Angara, Abello, Concepcion & Cruz For Respondent Pilipinas Shell Petroleum Corporation. Siguion Reyna, Montecillo & Ongsiako For Caltex
Angara, Abello, Concepcion & Cruz For Respondent Pilipinas Shell Petroleum Corporation. 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.
. . . 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 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 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:
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
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:
(a) From the payment of all taxes, duties, fees, imposts, charges
and restrictions to the Republic of the Philippines, its provinces,
cities, municipalities and other government agencies and
instrumentalities including the taxes, duties, fees, imposts and other
charges provided for under the Tariff and Customs Code of the
Philippines, Republic Act Numbered Nineteen Hundred Thirty-Seven,
as amended, and as further amended by Presidential Decree No. 34
dated October 27, 1972, and Presidential Decree No. 69, dated
November 24, 1972, and costs and service fees in any court or
administrative proceedings in which it may be a party;
(d) From all taxes, duties, fees, imposts, and all other charges
imposed directly or indirectly by the Republic of the Philippines, its
provinces, cities, municipalities and other government agencies and
instrumentalities, on all petroleum products used by the Corporation
in the generation, transmission, utilization and sale of electric
power. 33(Emphasis supplied)
On February 26, 1970, P.D. No. 395 was issued removing certain
restrictions in the NPC's sale of electricity to its different
customers. 34No tax exemption provision was amended, deleted or
added. chanroblesvirtualawlibrarychanrobles virtual law library
On July 31, 1975, P.D. No. 758 was issued directing that
P200,000,000.00 would be appropriated annually to cover the
unpaid subscription of the Government in the NPC authorized capital
stock, which amount would be taken from taxes accruing to the
General Funds of the Government, proceeds from loans, issuance of
bonds, treasury bills or notes to be issued by the Secretary of
Finance for this particular purpose. 35 chanrobles virtual law library
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 to its
indebtedness and obligations and in furtherance and effective
implementation of the policy enunciated in Section one of this Act,
the Corporation, including its subsidiaries, is hereby declared
exempt from the payment of all forms of taxes, duties, fees,
imposts as well as costs and service fees including filing fees, appeal
bonds, supersedeas bonds, in any court or administrative
proceedings. 42
II
On January 30, 1976, P.D. No. 882 was issued withdrawing the tax
exemption of NPC with regard to imports as follows:
(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. . . . .
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:
1) The effect on the relative price levels; chanrobles virtual law library
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:
(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
b) revise the scope and coverage of tax and/or duty exemption that
may be restored; chanrobles virtual law library
c) nature of the activity the beneficiary is engaged; and chanrobles virtual law library
III
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
IV
(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
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
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
(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.
(d) From all taxes, duties, fees, imposts, and all other charges
imposed directly or indirectly by the Republic of the Philippines, its
provinces, cities, municipalities and other government agencies and
instrumentalities, on all petroleum products used by the Corporation
in the generation, transmission, utilization and sale of electric
power. (Emphasis supplied)
Then came P.D. No. 938 which amended Sec. 13(a), (b), (c) and (d)
into one very simple paragraph as follows:
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, 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)
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
The tax exemption on foreign loans found in Section 8(b), R.A. No.
6395, reads as follows:
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
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
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
[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:
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 rules that when P.D. No. 1931 basically reenacted in its
Section 1 the first half of Section 23, P.D. No. 1177, on withdrawal
of tax exemption privileges of all GOCC's said Section 1, P.D. No.
1931 was deemed to be a continuation of the first half of Section
23, P.D. No. 1177, although the second half of Section 23, P.D. No.
177, on the subsidy scheme for former tax exempt GOCCs had been
expressly repealed by Section 2 with its institution of the FIRB
recommendation of partial/total restoration of tax exemption
privileges.
chanroblesvirtualawlibrarychanrobles virtual law library
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
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
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
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:
Par. (b) - For products subject to ad valorem tax only: chanrobles 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
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:
SO ORDERED.
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
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
25 Rep Act No. 6395, sec. 8(b). chanrobles virtual law library
26 Rep Act No. 6395, sec. 13. 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
33 Pres. Dec. No. 380, sec. 10. 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
42 Pres. Dec. No. 938, sec. 10. chanrobles virtual law library
44 Pres. Dec. No. 1177, sec. 23. chanrobles virtual law library
45 Pres. Dec. No. 1177, sec. 90. 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
50 Rule V, Rules and Regulations to Implement Exec. Order No. 93. chanrobles virtual law library
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)
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.)
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
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
65 In this case, Judge Magno Pulido of then CFI of Alaminos, Pangasinan, Branch XIII, promulgated a decision on May 17,
1974 in Criminal Case No. 266-A entitled "People vs. Bantolino." Bantolino filed a complaint against the judge charging him
with ignorance of the law because his sentence was "with subsidiary imprisonment." The case dismissed after respondent
judge therein state that he had corrected "with" to "without" but Bantolino's lawyer, Atty. Pulido, refused to return his
(Atty. Pulido) copy for a corrected copy. chanrobles virtual law library
Later, Atty. Pulido filed another charge against Judge Pablo, this time, for falsifying a Court of Appeals' decision (re
Bantolino's appeal with the Com. Act No.) and minutes of court hearings as well as insertions in the record of a false
commitment order. Respondent judge pleaded, among others, res adjudicata. chanrobles virtual law library
The Court made a distinction between the two administrative complaints and concluded that there was no res
adjudicata. On the procedural aspect involved, the Court stated:
"Furthermore, the defense of res adjudicata was not seasonably invoked. chanrobles virtual law library
"It may be noted that respondent Judge initially raised the defense of res adjudicata only in the motion for reconsideration
dated November 8, 1981. Atty. Pulido filed this complaint on April 6, 1978. Respondent failed to set up the defense of res
adjudicata when he filed his comment dated June 19, 1974 in compliance with the first indorsement dated June 3, 1974 of
the then Assistant to the Judicial Consultant, now Deputy Court Administrator Arturo B. Buena. Such failure to interpose
the defense of res adjudicata at the earliest opportunity is fatal as it deemed waived."
66 73 Am Jur 2d 518, sec. 410, citing United States v. Grainger 346 US 235, 97 L Ed 1575, 73 S Ct 1069; State v Bean
159 Me 455, 195 A2d 68; States v. Holland, 202 Or 656, 277 P2d 386. chanrobles virtual law library
For example, State vs. Bean was an action by the State ton recover for goods and services rendered an inmate of a state
hospital.
chanrobles virtual law library
The defendant was committed to the Augusta State Hospital on September 21, 1949 by order of court after he had been
found not guilty of the commission of a crime by reason of insanity. chanrobles virtual law library
The defendant was confined when the prevailing laws were R.S. Ch. 27, Sec. 121 which provided that the person so
committed shall be there supported at his own expense, if he has sufficient means; otherwise at the expense of the State,'
and R.S. Ch. 27 Sec. 139 which provided that "The state may recover from the insane, if able, or from persons legally
liable for his support, the reasonable expenses of his support in either insane hospital.' R.S. Ch. 27, Sec 121, was
expressly repealed by P.L. 1961, Ch. 304, Sec 17 while R.S. Ch. 27, Sec. 139 was expressly repealed by P.L. 1961, Ch.
304, Sec. 26. chanrobles virtual law library
However, by P.L. 1961, Ch. 304, Secs. 4 and 5, the legislature simultaneously enacted amendments which in the case of
Sec. 4 thereof charged the Department of Mental Health and Corrections with the duty of determining the ability of the
patient to pay for his support and of establishing rates and fees therefor, and in the case of sec. 5, it provided that "such
fees charges shall be a debt of the patient or any person legally liable for his support."
It was only on January 20,1960 that the hospital billed the defendant for his stay from September 21, 1949 in the amount
of $6651.72. Plaintiff filed on October 26, 1962 a case to recover said amount. Defendant disclaimed liability by arguing
that the enactment of P.L. 1961, Ch. 304 was to terminate his liability for board and care furnished prior to its
enactment. chanrobles virtual law library
The State of Maine's Supreme Judicial Court rebuffed the defendant and held that:
"[I]n the instant case P.L. 1961, Ch. 304 was intended to be a revision and condensation of the statutes relating to the
Department of Mental Health and Corrections by which the substance of the right of the State of Maine to reimbursement
for care and support from the criminally insane in accordance with "means" or "ability" to pay remained undisturbed. We
are satisfied that it was the intention of the Legislature that there should be no moment when the right to such
reimbursement did not exist. We think, the governing principle was well stated in 50 Am. Jur. 559, Sec. 555;
"It is a general rule of law that where a statute is repealed and all or some of its provisions are not the same time re-
enacted, the re-enactment is considered a reaffirmance of the old law, and a neutralization of the repeal, so that the
provisions of the repealed act which are thus re-enacted continue in force without interruption, and all rights and liabilities
incurred thereunder are preserved and may be enforced. Similarly, the rule of construction applicable to acts which revise
and consolidate other acts is, that when the revised and consolidated act re-enacts in the same or substantially the same
terms the provisions of the act or acts so revised and consolidated, the revision and consolidation shall be taken to be a
continuation of the former act or acts, although the former act or acts may be expressly repealed by the revised and
consolidated act; and all rights and liabilities under the former act or acts are preserved and may be enforced." (State vs.
Bean, 195 A2d 68, 71, 72; Emphasis supplied)
a. importations of fuel oil (crude equivalent) and coal as per FIRB Resolutions No. 1-84;
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.
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:
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.
Minister of Finance
Chairman, FIRB
69 Note should be taken that FIRB Resolution No. 10-85 covered the period from June 11, 1984 up to June 30, 1985 while
FIRB Resolution No. 1-86 covered the period from July 1, 1985 up to March 10, 1987. chanrobles virtual law library
70 "Whenever in the judgment of the President, there exists a grave emergency or a threat or imminence thereof, or
whenever the interim Batasang Pambansa or the regular National Assembly fails or is unable to act adequately on any
matter for any reason that in his judgment requires immediate action, he may in order to meet the exigency, issued the
necessary decrees, orders, or letters of instruction, which shall form part of the law of the land."
72 "The Philippines and International Monetary Fund (IMF) have failed in talks here to finalize an agreement on a $630
million standby credit badly needed by the Philippines, informed sources close to the talks told Reuters yesterday. chanrobles virtual law library
xxx xxx xxx
"Talks on the credit began in October when the Philippines declared a moratorium on repayments on its $26-billion foreign
debt and asked creditor banks to reschedule some of the debt." (Times Journal, June 21, 1984)
73 The Philippines will not default in the payment of its $25-billion foreign debt because it could be branded as an outlaw
in the international community, President Marcos said yesterday." (Times Journal, June 18, 1984)
74 WASHINGTON, D.C. - The Philippines and a consortium of international banks have signed in New York an agreement
restructuring $2.9 billion in maturing short and medium terms loans of the Central Bank and six other government
corporations. chanrobles virtual law library
"The amount restructed represents 90 percent of the public sector loans to be restructured with international banks. chanrobles virtual law library
Included in the restructuring were the loans of the Philippine National Bank (PNB), National Investment Development Corp.
(NIDC), Development Bank of the Philippines (DBP), Philippine National Oil Corp. (PNOC), National Power Corporation
(NAPOCOR) and Philippine Airlines (PAL)." (Express, January 12, 1986)
75 "The $2.1-billion BNPP, nestled on a plateau hugging the South China Sea, is planned to generate 620 megawatts for
the Luzon grid. The 'people power' revolt in 1986, however, toppled the plant's proponent, then President Marcos, from
power.chanrobles virtual law library
"So many technical defects were said to have been discovered in the plant, and this "most prodigious" project of the
government-owned National Power Corp. was mothballed and has remained so up to the present. It is a "white elephant"
and the country continues to pay a huge interests to its builder, Westinghouse, every month." (Manila Bulletin, July 15,
1992)
76 President Marcos issued for decrees yesterday, among them Decree No. 1934 (should be 1939 amending Rep. Act No.
4850 (should be Rep. Act No. 4850 (should be Rep. Act. No. 4860) to allow an increase in the ceiling on direct foreign
borrowings of the government from $5 billion to $10 billion. chanrobles virtual law library
"It would allow him to exclude specific categories of external debt from the debt service limitation whenever necessary in
connection with the general rescheduling or refinancing of foreign credits. chanrobles virtual law library
"The decree also increases the ceiling on the government's guarantee from the present $2.5 billion to $7.5 billion. chanrobles virtual law library
"It authorizes the government's guarantee of external debts of government corporations. chanrobles virtual law library
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
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.
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:
- 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:
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
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