CASE DIGEST / HOLLY-ANN A. CABASAG Manila International Airport vs. Court of Appeals G.R. No. 155650, July 20, 2006

 

Manila International Airport vs. Court of Appeals

G.R. No. 155650, July 20, 2006

 

Facts:

Petitioner Manila International Airport Authority (MIAA) operates the Ninoy Aquino International Airport (NAIA). And as the operator of the international airport, MIAA administers the land, improvements, and equipment within the NAIA Complex. The MIAA Charter transferred to MIAA approximately 600 hectares of land, including the runways and buildings ("Airport Lands and Buildings") then under the Bureau of Air Transportation. The MIAA Charter further provides that no portion of the land transferred to MIAA shall be disposed of through sale or any other mode unless specifically approved by the President of the Philippines.

The OGCC opined that the Local Government Code of 1991 withdrew the exemption from real estate tax granted to MIAA under Section 21 of the MIAA Charter. Thus, MIAA negotiated with the respondent City of Parañaque to pay the real estate tax imposed by the City. MIAA then paid some of the real estate tax already due.

MIAA received Final Notices of Real Estate Tax Delinquency from the City of Parañaque for the taxable years 1992 to 2001. And with this notice, the Mayor of the City of Parañaque threatened to sell at public auction the Airport Lands and Buildings should MIAA fails to pay the real estate tax delinquency.

MIAA then filed with the Court of Appeals an original petition for prohibition and injunction, and for preliminary injunction or temporary restraining order. However, the Court of Appeals dismissed the petition because MIAA filed it beyond the 60-day reglementary period. Moreover, CA also denied MIAA’s motion for reconsideration.

MIAA argues that Section 21 of the MIAA Charter specifically exempts MIAA from the payment of real estate tax. MIAA insists that it is also exempt from real estate tax under Section 234 of the Local Government Code because the Airport Lands and Buildings are owned by the Republic. To justify the exemption, MIAA invokes the principle that the government cannot tax itself. Respondents invoke as well Section 193 of the Local Government Code, which expressly withdrew the tax exemption privileges of "government-owned and-controlled corporations" upon the effectivity of the Local Government Code.

Issue:

Whether or not the Airport Lands and Buildings of MIAA are exempt from real estate tax under existing laws.

Held:

Yes. MIAA's Airport Lands and Buildings are exempt from real estate tax imposed by local governments. Few points were raised, first, MIAA is not a government-owned or controlled corporation but an instrumentality of the National Government and thus exempt from local taxation. Second, the real properties of MIAA are owned by the Republic of the Philippines and thus exempt from real estate tax.

A government-owned or controlled corporation must be "organized as a stock or non-stock corporation." MIAA is not organized as a stock or non-stock corporation. MIAA is not a stock corporation because it has no capital stock divided into shares. Since MIAA is neither a stock nor a non-stock corporation, MIAA does not qualify as a government-owned or controlled corporation.

MIAA is a government instrumentality vested with corporate powers to perform efficiently its governmental functions. MIAA is like any other government instrumentality, the only difference is that MIAA is vested with corporate powers.

When the law vests in a government instrumentality corporate powers, the instrumentality does not become a corporation. Unless the government instrumentality is organized as a stock or non-stock corporation, it remains a government instrumentality exercising not only governmental but also corporate powers. Thus, MIAA exercises the governmental powers of eminent domain, police authority, and the levying of fees and charges.

When local governments invoke the power to tax on national government instrumentalities, such power is construed strictly against local governments. The rule is that a tax is never presumed and there must be clear language in the law imposing the tax. Any doubt whether a person, article, or activity is taxable is resolved against taxation. This rule applies with greater force when local governments seek to tax national government instrumentalities.

 

 

 CASE DIGEST BY: HOLLY-ANN A. CABASAG