MACEDA VS MACARAIG (1993) 223 SCRA 217 June 8, 1993 8. On September 8, 1955, R.A. No.
n September 8, 1955, R.A. No. 1397, the tax exemption provision
related to the payment of this total indebtedness was not amended nor
FACTS: deleted.
Topic: Classification of Taxes According to Burden or Incidence (Direct or 9. On June 13, 1958, R.A. No. 2055, the tax provision related to the
Indirect) repayment of loans was not amended nor deleted.
Facts: This matter of indirect tax exemption of the private respondent 10. On June 18, 1960, R.A. No 2641 converted the NPC from a public
National Power Corporation (NPC) is brought to this Court a second time. corporation into a stock corporation. No tax exemption was incorporated in
Unfazed by the Decision We promulgated on May 31, 1991 petitioner said Act.
Ernesto Maceda asks this Court to reconsider said Decision.
A Chronological review of the relevant NPC laws, specially with respect to its 11. On June 17, 1961, R.A. No. 3043. No tax provision was incorporated in
tax exemption provisions. said Act.
1. On November 3, 1936, Commonwealth Act No. 120: creating the 12. On June 17, 1967, R.A. No 4897. No tax provision was incorporated in
National Power Corporation. The main source of funds for the NPC was the said Act.
flotation of bonds in the capital markets 4 and these bonds...“issued under
the authority of this Act shall be exempt from the payment of all taxes by 13. On September 10, 1971, R.A. No. 6395 was enacted revising the charter
the Commonwealth of the Philippines…” of the NPC. The bonds issued shall be exempt from the payment of all taxes.
As to the foreign loans the NPC was authorized to contract, shall also be
2. On June 24, 1938, C.A. No. 344, the provision on tax exemption in exempt from all taxes,
relation to the issuance of the NPC bonds was neither amended nor deleted.
14. On January 22, 1974, P.D. No. 380…shall also be exempt from all direct
3. On September 30, 1939, C.A. No. 495, the provision on tax exemption and indirect taxes,
in relation to the issuance of the NPC bonds was neither amended nor
deleted. 15. On February 26, 1970, P.D. No. 395, no tax exemption provision was
amended, deleted or added.
4. On June 4, 1949, Republic Act No. 357, any such loan or loans shall be
exempt from taxes, duties, fees, imposts, charges, contributions and 16. On July 31, 1975, P.D. No. 758 was issued directing that
restrictions of the Republic of the Philippines P200,000,000.00 would be appropriated annually to cover the unpaid
subscription of the Government in the NPC authorized capital stock, which
5. On the same date, R.A. No. 358, to facilitate payment of its amount would be taken from taxes accruing to the General Funds of the
indebtedness, the National Power Corporation shall be exempt from all Government, proceeds from loans, issuance of bonds, treasury bills or notes
taxes. to be issued
6. On July 10, 1952, R.A. No. 813 amended R.A. No. 357. The tax provision 17. On May 27, 1976 P.D. No. 938, declared exempt from the payment of
as stated in R.A. No. 357, was not amended. all forms of taxes…
7. On June 2, 1954, R.A. No. 987 was enacted specifically to withdraw 18. On January 30, 1976, P.D. No. 882 was issued withdrawing the tax
NPC's tax exemption for real estate taxes. exemption of NPC with regard to imports
19. On July 30, 1977, P.D. 1177, All units of government, including Examples: the internal revenue indirect taxes (specific tax, percentage taxes,
government-owned or controlled corporations, shall pay income taxes, (VAT) and the tariff and customs indirect taxes (import duties, special
customs duties and other taxes and fees are imposed under revenues laws: import tax and other dues)
provided, that organizations otherwise exempted by law from the payment
of such taxes/duties may ask for a subsidy from the General Fund A chronological review of the NPC laws will show that it has been the
lawmaker's intention that the NPC was to be completely tax exempt from all
20. On July 11, 1984, P.D. No. 1931, all exemptions from the payment of forms of taxes — direct and indirect.
duties, taxes, fees, imposts and other charges heretofore granted in favor of
government-owned or controlled corporations including their subsidiaries, P.D. No. 380 added phrase "directly or indirectly,"
are hereby withdrawn.
P.D. No. 938 amended into “exempt from the payment of ALL FORMS OF
21. On December 17, 1986, E.O. No. 93 was issued with a view to correct taxes”
presidential restoration or grant of tax exemption to other government and
private entities without benefit of review by the Fiscal Incentives Review President Marcos must have considered all the NPC statutes from C.A. No.
Board, “WHEREAS, in addition to those tax and duty exemption privileges 120 up to P.D. No. 938.
were restored by the Fiscal Incentives Review Board (FIRB), a number of
affected entities, government and private, had their tax and duty exemption One common theme in all these laws is that the NPC must be enable to pay
privileges restored” its indebtedness 56 which, as of P.D. No. 938, was P12 Billion in total
domestic indebtedness, at any one time, and U$4 Billion in total foreign
Petitioner contends that P.D. No. 938 repealed the indirect tax exemption of loans at any one time. The NPC must be and has to be exempt from all
NPC. forms of taxes if this goal is to be achieved.
ISSUE: Whether NPC is exempted to pay Indirect Income Tax? The tax exemption stood as is — with the express mention of "direct and
indirect" tax exemptions. Lawmakers wanted the NPC to be exempt from
HELD: YES ALL FORMS of taxes — direct and indirect. Therefore, that NPC had been
granted tax exemption privileges for both direct and indirect taxes under
Classifications or kinds of Taxes: According to Persons who pay or who bear P.D. No. 938.
the burden:
The Court rules and declares that the oil companies which supply bunker
a. Direct Tax — that where the person supposed to pay the tax really pays it. fuel oil to NPC have to pay the taxes imposed upon said bunker fuel oil sold
WITHOUT transferring the burden to someone else. to NPC. By the very nature of indirect taxation, the economic burden of such
Examples: Individual income tax, corporate income tax, transfer taxes taxation is expected to be passed on through the channels of commerce to
(estate tax, donor's tax), residence tax, immigration tax the user or consumer of the goods sold. Because, however, the NPC has
been exempted from both direct and indirect taxation, the NPC must be
b. Indirect Tax — that where the tax is imposed upon goods BEFORE held exempted from absorbing the economic burden of indirect taxation.
reaching the consumer who ultimately pays for it, not as a tax, but as a part
of the purchase price.
MACEDA VS MACARAIG (1991) GR No 88291, May 31, 1991 of the state, since as to such property “exception is the rule and taxation the
exception.”
FACTS:
Commonwealth Act 120 created NAPOCOR as a public corporation to
undertake the development of hydraulic power and the production of
power from other sources. RA 358 granted NAPOCOR tax and duty
exemption privileges. RA 6395 revised the charter of the NAPOCOR, tasking
it to carry out the policy of the national electrification and provided in detail
NAPOCOR’s tax exceptions. PD 380 specified that NAPOCOR’s exemption
includes all taxes, etc. imposed “directly or indirectly.” PD 938 dated May 27,
1976 further amended the aforesaid provision by integrating the tax
exemption in general terms under one paragraph.
ISSUE:
Whether NPC has ceased to enjoy indirect tax and duty exemption with the
enactment of PD 938 on May 27, 1976 which amended PD 380 issued on
January 11, 1974?
RULING: NO
No, it is still exempt.
NAPOCOR is a non-profit public corporation created for the general good
and welfare, and wholly owned by the government of the Republic of the
Philippines. From the very beginning of the corporation’s existence,
NAPOCOR enjoyed preferential tax treatment “to enable the corporation to
pay the indebtedness and obligation” and effective implementation of the
policy enunciated in Section 1 of RA 6395.
From the preamble of PD 938, it is evident that the provisions of PD 938
were not intended to be interpreted liberally so as to enhance the tax
exempt status of NAPOCOR.
It is recognized that the rule on strict interpretation does not apply in the
case of exemptions in favor of government political subdivision or
instrumentality. In the case of property owned by the state or a city or other
public corporations, the express exception should not be construed with the
same degree of strictness that applies to exemptions contrary to the policy
