Taxation Law Digest

GENERAL PRINCIPLES

National Grid Corporation of the Philippines vs. Ofelia M. Oliva

GR No. 213157, August 10, 2016

DOCTRINES:

Tax exemptions must be clear and unequivocal, and must be directly stated in a specific
legal provision; National Grid Corporation of the Philippines (NGCPʼs) payment of franchise
tax exempts it from payment of real property taxes on properties used in connection with its
franchise.

FACTS:

National Grid Corporation of the Philippines (NGCP) is a franchise grantee on January

15, 2009. NGCP received final notice of demand from City Treasurer for payment of real
estate tax from period 2001-2008 and 2009; it paid the total amount of P2.7 Million in 2009,
but under protest.

According to NGPC, it is not taxable because, inter-alia, the properties are exempt Sec.
9 of R.A. No. 9511, whereas payment of franchise tax exempts it from payment of real
property taxes on properties used in connection with its franchise.

However, according to City Treasurer, although the subject property is owned by

National Power Corporation (NPC), NPGC, as the beneficial owner of the property, is a
taxable private entity engaged in the generation and transmission of electric power.

ISSUE:

Whether or not NGCP is exempt from paying the real estate tax.

HELD:

YES. NGCP is exempt from paying real estate tax. Tax exemptions must be clear and
unequivocal, and must be directly stated in a specific legal provision. In this case, it is clearly
indicated in Section 9 of R.A. No. 9511, which states that “[T]he franchise tax xxx shall be in
lieu of income tax and any and all taxes, duties, fees and charges of any kind, nature xxx,
local or national.”

In contrast to Smartʼs franchise as quoted above, Section 9 of RA 9511 clearly stated

that the NGCPʼs “in lieu of all taxes” clause includes taxes imposed by the local government
on properties used in connection with NGCPʼs franchise.

SC remanded the case to the CBAA for the assessment and computation of the correct
amount of real property taxes on the subject properties for two different periods: the years
2001 to 2008 for NPC/TRANSCO, and the year 2009 for NGCP.