GR 96700; (November, 1996) (Digest)
G.R. No. 96700 November 19, 1996
NATIONAL POWER CORPORATION, petitioner, vs. PROVINCE OF LANAO DEL SUR, LANAO DEL SUR GOVERNOR SAIDAMEN B. PANGARUNGAN and LANAO DEL SUR PROVINCIAL TREASURER HADJI MACMOD L. DALIDIG, respondents.
FACTS
The National Power Corporation (NPC) owns the Agus II Hydroelectric Power Plant Complex in Lanao del Sur. The Provincial Assessor assessed NPC real property taxes amounting to over P154 million for the period June 14, 1984, to December 31, 1989, claiming NPC’s tax exemption had been withdrawn. After demand letters, the Provincial Treasurer published a Notice of Auction Sale. NPC filed a petition for prohibition with this Court, which issued a Temporary Restraining Order (TRO) on January 21, 1991. However, the auction proceeded as scheduled on January 22, with the province as the sole bidder, and a certificate of sale was registered before the provincial officials received the TRO notices later that afternoon.
ISSUE
Is NPC liable for real property taxes for the period in question, and were the respondents’ tax collection and auction sale proceedings valid?
RULING
No, NPC is not liable. The Court ruled that NPC remained exempt from real property taxes for the period covering June 14, 1984, to December 31, 1989. The legal logic is anchored on the principle that a tax exemption granted by statute can only be withdrawn by clear and express legislative language. NPC’s exemption was originally granted under its charter, Republic Act No. 6395. While Presidential Decree No. 1931 (effective June 11, 1984) generally withdrew tax exemptions of government-owned corporations, it allowed exemptions to be restored upon recommendation of the Fiscal Incentives Review Board (FIRB). The FIRB issued Resolution No. 10-85, which restored NPC’s tax exemptions effective June 11, 1984. This restoration was valid and legally effective. Consequently, NPC was exempt during the entire assessed period. Since the tax assessment was void for lack of legal basis, all subsequent collection proceedings, including the auction sale, were also null and void. The Court made the TRO permanent and annulled the auction sale and certificate of sale.