Atlas Fertilizer Vs CIR

G.R. No.
L-26686 & L-26698 October 30, 1980
ATLAS FERTILIZER CORPORATION, petitioner,

vs.
COMMISSION OF INTERNAL REVENUE and COURT OF TAX APPEALS, respondents;
COMMISSIONER OF INTERNAL REVENUE, petitioner,

vs.
ATLAS FERTILIZER CORPORATION and COURT OF TAX APPEALS, respondents.
DE CASTRO, J.:
These two (2) cases are appeals by way of certiorari from the decision dated August 24, 1966 of the
Court of Tax Appeals granting Atlas Fertilizer Corporation a tax credit in the sum of P81,899.00 which
may be applied by said corporation in pay — of its outstanding and/or future liability for internal revenue
taxes.
For the material facts, We could very well quote from the decision of the Court of Tax Appeals, the
following.
Petitioner Atlas Fertilizer Corporation was formerly a department of Atlas Mining z

Development Corporation. The latter was granted by the Secretary of Finance a
certificate of tax exemption under Republic Act No. 901 as a new and necessary industry
for engaging in the manufacture of fertilizer namely, sulphuric acid, phosphoric acid,
superphosphate, triple superphosphate and sun the tax exemption privileges of Atlas
Consolidated Mining and Development Corporation were later transferred to the
petitioner under the written authority of the Department of Finance dated November 27,
1957. During the period from June 26, 1961 to October 24, 1962, petitioner imported raw
materials, equipment, spare parts, containers and other supplies on which it paid one-half
or 60% of the compensating taxes due thereon (Exhs. 1 and G, pp. 98-100, BIR rec.).
While petitioner was still enjoying partial tax exemption of 50% as a new and necessary
industry under Republic Act No. 901, Republic Act No. 3050, which took effect on June
17, 1961, granted tax exemption to any person, partnership, company or corporation
engaged or which shall engage in the manufacture of of whatever nature from the
payment, among others, of compensating taxes on their importation of capital goods,
equipment, snare raw materials, supplies containers and fuel To implement z Republic
Act No. 3050, the Department of Finance issued Department Order No. 105, dated
September 15, 1961, which provides, among others, as follows:
Any ... corporation ... which shall engage in the manufacture of fertilizer and desiring to
enjoy the privileges grandted under the provisions of Republic Act No. 3050 may file its
application therefore with the Secretary of Finance.
Fertilizer manufacturer ... which are granted tax exemption under Republic Act No.
should likewise file appellant com/implications for tax exemption under Republic Act No.
3050, indicating therein, among other things, that the applicant waives the benefits of tax
exemption authorized under Republic Act No. 3127.
In compliance with the above regulation, petitioner filed on January 25, 1962 with the
Department of Finance an application for tax exemption under the provisions of Republic
Act No. 3050, which application was approved by the Secretary of Finance on February
19, 1962. The tax exemption granted by the said official to petitioner was made
retroactive commencing on June 17, 1961, the date of the effectivity of Republic Act No.
3050 (pp. 93-94, BIR rec.).
On the basis of the tax exemption granted by the Secretary of Finance under Republic
Act No. 3050, petitioner filed with responded on June 21, 1963 a claim for tax at of the
compensating taxes amounting to P 83,629.00 which petitioner allegedly paid to the
Bureau of Customs on petitioner's importations of tax exempt goods, equipment,
materials and supplies during the period from June 26, 1961 to October 24, 1962 (pp. 88-
90, BIR rec.). On June 22, 1963, the day after petitioner had filed its for tax credit with
respondent, petitioner filed a petition for review with this Court seek an order to compel
respondent to issue the corresponding letter of tax credit.
During the pendency of this case, petitioner's claim for tax credit of P 83,629.00 filed with
respondent was referred on June 26, 1963 to the Regional Director of Manila, BIR
Regional District No. 3, for investigation, report and recommendation. On July 15, 1963,
the case was assigned to Revenue Examiner Benjamin Fernandez. Shortly thereafter,
the Manila Regional Office (District No. 3) was divided into two (2) districts — North
Manila and South Manila (District Nos. 5 and 6). As a consequence thereof and the
confusion which ensued as a result of the sorting and transfer of revenue dockets and
records, allocation and assignment of personnel, and the division and transfer of
supplies, equipment and furniture, the papers bearing on the tax credit of petitioner were
misplaced. It was only on January 25, 1965 when the investigating examiner submitted
his report and recommended therein that petitioner be granted a tax credit of P76,935.00,
instead of P83, 629.00 as because the importations and payment of the compensating
taxes under Item Nos. 1, 17, 35, 50, 58, 61, 62, 64, 65, 67 and 68 were not supported
with import entry declarations and receipts of tax payment
After hearing, the Court of Tax Appeals rendered its decision on August 24, 1966 from which both parties
have appealed to this Court.
In his appeal, the Commissioner of Internal Revenue (Commission Commissioner for short) assigns the
following errors:
THE COURT OF TAX APPEALS ERRED IN HOLDING THAT THE PETITIONER NEED
NOT PROVE THAT THE RAW MATERIALS, EQUIPMENT, SPARE PARTS,
CONTAINERS AND OTHER SUPPLIES IT IMPORTED WERE USED BY IT IN THE
MANUFACTURE OF FERTILIZER TO BE ENTITLED TO TAX EXEMPTION UNDER
REPUBLIC ACT NO. 3050.
II
THE COURT OF TAX APPEALS ERRED IN HOLDING THAT IT IS INCUMBENT UPON

RESPONDENT TO PROVE THAT THE IMPORTATIONS IN QUESTION WERE NOT
USED BY THE PETITIONER IN THE MANUFACTURE OF FERTILIZER
NOTWITHSTANDING THE FACT THAT THERE WAS ABSOLUTELY NO EVIDENCE
INTRODUCED BY PETITIONER SHOWING THAT THE SAID IMPORTATIONS WERE
USED BY IT IN THE MANUFACTURE OF FERTILIZER.
III
THE COURT OF TAX APPEALS ERRED IN HOLDING THAT THE PETITIONER NEED
NOT PROVE THAT IT HAD PREVIOUSLY SECURED A SPECIFIC AUTHORITY FROM
THE SECRETARY OF FINANCE TO IMPORT THE GOODS IN QUESTION AS A
PREREQUISITE FOR THE ENJOYMENT OF ITS RIGHT TO TAX EXEMPTION UNDER
REPUBLIC ACT NO. 3050.
IV
THE COURT OF FAX APPEALS ERRED IN HOLDING THAT THE PETITIONER HAS IN
EFFECT ABANDONED AND GIVEN UP ITS PARTIAL EXEMPTION PRIVILEGE
UNDER REPUBLIC ACT NO. 901 BY SEEKING TO APPLY ITS TAX EXEMPTION
UNDER REPUBLIC ACT NO. 3050.
THE COURT OF TAX APPEALS ERRED IN ORDERING RESPONDENT TO GRANT

PETITIONER A TAX CREDIT OF P81,899.00 IN SPITE OF THE FACT THAT
PETITIONER IS NOT ENTITLED THERETO.
On the other hand, Atlas Fertilizer Corporation (AFC for short), as appellant has also assigned the
following errors:
THE COURT OF TAX APPEALS ERRED IN DENYING THE AWARD OF INTEREST TO

THE PETITIONER ON THE AMOUNT OF P81,899.00 FOUND TO BE DUE AS TAX
CREDIT IN FAVOR OF PETITIONER.
II
THE COURT OF TAX APPEALS ERRED IN CONCLUDING INCLUDING THAT

PETITIONER FILED ITS CLAIM FOR TAX CREDIT QUITE LATE OR ALMOST TWO
YEARS FROM THE FIRST PAYMENT OF THE COMPENSATING TAX AND EIGHT
MONTHS FROM THE LAST PAYMENT THEREOF.
III
THE COURT OF TAX APPEALS ERRED IN CONCLUDING INCLUDING THAT THE

DELAY IN PROCESSING THE CLAIM FOR TAX CREDIT WAS NOT PREMEDITATED
AND INTENTIONAL BUT CAUSED BY CIRCUMSTANCES BEYOND THE CONTROL
OF RESPONDENT.
IV
THE COURT OF TAX APPEALS ERRED IN APPLYING THE EXISTING DOCTRINE

THAT INTEREST ON REFUND (OR TAX CREDIT) IS AWARDED ONLY WHERE
COLLECTIVE TION OF THE TAXES WAS ATTENDED WITH ARBITRARINESS.
THE COURT OF TAX APPEALS ERRED IN NOT APPLYING THE APPLICABLE

PROVISIONS OF THE NEW CIVIL CODE, NAMELY, ARTICLES 2154, 2155 AND 2209,
GOVERNMENT ING THE RETURN OF PAYMENT'S BY REASON OF MISTAKE AND
THE AWARD OF INTEREST WHEN THE OBLIGOR INCURS DELAY.
Appeal by the Commissioner
The pertinent section upon which AFC based its claim for exemption reads:
Sec. 1. Notwithstanding any provisions of law to the contrary, subject to the conditions
hereinafter provided, any person, partnership, company or corporation engaged or which
shall engage in the manufacture of fertilizer of whatever nature be entitled to exemption
until December 31, 1965 from the payment of special port tax, margin fee on foreign
exchange, sales and compensating taxes and customs duties payable by such person,
partnership, company or corporation, in respect to the importation of capital goods,
equipment, spare parts, raw materials, supplies, containers and fuel by any of those
engaged in the above industry, ...1
Anent the first and second assignment of errors, the Commission Commissioner points out that it is well
settled that exemptions are strictly construed and are never presumed. And the burden of proof is on the
claimant to establish clearly his right to exempt Being an essential and indispensable requisite for the
enjoyment of its tax exemption, the fact that the AFC used the goods for the manufacture of fertilizer must
be shown by it.
In refutation to the above contention, AFC claims that since the Secretary of Finance, on February 19,
1962, approved its application for tax exemption under R.A. 3050, it may be assumed that among the
matters considered by the Secretary of Finance in processing the claim for exemption was the fact of
actual use for the manufacture of fertilizer by AFC of the importations made. It is, therefore, the position of
AFC that the certificate of exemption granted by the Secretary of Finance was sufficient proof that it used
the imported articles in the manufacture of fertilizer.
That the burden of proof is on the claimant to establish his right to exemption cannot be gainsaid. In the
instant case, however, We feel that AFC need not adduce further evidence to show that it is entitled to
exemption. It is to be observed that there is no dispute that AFC is engaged in the manufacturing capture
of fertilizer, as the very name of AFC suggests the nature of its business. It is also pertinent to state that
when R. A. 3050 took effect, AFC was already enjoying partial exemption under R.A. 901 as a new and
necessary industry engaged in the manufacture of fertilizer. Furthermore, when the Secretary of Finance,
on February 19, 1962, approved AFC's application for tax exemption under R. A. 3050, We believe that
he already considered that the importations were needed by AFC for the manufacture of fertilizer. This
may be inferred from the fact that before the Secretary of Finance approves an application, he requires
applicants to submit an application which "shall be in the form prescribed by the Secretary of Finance and
contain detailed and complete information caged for in such form. It shall contain a complete of raw
materials, supplies, con- re/containers, and fuel needed and for the exclusive use in the manufacture of
fertilizer. There shall be attached to the appellant com/implication a firm quotation of the complete
machinery equipment and spare parts thereof needed by and for the exclusive use of the applicant in the
manufacture of fertilizer. The appellant com/implication shall be sworn to before a notary public and filed
in quadruplicate.2 Likewise, since it is presumed that official duty has been regularly performed 3 it can be
assumed that the Secretary of Finance in approving the application, was satisfied that those importations
were not only needed for exclusive use in the manufacture of fertilizer but that they were actually used
therefor, for otherwise, the Secretary would have not approved the application.
We, therefore, agree with the position of AFC that the certiorari certificate of exemption granted by the
Secretary of Finance on February 19, 1962 was sufficient proof that it used the importations in question in
the manufacture of fertilizer. This is bolstered by the fact that the certificate of exemption was granted
after the imported goods have already arrived.
The Commissioner also argues that AFC failed to secure first an authority from the Secretary of Finance
to import the goods which AFC wanted to be exempt from tax before said goods were actually imported.
According to the Commissioner, such an authority is a prerequisite for the enjoyment of tax exemption,
since in the letter of the Secretary of Finance dated February 19, 1962 granting AFC tax exemption under
R.A. 3050, the Secretary stated:
As a bonafide fertilizer manufacturer under the provisions of the aforesaid Act, you are
entitled to exemption from the payment of the special import tax, margin fee on foreign
exchange, sales and compensating taxes, and customs duties directly payable by you in
respect to the importation of capital goods, equipment spare part. run materials, supplies,
containers and fuel which this office may specifically authorize until December 31, 1965
unless sooner let/lat/after terminated for failure to comply with the requirements of the law
and existing regulations.
Indeed, it would be illogical for the AFC to produce the acquired specific authority to import because when
the tax exemption was granted on February 19, 1962, sixty-one (61) of the imported goods have already
arrived, and the AFC has paid the corresponding compensating taxes pursuant P. A. 901 granting
manufacturer of fertilizer partial exemption from payment of compensating taxes. With respect to the
seven (7) importation which arrived after the grant of exemption, it should be noted that AFC was able to
withdraw them from customs custody. We must not lose sight of the fact that before goods may be
withdrawn from customs custody, it is necessary that "a true or photostat copy of the letter-grant
authorizing the tax-free importation of the articles applied to be withdrawn from customs custody" be
presented, pursuant to paragraph of the implementing rules and regulations which is Department Order
No. 105-A 4 issued by the Secretary of Finance. Since AFC has successfully withdrawn all the seven (7)
imported articles from customs custody, after payment of the compensating taxes, it may be inferred that
AFC has complied with the above provision of Department Order No. 105-A — to produce AFC's authority
to import.
On the fourth issue, the Commissioner contends that respondent court erred in ruling that AFC, by
seeking to avail of its exemption under R. A. No. 3050, has in effect abandoned and given up its partial
exemption privilege under R.A. No. 901. According to the Commissioner, AFC could not have abandoned
or given up its exemption under R. A. No. 901 because it has already applied the same to the
importations involved herein, and that one cannot abandon or give up what he has already taken
advantage of Furthermore, tax exemptions under R.A. 901 and R.A. 3050 cannot be enjoyed
simultaneous simultaneously.
The Commissioner's contention is without merit. Department, Order No. 105 issued by the Secretary of
Finance expressly directed fertilizer manufacturers enjoying benefits under R.A. No. 901 to likewise apply
for the benefits of R.A. No. 3050. Said Department Order No. 105 provides:
Fertilizer manufacturers who or which are granted tax exempt under R. A. No. 901 should
likewise file applications for tax exemption under R. A. No. 3050. ...
In compliance with said directive, AFC filed its application for total exemption under R. A. No. 3050 which
was granted by the Secretary of Finance. The Commissioner's argument that AFC enjoyed simultaneous
exemption under R. A. No. 901 and R. A. No. 3050, is without factual basis. R. A. No. 901 grants partial
exemption while R. A. 3050 grants total exemption. Once a manufacturer of fertilizer chose to come under
R. A. 3050, his partial exemption under R. A. 901 ceased. In effect, he enjoyed only one exemption
benefit, the full exemption under R. A. No. 3050. As correctly ruled by the respondent court, when AFC
availed of the total exemption under R. A. No. 3050, it has in effect given up the partial exemption which it
was enjoying under R. A. No. 901.
Appeal by AFC
The assignment of errors of AFC may be synthesized to the sole issue as to whether or not the
Government is liable for the payment of interest on refunds (on tax credit) of taxes erroneously or illegally
paid to it on the ground that the commission Commissioner is guilty of unjust and unreasonable delay in
performing an obligation of the Government .
AFC points out that the Commissioner received the claim for tax credit on June 21, 1963 but it was only
on January 11, 1965 or more than eighteen (18) months later that a BIR examiner came to the premises
of the taxpayer to investigate the claim. In other words, the Commissioner did not act on the claim of AFC
and this inaction is the essence of the delay incur red by the Commissioner in the performance of an
obligation which entitled AFC to reparation in the form of interest payment.
On the alleged delay, the Commissioner in his brief explaining the following:
The records of this case show that petitioner's claim for tax credit was received by the
Records Control Section of the Bureau of Internal Revenue on June 21, 1963
(Memorandum for Petitioner, STA Case No. 1410, p. 2, p. 121 STA par. 5 of Answer,
CTA Case No. 1410, P. 14 STA and was received by the Appellate Division of the said
Bureau which processes claims of that nature on June 25, 1963. The following day, or on
June 26, 1963, the said claim was indorsed to then BIR Regional District No. 3, Manila,
for investigation and report and, on the same date, petitioner was duly notified of the said
indorsement. (Exh. D, p. 101, CTA rec.).
However, shortly after the claim for tax credit was referred to Regional District No. 3 for
investigation and report, the said district was divided into two districts to become
Regional District Nos. 5 and 6.
As a consequence of the division, revenue dockets and records then handled by Region
No. 3 had to be sorted and apportioned between the two new districts. Office supplies,
equipment and furniture were likewise divided and transferred and personnel had to be
allocated and assigned to each of the new districts. Unfortunately, in the process, the
papers bearing on petitioner's claim for tax credit was misplaced.
This was discovered when the report previously requested on the said claim was called
up in a memorandum of the Deputy Com- Commissioner dated Nov. 23, 1964. As the
fieldmen of the Bureau of In- internal Revenue are grounded during the month of
December of each year, the investigation could not be immediately undertaken after the
said call-up but had to wait until January. On January 27, 1965, the desired report
contained in an indorsement dated January 25, 1965 was submitted (Exh. 1, supra).
Finding the above explanation meritorious, We agree with respondent court that the delay in processing
the claim of AFC for tax credit was neither premeditated nor intentional. The Commissioner did not sit on
the claim of AFC. If there was any delay, it was due to the splitting into two (2) districts of Regional District
No. 3 where the claim was filed, as a result of which the documents requesting for refund was misplaced.
But the more important consideration is the when settled rule that in the absence of a statutory provision
clearly or expressly directing or authorizing payment of interest on the amount to be refunded to taxpayer,
the Government cannot be acquired to pay interest. 5Likewise, it is the rule that interest may be awarded
only when the collection of tax sought to be refunded was attended with arbitrariness. 6 Such
circumstance is not present in the case at bar as the payment of compensation taxes in question was
made freely and voluntarily and conformably with the partial exemption granted by Republic Act No. 901.
WHEREFORE, judgment is hereby rendered affirmed the decision of the Court of Tax Appeals. Without
special pro-announcement as to cost.
SO ORDERED.
G.R. Nos. 83583-84 September 30, 1991
COMMISSIONER OF INTERNAL REVENUE, petitioner,

vs.
RIO TUBA NICKEL MINING CORPORATION and COURT OF TAX APPEALS, respondents.
FERNAN, C.J.:
Edmund Burke once said law, like houses, lean on one another. The question concerning their repeal
then becomes difficult especially when the new law does not expressly provide for the repeal of the old
law. Whether or not Republic Act No. 1435 (An Act To Provide Means of Increasing the Highway Special
Fund) or certain provisions thereof have been repaed by subsequent statutes is the problem now
confronting us.
Private respondent Rio Tuba Nickel Mining Corporation is a domestic corporation engaged in the
business of mining with several mining lease contracts entered into with the Republic of the Philippines.
During the period from June 1, 1980 to May 31, 1982 and from May, 1982 to March, 1983, Rio Ruba
purchased from Petrophil Corporation and the other oil companies varied quantities of manufactured
minerals oils, motor fuel oils and diesel fuel oils which respondent actually and exlusively used in
connection. Petrophil Corporation and the other oil companies paid and passed on to Rio Tuba the
specific taxes imposed under Sections 153 and 156 (formerly Section 142 and 145) of the National
Internal Revenue Code of 1977 on refined and manufactured oils, motor fuesl and diesel oils that the said
oil companies had sold to the mining firm.
On July 7, 1982 and September 23, 1983 and pursuant to Section 5 of Republic Act No. 1435 and the
Supreme Court decision in the case of Insular Lumber Co. vs. Court of Tax Appeals1 Rio Tuba filed with
the Commissioner of Internal Revenue two separate written claims for refund in the amounts of
P974,978.50 and P424,303.33, respectively, representing 25% of the specific taxes collected on the
refined and manufactured mineral oils, motor fuel and diesel fuel oils that it had utilized in its operations
as a mining concessionaire. In support of its claims for refund, Rio Tuba submitted affidavits of its
president and of at least two disinterested persons attesting to the fact that the refined and manufactured
mineral oils, motor fuels and diesel fuel oils purchased from Petrophil were actually and exclusively used
in the exploitation and operation of its mining concession.
Said claims were not immediately acted upon by the Commissioner of Internal Revenue, thus compelling
taxpayer Rio Tuba to seek recourse in the Court of Tax Appeals by means of a petition for review. During
the pendency of the said petition, petitioner, Commissioner denied the first claim for refund and ruled:
It appears that your claim is principally anchored on the provisions of Republic Act No. 1435,
Section 5 of which authorizes the refund of 25% of the specific tax paid on petroleum products if
used in mining or logging. Said provisions, should however be read in conjunction with the
provision of Section 4 of that law. It is our view that in order to avail of the benefits of partial tax
refund mentioned in said Act, there must also be a municipal or city ordinance which imposes an
additional tax of not exceeding 25% of the regular specific tax levied under Sections 142 and 145
of the Tax Code. In other words, refund will arise only after the enactment of the required
ordinance levying will arise only after the enactment of the required ordinance levying the
additional tax and subsequent payment thereof. In fine, it is no longer the national tax that is
being refunded but only 25% local additional tax.
With the issuance however of Presidential Decree Nos. 231 and 426 dated June 28, 1973 and
March 30, 1984, respectively, cities and municipalities can no longer levy any additional tax on
articles subject to the specific tax. Consequently, and as the refund sought entirely depends on
the exercise of such power, partial refund of specific tax payments on the petroleum products
used in logging or mining can no longer be authorized. Furthermore, Presidential Decree No. 711
which took effect on July 1, 1975 abolished all special and fiduciary funds. Since Republic Act No.
1435 was passed by Congress precisely to provide the means of increasing the Highway Special
Fund, said Decree has in effect repealed said Act; hence, the same can no longer be invoked as
the basis for instituting claims for refund of alleged overpaid specific tax. 2
As there was still no action on the second claim for refund and since the two-year required by law for
bringing the claim before the Court of Tax Appeals was about to lapse, Rio Tuba elevated that claim to
the Tax Court without waiting for the Commissioner's decision. Both claims were consolidated. 3
In the assailed decision dated February 1, 1988, the Court of Tax Appeals reversed the decision of the
Commissioner and instead granted Rio Tuba's claims for refund. Accordingly, the Commissioner was
ordered "to refund to ... Rio Tuba Nickel Mining Corporation the sums of P695,216.36 and P859,076.90
as specific tax paid, without interest.4
The Commissioner of Internal Revenue now asserts that the tax refunds granted to Rio Tuba are without
legal basis. He raises various arguments which can be simplified into two basic issues, to wit:
1. Whether the privilege of a partial refund of specific tax paid on manufactured oils used in
mining concessions as provided under Section 5, R.A. No. 1435 presently subsists; and
2. Assuming arguendo that such privilege still exists, whether Rio Tuba is entitled to such refund.
The full text of Republic Act No. 1435 states:
Section 1. Section one hundred and forty-two of the National Internal Revenue Code, as
amended, is further amended to read as follows:
Sec. 142. Specific Tax on manufactured oils and other fuels. On refined and manufactured
mineral oils and motor fuels, there shall be collected the following taxes:
(a) Kerosene or petroleum, per liter of volume capacity, two and one-half centavos;
(b) Lubricating oils, per liter of volume capacity, seven centavos;
(c) Naptha, gasoline and all other similar products of distillation, per liter of volume capacity, eight
centavos; and
(d) On denatured alcohol to be used for motive power, per liter of volume capacity, one
centavo: Provided, That if the denatured alcohol is mixed with gasoline, the specific tax on which
has already been paid, only the alcohol content shall be subject to the tax herein prescribed.
For the purpose of this subsection, the removal of denatured alcohol of not less than one hundred
eighty degrees proof (ninety per centum absolute alcohol) shall be deemed to have been
removed for motive power, unless shown to the contrary.
Whenever any of the oils mentioned above are, during the five years from June eighteen,
nineteen hundred and fifty-two, used in agriculture and aviatio, fifty per centum of the specific tax
paid thereon shall be refunded by the Collector of Internal Revenue upon the submission of the
following:
(1) A sworn affidavit of the producer and two disintegrated persons proving that the said oils were
actually used in agriculture, or in lieu thereof.
(2) Should the producer belong to any producers association or federation, duly registered with
the Securities and Exchange Commission, the affidavit of the president of the association of
federation, attesting to the fact that the oils were actually used in agriculutre.
(3) In the case of aviation oils, sworn certificate satisfactory to the Collector proving that the said
oils were actually used in aviation: Provided, That no such refunds shall be granted in respect to
the oils used in aviation by citizens and corporations of foreign countries which do not grant
equivalent refunds or exemptions in respect to similar oils used in aviation citizens and
corporations of the Philippines.
Section 2. Section one hundred and forty-five of the National Internal Revenue Code, as
amended, is further amended to read as follows:
Sec. 145. Specific Tax on Diesel fuel oil. — On fuel oil, commercially know as diesel fuel oil, and
and on all similar fuel oils, having more or less the same generating power, there shall be
collected, per metric ton, one peso.
Section 3. The proceeds of the increased taxes accruing to the Highway Special Fund, as a resulf
of the amendment of Sections one hundred and forty-two and one hundred and forty-five of the
National Internal Revenue Code as above provided, shall be set aside exclusively for amortizing
loans or bonds that may have been authorized for the construction, reconstruction or
improvement of highways inluding bridges as well as for liquidating toll bridges constructed from
revolving funds authorized under Act Number Thirty-five hundred, as amended, whenever such
liquidation is recommended by the Secretary of Public Works and Communications and approved
by the President.
Section 4. Municipal Boards or councils may, notwithstanding the provisions of sections one
hundred and forty-tw and one hundred and forty-five of the National Internal Revnue Code, as
hereinabove amended, levy an additional tax of not exceeding twenty-five per centum of the rates
fixed in said sections, on manufactured oils sold or distributed within the limits of the city or
municipality; Provided, That municipal taxes heretofore levied by cities through city ordinances on
gasoline, airplane fuel, lubricating oil and other fuels, are hereby ratified and declared valid. The
method of collecting said additional tax shall be prescribed by the municipal board or council
concerned.
Section 5. The proceeds of the additional tax on manufactured oils shall accrrue to the road and
bridge funds of the political subdivision for whose benefit the tax is collected: Provided, however,
that whenever any oils mentioned above are used by miners or forest concessionaires in their
operations, twenty-five per centum of the specific tax paid thereon shall be refunded by the
Collector of Internal Revenue upon submission of proof of actual use of ils and under similar
conditions enumerated in sub-paragraphs one and tow of section one thereof, amending section
one hundred forty-two of the Internal Revenue Code: Provided, further That no new road shall be
constructed unless the routesd or location thereof shall have been approved by the
Commissioner of Public Highways after a determination that such road can be made part of an
integral and articulated route in the Philippine Highway System, as required in section twenty-six
of the Philippine Highway Act of 1953.
Section 6. This Act shall take effect upon its approval.
Approved, June 14, 1956.5

It is the position of the Revenue Commissioner that the subject refund privilege is conditioned on the
actual payment of an additional tax imposed by the local government to augment the highway fund
pursuant to Section 4 of Republic Act 1435. Not having shown any proof that it has paid the additional
specific taxes pursuant to a municipal ordinance in accordance with Section 4 of RA No. 1435, Rio Tuba
cannot consider itself entitled tothe partial refund. We disagree. To our mind, the proviso in Section 5
standing alone is enough basis for the grant of regund. However, in the case of private respondent Rio
Tuba, the Commissioner interjected the aforementiuoned pre-requisite to justify his denial of the claimed
exemption. He proceeded to interpre the term "additional taxes" as referring to the municipal-imposed
specific taxes. The statutory grant of a partial exemption from the imposed increased specific taxes is
manifest from a reading of the proviso in Section 5, Republic Act 1435. As contended by Rio Tuba, there
is nothing in that proviso which states that before a miner can be entitled to the 25% tax refund of specific
tax paid on the oils it used in its operations, there must first be a municipal or city ordinance levying an
additional tax not exceeding 25% of the rates fixed in Sections 142 and 145 of the Tax Code. In fact, the
entire Section 5 does not even make any reference to Section 4 which empowers municipalities and cities
to impose the additional tax on oils sold or distributed within their resepctive territorial jurisdictions. What
is clear therein is that the Revenue Commissioner shall refund 25% of the specific tax whenever "any oils
mentioned above are used by miners or forest is complied with. But even on the supposition that private
respondent Rio Tuba could avail itself of the privilege of tax refund on the basis of the proviso in Section
5, RA No. 1435, we are not prepared to affirm the ruling of the Tax Court.
The cases of Commissioner of Internal Revenue vs. Insular Lumber Co., No. L-24221, December 11,
1967, 21 SCRA 1237, and Insular Lumber Co. vs. Court of Tax Appeals, No. L-31057, May 29, 1981, 104
SCRA 710, cited by Rio Tuba are not on all fours with the instant petition. For one thing, the factual milieu
in the earlier cases occurred between 1958 and 1963. Since then, much has taken place, including the
imposition of martial law which saw the seemingly endless enactment of tax decrees transforming
manufactured oils into a major source of revenue for the government. And this brings us to the discussion
of the reason why Rio Tuba's two claims for refund cannot be allowed.
Interestingly enough, the Solicitor General, as counsel for the Commissioner, has painstakingly provided
us with a detailed overview of the relevant revenue laws starting with Republic Act 1435 and including the
Local Tax Code and the National Internal Revenue Code of 1977 to drive home his main contention that
the disputed refund privilege or exemption laid down in RA No. 1435 has been repealed by subsequent
laws. But in our opinion, the tax measure most decisive of the present isue and the one that clearly
demonstrates the intent of the law-making body to legislate the exemption out of existence is Presidential
Decree No. 7116 issued on July 1, 1975. Reportedly concerend over the accumulation of big cash
balances in special and fiduciary funds which adversely affected the management and control of such
cash resources in the National Treasury and thus resulting in the useless immobilization of public funds
which could otherwise be advantageously availed of to finance the various essential public services, then
President Marcos abolished the so-called special funds. Section 1 of P.D. 711 states:
All existing special and fiduciary funds are hereby abolished and all assets, liabilities, surpluses
and appropriations pertaining to all special and fiduciary funds as authorized by the
corresponding acts, laws, or decrees creating such special and fiduciary funds, as well as then
finaning and operations thereof, are hereby tranferred to the General Fund of the National
Government; provided that the personnel whose salaries and/or wages are drawn from such
special and fidiciary funds shall be paid out of the General Fund subject to the provisions of
Section 2 hereof.
Private respondent Rio Tuba submits that the mere abrogation of the Highway Special Fund itself did not
make RA No. 1435, particulary its Section 5, inconsistent with PD No. 711 ot warrant an implied repeal.
What in effect was abolished was the designation and destination of the particular taxes, levies, fees or
imposts comprising the special fiduciary funds and their being spend only for the particular purposes
designated by the law creating them. In other words, the components of the various special funds and the
operations thereof, as well as all assets, liabilities, etc. were only transferred to the General Fund of the
government. Section 2 of said decree provides:
The existing functions and activities authorized under present laws creating each of the special
and fiduciary funds which, as determined by the National Economic and Development Authority,
are in conformity with the present social and economic plans and programs formulated consistent
with national development goals shall continue to be maintained under the General Fund. All
taxes, levies, fees, imposts and other income of all special and fiduciary funds duly authorized
under existing laws shall remain in force and shall accrue to the General Fund.
According to Rio Tuba, the essence of PD No. 711 is simply the transfer of the funding and operations of
all existing special and fiduciary funds into one fund, known as the General Fund, in order to facilitate the
implementation of social and economic programs and projects of the government for the general welfare
of the masses.
The laudable social and encompassing objective of PD No. 711 is precisely the reason why said decree
cannot be considered as consistent with the proviso set forth in Section 5 of RA No. 1435 which allows a
partial exemption to the miners and forest under special conditions. Section 5 does not extend to all and
sundry the privilege of partial refund of specific taxes on oils used in one's operations. Only to the miners
and forest concessionaires is given that privilege on account of circumstances peculiar to them. "...
(T)hese lumber and mining companies seldom use the national highways because they have their own
roads, they have their own compounds. ..." So if they are not entitled to the benefit of the law, it will be
unfair if they will be required to pay.7
Thus we find tha the disputed proviso found in Section 5 of RA No. 1435 was drated to favor a particular
group of taxpayers-the miners and the lumbermen-because it was "unfair" to subject them to the
increased rates and in effect make them subsidize the construction of highways from which they did not
directly benefit. This is the raison d'etre for the grant of partial tax exemption under RA No. 1435. Now, if,
by virtue of PD No. 711, the funds that have accrued from the various special funds are channeled to the
so-called General Fund, then there is no need or justification for the continued special treatment accorded
to the miners. With PD No. 711, any government project can be the beneficiary of such funds as long as it
is for the general welafare of the masses. Given the present concept of the general fund andits wide
application, then the proviso in Section 5 of RA No. 1435 has truly become an anachronism. It is
inevitable that, sooner or later, the miners will stand to benefit from any of the government endeavors and
it will no longer be correct to asseverate that the imposition of the increased rates in specific taxes to
augment the general fund for government undertakings is "unfair" to the miners because they are not
directly convenienced.
While we generally do not favor repeal by implication, it cannot be denied that situations can and do arise
wherein we are left with no other alternative but to concede the point that an earlier law has been
impliedly repealed or revoked by a later law because of an obvious inconsistency.
Tax measures, in recent years, have proliferated to alarming proportions. More often than not, they serve
to worsen the already growing confusion in the minds of our taxpayers. There is much to be said about
the strong and persuasive arguments of both sides but we are compelled to abide by the maxim that all
doubts must be resolved in favor of the taxing authority and that tax exemptions (or tax refunds for that
matter) must be strictly construed and can only be given force when the grant is clear and categorical. We
therefore hold that the tax refunds in the amounts of P695,216.36 and P859,076.90 in favor of private
respondent Rio Tuba must be set aside.
WHEREFORE, the instant petition is hereby GRANTED. The questioned decision of the Court of Tax
Appeals is SET ASIDE. Private respondent Rio Tuba Mining Corporation's twin claims for refunds of
specific taxes paid on manufactured oils are DENIED. No costs.
SO ORDERED.
Gutierrez, Jr., Feliciano, Bidin and Davide, Jr., JJ., concur.

G.R. No. 88291 June 8, 1993
ERNESTO M. MACEDA, Petitioner, vs. HON. CATALINO MACARAIG, JR., in his capacity
as Executive Secretary, Office of the President, HON. VICENTE JAYME, ETC., ET
AL., Respondents.
Angara, Abello, Concepcion & Cruz for respondent Pilipinas Shell Petroleum
Corporation.chanrobles virtual law library
Siguion Reyna, Montecillo & Ongsiako for Caltex.
NOCON, J.:
Just like lightning which does strike the same place twice in some instances, this matter of
indirect tax exemption of the private respondent National Power Corporation (NPC) is
brought to this Court a second time. Unfazed by the Decision We promulgated on May 31,
1991 1petitioner Ernesto Maceda asks this Court to reconsider said Decision. Lest We be
criticized for denying due process to the petitioner. We have decided to take a second look
at the issues. In the process, a hearing was held on July 9, 1992 where all parties presented
their respective arguments. Etched in this Court's mind are the paradoxical claims by both
petitioner and private respondents that their respective positions are for the benefit of the
Filipino people.
A Chronological review of the relevant NPC laws, specially with respect to its tax exemption
provisions, at the risk of being repetitious is, therefore, in
order.chanroblesvirtualawlibrarychanrobles virtual law library
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. 2The sum of P250,000.00 was appropriated out of the funds in
the Philippine Treasury for the purpose of organizing the NPC and conducting its preliminary
work. 3The main source of funds for the NPC was the flotation of bonds in the capital
markets 4and these bonds
. . . issued under the authority of this Act shall be exempt from the payment of all taxes by
the Commonwealth of the Philippines, or by any authority, branch, division or political
subdivision thereof and subject to the provisions of the Act of Congress, approved March 24,
1934, otherwise known as the Tydings McDuffle Law, which facts shall be stated upon the
face of said bonds. . . . . 5chanrobles virtual law library
On June 24, 1938, C.A. No. 344 was enacted increasing to P550,000.00 the funds needed
for the initial operations of the NPC and reiterating the provision of the flotation of bonds as
soon as the first construction of any hydraulic power project was to be decided by the NPC
Board. 6The provision on tax exemption in relation to the issuance of the NPC bonds was
neither amended nor deleted.chanroblesvirtualawlibrarychanrobles virtual law library
On September 30, 1939, C.A. No. 495 was enacted removing the provision on the payment
of the bond's principal and interest in "gold coins" but adding that payment could be made
in United States dollars. 7The provision on tax exemption in relation to the issuance of the
NPC bonds was neither amended nor deleted.chanroblesvirtualawlibrarychanrobles virtual
law library
On June 4, 1949, Republic Act No. 357 was enacted authorizing the President of the
Philippines to guarantee, absolutely and unconditionally, as primary obligor, the payment of
any and all NPC loans. 8He was also authorized to contract on behalf of the NPC with the
International Bank for Reconstruction and Development (IBRD) for NPC loans for the
accomplishment of NPC's corporate objectives 9and for the reconstruction and development
of the economy of the country. 10It was expressly stated that:
Any such loan or loans shall be exempt from taxes, duties, fees, imposts, charges,
contributions and restrictions of the Republic of the Philippines, its provinces, cities and
municipalities. 11chanrobles virtual law library
On the same date, R.A. No. 358 was enacted expressly authorizing the NPC, for the first
time, to incur other types of indebtedness, aside from indebtedness incurred by flotation of
bonds. 12As to the pertinent tax exemption provision, the law stated as follows:
To facilitate payment of its indebtedness, the National Power Corporation shall be exempt
from all taxes, duties, fees, imposts, charges, and restrictions of the Republic of the
Philippines, its provinces, cities and municipalities. 13chanrobles virtual law library
On July 10, 1952, R.A. No. 813 was enacted amending R.A. No. 357 in that, aside from the
IBRD, the President of the Philippines was authorized to negotiate, contract and guarantee
loans with the Export-Import Bank of of Washigton, D.C., U.S.A., or any other international
financial institution. 14The tax provision for repayment of these loans, as stated in R.A. No.
357, was not amended.chanroblesvirtualawlibrarychanrobles virtual law library
On June 2, 1954, R.A. No. 987 was enacted specifically to withdraw NPC's tax exemption for
real estate taxes. As enacted, the law states as follows:
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 Republic of the Philippines, its provinces, cities, and
municipalities. 15chanrobles virtual law library
On September 8, 1955, R.A. No. 1397 was enacted directing that the NPC projects to be
funded by the increased indebtedness 16should bear the National Economic Council's stamp
of approval. The tax exemption provision related to the payment of this total indebtedness
was not amended nor deleted.chanroblesvirtualawlibrarychanrobles virtual law library
On June 13, 1958, R.A. No. 2055 was enacted increasing the total amount of foreign loans
NPC was authorized to incur to US$100,000,000.00 from the US$50,000,000.00 ceiling in
R.A. No. 357. 17The tax provision related to the repayment of these loans was not amended
nor deleted.chanroblesvirtualawlibrarychanrobles virtual law library
On June 13, 1958, R.A. No. 2058 was enacting fixing the corporate life of NPC to December
31, 2000. 18All laws or provisions of laws and executive orders contrary to said R.A. No.
2058 were expressly repealed. 19chanrobles virtual law library
On June 18, 1960, R.A. No 2641 was enacted converting the NPC from a public corporation
into a stock corporation with an authorized capital stock of P100,000,000.00 divided into
1,000.000 shares having a par value of P100.00 each, with said capital stock wholly
subscribed to by the Government. 20No tax exemption was incorporated in said
Act.chanroblesvirtualawlibrarychanrobles virtual law library
On June 17, 1961, R.A. No. 3043 was enacted increasing the above-mentioned authorized
capital stock to P250,000,000.00 with the increase to be wholly subscribed by the
Government. 21No tax provision was incorporated in said
Act.chanroblesvirtualawlibrarychanrobles virtual law library
On June 17, 1967, R.A. No 4897 was enacted. NPC's capital stock was increased again to
P300,000,000.00, the increase to be wholly subscribed by the Government. No tax provision
was incorporated in said Act. 22chanrobles virtual law library
On September 10, 1971, R.A. No. 6395 was enacted revising the charter of the NPC, C.A.
No. 120, as amended. Declared as primary objectives of the nation were:
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) the total electrification of the Philippines through the
development of power from all sources to meet the needs of industrial development and
dispersal and the needs of rural electrification are primary objectives of the nation which
shall be pursued coordinately and supported by all instrumentalities and agencies of the
government, including the financial institutions. 23chanrobles virtual law library
Section 4 of C.A. No. 120, was renumbered as Section 8, and divided into sections 8 (a)
(Authority to incur Domestic Indebtedness) and Section 8 (b) (Authority to Incur Foreign
Loans).chanroblesvirtualawlibrarychanrobles virtual law library
As to the issuance of bonds by the NPC, Paragraph No. 3 of Section 8(a), states as follows:
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 thereof which facts shall be stated upon the face of said bonds. . .
. 24chanrobles virtual law library
As to the foreign loans the NPC was authorized to contract, Paragraph No. 5, Section 8(b),
states as follows:
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 charges and restrictions, including import restrictions, by the Republic of the
Philippines, or any of its agencies and political subdivisions. 25chanrobles virtual law library
A new section was added to the charter, now known as Section 13, R.A. No. 6395, which
declares the non-profit character and tax exemptions of NPC as follows:
The Corporation shall be non-profit and shall devote all its returns from its capital
investment, as well 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 enunciated in Section one of this Act, the Corporation is hereby
declared exempt:chanrobles virtual law library
(a) From the payment of all taxes, duties, fees, imposts, charges costs and service fees in
any court or administrative proceedings in which it may be a party, restrictions and duties
to the Republic of the Philippines, its provinces, cities, and municipalities and other
government agencies and instrumentalities;chanrobles virtual law library
(b) From all income taxes, franchise taxes and realty taxes to be paid to the National
Government, its provinces, cities, municipalities and other government agencies and
instrumentalities;chanrobles virtual law library
(c) From all import duties, compensating taxes and advanced sales tax, and wharfage fees
on import of foreign goods required for its operations and projects; andchanrobles virtual
law library
(d) From all taxes, duties, fees, imposts and all other charges its provinces, cities,
municipalities and other government agencies and instrumentalities, on all petroleum
products used by the Corporation in the generation, transmission, utilization, and sale of
electric power. 26
On November 7, 1972, Presidential Decree No. 40 was issued declaring that the
electrification of the entire country was one of the primary concerns of the country. And in
connection with this, it was specifically stated that:chanrobles virtual law library
The setting up of transmission line grids and the construction of associated generation
facilities in Luzon, Mindanao and major islands of the country, including the Visayas, shall
be the responsibility of the National Power Corporation (NPC) as the authorized
implementing agency of the State. 27
xxx xxx xxxchanrobles virtual law library
It is the ultimate objective of the State for the NPC to own and operate as a single
integrated system all generating facilities supplying electric power to the entire area
embraced by any grid set up by the NPC. 28chanrobles virtual law library
On January 22, 1974, P.D. No. 380 was issued giving extra powers to the NPC to enable it
to fulfill its role under aforesaid P.D. No. 40. Its authorized capital stock was raised to
P2,000,000,000.00, 29its total domestic indebtedness was pegged at a maximum of
P3,000,000,000.00 at any one time, 30and the NPC was authorized to borrow a total of
US$1,000,000,000.00 31in foreign loans.chanroblesvirtualawlibrarychanrobles virtual law
library
The relevant tax exemption provision for these foreign loans states as follows:
equipment, 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(Emphasis supplied)
Section 13(a) and 13(d) of R.A. No 6395 were amended to read as follows:
(a) From the payment of all taxes, duties, fees, imposts, charges and restrictions to the
Republic of the Philippines, its provinces, cities, municipalities and other government
agencies and instrumentalities including the taxes, duties, fees, imposts and other charges
provided for under the Tariff and Customs Code of the Philippines, Republic Act Numbered
Nineteen Hundred Thirty-Seven, 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 administrative proceedings in which it
may be a party;
(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, on all petroleum products used by the
Corporation in the generation, transmission, utilization and sale of electric
power. 33(Emphasis supplied)
On February 26, 1970, P.D. No. 395 was issued removing certain restrictions in the NPC's
sale of electricity to its different customers. 34No tax exemption provision was amended,
deleted or added.chanroblesvirtualawlibrarychanrobles virtual law library
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, treasury bills or notes to
be issued by the Secretary of Finance for this particular purpose. 35chanrobles virtual law
library
On May 27, 1976 P.D. No. 938 was issued
(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) and the ceilings for domestic and foreign borrowings are deemed
insufficient; 36
(I)n the application of the tax exemption provisions of the Revised Charter, the non-profit
character of NPC has not been fully utilized because of restrictive interpretation of the
taxing agencies of the government on said provisions; 37

(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 amended by Presidential Decrees Nos. 380, 395 and 758, have become
imperative; 38chanrobles virtual law library
Thus NPC's capital stock was raised to P8,000,000,000.00, 39the total domestic
indebtedness ceiling was increased to P12,000,000,000.00, 40the total foreign loan ceiling
was raised to US$4,000,000,000.00 41and Section 13 of R.A. No. 6395, was amended to
read as follows:
investment as well as excess revenues from its operation, for expansion. To enable the
Corporation to pay to its indebtedness and obligations and in furtherance and effective
implementation of the policy 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. 42
II
On the other hand, the pertinent tax laws involved in this controversy are P.D. Nos. 882,
1177, 1931 and Executive Order No. 93 (S'86).chanroblesvirtualawlibrarychanrobles virtual
law library
On January 30, 1976, P.D. No. 882 was issued withdrawing the tax exemption of NPC with
regard to imports as follows:
WHEREAS, importations by certain government agencies, including government-owned or

controlled corporation, are exempt from the payment of customs duties and compensating
tax; andchanrobles virtual law library
WHEREAS, in order to reduce foreign exchange spending and to protect domestic industries,
it is necessary to restrict and regulate such tax-free
importations.chanroblesvirtualawlibrarychanrobles virtual law library
NOW THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the

powers vested in me by the Constitution, and do hereby decree and order the
following:chanrobles virtual law library
Sec. 1. All importations of any government agency, including government-owned or

controlled corporations which are exempt from the payment of customs duties and internal
revenue taxes, shall be subject to the prior approval of an Inter-Agency Committee which
shall insure compliance with the following conditions:chanrobles virtual law library
(a) That no such article of local manufacture are available in sufficient quantity and
comparable quality at reasonable prices;chanrobles virtual law library
(b) That the articles to be imported are directly and actually needed and will be used
exclusively by the grantee of the exemption for its operations and projects or in the conduct
of its functions; andchanrobles virtual law library
(c) The shipping documents covering the importation are in the name of the grantee to
whom the goods shall be delivered directly by customs authorities.
Sec. 3. The Committee shall have the power to regulate and control the tax-free 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 government-owned or controlled corporation, or
any local manufacturer or business firm adversely affected by any decision or ruling of the
Inter-Agency Committee may file an appeal with the Office of the President within ten days
from the date of notice thereof. . . . .
Sec. 6. . . . . Section 13 of Republic Act No. 6395; . . .. and all similar provisions of all
general and special laws and decrees are hereby amended accordingly.
xxx xxx xxx
On July 30, 1977, P.D. 1177 was issued as it was
. . . declared the policy of the State to formulate and implement a National Budget that is
an instrument of national development, reflective of national objectives, strategies and
plans. The budget shall be supportive of and consistent with the socio-economic
development plan and shall be oriented towards the achievement of explicit objectives and
expected results, to ensure that funds are utilized and operations are conducted effectively,
economically and efficiently. The national budget shall be formulated within a context of a
regionalized government structure and of the totality of revenues and other receipts,
expenditures and borrowings of all levels of government-owned or controlled corporations.
The budget shall likewise be prepared within the context of the national long-term plan and
of a long-term budget program. 43chanrobles virtual law library
In line with such policy, the law decreed thatchanrobles virtual law library
All units of government, including government-owned or controlled corporations, shall pay

income taxes, customs duties and other taxes and fees are imposed under revenues laws:
provided, that organizations otherwise exempted by law from the payment of such
taxes/duties may ask for a subsidy from the General Fund in the exact amount of
taxes/duties due: provided, further, that a procedure shall be established by the Secretary
of Finance and the Commissioner of the Budget, whereby such subsidies shall automatically
be considered as both revenue and expenditure of the General Fund. 44chanrobles virtual
law library
The law also declared that -
[A]ll laws, decrees, executive orders, rules and regulations or parts thereof which are
inconsistent with the provisions of the Decree are hereby repealed and/or modified
accordingly. 45chanrobles virtual law library
On July 11, 1984, most likely due to the economic morass the Government found itself in
after the Aquino assassination, P.D. No. 1931 was issued to reiterate that:
WHEREAS, Presidential Decree No. 1177 has already expressly repealed the grant of tax
privileges to any government-owned or controlled corporation and all other units of
government; 46chanrobles virtual law library
and since there was a
. . . need for government-owned or controlled corporations and all other units of

government enjoying tax privileges to share in the requirements of development, fiscal or
otherwise, by paying the duties, taxes and other charges due from them. 47chanrobles
virtual law library
it was decreed that:
Sec. 1. The provisions of special on general law to the contrary notwithstanding, all
exemptions from the payment of duties, taxes, fees, imposts and other charges heretofore
granted in favor of government-owned or controlled corporations including their
subsidiaries, are hereby withdrawn.chanroblesvirtualawlibrarychanrobles virtual law library
Sec. 2. The President of the Philippines and/or the Minister of Finance, upon the
recommendation of the Fiscal Incentives Review Board created under Presidential Decree
No. 776, is hereby empowered to restore, partially or totally, the exemptions withdrawn by
Section 1 above, any applicable tax and duty, taking into account, among others, any or all
of the following:chanrobles virtual law library
1) The effect on the relative price levels;chanrobles virtual law library
2) The relative contribution of the corporation to the revenue generation effort;chanrobles

virtual law library
3) The nature of the activity in which the corporation is engaged in; orchanrobles virtual law
library
4) In general the greater national interest to be served.
Sec. 5. The provisions of Presidential Decree No. 1177 as well as all other laws, decrees,
executive orders, administrative orders, rules, regulations or parts thereof which are
inconsistent with this Decree are hereby repealed, amended or modified accordingly.
On December 17, 1986, E.O. No. 93 (S'86) was issued with a view to correct presidential
restoration or grant of tax exemption to other government and private entities without
benefit of review by the Fiscal Incentives Review Board, to wit:
WHEREAS, Presidential Decree Nos. 1931 and 1955 issued on June 11, 1984 and October
14, 1984, respectively, withdrew the tax and duty exemption privileges, including the
preferential tax treatment, of government and private entities with certain exceptions, in
order that the requirements of national economic development, in terms of fiscals and other
resources, may be met more adequately;
WHEREAS, in addition to those tax and duty exemption privileges were restored by the
Fiscal Incentives Review Board (FIRB), a number of affected entities, government and
private, had their tax and duty exemption privileges restored or granted by Presidential
action without benefit or review by the Fiscal Incentives Review Board (FIRB);
xxx xxx xxx
Since it was decided that:
[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 fiscal monitoring aspects of government operations.
It was thus ordered that:
Sec. 1. The Provisions of any general or special law to the contrary notwithstanding, all tax
and duty incentives granted to government and private entities are hereby withdrawn,
except:chanrobles virtual law library
a) those covered by the non-impairment clause of the Constitution;chanrobles virtual law

library
b) those conferred by effective internation agreement to which the Government of the

Republic of the Philippines is a signatory;chanrobles virtual law library
c) those enjoyed by enterprises registered with:
(i) the Board of Investment pursuant to Presidential Decree No. 1789, as

amended;chanrobles virtual law library
(ii) the Export Processing Zone Authority, pursuant to Presidential Decree No. 66 as
amended;chanrobles virtual law library
(iii) the Philippine Veterans Investment Development Corporation Industrial Authority

pursuant to Presidential Decree No. 538, was amended.
d) those enjoyed by the copper mining industry pursuant to the provisions of Letter of
Instructions No. 1416;chanrobles virtual law library
e) those conferred under the four basic codes namely:
(i) the Tariff and Customs Code, as amended;chanrobles virtual law library
(ii) the National Internal Revenue Code, as amended;chanrobles virtual law library
(iii) the Local Tax Code, as amended;chanrobles virtual law library
(iv) the Real Property Tax Code, as amended;chanrobles virtual law library
f) those approved by the President upon the recommendation of the Fiscal Incentives
Review Board.
Sec. 2. The Fiscal Incentives Review Board created under Presidential Decree No. 776, as
amended, is hereby authorized to:chanrobles virtual law library
a) restore tax and/or duty exemptions withdrawn hereunder in whole or in part;chanrobles

virtual law library
b) revise the scope and coverage of tax and/or duty exemption that may be
restored;chanrobles virtual law library
c) impose conditions for the restoration of tax and/or duty exemption;chanrobles virtual law
library
d) prescribe the date of period of effectivity of the restoration of tax and/or duty
exemption;chanrobles virtual law library
e) formulate and submit to the President for approval, a complete system for the grant of
subsidies to deserving beneficiaries, in lieu of or in combination with the restoration of tax
and duty exemptions or preferential treatment in taxation, indicating the source of funding
therefor, eligible beneficiaries and the terms and conditions for the grant thereof taking into
consideration the international commitment of the Philippines and the necessary precautions
such that the grant of subsidies does not become the basis for countervailing
action.chanroblesvirtualawlibrarychanrobles virtual law library
Sec. 3. In the discharge of its authority hereunder, the Fiscal Incentives Review Board shall
take into account any or all of the following considerations:chanrobles virtual law library
a) the effect on relative price levels;chanrobles virtual law library
b) relative contribution of the beneficiary to the revenue generation effort;chanrobles virtual

law library
c) nature of the activity the beneficiary is engaged; andchanrobles virtual law library
d) in general, the greater national interest to be served.
Sec. 5. All laws, orders, issuances, rules and regulations or parts thereof inconsistent with
this Executive Order are hereby repealed or modified accordingly.
E.O. No. 93 (S'86) was decreed to be effective 48upon the promulgation of the rules and
regulations, to be issued by the Ministry of Finance. 49Said rules and regulations were
promulgated and published in the Official Gazette
on February 23, 1987. These became effective on the 15th day after promulgation in the
50
Official Gasetter, 51which 15th day was March 10, 1987.
III
Now to some definitions. We refer to the very simplistic approach that all would-be lawyers,
learn in their TAXATION I course, which fro convenient reference, is as follows:chanrobles
virtual law library
Classifications or kinds of Taxes:
According to Persons who pay or who bear the burden:chanrobles virtual law library
a. Direct Tax - the where the person supposed to pay the tax really pays
it. WITHOUT transferring the burden to someone else.chanroblesvirtualawlibrary chanrobles
virtual law library
Examples: Individual income tax, corporate income tax, transfer taxes (estate tax, donor's
tax), residence tax, immigration taxchanrobles virtual law library
b. Indirect Tax - that where the tax is imposed upon goods BEFOREreaching the consumer
who ultimately pays for it, not as a tax, but as a part of the purchase
price.chanroblesvirtualawlibrarychanrobles virtual law library
Examples: the internal revenue indirect taxes (specific tax, percentage taxes, (VAT) and the
tariff and customs indirect taxes (import duties, special import tax and other dues) 52
IV
To simply matter, the issues raised by petitioner in his motion for reconsideration can be
reduced to the following:chanrobles virtual law library
(1) What kind of tax exemption privileges did NPC have?chanrobles virtual law library
(2) For what periods in time were these privileges being enjoyed?chanrobles virtual law
library
(3) If there are taxes to be paid, who shall pay for these taxes?
Petitioner contends that P.D. No. 938 repealed the indirect tax exemption of NPC as the
phrase "all forms of taxes etc.," in its section 10, amending Section 13, R.A. No. 6395, as
amended by P.D. No. 380, does not expressly include "indirect taxes."chanrobles virtual law
library
His point is not well-taken.chanroblesvirtualawlibrarychanrobles virtual law library

A chronological review of the NPC laws will show that it has been the lawmaker's intention
that the NPC was to be completely tax exempt from all forms of taxes - direct and
indirect.chanroblesvirtualawlibrarychanrobles virtual law library
NPC's tax exemptions at first applied to the bonds it was authorized to float to finance its
operations upon its creation by virtue of C.A. No. 120.chanroblesvirtualawlibrarychanrobles
virtual law library
When the NPC was authorized to contract with the IBRD for foreign financing, any loans
obtained were to be completely tax exempt.chanroblesvirtualawlibrarychanrobles virtual law
library
After the NPC was authorized to borrow from other sources of funds - aside issuance of
bonds - it was again specifically exempted from all types of taxes "to facilitate payment of
its indebtedness." Even when the ceilings for domestic and foreign borrowings were
periodically increased, the tax exemption privileges of the NPC were
maintained.chanroblesvirtualawlibrarychanrobles virtual law library
NPC's tax exemption from real estate taxes was, however, specifically withdrawn by Rep.
Act No. 987, as above stated. The exemption was, however, restored by R.A. No.
6395.chanroblesvirtualawlibrarychanrobles virtual law library
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 reproduced as follows:
[T]he Corporation is hereby declared exempt:
(d) From all taxes, duties, fees, imposts and all other charges imposed by the Republic of
the Philippines, its provinces, cities, municipalities and other government agencies and
instrumentalities, on all petroleum products used by the Corporation in the generation,
transmission, utilization, and sale of electric power.
P.D. No. 380 added phrase "directly or indirectly" to said Section 13(d), which now reads as
follows:
(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, on all petroleum products used by the
Corporation in the generation, transmission, utilization and sale of electric power. (Emphasis
supplied)
Then came P.D. No. 938 which amended Sec. 13(a), (b), (c) and (d) into one very simple
paragraph as follows:
investment as well 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 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. (Emphasis supplied)
Petitioner reminds Us that:
[I]t must be borne in mind that Presidential Decree Nos. 380

and 938 were issued by one man, acting as such the Executive and Legislative. 53
[S]ince both presidential decrees were made by the same person, it would have been very
easy for him to retain the same or similar language used in P.D. No. 380 P.D. No. 938 if his
intention were to preserve the indirect tax exemption of NPC. 54chanrobles virtual law
library
Actually, P.D. No. 938 attests to the ingenuousness of then President Marcos no matter
what his fault were. It should be noted that section 13, R.A. No. 6395, provided for tax
exemptions for the following items:
13(a) : court or administrative proceedings;chanrobles virtual law library
13(b) : income, franchise, realty taxes;chanrobles virtual law library
13(c) : import of foreign goods required for its operations and projects;chanrobles virtual
law library
13(d) : petroleum products used in generation of electric power.
P.D. No. 938 lumped up 13(b), 13(c), and 13(d) into the phrase "ALL FORMS OF TAXES,
ETC.,", included 13(a) under the "as well as" clause and added PNOC subsidiaries as
qualified for tax exemptions.chanroblesvirtualawlibrarychanrobles virtual law library
This is the only conclusion one can arrive at if he has read all the NPC laws in the order of
enactment or issuance as narrated above in part I hereof. President Marcos must have
considered all the NPC statutes from C.A. No. 120 up to its latest amendments, P.D. No.
380, P.D. No. 395 and P.D. No. 759, AND came up 55with a very simple Section 13, R.A. No.
6395, as amended by P.D. No. 938.chanroblesvirtualawlibrarychanrobles virtual law library
One common theme in all these laws is that the NPC must be enable to pay its
indebtedness 56which, as of P.D. No. 938, was P12 Billion in total domestic indebtedness, at
any one time, and U$4 Billion in total foreign loans at any one time. The NPC must be and
has to be exempt from all forms of taxes if this goal is to be
achieved.chanroblesvirtualawlibrarychanrobles virtual law library
By virtue of P.D. No. 938 NPC's capital stock was raised to P8 Billion. It must be
remembered that to pay the government share in its capital stock P.D. No. 758 was issued
mandating that P200 Million would be appropriated annually to cover the said unpaid
subscription of the Government in NPC's authorized capital stock. And significantly one of
the sources of this annual appropriation of P200 million is TAX MONEY accruing to the
General Fund of the Government. It does not stand to reason then that former President
Marcos would order P200 Million to be taken partially or totally from tax money to be used
to pay the Government subscription in the NPC, on one hand, and then order the NPC to
pay all its indirect taxes, on the other.chanroblesvirtualawlibrarychanrobles virtual law
library
The above conclusion that then President Marcos lumped up Sections 13 (b), 13 (c) and (d)
into the phrase "All FORMS OF" is supported by the fact that he did not do the same for the
tax exemption provision for the foreign loans to be
incurred.chanroblesvirtualawlibrarychanrobles virtual law library
The tax exemption on foreign loans found in Section 8(b), R.A. No. 6395, reads as follows:
equipment, materials and supplies by the Corporation, paid from the proceeds of any loan,
credit or indebtedness incurred under this Act, shall also be exempt from all taxes, fees,
imposts, other charges and restrictions, including import restrictions, by the Republic of the
Philippines, or any of its agencies and political subdivisions. 57chanrobles virtual law library
The same was amended by P.D. No. 380 as follows:
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, 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. 58(Emphasis supplied)
P.D. No. 938 did not amend the same 59and so the tax exemption provision in Section 8 (b),
R.A. No. 6395, as amended by P.D. No. 380, still stands. Since the subject matter of this
particular Section 8 (b) had to do only with loans and machinery imported, paid for from the
proceeds of these foreign loans, THERE WAS NO OTHER SUBJECT MATTER TO LUMP IT UP
WITH, and so, the tax exemption stood as is - with the express mention of "direct
and indirect" tax exemptions. And this "direct and indirect" tax exemption privilege
extended to "taxes, fees, imposts, other charges . . . to be imposed" in the future - surely,
an indication that the lawmakers wanted the NPC to be exempt from ALL FORMS of taxes -
direct and indirect.chanroblesvirtualawlibrarychanrobles virtual law library
It is crystal clear, therefore, that NPC had been granted tax exemption privileges for both
direct and indirect taxes under P.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. 60The 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,
allowed to ask for a subsidy from the General Fund in the exact amount of taxes/duties
due.chanroblesvirtualawlibrarychanrobles virtual law library
Actually, much earlier, P.D. No. 882 had already repealed NPC's tax-free importation
privileges. It allowed, however, NPC to appeal said repeal with the Office of the President
and to avail of tax-free importation privileges under its Section 1, subject to the prior
approval of an Inter-Agency Committed created by virtue of said P.D. No. 882. It is
presumed that the NPC, being the special creation of the State, was allowed to continue its
tax-free importations.chanroblesvirtualawlibrarychanrobles virtual law library
This Court notes that petitioner brought to the attention of this Court, the matter of the
abolition of NPC's tax exemption privileges by P.D. No. 1177 61only in his Common
Reply/Comment to private Respondents' "Opposition" and "Comment" to Motion for
Reconsideration, four (4) months AFTER the motion for Reconsideration had been filed.
During oral arguments heard on July 9, 1992, he proceeded to discuss this tax exemption
withdrawal as explained by then Secretary of Justice Vicente Abad Santos in opinion No.
133 (S '77). 62A careful perusal of petitioner's senate Blue Ribbon Committee 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. 63Applying by analogy Pulido vs. Pablo, 64the court
declares that the matter of P.D. No. 1177 abolishing NPC's tax exemption privileges was not
seasonably invoked 65by the petitioner.chanroblesvirtualawlibrarychanrobles virtual law
library
Be that as it may, the Court still has to discuss the effect of P.D. No. 1177 on the NPC tax
exemption privileges as this statute has been reiterated twice in P.D. No. 1931. The express
repeal of tax privileges of any government-owned or controlled corporation (GOCC). NPC
included, was reiterated in the fourth whereas clause of P.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 partial or total restoration of tax exemptions withdrawn by Section 1,
P.D. No. 1931.chanroblesvirtualawlibrarychanrobles virtual law library
The records before Us do not indicate whether or not NPC asked for the subsidy
contemplated in Section 23, P.D. No. 1177. Considering, however, that under Section 16 of
P.D. No. 1177, NPC had to submit to the Office of the President its request for the P200
million mandated by P.D. No. 758 to be appropriated annually by the Government to cover
its unpaid subscription to the NPC authorized capital stock and that under Section 22, of the
same P.D. No. NPC had to likewise submit to the Office of the President its internal
operating budget for review due to capital inputs of the government (P.D. No. 758) and to
the national government's guarantee of the domestic and foreign indebtedness of the NPC,
it is clear that NPC was covered by P.D. No. 1177.chanroblesvirtualawlibrarychanrobles
virtual law library
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/tax subsidy scheme of the
Government. In effect, NPC, did not put any cash to pay any tax as it got from the General
Fund the amounts necessary to pay different revenue collectors for the taxes it had to
pay.chanroblesvirtualawlibrarychanrobles virtual law library
In his memorandum filed July 16, 1992, petitioner submits:

[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 under P.D. No. 1931, issued on June 11, 1984. This is evident from sections 1
and 2 of said P.D. No. 1931, which reads:
"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 government-owned or controlled corporations including their subsidiaries
are hereby withdrawn."chanrobles virtual law library
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
hereby empowered to restore partially or totally, the exemptions withdrawn by section 1
above. . . .
Hence, P.D. No. 1931 did not have any effect or did it change NPC's status. Since it had
already lost all its tax exemptions privilege with the issuance of P.D. No. 1177 seven (7)
years earlier or on July 30, 1977, there were no tax exemptions to be withdrawn by section
1 which could later be restored by the Minister of Finance upon the recommendation of the
FIRB under Section 2 of P.D. No. 1931. Consequently, FIRB resolutions No. 10-85, and 1-
86, were all illegally and validly issued since FIRB acted beyond their statutory authority by
creating and not merely restoring the tax exempt status of NPC. The same is true for FIRB
Res. No. 17-87 which restored NPC's tax exemption under E.O. No. 93 which likewise
abolished all duties and tax exemptions but allowed the President upon recommendation of
the FIRB to restore those abolished.
The Court disagrees.chanroblesvirtualawlibrarychanrobles virtual law library
Applying by analogy the weight of authority that:
When a revised and consolidated act re-enacts 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 taken to be a continuation of the former act or acts, although the former act or acts
may be expressly repealed by the revised and consolidated act; and all rights
and liabilities under the former act or acts are preserved and may be enforced. 66chanrobles
virtual law library
the Court rules that when P.D. No. 1931 basically reenacted in its Section 1 the first half of
Section 23, P.D. No. 1177, on withdrawal of tax exemption privileges of all GOCC's said
Section 1, P.D. No. 1931 was deemed to be a continuation of the first half of Section 23,
P.D. No. 1177, although the second half of Section 23, P.D. No. 177, on the subsidy scheme
for former tax exempt GOCCs had been expressly repealed by Section 2 with its institution
of the FIRB recommendation of partial/total restoration of tax exemption
privileges.chanroblesvirtualawlibrarychanrobles virtual law library
The NPC tax privileges withdrawn by Section 1. P.D. No. 1931, were, therefore, the same
NPC tax exemption privileges withdrawn by Section 23, P.D. No. 1177. NPC could no longer
obtain a subsidy for the taxes it had to pay. It could, however, under P.D. No. 1931, ask for
a total restoration of its tax exemption privileges, which, it did, and the same were granted
under FIRB Resolutions Nos. 10-85 67and 1-86 68as approved by the Minister of
Finance.chanroblesvirtualawlibrarychanrobles virtual law library
Consequently, contrary to petitioner's submission, FIRB Resolutions Nos. 10-85 and 1-86
were both legally and validly issued by the FIRB pursuant to P.D. No. 1931. FIRB did not
created NPC's tax exemption status but merely restored it. 69chanrobles virtual law library
Some quarters have expressed the view that P.D. No. 1931 was illegally issued under the
now rather infamous Amendment No. 6 70as there was no showing that President Marcos'
encroachment on legislative prerogatives was justified under the then prevailing condition
that he could legislate "only if the Batasang Pambansa 'failed or was unable to act
inadequately on any matter that in his judgment required immediate action' to meet the
'exigency'. 71chanrobles virtual law library
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 must be remembered that said
Presidential Decree was issued only around nine (9) months after the Philippines unilaterally
declared a moratorium on its foreign debt payments 72as a result of the economic crisis
triggered by loss of confidence in the government brought about by the Aquino
assassination. The Philippines was then trying to reschedule its debt payments. 73One of the
big borrowers was the NPC 74which had a US$ 2.1 billion white elephant of a Bataan Nuclear
Power Plant on its back. 75From all indications, it must have been this grave emergency of a
debt rescheduling which compelled Marcos to issue P.D. No. 1931, under his Amendment 6
power. 76chanrobles virtual law library
The rule, therefore, that under the 1973 Constitution "no law granting a tax exemption shall
be passed without the concurrence of a majority of all the members of the Batasang
Pambansa" 77does not apply as said P.D. No. 1931 was not passed by the Interim Batasang
Pambansa but by then President Marcos under His Amendment No. 6
power.chanroblesvirtualawlibrarychanrobles virtual law library
P.D. No. 1931 was, therefore, validly issued by then President Marcos under his Amendment
No. 6 authority.chanroblesvirtualawlibrarychanrobles virtual law library
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. 17-87 78dated June
24, 1987 which restored NPC's tax exemption privileges effective, starting March 10, 1987,
the date of effectivity of E.O. No. 93 (S'86).chanroblesvirtualawlibrarychanrobles virtual law
library
FIRB Resolution No. 17-87 was approved by the President on October 5, 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. 10-85 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 happened in Zambales Chromate vs. Court of Appeals 80when the Secretary
of Agriculture and Natural Resources approved a decision earlier rendered by him when he
was the Director of Mines, 81and in Anzaldo vs. Clave 82where Presidential Executive
Assistant Clave affirmed, on appeal to Malacañang, his own decision as Chairman of the
Civil Service Commission. 83chanrobles virtual law library
Upon deeper analysis, the question arises as to whether one can talk about "due process"
being violated when FIRB Resolutions Nos. 10-85 and 1-86 were approved by the Minister of
Finance when the same were recommended by him in his capacity as Chairman of the Fiscal
Incentives Review Board. 84chanrobles virtual law library
In Zambales Chromite and Anzaldo, two (2) different parties were involved: mining groups
and scientist-doctors, respectively. Thus, there was a need for procedural due process to be
followed.chanroblesvirtualawlibrarychanrobles virtual law library
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 objected to the restoration of NPC's tax exemption
privileges.chanroblesvirtualawlibrarychanrobles virtual law library
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. 10-85 and 1-86, done by the same person
acting in his dual capacities as Chairman of the Fiscal Incentives Review Board and Minister
of Finance, respectively, do not violate procedural due
process.chanroblesvirtualawlibrarychanrobles virtual law library
While as above-mentioned, FIRB Resolution No. 17-87 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 sub-delegate to the FIRB, which was allegedly
not a delegate of the legislature, the power delegated to her
thereunder.chanroblesvirtualawlibrarychanrobles virtual law library
A misconception must be cleared up.chanroblesvirtualawlibrarychanrobles virtual law library
When E.O No. 93 (S'86) was issued, President Aquino was exercising both Executive and
Legislative powers. Thus, there was no power delegated to her, rather it was she who was
delegating her power. She delegated it to the FIRB, which, for purposes of E.O No. 93
(S'86), is a delegate of the legislature. Clearly, she was not sub-delegating her
power.chanroblesvirtualawlibrarychanrobles virtual law library
And E.O. No. 93 (S'86), as a delegating law, was complete in itself - it set forth the policy to
be carried out 85and it fixed the standard to which the delegate had to conform in the
performance of his functions, 86both qualities having been enunciated by this Court
in Pelaez vs. Auditor General. 87chanrobles virtual law library
Thus, after all has been said, it is clear that the NPC had its tax exemption privileges
restored from June 11, 1984 up to the present.
VII
The next question that projects itself is - who pays the tax?chanrobles virtual law library
The answer to the question could be gleamed from the manner by which the Commissaries
of the Armed Forces of the Philippines sell their goods.chanroblesvirtualawlibrarychanrobles
virtual law library
By virtue of P.D. No. 83, 88veterans, members of the Armed of the Philippines, and their
defendants but groceries and other goods free of all taxes and duties if bought from any AFP
Commissaries.chanroblesvirtualawlibrarychanrobles virtual law library
In practice, the AFP Commissary suppliers probably treat the unchargeable specific, ad
valorem and other taxes on the goods earmarked for AFP Commissaries as an added cost of
operation and distribute it over the total units of goods sold as it would any other cost.
Thus, even the ordinary supermarket buyer probably pays for the specific, ad valorem and
other taxes which theses suppliers do not charge the AFP Commissaries. 89chanrobles
virtual law library
IN MUCH THE SAME MANNER, it is clear that private respondents-oil companies have to
absorb the taxes they add to the bunker fuel oil they sell to
NPC.chanroblesvirtualawlibrarychanrobles virtual law library
It should be stated at this juncture that, as early as May 14, 1954, the Secretary of Justice
renders an opinion, 90wherein he stated and We quote:
Republic Act No. 358 exempts the National Power Corporation from "all taxes, duties, fees,
imposts, charges, and restrictions of the Republic of the Philippines and its provinces, cities,
and municipalities." This exemption is broad enough to include all taxes, whether direct or
indirect, which the National Power Corporation may be required to pay, such as the specific
tax on petroleum products. That it is indirect or is of no amount [should be of no moment],
for it is the corporation that ultimately pays it. The view which refuses to accord the
exemption because the tax is first paid by the seller disregards realities and gives more
importance to form than to substance. Equity and law always exalt substance over from.
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 language of the statue will be to thwrat the
legislative intention in giving exemption from all forms of taxes and impositions without
distinguishing between those that are direct and those that are not. (Emphasis supplied)
In view of all the foregoing, the Court rules and declares that the oil companies which
supply bunker fuel oil to NPC have to pay the taxes imposed upon said bunker fuel oil sold
to NPC. By the very nature of indirect taxation, the economic burden of such taxation is
expected to be passed on through the channels of commerce to the user or consumer of the
goods sold. Because, however, the NPC has been exempted from both direct and indirect
taxation, the NPC must beheld exempted from absorbing the economic burden of indirect
taxation. This means, on the one hand, that the oil companies which wish to sell to NPC
absorb all or part of the economic burden of the taxes previously paid to BIR, which could
they shift to NPC if NPC did not enjoy exemption from indirect taxes. This means also, on
the other hand, that the NPC may refuse to pay the part of the "normal" purchase price of
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 ultimately less costly for NPC than NPC itself importing and
hauling and storing the oil from overseas - NPC is entitled to be reimbursed by the BIR for
that part of the buying price of NPC which verifiably represents the tax already paid by the
oil company-vendor to the BIR.chanroblesvirtualawlibrarychanrobles virtual law library
It should be noted at this point in time that the whole issue of who WILL pay these indirect
taxes HAS BEEN RENDERED moot and academic by E.O. No. 195 issued on June 16, 1987
by virtue of which the ad valorem tax rate on bunker fuel oil was reduced to ZERO (0%)
PER CENTUM. Said E.O. no. 195 reads as follows:
EXECUTIVE ORDER NO. 195chanrobles virtual law library
AMENDING PARAGRAPH (b) OF SECTION 128 OF THE NATIONAL INTERNAL REVENUE CODE,
AS AMENDED BY REVISING THE EXCISE TAX RATES OF CERTAIN PETROLEUM PRODUCTS.
Sec. 1. Paragraph (b) of Section 128 of the National Internal Revenue Code, as amended, is
hereby amended to read as follows:chanrobles virtual law library
Par. (b) - For products subject to ad valorem tax only:chanrobles virtual law library
PRODUCT AD VALOREM TAX RATEchanrobles virtual law library
1. . . .chanroblesvirtualawlibrarychanrobles virtual law library
4. Fuel oil, commercially known as bunker oil and on similar fuel oils having more or less the
same generating power 0%
Sec. 3. This Executive Order shall take effect

immediately.chanroblesvirtualawlibrarychanrobles virtual law library
Done in the city of Manila, this 17th day of June, in the year of Our Lord, nineteen hundred
and eighty-seven. (Emphasis supplied)
The oil companies can now deliver bunker fuel oil to NPC without having to worry about who
is going to bear the economic burden of the ad valorem taxes. What this Court will now
dispose of are petitioner's complaints that some indirect tax money has been illegally
refunded by the Bureau of Internal Revenue to the NPC and that more claims for refunds by
the NPC are being processed for payment by the BIR.chanroblesvirtualawlibrarychanrobles
virtual law library
A case in point is the Tax Credit Memo issued by the Bureau of Internal Revenue in favor of
the NPC last July 7, 1986 for P58.020.110.79 which were for "erroneously paid specific
and ad valorem taxes during the period from October 31, 1984 to April 27,
1985. 91Petitioner 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. and
whether the Bureau of Internal Revenue properly refunded the amount to
NPC.chanroblesvirtualawlibrarychanrobles virtual law library
After P.D. No. 1931 was issued on June 11, 1984 withdrawing the
tax exemptions of all GOCCs - NPC included, it was only on May 8, 1985 when the BIR
issues its letter authority to the NPC authorizing it to withdraw tax-free bunker fuel oil from
the oil companies pursuant to FIRB Resolution No. 10-85. 92Since the tax exemption
restoration was retroactive to June 11, 1984 there was a need. therefore, to recover said
amount as Caltex (PhiIs.) Inc. had already paid the BIR the specific and ad valorem taxes
on the bunker oil it sold NPC during the period above indicated and had billed NPC
correspondingly. 93It should be noted that the NPC, in its letter-claim 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. 94chanrobles virtual law library
The law governing recovery of erroneously or illegally, collected taxes is section 230 of the
National Internal Revenue Code of 1977, as amended which reads as follows:
Sec. 230. Recover of tax erroneously or illegally collected. - No suit or proceeding shall be
maintained in any court for the recovery of any national internal revenue tax hereafter
alleged to have been erroneously or illegally assessed or collected, or of any penalty
claimed to have been collected without authority, or of any sum alleged to have been
excessive or in any Manner wrongfully collected. until a claim for refund or credit has been
duly filed with the Commissioner; but such suit or proceeding may be maintained, whether
or not such tax, penalty, or sum has been paid under protest or
duress.chanroblesvirtualawlibrarychanrobles virtual law library
In any case, no such suit or proceeding shall be begun after the expiration of two years
from the date of payment of the tax or penalty regardless of any supervening cause that
may arise after payment; 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 appears clearly, to have been erroneously paid.
xxx xxx xxx
Inasmuch as NPC filled its claim for P58.020,110.79 on September 11, 1985, 95the
Commissioner correctly issued the Tax Credit Memo in view of NPC's indirect tax
exemption.chanroblesvirtualawlibrary chanrobles virtual law library
Petitioner, however, asks Us to restrain the Commissioner from acting favorably on NPC's
claim for P410.580,000.00 which represents specific and ad valorem taxes paid by the oil
companies to the BIR from June 11, 1984 to the early part of 1986. 96
chanrobles virtual law
library
A careful examination of petitioner's pleadings and annexes attached thereto does not
reveal when the alleged claim for a P410,580,000.00 tax refund was filed. It is only stated
In paragraph No. 2 of the Deed of Assignment 97executed by and between NPC and Caltex
(Phils.) Inc., as follows:
That the ASSIGNOR(NPC) has a pending tax credit claim with the Bureau of Internal
Revenue amounting to P442,887,716.16. P58.020,110.79 of which is due to Assignor's oil
purchases from the 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. Neither can We order the BIR to refund said amount to
NPC as there is no pending petition for review on certiorari of a suit for its collection before
Us. At any rate, at this point in time, NPC can no longer file any suit to collect said amount
EVEN IF lt has previously filed a claim with the BIR because it is time-barred under Section
230 of the National Internal Revenue Code of 1977. as amended, which states:
In any case, no such suit or proceeding shall be begun after the expiration of two years
from the date of payment of the tax or penalty REGARDLESS of any supervening cause
that may arise after payment. . . . (Emphasis supplied)
The date of the Deed of Assignment is June 6. 1986. Even if We were to assume that
payment by NPC for the amount of P410,580,000.00 had been made on said date. it is clear
that more than two (2) years had already elapsed from said date. At the same time, We
should note that there is no legal obstacle to the BIR granting, 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.chanroblesvirtualawlibrarychanrobles virtual law library
WHEREFORE, in view of all the foregoing, the Motion for Reconsideration of petitioner is
hereby DENIED for lack of merit and the decision of this Court promulgated on May 31,
1991 is hereby AFFIRMED.chanroblesvirtualawlibrarychanrobles virtual law library
SO ORDERED.
Narvasa, C.J., Feliciano, Bidin, Regalado, Romero, Bellosillo and Melo, JJ.,
concur.chanroblesvirtualawlibrarychanrobles virtual law library
Padilla and Quiason, JJ. took no part.
Endnotes:
1 Penned by Justice Gancayo, concurred in by Justices Narvasa, Melencio-Herrera, Feliciano,

Bidin, Medialdea, and Regalado; separate dissenting opinions by Justices Cruz, Paras, and
Sarmiento, with justices Griño-Aquino and Davide joining in the dissent of Justice Sarmiento
while Justice Gutierrez joined in the dissents. Chief Justice Gutierrez joined in the dissents.
Chief Justice Fernan and Justice Padilla took no part.chanrobles virtual law library
2 Com. Act No. 120, secs. 1, & 2 (g).chanrobles virtual law library
3 Com. Act No. 120, sec. 11.chanrobles virtual law library
4 Com. Act No. 120, sec. 2(k).chanrobles virtual law library
5 Com. Act No. 120, sec. 4, par. 3.chanrobles virtual law library
8 Rep. Act No. 357, sec. 3.chanrobles virtual law library
16 Increased to P500,000,000.00 from P170,500,000.00 in Rep. Act No. 358 (Rep. Act No.
1397, sec. 1).chanrobles virtual law library
17 Rep Act No. 2055, secs. 1 and 2.chanrobles virtual law library
18 Rep Act No. 2058, sec. 1.chanrobles virtual law library
24 Rep Act No. 6395, sec. 8(a).chanrobles virtual law library

25 Rep Act No. 6395, sec. 8(b).chanrobles virtual law library
27 Pres. Dec. No. 40, par. 2.chanrobles virtual law library
29 Pres. Dec. No. 380, sec. 5.chanrobles virtual law library
31 Pres. Dec. No. 380, sec. 9, par. 1.chanrobles virtual law library
32 Pres. Dec. No. 380, sec. 9, par. 4.chanrobles virtual law library
36 Pres. Dec. No. 938, 1st Whereas clause.chanrobles virtual law library
37 Pres. Dec. No. 938, 4th Whereas clause.chanrobles virtual law library
38 Pres. Dec. No. 938, 6th Whereas clause.chanrobles virtual law library
46 Pres. Dec. No. 1931, Fourth Whereas clause.chanrobles virtual law library
47 Pres. Dec. No. 1931, Fifth Whereas clause.chanrobles virtual law library
48 Exec. Order No. 93 (S'86). sec. 6.chanrobles virtual law library
49 Exec. Order No. 93, sec. 4.chanrobles virtual law library

50 Rule V, Rules and Regulations to Implement Exec. Order No. 93.chanrobles virtual law
library
51 83 O.G. 8, pp. 722-725.chanrobles virtual law library
52 PARAS, TAXATION FUNDAMENTALS, 24-25 (1966)
53 Rollo, p. 687; Motion for Reconsideration, p. 12.chanrobles virtual law library
54 Rollo, p. 688; Motion for Reconsideration, p. 13.chanrobles virtual law library
55 "Statutes are considered to be in pari materia - to pertain to the same subject matter -
when they relate to the same person or thing, or to the same class of persons of things, or
have the same purpose or object. They may be independent or amendatory in form; they
may be complete enactments dealing with a single, limited subject matter or sections of
code or revision; or they may be combination of these. (2 Sutherland Statutory
Construction, 2nd Ed., sec. 5202, p. 535)
xxx xxx xxx
Statutes in pari materia, although some may be special and some general, in the event one
of them is ambiguous or uncertain, are to be construed together, even if the various
statutes have not been enacted simultaneously, and do not refer to each other expressly,
and although some of them have been repealed or have expired, or held unconstitutional, or
invalid. (Crawford, Statutory Construction, sec. 231, p. 431.)
xxx xxx xxx
The reasons which support this rule are twofold. In the first place, all the enactments of the
same legislature on the general subject-matter are to be regarded as parts of one uniform
system. Later statutes are considered as supplementary or complementary to the earlier
enactments. In the passage of each act, the legislative body must be supposed to have had
in mind and in contemplation the existing legislation on the same subject, and to have
shaped its new enactment with reference thereto. Secondly, the rule derives support from
the principle which requires the interpretation of a statute shall be such, if possible, as to
avoid any repugnancy or inconsistency between different enactments of the same
legislature. To achieve this result, it is necessary to consider all previous acts relating to the
same matters, and to construe the act in hand so as to avoid, as far as it may be possible,
any conflict between them. Hence for example, when the legislature has used a word in a
statute in one sense and with one meaning, and subsequently uses the same word in
legislating on the same subject matter, it will be understood as using the word in the same
sense, unless there is something in the context or in the nature of things to indicate that it
intended a different meaning thereby. (Black on Interpretation of Laws, 2nd Ed., pp. 232-
234) FRANCISCO, STATUTORY CONSTRUCTION, 287-288 (1986).chanrobles virtual law
library
56 The NPC is the implementing arm of the State in its policy of electrification of the entire
country. Its authorized capital stock and total local and foreign debt ceiling have, therefore,
been regularly raised to provide NPC with massive fund flows to achieve said
policy.chanrobles virtual law library
57 Rep. Act No. 6395. sec. 8 (b), par. 5.chanrobles virtual law library
58 Rep. Act No. 6395, sec. 8 (b), par. 5. was deleted and paragraph 5, sec. 8(b) became
paragraph 4, Section 8(b), as amended by Pres. Dec. 380.chanrobles virtual law library
59 "Sec. 8. The first paragraph of Section 8(b) of the same Act is hereby further amended
and a new paragraph shall be inserted between the third and fourth paragraph of said
section which shall both read as follows: . . .."
60 See Pres. Dec. No. 1177, sec. 4.chanrobles virtual law library
61 Rollo, p. 783.chanrobles virtual law library
62 T.S.N., July 9, 1992, pp. 19-21.chanrobles virtual law library
63 Rollo, pp. 53-119. In the report submitted to the Senate Blue Ribbon Committee, the
discussion centered on NPC's tax exemption privileges being abolished by Pres. Dec. No.
1931 in paragraphs 11, 37, 81, 83.1 and F.1 Pres. Dec. No. 1177 was mentioned in
paragraph C(2) in the Recommendation portion but only by way of its state policy being
made a model for a future bill to be filled by the Senators involved in the
investigation.chanrobles virtual law library
64 117 SCRA 16 (1980).chanrobles virtual law library
65 In this case, Judge Magno Pulido of then CFI of Alaminos, Pangasinan, Branch XIII,
promulgated a decision on May 17, 1974 in Criminal Case No. 266-A entitled "People vs.
Bantolino." Bantolino filed a complaint against the judge charging him with ignorance of the
law because his sentence was "with subsidiary imprisonment." The case dismissed after
respondent judge therein state that he had corrected "with" to "without" but Bantolino's
lawyer, Atty. Pulido, refused to return his (Atty. Pulido) copy for a corrected
copy.chanrobles virtual law library
Later, Atty. Pulido filed another charge against Judge Pablo, this time, for falsifying a Court
of Appeals' decision (re Bantolino's appeal with the Com. Act No.) and minutes of court
hearings as well as insertions in the record of a false commitment order. Respondent judge
pleaded, among others, res adjudicata.chanrobles virtual law library
The Court made a distinction between the two administrative complaints and concluded that
there was no res adjudicata.On the procedural aspect involved, the Court stated:
"Furthermore, the defense of res adjudicata was not seasonably invoked.chanrobles virtual
law library
"It may be noted that respondent Judge initially raised the defense of res adjudicata only in
the motion for reconsideration dated November 8, 1981. Atty. Pulido filed this complaint on
April 6, 1978. Respondent failed to set up the defense of res adjudicata when he filed his
comment dated June 19, 1974 in compliance with the first indorsement dated June 3, 1974
of the then Assistant to the Judicial Consultant, now Deputy Court Administrator Arturo B.
Buena. Such failure to interpose the defense of res adjudicata at the earliest opportunity is
fatal as it deemed waived."
66 73 Am Jur 2d 518, sec. 410, citing United States v. Grainger 346 US 235, 97 L Ed 1575,
73 S Ct 1069; State v Bean 159 Me 455, 195 A2d 68; States v. Holland, 202 Or 656, 277
P2d 386.chanrobles virtual law library
For example, State vs. Bean was an action by the State ton recover for goods and services
rendered an inmate of a state hospital.chanrobles virtual law library
The defendant was committed to the Augusta State Hospital on September 21, 1949 by
order of court after he had been found not guilty of the commission of a crime by reason of
insanity.chanrobles virtual law library
The defendant was confined when the prevailing laws were R.S. Ch. 27, Sec. 121 which
provided that the person so committed shall be there supported at his own expense, if he
has sufficient means; otherwise at the expense of the State,' and R.S. Ch. 27 Sec. 139
which provided that "The state may recover from the insane, if able, or from persons legally
liable for his support, the reasonable expenses of his support in either insane hospital.' R.S.
Ch. 27, Sec 121, was expressly repealed by P.L. 1961, Ch. 304, Sec 17 while R.S. Ch. 27,
Sec. 139 was expressly repealed by P.L. 1961, Ch. 304, Sec. 26.chanrobles virtual law
library
However, by P.L. 1961, Ch. 304, Secs. 4 and 5, the legislature simultaneously enacted
amendments which in the case of Sec. 4 thereof charged the Department of Mental Health
and Corrections with the duty of determining the ability of the patient to pay for his support
and of establishing rates and fees therefor, and in the case of sec. 5, it provided that "such
fees charges shall be a debt of the patient or any person legally liable for his support."
It was only on January 20,1960 that the hospital billed the defendant for his stay from
September 21, 1949 in the amount of $6651.72. Plaintiff filed on October 26, 1962 a case
to recover said amount. Defendant disclaimed liability by arguing that the enactment of P.L.
1961, Ch. 304 was to terminate his liability for board and care furnished prior to its
enactment.chanrobles virtual law library
The State of Maine's Supreme Judicial Court rebuffed the defendant and held that:
"[I]n the instant case P.L. 1961, Ch. 304 was intended to be a revision and condensation of
the statutes relating to the Department of Mental Health and Corrections by which the
substance of the right of the State of Maine to reimbursement for care and support from the
criminally insane in accordance with "means" or "ability" to pay remained undisturbed. We
are satisfied that it was the intention of the Legislature that there should be no moment
when the right to such reimbursement did not exist. We think, the governing principle was
well stated in 50 Am. Jur. 559, Sec. 555;
"It is a general rule of law that where a statute is repealed and all or some of its provisions
are not the same time re-enacted, the re-enactment is considered a reaffirmance of the old
law, and a neutralization of the repeal, so that the provisions of the repealed act which are
thus re-enacted continue in force without interruption, and all rights and liabilities incurred
thereunder are preserved and may be enforced. Similarly, the rule of construction applicable
to acts which revise and consolidate other acts is, that when the revised and consolidated
act re-enacts 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 taken to be a
continuation of the former act or acts, although the former act or acts may be expressly
repealed by the revised and consolidated act; and all rights and liabilities under the former
act or acts are preserved and may be enforced." (State vs. Bean, 195 A2d 68, 71, 72;
Emphasis supplied)
67 BE IT RESOLVED, AS IT HEREBY RESOLVED, That:
1. Effective June 11, 1984, the tax and duty exemption privileges enjoyed by the National
Power Corporation under Com. Act No. No. 120 as amended are restored up to June 30,
1985.chanrobles virtual law library
2. Provided, That this restoration does not apply to the following:
a. importations of fuel oil (crude equivalent) and coal as per FIRB Resolutions No. 1-84;
b. commercially-funded importations; and
c. interest income derived from any investment source.chanrobles virtual law library
3. Provided further, That in the case of importations funded by international financing

agreements, the NPC is hereby required to furnish the FIRB on a periodic basis the
particulars of items received or to be received through such arrangements, for purposes of
tax and duty exemption privileges.
(SGD.) ALFREDO PIO DE RODA, JR.chanrobles virtual law library
Acting Minister of Finance
Acting Chairman, FIRB
SUBJECT: National Power Corporation (NPC)"
68 BE IT RESOLVED, AS IT IS HEREBY RESOLVED: That
1. Effective July 1, 1985, the tax and duty exemption privileges enjoyed by the National
Power Corporation (NPC) under Commonwealth Act No. 120, as amended, are
restored; Provided, That importations of fuel oil (crude oil equivalent) and coal of the herein
grantee shall be subject to the basic and additional imports duties; Provided, further, That
the following shall remain fully taxable:
a. Commercially funded importations; and
b. Interest income derived by said grantee from bank deposits and yield or any other
monetary benefits from deposits substitutes, trust funds and other similar
arrangements.chanrobles virtual law library
2. The NPC as a government corporation is exempt from the real property tax on land and
improvements owned by it provided that the beneficial use of the property is not transferred
to another pursuant to the provisions of Sec. 10(a) of the Real Property Tax Code, as
amended.
(SGD.) CESAR E.A. VIRATA

Minister of Finance
Chairman, FIRB
SUBJECT: National Power Corporation."
69 Note should be taken that FIRB Resolution No. 10-85 covered the period from June 11,
1984 up to June 30, 1985 while FIRB Resolution No. 1-86 covered the period from July 1,
1985 up to March 10, 1987.chanrobles virtual law library
70 "Whenever in the judgment of the President, there exists a grave emergency or a threat
or imminence thereof, or whenever the interim Batasang Pambansa or the regular National
Assembly fails or is unable to act adequately on any matter for any reason that in his
judgment requires immediate action, he may in order to meet the exigency, issued the
necessary decrees, orders, or letters of instruction, which shall form part of the law of the
land."
72 "The Philippines and International Monetary Fund (IMF) have failed in talks here to
finalize an agreement on a $630 million standby credit badly needed by the Philippines,
informed sources close to the talks told Reuters yesterday.chanrobles virtual law library
xxx xxx xxx
"Talks on the credit began in October when the Philippines declared a moratorium on
repayments on its $26-billion foreign debt and asked creditor banks to reschedule some of
the debt." (Times Journal, June 21, 1984)
73 The Philippines will not default in the payment of its $25-billion foreign debt because it
could be branded as an outlaw in the international community, President Marcos said
yesterday." (Times Journal, June 18, 1984)
74 WASHINGTON, D.C. - The Philippines and a consortium of international banks have

signed in New York an agreement restructuring $2.9 billion in maturing short and medium
terms loans of the Central Bank and six other government corporations.chanrobles virtual
law library
"The amount restructed represents 90 percent of the public sector loans to be restructured
with international banks.chanrobles virtual law library
Included in the restructuring were the loans of the Philippine National Bank (PNB), National
Investment Development Corp. (NIDC), Development Bank of the Philippines (DBP),
Philippine National Oil Corp. (PNOC), National Power Corporation (NAPOCOR) and Philippine
Airlines (PAL)." (Express, January 12, 1986)
75 "The $2.1-billion BNPP, nestled on a plateau hugging the South China Sea, is planned to
generate 620 megawatts for the Luzon grid. The 'people power' revolt in 1986, however,
toppled the plant's proponent, then President Marcos, from power.chanrobles virtual law
library
"So many technical defects were said to have been discovered in the plant, and this "most
prodigious" project of the government-owned National Power Corp. was mothballed and has
remained so up to the present. It is a "white elephant" and the country continues to pay a
huge interests to its builder, Westinghouse, every month." (Manila Bulletin, July 15, 1992)
76 President Marcos issued for decrees yesterday, among them Decree No. 1934 (should be
1939 amending Rep. Act No. 4850 (should be Rep. Act No. 4850 (should be Rep. Act. No.
4860) to allow an increase in the ceiling on direct foreign borrowings of the government
from $5 billion to $10 billion.chanrobles virtual law library
"It would allow him to exclude specific categories of external debt from the debt service
limitation whenever necessary in connection with the general rescheduling or refinancing of
foreign credits.chanrobles virtual law library
"The decree also increases the ceiling on the government's guarantee from the present $2.5
billion to $7.5 billion.chanrobles virtual law library
"It authorizes the government's guarantee of external debts of government

corporations.chanrobles virtual law library
"He also issued:
1. Decree No. 1932 (should be No. 1937) amending the Central Bank Charter to allow it
greater flexibility in administering the monetary, banking and credit system and to give a
policy direction in the areas of money, banking and credit.chanrobles virtual law library
2. Decree No 1933 (should be no. 1938) clothing the government with expanded authority
to guarantee foreign loans of the Central Bank.chanrobles virtual law library
3. Decree no. 1936 (should be No. 1939) authorizing the Credit Information Bureau, to
secure credit information on individuals and institutions in the possession of government
and private entities.chanrobles virtual law library
(Manila Bulletin, June 29, 1984)
77 "Section 17(4), Article VIII, 1973 Constitution.chanrobles virtual law library
78 "BE IT RESOLVED, AS IT IS HEREBY RESOLVED, That the tax and duty exemption
privileges of the National Power Corporation, including those pertaining to its domestic
purchases of petroleum and petroleum products, granted under the terms and conditions of
Commonwealth Act No. 120 (Creating the National Power Corporation, defining its powers,
objectives and functions, and for other purposes), as amended, are restored effective March
10, 1987, subject to the following conditions:
1. The restoration of the tax and duty exemption privileges does not apply to the following:
1.1. Importations of fuel oil (crude equivalent) and coal;
1.2. Commercially-funded importations (i.e., importations which include but are not limited
to those financed by the NPC's own internal funds, domestic borrowings from any source
whatsoever, borrowings from foreign-based private financial institutions, etc.); and
1.3. Interest income derived from any source.chanrobles virtual law library
2. The NPC shall submit to the FIRB a report of its expansion of relieved program, including
details of disposition of relieved tax and duty payments for such expansion on an annual
basis or as often as the FIRB may require it to do so. This report shall be in addition to the
usual FIRB reporting requirements on incentive availment.
(SGD.) ALFREDO PIO DE RODA, JR.chanrobles virtual law library
Acting Secretary of Finance
Chairman, FIRB"
79 Rollo, p. 233; Annex "M" of the Petition.chanrobles virtual law library
81 In order that the review of the decision of a subordinate officer might not turn out to be
a farce, the reviewing officer must perforce be other than the officer whose decision is
under review; otherwise, there could be no different view or there would be no real view of
the case. The decision of the reviewing officer would be biased view; inevitably, it would be
the same view since being human, he would not admit that he was mistaken in his first view
of the case." (Ibid., p. 267)
83 "Due process of law means fundamental fairness It is not fair to Doctor Anzaldo that
Presidential Executive Assistant Clave should decide whether his own recommendation as
Chairman of the Civil Service Commission, as to who between Doctor Anzaldo and Doctor
Venzon should be appointed Science Research Supervisor II, should be adopted by the
President of the Philippines." (Ibid. p. 357).chanrobles virtual law library
84 "A Fiscal Incentive Review Board is hereby created for the purpose of determining what
subsidies and tax exemptions should be modified, withdrawn, revoked and suspended,
which shall be composed of the following officials:
Chairman - Secretary of Finance
Members - Secretary of Industry
- Director General of the National
Economic and Development Authority
- Commissioner of Internal Revenue
- Commissioner of Customs
"The Board may recommend to the President of the Philippines and for reasons of
compatibility with the declared economic policy, the withdrawal, modification revocation or
suspension of the enforceability of any of the above-cited statutory or tax exemption grants,
except those granted by the Constitution. To attain its objectives, the Board may require
the assistance of any appropriate government agency or entity. The Board shall meet once
a month, or oftener at the call of Secretary of Finance." (Sec. 2, Pres. Dec. No. 776)
85 WITHDRAWING ALL TAX AND DUTY INCENTIVES, SUBJECT TO CERTAIN EXCEPTIONS,

EXPANDING THE POWERS OF THE FISCAL INCENTIVES REVIEW BOARD AND FOR OTHER
PURPOSES."
86 In the discharge of its authority hereunder the Fiscal Incentives Review Board shall take
into account or any of the following considerations:
a) the effect on relative price levels;
b) relative contribution of the beneficiary to the revenue generation effort;
c) nature of the activity the beneficiary is engaged; and
d) in general, the greater national interest to be served."
88 "WHEREAS, pursuant to Proclamation No. 1081, dated September 21, 1972, martial law
is in effect throughout the land;
"WHEREAS, in order to extend further assistance to the Veterans of the Philippines in World
War II, and their windows and orphans, as well as to the members of the Armed Forces of
the Philippines (who are now carrying the greater part of the burden of suppressing the
activities of groups of men actively engaged in a criminal conspiracy to seize political and
state powers in the Philippines and of eradicating lawlessness, anarchy, disorder and
wanton destruction of lives and property) and their dependents, I ordered the Philippine
Veterans Bank to set aside the sum of five million pesos (P5,000,000.00) in Letter of
Instruction No. 31, October 23, 1972, as amended, for the operation and maintenance of
commissary and PX facilities for the aforementioned veterans, their widows and orphans,
and the members of the Armed Forces of the Philippines and their dependents;
"WHEREAS, to better realize the objectives of the aforementioned Leter Instructions and in
order to render fuller meaning to said objectives, it is necessary that certain commodities
which are to be sold by the commissary from local producers, manufacturers or suppliers be
free of all taxes, duties and/or charges imposed by the Government;
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the

powers in me vested by the Constitution as Commander-in-Chief of all the Armed Forces of
the Philippines, and pursuant to the Letter of Instruction cited above, do hereby promulgate
and decree as part of the law of the land that all purchases from local sources,
manufacturers, suppliers and producers of commodities or items decided by the AFP
Exchange and Commissary Service to be sold to persons entitled to commissary and PX
privileges under Letter of Instruction No. 31, dated October 23, 1972, as amended, shall be
free of all taxes, duties and other charges prescribed for similar commodities or items under
existing revenue and other laws and regulations.chanrobles virtual law library
The Chief of Staff, AFP, with approval of December, in the year of Our Lord, nineteen
hundred and seventy-two." (Emphasis Supplied)
89 Footnote No. 15 Philippine Acetylene Co., Inc. vs. Commissioner of Internal Revenue, 20
SCRA 1056, at 1064: "In the long run a sales tax is probably shifted to the consumer, but
during the period when supply is being adjusted to changes in demand it must be in part
absorbed. In practice the business man will treat the levy as an added cost of operation and
distribute it over his sales as he would any other cost, increasing by more than the amount
of tax prices of goods demand for which will be least affected and leaving other prices
unchanged." [47 Harv. Ld. Rev. 860, 869 (1934)].chanrobles virtual law library
90 Opinion No. 106, S'54.chanrobles virtual law library
91 Rollo, p. 212; Petition, Annex "F".chanrobles virtual law library
92 Rollo, p. 124 Petition, Annex "D" of Annex "A".chanrobles virtual law library
93 Rollo, p. 156; Petition, Annex "N-1" of Annex "A".chanrobles virtual law library
94 Rollo, p. 128; Petition, Annex "G" of Annex "A".chanrobles virtual law library
95 Ibid.chanrobles virtual law library
97 Rollo, p. 213, Petition, Annex "G".
150 Phil. 940
REYES, J.B.L., J.:

These are appeals from the decision of the Court of Tax Appeals in CTA Cases Nos. 1337 and 1551, denying
the claim of Davao Light & Power Co., Inc., for refund of the amount paid by said company as customs
duties, special import taxes, compensating taxes and wharfage fees on the importations of electrical
supplies and materials for installation and use at its power plant.
The Davao Light & Power Co., Inc., hereafter referred to as Davao Light, is the grantee of a legislative
franchise to install, operate and maintain an electric light, heat and power plant in the city (then
Municipality) of Davao, for a period of 50 years. On two different occasions in 1962, it imported electrical
supplies, materials and equipment for installation in its power plant. The importations arrived in the port
of Cebu City, on which the Collector of Customs imposed, and Davao Light paid under protest, customs
duties and taxes in the total amount of P9,928.00. As the Collector of Customs later ruled unfavorably on
the protests (Nos. 267, 268, 269 and 278) and denied its claim for refund of the taxes and duties paid on
the imported articles, Davao Light appealed to the Commissioner of Customs. And when said official
sustained the action of the Collector, Davao Light went to the Court of Tax Appeals, maintaining its claim
to exemption from the taxes and duties imposable on the aforementioned importations.
In the Court of Tax Appeals, the parties entered into a stipulation of facts, the pertinent provisions of
which read as follows:
"6. - That the petitioner (Davao Light) is a grantee of a legislative franchise under Philippine Legislature
Act No. 3760, * * *;
"7. - That the petitioner was granted by the Public Service Commission its Certificate of Public
Convenience and Necessity in 1931 and by virtue of said franchise has established and has been
maintaining and operating a power plant generating electric light, heat and power and distributing the
same for sale within the municipality (now City) of Davao;
"8. - That the National Power Corporation was created by virtue of Commonwealth Act. No. 120, and
under Section 2, par. (g) it was empowered and granted authority:
'To construct, operate and maintain power plants, auxiliary plants, dams, reservoirs, pipes, mains,
transmission lines, power stations and substations and other works, for the purpose of developing
hydraulic power from any river, creek, lake, spring and waterfall in the Philippines and supplying such
power to the inhabitants thereof; to acquire, construct, install, maintain and operate and improve gas, oil
or steam engines and/or other prime movers, generators and other machinery in plants and/or auxiliary
plants for the production of electric power; to establish, develop, operate and maintain and administer
power and lighting systems for the use of the Government and the general public; to sell electric power
and to fix the rates and provide for the collection of the charges for any service rendered: Provided, that
the rates of charges shall not be subject to revision by the Public Service Commission.'
"9. - That by virtue of this authority given the National Power Corporation, it established and constructed
a power plant, power stations and transmission lines in Davao City, for the purpose of generating electric
light, heat and power for the inhabitants of Davao City and its surrounding areas and that it is presently
operating and maintaining said power plant, power station and transmission lines and selling electric
power, heat and light in the City of Davao;
"10. - That Section 17 of (pre-Commonwealth) Act No. 3636 (Standard Electric Power & Light Franchises
Law) provides:
'In the event of any competing individual, association of persons or corporation receiving either a
franchise or permission from the Government of the Philippine Islands, or from any province, city or
municipality thereof, to conduct a similar business in all or any substantial portion of the territory covered
by this franchise to that of the grantee, in which franchise or permission there shall be any term or terms
more favorable than those herein granted or tending to place the herein grantee at any disadvantage, then
such term or terms shall ipso facto become a part of the terms hereof and shall operate equally in favor of
the grantee as in the case of said competing individual association of persons or corporations.'
*** ***
"12. - That under Section 2 of Republic Act No. 358, as amended by Republic Act No. 937, it is provided
that '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 Republic
of the Philippines, its provinces, cities and municipalities.'"
It was therein petitioner's contention that pursuant to Section 17 of Act 3636, the provision of Republic
Act 987 granting tax exemption privileges to the National Power Corporation ipso facto became part of its
franchise; hence, its claim to exemption from taxes and customs duties on the importations in question.
In its decision of 15 December 1967, the Court of Tax Appeals affirmed the ruling of the Customs
Commissioner, the Court holding that the tax exemption privileges granted to the National Power
Corporation were intended to benefit only said government corporation and did not extend to other
bodies or entities. Davao Light thus brought the present petition for review in this Court, raising the same
issue of the correctness of the imposition of taxes and customs duties on its importations of electrical
supplies and materials for use in its electric plant.
Petitioner in this instance reiterates the contention that its legislative franchise to construct, maintain and
operate an electric light, heat, and power system (granted by Act 3760) was specifically made subject to
Act 3636, which Act, in its Section 17, provides that any favorable terms granted to any "competing
individual, association of persons or corporation" shall ipso facto become part of a franchise earlier
issued. As the National Power Corporation (NPC) is actually operating a power plant, power stations and
transmission lines in Davao City and selling electric power, heat and light in said locality, and said
corporation is enjoying exemption from all taxes, duties, fees, imposts and charges collectible by the
government, it is argued that such tax exemption benefits ipso facto became part of its franchise and are
not available to petitioner.
There is no merit in petitioner's contention. Firstly, the aforecited provision of Section 17 of Act 3636
makes mention of franchise or permit issued to "competing" individuals, associations or corporations. In
short, by express provision of law favorable terms contained in a subsequent franchise issued to an
individual, association, etc. shall automatically be considered incorporated in the franchise or permit
earlier issued to another individual, association, etc. engaged in the same business. The idea is to place
both competing groups or entities on equal footing and not to give one an advantage over the other. This
principle of fair play, which is the basic idea behind the provision, does not find operation in the present
case.
It is undeniable that petitioner's purpose in securing a franchise to establish and operate an electric plant
and power stations was to engage in a business or profit-making venture. The NPC, on the other hand,
was specifically created to undertake the development of hydraulic power throughout the country and the
production of power from other sources, for use of the government and the general public. [1] As
envisioned by the law creating it, the activity to be pursued by the NPC can hardly be motivated by profit
or income.
In operating and maintaining a power plant, power stations and transmission lines in Davao City, as duly
authorized in its charter, the NPC can not be considered as posing competition to petitioner's business. In
fact, there is evidence on record that the NPC does not sell electric power directly to the general public;
instead, it did sell power to petitioner for resale to the latter's customers.[2] In other words, the NPC is
even the source of petitioner's merchandise; it is aiding petitioner in its business operations, not
competing with it.
Nor would the fact that the NPC supplies electric power to the National Development Company (NDC)
plant in Davao justify the claim that the NPC is a competitor to petitioner's business, because Section 10
of Commonwealth Act 120 (NPC charter) made it NPC's duty to supply power to the NDC.
"Sec. 10. At any time that the Board certifies that the Corporation is able to furnish electric power for
lighting and other purposes to any office, shop, or establishment operated and/or owned or controlled by
the National Government or by any city, province, municipality or other political subdivision of the
Commonwealth of the Philippines, the National Government and the government of said city, province,
municipality or other political subdivision shall be compelled to secure from the Corporation as soon as
practicable such electric power as it may need for lighting and the operation of its offices, shops or
establishment or for any work undertaken by it.
The provisions of this section shall also apply to firms or business owned or controlled by the National
Government or by the government of any city, province, municipality or other political subdivision."
Be that as it may, such an isolated case of sale of electric power to one government-owned plant would not
be enough to classify the NPC as a "competing" concern to petitioner's enterprise, which must be assumed
to be catering to the general public to which the NPC has no dealing.
Secondly, petitioner can not rely on the provisions of Republic Act 358, as amended by Republic Act
987[3] , to support its claim for tax exemption.
Section 1 of Republic Act 358, approved on 4 June 1949, amended Section 2 (k) of Commonwealth Act
120, which authorized the NPC to "contract indebtedness and issue bonds subject to the approval of the
President of the Philippines, upon recommendation of the Secretary of Finance", in an amount not to
exceed one hundred seventy million five hundred pesos. Then in its Section 2, the same law provided:
"SEC. 2. To facilitate payment of its indebtedness, the National Power Corporation shall be exempt from
all taxes, duties, fees, imposts, charges, and restrictions of the Republic of the Philippines, its provinces,
cities, and municipalities." (Italics supplied)
On the same day, 4 June 1949, Republic Act 357 was approved, authorizing the President of the
Philippines to negotiate and contract loans from time to time from the International Bank for
Reconstruction and Development, on behalf of the NPC, and to guarantee, absolutely and
unconditionally, as primary obligor and not merely as surety, the payment of loans therefore
contracted.[4] The provisions of Section 2 of Republic Act 358 granting tax exemptions to the NPC, taken
in the light of the existing legislation affecting the NPC, notably Republic Act 357, must be construed as
intended to benefit only the NPC, the lawmakers expecting (as so unequivocally expressed in the law) that
by relieving said corporation of tax obligations, the NPC would be enabled to pay easily its indebtedness
or whatever indebtedness it is certain to incur. In granting such tax exemption, the government actually
waived its right to collect taxes from the NPC in order to facilitate the liquidation by said corporation of its
liabilities, and the consequential release by the government itself from its obligation (as principal obligor)
in the transactions entered into by the President on behalf of the NPC. Such condition, peculiar only to
the NPC, cannot be said to exist in petitioner's case; hence, the absolute lack of basis for awarding of equal
privileges (granted to the NPC) to said petitioner.
Similarly, petitioner can not lay claim to the enjoyment of the tax exemption benefits given to NPC
because said corporation happened to be operating a power plant in the same locality where petitioner has
a franchise. The legal principle on the matter is firmly established and well-observed: exemption from
taxation is never presumed,[5] for tax exemption to be recognized, the grant must be clear and expressed;
it cannot be made to rest on vague implications.[6] The possession by petitioner of a permit to operate an
electric plant in Davao City does not entitle it to the same tax exemption privileges enjoyed by another
operator without an express provision of the law to that effect.
For the foregoing considerations, the decision of the Court of Tax Appeals is hereby affirmed, with costs
against the petitioner.
Concepcion, C.J., Makalintal, Zaldivar, Castro, Fernando, Teehankee, Barredo, Villamor, and Makasiar
JJ., concur.
G.R. No. 72477 October 16, 1990
NATIONAL POWER CORPORATION, petitioner,

vs.
HON. PRESIDING JUDGE, REGIONAL TRIAL COURT, 10TH JUDICIAL REGION BRANCH XXV, CAGAYAN DE ORO CITY, PROVINCE OF MISAMIS
ORIENTAL, MUNICIPALITY OF JASAAN, MISAMIS ORIENTAL AND BARANGAY APLAYA, JASAAN, MISAMIS ORIENTAL, respondents.
Pantaleon Z. Salcedo for respondent Barangay Aplaya.
The Provincial Attorney for respondent Misamis Oriental and Municipality of Jasaan.
FERNAN, C.J.:
In this Special Civil Action for Certiorari, petitioner National Power Corporation (NAPOCOR for brevity) questions the jurisdiction of the
Regional Trial Court of Cagayan de Oro City, Branch XXV to hear Civil Case No. 9901 filed by respondents Province of Misamis Oriental and
Municipality of Jasaan for the collection of real property tax and special education fund tax from petitioner covering the years 1978 to 1984.
The antecedent facts are as follows:
On October 10, 1984, the Province of Misamis Oriental filed a complaint with the Regional Trial Court of Cagayan de Oro City, Branch XXV against NAPOCOR
1
for the collection of real property tax and special education fund tax in the amounts of P11,105,008.10 and P11,104,658.10, respectively, covering the period 1978
to 1984. Petitioner NAPOCOR then defendant therein, filed a motion to dismiss dated January 12, 1985 on the grounds that the court has no jurisdiction over the
2
action or suit and that it is not the proper forum for the adjudication of the case. In support of this motion NAPOCOR cited Presidential Decree No. 242 dated July
9, 1973 which provides that disputes between agencies of the government including govemment-owned or controlled corporations shall be administratively settled
or adjudicated by the Secretary of Justice.
The court through Judge Pablito C. Pielago issued an order dated January 28, 1985 denying the motion to dismiss. NAPOCOR filed a supplemental motion to
3
dismiss on February 22, 1985 citing a resolution of the Fiscal Incentive Review Board, No. 10-85 effective January 11, 1984, restoring the tax and duty exemption
4
privileges of petitioner.
On March 27, 1985, NAPOCOR filed its answer to the complaint with counterclaim. Treating the same as a second motion to dismiss and finding the affirmative
defenses therein stated to be unmeritorious, the court a quo issued an order on June 27, 1985, denying the second motion to dismiss and requiring both parties to
appear before the court for the purpose of submitting a stipulation of facts.
On July 23, 1985, Barangay Aplaya, Municipality of Jasaan, Misamis Oriental filed a complaint in intervention contending that non-payment by NAPOCOR of real
5
property taxes would adversely affect its interest since under the law, ten percent (10%) of the real property tax collected on properties within its jurisdiction shall
accrue to the general fund of the barangay. Thereafter, the case was set for trial pursuant to the court's order dated August 20, 1985. 6
On October 30, 1985, petitioner NAPOCOR filed before this Court the present special civil action for certiorari setting forth the following issues, to wit:
7
1) Respondent Court acted without or in excess of jurisdiction and with grave abuse of discretion when it issued the orders dated January
28, 1985, June 27, 1985 and August 20, 1985, denying petitioner's motions to have Civil Case No. 9901 dismissed on the grounds of lack
of jurisdiction and/or improper venue.
2) Petitioner is exempt from payment of real property taxes.
Relied upon by NAPOCOR in assailing the jurisdiction of the lower court and/or the venue of the action are Sections 2 and 3 of Presidential Decree No. 242,
entitled "PRESCRIBING THE PROCEDURE FOR ADMINISTRATIVE SETTLEMENT OR ADJUDICATION OF DISPUTES, CLAIMS AND CONTROVERSIES
BETWEEN OR AMONG GOVERNMENT OFFICES, AGENCIES AND INSTRUMENTALITIES, INCLUDING GOVERNMENT-OWNED OR CONTROLLED
CORPORATIONS, AND FOR OTHER PURPOSES" dated on July 9, 1973. Sections 2 and 3 of this Decree provide:
Section 2. In all cases involving only questions of law, the same shall be submitted to and settled or adjudicated by the Secretary of
Justice, as Attorney General and ex officio legal adviser of all government-owned or controlled corporations and entities, in consonance
with section 83 of the Revised Administrative Code. His ruling or determination of the question in each case shall be conclusive and
binding upon all the parties concerned.
Section 3. Cases involving mixed questions of law and of fact or only factual issues shall be submitted to and settled or adjudicated by:
(a) The Solicitor General, with respect to disputes or claims or controversies between or among the departments, bureaus, offices and
other agencies of the National Government;
(b) The Govermnent Corporate Counsel, with respect to disputes or claims or controversies between or among the government-owned or
controlled corporations or entities being served by the office of the Government Corporate Counsel and
(c) The Secretary of Justice, with respect to all other disputes or claims or controversies which do not fall under the categories mentioned
in paragraphs (a) and (b). (Emphasis supplied)
In upholding the lower court's jurisdiction, respondent municipal corporations, on the other hand, rely on Presidential Decree No. 464, entitled "THE REAL
PROPERTY TAX CODE" enacted on July 1, 1974, specifically Section 82 thereof which provides:
Section 82. Collection of real property tax through the courts. — The delinquent real property tax shall constitute a lawful indebtedness of
the taxpayer to the province or city and collection of the tax may be enforced by civil action in any court of competent jurisdiction. The civil
action shall be filed by the Provincial or City Fiscal within fifteen days after receipt of the statement of delinquency certified to by the
provincial or city treasurer. This remedy shall be in addition to all other remedies provided by law.
It is indeed desirable and beneficial to the Judiciary's ongoing program of decongesting court dockets that intra-governmental disputes such as this be settled
administratively. Unfortunately, our consideration of the legal provisions involved leads us to a different conclusion. In reconciling these two conflicting provisions of
P.D. 242 and P.D. 464 on the matter of jurisdiction, we are guided by the basic rules on statutory construction.
An examination of these two decrees shows that P.D. 242 is a general law which deals with administrative settlement or adjudication of disputes, claims and
controversies between or among government offices, agencies and instrumentalities, including government-owned or controlled corporations. The coverage is
broad and sweeping, encompassing all disputes, claims and controversies.
P.D. 464 on the other hand, governs the appraisal and assessment of real property for purposes of taxation by provinces, cities and municipalities, as wen as the
levy, collection and administration of real property tax. It is a special law which deals specifically with real property taxes.
It is a basic tenet in statutory construction that between a general law and a special law, the special law prevails. GENERALIA SPECIALIBUS NON DEROGANT. 8
Where a later special law on a particular subject is repugnant to, or inconsistent with, a prior general law on the same subject, a partial repeal of the latter win be
implied to the extent of the repugnancy or an exception grafted upon the general law.
A special law must be intended to constitute an exception to the general law in the absence of special circumstances forcing a contrary conclusion. 9
The conflict in the provisions on jurisdiction between P.D. 242 and P.D. 464 should be resolved in favor of the latter law, since it is a special law and of later
enactment. P.D. 242 must yield to P.D. 464 on the matter of who or which tribunal or agency has jurisdiction over the enforcement and collection of real property
taxes. Therefore, respondent court has jurisdiction to hear and decide Civil Case No. 9901.
On the question of whether or not NAPOCOR is liable to pay real property taxes and special education fund taxes for the years 1978 to 1984, we rule in the
affirmative.
Presidential Decree No. 1177, entitled "REVISING THE BUDGET PROCESS IN ORDER TO INSTITUTIONALIZE THE BUDGETARY INNOVATIONS OF THE
NEW SOCIETY" was passed on July 30, 1977. Section 23 thereof provides:
Section 23. Tax and Duty Exemptions. — All units of govemment, including government-owned or controlled corporations, shall pay
income taxes, customs duties and other taxes and fees as are imposed under revenue laws; provided, that organizations otherwise
exempted by law from the payment of such taxes/duties may ask for a subsidy from the General Fund in the exact amount of taxes/duties
due; provided, further, that a procedure shag be established by the Secretary of Finance and the Commissioner of the Budget, whereby
such subsidies shall automatically be considered as both revenue and expenditure of the General Fund. (Emphasis supplied)
Petitioner alleges that what has been withdrawn is its exemption from taxes, duties, and fees which are payable to the national government while its exemption
from taxes, duties and fees payable to government branches, agencies and instrumentalities remains unaffected. Considering that real property taxes are payable
to the local government, NAPOCOR maintains that it is exempt therefrom.
We find the above argument untenable. It reads into the law a distinction that is not there. It is contrary to the clear intent of the law to withdraw from all units of
government, including government-owned or controlled corporations their exemptions from all kinds of taxes. Had it been otherwise, then the law would have said
so. Not having distinguished as to the kinds of tax exemptions withdrawn, the plain meaning is that all tax exemptions are covered. There the law does not
distinguish, neither must we.
Moreover, Presidential Decree No. 1931 entitled "DIRECTING THE RATIONALIZATION OF DUTY AND TAX EXEMPTION PRIVILEGES GRANTED TO
GOVERNMENT-OWNED OR CONTROLLED CORPORATIONS AND ALL OTHER UNITS OF GOVERNMENT" which was passed on June 11, 1984,
categorically states:
WHEREAS, Presidential Decree No. 1177 has already expressly repealed the grunt of tax privileges to any government-owned or
controlled corporation and all other units of government. (Emphasis supplied )
Thus, any dubiety on NAPOCOR'S liability to pay taxes, duties and fees should be considered unequivocably resolved by the above provision.
In the case of National Power Corporation vs. The Province of Albay, et. al., herein petitioner was held liable for real property taxes to the provincial government
10
of Albay for the period June 11, 1984 to March 10, 1987, when it claims to have been enjoying tax exemptions under Resolutions Nos. 10-85, 1-86 and 17-87 of
the Fiscal Incentives Review Board (FIRB). It must be noted that Resolution 10-85 was the same resolution cited by petitioner in its supplemental motion to
dismiss inCivil Case No. 9901. If the attempt (found ineffective for lack of authority in the above-cited case of NPC vs. The Province of Albay) to restore
11
petitioner's tax exemptions began only in 1985 with the issuance of FIRB Resolution No. 10-85, it stands to reason that prior thereto, i.e., from 1977 when P.D.
1177 was promulgated up to 1984, petitioner did not enjoy any tax privilege as would exempt it from the payment of the taxes under consideration.
In the same case of NPC vs. The Province of Albay, this Court had occasion to state:
12
Actually, the State has no reason to decry the taxation of NAPOCOR's properties, as and by way of real property taxes. Real property
taxes, after all, form part and parcel of the financing apparatus of the Government in development and nation-building, particularly in the
local government level.
xxx xxx xxx
To all intents and purposes, real property taxes are funds taken by the State with one hand and given to the other. In no measure can the
Government be said to have lost anything.
The proceeds of the real property tax are divided among the province, city or municipality where the property subject to the tax is situated and shall be applied by
the respective local government unit for its own use and benefit. Even the barrio where the property is situated shares in the real property tax collections. Likewise,
the entire proceeds of the additional one per cent (1%) real property tax levied for the Special Education Fund created under R.A. 5447, are divided among the
province, city and municipalities where the property is situated.
WHEREFORE, the petition is DISMISSED. Petitioner having been found liable for the taxes being collected in Civil Case No. 9901, the respondent court is hereby
directed to proceed with deliberate dispatch in hearing the case for the purpose of determining the exact liability of petitioner. No Costs.
SO ORDERED.
Gutierrez, Jr., Bidin and Cortes, JJ., concur.

Atlas Fertilizer Vs CIR

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G.R. No.

L-26686 & L-26698 October 30, 1980

ATLAS FERTILIZER CORPORATION, petitioner,

COMMISSIONER OF INTERNAL REVENUE, petitioner,

Petitioner Atlas Fertilizer Corporation was formerly a department of Atlas Mining z

THE COURT OF TAX APPEALS ERRED IN HOLDING THAT IT IS INCUMBENT UPON

THE COURT OF TAX APPEALS ERRED IN ORDERING RESPONDENT TO GRANT

THE COURT OF TAX APPEALS ERRED IN DENYING THE AWARD OF INTEREST TO

THE COURT OF TAX APPEALS ERRED IN CONCLUDING INCLUDING THAT

THE COURT OF TAX APPEALS ERRED IN CONCLUDING INCLUDING THAT THE

THE COURT OF TAX APPEALS ERRED IN APPLYING THE EXISTING DOCTRINE

THE COURT OF TAX APPEALS ERRED IN NOT APPLYING THE APPLICABLE

Appeal by the Commissioner

COMMISSIONER OF INTERNAL REVENUE, petitioner,

The full text of Republic Act No. 1435 states:

(b) Lubricating oils, per liter of volume capacity, seven centavos;

Section 6. This Act shall take effect upon its approval.

Approved, June 14, 1956.5

Gutierrez, Jr., Feliciano, Bidin and Davide, Jr., JJ., concur.

Siguion Reyna, Montecillo & Ongsiako for Caltex.

xxx xxx xxxchanrobles virtual law library

xxx xxx xxxchanrobles virtual law library

On May 27, 1976 P.D. No. 938 was issued

xxx xxx xxxchanrobles virtual law library

xxx xxx xxxchanrobles virtual law library

WHEREAS, importations by certain government agencies, including government-owned or

NOW THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the

Sec. 1. All importations of any government agency, including government-owned or

xxx xxx xxxchanrobles virtual law library

xxx xxx xxxchanrobles virtual law library

xxx xxx xxx

On July 30, 1977, P.D. 1177 was issued as it was

All units of government, including government-owned or controlled corporations, shall pay

The law also declared that -

and since there was a

. . . need for government-owned or controlled corporations and all other units of

it was decreed that:

1) The effect on the relative price levels;chanrobles virtual law library

2) The relative contribution of the corporation to the revenue generation effort;chanrobles

4) In general the greater national interest to be served.

xxx xxx xxxchanrobles virtual law library

xxx xxx xxxchanrobles virtual law library

xxx xxx xxx

Since it was decided that:

It was thus ordered that:

a) those covered by the non-impairment clause of the Constitution;chanrobles virtual law

b) those conferred by effective internation agreement to which the Government of the

c) those enjoyed by enterprises registered with:

(i) the Board of Investment pursuant to Presidential Decree No. 1789, as

(iii) the Philippine Veterans Investment Development Corporation Industrial Authority

e) those conferred under the four basic codes namely:

a) restore tax and/or duty exemptions withdrawn hereunder in whole or in part;chanrobles

a) the effect on relative price levels;chanrobles virtual law library

b) relative contribution of the beneficiary to the revenue generation effort;chanrobles virtual

d) in general, the greater national interest to be served.

xxx xxx xxxchanrobles virtual law library

Official Gasetter, 51which 15th day was March 10, 1987.

Classifications or kinds of Taxes:

His point is not well-taken.chanroblesvirtualawlibrarychanrobles virtual law library

[T]he Corporation is hereby declared exempt:

xxx xxx xxxchanrobles virtual law library

xxx xxx xxxchanrobles virtual law library

Petitioner reminds Us that: