Maceda v Macaraig (1991)

Maceda v Macaraig
GR No 88291, May 31, 1991

FACTS:
Commonwealth Act 120 created NAPOCOR as a public corporation to undertake the development of
hydraulic power and the production of power from other sources. RA 358 granted NAPOCOR tax and
duty exemption privileges. RA 6395 revised the charter of the NAPOCOR, tasking it to carry out the
policy of the national electrification and provided in detail NAPOCOR’s tax exceptions. PD 380 specified
that NAPOCOR’s exemption includes all taxes, etc. imposed “directly or indirectly.” PD 938 dated May
27, 1976 further amended the aforesaid provision by integrating the tax exemption in general terms under
one paragraph.

ISSUE:
Whether or not NPC has ceased to enjoy indirect tax and duty exemption with the enactment of PD 938
on May 27, 1976 which amended PD 380 issued on January 11, 1974

RULING:
No, it is still exempt.
NAPOCOR is a non-profit public corporation created for the general good and welfare, and wholly
owned by the government of the Republic of the Philippines. From the very beginning of the
corporation’s existence, NAPOCOR enjoyed preferential tax treatment “to enable the corporation to pay
the indebtedness and obligation” and effective implementation of the policy enunciated in Section 1 of
RA 6395.

From the preamble of PD 938, it is evident that the provisions of PD 938 were not intended to be
interpreted liberally so as to enhance the tax exempt status of NAPOCOR.

It is recognized that the rule on strict interpretation does not apply in the case of exemptions in favor of
government political subdivision or instrumentality. In the case of property owned by the state or a city or
other public corporations, the express exception should not be construed with the same degree of
strictness that applies to exemptions contrary to the policy of the state, since as to such property
“exception is the rule and taxation the exception.”