National Power Corporation v. Province of Albay
NEW DOCTRINEFacts
The Antecedents: The National Power Corporation (NAPOCOR) questioned the authority of the Province of Albay to collect real property taxes on its properties located in Tiwi, Albay, accumulated between June 11, 1984, and March 10, 1987. The Province of Albay had published a notice of auction sale for these properties to cover alleged tax delinquencies amounting to P214,845,184.76. Procedural History: NAPOCOR opposed the sale, citing FIRB Resolution No. 17-87 and a Memorandum from the Executive Secretary, which purportedly restored its tax and duty exemption privileges effective March 10, 1987. The Supreme Court issued a temporary restraining order (TRO) on March 10, 1989, directing the provincial government to cease and desist from selling the properties. However, the TRO failed to reach the respondents before the scheduled bidding on March 30, 1989, and the Province of Albay emerged as the highest bidder. The Petition: NAPOCOR sought to prevent the collection of real property taxes for the period between June 11, 1984, and March 10, 1987, arguing its exemption status. The Province of Albay defended the auction sale, contending that the FIRB issuances constituted an undue delegation of taxing power and were thus void. They also argued that Executive Order No. 93, which authorized the FIRB to grant tax exemptions, was unconstitutional as only the legislature could grant such privileges.
Issue(s)
Whether the Province of Albay has the power to collect real property taxes from NAPOCOR for the period between June 11, 1984, and March 10, 1987. Whether FIRB Resolutions Nos. 10-85, 1-86, and 17-87, and the Memorandum of the Office of the President, validly restored NAPOCOR's tax exemption privileges during the specified period. Whether Executive Order No. 93 constitutes an unlawful delegation of legislative power.
Ruling
The petition is DENIED. The auction sale of NAPOCOR's properties to answer for real estate taxes accumulated between June 11, 1984, through March 10, 1987, is declared valid. No costs.
Ratio Decidendi
On the liability for real property taxes between June 11, 1984, and March 10, 1987: The Court held that NAPOCOR is liable for real property taxes during this period. Presidential Decree No. 1931, promulgated on June 11, 1984, withdrew all tax exemptions previously granted to government-owned or controlled corporations. While FIRB Resolutions Nos. 10-85 and 1-86 purported to restore NAPOCOR's tax exemption, the Court found these resolutions invalid because the FIRB, under its charter (Presidential Decree No. 776), was only empowered to "recommend" tax exemptions, not to prescribe or restore them independently. Therefore, as of June 11, 1984, NAPOCOR ceased to enjoy tax exemption privileges. The subsequent Executive Order No. 93, which granted the FIRB the prerogative to "restore tax and/or duty exemptions," was prospective in character and could not validate the FIRB's past acts prior to its promulgation. The Court emphasized that claims of tax exemption are construed strictly against the claimant and must be supported by clear legal provisions. On the validity of FIRB Resolutions and the Memorandum: The Court found FIRB Resolutions Nos. 10-85 and 1-86 to be invalid in restoring NAPOCOR's tax exemption privileges because the FIRB lacked the authority to independently grant or restore such exemptions, its power being limited to making recommendations under Presidential Decree No. 776. The Court noted that Presidential Decree No. 1931 had already withdrawn these exemptions. While FIRB Resolution No. 17-87 and the subsequent Memorandum of the Office of the President were acknowledged as restoring NAPOCOR's exemption effective March 10, 1987, this restoration did not retroactively cover the period from June 11, 1984, to March 10, 1987. The Court reiterated that tax exemptions must be granted in clear and categorical terms and are strictly construed against the taxpayer. On Executive Order No. 93 and the delegation of legislative power: The Court noted that the Province of Albay admitted NAPOCOR's exemption had been validly restored as of March 10, 1987. Therefore, the Court found it unnecessary to delve into the constitutionality of Executive Order No. 93 as an alleged unlawful delegation of legislative power, particularly concerning the period from June 11, 1984, to March 10, 1987. The Court stated that it would leave the issue of delegation for a proper case to arise and chose to leave Executive Order No. 93 and its validity regarding tax exemptions granted through the FIRB from December 17, 1986, onwards, undisturbed for the time being. The primary focus remained on NAPOCOR's tax liability during the interregnum.
Main Doctrine
The National Power Corporation (NAPOCOR) is liable for real property taxes on its properties for the period between June 11, 1984, when its tax exemption privileges were withdrawn by Presidential Decree No. 1931, and March 10, 1987, when its tax exemption privileges were restored by FIRB Resolution No. 17-87, as confirmed by the Memorandum of the Office of the President. The FIRB's authority to restore tax exemptions under Executive Order No. 93 is prospective and cannot validate its past acts prior to the issuance of the Executive Order.