Angara, Abello, Concepcion & Cruz For Respondent Pilipinas Shell Petroleum Corporation. Siguion Reyna, Montecillo & Ongsiako For Caltex

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. . . . . 5
chanrobles 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. 11 chanrobles 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. 13 chanrobles 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. 15 chanrobles 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. 22 chanrobles 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. 23 chanrobles 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. . . . 24
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. 25 chanrobles 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; and chanrobles 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 xxx chanrobles 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. 28 chanrobles 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
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. 35 chanrobles 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; 38 chanrobles 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:
from its capital investment as well as excess revenues from its
operation, for expansion. To enable the Corporation to pay to its
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; and chanrobles 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; and chanrobles 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. 43 chanrobles virtual law library
In line with such policy, the law decreed that chanrobles 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. 45 chanrobles 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; 46 chanrobles 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. 47 chanrobles 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;

virtual law library
chanrobles
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:
library
chanrobles virtual law
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;
c) nature of the activity the beneficiary is engaged; and chanrobles 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 50in the 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 tax chanrobles virtual law library
b. Indirect Tax - that where the tax is imposed upon
goods BEFORE reaching 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.
library
chanroblesvirtualawlibrarychanrobles virtual law
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
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:
from its capital investment as well as excess revenues from its
operation, for expansion. To enable the Corporation to pay its
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. 54 chanrobles 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. 57 chanrobles 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.
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.
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. 69 chanrobles 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'. 71 chanrobles 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. 76 chanrobles 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. 83 chanrobles 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. 84 chanrobles 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. 87 chanrobles 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. 89 chanrobles 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. 195 chanrobles 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:
virtual law library
chanrobles
Par. (b) - For products subject to ad valorem tax only: chanrobles virtual law library
PRODUCT AD VALOREM TAX RATE chanrobles 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. 94 chanrobles 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.
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."
71 Rollo, p. 652.chanrobles virtual law library
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
96 Rollo, p. 12. chanrobles virtual law library

97 Rollo, p. 213, Petition, Annex "G".

Angara, Abello, Concepcion & Cruz For Respondent Pilipinas Shell Petroleum Corporation. Siguion Reyna, Montecillo & Ongsiako For Caltex

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Angara, Abello, Concepcion & Cruz For Respondent Pilipinas Shell Petroleum Corporation. Siguion Reyna, Montecillo & Ongsiako For Caltex

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G.R. No.

88291 June 8, 1993

ERNESTO M. MACEDA, Petitioner, vs. HON. CATALINO

Angara, Abello, Concepcion & Cruz for respondent Pilipinas Shell

Siguion Reyna, Montecillo & Ongsiako for Caltex.

A Chronological review of the relevant NPC laws, specially with

On November 3, 1936, Commonwealth Act No. 120 was enacted

On June 24, 1938, C.A. No. 344 was enacted increasing to

On June 2, 1954, R.A. No. 987 was enacted specifically to withdraw

To facilitate payment of its indebtedness, the National Power

On September 8, 1955, R.A. No. 1397 was enacted directing that

Declaration of Policy. - Congress hereby declares that (1) the

Section 4 of C.A. No. 120, was renumbered as Section 8, and

As to the issuance of bonds by the NPC, Paragraph No. 3 of Section

As to the foreign loans the NPC was authorized to contract,

The loans, credits and indebtedness contracted under this

On November 7, 1972, Presidential Decree No. 40 was issued

The setting up of transmission line grids and the construction of

xxx xxx xxx chanrobles virtual law library

The loans, credits and indebtedness contracted under this

Section 13(a) and 13(d) of R.A. No 6395 were amended to read as

xxx xxx xxx chanrobles virtual law library

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

(I)n view of the accelerated expansion programs for generation and

xxx xxx xxx chanrobles virtual law library

(I)n the application of the tax exemption provisions of the Revised

xxx xxx xxx chanrobles virtual law library

(I)n order to effect the accelerated expansion program and attain

Thus NPC's capital stock was raised to P8,000,000,000.00, 39the

On the other hand, the pertinent tax laws involved in this

WHEREAS, importations by certain government agencies, including

WHEREAS, in order to reduce foreign exchange spending and to

NOW THEREFORE, I, FERDINAND E. MARCOS, President of the

Sec. 1. All importations of any government agency, including

(a) That no such article of local manufacture are available in

xxx xxx xxx chanrobles virtual law library

xxx xxx xxx chanrobles virtual law library

Sec. 6. . . . . Section 13 of Republic Act No. 6395; . . .. and all

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

All units of government, including government-owned or controlled

The law also declared that -

[A]ll laws, decrees, executive orders, rules and regulations or parts

WHEREAS, Presidential Decree No. 1177 has already expressly

and since there was a

. . . need for government-owned or controlled corporations and all

it was decreed that:

Sec. 1. The provisions of special on general law to the contrary

Sec. 2. The President of the Philippines and/or the Minister of

2) The relative contribution of the corporation to the revenue

3) The nature of the activity in which the corporation is engaged in;

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

xxx xxx xxx chanrobles virtual law library

Sec. 5. The provisions of Presidential Decree No. 1177 as well as all

WHEREAS, Presidential Decree Nos. 1931 and 1955 issued on June

xxx xxx xxx chanrobles virtual law library

xxx xxx xxx

Since it was decided that:

[A]ssistance to government and private entities may be better

It was thus ordered that:

Sec. 1. The Provisions of any general or special law to the contrary