524 Phil. 483
CALLEJO, SR., J.:
In answer to the amended complaint-in-intervention, respondent asserted that the Magat Hydro-Electric Power Plant is located within its territory. It averred that the power plant is an expansion of the Magat River Irrigation System, constructed in 1957 and located in Ramon, Isabela, and the Siffu River Irrigation System, located along the boundaries of San Mateo and Ramon, Isabela. All communications received and sent during the construction of the power plant were addressed to the respondent and not the intervenor. If the power plant is located within the intervenor's territorial boundary, it should have laid its claim over it during its construction in 1974. Petitioner and the intervenor are guilty of laches and estoppel because they have known way back in 1976 that the location of the power plant is within respondent's territory. In fact, this has been well publicized all throughout the Philippines.[7]Other reliefs just and equitable under the premises.[6]
- Ordering the National Power Corporation to pay unto intervenor the sum of P7,116,949.00 representing the franchise tax for 1994 and all franchise tax accruing thereafter;
- Ordering the Province of Isabela to pay unto intervenor the aggregate amount of P9,473,275.00 representing the franchise tax for the years 1992 and 1993 plus legal interest;
- Ordering defendants to pay jointly and severally attorney's fee and litigation expenses.
WHEREFORE, for and in consideration of all the foregoing, judgment is hereby rendered in favor of the plaintiffs and against the defendant: declaring the defendant National Power Corporation liable for payment of Franchise Tax and ordering said defendant, to immediately deposit, in escrow, in favor of the plaintiffs, with the Land Bank of the Philippines, Ilagan Branch, the amount of P7,116,949.00, representing Franchise Tax for the year 1994, plus legal interest amounting to P854,033.00 for the same year 1994; and to pay the costs of this suit.Petitioner then filed an appeal with the CA. On October 21, 2004, the CA rendered a decision affirming the RTC Decision. Citing the case of National Power Corporation v. City of Cabanatuan,[10] the CA ruled that the petitioner is not exempt from paying the franchise tax. It held that Section 193 of the Local Government Code withdrew the tax exemption provided under the petitioner's charter. Petitioner, however, contended that the court a quo had no basis in ordering it to pay franchise tax to respondent since the latter's territorial dispute with the intervenor has not yet been resolved; the RTC likewise had no jurisdiction because respondent failed to exhaust administrative remedies before filing the complaint. In answer to this argument, the appellate court pointed out that the court a quo did not order petitioner to pay the franchise tax specifically to respondent, but merely to deposit the amount in escrow pending final determination in the proper forum of which province is entitled thereto. Thus, the CA upheld the dismissal of the complaint-in-intervention as against respondent since the matter refers to a boundary dispute and the legal steps for its resolution should have been followed.[11]
SO ORDERED.[9]
THE COURT OF APPEALS ERRED IN HOLDING THAT THE NATIONAL POWER CORPORATION IS LIABLE FOR THE PAYMENT OF FRANCHISE TAX UNDER THE LOCAL GOVERNMENT CODE.[12]Petitioner urges this Court to take a second look at its ruling in National Power Corporation v. City of Cabanatuan,[13] which held it liable for franchise tax by virtue of the LGC. It contends that Section 193 thereof did not withdraw the tax exemption provided under Section 13 of its charter, Rep. Act No. 6395, which provides:
Section 13. Non-profit Character of the Corporation; Exemption from All Taxes, Duties, Fees, Imposts and Other Charges by the Government and Government Instrumentalities. - The Corporation shall be non-profit and shall devote all its returns from its capital investment as well as excess revenues from its operation, for expansion. To enable the Corporation to pay its indebtedness and obligations and in furtherance and effective implementation of the policy enunciated in Section One of this Act, the Corporation, including its subsidiaries, is hereby declared, exempt from the payment of all forms of taxes, duties, fees, imposts as well as costs and service fees including filing fees, appeal bonds, supersedeas bonds, in any court or administrative proceedings.Petitioner stresses that there was no provision in the LGC expressly repealing the said provision; neither was there an implied repeal thereof. It points out that repeals by implication are not favored. Moreover, a general law, such as the LGC, cannot repeal a special law, such as Rep. Act No. 6395, unless it clearly appears that the legislature intended to do so.[14] Petitioner argues that, in this case, there was clearly no intention to repeal; on the contrary, the intention to exempt it from local taxes is clearly manifest in said Section 13. This is bolstered by the Declaration of Policy which provides that "the total electrification of the Philippines through the development of power from all sources to meet the needs of industrial development and dispersal, and the needs of rural electrification are primary objectives of the nation which shall be pursued coordinately and supported by all instrumentalities of the government, including its financial institutions." In addition, petitioner cites the case of Maceda v. Macaraig, Jr.[15] to show the intent of lawmakers to exempt it from all forms of taxes. Petitioner further maintains that it is a government-owned and controlled corporation with an original charter and its shares of stock are owned by the National Government; as such, it is exempt from local taxes.[16]
SECTION 137. Franchise Tax. - Notwithstanding any exemption granted by any law or other special law, the province may impose a tax on business enjoying a franchise, at a rate not exceeding fifty percent (50%) of one percent (1%) of the gross annual receipts for the preceding calendar year based on the incoming receipt, or realized, within its territorial jurisdiction.Petitioner stresses that, under the LGC, "business" means a trade or commercial activity regularly engaged in as a means of livelihood or with a view to a profit.[17] On the other hand, "franchise" means a right or privilege, affected with public interest which is conferred upon private persons or corporations, under such terms and conditions as the government and its political subdivisions may impose in the interest of public welfare, security and safety.[18] Petitioner thus asserts that it cannot be held liable to pay franchise tax because it is neither a private corporation nor a business created for profit.
Section 133. Common Limitations on the Taxing Powers of the Local Government Units.- Unless otherwise provided herein, the exercise of the taxing powers of provinces, cities, municipalities and barangays shall not extend to the levy of the following:Petitioner claims that it is an instrumentality of the National Government, which is beyond the authority of local government units to tax. It points out that it remits the profits derived from its operations to the National Government; Congress approves its yearly budget, which forms part of the General Appropriations Act; and all of its indebtedness, foreign or domestic, is guaranteed by the National Government.[19]
x x x x
(o) Taxes, fees, or charges of any kind on the National Government, its agencies and instrumentalities, and local government units.
x x x [S]ection 193 of the LGC withdrew, subject to limited exceptions, the sweeping tax privileges previously enjoyed by private and public corporations. Contrary to the contention of petitioner, Section 193 of the LGC is an express, albeit general, repeal of all statutes granting tax exemptions from local taxes. It reads:Even prior to the Cabanatuan case, the Court already declared in City Government of San Pablo, Laguna v. Reyes[26] that the franchise tax may still be imposed despite any exemption enjoyed under special laws, explaining thus:Sec. 193. Withdrawal of Tax Exemption Privileges.- Unless otherwise provided in this Code, tax exemptions or incentives granted to, or presently enjoyed by all persons, whether natural or juridical, including government-owned or controlled corporations, except local water districts, cooperatives duly registered under R.A. No. 6938, non-stock and non-profit hospitals and educational institutions, are hereby withdrawn upon the effectivity of this Code. (italics supplied)It is a basic precept of statutory construction that the express mention of one person, thing, act, or consequence excludes all others as expressed in the familiar maxim expressio unius est exclusio alterius. Not being a local water district, a cooperative registered under R.A. No. 6938, or a non-stock and non-profit hospital or educational institution, petitioner clearly does not belong to the exception. It is therefore incumbent upon the petitioner to point to some provisions of the LGC that expressly grant it exemption from local taxes.
But this would be an exercise in futility. Section 137 of the LGC clearly states that the LGUs can impose franchise tax "notwithstanding any exemption granted by any law or other special law." This particular provision of the LGC does not admit any exception. x x x[25]
x x x The legislative purpose to withdraw tax privileges enjoyed under existing law or charter is clearly manifested by the language used in Sections 137 and 193 categorically withdrawing such exemption subject only to the exceptions enumerated. Since it would be not only tedious and impractical to attempt to enumerate all the existing statutes providing for an express, albeit general, withdrawal of such exemptions or privileges. No more unequivocal language could have been used.[27]Nonetheless, petitioner seeks to avoid paying the franchise tax by arguing further that it is not liable therefor under Section 137 of the LGC because said tax applies only to a "business enjoying a franchise." It contends that it is not a private corporation or a business for profit. Again, we do not agree. The Court also declared in the Cabanatuan case that petitioner qualifies as a "business enjoying a franchise":
In section 131 (m) of the LGC, Congress unmistakably defined a franchise in the sense of a secondary or special franchise. This is to avoid any confusion when the word franchise is used in the concept of taxation. As commonly used, a franchise tax is "a tax on the privilege of transacting business in the state and exercising corporate franchises granted by the state." It is not levied on the corporation simply for existing as a corporation, upon its property or its income, but on its exercise of the rights or privileges granted to it by the government. Hence, a corporation need not pay franchise tax from the time it ceased to do business and exercise its franchise. It is within this context that the phrase "tax on businesses enjoying a franchise" in Section 137 of the LGC should be interpreted and understood. Verily, to determine whether the petitioner is covered by the franchise tax in question, the following requisites should concur: (1) that petitioner has a "franchise" in the sense of a secondary or special franchise; and (2) that it is exercising its rights or privileges under this franchise within the territory of the respondent city government.Petitioner was likewise characterized therein as a private enterprise for profit, on the following ratiocination:
Petitioner fulfills the first requisite. Commonwealth Act No. 120, as amended by Rep. Act No. 6395, constitutes petitioner's primary and secondary franchises. It serves as the petitioner's charter, defining its composition, capitalization, the appointment and the specific duties of its corporate officers, and its corporate life span. As its secondary franchise, Commonwealth Act No. 120, as amended, vests the petitioner [with x x x certain] powers which are not available to ordinary corporations x x x
x x x x
Petitioner also fulfills the second requisite. It is operating within the respondent city government's territorial jurisdiction pursuant to the powers granted to it by Commonwealth Act No. 120, as amended. x x x[28]
Petitioner was created to "undertake the development of hydroelectric generation of power and the production of electricity from nuclear, geothermal and other sources, as well as the transmission of electric power on a nationwide basis. Pursuant to this mandate, petitioner generates power and sells electricity in bulk. Certainly, these activities do not partake of the sovereign functions of the government. They are purely private and commercial undertakings, albeit imbued with public interest. The public interest involved in its activities, however, does not distract from the true nature of the petitioner as a commercial enterprise, in the same league with similar public utilities like telephone and telegraph companies, railroad companies, water supply and irrigation companies, gas, coal or light companies, power plants, ice plant among others; all of which are declared by this Court as ministrant or proprietary functions of government aimed at advancing the general interest of society.[29]Petitioner nevertheless contends that respondent cannot impose a franchise tax on it because it is an instrumentality of the National Government. It also cites the case of Basco v. Philippine Amusements and Gaming Corporation[30] which held that a government-owned and controlled corporation whose shares of stock are owned by the national government is exempt from local taxes.