G.R. No. 88291 – 197 SCRA 771 – Political Law – Constitutional Law – The Executive Department – Powers of the President; Control Power – Acts of the Executive Secretary
The National Power Corporation (NAPOCOR) was created by Commonwealth Act No. 120. In 1949, it was given tax exemption by Republic Act No. 358. In 1984, Presidential Decree No. 1931 was passed removing the tax exemption of NAPOCOR and other government owned and controlled corporations (GOCCs). There was a reservation, however, that the president or the Minister of Finance, upon recommendation by the Fiscal Incentives Review Board (FIRB), may restore or modify the exemption.
In 1985, the tax exemption was revived. It was again removed in 1987 by virtue of Executive Order 93 which again provided that upon FIRB recommendation it can again be restored. In the same year, FIRB resolved to restore the exemption. The same was approved by President Corazon Aquino through Executive Secretary Catalino Macaraig, Jr. acting as her alter ego. Ernesto Maceda assailed the FIRB resolution averring that the power granted to the FIRB is an undue delegation of legislative power. Maceda’s claim was strengthened by Opinion 77 issued by then DOJ Secretary Sedfrey Ordonez. Macaraig however did not give credence to the opinion issued by the DOJ secretary.
ISSUE: Whether or not the Executive Secretary can validly ignore the legal opinion of the Justice Secretary.
HELD: Yes. The Supreme Court first ruled that there is no undue delegation of legislative power. First of all, since the NAPOCOR is a GOCC and is non-profit it can be exempt from taxation. Also, Opinion 77 issued by DOJ Secretary Ordonez was validly overruled by Macaraig. This action by Macaraig is valid because the Executive Secretary, by authority of the President, has the power to modify, alter or reverse the construction of a statute given by a department secretary – pursuant to the president’s control power.