Case Summary (G.R. No. 87479)
Petitioner
National Power Corporation, challenging the provincial government’s authority to levy and enforce real property taxes on its Tiwi, Albay properties for the period June 11, 1984 to March 10, 1987.
Respondents
Province of Albay, Governor Salalima, and Provincial Treasurer Nunez, who initiated public auction of NAPOCOR’s Tiwi properties for alleged tax delinquencies amounting to ₱214,845,184.76.
Key Dates
• June 11, 1984 – Issuance of PD 1931 withdrawing all tax exemptions for government-controlled corporations.
• March 10, 1987 – FIRB Resolution No. 17-87 restoring NAPOCOR’s tax exemption privileges, confirmed by Executive Secretary memorandum.
• March 30, 1989 – Auction sale proceeds applied toward alleged real property tax arrears.
• June 4, 1990 – Supreme Court En Banc decision.
Applicable Law
• 1987 Philippine Constitution, Art. VI, Sec. 28(4) – Only the legislature may grant tax exemptions.
• Commonwealth Act No. 120, as amended by Republic Act No. 6395 – Charters NAPOCOR and declares it tax-exempt.
• PD 776 (1975) – Creates FIRB to recommend modifications or withdrawals of statutory tax incentives.
• PD 1931 (1984) – Withdraws existing tax exemptions for government corporations.
• EO 93 (1986) – Authorizes FIRB to restore tax and duty exemptions prospectively.
• Local Government Code (PD 464) – Governs real property taxation and distribution of proceeds.
Issues
- Whether FIRB Resolutions Nos. 10-85 and 1-86 validly restored NAPOCOR’s tax exemptions between June 11, 1984 and March 10, 1987.
- Whether NAPOCOR remains liable for real property taxes on its Tiwi properties for that interregnum.
- Constitutional propriety of FIRB’s exercise of authority under PD 776 and EO 93.
Ruling
The petition is denied. The auction sale is valid and NAPOCOR remains liable for real property taxes accrued between June 11, 1984 and March 10, 1987.
Reasoning
- Under PD 1931, all tax exemptions for government-controlled corporations ceased as of June 11, 1984. FIRB’s original charter (PD 776) empowered it only to recommend to the President the withdrawal or modification of incentives; it lacked inherent authority to impose, withdraw, or restore tax exemptions unilaterally.
- FIRB Resolutions Nos. 10-85 (effective June 11, 1984 to June 30, 1985) and 1-86 (effective thereafter) exceeded FIRB’s recommendation-only mandate and thus cannot revive NAPOCOR’s tax-exempt status for the interregnum.
- Although EO 93 (December 17, 1986) prospectively authorized FIRB to restore exemptions and impose conditions, it does not retroactively validate prior unlawful acts of the Board.
Case Syllabus (G.R. No. 87479)
Facts
- The National Power Corporation (NAPOCOR) owns real properties, buildings, machines, and improvements at Tiwi, Albay.
- Between June 11, 1984 and March 10, 1987, real property taxes allegedly accrued on these properties in the amount of ₱214,845,184.76.
- On March 14–15, 1989, the Province of Albay published notice of public auction for NAPOCOR’s Tiwi properties to satisfy the claimed tax delinquencies.
- NAPOCOR invoked Fiscal Incentives Review Board (FIRB) Resolution No. 17-87 (restoring its tax‐and‐duty exemptions effective March 10, 1987) and a confirming Memorandum of Executive Secretary Catalino Macaraig.
- On March 10, 1989, the Supreme Court issued a temporary restraining order (TRO) directing respondents to cease the sale, but the TRO did not reach them in time.
- The auction proceeded on March 30, 1989, with the Province of Albay as highest bidder.
Procedural Background
- NAPOCOR filed a petition before the Supreme Court questioning the power of the provincial government of Albay to collect real property taxes on its properties.
- Respondents justified the auction on the ground that NAPOCOR’s exemption privileges had been lawfully withdrawn or not validly restored for the period June 11, 1984 to March 10, 1987.
- The case was heard En Banc; the TRO remained effective only from its issuance until the attempted sale.
Issues
- Whether NAPOCOR remained exempt from real property taxes between June 11, 1984 and March 10, 1987.
- Whether FIRB Resolutions Nos. 10-85, 1-86, and 17-87 validly restored NAPOCOR’s tax‐and‐duty exemptions.
- Whether Executive Order No. 93 (series of 1986) and related FIRB action amounted to an unconstitutional delegation of the legislative taxing power.
- Whether the auction sale of NAPOCOR’s properties by the Province of Albay is valid.
Relevant Statutory and Administrative Provisions
- Section 13, Republic Act No. 6395 (amending Commonwealth Act No. 120): declares NAPOCOR non‐profit and exempts it from all forms of taxes, duties, fees, imposts, and charges.
- Presidential Decree No. 776 (August 24, 1975): creates the Fiscal Incentives Review Board, empowered to recommend modification, withdrawal, revocation, or suspension of subsidies and tax exemptions.
- Presidential Decree No. 1931 (June 11, 1984): withdraws all exemptions from government‐owned or controlled corporations, including their subsidiaries.
- FIRB Res