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MACEDA VS.

MACARAIG
GR NO. 88291
JUNE 8, 1993

FACTS:

Commonwealth Act 120 created NPC as a public corporation to undertake the development of
hydraulic power and the production of power from other sources.

On June 4, 1949, Republic Act No. 357 was enacted authorizing the President of the Philippines
to: a.) guarantee, absolutely and unconditionally, as primary obligor, the payment of any NPC loan; and b.)
contract on behalf of NPC with the International Bank for Reconstruction and Development for the
accomplishment of NPC’s corporate objectives and for the reconstruction and development of the economy
of the country. It was expressly stated that any loan shall be exempt from taxes, duties, fees, charges,
contributions, and restrictions.

On June 2, 1954, Republic Act No. 987 was enacted withdrawing NPC ‘s tax exemption for real
estate taxes.

On September 10, 1971, Republic Act No. 6395 was enacted revising NPC ‘s charter. It declared
the non-profit character and tax exemptions of NPC.

On January 22, 1974, Presidential Decree No. 380 was issued giving extra powers to the NPC to
fulfill its role under P.D. No. 40. It specified that NPC’s exemption includes all taxes imposed directly and
indirectly.

P.D. No. 938 integrated the exemptions in favor of GOCCs including their subsidiaries. It
empowered the President or the Minister of Finance, upon recommendation of the Fiscal Incentives Review
Board, to restore the exemptions withdrawn or revised. Thus, the FIRB issued Resolution 10-85 restoring
the duty and tax exemption privileges of NPC for June 11, 1984 to June 30, 1985. Resolution 1-86 restored
such exemption indefinitely effective June 1, 1985.

However, Executive Order 93 withdrew the exemption. Thus, FIRB issued Resolution 17-87
restoring NPC’s exemption.

ISSUE:

Whether NPC is subject to indirect tax exemption.

RULING:

YES. The NPC is subject to indirect tax exemption.

The laws show that it has been the intention of the lawmakers to completely exempt NPC from all
forms of taxes, direct or indirect. Any loan obtained for foreign financing shall also be tax exempt. The law
specifically exempted NPC from all types of taxes to facilitate payment of its indebtedness. Repeal by
implication is not favored unless it is manifest that the legislature so intended.

Furthermore, then President Marcos mandated that 200 million pesos be appropriated annually to
NPC, such amount should be taken from the general fund of the government. It does not stand to reason
that then President Marcos would order 200 million pesos to be taken partially or totally from the tax money
to be used to pay the government subscription in the NPC on one hand and order the NPC to pay its indirect
tax.