Maceda Vs Macaraig
Maceda Vs Macaraig
Maceda Vs Macaraig
would now enable him (Acetylene having been “abrogated”), is, I submit,
to defeat the very laws of science. The theory of “indirect taxes” and that On June 4, 1949, Republic Act No. 358 granted NPC tax and
no exemption is possible therefrom, so I reiterate, are well-settled concepts duty exemption privileges under—
of taxation, as the law of supply and demand is to the law of economics. A “Sec. 2 . To facilitate payment of its indebtedness, the National Power
President is said (unfairly) to have attempted it, but one can not repeal the Corporation shall be exempt from all taxes, duties, fees, imposts, charges
law on supply and demand. and restrictions of the Republic of the Philippines, its provinces, cities and
Same; Same; Same; The fact that NPC has been tasked with the municipalities.”
enormous undertaking to improve the quality of life of the people, is no
reason, to include indirect taxes, within the coverage of its preferential tax On September 10, 1971, Republic Act No. 6395 revised the
treatment.—I do not find the National Power Corporation’s alleged charter of the NPC wherein Congress declared as a national policy
exemption from indirect tax evident, as the majority finds it evident, from the total electrification of the Philippines through the development
the Corporation’s charter, Republic Act No. 6395, as amended by of power from all sources to meet the needs of industrial
Presidential Decrees Nos. 380 and 938. It is true that since Commonwealth development and rural electrification which should be pursued
Act No. 120 (the Corporation’s original charter, which Republic Act No. coordinately and supported by all instrumentalities and agencies of
6395 repealed), the Corporation has enjoyed a “preferential tax treatment,”
the government, including its financial institutions. The corporate
2
perusal of Republic Act No. 6395 and subsequent amendatory statutes, was corporation, Section 13 of the law provided in detail the
to give the National Power Cor- exemption of the NPC from all taxes, duties, fees, imposts and
777
other charges by the government and its instrumentalities.
________________
VOL. 197, MAY 31, 777
1991 1
Section 1, Com. Act No. 120 (1936).
2
Section 1, Rep. Act No. 6395 (1971).
Maceda vs. Macaraig, Jr. 3
Section 2, Rep. Act No. 6395 (1971).
779 3. 3.“Caltex billings to NPC until June 10, 1984 always included
customs duty without the tax portion. Beginning June 11,
VOL. 197, MAY 31, 1991 779
1984, when P.D. 1931 was promulgated abolishing NPC’s tax
Maceda vs. Macaraig, Jr. exemptions, Caltex’s billings to NPC always included both
On January 22, 1974, Presidential Decree No. 380 amended duties and taxes. (Caturla, tsn, Oct. 10, 1988, pp. 1-5)” (par.
24, p. 7, Annex “A”)
section 13, paragraphs (a) and (d) of Republic Act No. 6395 by
4. 4.“For the sales of petroleum products delivered to NPC during
specifying, among others, the exemption of NPC from such taxes, the period from October, 1984 to April, 1985, NPC was billed
duties, fees, imposts and other charges imposed “directly or a total of P522,016,77.34 (sic) including both duties and
indirectly,” on all petroleum products used by NPC in its taxes, the specific tax component being valued at
operation. Presidential Decree No. 938 dated May 27, 1976 further P58,020,110.79.” (par. 25, p. 8, Annex “A”).
amended the aforesaid provision by integrating the tax exemption 5. 5.“Fiscal Incentives Review Board (FIRB) Resolution 10-85,
in general terms under one paragraph.
On June 11, 1984, Presidential Decree No. 1931 withdrew all 781
tax exemption privileges granted in favor of government-owned or
VOL. 197, MAY 31, 1991 781
controlled corporations including their subsidiaries. However, said
4
law empowered the President and/or the then Minister of Finance, Maceda vs. Macaraig, Jr.
upon recommendation of the FIRB, to restore, partially or totally,
the exemption withdrawn, or otherwise revise the scope and 1. dated February 7, 1985, certified true copy of which is hereto
coverage of any applicable tax and duty. attached as Annex “C”, restored the tax exemption privileges
Pursuant to said law, on February 7, 1985, the FIRB issued of NPC effective retroactively to June 11, 1984 up to June 30,
Resolution No. 10-85 restoring the tax and duty exemption 1985. The first paragraph of said resolution reads as follows:
privileges of NPC from June 11, 1984 to June 30, 1985. On
January 7, 1986, the FIRB issued resolution No. 1-86 indefinitely 1. “1.Effective June 11, 1984, the tax and duty exemption
restoring the NPC tax and duty exemption privileges effective July privileges enjoyed by the National Power Corporation under
1, 1985. C.A. No. 120, as amended, are restored up to June 30, 1985.”
However, effective March 10, 1987, Executive Order No. 93
once again withdrew all tax and duty incentives granted to Because of this restoration (Annex “G”) the NPC applied on
government and private entities which had been restored under September 11, 1985 with the BIR for a “refund of Specific Taxes paid on
Presidential Decree Nos. 1931 and 1955 but it gave the authority petroleum products x x x x x x x x x x x x x x x in the total amount of
to FIRB to restore, revise the scope and prescribe the date of P58,020,110.79.” (par. 26, pp. 8-9, Annex “A”)
effectivity of such tax and/or duty exemptions.
On June 24, 1987 the FIRB issued Resolution No. 17-87 1. 6.In a letter to the president of the NPC dated May 8, 1985
restoring NPC’s tax and duty exemption privileges effective (copy attached as petitioner’s Annex “D”), Acting BIR
March 10, 1987. On October 5, 1987, the President, through Commissioner Ruben Ancheta declared:
respondent Executive Secretary Macaraig, Jr., confirmed and
approved FIRB Resolution No. 17-87. “FIRB Resolution No. 10-85 serves as sufficient basis to allow NPC to purchase
As alleged in the petition, the following are the background petroleum products from the oil companies free of specific and ad valorem taxes,
during the period in question.”
facts:
The following are the facts relevant to NPC’s questioned claim for refunds The “period in question” is June 11, 1984 to June 30, 1985.
of taxes and duties originally paid by respondents Caltex, Petrophil and
Shell for specific and ad valorem taxes to the BIR; and
________________ 2. 7.“On June 6, 1985—The president of the NPC, Mr. Gabriel
Itchon, wrote Mr. Cesar Virata, Chairman of the FIRB
4
Section 1, Pres. Decree No. 1931 (1984). (Annex “E”), requesting “the FIRB to resolve conflicting
rulings on the tax exemption privileges of the National Power
780 Corporation (NPC).” These rulings involve FIRB Resolutions
78 SUPREME COURT REPORTS No. 1-84 and 10-85. (par. 40, p. 12, Annex “A”)
3. 8.In a letter to the President of NPC (Annex “F”), dated June
0 ANNOTATED 26, 1985, Minister Cesar Virata confirmed the ruling of May
Maceda vs. Macaraig, Jr. 8, 1985 of Acting BIR Commissioner Ruben Ancheta, (par.
41, p. 12, Annex “A”)
for Customs duties and ad valorem taxes paid by PNOC, Shell and Caltex
4. 9.On October 22, 1985, however, under BIR Ruling No. 186-
to the Bureau of Customs on its crude oil importation.
85, addressed to Hanil Development Co., Ltd., a Korean
Many of the factual statements are reproduced from the Senate
contractor of NPC for its infrastructure projects, certified true
Committee on Accountability of Public Officers and Investigations (Blue
copy of which is attached hereto as petitioner’s Annex “E”,
Ribbon) Report No. 474 dated January 12, 1989 and approved by the
BIR Acting Commissioner Ruben Ancheta ruled:
Senate on April 21, 1989 (copy attached hereto as Annex “A”) and are
identified in quotation marks:
“In Reply please be informed that after a re-study of Section 13, R.A. 6395, as
amended by P.D. 938, this Office is of the opinion, and so holds, that the scope of
1. 1.“Since May 27, 1976 when P.D. No. 938 was issued until the tax exemption privilege enjoyed by NPC under said section covers only taxes for
June 11, 1984 when P.D. No. 1931 was promulgated which it is directly liable and not on taxes which are only shifted to it. (Phil.
abolishing the tax exemptions of all government-owned or- Acetylene vs. C.I.R. et al., G.R. L-19707, Aug. 17, 1967) Since contractor’s tax is
controlled corporations, the oil firms never paid excise or directly payable by the contractor, not by NPC, your request for exemption, based on
the stipulation in the aforesaid contract that NPC shall assume payment
specific and ad valorem taxes for petroleum products sold and
delivered to the NPC. This non-payment of taxes therefore 782
spanned a period of eight (8) years.” (par. 23, p. 7, Annex
“A”) 78 SUPREME COURT REPORTS
During this period, the Bureau of Internal Revenue was not 2 ANNOTATED
collecting specific taxes on the purchases of NPC of
petroleum products from the oil companies on the erroneous Maceda vs. Macaraig, Jr.
belief that the National Power Corporation (NPC) was of your contractor’s tax liability, cannot be granted for lack of legal basis.” (Annex
exempt from indirect taxes as reflected in the letter of Deputy “H”) (italics added)
Commissioner of Internal Revenue (DCIR) Romulo Villa to
the NPC dated October 29, 1980 granting blanket authority to Said BIR ruling clearly states that NPC’s exemption privileges covers
the NPC to purchase petroleum products from the oil (sic) only taxes for which it is directly liable and does not cover taxes
companies without payment of specific tax (copy of this letter which are only shifted to it or for indirect taxes. The BIR, through
is attached hereto as petitioner’s Annex “B”). Ancheta, reversed its previous position of May 8, 1985 adopted by
2. 2.The oil companies started to pay specific and ad valorem Ancheta himself favoring NPC’s indirect tax exemption privilege.
taxes on their sales of oil products to NPC only after the
promulgation of P.D. No. 1931 on June 11, 1984, 1. 10. Furthermore, “in a BIR Ruling, unnumbered,” dated June
withdrawing all exemptions granted in favor of government- 30, 1986, “addressed to Caltex (Annex “F”), the BIR
owned or-controlled corporations and empowering the FIRB Commissioner declared that PAL’s tax exemption is limited
to recommend to the President or to the Minister of Finance to taxes for which PAL is directly liable, and that the payment
the restoration of the exemptions which were withdrawn. of specific and ad valorem taxes on petroleum products is a
“Specifically, Caltex paid the total amount of P58,020,110.79 direct liability of the manufacturer or producer thereof”. (par.
in specific and ad valorem taxes for deliveries of petroleum 51, p. 15, Annex “A”)
products to NPC covering the period from October 31, 1984 2. 11.“On January 7, 1986, FIRB Resolution No. 1-86 was issued
to April 27, 1985.” (par. 23, p. 7, Annex “A”) restoring NPC’s tax exemptions retroactively from July 1,
1985 to a indefinite period,” certified true copy of which is
hereto attached as petitioner’s Annex “H”.
78 SUPREME COURT REPORTS
3. 12.NPC’s total refund claim was P468.58 million but only a 4 ANNOTATED
portion thereof i.e. the P58,020,110.79 (corresponding to
Caltex) was approved and released by way of a Tax Credit Maceda vs. Macaraig, Jr.
Memo (Annex “Q”) dated July 7, 1986, certified true copy of
which [is] attached hereto as petitioner’s Annex “F,” which 1. used for the generation of electricity,” a certified true copy of
was assigned by NPC to Caltex. BIR Commissioner Tan which is attached hereto as petitioner’s Annex “N.” (par. 30,
approved the Deed of Assignment on July 30, 1987, certified pp. 9-10, Annex “A”)
true copy of which is hereto attached as petitioner’s Annex 2. 21.Respondent Executive Secretary came up likewise with a
“G”). (pars. 26, 52, 53, pp. 9 and 15, Annex “A”) confirmatory letter dated June 15, 1988 but without the usual
The Deed of Assignment stipulated among others that NPC is official form of “By the Authority of the President,” a
assigning the tax credit to Caltex in partial settlement of its certified true copy of which is hereto attached and made a
outstanding obligations to the latter while Caltex, in turn, part hereof as Petitioner’s Annex “O”.
would apply the assigned tax credit against its specific tax 3. 22.The actions of respondents Finance Secretary and the
payments for two (2) months. (per memorandum dated July Executive Secretary are based on the RESOLUTION No. 17-
28, 1986 of DCIR Villa, copy attached as petitioner Annex 87 of FIRB, restoring the tax and duty exemption of the
“G”) respondent NPC pertaining to its domestic purchases of
4. 13.As a result of the favorable action taken by the BIR in the petroleum products (petitioner’s Annex “K”, supra ).
refund of the P58.0 million tax credit assigned to Caltex, the 4. 23.“Subsequently, the newspapers particularly, the Daily
NPC reiterated its request for the release of the balance of its Globe, in its issue of July 11, 1988 reported that the Office of
pending refunds of taxes paid by respondents Petrophil, Shell the President and the Department of Finance had ordered the
and Caltex covering the period from June 11, 1984 to early BIR to refund the tax payments of the NPC amounting to
part of 1986 amounting to P410.58 million. (The claim of the P1.58 Billion which includes the P410 Million Tax refund
first two (2) oil companies covers the period from June 11, already rejected by BIR Commissioner Tan, Jr., in his BIR
1984 to early part of 1986; while that of Caltex starts from Ruling No. 152-86. And in a letter dated July 28, 1988 of
July 1, 1985 to early 1986). This request was denied on Undersecretary Marcelo B. Fernando to BIR Commissioner
August 18, 1986, under BIR Ruling 152-86 (certified true Tan, Jr. the P1.58 Billion tax refund was ordered released to
copy of which is attached hereto as petitioner’s Annex “I”). NPC.” (par. 31, p. 10, Annex “A”)
The BIR ruled that NPC’s tax free privilege to buy petroleum 5. 24.On August 8, 1988, petitioner “wrote both Undersecretary
products covered only the period frome June 11, 1984 up to Fernando and Commissioner Tan requesting them to hold in
June 30, 1985. It further abeyance the release of the P1.58 billion and await the
outcome of the investigation in regard to Senate Resolution
783 No. 227,” copies attached as Petitioner’s Annexes “P” and
“P-1” (par. 32, p. 10, Annex “A”). Reacting to this letter of
VOL. 197, MAY 31, 1991 783 the petitioner, Undersecretary Fernando wrote Commissioner
Maceda vs. Macaraig, Jr. Tan of the BIR dated August, 1988 requesting him to hold in
abeyance the release of the tax refunds to NPC until after the
termination of the Blue Ribbon investigation.
1. declared that, despite FIRB No. 1-86, NPC had already lost its 6. 25.In the Bureau of Customs, oil companies import crude oil
tax and duty exemptions because it only enjoys special and before removal thereof from customs custody, the
privilege for taxes for which it is directly liable. This ruling, corresponding customs duties and ad valorem taxes are paid.
in effect, denied the P410-Million tax refund application of Bunker fuel oil is one of the petroleum products processed
NPC.” (par. 28, p. 9, Annex “A”) from the crude oil; and same is sold to NPC. After the sale,
2. 14.“NPC filed a motion for reconsideration on September 18, NPC applies for tax credit covering the duties and ad valorem
1986. Until now the BIR has not resolved the motion. exemption under its Charter. Such applications are processed
(Benigna, II-3, Oct. 17, 1988, p. 2; Memorandum for the by the Bureau of Customs and the corresponding tax credit
Complainant, Oct. 26, 1988, p. 15).” (par. 29, p. 9, Annex certificates are issued in favor of NPC which, in turn assigns
“A”) it to the oil firm that imported the crude oil. These certificates
3. 15.On December 22, 1986, in a 2nd Indorsement to the Hon. are eventually used by the assignee-oil firms in payment of
Fulgencio S. Factoran, Jr., BIR Commissioner Tan, Jr. their other duty and tax liabilities with the Bureau of
(certified true copy of which is hereto attached and made a Customs.” (par. 70, p. 19, Annex “A”)
part hereof as petitioner’s Annex “J”), reversed his previous
position and states this time that all deliveries of petroleum
products to NPC are tax exempt, regardless of the period of A lesser amount totalling P740 million, covering the period from
delivery. 1985 to the present, is being sought by respondent NPC for refund
4. 16.On December 17, 1986, President Corazon C. Aquino
785
enacted Executive Order No. 93, entitled “Withdrawing All
Tax and Duty Incentives, Subject to Certain Exceptions, VOL. 197, MAY 31, 1991 785
Expanding the Powers of the Fiscal Incentives Review Board
and Other Purposes.” Maceda vs. Macaraig, Jr.
5. 17.On June 24, 1987, the FIRB issued Resolution No. 17-87,
which restored NPC’s tax exemption privilege and included 1. from the Bureau of Customs for duties paid by the oil
in the exemption “those pertaining to its domestic purchases companies on the importation of crude oil from which the
of petroleum and petroleum products, and the restorations processed products sold locally by them to NPC was derived.
were made to retroact effective March 10, 1987, a certified However, based on figures submitted to the Blue Ribbon
true copy of which is hereto attached and made a part hereof Committee of the Philippine Senate which conducted an
as Annex “K”. investigation on this matter as mandated by Senate Resolution
6. 18.On August 6, 1987, the Hon. Sedfrey A. Ordoñez, Secretary No. 227 of which the herein petitioner was the sponsor, a
of Justice, issued Opinion No. 77, series of 1987, opining that much bigger figure was actually refunded to NPC
“the power conferred upon Fiscal Incentives Review Board representing duties and ad valorem taxes paid to the Bureau
by Section 2-(a), (b), (c) and (d) of Executive order No. 93 of Customs by the oil companies on the importation of crude
constitute undue delegation of legislative power and, oil from 1979 to 1985.
therefore, [are] unconstitutional,” a copy of which is hereto 2. 26.Meantime, petitioner, as member of the Philippine Senate
attached and made a part hereof as Petitioner’s Annex “L.” introduced P.S. Res. No. 227, entitled:
7. 19.On October 5, 1987, respondent Executive Secretary
Macaraig, Jr. in a Memorandum to the Chairman of the FIRB,
a certified true copy of which is hereto attached and made a “Resolution Directing the Senate Blue Ribbon Committee, In Aid of Legislation, To
conduct a Formal and Extensive Inquiry into the Reported Massive Tax
part hereof as petitioner’s Annex “M,” confirmed and Manipulations and Evasions by Oil Companies, particularly Caltex (Phils.) Inc.,
approved FIRB Res. No. 17-87 dated June 24, 1987, allegedly Pilipinas Shell and Petrophil, Which Were Made Possible By Their Availing of the
pursuant to Sections 1 (f) and 2 (e) of Executive Order No. Non-Existing Exemption of National Power Corporation (NPC) from Indirect Taxes,
93. Resulting Recently in Their Obtaining A Tax Refund Totalling P1.55 Billion From
8. 20.“Secretary Vicente Jayme in a reply dated May 20, 1988 to the Department of Finance, Their Refusal to Pay Since 1976 Customs Duties
Secretary Catalino Macaraig, who by letter dated May 2, Amounting to Billions of Pesos on Imported Crude Oil Purportedly for the Use of the
1988 asked him to rule “on whether or not, as the law now National Power Corporation, the Non-Payment of Surtax on Windfall Profits from
Increases in the Price of Oil Products in August 1987 amounting Maybe to as Much
stands, the National Power Corporation is still exempt from as P1.2 Billion Surtax Paid by Them in 1984 and For Other Purposes.”
taxes, duties . . . on its local purchases of . . . petroleum
products . . .” declared that “NPC under the provisions of its
Revised Charter retains its exemption from duties and taxes 1. 27.Acting on the above Resolution, the Blue Ribbon Committee
imposed on the petroleum products purchased locally and of the Senate did conduct a lengthy formal inquiry on the
matter, calling all parties interested to the witness stand
including representatives from the different oil companies,
784
and in due time submitted its Committee Report No. 474 xxx.
—The Blue Ribbon Committee recommended the following 1. 2.Said temporary restraining order should also include
courses of action. respondents Commissioners of Customs Mison and
Internal Revenue Ong restraining them from
1. “1.Cancel its approval of the tax refund of P58,020,110.70 to processing and releasing any pending claim or
the National Power Corporation (NPC) and its approval of application by respondent NPC for tax and duty
Tax Credit memo covering said amount (Annex “P” hereto), refunds.
dated July 7, 1986, and cancel its approval of the Deed of 2. 3.Thereafter, and during the pendency of this petition, to
Assignment (Annex “Q” hereto) by NPC to Caltex, dated July
issue a writ or preliminary injunction against above-
28, 1986, and collect from Caltex its tax liabilities which
were erroneously treated as paid or settled with the use of the named respondents and all persons acting for and in
tax credit certificate that NPC assigned to said firm.: their behalf.
3. 4.A decision be rendered in favor of the petitioner and
against the respondents:
1. “1.1NPC did not have any indirect tax exemption since May 27,
1976 when PD 938 was issued. Therefore,
1. A.Declaring that respondent NPC did not enjoy indirect
786 tax exemption privilege since May 27, 1976 up to the
present;
78 SUPREME COURT REPORTS 2. B.Nullifying the setting aside the following:
6 ANNOTATED
Maceda vs. Macaraig, Jr. 1. 1.FIRB Resolution No. 17-87 dated June 24, 1987
the grant of a tax refund to NPC in the amount of P58 million was illegal, and (petitioner’s Annex “K”);
therefore, null and void. Such refund was a nullity right from the beginning. Hence, it 2. 2.Memorandum-Order of the Office of the President
never transferred any right in favor of NPC.
dated October 5, 1987 (petitioner’s Annex “M”);
3. 3.Order of the Executive Secretary dated June 15, 1988
1. “2.Stop the processing and/or release of P1.58 billion tax (petitioner’s Annex “O”);
refund to NPC and/or oil companies on the same ground that 4. 4.Order of the Executive Secretary dated March 30,
the NPC, since May 27, 1976 up to June 17, 1987 was never
granted any indirect tax exemption. So, the P1.58 billion
1989 (petitioner’s Annex “Q”);
represent taxes legally and properly paid by the oil firms. 5. 5.Ruling of the Finance Secretary dated May 20, 1988
2. “3.Start collection actions of specific or excise and ad valorem (petitioner’s Annex “N”);
taxes due on petroleum products sold to NPC from May 27, 6. 6.Tax Credit memo dated July 7, 1986 issued to
1976 (promulgation of PD 938) to June 17, 1987 (issuance of respondent NPC representing tax refund for
EO 195). P58,020,110.79 (petitioner’s Annex “F”);
7. 7.Deed of Assignment of said tax credit memo to
“B. For the Bureau of Customs (BOC) to do the following: respondent Caltex dated July 30, 1987 (petitioner’s
“1. Start recovery actions on the illegal duty refunds or duty credit Annex “G”);
certificates for purchases of petroleum products by NPC and allegedly 8. 8.Application of the assigned tax credit of Caltex in
granted under the NPC charter covering the years 1978-1988 xxx”.
788
1. 28.On March 30, 1989, acting on the request of respondent
Finance Secretary for clearance to direct the Bureau of 78 SUPREME COURT REPORTS
Internal Revenue and of Customs to proceed with the 8 ANNOTATED
processing of claims for tax credits/refunds of the NPC,
respondent Executive Secretary rendered his ruling, the Maceda vs. Macaraig, Jr.
dispositive portion of which reads:
1. payment of its tax liabilities with the Bureau of Internal
“IN VIEW OF THE FOREGOING, the clearance is hereby GRANTED and, Revenue; and
accordingly, unless restrained by proper authorities, that department and/or its line-
tax bureaus may now proceed with the processing of the claims of the National Power 2. 9.Illegal duty and tax refunds issued by the Bureau of
Corporation for duty and tax free exemption and/or tax credits/ refunds, if there be Customs to respondent NPC by way of tax credit
any, in accordance with the ruling of that Department dated May 20, 1988, as certificates from 1979 up to the present.
confirmed by this Office on June 15, 1988.” xxx. 5
Hence, this petition for certiorari, prohibition and mandamus with 1. C.Declaring as illegal and null and void the pending
prayer for a writ of preliminary injunction and/or restraining order, claims for tax and duty refunds by respondent NPC
praying among others that: with the Bureau of Customs and the Bureau of Internal
Revenue;
1. “1.Upon filing of this petition, a temporary restraining 2. D.Prohibiting respondents Commissioner of Customs
order forthwith be issued against respondent FIRB, and Commissioner of Internal Revenue from enforcing
Executive Secretary the above-questioned resolution, orders and ruling of
respondents Executive Secretary, Secretary of Finance,
and FIRB by processing and releasing respondent
________________
NPC’s tax and duty refunds;
3. E.Ordering the respondent Commissioner of Customs to
5
Pages 7 to 19, rollo.
deny as being null and void the pending claims for
787 refund of respondent NPC with the Bureau of Customs
VOL. 197, MAY 31, 1991 787 covering the period from 1985 to the present; to cancel
and invalidate the illegal payment made by
Maceda vs. Macaraig, Jr. respondents Caltex, Shell and PNOC by using the tax
Macaraig, and Secretary of Finance Jayme restraining them and credit certificates assigned to them by NPC; and to
other persons acting for, under, and in their behalf from enforcing recover from respondents Caltex, Shell and PNOC all
their resolution, orders and ruling, to wit: the amounts appearing in said tax credit certificates
which were used to settle their duty and tax liabilities
1. A.FIRB Resolution No. 17-87 dated June 24, 1987 with the Bureau of Customs.
(petitioner’s Annex “K”); 4. F.Ordering respondent Commissioner of Internal
2. B.Memorandum-Order of the Office of the President Revenue to deny as being null and void the pending
dated October 5, 1987 (petitioner’s Annex “M”); claims for refund of respondent NPC with the Bureau
3. C.Order of the Executive Secretary dated June 15, 1988 of Internal Revenue covering the period from June 11,
(petitioner’s Annex “O”); 1984 to June 17, 1987.
4. D.Order of the Executive Secretary dated March 30,
1989 (petitioner’s Annex “Q”); and PETITIONER prays for such other relief and remedy as may be just and
5. E.Ruling of the Finance Secretary dated May 20, 1988 equitable in the premises.”
6
6
Pages 49 to 52, rollo. Public respondents then assert that a writ of prohibition is not
proper as its function is to prevent an unlawful exercise of
789 jurisdiction or to prevent the oppressive exercise of legal
11
was filed by petitioner on November 15, 1989 the Court gave due
example, the excise and ad valorem taxes that oil companies pay
course to the petition, considering the comments of respondents as to the Bureau of Internal Revenue upon removal of petroleum
their answer to the petition, and requiring the parties to file
products from its refinery can be shifted to its buyer, like the NPC,
simultaneously their respective memoranda within twenty (20) by adding them to the “cash” and/or “selling price.”
days from notice. The parties having submitted their respective
The main thrust of the petition is that under the latest
memoranda, the petition was deemed submitted for resolution. amendment to the NPC charter by Presidential Decree No. 938,
First the preliminary issues.
the exemption of NPC from indirect taxation was revoked and
Public respondents allege that petitioner does not have the repealed. While petitioner concedes that NPC enjoyed broad
standing to challenge the questioned orders and resolution. In the
exemption privileges from both direct and indirect taxes on the
petition it is alleged that petitioner is “instituting this suit in his petroleum products it used, under Section 13 of Republic Act No.
capacity as a taxpayer and a duly-elected Senator of the
6395 and more so under Presidential Decree No. 380, however, by
Philippines.” Public respondent argues that petitioner must show the deletion of the phrases “directly or indirectly” and “on all
he has sustained direct injury as a result of the action and that it is
petroleum products used by the Corporation in the generation,
not sufficient for him to have a mere general interest common to transmission, utilization and sale of electric power” he contends
all members of the public.
that the exemption from indirect taxes was withdrawn by P.D. No.
8
vs. Commission on Elections, 120 SCRA 337 (1983). the principle in taxation that the exception contained in the tax
statutes must be strictly construed against the
790
________________
79 SUPREME COURT REPORTS
Citing Fortun vs. Labang, 104 SCRA 607 (1981).
0 ANNOTATED
12
13
51 Am. Jur. Section 21; 61 C.J. Section 6, note 57(e), p. 73.
20 SCRA 1056 (1967).
Maceda vs. Macaraig, Jr. 14
The petition questions the legality of the tax refund to NPC by 792
way of tax credit certificates and the use of said assigned tax
79 SUPREME COURT REPORTS
credits by respondent oil companies to pay for their tax and duty
liabilities to the BIR and Bureau of Customs. 2 ANNOTATED
Assuming petitioner has the personality to file the petition, Maceda vs. Macaraig, Jr.
public respondents also allege that the proper remedy for one claiming the exemption, and that the rule that a tax
petitioner is an appeal to the Court of Tax Appeals under Section 7
statute granting exemption must be strictly construed against the
of R.A. No. 125 instead of this petition. However Section 11 of one claiming the exemption is similar to the rule that a statute
said law provides—
granting taxing power is to be construed strictly, with doubts
“Sec. 11. Who may appeal; effect of appeal—Any person, association or
corporation adversely affected by a decision or ruling of the Commissioner resolved against its existence. Petitioner cites rulings of the BIR
15
of Internal Revenue, the Collector of Customs (Commissioner of Customs) that the phrase exemption from “all taxes, etc.” from “all forms of
or any provincial or City Board of Assessment Appeals may file an appeal taxes” and “in lieu of all taxes” covers only taxes for which the
in the Court of Tax Appeals within thirty days after receipt of such taxpayer is directly liable. 16
decision or ruling.” On the corollary issues. First, FIRB Resolution Nos. 10-85
and 1-86 issued under Presidential Decree No. 1931, the relevant
From the foregoing, it is only the taxpayer adversely affected by a provision of which are to wit:
decision or ruling of the Commissioner of Internal Revenue, the “P.D. No. 1931 provides as follows:
Commissioner of Customs or any provincial or city Board of “SECTION 1. The provisions of special or general law to the
Assessment Appeal who may apeal to the Court of Tax Appeals. contrary notwithstanding, all exemptions from the payment of duties,
Petitioner does not fall under this category. taxes . . . heretofore granted in favor of government-owned or controlled
Public respondents also contend that mandamus does not lie to corporations . . . are hereby withdrawn. (Italics supplied.)
compel the Commissioner of Internal Revenue to impose a tax “SECTION 2. The President of the Philippines and/or the Minister
of Finance, upon the recommendation of the Fiscal Incentives Review
assessment not found by him to be proper. It would be tantamount
Board . . . is hereby empowered to restore, partially or totally, the
to a usurpation of executive functions. 9
Court observed that under P.D. No. 776 the power of the FIRB
1. “1.Effective June 11, 1984, the tax and duty exemption was only recommendatory and requires the approval of the
privileges enjoyed by the National Power Corporation under President to be valid. Thus, in said case the Court held that FIRB
C.A. No. 120 as amended are restored up to June 30, 1985. Resolutions Nos. 10-85 and 1-86 not having been approved by the
2. “2.Provided, That this restoration does not apply to the President were not valid and effective while the validity of FIRB
following: 17-87 was upheld as it was duly approved by the Office of the
President on October 5, 1987.
1. a.importations of fuel oil (crude equivalent) and coal as per However, under Section 2 of P.D. No. 1931 of June 11, 1984,
FIRB Resolution No. 1-84; hereinabove reproduced, which amended P.D. No. 776, it is
clearly provided for that such FIRB resolution, may be approved
________________ by the “President of the Philippines and/or the Minister of
Finance.” To repeat, as FIRB Resolutions Nos. 10-85 and 1-86
Citing United Garment Co., Inc. vs. Court of Tax Appeals, 4 SCRA 304 (1962); and Butuan
15
“BE IT RESOLVED AS IT IS HEREBY RESOLVED: That: assignment approved by the BIR is patently illegal. He also
22
794
Section 1, Commonwealth Act No. 120; Sections 2 and 13, Republic Act No.
23
4 ANNOTATED
796
Maceda vs. Macaraig, Jr.
The observation of Mr. Justice Sarmiento in the dissenting opinion 79 SUPREME COURT REPORTS
that FIRB Resolution Nos. 10-85 and 1-86 which were 6 ANNOTATED
promulgated by then Acting Minister of Finance Alfredo de Roda,
Maceda vs. Macaraig, Jr.
Jr. and Minister of Finance Cesar E.A. Virata, as Chairman of
ment, “to enable the Corporation to pay the indebtedness and
FIRB, respectively, should be separately approved by said
25
implementation of the policy enunciated in Section one of this Act, the “The basis for applying the rule of strict construction to statutory
Corporation, including its subsidiaries, is hereby declared, exempt: provisions granting tax exemptions or deductions, even more obvious than
with reference to the affirmative or levying provisions of tax statutes, is to
1. (a)From the payment of all taxes, duties, fees, imposts, charges, minimize differential treatment and foster impartiality, fairness, and
costs and services fees in any court or administrative equality of treatment among tax payers.
proceedings in which it may be a party, restrictions and duties The reason for the rule does not apply in the case of exemptions
to the Republic of the Philippines, its provinces, cities, running to the benefit of the government itself or its agencies. In such case
municipalities and other government agencies and the practical effect of an exemption is merely to reduce the amount of
instrumentalities; money that has to be handled by government in the course of its
2. (b)From all income taxes, franchise taxes and realty taxes to be operations. For these reasons, provisions granting exemptions to
paid to the National Government, its provinces, cities, government agencies may be construed liberally, in favor of non tax-
municipalities and other governmental agencies and liability of such agencies.” 29
instrumentalities;
3. (c)From all import duties, compensating taxes and advanced In the case of property owned by the state or a city or other public
sales tax, and wharfage fees on import of foreign goods corporations, the express exemption should not be construed with
required for its operation and projects; and the same degree of strictness that applies to exemptions contrary to
4. (d)From all taxes, duties, fees, imposts, and all other charges the policy of the state, since as to such property “exemption is the
imposed directly or indirectly by the Republic of the rule and taxation the exception.” 30
800
802
80 SUPREME COURT REPORTS
80 SUPREME COURT REPORTS
0 ANNOTATED
2 ANNOTATED
Maceda vs. Macaraig, Jr.
The contention of petitioner that the exemption of NPC from Maceda vs. Macaraig, Jr.
indirect taxes under Section 13 of R.A. No. 6395 and P.D. No. clauses’ may disclose the intent of the law-maker, the changes effected by
P.D. 938 can only be read as being expansive rather than restrictive,
380, is deemed repealed by P.D. No. 938 when the reference to it including its version of Section 13.
was deleted is not well-taken. Our Tax Code does not recognize that there are taxes directly imposed
Repeal by implication is not favored unless it is manifest that and those imposed indirectly. The textbook distinction between a direct
the legislature so intended. As laws are presumed to be passed and an indirect tax may be based on the possibility of shifting the
with deliberation and with knowledge of all existing ones on the incidence of the tax. A direct tax is one which is demanded from the very
subject, it is logical to conclude that in passing a statute it is not person intended to be the payor, although it may ultimately be shifted to
intended to interfere with or abrogate a former law relating to the another. An example of a direct tax is the personal income tax. On the
same subject matter, unless the repugnancy between the two is not other hand, indirect taxes are those which are demanded from one person
in the expectation and intention that he shall indemnify himself at the
only irreconcilable but also clear and convincing as a result of the expense of another. An example of this type of tax is the sales tax levied
language used, or unless the latter Act fully embraces the subject on sales of a commodity.
matter of the earlier. The first effort of a court must always be to
31
The distinction between a direct tax and one indirectly imposed (or an
reconcile or adjust the provisions of one statute with those of indirect tax) is really of no moment. What is more relevant is that when an
another so as to give sensible effect to both provisions. 32 ‘indirect tax’ is paid by those upon whom the tax ultimately falls, it is
The legislative intent must be ascertained from a consideration paid not as a tax but as an additional part of the cost or of the market price
of the statute as a whole, and not of an isolated part or a particular of the commodity.
provision alone. When construing a statute, the reason for its
33
This distinction was made clear by Chief Justice Castro in the
Philippine Acetylene case, when he analyzed the nature of the percentage
enactment should be kept in mind and the statute should be (sales) tax to determine whether it is a tax on the producer or on the
construed with reference to its intended scope and purpose and the 34
purchaser of the commodity. Under out Tax Code, the sales tax falls upon
evil sought to be remedied. 35
the manufacturer or producer. The phrase ‘pass on’ the tax was criticized
The NPC is a government instrumentality with the enormous as being inaccurate. Justice Castro says that the tax remains on the
task of undertaking development of hydroelectric generation of manufacturer alone. The purchaser does not pay the tax; he pays an amount
power and production of electricity from other sources, as well as added to the price because of the tax. Therefore, the tax is not ‘passed on’
the transmission of electric power on a nationwide basis, to and does not for that reason become an ‘indirect tax’ on the purchaser. It is
improve the quality of life of the people pursuant to the State eminently possible that the law maker in enacting P.D. 938 in 1976 may
have used lessons from the analysis of Chief Justice Castro in 1967
policy embodied in Section E, Article II of the 1987 Constitution. Philippine Acetylene case.
It is evident from the provisions of P.D. No. 938 that its When P.D. 938 which exempted NPC from ‘all forms of taxes’ was
________________
issued in May 1976, the so-called oil crunch had already drastically
pushed up crude oil prices from about $1.00 per bbl. in 1971 to about $10
U.S. vs. Palacio, 33 Phil. 208 (1916); Commissioner of Customs vs. Esso
31
and a peak (as it turned out) of about $34 per bbl. in 1981. In 1974-78,
Standard Eastern, Inc., 66 SCRA 113 (1975). NPC was operating the Meralco thermal plants under a lease agreement.
Larga vs. Ranada, Jr., 164 SCRA 18 (1988).
32
directly liable. NPC therefore could very well have imported its fuel oil or 806
crude residue for burning at its thermal plants. There would have been no
question in such a case as to its exemption from all duties and taxes, even 80 SUPREME COURT REPORTS
under the strictest interpretation that can be put forward. However, at the 6 ANNOTATED
time P.D. 938 was issued in 1976, there were already operating in the
Philippines three oil refineries. The establishment of these refineries in the Maceda vs. Macaraig, Jr.
Philippines involved heavy investments, were economically desirable and to cover “all forms of taxes, duties, fees, imposts, etc.” which, as
enabled the country to import crude oil and process/refine the same into hereinabove discussed, logically includes exemption from indirect
the various petroleum products at a savings to the industry and the public. taxes on petroleum products used in its operation.
The refining process produced as its largest output, in volume, fuel oil or
residue, whose conventional economic use was for burning in electric or
This is the status of the tax exemptions the NPC was enjoying
steam generating plants. Had there been no use locally for the residue, the when P.D. No. 1931 was passed, on the authority of which FIRB
oil refineries would have become largely unviable. Resolution Nos. 10-85 and 1-86 were issued, and when Executive
Again, in this circumstances, I cannot accept that P.D. 938 would Order No. 93 was promulgated, by which FIRB Resolution 17-87
have in effect forced NPC to by-pass the local oil refineries and import its was issued.
fossil fuel requirements directly in order to avail itsel of its exemption Thus, the ruling in Philippine Acetylene cannot apply to this
from ‘direct taxes.’ The oil refineries had to keep operating both for case due to the different environmental circumstances. As a matter
economic development and national security reasons. In fact, the of fact, the amendments of Section 13, under R.A. No. 6395, P.D.
restoration by the FIRB of NPC’s exemption after P.D. 1931 and E.O. 93
expressly excluded direct fuel oil importations, so as not to prejudice the
No. 380 and P.D. No. 838 appear to have been brought about by
continued operations of the local oil refineries. the earlier inconsistent rulings of the tax agencies due to the
To answer your query therefore, it is the opinion of this Department doctrine in Philippine Acetylene, so as to leave no doubt as to the
that NPC under the provisions of its Revised Charter retains its exemption exemption of the NPC from indirect taxes on petroleum products it
from duties and taxes imposed on the petroleum products purchased uses in its operation. Effectively, said amendments superseded if
locally and used for the generation of electricity. not abrogated the ruling in Philippine Acytelene that the tax
The Department in issuing this ruling does so pursuant to its power exemption of NPC should be limited to direct taxes only.
and function to supervise and control the collection of government In the light of the foregoing discussion the first corollary issue
revenues by the application and implementation of revenue laws. It is
prepared to take the measures supplemental to this ruling necessary to
must consequently be resolved in the affirmative, that is, FIRB
carry the same into full effect. Resolution No. 10-85 dated February 7, 1985 and FIRB
As presented rather extensively above, the NPC electric power rates Resolution No. 1-86 dated January 7, 1986 which restored NPC’s
did not carry the taxes and duties paid on the fuel oil it used. The point is tax exemption privileges included the restoration of the indirect
that while these levies were in fact paid to the government, no part thereof tax exemption of the NPC on petroleum products it used.
was recovered from the sale of electricity produced. As a consequence, as On the second corollary issue as to the validity of FIRB
of our most recent information, some P1.55 B in claims represent amounts resolution No. 17-87 dated June 24, 1987 which restored NPC’s
for which the oil suppliers and NPC are ‘out-of-pocket. There would have tax exemption privilege effective March 10, 1987, the Court finds
to be specific order to the Bureaus concerned for the resumption of the
processing of these claims.” 38
that the same is valid and effective.
It provides as follows:
________________ “BE IT RESOLVED, AS IT IS HEREBY RESOLVED, That the tax and
duty exemption privileges of the National Power Corporation, including
38
Annex N; italics supplied. those pertaining to its domestic purchases of petroleum and petroleum
products, granted under the terms and conditions of Commonwealth Act
805 No. 120 (Creating the National Power Corporation, defining its powers,
objectives and functions, and for other purposes), as amended, are restored
VOL. 197, MAY 31, 1991 805 effective March 10, 1987, subject to the following conditions:
Maceda vs. Macaraig, Jr.
In the latter of June 15, 1988 of then Executive Secretary 1. “1.The restoration of the tax and duty exemption privileges
Macaraig to the then Secretary of Finance, the said opinion-ruling does not apply to the following:
of the latter was confirmed and its implementation was directed. 39
The Court finds and so holds that the foregoing reasons 807
adduced in the aforestated letter of the Secretary of Finance as
VOL. 197, MAY 31, 1991 807
confirmed by the then Executive Secretary are well-taken. When
the NPC was exempted from all forms of taxes, duties, fees, Maceda vs. Macaraig, Jr.
imposts and other charges, under P.D. No. 938, it means exactly
what it says, i.e., all forms of taxes including those that were 1. 1.1Importation of fuel oil (crude equivalent) and coal;
imposed directly or indirectly on petroleum products used in its 2. 1.2Commercially-funded importations (i.e., importations which
operation. include but are not limited to those financed by the NPC’s
Reference is made in the dissenting opinion to contrary own internal funds, domestic borrowings from any source
rulings of the BIR that the exemption of the NPC extends only to whatsoever, borrowing from foreign-based private financial
taxes for which it is directly liable and not to taxes merely shifted institutions, etc.); and
to it. However, these rulings are predicated on Philippine 3. 1.3Interest income derived from any source.
Acytelene.
The doctrine in Philippine Acytelene decided in 1967 by this 1. “2.The NPC shall submit to the FIRB a report of its expansion
Court cannot apply to the present case. It involved the sales tax of program, including details of disposition of relieved tax and
products the plaintiff sold to NPC from June 2, 1953 to June 30, duty payments for such expansion on an annual basis or as
1958 when NPC was enjoying tax exemption from all taxes under often as the FIRB may require it to do so. This report shall be
Commonwealth Act No. 120, as amended by Republic Act No. in addition to the usual FIRB reporting requirements on
358 issued on June 4, 1949 hereinabove reproduced. incentive availment.”40
In said case, this Court held, that the sales tax is due from the
manufacturer and not the buyer, so plaintiff cannot claim Executive Order No. 93 provides as follows—
exemptions simply because the NPC, the buyer, was exempt. “SECTION 1. The provisions of any general or special law to the contrary
However, on September 10, 1971, Republic Act No. 6395 was notwithstanding, all tax and duty incentives granted to government and
passed as the revised charter of NPC whereby Section 13 thereof private entities are hereby withdrawn, except:
was amended by emphasizing its non-profit character and
expanding the extent of its tax exemption. 1. a)those covered by the non-impairment clause of the
Constitution;
2. b)those conferred by effective international agreements to A reading of Section 3 of said law shows that it set the policy to be
which the Government of the Republic of the Philippines is a the greater national interest. The standards of the delegated power
signatory; are also clearly provided for.
3. c)those enjoyed by enterprises registered with:
The required “standard” need not be expressed. In Edu vs.
Ericta and in De la Llana vs. Alba, this Court held: “The
42 43
1. (i)the Board of Investments pursuant to Presidential Decree No. standard may be either express or implied. If the former, the non-
1789, as amended; delegated objection is easily met. The standard though does not
2. (ii)the Export Processing Zone Authority, pursuant to
have to be spelled out specifically. It could be implied from the
Presidential Decree No. 66, as amended;
3. (iii)the Philippine Veterans Investment Development policy and purpose of the act considered as a whole.”
Corporation Industrial Authority pursuant to Presidential In People vs. Rosenthal the broad standard of “public
44
Decree No. 538, as amended; interest” was deemed sufficient. In Calalang vs. Williams, it was 45
“public welfare” and in Cervantes vs. Auditor General, it was the 46
40
Annex K to the Petition; page 176, Rollo. Mr. Justice Isagani A. Cruz commenting on the delegation of
legislative power stated—
808 “The latest in our jurisprudence indicates that delegation of legislative
80 SUPREME COURT REPORTS power has become the rule and its non-delegation the exception.
________________
8 ANNOTATED
Faculty Association, 117 SCRA 554, 572 (1982).
Maceda vs. Macaraig, Jr. 42
35 SCRA 481 (1970).
112 SCRA 294 (1982).
tion of the Fiscal Incentives Review Board.
43
44
68 Phil. 328 (1939).
“SECTION 2. The Fiscal Incentives Review Board created under 45
70 Phil. 726 (1940).
Presidential Decree No. 776, as amended, is hereby authorized to: 46
91 Phil. 359 (1952).
47
Hirabayashi vs. United States, 320 U.S. 99.
48
Araneta vs. Gatmaitan, 101 Phil. 328 (1957); see also Justice Isagani A. Cruz, Philippine
Political Law, 1984 Ed., pages 105 to 106.
1. a)restore tax and/or duty exemptions withdrawn hereunder in 49
Annex M to the Petition.
whole or in part;
2. b)revise the scope and coverage of tax and/of duty exemption 810
that may be restored.
3. c)impose conditions for the restoration of tax and/or duty 81 SUPREME COURT REPORTS
exemption; 0 ANNOTATED
4. d)prescribe the date or period of effectivity of the restoration of
tax and/or duty exemption; Maceda vs. Macaraig, Jr.
5. e)formulate and submit to the President for approval, a The reason is the increasing complexity of modern life and many technical
complete system for the grant of subsidies to deserving fields of governmental functions as in matters pertaining to tax
beneficiaries, in lieu of or in combination with the restoration exemptions. This is coupled by the growing inability of the legislature to
of tax and duty exemptions or preferential treatment in cope directly with the many problems demanding its attention. The growth
taxation, indicating the source of funding therefor, eligible of society has ramified its activities and created peculiar and sophisticated
beneficiaries and the terms and conditions for the grant problems that the legislature cannot be expected reasonably to
thereof taking into consideration the international comprehend. Specialization even in legislation has become necessary. To
commitments of the Philippines and the necessary precautions many of the problems attendant upon present day undertakings, the
such that the grant of subsidies does not become the basis for legislature may not have the competence, let alone the interest and the
countervailing action. time, to provide the required direct and efficacious, not to say specific
solutions.” 50
Incentives Review Board shall take into account any or all of the following
considerations: the rationale in favor of delegation of legislative functions—
“One thing however, is apparent in the development of the principle of
separation of powers and that is that the maxim of delegatus non potest
1. a)the effect on relative price levels; delegare or delegati potestas non potest delegare, adopted this practice
2. b)relative contribution of the beneficiary to the revenue (Delegibus et Consuetudiniis, Anglia edited by G.E. Woodline, Yale
generation effort; University Press, 1922, Vol. 2, p. 167) but which is also recognized in
3. c)nature of the activity the beneficiary is engaged; principle in the Roman Law (d. 17.18.3) has been made to adapt itself to
4. d)in general, the greater national interest to be served.” the complexities of modern government, giving rise to the adoption, within
certain limits, of the principle of subordinate legislation, not only in the
United States and England but in practically all modern
True it is that the then Secretary of Justice in Opinion No. 77 dated governments. (People vs. Rosenthal and Osmeña, 68 Phil. 318,
August 6, 1977 was of the view that the powers conferred upon 1939). Accordingly, with the growing complexities of modern life, the
the FIRB by Sections 2(a), (b), (c), and (d) of Executive Order No. multiplication of the subjects of governmental regulation, and the
93 constitute undue delegation of legislative power and is increased difficulty of administering the laws, there is a constantly
therefore unconstitutional. However, he was overruled by the growing tendency toward the delegation of greater power by the
respondent Executive Secretary in a letter to the Secretary of legislative, and toward the approval of the practice by the Courts.” (Italics
Finance dated March 30, 1989. The Executive Secretary, by supplied.)
authority of the President, has the power to modify, alter or
The legislative authority could not or is not expected to state all
reverse the construction of a statute given by a department
the detailed situations wherein the tax exemption privileges of
secretary.
persons or entities would be restored. The task may be assigned to
41
________________
an administrative body like the FIRB.
41
Annex Q to petition, citing University of the East vs. U.E. Moreover, all presumptions are indulged in favor of the con-
________________
809
Pages 82 to 83, Philippine Political Law, Isagani A. Cruz, 1989 ed.
VOL. 197, MAY 31, 1991 809
50
51
152 SCRA 730 (1987).
Maceda vs. Macaraig, Jr. 811
VOL. 197, MAY 31, 1991 811
in any economic activity. It is not relevant to this case which involves a government
Maceda vs. Macaraig, Jr. corporation.
stitutionality and validity of the statute. Such presumption can be
813
overturned if its invalidity is proved beyond reasonable doubt.
Otherwise, a liberal interpretation in favor of constitutionality of VOL. 197, MAY 31, 1991 813
legislation should be adopted.
Maceda vs. Macaraig, Jr.
52
newspapers of same day as well as the March 10, 1991 issue of the Manila Bulletin.
812 Please see Sec. 5 of P.D. No. 1931 which provide that all other laws, decrees,
57
etc. inconsistent with the same decree are “thereby repealed, amended or modified
81 SUPREME COURT REPORTS accordingly.”
2 ANNOTATED 814
Maceda vs. Macaraig, Jr. 814 SUPREME COURT REPORTS
Philippines as required by P.D. No. 776. The Court also sustained
ANNOTATED
55
as required by said executive order. Moreover, under Section 3, the oil companies but of tax relief for the NPC. The billions of
Article XVIII of the Transitory Provisions of the 1987 pesos involved in these exemptions will certainly inure to the
Constitution, it is provided that: ultimate good and benefit of the consumers who are thereby
“All existing laws, decrees, executive orders, proclamation, letters of spared the additional burden of increased power rates to cover
instructions, and other executive issuances not inconsistent with this these taxes paid or to be paid by the NPC if it is held liable for the
constitution shall remain operative until amended, repealed or revoked.”
same.
Thus, P.D. Nos. 776 and 1931 are valid and operative unless it is The fear of the serious implication of this decision in that
shown that they are inconsistent with the Constitution. NPC’s suppliers, importers and contractors may claim the same
Even assuming arguendo that P.D. Nos. 776, 1931 and privilege should be dispelled by the fact that (a) this decision
Executive Order No. 93 are not valid and are unconstitutional, the particularly treats of only the exemption of the NPC from all taxes,
result would be the same, as then the latest applicable law would duties, fees, imposts and all other charges imposed by the
be P.D. No. 938 which amended the NPC charter by granting government on the petroleum products it used or uses for its
exemption to NPC from all forms of taxes. As above discussed, operation; and (b) Section 13(d) of R.A. No. 6395 and Section
this exemption of NPC covers direct and indirect taxes on 13(d) of P.D. No. 380, both specifically exempt the NPC from all
petroleum products used in its operation. This is as it should be, if taxes, duties, fees, imposts and all other charges imposed by the
We are to hold as invalid and inoperative the withdrawal of such Government on all petroleum products used in its operation only,
tax exemptions under P.D. No. 1931 as well as under Executive which is the very exemption which this Court deems to be carried
Order No. 93 and the delegation of the power to restore these over by the passage of P.D. No. 938. As a matter of fact in Section
exemptions to the FIRB. 13(d) of P.D. No. 380 it is specified that the aforesaid exemption
The Court realizes the magnitude of the consequences of this from taxes, etc. covers those “directly or indirectly” imposed by
decision. To reiterate, in Albay this Court ruled that the NPC is the “Republic of the Philippines, its provincies, cities,
liable for real estate taxes as of June 11, 1984 (the date of municipalities and other government agencies and
promulgation of P.D. No. 1931) when NPC had ceased to enjoy instrumentalities” on said petroleum products. The exemption
tax exemption privileges since FIRB Resolution Nos. 1085 and 1- therefore from direct and indirect tax on petroleum products used
86 were not validly issued. The real estate tax liability of NPC by NPC cannot benefit the suppliers, importers and contractors of
from June 11, 1984 to December 1, 1990 is estimated to amount to NPC of other products or services.
P7.49 billion plus another P4.76 billion in fuel import duties the The Court realizes the laudable objective of petitioner to
firm had earlier paid to the government which the NPC now improve the revenue of the government. The amount of revenue
________________ received or expected to be received by this tax exemption is,
however, not going to any of the oil companies. There would be
P.D. No. 1955 was issued effective October 15, 1984 providing for the
55 no loss to the government. The said amount shall accrue to the
withdrawal of tax exemptions of private business enterprises and/or persons engaged benefit of the NPC, a government corporation, so as to enable it to
sustain its tremendous task of providing electricity for the country said decrees, I would still question the authority of the President to
and at the least cost to the consumers. Denying this tax exemption sub-delegate the powers delegated to her thereunder.
would mean hampering if not paralyzing the opera- Such sub-delegation was not permissible because potestas
________________ delegata non delegari potest. Even if we were to disregard the
opinion of Secretary of Justice Sedfrey A. Ordoñez that there were
58
See letter opinion of Secretary of Finance Vicente Jayme dated May 20, 1988. no sufficient standards in Executive Order No. 93 (although he
815
was reversed on this legal questions by the Executive Secretary),
the President’s delegated authority could still not be extended to
VOL. 197, MAY 31, 1991 815 the FIRB, which was not a delegate of the legislature.
Maceda vs. Macaraig, Jr. It is remarkable that the respondents could seriously argue that
tions of the NPC. The resulting increased revenue in the a mere administrative body like the FIRB can exercise the
817
government will also mean increased power rates to be shouldered
by the consumers if the NPC is to survive and continue to provide VOL. 197, MAY 31, 1991 817
our power requirements. The greater interest of the people must
59
consumers is P0.23 per year. (Please see Daily Inquirer of March 5, 1991; “Napocor
wants new power rate increase”). Constitution under Article VI, Section 28(4).
The ponencia holds that the rule of strict construction is not
816 applicable where the grantee is an agency of the government itself,
816 SUPREME COURT REPORTS like the MPC in the case before us. I notice, however, that
818
ANNOTATED
818 SUPREME COURT REPORTS
Maceda vs. Macaraig, Jr.
tion as having been validly granted under P.D. Nos. 1931 and ANNOTATED
1955 and Resolutions Nos. 10-85 and 1-86 of the Fiscal Incentives Maceda vs. Macaraig, Jr.
Review Board. It is also asserted that FIRB Resolution No. 17-87, the ultimate beneficiaries of the expected tax credit will be the oil
which restored MPC’s tax exemption effective March 10, 1987, companies, which certainly are not part of the Republic of the
was lawfully adopted pursuant to a valid delegation of power Philippines. As the tax refunds will not be enjoyed by the MPC
made by Executive Order No. 93. itself, I see no reason why we should be exceptionally lenient in
When P.D. Nos. 1931 and 1955 were issued by President applying the exception. The tax credits involved in this petition are
Marcos in 1984, the Batasang Pambansa was already in existence tremendous—no less than P1.58 billion. This amount could go a
and discharging its legislative powers. Presumably, these decrees long way in improving the national economy and the well-being of
were promulgated under the infamous Amendment No. 6. the Filipino people, who deserve the continuing solicitude of the
Assuming that the reservation of legislative power in the President government, including this Court. I respectfully submit that it is to
was then valid, I submit that the power was nevertheless not them that we owe our foremost loyalty.
validly exercised. My reason is that the President could legislate
DISSENTING OPINION
under the said amendment only if the Batasang Pambansa “failed
or was unable to act adequately on any matter that in his judgment
required immediate action” to meet the “exigency.” There is no SARMIENTO, J.:
showing that the presidential encroachment on legislative
prerogatives was justified under these conditions. Simply because I would like to point out specifically two things in connection with
the rubber-stamp legislature then meekly submitted did not make the majority’s disposition as to: (1) Finance Incentives Review
the usurpation valid. Board (FIRB) Resolutions Nos. 10-85 and 186; and (2) the
By these decrees, President Marcos, exercising legislative National Power Corporation’s tax exemption vis-a-vis our decision
power, delegated it to himself as executive and empowered in the case of Philippine Acetylene Co., Inc. vs. Commission of
himself and/or the Minister of Finance to restore the exemptions Internal Revenue, and in the light of the provisions of its charter,
1
previously withdrawn. Republic Act No. 6395, and the various amendments entered into
As the decrees themselves were invalid, it should follow that it.
Executive Order No. 93, which was intended only to implement
them, should also be illegal. But even assuming the legality of the (1)
On pages 20-23 of the Decision, the majority suggests that FIRB arrangements, for purposes of tax and duty exemption
Resolutions Nos. 10-85 and 1-86 had validly restored the National privileges.
Power Corporation’s tax exemption privileges, which Presidential
Decree No. 1931 had meanwhile suspended. I wish to stress that in (Sgd.) ALFREDO PIO DE RODA, JR.
the case of National Power Corporation vs. Province of Acting Minister of Finance
Albay , the Court held that the FIRB Resolutions Nos. 10-85 and
2 Acting Chairman, FIRB
1-86 had the bare force of recommendations and did not operate as
a restoration, in the absence of an approval by the President (in FISCAL INCENTIVES REVIEW BOARD
then President Marcos’ exercise of legislative powers), of tax RESOLUTION NO. 1-86
exemptions. The Court noted that there is nothing in Presidential
Decree No. 776, the FIRB charter, BE IT RESOLVED, AS IT IS HEREBY RESOLVED: That:
________________
1. 1.Effective July 1, 1985, the tax and duty exemption privileges
1
No. L-19707, August 17, 1967, 20 SCRA 1056. enjoyed by the National Power Corporation (NPC) under
2
G.R. No. 87479, June 4, 1990. Commonwealth Act No. 120, as amended, are restored;
Provided, That importations of fuel oil (crude oil equivalent)
819
and coal of the herein grantee shall be subject to the basic and
VOL. 197, MAY 31, 1991 819 additional import duties; Provided, further, That the following
shall remain fully taxable:
Maceda vs. Macaraig, Jr.
conferring on it the authority to grant or restore exemptions, other
1. a.Commercially-funded importations; and
than to make recommendations on what exemptions to grant or
2. b.Interest income derived by said grantee from bank deposits
restore. I quote: and yield or any other monetary benefits from deposit
xxx xxx xxx substitutes, trust fund and other similar arrangements.
It is to be pointed out that under Presidential Decree No. 776, the
power of the FIRB was merely to “recommend to the President of the
Philippines and for reasons of compatibility with the declared economic 821
policy, the withdrawal, modification, revocation or suspension of the VOL. 197, MAY 31, 1991 821
enforceability of any of the abovecited statutory subsidies or tax exemption
grants, except those granted by the Constitution.” It has no authority to Maceda vs. Macaraig, Jr.
impose taxes or revoke existing ones, which, after all, under the
Constitution, only the legislature may accomplish. x x x 3
xxx xxx xxx 1. 2.The NPC as a government corporation is exempt from the
real property tax on land and improvements owned by it
As the Court held there, it was only on March 10, 1987 that the provided that the beneficial use of the property is not
restoration became effective, not because Resolutions Nos. 10-85 transferred to another pursuant to the provisions of Sec. 40(a)
of the Real Property Tax Code, as amended.
and 1-86 decreed a restoration, but because of Resolution No. 17-
87 which, on the other hand, carried the approval of the Office of
the President. (FIRB Resolution No. 17-87 made the National
4
(Sgd.) CESAR E.A. VIRATA
Power Corporation’s exemption effective March 10, 1987.) Hence, Minister of Finance
Chairman—FIRB
the National Power Corporation, so the Court held, was liable for
payment of real property taxes to the Province of Albay between I respectfully submit that to say that Mr. Virata’s signature is
June 11, 1984, the date Presidential Decree No. 1931 sufficient (please note that Resolution No. 10-85 was not even
(withdrawing its tax exemptions) took effect, and March 10, 1987. signed by Mr. Virata, but rather by Mr. Alfredo Pio de Roda, Jr.)
As far therefore as the majority in the present case rules that is in fact to confer on the Board actual “restoration” or even
the National Power Corporation is also entitled to a refund as a exemption powers, because in all cases, FIRB Resolutions are
result of FIRB Resolutions Nos. 10-15 and 1-86, I respectfully signed by Mr. Virata (or the acting chairman) in his capacity as
submit that a serious conflict has arisen. Board Chairman. I submit that we can not consider an FIRB
While it is true that FIRB Resolutions Nos. 10-85 and 1-86 Resolution as an act of Mr. Virata in his capacity as Minister of
were signed by the Finance Minister Cesar Virata, I submit 5
Supra, 5.
4
Executive Order No. 93, insofar as it “delegates” the power to
Under Presidential Decree No. 1931, the Minister of Finance could restore
5 restore exemptions to the FIRB, I hold that in the first place,
exemptions. Executive Order No. 93 makes no delegation at all. As the
820
majority points out, “[u]nder Section 1(f) of Executive Order No.
93, aforestated, such tax and duty exemptions extended by the
820 SUPREME COURT REPORTS FIRB must be approved by the President.” Hence, the FIRB does
6
ANNOTATED not exercise any power—and as I had held, its powers does not
merely recommendatory—and it is the President who in fact
Maceda vs. Macaraig, Jr. exercises it. It is true that Executive Order No. 93 has set out
Board (FIRB). I find this clear from the very Resolutions in certain standards by which the FIRB, as a reviewing body, may
question: act, but I do not believe that a genuine delegation question has
FISCAL INCENTIVES REVIEW BOARD
arisen because precisely, the acts of the Board are subject to
RESOLUTION NO. 10-85
approval by the President, in the exercise of her legislative
________________
BE IT RESOLVED, AS IT IS HEREBY RESOLVED, That:
6
Decision, 42.
1. 1.Effective June 11, 1984, the tax and duty exemption
privileges enjoyed by the National Power Corporation under 822
C.A. No. 120 as amended are restored up to June 30, 1985. 822 SUPREME COURT REPORTS
2. 2.Provided, That this restoration does not apply to the
following: ANNOTATED
1. a.importations of fuel oil (crude equivalent) and coal Maceda vs. Macaraig, Jr.
as per FIRB Resolution No. 1-84;
2. b.commercially-funded importations; and powers under the Freedom Constitution. 7
alone by Congress (CONST., art. VI, sec. 28, par. 4.) Unless and until Congress,
however, repeals Executive Order No. 93, the President may continue to grant for which PAL is directly liable, and that the payment of specific
exemptions. and ad valorem taxes on petroleum products is a direct liability of
At 1063.
8
474, 1st Cong., 2nd Sess. (1989), 4-5; also 13; also 25; also 29; emphasis in the
Maceda vs. Macaraig, Jr. original.
“net of tax” because it never paid for the tax in the first place, and
was never liable therefor, in the second place. 825
According to the majority, Philippine Acetylene has been VOL. 197, MAY 31, 1991 825
“abrogated,” and the majority points to the various amendments to
the charter of the National Power Corporation as authority for its
Maceda vs. Macaraig, Jr.
view. ...” 10
First, there is nothing in those amendments that would Again, under BIR Ruling No. 152-86, the Bureau of Internal
remotely point to this conclusion. Revenue reiterated, as to the National Power Corporation’s claim
Second, Acetylene’s pronouncement is founded on the very for a refund, I quote:
. . . this Office has maintained the stand that your tax exemption privileges
science of taxation—that indirect taxes are no taxes for purposes
covers only taxes for which you are directly liable. 11
of exemption, and that consequently, one who did not pay taxes
can not claim an exemption although the price he paid for the Per BIR Ruling No. 70-043, dated August 27, 1970, the Bureau
goods included taxes. To enable him to claim an exemption, as the likewise held that the term “all forms of taxes” covers only direct
majority would now enable him (Acetylene having been taxes. 12
“abrogated”), is, I submit, to defeat the very laws of science. In his letter addressed to former BIR Commissioner Tan, Atty.
The theory of “indirect taxes” and that no exemption is Reynoso Floreza, BIR Assistant Commissioner for Legal, opposed
possible therefrom, so I reiterate, are well-settled concepts of Caltex Philippines’ claim for a P58-million refund, and although
taxation, as the law of supply and demand is to the law of the Commissioner at that time hedged, he was later persuaded by
economics. A President is said (unfairly) to have attempted it, but Special Assistant Abraham De la Viña, and in fact, instructed
one can not repeal the law on supply and demand. Atty. De la Viña to “prepare [the] corresponding notice to NPC
I do not find the National Power Corporation’s alleged and Caltex” to inform them that their claim has been denied.
13
exemption from indirect tax evident, as the majority finds it (Although strangely, he changed his mind later.)
evident, from the Corporation’s charter, Republic Act No. 6395, as Hence, I do not think that we can judiciously rely on executive
amended by Presidential Decrees Nos. 380 and 938. It is true that construction because executive construction has been at best,
since Commonwealth Act No. 120 (the Corporation’s original erratic, and at worst, conflicting.
charter, which Republic Act No. 6395 repealed), the Corporation I do not find that majority’s historical construction a reliable
has enjoyed a “preferential tax treatment,” I seriously doubt, yardstick in this case, for if the historical development of the law
however, whether or not that preference embraces “indirect taxes” were any indication, the legislative intent is, on the contrary, to
as well—which, as I said, are no taxes for purposes of claims for exclude indirect taxes from the coverage of the National Power
exemptions by the “indirect payor.” And albeit Presidential Decree Corporation’s tax exemption. Thus, under Commonwealth Act No.
No. 938 refers to “all forms of taxes,” I can not take that to 120, the Corporation was made exempt from the payment of all
include, as a matter of logic, “indirect taxes,” and as I discussed taxes in connection with the issuance of bonds. Under Republic
above, that scenario is not possible. Act No. 358, it was made exempt from the payment of all taxes,
I quite agree that the legislative intent, based on a perusal of duties, fees, imposts, and charges of the national and local
Republic Act No. 6395 and subsequent amendatory statutes was to governments.
give the National Power Corporation a broad tax preference on Under Republic Act No. 6395, the National Power
account of the vital functions it performs, indeed, “to enable the Corporation was further declared exempt:
Corporation to pay the indebtedness and obligation and in ________________
furtherance and effective implementation of the policy initiated”
by its charter. I submit, however, that that alone can 10
Id., 4; also 15; also 25; also 39, 40; emphasis in the original.
824 11
Id., 16; emphasis in the original.
12
Id., 24; also BIR Ruling No. 068-79 (1979), id., involving specific taxes.
824 SUPREME COURT REPORTS 13
Id., 31.
ANNOTATED 826
826 SUPREME COURT REPORTS electricity to consumers because the cost of electric generation and
sale already takes into account the tax component.” 17
ANNOTATED ________________
17
Comm. on Accountability of Public Officers and Investigations,
charges imposed by the Republic of the Philippines, its
provinces, cities, municipalities and other government 828
agencies and instrumentalities, on all petroleum 828 SUPREME COURT REPORTS
products used by the Corporation . . .
ANNOTATED
By virtue of Presidential Decree No. 380, it was made exempt: Maceda vs. Macaraig, Jr.
I can not accept finally, what to me is an unabashed effort by the
1. (d)from all taxes, duties, fees, imposts, and all other oil firms to evade taxes, the arrangement (as I gather from the
charges imposed directly or indirectly by the Republic Decision) between the National Power Corporation and the oil
of the Philippines, its provinces, cities, municipalities companies in which the former assigns its tax credit to the latter. I
and other government agencies and instrumentalities, also presume that this is the natural consequence of the
on all petroleum products used by the corporation in “understanding,” as I discussed above, to purchase oil “net of tax”
the generation, transmission, utilization and sale of between NAPOCOR and the oil firms, because logically, the latter
electric power. will look for other sources from which to recoup the taxes they
had failed to shift and recover their losses as a result. According to
the Decision, no tax is left unpaid because they have been pre-paid
By virtue however of Presidential Decree No. 938, reference to before the oil is delivered to the National Power Corporation. But
“indirect taxes” was omitted thus: whatever taxes are paid are in fact wiped out because the
. . . To enable the Corporation to pay its indebtedness and obligations and subsequent credit transfer will enable the oil companies to recover
in furtherance and effective implementation of the policy enunciated in
the taxes pre-paid.
Section One of this Act, the Corporation, including its subsidiaries, is
hereby declared exempt from the payment of all forms of taxes, duties, According to the majority, “[t]his is not a case of tax evasion
fees, imposts as well as costs and service fees including filing fees, appeal of the oil companies but a tax relief for the NPC.” The problem, 18
bonds, supersedeas bonds, in any court or administrative proceedings. precisely, is that while it is NPC which is entitled to “tax relief,”
the arrangement between NPC and the oil companies has enabled
The deletion of “indirect taxes” in the Decree is, so I hold, instead the latter to enjoy relief—when relief is due to NPC alone.
significant, because if the intent of the law were truly to exempt The point still remains that no tax money actually reaches our
the National Power Corporation from so-called indirect taxes as coffers because as I said, that arrangement enables them to wipe it
well, the law would have said so specifically, as it said so out. If the NPC were the direct importer, I would then have no
specifically in Presidential Decree No. 380. reason to object, after all, the NPC is exempt from direct taxation
I likewise do not think that the reference to the whereas and secondly, the money it is paying to finance its importations
clauses of Presidential Decree No. 938 is warranted, in particular, belongs to the government. The law, however, gave the exemption
the following whereas clause: to NPC, not the oil companies.
WHEREAS, in the application of the tax exemption provisions of the According to the Decision: “The amount of revenue received
Revised Charter, the non-profit character of NPC has not been fully or expected to be received by this tax exemption is, however, not
utilized because of the restrictive interpretations of the taxing agencies of
going to any of the oil companies . . .” and that “[t]here would be
19
I am not certain whether it can be basis for a “liberal” With due respect to the majority, it is erroneous, if not
construction. I am more inclined to believe that the term misleading, to say that no money is going to the oil companies and
“restrictive interpretations” refers to BIR rulings confining the that the government is not losing anything. Definitely, the tax-
exemption to the Corporation alone (but not its subsidiaries), and credit assignment arrangement between the NPC and the oil S.
not, Rpt. 474, id., 61.
827 ________________
the period when supply is being adjusted to changes in demand it must be events have suggested, “miscalculations” at the top levels of NPC.
in part absorbed. In practice the businessman will treat the levy as an I can not however attribute it, as the majority in all earnest
added cost of operation and distribute it over his sales as he would any attributes it, to the fact, far-fetched as it is, that the NPC has not
other cost, increasing by more than the amount of the tax prices of goods been allowed to enjoy exemption from indirect taxes.
demand for which will be least affected and leaving other prices
unchanged. 47 Harv. Ld. Rev. 860, 869 (1934). 16
Tax exemptions furthermore are a matter of personal privilege
of the grantee. It has been held that as such, they can not be
It therefore appears to me that any talk of the public ultimately assigned, unless the statute granting them permits an assignment. 22
absorbing the tax is pure speculation. While “shifting the burden of tax” is a permissible method
Second, it has typically been the bogeyman that business, with of avoiding a tax, evading it is a totally different matter. And while
due respect, has invoked to avoid the payment of tax. And to be I agree with the National Power Corporation should be given the
sure, the populist allure of that argument has appealed to many, widest financial assistance possible, assistance should not be an
yet it has probably also obscured what is as fundamental as excuse for plain tax evasion, if not tax fraud, by Big Business, in
protecting consumers—preserving public revenue, the very particular, Big Oil.
lifeblood of the nation. I am afraid that this is not healthy policy,
and what occurs to me—and what indeed leaves me very (3) Postscripts
uncomfortable—is that by the stroke of the pen, we sould have in
fact given away P13,750,214,639.00 (so it is said) of legitimate With all due respect, I do not think that the majority has
government money. appreciated enough the serious implications of its decision—to the
According moreover to Committee Report No. 474 of the Sen contrary, in particular, its shrinking coffers. I do not think that we
ate, “NPC itself says that it does not use taxes to increase prices of are, after all, talking here of “simple” billions, but in fact, billions
upon billions in lost revenue looming large.
I am also afraid that the majority is not quite aware that it is from “indirect taxes on petroleum” alone. What is sauce for the
setting a precedent not only for the oil companies but in fact, for goose (taxes on petroleum) is also sauce for the gander (all other
the National Power Corporation’s suppliers, importers, and taxes).
contractors. Although I am not, as of this writing, aware of their I still would have reason for my fears.
exact number or the precise amount the National Power I can not, in all candor, accept the majority’s efforts, and
Corporation has spent in payment of supplies and equipment, I can going back to the Corporation’s charters, to “carry over,” in
________________ particular, Section 13(d) of Presidential Decree No. 380, to
Presidential Decree No. 938. First of all, if Presidential Decree No.
See Maceda vs. Energy Regulatory Board, G.R. Nos. 95203-05 and 95119-21,
21
938 meant to absorb Presidential Decree No. 380 it would have
December 18, 1990.
DE LEON, THE FUNDAMENTALS OF TAXATION 55 (1980 ed.)
22
said so specifically, or at the very least, left it alone. Obviously,
Presidential Decree No. 938 meant otherwise, to begin with,
830 because it is precisely an amendatory statute. Secondly, a “carry-
830 SUPREME COURT REPORTS over” would have allowed this Court to make law, so only it can
fit in its theories.
ANNOTATED ________________
Maceda vs. Macaraig, Jr.
Supra.
imagine that the Corporation’s assets consisting of those supplies
24
25
Pres. Decree No. 938, supra, sec. 10.
and equipment, machines and machinery, are worth no fewer than
billions. 832
With this precedent, there is no stopping indeed the 832 SUPREME COURT REPORTS
NAPOCOR’s suppliers, from makers of storage tanks, steel
towers, cables and cable poles, to builders of dikes, to layers of ANNOTATED
pipelines, and pipes, from claiming the same privilege. Maceda vs. Macaraig, Jr.
There is no stopping the NPC’s contractors, from suppliers of The country has gone to lengths fashioning an elaborate tax
cement for plant fixtures and lumber for edifices, to the very system and an efficient tax collection machinery. Planners’ efforts
engineers and technicians who designed them, from demanding have seen various shifts in the taxing system, from specific, to ad
equal rights. valorem, to value-added taxation, purportedly to maximize
There will be no stopping the Corporation’s transporters, from collection. For this year, the Bureau of Internal Revenue has a
container van and rig owners to suppliers of service vehicles of collection target of P130 billion, and significantly, it has been
NPC executives, from demanding the privilege. unrelenting in its tax and tax-consciousness drive. I am not
What is to stop, indeed, caterers of food served in board prepared to cite numbers but I figure that the money it will lose by
meetings or in NAPOCOR cafeterias from asking for exemption, virtue of this Decision is a meaningful chunk off its target, and a
since food billed includes sales taxes shifted to a tax-exempt entity significant setback to the government’s programs.
and, following the theory of the majority, taxes that may be I am afraid that by this Decision, the majority has ignored the
refunded? forest (the welfare of the entire nation) in favor of a tree (the
What is, indeed, to stop all imagined claimants from welfare of a government corporation). The issue, in my opinion, is
demanding all imagined claims, since as we are aware, the rule of not the viability of the National Power Corporation—as if the fate
taxation—and consequently, tax exemption—is uniform and of the nation depended alone on it—but the very survival of the
equitable? 23
23
CONST., art. VI, sec. 28(1).
831
VOL. 197, MAY 31, 1991 831
Maceda vs. Macaraig, Jr.
ticularly treats of only the exemption of the NPC from all taxes,
duties, fees, imposts and all other charges imposed by the
government on the petroleum products it need or uses for its
operation . . . ” Firstly, under Presidential Decree No. 938, the
24