National Power Corporation vs.

City of Cabanatuan
G.R. No. 177332
October 1, 2014

NPC, a GOCC, created under CA 120 as amended, selling electric power, was assessed by the
City of Cabanatuan for franchise tax pursuant to sec. 37 of Ordinance No. 165-92. NPC refused
to pay the tax assessment on the grounds that the City of Cabanatuan has no authority to impose
tax on government entities and also that it is exempted as a non-profit organization. For its part,
the City government alleged that NPC’s exemption from local taxes has been repealed by sec.
193 of RA 716 

Issue: Whether NPC is liable to pay an annual franchise tax to the City government. 

Ruling: Yes, NPC is liable. As a general rule, LGUs cannot impose taxes, fees or charges of any
kind on the National Government, its agencies and instrumentalities, this rule now admits an
exception, i.e., when specific provisions of the LGC authorize the LGUs to impose taxes, fees or
charges on the aforementioned entities.