontemplatedinSection23,P.D.
No.1177.Considering,however,thatunderSection16ofP.D.No.1177,NPChadtosubmittotheOfficeofthe
President its request for the P200 million mandated by P.D. No. 758 to be appropriated annually by the
GovernmenttocoveritsunpaidsubscriptiontotheNPCauthorizedcapitalstockandthatunderSection22,ofthe
sameP.D.No.NPChadtolikewisesubmittotheOfficeofthePresidentitsinternaloperatingbudgetforreview
due to capital inputs of the government (P.D. No. 758) and to the national government's guarantee of the
domesticandforeignindebtednessoftheNPC,itisclearthatNPCwascoveredbyP.D.No.1177.
There is reason to believe that NPC availed of subsidy granted to exempt GOCC's that suddenly found
themselves having to pay taxes. It will be noted that Section 23, P.D. No. 1177, mandated that the Secretary of
Finance and the Commissioner of the Budget had to establish the necessary procedure to accomplish the tax
payment/taxsubsidyschemeoftheGovernment.Ineffect,NPC,didnotputanycashtopayanytaxasitgotfrom
theGeneralFundtheamountsnecessarytopaydifferentrevenuecollectorsforthetaxesithadtopay.
InhismemorandumfiledJuly16,1992,petitionersubmits:
[T]hat with the enactment of P.D. No. 1177 on July 30, 1977, the NPC lost all its duty and tax
exemptions, whether direct or indirect. And so there was nothing to be withdrawn or to be restored
underP.D.No.1931,issuedonJune11,1984.Thisisevidentfromsections1and2ofsaidP.D.No.
1931,whichreads:
"Section 1. The provisions of special or general law to the contrary notwithstanding, all
exemptions from the payment of duties, taxes, fees, imports and other charges
heretofore granted in favor of governmentowned or controlled corporations including
theirsubsidiariesareherebywithdrawn."
Sec. 2. The President of the Philippines and/or the Minister of Finance, upon the
recommendation of the Fiscal Incentives Review Board created under P.D. No. 776, is
herebyempoweredtorestorepartiallyortotally,theexemptionswithdrawnbysection1
above....
Hence,P.D.No.1931didnothaveanyeffectordiditchangeNPC'sstatus.Sinceithadalreadylost
allitstaxexemptionsprivilegewiththeissuanceofP.D.No.1177seven(7)yearsearlieroronJuly
30,1977,therewerenotaxexemptionstobewithdrawnbysection1whichcouldlaterberestoredby
the Minister of Finance upon the recommendation of the FIRB under Section 2 of P.D. No. 1931.
Consequently,FIRBresolutionsNo.1085,and186,wereallillegallyandvalidlyissuedsinceFIRB
actedbeyondtheirstatutoryauthoritybycreatingandnotmerelyrestoringthetaxexemptstatusof
NPC.ThesameistrueforFIRBRes.No.1787whichrestoredNPC'staxexemptionunderE.O.No.
93 which likewise abolished all duties and tax exemptions but allowed the President upon
recommendationoftheFIRBtorestorethoseabolished.
TheCourtdisagrees.
Applyingbyanalogytheweightofauthoritythat:
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When a revised and consolidated act reenacts in the same or substantially the same terms the
provisions of the act or acts so revised and consolidated, the revision and consolidation shall be
takentobeacontinuationoftheformeractoracts,althoughtheformeractoractsmaybeexpressly
repealedbytherevisedandconsolidatedactandallrights
andliabilitiesundertheformeractoractsarepreservedandmaybeenforced.66
theCourtrulesthatwhenP.D.No.1931basicallyreenactedinitsSection1thefirsthalfofSection23,P.D.No.
1177,onwithdrawaloftaxexemptionprivilegesofallGOCC'ssaidSection1,P.D.No.1931wasdeemedtobea
continuationofthefirsthalfofSection23,P.D.No.1177,althoughthesecondhalfofSection23,P.D.No.177,on
thesubsidyschemeforformertaxexemptGOCCshadbeenexpresslyrepealedbySection2withitsinstitutionof
theFIRBrecommendationofpartial/totalrestorationoftaxexemptionprivileges.
The NPC tax privileges withdrawn by Section 1. P.D. No. 1931, were, therefore, the same NPC tax exemption
privilegeswithdrawnbySection23,P.D.No.1177.NPCcouldnolongerobtainasubsidyforthetaxesithadto
pay.Itcould,however,underP.D.No.1931,askforatotalrestorationofitstaxexemptionprivileges,which,itdid,
and the same were granted under FIRB Resolutions Nos. 1085 67 and 186 68 as approved by the Minister of
Finance.
Consequently, contrary to petitioner's submission, FIRB Resolutions Nos. 1085 and 186 were both legally and
validlyissuedbytheFIRBpursuanttoP.D.No.1931.FIRBdidnotcreatedNPC'staxexemptionstatusbutmerely
restoredit.69
Some quarters have expressed the view that P.D. No. 1931 was illegally issued under the now rather infamous
Amendment No. 6 70 as there was no showing that President Marcos' encroachment on legislative prerogatives was
justifiedunderthethenprevailingconditionthathecouldlegislate"onlyiftheBatasangPambansa'failedorwasunableto
actinadequatelyonanymatterthatinhisjudgmentrequiredimmediateaction'tomeetthe'exigency'.71
Actually under said Amendment No. 6, then President Marcos could issue decrees not only when the Interim
Batasang Pambansa failed or was unable to act adequately on any matter for any reason that in his (Marcos')
judgment required immediate action, but also when there existed a grave emergency or a threat or thereof. It
mustberememberedthatsaidPresidentialDecreewasissuedonlyaroundnine(9)monthsafterthePhilippines
unilaterallydeclaredamoratoriumonitsforeigndebtpayments 72asaresultoftheeconomiccrisistriggeredbyloss
ofconfidenceinthegovernmentbroughtaboutbytheAquinoassassination.ThePhilippineswasthentryingtoreschedule
its debt payments. 73 One of the big borrowers was the NPC 74 which had a US$ 2.1 billion white elephant of a Bataan
Nuclear Power Plant on its back. 75 From all indications, it must have been this grave emergency of a debt rescheduling
whichcompelledMarcostoissueP.D.No.1931,underhisAmendment6power.76
Therule,therefore,thatunderthe1973Constitution"nolawgrantingataxexemptionshallbepassedwithoutthe
concurrenceofamajorityofallthemembersoftheBatasangPambansa" 77 does not apply as said P.D. No. 1931
wasnotpassedbytheInterimBatasangPambansabutbythenPresidentMarcosunderHisAmendmentNo.6power.
P.D.No.1931was,therefore,validlyissuedbythenPresidentMarcosunderhisAmendmentNo.6authority.
Under E.O No. 93 (S'86) NPC's tax exemption privileges were again clipped by, this time, President Aquino. Its
section 2 allowed the NPC to apply for the restoration of its tax exemption privileges. The same was granted
under FIRB Resolution No. 1787 78 dated June 24, 1987 which restored NPC's tax exemption privileges effective,
startingMarch10,1987,thedateofeffectivityofE.O.No.93(S'86).
FIRBResolutionNo.1787wasapprovedbythePresidentonOctober5,1987. 79There is no indication, however,

from the records of the case whether or not similar approvals were given by then President Marcos for FIRB Resolutions
Nos. 1085 and 1 86. This has led some quarters to believe that a "travesty of justice" might have occurred when the
Minister of Finance approved his own recommendation as Chairman of the Fiscal Incentives Review Board as what
happenedinZambalesChromatevs.CourtofAppeals80whentheSecretaryofAgricultureandNaturalResourcesapproved
a decision earlier rendered by him when he was the Director of Mines, 81 and in Anzaldo vs. Clave 82 where Presidential
Executive Assistant Clave affirmed, on appeal to Malacaang, his own decision as Chairman of the Civil Service
Commission.83
Upon deeper analysis, the question arises as to whether one can talk about "due process" being violated when
FIRB Resolutions Nos. 1085 and 186 were approved by the Minister of Finance when the same were
recommendedbyhiminhiscapacityasChairmanoftheFiscalIncentivesReviewBoard.84
InZambalesChromiteandAnzaldo,two(2)differentpartieswereinvolved:mininggroupsandscientistdoctors,
respectively.Thus,therewasaneedforproceduraldueprocesstobefollowed.
In the case of the tax exemption restoration of NPC, there is no other comparable entity not even a single
public or private corporation whose rights would be violated if NPC's tax exemption privileges were to be
restored. While there might have been a MERALCO before Martial Law, it is of public knowledge that the
MERALCO generating plants were sold to the NPC in line with the State policy that NPC was to be the State
implementing arm for the electrification of the entire country. Besides, MERALCO was limited to Manila and its
environs. And as of 1984, there was no more MERALCO as a producer of electricity which could have
objectedtotherestorationofNPC'staxexemptionprivileges.
It should be noted that NPC was not asking to be granted tax exemption privileges for the first time. It was just
asking that its tax exemption privileges be restored. It is for these reasons that, at least in NPC's case, the
recommendation and approval of NPC's tax exemption privileges under FIRB Resolution Nos. 1085 and 186,
done by the same person acting in his dual capacities as Chairman of the Fiscal Incentives Review Board and
MinisterofFinance,respectively,donotviolateproceduraldueprocess.
While as abovementioned, FIRB Resolution No. 1787 was approved by President Aquino on October 5, 1987,
the view has been expressed that President Aquino, at least with regard to E.O. 93 (S'86), had no authority to
subdelegate to the FIRB, which was allegedly not a delegate of the legislature, the power delegated to her
thereunder.
Amisconceptionmustbeclearedup.
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When E.O No. 93 (S'86) was issued, President Aquino was exercising both Executive and Legislative powers.
Thus,therewasnopowerdelegatedtoher,ratheritwasshewhowasdelegatingherpower.Shedelegateditto
the FIRB, which, for purposes of E.O No. 93 (S'86), is a delegate of the legislature. Clearly, she was not sub
delegatingherpower.
AndE.O.No.93(S'86),asadelegatinglaw,wascompleteinitselfitsetforththepolicytobecarriedout85and
itfixedthestandardtowhichthedelegatehadtoconformintheperformanceofhisfunctions, 86bothqualitieshavingbeen
enunciatedbythisCourtinPelaezvs.AuditorGeneral.87
Thus,afterallhasbeensaid,itisclearthattheNPChaditstaxexemptionprivilegesrestoredfromJune11,1984
uptothepresent.
VII
Thenextquestionthatprojectsitselfiswhopaysthetax?
TheanswertothequestioncouldbegleamedfromthemannerbywhichtheCommissariesoftheArmedForces
ofthePhilippinesselltheirgoods.
ByvirtueofP.D.No.83, 88 veterans, members of the Armed of the Philippines, and their defendants but groceries and
othergoodsfreeofalltaxesanddutiesifboughtfromanyAFPCommissaries.
Inpractice,theAFPCommissarysuppliersprobablytreattheunchargeablespecific,advaloremandothertaxes
onthegoodsearmarkedforAFPCommissariesasanaddedcostofoperationanddistributeitoverthetotalunits
of goods sold as it would any other cost. Thus, even the ordinary supermarket buyer probably pays for the
specific,advaloremandothertaxeswhichthesessuppliersdonotchargetheAFPCommissaries.89
INMUCHTHESAMEMANNER,itisclearthatprivaterespondentsoilcompanieshavetoabsorbthetaxesthey
addtothebunkerfueloiltheyselltoNPC.
Itshouldbestatedatthisjuncturethat,asearlyasMay14,1954,theSecretaryofJusticerendersanopinion, 90
whereinhestatedandWequote:
xxxxxxxxx
RepublicActNo.358exemptstheNationalPowerCorporationfrom"alltaxes,duties,fees,imposts,
charges, and restrictions of the Republic of the Philippines and its provinces, cities, and
municipalities."Thisexemptionisbroadenoughtoincludealltaxes,whetherdirectorindirect,which
the National Power Corporation may be required to pay, such as the specific tax on petroleum
products.Thatitisindirectorisofnoamount[shouldbeofnomoment],foritisthecorporationthat
ultimatelypaysit.Theviewwhichrefusestoaccordtheexemptionbecausethetaxisfirstpaidbythe
seller disregards realities and gives more importance to form than to substance. Equity and law
alwaysexaltsubstanceoverfrom.
xxxxxxxxx
Tax exemptions are undoubtedly to be construed strictly but not so grudgingly as knowledge that
many impositions taxpayers have to pay are in the nature of indirect taxes. To limit the exemption
granted the National Power Corporation to direct taxes notwithstanding the general and broad
languageofthestatuewillbetothwratthelegislativeintentioningivingexemptionfromallformsof
taxes and impositions without distinguishing between those that are direct and those that are not.
(Emphasissupplied)
In view of all the foregoing, the Court rules and declares that the oil companies which supply bunker fuel oil to
NPChavetopaythetaxesimposeduponsaidbunkerfueloilsoldtoNPC.Bytheverynatureofindirecttaxation,
theeconomicburdenofsuchtaxationisexpectedtobepassedonthroughthechannelsofcommercetotheuser
or consumer of the goods sold. Because, however, the NPC has been exempted from both direct and indirect
taxation,theNPCmustbeheldexemptedfromabsorbingtheeconomicburdenofindirecttaxation.Thismeans,
ontheonehand,thattheoilcompanieswhichwishtoselltoNPCabsorballorpartoftheeconomicburdenofthe
taxes previously paid to BIR, which could they shift to NPC if NPC did not enjoy exemption from indirect taxes.
Thismeansalso,ontheotherhand,thattheNPCmayrefusetopaythepartofthe"normal"purchasepriceof
bunker fuel oil which represents all or part of the taxes previously paid by the oil companies to BIR. If NPC
nonetheless purchases such oil from the oil companies because to do so may be more convenient and
ultimatelylesscostlyforNPCthanNPCitselfimportingandhaulingandstoringtheoilfromoverseasNPCis
entitled to be reimbursed by the BIR for that part of the buying price of NPC which verifiably represents the tax
alreadypaidbytheoilcompanyvendortotheBIR.
It should be noted at this point in time that the whole issue of who WILL pay these indirect taxes HAS BEEN
RENDEREDmootandacademicbyE.O.No.195issuedonJune16,1987byvirtueofwhichtheadvaloremtax
rateonbunkerfueloilwasreducedtoZERO(0%)PERCENTUM.SaidE.O.no.195readsasfollows:
EXECUTIVEORDERNO.195
AMENDING PARAGRAPH (b) OF SECTION 128 OF THE NATIONAL INTERNAL REVENUE CODE,
ASAMENDEDBYREVISINGTHEEXCISETAXRATESOFCERTAINPETROLEUMPRODUCTS.
xxxxxxxxx
Sec.1.Paragraph(b)ofSection128oftheNationalInternalRevenueCode,asamended,ishereby
amendedtoreadasfollows:
Par.(b)Forproductssubjecttoadvaloremtaxonly:
PRODUCTADVALOREMTAXRATE
1....
8/31/2016 G.R.No.88291
2....
3....
4.Fueloil,commerciallyknownasbunkeroilandonsimilarfueloilshavingmoreorlessthesame
generatingpower0%
xxxxxxxxx
Sec.3.ThisExecutiveOrdershalltakeeffectimmediately.
Done in the city of Manila, this 17th day of June, in the year of Our Lord, nineteen hundred and
eightyseven.(Emphasissupplied)
TheoilcompaniescannowdeliverbunkerfueloiltoNPCwithouthavingtoworryaboutwhoisgoingtobearthe
economic burden of the ad valorem taxes. What this Court will now dispose of are petitioner's complaints that
someindirecttaxmoneyhasbeenillegallyrefundedbytheBureauofInternalRevenuetotheNPCandthatmore
claimsforrefundsbytheNPCarebeingprocessedforpaymentbytheBIR.
AcaseinpointistheTaxCreditMemoissuedbytheBureauofInternalRevenueinfavoroftheNPClastJuly7,
1986forP58.020.110.79whichwerefor"erroneouslypaidspecificandadvaloremtaxesduringtheperiodfrom
October31,1984toApril27,1985. 91 Petitioner asks Us to declare this Tax Credit Memo illegal as the PNC did not
have indirect tax exemptions with the enactment of P.D. No. 938. As We have already ruled otherwise, the only questions
left are whether NPC Is entitled to a tax refund for the tax component of the price of the bunker fuel oil purchased from
Caltex(Phils.)Inc.andwhethertheBureauofInternalRevenueproperlyrefundedtheamounttoNPC.
AfterP.D.No.1931wasissuedonJune11,1984withdrawingthe
taxexemptionsofallGOCCsNPCincluded,itwasonlyonMay8,1985whentheBIRissuesitsletterauthority
totheNPCauthorizingittowithdrawtaxfreebunkerfueloilfromtheoilcompaniespursuanttoFIRBResolution
No.1085.92SincethetaxexemptionrestorationwasretroactivetoJune11,1984therewasaneed.therefore,torecover
saidamountasCaltex(PhiIs.)Inc.hadalreadypaidtheBIRthespecificandadvaloremtaxesonthebunkeroilitsoldNPC
duringtheperiodaboveindicatedandhadbilledNPCcorrespondingly. 93ItshouldbenotedthattheNPC,initsletterclaim
dated September 11, 1985 to the Commissioner of the Bureau of Internal Revenue DID NOT CATEGORICALLY AND
UNEQUIVOCALLY STATE that itself paid the P58.020,110.79 as part of the bunker fuel oil price it purchased from Caltex
(Phils)Inc.94
The law governing recovery of erroneously or illegally, collected taxes is section 230 of the National Internal
RevenueCodeof1977,asamendedwhichreadsasfollows:
Sec. 230. Recover of tax erroneously or illegally collected. No suit or proceeding shall be
maintainedinanycourtfortherecoveryofanynationalinternalrevenuetaxhereafterallegedtohave
beenerroneouslyorillegallyassessedorcollected,orofanypenaltyclaimedtohavebeencollected
without authority, or of any sum alleged to have been excessive or in any Manner wrongfully
collected.untilaclaimforrefundorcredithasbeendulyfiledwiththeCommissionerbutsuchsuitor
proceedingmaybemaintained,whetherornotsuchtax,penalty,orsumhasbeenpaidunderprotest
orduress.
Inanycase,nosuchsuitorproceedingshallbebegunaftertheexpirationoftwoyearsfromthedate
ofpaymentofthetaxorpenaltyregardlessofanysuperveningcausethatmayariseafterpayment
Provided, however, That the Commissioner may, even without a written claim therefor, refund or
credit any tax, where on the face of the return upon which payment was made, such payment
appearsclearly,tohavebeenerroneouslypaid.
xxxxxxxxx
InasmuchasNPCfilleditsclaimforP58.020,110.79onSeptember11,1985, 95 the Commissioner correctly issued

theTaxCreditMemoinviewofNPC'sindirecttaxexemption.
Petitioner, however, asks Us to restrain the Commissioner from acting favorably on NPC's claim for
P410.580,000.00whichrepresentsspecificandadvaloremtaxespaidbytheoilcompaniestotheBIRfromJune
11,1984totheearlypartof1986.96
A careful examination of petitioner's pleadings and annexes attached thereto does not reveal when the alleged
claimforaP410,580,000.00taxrefundwasfiled.ItisonlystatedInparagraphNo.2oftheDeedofAssignment
97executedbyandbetweenNPCandCaltex(Phils.)Inc.,asfollows:
That the ASSIGNOR(NPC) has a pending tax credit claim with the Bureau of Internal Revenue
amountingtoP442,887,716.16.P58.020,110.79ofwhichisduetoAssignor'soilpurchasesfromthe
Assignee(Caltex[Phils.]Inc.)
Actually, as the Court sees it, this is a clear case of a "Mexican standoff." We cannot restrain the BIR from
refunding said amount because of Our ruling that NPC has both direct and indirect tax exemption privileges.
NeithercanWeordertheBIRtorefundsaidamounttoNPCasthereisnopendingpetitionforreviewoncertiorari
ofasuitforitscollectionbeforeUs.Atanyrate,atthispointintime,NPCcannolongerfileanysuittocollectsaid
amount EVEN IF lt has previously filed a claim with the BIR because it is timebarred under Section 230 of the
NationalInternalRevenueCodeof1977.asamended,whichstates:
Inanycase,nosuchsuitorproceedingshallbebegunaftertheexpirationoftwoyearsfromthedate
of payment of the tax or penalty REGARDLESS of any supervening cause that may arise after
payment....(Emphasissupplied)
ThedateoftheDeedofAssignmentisJune6.1986.EvenifWeweretoassumethatpaymentbyNPCforthe
amount of P410,580,000.00 had been made on said date. it is clear that more than two (2) years had already
elapsedfromsaiddate.Atthesametime,WeshouldnotethatthereisnolegalobstacletotheBIRgranting,even
without a suit by NPC, the tax credit or refund claimed by NPC, assuming that NPC's claim had been made
seasonably, and assuming the amounts covered had actually been paid previously by the oil companies to the
BIR.
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WHEREFORE,inviewofalltheforegoing,theMotionforReconsiderationofpetitionerisherebyDENIEDforlack
ofmeritandthedecisionofthisCourtpromulgatedonMay31,1991isherebyAFFIRMED.
SOORDERED.
Narvasa,C.J.,Feliciano,Bidin,Regalado,Romero,BellosilloandMelo,JJ.,concur.
PadillaandQuiason,JJ.tooknopart.
#Footnotes
1PennedbyJusticeGancayo,concurredinbyJusticesNarvasa,MelencioHerrera,Feliciano,Bidin,
Medialdea,andRegaladoseparatedissentingopinionsbyJusticesCruz,Paras,andSarmiento,with
justicesGrioAquinoandDavidejoininginthedissentofJusticeSarmientowhileJusticeGutierrez
joinedinthedissents.ChiefJusticeGutierrezjoinedinthedissents.ChiefJusticeFernanandJustice
Padillatooknopart.
2Com.ActNo.120,secs.1,&2(g).
3Com.ActNo.120,sec.11.
4Com.ActNo.120,sec.2(k).
5Com.ActNo.120,sec.4,par.3.
8Rep.ActNo.357,sec.3.
16IncreasedtoP500,000,000.00fromP170,500,000.00inRep.ActNo.358(Rep.ActNo.1397,
sec.1).
17RepActNo.2055,secs.1and2.
18RepActNo.2058,sec.1.
24RepActNo.6395,sec.8(a).
25RepActNo.6395,sec.8(b).
27Pres.Dec.No.40,par.2.
29Pres.Dec.No.380,sec.5.
31Pres.Dec.No.380,sec.9,par.1.
32Pres.Dec.No.380,sec.9,par.4.
36Pres.Dec.No.938,1stWhereasclause.
37Pres.Dec.No.938,4thWhereasclause.
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38Pres.Dec.No.938,6thWhereasclause.
46Pres.Dec.No.1931,FourthWhereasclause.
47Pres.Dec.No.1931,FifthWhereasclause.
48Exec.OrderNo.93(S'86).sec.6.
49Exec.OrderNo.93,sec.4.
50RuleV,RulesandRegulationstoImplementExec.OrderNo.93.
5183O.G.8,pp.722725.
52PARAS,TAXATIONFUNDAMENTALS,2425(1966)
53Rollo,p.687MotionforReconsideration,p.12.
54Rollo,p.688MotionforReconsideration,p.13.
55"Statutesareconsideredtobeinparimateriatopertaintothesamesubjectmatterwhen
theyrelatetothesamepersonorthing,ortothesameclassofpersonsofthings,orhavethesame
purposeorobject.Theymaybeindependentoramendatoryinformtheymaybecomplete
enactmentsdealingwithasingle,limitedsubjectmatterorsectionsofcodeorrevisionortheymay
becombinationofthese.(2SutherlandStatutoryConstruction,2ndEd.,sec.5202,p.535)
xxxxxxxxx
Statutesinparimateria,althoughsomemaybespecialandsomegeneral,intheeventoneofthem
isambiguousoruncertain,aretobeconstruedtogether,evenifthevariousstatuteshavenotbeen
enactedsimultaneously,anddonotrefertoeachotherexpressly,andalthoughsomeofthemhave
beenrepealedorhaveexpired,orheldunconstitutional,orinvalid.(Crawford,StatutoryConstruction,
sec.231,p.431.)
xxxxxxxxx
Thereasonswhichsupportthisrulearetwofold.Inthefirstplace,alltheenactmentsofthesame
legislatureonthegeneralsubjectmatteraretoberegardedaspartsofoneuniformsystem.Later
statutesareconsideredassupplementaryorcomplementarytotheearlierenactments.Inthe
passageofeachact,thelegislativebodymustbesupposedtohavehadinmindandin
contemplationtheexistinglegislationonthesamesubject,andtohaveshapeditsnewenactment
withreferencethereto.Secondly,therulederivessupportfromtheprinciplewhichrequiresthe
interpretationofastatuteshallbesuch,ifpossible,astoavoidanyrepugnancyorinconsistency
betweendifferentenactmentsofthesamelegislature.Toachievethisresult,itisnecessaryto
considerallpreviousactsrelatingtothesamematters,andtoconstruetheactinhandsoasto
avoid,asfarasitmaybepossible,anyconflictbetweenthem.Henceforexample,whenthe
legislaturehasusedawordinastatuteinonesenseandwithonemeaning,andsubsequentlyuses
thesamewordinlegislatingonthesamesubjectmatter,itwillbeunderstoodasusingthewordinthe
samesense,unlessthereissomethinginthecontextorinthenatureofthingstoindicatethatit
intendedadifferentmeaningthereby.(BlackonInterpretationofLaws,2ndEd.,pp.232234)
FRANCISCO,STATUTORYCONSTRUCTION,287288(1986).
56TheNPCistheimplementingarmoftheStateinitspolicyofelectrificationoftheentirecountry.Its
authorizedcapitalstockandtotallocalandforeigndebtceilinghave,therefore,beenregularlyraised
toprovideNPCwithmassivefundflowstoachievesaidpolicy.
57Rep.ActNo.6395.sec.8(b),par.5.
58Rep.ActNo.6395,sec.8(b),par.5.wasdeletedandparagraph5,sec.8(b)becameparagraph
4,Section8(b),asamendedbyPres.Dec.380.
59"Sec.8.ThefirstparagraphofSection8(b)ofthesameActisherebyfurtheramendedandanew
paragraphshallbeinsertedbetweenthethirdandfourthparagraphofsaidsectionwhichshallboth
readasfollows:...."
60SeePres.Dec.No.1177,sec.4.
61Rollo,p.783.
62T.S.N.,July9,1992,pp.1921.
63Rollo,pp.53119.InthereportsubmittedtotheSenateBlueRibbonCommittee,thediscussion
centeredonNPC'staxexemptionprivilegesbeingabolishedbyPres.Dec.No.1931inparagraphs
11,37,81,83.1andF.1Pres.Dec.No.1177wasmentionedinparagraphC(2)inthe
8/31/2016 G.R.No.88291
Recommendationportionbutonlybywayofitsstatepolicybeingmadeamodelforafuturebilltobe
filledbytheSenatorsinvolvedintheinvestigation.
64117SCRA16(1980).
65Inthiscase,JudgeMagnoPulidoofthenCFIofAlaminos,Pangasinan,BranchXIII,promulgated
adecisiononMay17,1974inCriminalCaseNo.266Aentitled"Peoplevs.Bantolino."Bantolinofiled
acomplaintagainstthejudgecharginghimwithignoranceofthelawbecausehissentencewas"with
subsidiaryimprisonment."Thecasedismissedafterrespondentjudgethereinstatethathehad
corrected"with"to"without"butBantolino'slawyer,Atty.Pulido,refusedtoreturnhis(Atty.Pulido)
copyforacorrectedcopy.
Later,Atty.PulidofiledanotherchargeagainstJudgePablo,thistime,forfalsifyingaCourtof
Appeals'decision(reBantolino'sappealwiththeCom.ActNo.)andminutesofcourthearingsaswell
asinsertionsintherecordofafalsecommitmentorder.Respondentjudgepleaded,amongothers,
resadjudicata.
TheCourtmadeadistinctionbetweenthetwoadministrativecomplaintsandconcludedthatthere
wasnoresadjudicata.Ontheproceduralaspectinvolved,theCourtstated:
"Furthermore,thedefenseofresadjudicatawasnotseasonablyinvoked.
"ItmaybenotedthatrespondentJudgeinitiallyraisedthedefenseofresadjudicataonlyinthe
motionforreconsiderationdatedNovember8,1981.Atty.PulidofiledthiscomplaintonApril6,1978.
RespondentfailedtosetupthedefenseofresadjudicatawhenhefiledhiscommentdatedJune19,
1974incompliancewiththefirstindorsementdatedJune3,1974ofthethenAssistanttotheJudicial
Consultant,nowDeputyCourtAdministratorArturoB.Buena.Suchfailuretointerposethedefenseof
resadjudicataattheearliestopportunityisfatalasitdeemedwaived."
6673AmJur2d518,sec.410,citingUnitedStatesv.Grainger346US235,97LEd1575,73SCt
1069StatevBean159Me455,195A2d68Statesv.Holland,202Or656,277P2d386.
Forexample,Statevs.BeanwasanactionbytheStatetonrecoverforgoodsandservicesrendered
aninmateofastatehospital.
ThedefendantwascommittedtotheAugustaStateHospitalonSeptember21,1949byorderof
courtafterhehadbeenfoundnotguiltyofthecommissionofacrimebyreasonofinsanity.
ThedefendantwasconfinedwhentheprevailinglawswereR.S.Ch.27,Sec.121whichprovidedthat
thepersonsocommittedshallbetheresupportedathisownexpense,ifhehassufficientmeans
otherwiseattheexpenseoftheState,'andR.S.Ch.27Sec.139whichprovidedthat"Thestatemay
recoverfromtheinsane,ifable,orfrompersonslegallyliableforhissupport,thereasonable
expensesofhissupportineitherinsanehospital.'R.S.Ch.27,Sec121,wasexpresslyrepealedby
P.L.1961,Ch.304,Sec17whileR.S.Ch.27,Sec.139wasexpresslyrepealedbyP.L.1961,Ch.
304,Sec.26.
However,byP.L.1961,Ch.304,Secs.4and5,thelegislaturesimultaneouslyenactedamendments
whichinthecaseofSec.4thereofchargedtheDepartmentofMentalHealthandCorrectionswith
thedutyofdeterminingtheabilityofthepatienttopayforhissupportandofestablishingratesand
feestherefor,andinthecaseofsec.5,itprovidedthat"suchfeeschargesshallbeadebtofthe
patientoranypersonlegallyliableforhissupport."
ItwasonlyonJanuary20,1960thatthehospitalbilledthedefendantforhisstayfromSeptember21,
1949intheamountof$6651.72.PlaintifffiledonOctober26,1962acasetorecoversaidamount.
DefendantdisclaimedliabilitybyarguingthattheenactmentofP.L.1961,Ch.304wastoterminate
hisliabilityforboardandcarefurnishedpriortoitsenactment.
TheStateofMaine'sSupremeJudicialCourtrebuffedthedefendantandheldthat:
"[I]ntheinstantcaseP.L.1961,Ch.304wasintendedtobearevisionandcondensationofthe
statutesrelatingtotheDepartmentofMentalHealthandCorrectionsbywhichthesubstanceofthe
rightoftheStateofMainetoreimbursementforcareandsupportfromthecriminallyinsanein
accordancewith"means"or"ability"topayremainedundisturbed.Wearesatisfiedthatitwasthe
intentionoftheLegislaturethatthereshouldbenomomentwhentherighttosuchreimbursementdid
notexist.Wethink,thegoverningprinciplewaswellstatedin50Am.Jur.559,Sec.555
"Itisageneralruleoflawthatwhereastatuteisrepealedandallorsomeofitsprovisionsarenotthe
sametimereenacted,thereenactmentisconsideredareaffirmanceoftheoldlaw,anda
neutralizationoftherepeal,sothattheprovisionsoftherepealedactwhicharethusreenacted
continueinforcewithoutinterruption,andallrightsandliabilitiesincurredthereunderarepreserved
andmaybeenforced.Similarly,theruleofconstructionapplicabletoactswhichreviseand
consolidateotheractsis,thatwhentherevisedandconsolidatedactreenactsinthesameor
substantiallythesametermstheprovisionsoftheactoractssorevisedandconsolidated,the
revisionandconsolidationshallbetakentobeacontinuationoftheformeractoracts,althoughthe
formeractoractsmaybeexpresslyrepealedbytherevisedandconsolidatedactandallrightsand
liabilitiesundertheformeractoractsarepreservedandmaybeenforced."(Statevs.Bean,195A2d
68,71,72Emphasissupplied)
67BEITRESOLVED,ASITHEREBYRESOLVED,That:
1.EffectiveJune11,1984,thetaxanddutyexemptionprivilegesenjoyedbytheNationalPower
CorporationunderCom.ActNo.No.120asamendedarerestoreduptoJune30,1985.
2.Provided,Thatthisrestorationdoesnotapplytothefollowing:
a.importationsoffueloil(crudeequivalent)andcoalasperFIRBResolutionsNo.184
b.commerciallyfundedimportationsand
8/31/2016 G.R.No.88291
c.interestincomederivedfromanyinvestmentsource.
3.Providedfurther,Thatinthecaseofimportationsfundedbyinternationalfinancingagreements,
theNPCisherebyrequiredtofurnishtheFIRBonaperiodicbasistheparticularsofitemsreceivedor
tobereceivedthroughsucharrangements,forpurposesoftaxanddutyexemptionprivileges.
(SGD.)ALFREDOPIO
DERODA,JR.
ActingMinisterof
Finance
ActingChairman,FIRB
SUBJECT:NationalPowerCorporation(NPC)"
68BEITRESOLVED,ASITISHEREBYRESOLVED:That
1.EffectiveJuly1,1985,thetaxanddutyexemptionprivilegesenjoyedbytheNationalPower
Corporation(NPC)underCommonwealthActNo.120,asamended,arerestoredProvided,That
importationsoffueloil(crudeoilequivalent)andcoalofthehereingranteeshallbesubjecttothe
basicandadditionalimportsdutiesProvided,further,Thatthefollowingshallremainfullytaxable:
a.Commerciallyfundedimportationsand
b.Interestincomederivedbysaidgranteefrombankdepositsandyieldoranyothermonetary
benefitsfromdepositssubstitutes,trustfundsandothersimilararrangements.
2.TheNPCasagovernmentcorporationisexemptfromtherealpropertytaxonlandand
improvementsownedbyitprovidedthatthebeneficialuseofthepropertyisnottransferredto
anotherpursuanttotheprovisionsofSec.10(a)oftheRealPropertyTaxCode,asamended.
(SGD.)
CESARE.A.
VIRATA
Ministerof
Finance
Chairman,
FIRB
SUBJECT:NationalPowerCorporation."
69NoteshouldbetakenthatFIRBResolutionNo.1085coveredtheperiodfromJune11,1984up
toJune30,1985whileFIRBResolutionNo.186coveredtheperiodfromJuly1,1985uptoMarch
10,1987.
70"WheneverinthejudgmentofthePresident,thereexistsagraveemergencyorathreator
imminencethereof,orwhenevertheinterimBatasangPambansaortheregularNationalAssembly
failsorisunabletoactadequatelyonanymatterforanyreasonthatinhisjudgmentrequires
immediateaction,hemayinordertomeettheexigency,issuedthenecessarydecrees,orders,or
lettersofinstruction,whichshallformpartofthelawoftheland."
71Rollo,p.652.
72"ThePhilippinesandInternationalMonetaryFund(IMF)havefailedintalksheretofinalizean
agreementona$630millionstandbycreditbadlyneededbythePhilippines,informedsourcesclose
tothetalkstoldReutersyesterday.
xxxxxxxxx
"TalksonthecreditbeganinOctoberwhenthePhilippinesdeclaredamoratoriumonrepaymentson
its$26billionforeigndebtandaskedcreditorbankstoreschedulesomeofthedebt."(TimesJournal,
June21,1984)
73ThePhilippineswillnotdefaultinthepaymentofits$25billionforeigndebtbecauseitcouldbe
brandedasanoutlawintheinternationalcommunity,PresidentMarcossaidyesterday."(Times
Journal,June18,1984)
74WASHINGTON,D.C.ThePhilippinesandaconsortiumofinternationalbankshavesignedin
NewYorkanagreementrestructuring$2.9billioninmaturingshortandmediumtermsloansofthe
CentralBankandsixothergovernmentcorporations.
"Theamountrestructedrepresents90percentofthepublicsectorloanstoberestructuredwith
internationalbanks.
IncludedintherestructuringweretheloansofthePhilippineNationalBank(PNB),National
InvestmentDevelopmentCorp.(NIDC),DevelopmentBankofthePhilippines(DBP),Philippine
NationalOilCorp.(PNOC),NationalPowerCorporation(NAPOCOR)andPhilippineAirlines(PAL)."
(Express,January12,1986)
75"The$2.1billionBNPP,nestledonaplateauhuggingtheSouthChinaSea,isplannedtogenerate
620megawattsfortheLuzongrid.The'peoplepower'revoltin1986,however,toppledtheplant's
proponent,thenPresidentMarcos,frompower.
"Somanytechnicaldefectsweresaidtohavebeendiscoveredintheplant,andthis"most
prodigious"projectofthegovernmentownedNationalPowerCorp.wasmothballedandhas
8/31/2016 G.R.No.88291
remainedsouptothepresent.Itisa"whiteelephant"andthecountrycontinuestopayahuge
intereststoitsbuilder,Westinghouse,everymonth."(ManilaBulletin,July15,1992)
76PresidentMarcosissuedfordecreesyesterday,amongthemDecreeNo.1934(shouldbe1939
amendingRep.ActNo.4850(shouldbeRep.ActNo.4850(shouldbeRep.Act.No.4860)toallow
anincreaseintheceilingondirectforeignborrowingsofthegovernmentfrom$5billionto$10billion.
"Itwouldallowhimtoexcludespecificcategoriesofexternaldebtfromthedebtservicelimitation
whenevernecessaryinconnectionwiththegeneralreschedulingorrefinancingofforeigncredits.
"Thedecreealsoincreasestheceilingonthegovernment'sguaranteefromthepresent$2.5billionto
$7.5billion.
"Itauthorizesthegovernment'sguaranteeofexternaldebtsofgovernmentcorporations.
"Healsoissued:
1.DecreeNo.1932(shouldbeNo.1937)amendingtheCentralBankChartertoallowitgreater
flexibilityinadministeringthemonetary,bankingandcreditsystemandtogiveapolicydirectioninthe
areasofmoney,bankingandcredit.
2.DecreeNo1933(shouldbeno.1938)clothingthegovernmentwithexpandedauthorityto
guaranteeforeignloansoftheCentralBank.
3.Decreeno.1936(shouldbeNo.1939)authorizingtheCreditInformationBureau,tosecurecredit
informationonindividualsandinstitutionsinthepossessionofgovernmentandprivateentities.
(ManilaBulletin,June29,1984)
77"Section17(4),ArticleVIII,1973Constitution.
78"BEITRESOLVED,ASITISHEREBYRESOLVED,Thatthetaxanddutyexemptionprivilegesof
theNationalPowerCorporation,includingthosepertainingtoitsdomesticpurchasesofpetroleum
andpetroleumproducts,grantedunderthetermsandconditionsofCommonwealthActNo.120
(CreatingtheNationalPowerCorporation,definingitspowers,objectivesandfunctions,andforother
purposes),asamended,arerestoredeffectiveMarch10,1987,subjecttothefollowingconditions:
1.Therestorationofthetaxanddutyexemptionprivilegesdoesnotapplytothefollowing:
1.1.Importationsoffueloil(crudeequivalent)andcoal
1.2.Commerciallyfundedimportations(i.e.,importationswhichincludebutarenotlimitedtothose
financedbytheNPC'sowninternalfunds,domesticborrowingsfromanysourcewhatsoever,
borrowingsfromforeignbasedprivatefinancialinstitutions,etc.)and
1.3.Interestincomederivedfromanysource.
2.TheNPCshallsubmittotheFIRBareportofitsexpansionofrelievedprogram,includingdetailsof
dispositionofrelievedtaxanddutypaymentsforsuchexpansiononanannualbasisorasoftenas
theFIRBmayrequireittodoso.ThisreportshallbeinadditiontotheusualFIRBreporting
requirementsonincentiveavailment.
(SGD.)ALFREDOPIO
DERODA,JR.
ActingSecretaryof
Finance
Chairman,FIRB"
79Rollo,p.233Annex"M"ofthePetition.
8094SCRA261(1974).
81Inorderthatthereviewofthedecisionofasubordinateofficermightnotturnouttobeafarce,the
reviewingofficermustperforcebeotherthantheofficerwhosedecisionisunderreviewotherwise,
therecouldbenodifferentviewortherewouldbenorealviewofthecase.Thedecisionofthe
reviewingofficerwouldbebiasedviewinevitably,itwouldbethesameviewsincebeinghuman,he
wouldnotadmitthathewasmistakeninhisfirstviewofthecase."(Ibid.,p.267)
82119SCRA353(1982).
83"DueprocessoflawmeansfundamentalfairnessItisnotfairtoDoctorAnzaldothatPresidential
ExecutiveAssistantClaveshoulddecidewhetherhisownrecommendationasChairmanoftheCivil
ServiceCommission,astowhobetweenDoctorAnzaldoandDoctorVenzonshouldbeappointed
ScienceResearchSupervisorII,shouldbeadoptedbythePresidentofthePhilippines."(Ibid.p.357).
84"AFiscalIncentiveReviewBoardisherebycreatedforthepurposeofdeterminingwhatsubsidies
andtaxexemptionsshouldbemodified,withdrawn,revokedandsuspended,whichshallbe
composedofthefollowingofficials:
ChairmanSecretaryofFinance
MembersSecretaryofIndustry
DirectorGeneraloftheNational
EconomicandDevelopmentAuthority
8/31/2016 G.R.No.88291
CommissionerofInternalRevenue
CommissionerofCustoms
"TheBoardmayrecommendtothePresidentofthePhilippinesandforreasonsofcompatibilitywith
thedeclaredeconomicpolicy,thewithdrawal,modificationrevocationorsuspensionofthe
enforceabilityofanyoftheabovecitedstatutoryortaxexemptiongrants,exceptthosegrantedby
theConstitution.Toattainitsobjectives,theBoardmayrequiretheassistanceofanyappropriate
governmentagencyorentity.TheBoardshallmeetonceamonth,orofteneratthecallofSecretary
ofFinance."(Sec.2,Pres.Dec.No.776)
85WITHDRAWINGALLTAXANDDUTYINCENTIVES,SUBJECTTOCERTAINEXCEPTIONS,
EXPANDINGTHEPOWERSOFTHEFISCALINCENTIVESREVIEWBOARDANDFOROTHER
PURPOSES."
86InthedischargeofitsauthorityhereundertheFiscalIncentivesReviewBoardshalltakeinto
accountoranyofthefollowingconsiderations:
a)theeffectonrelativepricelevels
b)relativecontributionofthebeneficiarytotherevenuegenerationeffort
c)natureoftheactivitythebeneficiaryisengagedand
d)ingeneral,thegreaternationalinteresttobeserved."
8715SCRA569(1965).
88"WHEREAS,pursuanttoProclamationNo.1081,datedSeptember21,1972,martiallawisin
effectthroughouttheland
"WHEREAS,inordertoextendfurtherassistancetotheVeteransofthePhilippinesinWorldWarII,
andtheirwindowsandorphans,aswellastothemembersoftheArmedForcesofthePhilippines
(whoarenowcarryingthegreaterpartoftheburdenofsuppressingtheactivitiesofgroupsofmen
activelyengagedinacriminalconspiracytoseizepoliticalandstatepowersinthePhilippinesandof
eradicatinglawlessness,anarchy,disorderandwantondestructionoflivesandproperty)andtheir
dependents,IorderedthePhilippineVeteransBanktosetasidethesumoffivemillionpesos
(P5,000,000.00)inLetterofInstructionNo.31,October23,1972,asamended,fortheoperationand
maintenanceofcommissaryandPXfacilitiesfortheaforementionedveterans,theirwidowsand
orphans,andthemembersoftheArmedForcesofthePhilippinesandtheirdependents
"WHEREAS,tobetterrealizetheobjectivesoftheaforementionedLeterInstructionsandinorderto
renderfullermeaningtosaidobjectives,itisnecessarythatcertaincommoditieswhicharetobesold
bythecommissaryfromlocalproducers,manufacturersorsuppliersbefreeofalltaxes,duties
and/orchargesimposedbytheGovernment
NOW,THEREFORE,I,FERDINANDE.MARCOS,PresidentofthePhilippines,byvirtueofthe
powersinmevestedbytheConstitutionasCommanderinChiefofalltheArmedForcesofthe
Philippines,andpursuanttotheLetterofInstructioncitedabove,doherebypromulgateanddecree
aspartofthelawofthelandthatallpurchasesfromlocalsources,manufacturers,suppliersand
producersofcommoditiesoritemsdecidedbytheAFPExchangeandCommissaryServicetobesold
topersonsentitledtocommissaryandPXprivilegesunderLetterofInstructionNo.31,datedOctober
23,1972,asamended,shallbefreeofalltaxes,dutiesandotherchargesprescribedforsimilar
commoditiesoritemsunderexistingrevenueandotherlawsandregulations.
TheChiefofStaff,AFP,withapprovalofDecember,intheyearofOurLord,nineteenhundredand
seventytwo."(EmphasisSupplied)
89FootnoteNo.15PhilippineAcetyleneCo.,Inc.vs.CommissionerofInternalRevenue,20SCRA
1056,at1064:"Inthelongrunasalestaxisprobablyshiftedtotheconsumer,butduringtheperiod
whensupplyisbeingadjustedtochangesindemanditmustbeinpartabsorbed.Inpracticethe
businessmanwilltreatthelevyasanaddedcostofoperationanddistributeitoverhissalesashe
wouldanyothercost,increasingbymorethantheamountoftaxpricesofgoodsdemandforwhich
willbeleastaffectedandleavingotherpricesunchanged."[47Harv.Ld.Rev.860,869(1934)].
90OpinionNo.106,S'54.
91Rollo,p.212Petition,Annex"F".
92Rollo,p.124Petition,Annex"D"ofAnnex"A".
93Rollo,p.156Petition,Annex"N1"ofAnnex"A".
94Rollo,p.128Petition,Annex"G"ofAnnex"A".
95Ibid.
96Rollo,p.12.
97Rollo,p.213,Petition,Annex"G".
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8/31/2016 G.R.No.

OnJune13,1958,R.A.No.2058wasenactingfixingthecorporatelifeofNPCtoDecember31,2000. 18All laws

ThusNPC'scapitalstockwasraisedtoP8,000,000,000.00, 39 the total domestic indebtedness ceiling was increased

Sec. 1. All importations of any government agency, including governmentowned or controlled

(iii) the Philippine Veterans Investment Development Corporation Industrial Authority

E.O.No.93(S'86)wasdecreedtobeeffective 48 upon the promulgation of the rules and regulations, to be issued by

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FIRBResolutionNo.1787wasapprovedbythePresidentonOctober5,1987. 79There is no indication, however,

InasmuchasNPCfilleditsclaimforP58.020,110.79onSeptember11,1985, 95 the Commissioner correctly issued

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