G.R. No. 88291 June 8, 1993
ERNESTO M. MACEDA, petitioner, vs. HON. CATALINO MACARAIG, JR., in his capacity as Executive Secretary, Office of the President, HON. VICENTE JAYME, ETC., ET AL., respondents.

FACTS

This is a motion for reconsideration of the Court’s Decision dated May 31, 1991. The case involves the indirect tax exemption of the National Power Corporation (NPC). A chronological review of NPC laws regarding tax exemptions was undertaken. Commonwealth Act No. 120 (1936) created the NPC and exempted its bonds from all taxes. Republic Act No. 358 (1949) exempted NPC “from all taxes, duties, fees, imposts, charges, and restrictions” to facilitate payment of its indebtedness. Republic Act No. 987 (1954) amended this by making NPC “exempt from all taxes, except real property tax.” Republic Act No. 6395 (1971), the revised NPC charter, declared NPC non-profit and exempt under Section 13, which includes exemption “(d) From all taxes, duties, fees, imposts and all other charges… on all petroleum products used by the Corporation in the generation, transmission, utilization, and sale of electric power.” Presidential Decree No. 380 (1974) amended the tax exemption for foreign loans, making them exempt from “all direct and indirect taxes.” The core issue revolves around whether NPC’s tax exemption on petroleum products includes indirect taxes, such that its suppliers (like oil companies) are exempt from paying taxes (like specific taxes) on the petroleum products sold to NPC.

ISSUE

Whether the tax exemption granted to the National Power Corporation under its charter includes indirect taxes, thereby exempting its suppliers (e.g., oil companies) from paying taxes on petroleum products sold to NPC.

RULING

Yes. The Court, upon reconsideration, held that the tax exemption granted to NPC includes both direct and indirect taxes. The clear intent of the law, as evidenced by the legislative history and the specific wording of Section 13(d) of R.A. No. 6395 and the amendment by P.D. No. 380, is to exempt NPC from all taxes on petroleum products used in its operations. This exemption is comprehensive and covers taxes imposed on the petroleum products themselves, regardless of whether they are levied directly on NPC or indirectly on its suppliers. The exemption is intended to reduce the cost of power generation for the benefit of the public. Therefore, the oil companies supplying petroleum products to NPC are not required to pay the specific taxes on these products, and NPC is not liable to reimburse them for such taxes. The Court emphasized that tax exemptions must be clearly granted by law, and in this case, the language of the statute is explicit and unequivocal.