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    National Power Corporation Vs Provincial Government of Bataan

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    Rachel Leachon
    The National Power Corporation (NPC) was assessed local franchise taxes by the Provincial Government of Bataan for the years 2001-2003 totaling P45.9 million. NPC argued it was exempt from these taxes due to the enactment of the Electric Power Industry Reform Act (EPIRA) in 2001, which relieved NPC of power generation and transferred these functions to other entities. The RTC and CA ruled against NPC. The Supreme Court ruled in favor of NPC, finding that under EPIRA, NPC no longer owned or operated the business subject to tax as its transmission facilities and franchise were transferred to the National Transmission Corporation in 2001. The case was remanded to properly implead the successor entities as parties.

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    National Power Corporation Vs Provincial Government of Bataan

    Uploaded by

    Rachel Leachon
    282 views2 pages
    The National Power Corporation (NPC) was assessed local franchise taxes by the Provincial Government of Bataan for the years 2001-2003 totaling P45.9 million. NPC argued it was exempt from these taxes due to the enactment of the Electric Power Industry Reform Act (EPIRA) in 2001, which relieved NPC of power generation and transferred these functions to other entities. The RTC and CA ruled against NPC. The Supreme Court ruled in favor of NPC, finding that under EPIRA, NPC no longer owned or operated the business subject to tax as its transmission facilities and franchise were transferred to the National Transmission Corporation in 2001. The case was remanded to properly implead the successor entities as parties.

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    Tax Digest

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    National Power Corporation vs Provincial Government of Bataan

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    The National Power Corporation (NPC) was assessed local franchise taxes by the Provincial Government of Bataan for the years 2001-2003 totaling P45.9 million. NPC argued it was exempt from these taxes due to the enactment of the Electric Power Industry Reform Act (EPIRA) in 2001, which relieved NPC of power generation and transferred these functions to other entities. The RTC and CA ruled against NPC. The Supreme Court ruled in favor of NPC, finding that under EPIRA, NPC no longer owned or operated the business subject to tax as its transmission facilities and franchise were transferred to the National Transmission Corporation in 2001. The case was remanded to properly implead the successor entities as parties.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    282 views2 pages

    National Power Corporation Vs Provincial Government of Bataan

    Uploaded by

    Rachel Leachon
    The National Power Corporation (NPC) was assessed local franchise taxes by the Provincial Government of Bataan for the years 2001-2003 totaling P45.9 million. NPC argued it was exempt from these taxes due to the enactment of the Electric Power Industry Reform Act (EPIRA) in 2001, which relieved NPC of power generation and transferred these functions to other entities. The RTC and CA ruled against NPC. The Supreme Court ruled in favor of NPC, finding that under EPIRA, NPC no longer owned or operated the business subject to tax as its transmission facilities and franchise were transferred to the National Transmission Corporation in 2001. The case was remanded to properly implead the successor entities as parties.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    National Power Corporation vs Provincial Government of Bataan

    G.R. No. 180654 |


    April 21, 2014
    J. Abad

    FACTS:

    On March 28, 2003, the National Power Corporation (NPC) was given a notice of franchise tax delinquency
    worth P45.9 million by the respondent Provincial Government for the period covering the years 2001-2003.
    The NPC did not contest as it awaited the SC ruling in “NPC vs City of Cabanatutan” which dealt on its
    exemption to pay the local franchise tax. NPC lost in this case. Thus, the Province again sent the tax notices.
    This time, NPC alleged that it cannot be liable for the taxes because of the enactment of R.A. 9136 or the
    Electric Power Industry Reform Act (EPIRA) that took effect on June 26, 2001. Under this, the NPC was
    relieved of the function of generating and supplying energy beginning 2001 as its energy transmission function
    and facilities were transferred to the “National Transmission Corporation” (TRANSCO).

    Despite this, the respondent levied 14 of the former properties of the petitioner in Limay, Bataan. The Province
    then won the same properties at the public auction it held and sent the Certificate of Sale to the NPC stating
    that the amount garnered already covered its franchise tax delinquency. Thus, the NPC filed with the RTC of
    Mariveles, Bataan a petition for declaration of nullity of the foreclosure sale with prayer for preliminary
    mandatory injunction against the above-mentioned respondents. Its main allegation being that the EPIRA
    provided that power generation is not a public utility operation requiring a franchise hence, it is not taxable.
    Also, it cannot be held liable for the taxes since TRANSCO now holds the facilities and franchise.

    The RTC dismissed NPC’s petition as it held that the franchise tax was not based on ownership of property
    but on the NPC’s exercise of the privilege of doing business within Bataan and that petitioner failed to prove
    that it had ceased to operate power plants in that jurisdiction. The CA dismissed the case saying that it is the
    CTA who has jurisdiction.

    ISSUE:
    Whether or not NPC no longer owned or operated the business subject to local franchise tax

    RATIO:
    Yes. There is no need for the presentation of evidence as the NPC wins the case by operation of law.

    NPC no longer owned or operated the business. Section 8 of the EPIRA clearly provides that TRANSCO shall
    assume the nationwide franchise of the NPC for the operation of the transmission system and the grid which
    includes all the NPC facilities and assets required to carry out this function. All these took effect on June 26,
    2001. Therefore, the respondent Province, cannot levy the transmission facilities to satisfy the tax assessment
    as these are no longer owned by the NPC.

    In relation to this, Section 49 of the EPIRA transferred all existing assets and liabilities of the NPC to the
    GOCC, “Power Sector Assets and Liabilities Management Corporation” (PSALM Corp) within 180 days from
    the approval of the act. Included in these liabilities is the local franchise tax from January 1 to June 25, 2001.
    Thus, the subject obligations is collectible solely from PSALM Corp.

    With all these, it can be said that NPC is not an indispensable party to the case unlike TRANSCO and PSALM
    Corp. The last two must be included for the case to go forward. The proceedings from the lower courts that
    held NPC liable are therefore a nullity.
    Based on the foregoing, the Court GRANTS the petition of the National Power Corporation and SETS ASIDE
    the resolution of the CA and REMANDS the case to the RTC so that PSALM Corp and TRANSCO may be
    impleaded as proper parties.

    CASE DOCTRINE:

    Q: Is NPC subject to local franchise tax?

    A: No. NPC no longer owned or operated the business. Section 8 of the EPIRA clearly provides that
    TRANSCO shall assume the nationwide franchise of the NPC for the operation of the transmission system
    and the grid which includes all the NPC facilities and assets required to carry out this function. In relation to
    this, Section 49 of the EPIRA transferred all existing assets and liabilities of the NPC to the GOCC, “Power
    Sector Assets and Liabilities Management Corporation” (PSALM Corp). (National Power Corporation v. Provincial
    Government of Bataan G.R. No. 180654. April 21, 2014)

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