NATIONAL POWER CORPORATION, petitioner, vs. CITY OF CABANATUAN, respondent.

This is a petition for review!" of the #e$ision%" an& the Reso'(tion)" of the Co(rt of Appea's
&ate& *ar$h !%, %++! an& ,('- !+, %++!, respe$tive'-, fin&in. petitioner Nationa' Power Corporation
/NPC0 'ia1'e to pa- fran$hise ta2 to respon&ent Cit- of Ca1anat(an.
Petitioner is a .overn3ent4owne& an& $ontro''e& $orporation $reate& (n&er Co33onwea'th A$t
No. !%+, as a3en&e&.5" It is tas6e& to (n&erta6e the 7&eve'op3ent of h-&roe'e$tri$ .enerations of
power an& the pro&($tion of e'e$tri$it- fro3 n($'ear, .eother3a' an& other so(r$es, as we'' as, the
trans3ission of e'e$tri$ power on a nationwi&e 1asis.89" Con$o3itant to its 3an&ate& &(t-, petitioner
has, a3on. others, the power to $onstr($t, operate an& 3aintain power p'ants, a(2i'iar- p'ants, power
stations an& s(1stations for the p(rpose of &eve'opin. h-&ra('i$ power an& s(pp'-in. s($h power to the
inha1itants.:"
For 3an- -ears now, petitioner se''s e'e$tri$ power to the resi&ents of Ca1anat(an Cit-, postin. a
.ross in$o3e of P!+;,<!5,!<;.=: in !==%.;" P(rs(ant to se$tion ); of Or&inan$e No. !:94=%,<" the
respon&ent assesse& the petitioner a fran$hise ta2 a3o(ntin. to P<+<,:+:.5!, representin. ;9> of !>
of the 'atter?s .ross re$eipts for the pre$e&in. -ear.="
Petitioner, whose $apita' sto$6 was s(1s$ri1e& an& pai& who''- 1- the Phi'ippine @overn3ent,
!+" ref(se& to pa- the ta2 assess3ent. It ar.(e& that the respon&ent has no a(thorit- to i3pose ta2 on
.overn3ent entities. Petitioner a'so $onten&e& that as a non4profit or.aniAation, it is e2e3pte& fro3
the pa-3ent of a'' for3s of ta2es, $har.es, &(ties or fees!!" in a$$or&an$e with se$. !) of Rep. A$t
No. :)=9, as a3en&e&, viz:
7Be$.!). Non-profit Character of the Corporation; Exemption from all Taxes, Duties, Fees, mposts
and !ther Char"es #$ %overnment and %overnmental nstrumentalities.- The Corporation sha'' 1e
non4profit an& sha'' &evote a'' its ret(rn fro3 its $apita' invest3ent, as we'' as e2$ess reven(es fro3 its
operation, for e2pansion. To ena1'e the Corporation to pa- its in&e1te&ness an& o1'i.ations an& in
f(rtheran$e an& effe$tive i3p'e3entation of the po'i$- en(n$iate& in Be$tion one of this A$t, the
Corporation is here1- e2e3ptC
/a0 Fro3 the pa-3ent of a'' ta2es, &(ties, fees, i3posts, $har.es, $osts an& servi$e fees in an- $o(rt or
a&3inistrative pro$ee&in.s in whi$h it 3a- 1e a part-, restri$tions an& &(ties to the Rep(1'i$ of the
Phi'ippines, its provin$es, $ities, 3(ni$ipa'ities an& other .overn3ent a.en$ies an& instr(3enta'itiesD
/10 Fro3 a'' in$o3e ta2es, fran$hise ta2es an& rea't- ta2es to 1e pai& to the Nationa' @overn3ent, its
provin$es, $ities, 3(ni$ipa'ities an& other .overn3ent a.en$ies an& instr(3enta'itiesD
/$0 Fro3 a'' i3port &(ties, $o3pensatin. ta2es an& a&van$e& sa'es ta2, an& wharfa.e fees on i3port of
forei.n .oo&s reE(ire& for its operations an& proFe$tsD an&
/&0 Fro3 a'' ta2es, &(ties, fees, i3posts, an& a'' other $har.es i3pose& 1- the Rep(1'i$ of the
Phi'ippines, its provin$es, $ities, 3(ni$ipa'ities an& other .overn3ent a.en$ies an& instr(3enta'ities,
on a'' petro'e(3 pro&($ts (se& 1- the Corporation in the .eneration, trans3ission, (ti'iAation, an& sa'e
of e'e$tri$ power.8 !%"
The respon&ent fi'e& a $o''e$tion s(it in the Re.iona' Tria' Co(rt of Ca1anat(an Cit-, &e3an&in.
that petitioner pa- the assesse& ta2 &(e, p'(s a s(r$har.e eE(iva'ent to %9> of the a3o(nt of ta2, an&
%> 3onth'- interest.!)" Respon&ent a''e.e& that petitioner?s e2e3ption fro3 'o$a' ta2es has 1een
repea'e& 1- se$tion !=) of Rep. A$t No. ;!:+,!5" whi$h rea&s as fo''owsC
7Be$. !=). &ithdra'al of Tax Exemption (rivile"es.- Un'ess otherwise provi&e& in this Co&e, ta2
e2e3ptions or in$entives .rante& to, or present'- enFo-e& 1- a'' persons, whether nat(ra' or F(ri&i$a',
in$'(&in. .overn3ent owne& or $ontro''e& $orporations, e2$ept 'o$a' water &istri$ts, $ooperatives &('-
re.istere& (n&er R.A. No. :=)<, non4sto$6 an& non4profit hospita's an& e&($ationa' instit(tions, are
here1- with&rawn (pon the effe$tivit- of this Co&e.8
On ,an(ar- %9, !==:, the tria' $o(rt iss(e& an Or&er!9" &is3issin. the $ase. It r('e& that the ta2
e2e3ption privi'e.es .rante& to petitioner s(1sist &espite the passa.e of Rep. A$t No. ;!:+ for the
fo''owin. reasonsC /!0 Rep. A$t No. :)=9 is a parti$('ar 'aw an& it 3a- not 1e repea'e& 1- Rep. A$t No.
;!:+ whi$h is a .enera' 'awD /%0 se$tion !=) of Rep. A$t No. ;!:+ is in the nat(re of an i3p'ie& repea'
whi$h is not favore&D an& /)0 'o$a' .overn3ents have no power to ta2 instr(3enta'ities of the nationa'
.overn3ent. Pertinent portion of the Or&er rea&sC
7The E(estion of whether a parti$('ar 'aw has 1een repea'e& or not 1- a s(1seE(ent 'aw is a 3atter of
'e.is'ative intent. The 'aw3a6ers 3a- e2press'- repea' a 'aw 1- in$orporatin. therein repea'in.
provisions whi$h e2press'- an& spe$ifi$a''- $ite/s0 the parti$('ar 'aw or 'aws, an& portions thereof, that
are inten&e& to 1e repea'e&. A &e$'aration in a stat(te, (s(a''- in its repea'in. $'a(se, that a parti$('ar
an& spe$ifi$ 'aw, i&entifie& 1- its n(31er or tit'e is repea'e& is an e2press repea'D a'' others are i3p'ie&
repea'. Be$. !=) of R.A. No. ;!:+ is an i3p'ie& repea'in. $'a(se 1e$a(se it fai's to i&entif- the a$t or
a$ts that are inten&e& to 1e repea'e&. It is a we''4sett'e& r('e of stat(tor- $onstr($tion that repea's of
stat(tes 1- i3p'i$ation are not favore&. The pres(3ption is a.ainst in$onsisten$- an& rep(.nan$- for
the 'e.is'ative is pres(3e& to 6now the e2istin. 'aws on the s(1Fe$t an& not to have ena$te&
in$onsistent or $onf'i$tin. stat(tes. It is a'so a we''4sett'e& r('e that, .enera''-, .enera' 'aw &oes not
repea' a spe$ia' 'aw (n'ess it $'ear'- appears that the 'e.is'ative has inten&e& 1- the 'atter .enera' a$t to
3o&if- or repea' the ear'ier spe$ia' 'aw. Th(s, &espite the passa.e of R.A. No. ;!:+ fro3 whi$h the
E(estione& Or&inan$e No. !:94=% was 1ase&, the ta2 e2e3ption privi'e.es of &efen&ant NPC re3ain.
Another point .oin. a.ainst p'aintiff in this $ase is the r('in. of the B(pre3e Co(rt in the $ase of Bas$o
vs. Phi'ippine A3(se3ent an& @a3in. Corporation, !=; BCRA 9%, where it was he'& thatC
GLo$a' .overn3ents have no power to ta2 instr(3enta'ities of the Nationa' @overn3ent. PA@COR is a
.overn3ent owne& or $ontro''e& $orporation with an ori.ina' $harter, P# !<:=. A'' of its shares of
sto$6s are owne& 1- the Nationa' @overn3ent. 222 Bein. an instr(3enta'it- of the .overn3ent,
PA@COR sho('& 1e an& a$t(a''- is e2e3pt fro3 'o$a' ta2es. Otherwise, its operation 3i.ht 1e
1(r&ene&, i3pe&e& or s(1Fe$te& to $ontro' 1- 3ere 'o$a' .overn3ent.?
Li6e PA@COR, NPC, 1ein. a .overn3ent owne& an& $ontro''e& $orporation with an ori.ina' $harter
an& its shares of sto$6s owne& 1- the Nationa' @overn3ent, is 1e-on& the ta2in. power of the Lo$a'
@overn3ent. Coro''ar- to this, it sho('& 1e note& here that in the NPC Charter?s &e$'aration of Po'i$-,
Con.ress &e$'are& thatC G222 /%0 the tota' e'e$trifi$ation of the Phi'ippines thro(.h the &eve'op3ent of
power fro3 a'' servi$es to 3eet the nee&s of in&(stria' &eve'op3ent an& &ispersa' an& nee&s of r(ra'
e'e$trifi$ation are pri3ar- o1Fe$tives of the nations whi$h sha'' 1e p(rs(e& $oor&inate'- an& s(pporte&
1- a'' instr(3enta'ities an& a.en$ies of the .overn3ent, in$'(&in. its finan$ia' instit(tions.?
/(n&ers$orin. s(pp'ie&0. To a''ow p'aintiff to s(1Fe$t &efen&ant to its ta24or&inan$e wo('& 1e to i3pe&e
the avowe& .oa' of this .overn3ent instr(3enta'it-.
Un'i6e the Btate, a $it- or 3(ni$ipa'it- has no inherent power of ta2ation. Its ta2in. power is 'i3ite& to
that whi$h is provi&e& for in its $harter or other stat(te. An- .rant of ta2in. power is to 1e $onstr(e&
stri$t'-, with &o(1ts reso've& a.ainst its e2isten$e.
Fro3 the e2istin. 'aw an& the r('in.s of the B(pre3e Co(rt itse'f, it is ver- $'ear that the p'aintiff $o('&
not i3pose the s(1Fe$t ta2 on the &efen&ant.8 !:"
On appea', the Co(rt of Appea's reverse& the tria' $o(rt?s Or&er!;" on the .ro(n& that se$tion !=),
in re'ation to se$tions !); an& !9! of the L@C, e2press'- with&rew the e2e3ptions .rante& to the
petitioner.!<" It or&ere& the petitioner to pa- the respon&ent $it- .overn3ent the fo''owin.C /a0 the
s(3 of P<+<,:+:.5! representin. the fran$hise ta2 &(e 1ase& on .ross re$eipts for the -ear !==%, /10 the
ta2 &(e ever- -ear thereafter 1ase& in the .ross re$eipts earne& 1- NPC, /$0 in a'' $ases, to pa- a
s(r$har.e of %9> of the ta2 &(e an& (npai&, an& /&0 the s(3 of P !+,+++.++ as 'iti.ation e2pense.!="
On Apri' 5, %++!, the petitioner fi'e& a *otion for Re$onsi&eration on the Co(rt of Appea'?s
#e$ision. This was &enie& 1- the appe''ate $o(rt, vizC
7The Co(rt fin&s no 3erit in NPC?s 3otion for re$onsi&eration. Its ar.(3ents reiterate& therein that the
ta2in. power of the provin$e (n&er Art. !); /sic0 of the Lo$a' @overn3ent Co&e refers 3ere'- to
private persons or $orporations in whi$h $ate.or- it /NPC0 &oes not 1e'on., an& that the L@C /RA
;!:+0 whi$h is a .enera' 'aw 3a- not i3p'ie&'- repea' the NPC Charter whi$h is a spe$ia' 'awHfin&s
the answer in Be$tion !=) of the L@C to the effe$t that Gta2 e2e3ptions or in$entives .rante& to, or
present'- enFo-e& 1- a'' persons, whether nat(ra' or F(ri&i$a', in$'(&in. .overn3ent4owne& or
$ontro''e& $orporations e2$ept 'o$a' water &istri$ts 222 are here1- with&rawn.? The repea' is &ire$t an&
(neE(ivo$a', not i3p'ie&.
IN IIEW WJEREOF, the 3otion for re$onsi&eration is here1- #ENIE#.
BO OR#ERE#.8%+"
In this petition for review, petitioner raises the fo''owin. iss(esC
7A. TJE COURT OF APPEALB @RAIELY ERRE# IN JOL#IN@ TJAT NPC, A PUBLIC NON4
PROFIT CORPORATION, IB LIABLE TO PAY A FRANCJIBE TAK AB IT FAILE# TO CONBI#ER
TJAT BECTION !); OF TJE LOCAL @OIERN*ENT CO#E IN RELATION TO BECTION !)!
APPLIEB ONLY TO PRIIATE PERBONB OR CORPORATIONB EN,OYIN@ A FRANCJIBE.
B. TJE COURT OF APPEALB @RAIELY ERRE# IN JOL#IN@ TJAT NPC?B EKE*PTION
FRO* ALL FOR*B OF TAKEB JAB BEEN REPEALE# BY TJE PROIIBION OF TJE LOCAL
@OIERN*ENT CO#E AB TJE ENACT*ENT OF A LATER LE@IBLATION, WJICJ IB A
@ENERAL LAW, CANNOT BE CONBTRUE# TO JAIE REPEALE# A BPECIAL LAW.
C. TJE COURT OF APPEALB @RAIELY ERRE# IN NOT CONBI#ERIN@ TJAT AN EKERCIBE
OF POLICE POWER TJROU@J TAK EKE*PTION BJOUL# PREIAIL OIER TJE LOCAL
@OIERN*ENT CO#E.8
It is 1e-on& &isp(te that the respon&ent $it- .overn3ent has the a(thorit- to iss(e Or&inan$e No.
!:94=% an& i3pose an ann(a' ta2 on 71(sinesses enFo-in. a fran$hise,8 p(rs(ant to se$tion !9! in
re'ation to se$tion !); of the L@C, vizC
7Be$. !);. Fran$hise Ta2.- Notwithstan&in. an- e2e3ption .rante& 1- an- 'aw or other spe$ia' 'aw, the
provin$e 3a- i3pose a ta2 on 1(sinesses enFo-in. a fran$hise, at a rate not e2$ee&in. fift- per$ent
/9+>0 of one per$ent /!>0 of the .ross ann(a' re$eipts for the pre$e&in. $a'en&ar -ear 1ase& on the
in$o3in. re$eipt, or rea'iAe&, within its territoria' F(ris&i$tion.
In the $ase of a new'- starte& 1(siness, the ta2 sha'' not e2$ee& one4twentieth /!L%+0 of one per$ent
/!>0 of the $apita' invest3ent. In the s($$ee&in. $a'en&ar -ear, re.ar&'ess of when the 1(siness starte&
to operate, the ta2 sha'' 1e 1ase& on the .ross re$eipts for the pre$e&in. $a'en&ar -ear, or an- fra$tion
thereof, as provi&e& herein.8 )emphasis supplied*
222
Be$. !9!. B$ope of Ta2in. Powers.4 E2$ept as otherwise provi&e& in this Co&e, the $it-, 3a- 'ev- the
ta2es, fees, an& $har.es whi$h the provin$e or 3(ni$ipa'it- 3a- i3poseC (rovided, ho'ever, That the
ta2es, fees an& $har.es 'evie& an& $o''e$te& 1- hi.h'- (r1aniAe& an& in&epen&ent $o3ponent $ities
sha'' a$$r(e to the3 an& &istri1(te& in a$$or&an$e with the provisions of this Co&e.
The rates of ta2es that the $it- 3a- 'ev- 3a- e2$ee& the 3a2i3(3 rates a''owe& for the provin$e or
3(ni$ipa'it- 1- not 3ore than fift- per$ent /9+>0 e2$ept the rates of professiona' an& a3(se3ent
ta2es.8
Petitioner, however, s(13its that it is not 'ia1'e to pa- an ann(a' fran$hise ta2 to the respon&ent
$it- .overn3ent. It $onten&s that se$tions !); an& !9! of the L@C in re'ation to se$tion !)!, 'i3it the
ta2in. power of the respon&ent $it- .overn3ent to private entities that are en.a.e& in tra&e or
o$$(pation for profit.
Be$tion !)! /30 of the L@C &efines a 7fran$hise8 as 7a ri.ht or privi'e.e, affe$te& with p(1'i$
interest whi$h is $onferre& (pon private persons or $orporations, (n&er s($h ter3s an& $on&itions as the
.overn3ent an& its po'iti$a' s(1&ivisions 3a- i3pose in the interest of the p(1'i$ we'fare, se$(rit- an&
safet-.8 Fro3 the phraseo'o.- of this provision, the petitioner $'ai3s that the wor& 7private8 3o&ifies
the ter3s 7persons8 an& 7$orporations.8 Jen$e, when the L@C (ses the ter3 7fran$hise,8 petitioner
s(13its that it sho('& refer spe$ifi$a''- to fran$hises .rante& to private nat(ra' persons an& to private
$orporations.%)" Er.o, its $harter sho('& not 1e $onsi&ere& a 7fran$hise8 for the p(rpose of i3posin.
the fran$hise ta2 in E(estion.
On the other han&, se$tion !)! /&0 of the L@C &efines 71(siness8 as 7tra&e or $o33er$ia' a$tivit-
re.('ar'- en.a.e& in as 3eans of 'ive'ihoo& or with a view to profit.8 Petitioner $'ai3s that it is not
en.a.e& in an a$tivit- for profit, in as 3($h as its $harter spe$ifi$a''- provi&es that it is a 7non4profit
or.aniAation.8 In an- $ase, petitioner ar.(es that the a$$(3('ation of profit is 3ere'- in$i&enta' to its
operationD a'' these profits are reE(ire& 1- 'aw to 1e $hanne'e& for e2pansion an& i3prove3ent of its
fa$i'ities an& servi$es.%5"
Petitioner a'so a''e.es that it is an instr(3enta'it- of the Nationa' @overn3ent,%9" an& as s($h,
3a- not 1e ta2e& 1- the respon&ent $it- .overn3ent. It $ites the &o$trine in Bas$o vs. Phi'ippine
A3(se3ent an& @a3in. Corporation%:" where this Co(rt he'& that 'o$a' .overn3ents have no power
to ta2 instr(3enta'ities of the Nationa' @overn3ent, vizC
7Lo$a' .overn3ents have no power to ta2 instr(3enta'ities of the Nationa' @overn3ent.
PA@COR has a &(a' ro'e, to operate an& re.('ate .a31'in. $asinos. The 'atter ro'e is .overn3enta',
whi$h p'a$es it in the $ate.or- of an a.en$- or instr(3enta'it- of the @overn3ent. Bein. an
instr(3enta'it- of the @overn3ent, PA@COR sho('& 1e an& a$t(a''- is e2e3pt fro3 'o$a' ta2es.
Otherwise, its operation 3i.ht 1e 1(r&ene&, i3pe&e& or s(1Fe$te& to $ontro' 1- a 3ere 'o$a'
.overn3ent.
GThe states have no power 1- ta2ation or otherwise, to retar&, i3pe&e, 1(r&en or in an- 3anner $ontro'
the operation of $onstit(tiona' 'aws ena$te& 1- Con.ress to $arr- into e2e$(tion the powers veste& in
the fe&era' .overn3ent. /*C C(''o$h v. *ar-'an&, 5 Wheat )!:, 5 L E&. 9;=0?
This &o$trine e3anates fro3 the Gs(pre3a$-? of the Nationa' @overn3ent over 'o$a' .overn3ents.
G,(sti$e Jo'3es, spea6in. for the B(pre3e Co(rt, 3a&e referen$e to the entire a1sen$e of power on the
part of the Btates to to($h, in that wa- /ta2ation0 at 'east, the instr(3enta'ities of the Unite& Btates
/,ohnson v. *ar-'an&, %95 UB 9!0 an& it $an 1e a.ree& that no state or political su#division can
re"ulate a federal instrumentalit$ in such a 'a$ as to prevent it from consummatin" its federal
responsi#ilities, or even seriousl$ #urden it from accomplishment of them.? /Antiea(, *o&ern
Constit(tiona' Law, Io'. %, p. !5+, ita'i$s s(pp'ie&0
Otherwise, 3ere $reat(res of the Btate $an &efeat Nationa' po'i$ies thr( e2ter3ination of what 'o$a'
a(thorities 3a- per$eive to 1e (n&esira1'e a$tivities or enterprise (sin. the power to ta2 as G a too'
re.('ation? / U.B. v. Ban$heA, )5+ UB 5%0.
The power to ta2 whi$h was $a''e& 1- ,(sti$e *arsha'' as the Gpower to &estro-? /*$ C(''o$h v.
*ar-'an&, s(pra0 $annot 1e a''owe& to &efeat an instr(3enta'it- or $reation of the ver- entit- whi$h
has the inherent power to wie'& it.8
Petitioner $onten&s that se$tion !=) of Rep. A$t No. ;!:+, with&rawin. the ta2 privi'e.es of
.overn3ent4owne& or $ontro''e& $orporations, is in the nat(re of an i3p'ie& repea'. A spe$ia' 'aw, its
$harter $annot 1e a3en&e& or 3o&ifie& i3p'ie&'- 1- the 'o$a' .overn3ent $o&e whi$h is a .enera' 'aw.
ConseE(ent'-, petitioner $'ai3s that its e2e3ption fro3 a'' ta2es, fees or $har.es (n&er its $harter
s(1sists &espite the passa.e of the L@C, vizC
7It is a we''4sett'e& r('e of stat(tor- $onstr($tion that repea's of stat(tes 1- i3p'i$ation are not favore&
an& as 3($h as possi1'e, effe$t 3(st 1e .iven to a'' ena$t3ents of the 'e.is'at(re. *oreover, it has to 1e
$on$e&e& that the $harter of the NPC $onstit(tes a spe$ia' 'aw. Rep(1'i$ A$t No. ;!:+, is a .enera' 'aw.
It is a 1asi$ r('e in stat(tor- $onstr($tion that the ena$t3ent of a 'ater 'e.is'ation whi$h is a .enera' 'aw
$annot 1e $onstr(e& to have repea'e& a spe$ia' 'aw. Where there is a $onf'i$t 1etween a .enera' 'aw an&
a spe$ia' stat(te, the spe$ia' stat(te sho('& prevai' sin$e it evin$es the 'e.is'ative intent 3ore $'ear'-
than the .enera' stat(te.8%<"
Fina''-, petitioner s(13its that the $harter of the NPC, 1ein. a va'i& e2er$ise of po'i$e power,
sho('& prevai' over the L@C. It a''e.es that the power of the 'o$a' .overn3ent to i3pose fran$hise ta2
is s(1or&inate to petitioner?s e2e3ption fro3 ta2ationD 7po'i$e power 1ein. the 3ost pervasive, the
'east 'i3ita1'e an& 3ost &e3an&in. of a'' powers, in$'(&in. the power of ta2ation.8%="
The petition is witho(t 3erit.
Ta2es are the 'ife1'oo& of the .overn3ent,)+" for witho(t ta2es, the .overn3ent $an neither e2ist
nor en&(re. A prin$ipa' attri1(te of soverei.nt-,)!" the e2er$ise of ta2in. power &erives its so(r$e
fro3 the ver- e2isten$e of the state whose so$ia' $ontra$t with its $itiAens o1'i.es it to pro3ote p(1'i$
interest an& $o33on .oo&. The theor- 1ehin& the e2er$ise of the power to ta2 e3anates fro3
ne$essit-D)%" witho(t ta2es, .overn3ent $annot f('fi'' its 3an&ate of pro3otin. the .enera' we'fare
an& we''41ein. of the peop'e.
In re$ent -ears, the in$reasin. so$ia' $ha''en.es of the ti3es e2pan&e& the s$ope of state a$tivit-,
an& ta2ation has 1e$o3e a too' to rea'iAe so$ia' F(sti$e an& the eE(ita1'e &istri1(tion of wea'th,
e$ono3i$ pro.ress an& the prote$tion of 'o$a' in&(stries as we'' as p(1'i$ we'fare an& si3i'ar
o1Fe$tives.))" Ta2ation ass(3es even .reater si.nifi$an$e with the ratifi$ation of the !=<;
Constit(tion. Then$eforth, the power to ta2 is no 'on.er veste& e2$'(sive'- on Con.ressD 'o$a'
'e.is'ative 1o&ies are now .iven &ire$t a(thorit- to 'ev- ta2es, fees an& other $har.es)5" p(rs(ant
to Arti$'e K, se$tion 9 of the !=<; Constit(tion, vizC
7Be$tion 9.4 Ea$h Lo$a' @overn3ent (nit sha'' have the power to $reate its own so(r$es of reven(e, to
'ev- ta2es, fees an& $har.es s(1Fe$t to s($h .(i&e'ines an& 'i3itations as the Con.ress 3a- provi&e,
$onsistent with the 1asi$ po'i$- of 'o$a' a(tono3-. B($h ta2es, fees an& $har.es sha'' a$$r(e
e2$'(sive'- to the Lo$a' @overn3ents.8
This para&i.3 shift res('ts fro3 the rea'iAation that .en(ine &eve'op3ent $an 1e a$hieve& on'- 1-
stren.thenin. 'o$a' a(tono3- an& pro3otin. &e$entra'iAation of .overnan$e. For a 'on. ti3e, the
$o(ntr-?s hi.h'- $entra'iAe& .overn3ent str($t(re has 1re& a $('t(re of &epen&en$e a3on. 'o$a'
.overn3ent 'ea&ers (pon the nationa' 'ea&ership. It has a'so 7&a3pene& the spirit of initiative,
innovation an& i3a.inative resi'ien$e in 3atters of 'o$a' &eve'op3ent on the part of 'o$a' .overn3ent
'ea&ers.8 )9" The on'- wa- to shatter this $('t(re of &epen&en$e is to .ive the L@Us a wi&er ro'e in the
&e'iver- of 1asi$ servi$es, an& $onfer the3 s(ffi$ient powers to .enerate their own so(r$es for the
p(rpose. To a$hieve this .oa', se$tion ) of Arti$'e K of the !=<; Constit(tion 3an&ates Con.ress to
ena$t a 'o$a' .overn3ent $o&e that wi'', $onsistent with the 1asi$ po'i$- of 'o$a' a(tono3-, set the
.(i&e'ines an& 'i3itations to this .rant of ta2in. powers, vizC
7Be$tion ). The Con.ress sha'' ena$t a 'o$a' .overn3ent $o&e whi$h sha'' provi&e for a 3ore
responsive an& a$$o(nta1'e 'o$a' .overn3ent str($t(re instit(te& thro(.h a s-ste3 of &e$entra'iAation
with effe$tive 3e$hanis3s of re$a'', initiative, an& referen&(3, a''o$ate a3on. the &ifferent 'o$a'
.overn3ent (nits their powers, responsi1i'ities, an& reso(r$es, an& provi&e for the E(a'ifi$ations,
e'e$tion, appoint3ent an& re3ova', ter3, sa'aries, powers an& f(n$tions an& &(ties of 'o$a' offi$ia's,
an& a'' other 3atters re'atin. to the or.aniAation an& operation of the 'o$a' (nits.8
To re$a'', prior to the ena$t3ent of the Rep. A$t No. ;!:+, ):" a'so 6nown as the Lo$a'
@overn3ent Co&e of !==! /L@C0, vario(s 3eas(res have 1een ena$te& to pro3ote 'o$a' a(tono3-.
These in$'(&e the Barrio Charter of !=9=,);" the Lo$a' A(tono3- A$t of !=9=,)<" the
#e$entra'iAation A$t of !=:;)=" an& the Lo$a' @overn3ent Co&e of !=<).5+" #espite these
initiatives, however, the sha$6'es of &epen&en$e on the nationa' .overn3ent re3aine&. Lo$a'
.overn3ent (nits were fa$e& with the sa3e pro1'e3s that ha3per their $apa1i'ities to parti$ipate
effe$tive'- in the nationa' &eve'op3ent efforts, a3on. whi$h areC /a0 ina&eE(ate ta2 1ase, /10 'a$6 of
fis$a' $ontro' over e2terna' so(r$es of in$o3e, /$0 'i3ite& a(thorit- to prioritiAe an& approve
&eve'op3ent proFe$ts, /&0 heav- &epen&en$e on e2terna' so(r$es of in$o3e, an& /e0 'i3ite& s(pervisor-
$ontro' over personne' of nationa' 'ine a.en$ies.5!"
Consi&ere& as the 3ost revo'(tionar- pie$e of 'e.is'ation on 'o$a' a(tono3-, 5%" the L@C
effe$tive'- &ea's with the fis$a' $onstraints fa$e& 1- L@Us. It wi&ens the ta2 1ase of L@Us to in$'(&e
ta2es whi$h were prohi1ite& 1- previo(s 'aws s($h as the i3position of ta2es on forest pro&($ts, forest
$on$essionaires, 3inera' pro&($ts, 3inin. operations, an& the 'i6e. The L@C 'i6ewise provi&es eno(.h
f'e2i1i'it- to i3pose ta2 rates in a$$or&an$e with their nee&s an& $apa1i'ities. It &oes not pres$ri1e
.ra&(ate& fi2e& rates 1(t 3ere'- spe$ifies the 3ini3(3 an& 3a2i3(3 ta2 rates an& 'eaves the
&eter3ination of the a$t(a' rates to the respe$tive san""unian.5)"
One of the 3ost si.nifi$ant provisions of the L@C is the re3ova' of the 1'an6et e2$'(sion of
instr(3enta'ities an& a.en$ies of the nationa' .overn3ent fro3 the $overa.e of 'o$a' ta2ation.
A'tho(.h as a .enera' r('e, L@Us $annot i3pose ta2es, fees or $har.es of an- 6in& on the Nationa'
@overn3ent, its a.en$ies an& instr(3enta'ities, this r('e now a&3its an e2$eption, i.e., when spe$ifi$
provisions of the L@C a(thoriAe the L@Us to i3pose ta2es, fees or $har.es on the afore3entione&
entities, vizC
7Be$tion !)). Common +imitations on the Taxin" (o'ers of the +ocal %overnment ,nits.4 Un'ess
otherwise provi&e& herein, the e2er$ise of the ta2in. powers of provin$es, $ities, 3(ni$ipa'ities, an&
1aran.a-s sha'' not e2ten& to the 'ev- of the fo''owin.C
222
/o0 Ta2es, fees, or $har.es of an- 6in& on the Nationa' @overn3ent, its a.en$ies an& instr(3enta'ities,
an& 'o$a' .overn3ent (nits.8 )emphasis supplied*
In view of the afore4E(ote& provision of the L@C, the &o$trine in Bas$o vs. Phi'ippine A3(se3ent
an& @a3in. Corporation55" re'ie& (pon 1- the petitioner to s(pport its $'ai3 no 'on.er app'ies. To
e3phasiAe, the Bas$o $ase was &e$i&e& prior to the effe$tivit- of the L@C, when no 'aw e3powerin.
the 'o$a' .overn3ent (nits to ta2 instr(3enta'ities of the Nationa' @overn3ent was in effe$t. Jowever,
as this Co(rt r('e& in the $ase of *a$tan Ce1( Internationa' Airport A(thorit- /*CIAA0 vs. *ar$os,
59" nothin. prevents Con.ress fro3 &e$reein. that even instr(3enta'ities or a.en$ies of the
.overn3ent perfor3in. .overn3enta' f(n$tions 3a- 1e s(1Fe$t to ta2.5:" In ena$tin. the L@C,
Con.ress e2er$ise& its prero.ative to ta2 instr(3enta'ities an& a.en$ies of .overn3ent as it sees fit.
Th(s, after reviewin. the spe$ifi$ provisions of the L@C, this Co(rt he'& that *CIAA, a'tho(.h an
instr(3enta'it- of the nationa' .overn3ent, was s(1Fe$t to rea' propert- ta2, vizC
7Th(s, rea&in. to.ether se$tions !)), %)%, an& %)5 of the L@C, we $on$'(&e that as a .enera' r('e, as
'ai& &own in se$tion !)), the ta2in. power of 'o$a' .overn3ents $annot e2ten& to the 'ev- of inter alia,
Gta2es, fees an& $har.es of an- 6in& on the nationa' .overn3ent, its a.en$ies an& instr(3enta'ities, an&
'o$a' .overn3ent (nits?D however, p(rs(ant to se$tion %)%, provin$es, $ities an& 3(ni$ipa'ities in the
*etropo'itan *ani'a Area 3a- i3pose the rea' propert- ta2 e2$ept on, inter alia, Grea' propert- owne&
1- the Rep(1'i$ of the Phi'ippines or an- of its po'iti$a' s(1&ivisions e2$ept when the 1enefi$ia' (se
thereof has 1een .rante& for $onsi&eration or otherwise, to a ta2a1'e person as provi&e& in the ite3 /a0
of the first para.raph of se$tion !%.?85;"
In the $ase at 1ar, se$tion !9! in re'ation to se$tion !); of the L@C $'ear'- a(thoriAes the
respon&ent $it- .overn3ent to i3pose on the petitioner the fran$hise ta2 in E(estion.
In its .enera' si.nifi$ation, a fran$hise is a privi'e.e $onferre& 1- .overn3ent a(thorit-, whi$h
&oes not 1e'on. to $itiAens of the $o(ntr- .enera''- as a 3atter of $o33on ri.ht.5<" In its spe$ifi$
sense, a fran$hise 3a- refer to a .enera' or pri3ar- fran$hise, or to a spe$ia' or se$on&ar- fran$hise.
The for3er re'ates to the ri.ht to e2ist as a $orporation, 1- virt(e of &('- approve& arti$'es of
in$orporation, or a $harter p(rs(ant to a spe$ia' 'aw $reatin. the $orporation.5=" The ri.ht (n&er a
pri3ar- or .enera' fran$hise is veste& in the in&ivi&(a's who $o3pose the $orporation an& not in the
$orporation itse'f.9+" On the other han&, the 'atter refers to the ri.ht or privi'e.es $onferre& (pon an
e2istin. $orporation s($h as the ri.ht to (se the streets of a 3(ni$ipa'it- to 'a- pipes of tra$6s, ere$t
po'es or strin. wires.9!" The ri.hts (n&er a se$on&ar- or spe$ia' fran$hise are veste& in the
$orporation an& 3a- or&inari'- 1e $onve-e& or 3ort.a.e& (n&er a .enera' power .rante& to a
$orporation to &ispose of its propert-, e2$ept s($h spe$ia' or se$on&ar- fran$hises as are $har.e& with a
p(1'i$ (se.9%"
In se$tion !)! /30 of the L@C, Con.ress (n3ista6a1'- &efine& a fran$hise in the sense of a
se$on&ar- or spe$ia' fran$hise. This is to avoi& an- $onf(sion when the wor& fran$hise is (se& in the
$onte2t of ta2ation. As $o33on'- (se&, a fran$hise ta2 is 7a ta2 on the privi'e.e of transa$tin. 1(siness
in the state an& e2er$isin. $orporate fran$hises .rante& 1- the state.89)" It is not 'evie& on the
$orporation si3p'- for e2istin. as a $orporation, (pon its propert-95" or its in$o3e,99" 1(t on its
e2er$ise of the ri.hts or privi'e.es .rante& to it 1- the .overn3ent. Jen$e, a $orporation nee& not pa-
fran$hise ta2 fro3 the ti3e it $ease& to &o 1(siness an& e2er$ise its fran$hise.9:" It is within this
$onte2t that the phrase 7ta2 on 1(sinesses enFo-in. a fran$hise8 in se$tion !); of the L@C sho('& 1e
interprete& an& (n&erstoo&. Ieri'-, to &eter3ine whether the petitioner is $overe& 1- the fran$hise ta2
in E(estion, the fo''owin. reE(isites sho('& $on$(rC /!0 that petitioner has a 7fran$hise8 in the sense of a
se$on&ar- or spe$ia' fran$hiseD an& /%0 that it is e2er$isin. its ri.hts or privi'e.es (n&er this fran$hise
within the territor- of the respon&ent $it- .overn3ent.
Petitioner f('fi''s the first reE(isite. Co33onwea'th A$t No. !%+, as a3en&e& 1- Rep. A$t No.
;)=9, $onstit(tes petitioner?s pri3ar- an& se$on&ar- fran$hises. It serves as the petitioner?s $harter,
&efinin. its $o3position, $apita'iAation, the appoint3ent an& the spe$ifi$ &(ties of its $orporate
offi$ers, an& its $orporate 'ife span.9;" As its se$on&ar- fran$hise, Co33onwea'th A$t No. !%+, as
a3en&e&, vests the petitioner the fo''owin. powers whi$h are not avai'a1'e to or&inar-
$orporations, vizC
7222
/e0 To $on&($t investi.ations an& s(rve-s for the &eve'op3ent of water power in an- part of the
Phi'ippinesD
/f0 To ta6e water fro3 an- p(1'i$ strea3, river, $ree6, 'a6e, sprin. or waterfa'' in the Phi'ippines, for
the p(rposes spe$ifie& in this A$tD to inter$ept an& &ivert the f'ow of waters fro3 'an&s of riparian
owners an& fro3 persons ownin. or intereste& in waters whi$h are or 3a- 1e ne$essar- for sai&
p(rposes, (pon pa-3ent of F(st $o3pensation thereforD to a'ter, strai.hten, o1str($t or in$rease the f'ow
of water in strea3s or water $hanne's interse$tin. or $onne$tin. therewith or $onti.(o(s to its wor6s or
an- part thereofC Provi&e&, That F(st $o3pensation sha'' 1e pai& to an- person or persons whose
propert- is, &ire$t'- or in&ire$t'-, a&verse'- affe$te& or &a3a.e& there1-D
/.0 To $onstr($t, operate an& 3aintain power p'ants, a(2i'iar- p'ants, &a3s, reservoirs, pipes, 3ains,
trans3ission 'ines, power stations an& s(1stations, an& other wor6s for the p(rpose of &eve'opin.
h-&ra('i$ power fro3 an- river, $ree6, 'a6e, sprin. an& waterfa'' in the Phi'ippines an& s(pp'-in. s($h
power to the inha1itants thereofD to a$E(ire, $onstr($t, insta'', 3aintain, operate, an& i3prove .as, oi',
or stea3 en.ines, an&Lor other pri3e 3overs, .enerators an& 3a$hiner- in p'ants an&Lor a(2i'iar-
p'ants for the pro&($tion of e'e$tri$ powerD to esta1'ish, &eve'op, operate, 3aintain an& a&3inister
power an& 'i.htin. s-ste3s for the trans3ission an& (ti'iAation of its power .enerationD to se'' e'e$tri$
power in 1('6 to /!0 in&(stria' enterprises, /%0 $it-, 3(ni$ipa' or provin$ia' s-ste3s an& other
.overn3ent instit(tions, /)0 e'e$tri$ $ooperatives, /50 fran$hise ho'&ers, an& /90 rea' estate s(1&ivisions
222D
/h0 To a$E(ire, pro3ote, ho'&, transfer, se'', 'ease, rent, 3ort.a.e, en$(31er an& otherwise &ispose of
propert- in$i&ent to, or ne$essar-, $onvenient or proper to $arr- o(t the p(rposes for whi$h the
Corporation was $reate&C Provi&e&, That in $ase a ri.ht of wa- is ne$essar- for its trans3ission 'ines,
ease3ent of ri.ht of wa- sha'' on'- 1e so(.htC Provi&e&, however, That in $ase the propert- itse'f sha''
1e a$E(ire& 1- p(r$hase, the $ost thereof sha'' 1e the fair 3ar6et va'(e at the ti3e of the ta6in. of s($h
propert-D
/i0 To $onstr($t wor6s a$ross, or otherwise, an- strea3, water$o(rse, $ana', &it$h, f'(3e, street, aven(e,
hi.hwa- or rai'wa- of private an& p(1'i$ ownership, as the 'o$ation of sai& wor6s 3a- reE(ire 222D
/F0 To e2er$ise the ri.ht of e3inent &o3ain for the p(rpose of this A$t in the 3anner provi&e& 1- 'aw
for instit(tin. $on&e3nation pro$ee&in.s 1- the nationa', provin$ia' an& 3(ni$ipa' .overn3entsD
222
/30 To $ooperate with, an& to $oor&inate its operations with those of the Nationa' E'e$trifi$ation
A&3inistration an& p(1'i$ servi$e entitiesD
/n0 To e2er$ise $o3p'ete F(ris&i$tion an& $ontro' over watershe&s s(rro(n&in. the reservoirs of p'ants
an&Lor proFe$ts $onstr($te& or propose& to 1e $onstr($te& 1- the Corporation. Upon &eter3ination 1-
the Corporation of the areas reE(ire& for watershe&s for a spe$ifi$ proFe$t, the B(rea( of Forestr-, the
Reforestation A&3inistration an& the B(rea( of Lan&s sha'', (pon written a&vi$e 1- the Corporation,
forthwith s(rren&er F(ris&i$tion to the Corporation of a'' areas e31ra$e& within the watershe&s, s(1Fe$t
to e2istin. private ri.hts, the nee&s of waterwor6s s-ste3s, an& the reE(ire3ents of &o3esti$ water
s(pp'-D
/o0 In the prose$(tion an& 3aintenan$e of its proFe$ts, the Corporation sha'' a&opt 3eas(res to prevent
environ3enta' po''(tion an& pro3ote the $onservation, &eve'op3ent an& 3a2i3(3 (ti'iAation of
nat(ra' reso(r$es 222 89<"
With these powers, petitioner event(a''- ha& the 3onopo'- in the .eneration an& &istri1(tion of
e'e$tri$it-. This 3onopo'- was stren.thene& with the iss(an$e of Pres. #e$ree No. 5+,9=" nationa'iAin.
the e'e$tri$ power in&(str-. A'tho(.h E2e$. Or&er No. %!9:+" thereafter a''owe& private se$tor
parti$ipation in the .eneration of e'e$tri$it-, the trans3ission of e'e$tri$it- re3ains the 3onopo'- of the
petitioner.
Petitioner a'so f('fi''s the se$on& reE(isite. It is operatin. within the respon&ent $it- .overn3ent?s
territoria' F(ris&i$tion p(rs(ant to the powers .rante& to it 1- Co33onwea'th A$t No. !%+, as a3en&e&.
Fro3 its operations in the Cit- of Ca1anat(an, petitioner rea'iAe& a .ross in$o3e of P!+;,<!5,!<;.=: in
!==%. F('fi''in. 1oth reE(isites, petitioner is, an& o(.ht to 1e, s(1Fe$t of the fran$hise ta2 in E(estion.
Petitioner, however, insists that it is e2$'(&e& fro3 the $overa.e of the fran$hise ta2 si3p'-
1e$a(se its sto$6s are who''- owne& 1- the Nationa' @overn3ent, an& its $harter $hara$teriAe& it as a
7non4profit8 or.aniAation.
These $ontentions 3(st ne$essari'- fai'.
To stress, a fran$hise ta2 is i3pose& 1ase& not on the ownership 1(t on the e2er$ise 1- the
$orporation of a privi'e.e to &o 1(siness. The ta2a1'e entit- is the $orporation whi$h e2er$ises the
fran$hise, an& not the in&ivi&(a' sto$6ho'&ers. B- virt(e of its $harter, petitioner was $reate& as a
separate an& &istin$t entit- fro3 the Nationa' @overn3ent. It $an s(e an& 1e s(e& (n&er its own na3e,
:!" an& $an e2er$ise a'' the powers of a $orporation (n&er the Corporation Co&e.:%"
To 1e s(re, the ownership 1- the Nationa' @overn3ent of its entire $apita' sto$6 &oes not
ne$essari'- i3p'- that petitioner is not en.a.e& in 1(siness. Be$tion % of Pres. #e$ree No.
%+%=:)" $'assifies .overn3ent4owne& or $ontro''e& $orporations /@OCCs0 into those perfor3in.
.overn3enta' f(n$tions an& those perfor3in. proprietar- f(n$tions, vizC
7A .overn3ent4owne& or $ontro''e& $orporation is a sto$6 or a non4sto$6 $orporation, whether
perfor3in. .overn3enta' or proprietar- f(n$tions, whi$h is &ire$t'- $hartere& 1- spe$ia' 'aw or if
or.aniAe& (n&er the .enera' $orporation 'aw is owne& or $ontro''e& 1- the .overn3ent &ire$t'-, or
in&ire$t'- thro(.h a parent $orporation or s(1si&iar- $orporation, to the e2tent of at 'east a 3aForit- of
its o(tstan&in. votin. $apita' sto$6 222.8 /emphases supplied0
@overn3enta' f(n$tions are those pertainin. to the a&3inistration of .overn3ent, an& as s($h, are
treate& as a1so'(te o1'i.ation on the part of the state to perfor3 whi'e proprietar- f(n$tions are those
that are (n&erta6en on'- 1- wa- of a&van$in. the .enera' interest of so$iet-, an& are 3ere'- optiona' on
the .overn3ent.:5" In$'(&e& in the $'ass of @OCCs perfor3in. proprietar- f(n$tions are 71(siness4
'i6e8 entities s($h as the Nationa' Btee' Corporation /NBC0, the Nationa' #eve'op3ent Corporation
/N#C0, the Bo$ia' Be$(rit- B-ste3 /BBB0, the @overn3ent Bervi$e Ins(ran$e B-ste3 /@BIB0, an& the
Nationa' Water Bewera.e A(thorit- /NAWABA0,:9" a3on. others.
Petitioner was $reate& to 7(n&erta6e the &eve'op3ent of h-&roe'e$tri$ .eneration of power an& the
pro&($tion of e'e$tri$it- fro3 n($'ear, .eother3a' an& other so(r$es, as we'' as the trans3ission of
e'e$tri$ power on a nationwi&e 1asis.8::" P(rs(ant to this 3an&ate, petitioner .enerates power an&
se''s e'e$tri$it- in 1('6. Certain'-, these a$tivities &o not parta6e of the soverei.n f(n$tions of the
.overn3ent. The- are p(re'- private an& $o33er$ia' (n&erta6in.s, a'1eit i31(e& with p(1'i$ interest.
The p(1'i$ interest invo've& in its a$tivities, however, &oes not &istra$t fro3 the tr(e nat(re of the
petitioner as a $o33er$ia' enterprise, in the sa3e 'ea.(e with si3i'ar p(1'i$ (ti'ities 'i6e te'ephone an&
te'e.raph $o3panies, rai'roa& $o3panies, water s(pp'- an& irri.ation $o3panies, .as, $oa' or 'i.ht
$o3panies, power p'ants, i$e p'ant a3on. othersD a'' of whi$h are &e$'are& 1- this Co(rt as 3inistrant
or proprietar- f(n$tions of .overn3ent ai3e& at a&van$in. the .enera' interest of so$iet-.:;"
A $'oser rea&in. of its $harter revea's that even the 'e.is'at(re treats the $hara$ter of the
petitioner?s enterprise as a 71(siness,8 a'tho(.h it 'i3its petitioner?s profits to twe've per$ent
/!%>0, vizC:<"
7/n0 When essentia' to the proper a&3inistration of its $orporate affairs or ne$essar- for the proper
transa$tion of its 1(siness or to $arr- o(t the p(rposes for whi$h it was or.aniAe&, to $ontra$t
in&e1te&ness an& iss(e 1on&s s(1Fe$t to approva' of the Presi&ent (pon re$o33en&ation of the
Be$retar- of Finan$eD
/o0 To e2er$ise s($h powers an& &o s($h thin.s as 3a- 1e reasona1'- ne$essar- to $arr- o(t
the 1(siness an& p(rposes for whi$h it was or.aniAe&, or whi$h, fro3 ti3e to ti3e, 3a- 1e &e$'are& 1-
the Boar& to 1e ne$essar-, (sef(', in$i&enta' or a(2i'iar- to a$$o3p'ish the sai& p(rpose
222.8/emphases supplied0
It is worth- to note that a'' other private fran$hise ho'&ers re$eivin. at 'east si2t- per$ent /:+>0 of
its e'e$tri$it- reE(ire3ent fro3 the petitioner are 'i6ewise i3pose& the $ap of twe've per$ent /!%>0 on
profits.:=" The 3ain &ifferen$e is that the petitioner is 3an&ate& to &evote 7a'' its ret(rns fro3 its
$apita' invest3ent, as we'' as e2$ess reven(es fro3 its operation, for e2pansion8;+" whi'e other
fran$hise ho'&ers have the option to &istri1(te their profits to its sto$6ho'&ers 1- &e$'arin.
&ivi&en&s. We &o not see wh- this fa$t $an 1e a so(r$e of &ifferen$e in ta2 treat3ent. In 1oth instan$es,
the ta2a1'e entit- is the $orporation, whi$h e2er$ises the fran$hise, an& not the in&ivi&(a' sto$6ho'&ers.
We a'so &o not fin& 3erit in the petitioner?s $ontention that its ta2 e2e3ptions (n&er its $harter
s(1sist &espite the passa.e of the L@C.
As a r('e, ta2 e2e3ptions are $onstr(e& stron.'- a.ainst the $'ai3ant. E2e3ptions 3(st 1e shown
to e2ist $'ear'- an& $ate.ori$a''-, an& s(pporte& 1- $'ear 'e.a' provisions.;!" In the $ase at 1ar, the
petitioner?s so'e ref(.e is se$tion !) of Rep. A$t No. :)=9 e2e3ptin. fro3, a3on. others, 7a'' in$o3e
ta2es, fran$hise ta2es an& rea't- ta2es to 1e pai& to the Nationa' @overn3ent, its provin$es, $ities,
3(ni$ipa'ities an& other .overn3ent a.en$ies an& instr(3enta'ities.8 Jowever, se$tion !=) of the L@C
with&rew, s(1Fe$t to 'i3ite& e2$eptions, the sweepin. ta2 privi'e.es previo(s'- enFo-e& 1- private an&
p(1'i$ $orporations. Contrar- to the $ontention of petitioner, se$tion !=) of the L@C is an e2press,
a'1eit .enera', repea' of a'' stat(tes .rantin. ta2 e2e3ptions fro3 'o$a' ta2es.;%" It rea&sC
7Be$. !=). &ithdra'al of Tax Exemption (rivile"es.- Un'ess otherwise provi&e& in this Co&e, ta2
e2e3ptions or in$entives .rante& to, or present'- enFo-e& 1- a'' persons, whether nat(ra' or F(ri&i$a',
in$'(&in. .overn3ent4owne& or $ontro''e& $orporations, e2$ept 'o$a' water &istri$ts, $ooperatives &('-
re.istere& (n&er R.A. No. :=)<, non4sto$6 an& non4profit hospita's an& e&($ationa' instit(tions, are
here1- with&rawn (pon the effe$tivit- of this Co&e.8 /emphases supplied0
It is a 1asi$ pre$ept of stat(tor- $onstr($tion that the e2press 3ention of one person, thin., a$t, or
$onseE(en$e e2$'(&es a'' others as e2presse& in the fa3i'iar 3a2i3 expressio unius est exclusio
alterius.;)" Not 1ein. a 'o$a' water &istri$t, a $ooperative re.istere& (n&er R.A. No. :=)<, or a non4
sto$6 an& non4profit hospita' or e&($ationa' instit(tion, petitioner $'ear'- &oes not 1e'on. to the
e2$eption. It is therefore in$(31ent (pon the petitioner to point to so3e provisions of the L@C that
e2press'- .rant it e2e3ption fro3 'o$a' ta2es.
B(t this wo('& 1e an e2er$ise in f(ti'it-. Be$tion !); of the L@C $'ear'- states that the L@Us $an
i3pose fran$hise ta2 7notwithstan&in. an- e2e3ption .rante& 1- an- 'aw or other spe$ia' 'aw.8 This
parti$('ar provision of the L@C &oes not a&3it an- e2$eption. In Cit- @overn3ent of Ban Pa1'o,
La.(na v. Re-es,;5" *ERALCO?s e2e3ption fro3 the pa-3ent of fran$hise ta2es was 1ro(.ht as an
iss(e 1efore this Co(rt. The sa3e iss(e was invo've& in the s(1seE(ent $ase of *ani'a E'e$tri$
Co3pan- v. Provin$e of La.(na.;9" R('in. in favor of the 'o$a' .overn3ent in 1oth instan$es, we
r('e& that the fran$hise ta2 in E(estion is i3posa1'e &espite an- e2e3ption enFo-e& 1- *ERALCO
(n&er spe$ia' 'aws, vizC
7It is o(r view that petitioners $orre$t'- re'- on provisions of Be$tions !); an& !=) of the L@C to
s(pport their position that *ERALCO?s ta2 e2e3ption has 1een with&rawn. The e2p'i$it 'an.(a.e of
se$tion !); whi$h a(thoriAes the provin$e to i3pose fran$hise ta2 Gnotwithstan&in. an- e2e3ption
.rante& 1- an- 'aw or other spe$ia' 'aw? is a''4en$o3passin. an& $'ear. The fran$hise ta2 is i3posa1'e
&espite an- e2e3ption enFo-e& (n&er spe$ia' 'aws.
Be$tion !=) 1(ttresses the with&rawa' of e2tant ta2 e2e3ption privi'e.es. B- statin. that (n'ess
otherwise provi&e& in this Co&e, ta2 e2e3ptions or in$entives .rante& to or present'- enFo-e& 1- a''
persons, whether nat(ra' or F(ri&i$a', in$'(&in. .overn3ent4owne& or $ontro''e& $orporations e2$ept
/!0 'o$a' water &istri$ts, /%0 $ooperatives &('- re.istere& (n&er R.A. :=)<, /)0 non4sto$6 an& non4profit
hospita's an& e&($ationa' instit(tions, are with&rawn (pon the effe$tivit- of this $o&e, the o1vio(s
i3port is to 'i3it the e2e3ptions to the three en(3erate& entities. It is a 1asi$ pre$ept of stat(tor-
$onstr($tion that the e2press 3ention of one person, thin., a$t, or $onseE(en$e e2$'(&es a'' others as
e2presse& in the fa3i'iar 3a2i3 expressio unius est exclusio alterius. In the a1sen$e of an- provision
of the Co&e to the $ontrar-, an& we fin& no other provision in point, an- e2istin. ta2 e2e3ption or
in$entive enFo-e& 1- *ERALCO (n&er e2istin. 'aw was $'ear'- inten&e& to 1e with&rawn.
Rea&in. to.ether se$tions !); an& !=) of the L@C, we $on$'(&e that (n&er the L@C the 'o$a'
.overn3ent (nit 3a- now i3pose a 'o$a' ta2 at a rate not e2$ee&in. 9+> of !> of the .ross ann(a'
re$eipts for the pre$e&in. $a'en&ar 1ase& on the in$o3in. re$eipts rea'iAe& within its territoria'
F(ris&i$tion. The 'e.is'ative p(rpose to with&raw ta2 privi'e.es enFo-e& (n&er e2istin. 'aw or $harter is
$'ear'- 3anifeste& 1- the 'an.(a.e (se& on )sic* Be$tions !); an& !=) $ate.ori$a''- with&rawin. s($h
e2e3ption s(1Fe$t on'- to the e2$eptions en(3erate&. Bin$e it wo('& 1e not on'- te&io(s an&
i3pra$ti$a' to atte3pt to en(3erate a'' the e2istin. stat(tes provi&in. for spe$ia' ta2 e2e3ptions or
privi'e.es, the L@C provi&e& for an e2press, a'1eit .enera', with&rawa' of s($h e2e3ptions or
privi'e.es. No 3ore (neE(ivo$a' 'an.(a.e $o('& have 1een (se&.8;:" /emphases supplied0.
It is worth 3entionin. that se$tion !=% of the L@C e3powers the L@Us, thro(.h or&inan$es &('-
approve&, to .rant ta2 e2e3ptions, initiatives or re'iefs. ;;" B(t in ena$tin. se$tion ); of Or&inan$e
No. !:94=% whi$h i3poses an ann(a' fran$hise ta2 7notwithstan&in. an- e2e3ption .rante& 1- 'aw or
other spe$ia' 'aw,8 the respon&ent $it- .overn3ent $'ear'- &i& not inten& to e2e3pt the petitioner fro3
the $overa.e thereof.
#o(1t'ess, the power to ta2 is the 3ost effe$tive instr(3ent to raise nee&e& reven(es to finan$e
an& s(pport 3-ria& a$tivities of the 'o$a' .overn3ent (nits for the &e'iver- of 1asi$ servi$es essentia'
to the pro3otion of the .enera' we'fare an& the enhan$e3ent of pea$e, pro.ress, an& prosperit- of the
peop'e. As this Co(rt o1serve& in the *a$tan $ase, 7the ori.ina' reasons for the with&rawa' of ta2
e2e3ption privi'e.es .rante& to .overn3ent4owne& or $ontro''e& $orporations an& a'' other (nits of
.overn3ent were that s($h privi'e.e res('te& in serio(s ta2 1ase erosion an& &istortions in the ta2
treat3ent of si3i'ar'- sit(ate& enterprises.8;<" With the a&&e& 1(r&en of &evo'(tion, it is even 3ore
i3perative for .overn3ent entities to share in the reE(ire3ents of &eve'op3ent, fis$a' or otherwise, 1-
pa-in. ta2es or other $har.es &(e fro3 the3.
IN IIEW WJEREOF, the instant petition is #ENIE# an& the assai'e& #e$ision an& Reso'(tion of
the Co(rt of Appea's &ate& *ar$h !%, %++! an& ,('- !+, %++!, respe$tive'-, are here1- AFFIR*E#.
BO OR#ERE#.