National Power Corporation v. Province of Lanao del Sur
REITERATIONFacts
The Antecedents: Petitioner National Power Corporation (NPC) was assessed real property taxes amounting to P154,114,854.82 for its Agus II Hydroelectric Power Plant Complex in Lanao del Sur for the period June 14, 1984, to December 31, 1989. Respondents Province of Lanao del Sur, its Governor, and Provincial Treasurer proceeded to sell the subject properties at public auction to collect the alleged tax delinquency. Procedural History: NPC filed a special civil action for prohibition with the Supreme Court to perpetually prohibit the disposal and sale of its properties, annul the auction sale, and cancel the certificate of sale. The Court issued a temporary restraining order (TRO) enjoining the auction sale. Despite the TRO, the auction sale was held, with the Province of Lanao del Sur as the sole bidder, and a certificate of sale was issued and registered. The respondents received the telegraphic notice of the TRO after the auction sale and registration. The Petition: NPC sought to prohibit the respondents from disposing of its real properties, annul the auction sale, and cancel the certificate of sale, arguing that it remained exempt from real property taxes during the period in question.
Issue(s)
Whether the National Power Corporation (NPC) is liable for real property taxes for the period June 14, 1984, to December 31, 1989; Whether the Fiscal Incentives Review Board (FIRB) resolutions restoring NPC's tax exemptions were valid; Whether Presidential Decree No. 1931 and Executive Order No. 93 validly withdrew NPC's tax exemptions; Whether Presidential Decree No. 1177 repealed NPC's tax exemption privilege; and Whether there is an exemption under Section 40(a) of PD 464. Whether the respondents acted correctly in selling at publication NPC's real properties situated the hydroelectric power plant complex to compel payment of alleged realty tax delinquency. Whether the principle of stare decisis and judicial stability should be upheld in this case.
Ruling
The petition is GRANTED. The auction sale conducted on January 22, 1991, and the registration thereof are declared NULL AND VOID. The Register of Deeds of Lanao del Sur is ORDERED to cancel the registration of the auction sale. The subject properties, including the hydroelectric power plant complex, remain in NPC's ownership and control as if the assessment and auction sale never took place.
Ratio Decidendi
On the validity of FIRB Resolutions and NPC's tax exemption, the effect of PD 1177, the exemption under Section 40(a) of PD 464, and NPC's liability for real property taxes: The Court held that NPC's tax exemption privileges, though withdrawn by Presidential Decree No. 1931 and Executive Order No. 93, were validly restored by FIRB Resolutions Nos. 10-85, 1-86, and 17-87. These resolutions were issued pursuant to the authority granted to the FIRB and the Minister of Finance under PD 1931 and EO 93, respectively. The Court explicitly overturned its earlier ruling in National Power Corporation v. Province of Albay and affirmed the validity of these resolutions in light of the Maceda v. Macaraig, Jr. case. The Court emphasized that the FIRB did not create NPC's tax exemption status but merely restored it, and that the dual capacity of the signatory officials (as FIRB Chairman and Minister of Finance) did not invalidate the resolutions. The Court also noted that the delegation of power to the FIRB under EO 93 was a valid delegation of legislative power due to the complexity of modern governmental functions. The argument that PD 1177 repealed NPC's tax exemption privilege was rejected. The Court reiterated the principle that repeals by implication are not favored and will not be decreed unless manifest intent is shown. It found no irreconcilable conflict between PD 1177 and the prior laws granting tax exemptions to NPC, especially considering that PD 938 had already amended NPC's charter to consolidate its tax exemptions. Therefore, PD 1177 did not operate to repeal NPC's tax-exempt status. The Court found another basis for NPC's exemption in Section 40(a) of the Real Property Tax Code (PD 464), which exempts real property owned by government-owned corporations whose charters grant them such exemption. The properties in question, comprising the Agus II Hydroelectric Power Plant Complex, are government properties wholly owned by NPC and devoted to public service, directly implementing the state policy of total electrification. This exemption was legally defensible and logically unassailable, as NPC is a non-profit corporation mandated to devote its revenues to expansion and to pay its obligations, necessitating tax exemptions. On the nullity of the assessment and auction sale: Consequently, the assessment and levy of realty taxes on NPC's properties, as well as the subsequent auction sale, were declared null and void. Since the properties were exempt from realty taxes, NPC never became delinquent, and the province had no right to sell the properties. The Court also noted that Section 73 of the Real Property Tax Code excludes such exempt properties from advertisement for sale at public auction. The timing of the receipt of the TRO after the auction sale and registration was deemed irrelevant given the fundamental nullity of the proceedings. On the issue of stare decisis and judicial stability: The Court emphasized the importance of upholding the authoritativeness and stability of its pronouncements, citing Screws v. United States and Cabagnot v. Comelec. It highlighted that while Albay initially ruled against the FIRB resolutions, Maceda v. Macaraig, Jr. (both the original decision and the resolution on the motion for reconsideration) reversed this stance, strengthening the doctrine that NPC's tax exemptions were validly restored. The Court warned against needless flip-flops and underscored the disastrous practical consequences of denying NPC's tax-exempt status, which could impair its mandate to provide electrification.
Main Doctrine
The tax exemption privileges of the National Power Corporation (NPC) for the period in question (June 14, 1984 to December 31, 1989) were validly restored and preserved through various FIRB resolutions, rendering the assessment and auction sale of its properties for real property taxes null and void. The Supreme Court's pronouncements in Maceda v. Macaraig, Jr., which affirmed the validity of these FIRB resolutions, superseded the earlier ruling in National Power Corporation v. Province of Albay.