digest of MIAA v. CA (G.R. No. 155650)

MIAA v. Court of Appeals G.R. No. 155650, July 20, 2006 Carpio, J.

Facts:   The The Mani Manila la Inte Intern rnat atio iona nall Airp Airpor ortt Auth Author orit ity y (MIA (MIAA) A) oper operat ates es the the Nino Ninoy y Aqui Aquino no International Airport (NAIA) Complex in Parañaque City under Executive Order No. 903 (MIAA Charte Charter), r), as ame amende nded. d. As such such operat operator, or, it admini administe sters rs the land, land, improv improveme ements nts and equipment within the NAIA Complex. In March 1997, the Office of the Government Corporate Counsel (OGCC) issued Opinion No. 061 to the effect that the Local Government Code of  1991 (LGC) withdrew the exemption from real estate tax granted to MIAA under Section 21 of its Charter.

 Thus, MIAA paid some of the real estate tax already due. In June 2001, it received Final Notices of Real Estate Tax Delinquency from the City of Parañaque for the taxable years 1992 to 2001. The City Treasurer subsequently issued notices of levy and warrants of  levy on the airport lands and buildings. At the instance of MIAA, the OGCC issued Opinion No. 147 clarifying Opinion No. 061, pointing out that Sec. 206 of the LGC requires persons exempt from real estate tax to show proof of exemption. According to the OGCC, Sec. 21 of the MIAA Charter is the proof that MIAA is exempt from real estate tax. MIAA, thus, filed a petition with the Court of Appeals seeking to restrain the City of Parañaque from imposing real estate tax on, levying against, and auctioning for public sale the airport lands and buildings, but this was dismissed for having been filed out of time. Hence, MIAA filed this petition for review, pointing out that it is exempt from real estate tax under Sec. 21 of its charter and Sec. 234 of the LGC. It invokes the principle that the government cannot tax itself as a justification for exemption, since the airport lands and buildings, being devoted to public use and public service, are owned by the Republic of the Philippines. On the other hand, the City of Parañaque invokes Sec. 193 of the LGC, which expressly expressly withdrew the tax exemptio exemption n privileg privileges es of governmen government-own t-owned ed and controlle controlled d corporations (GOCC) upon the effectivity of the LGC. It asserts that an international airport is not among the exceptions mentioned in the said law. Meanwhile, the City of Parañaque posted and published notices announcing the public auction sale of the airport lands and buildings. In the afternoon before the scheduled public auction, MIAA applied with the Court for the issuance of a TRO to restrain the auction sale. The Court issued a TRO on the day of the auction sale, however, the same was received only by the City of Parañaque three hours after the sale. Issue:

Whether or not the airport lands and buildings of MIAA are exempt from real estate tax? Held:

 The airport lands and buildings of MIAA are exempt from real estate tax imposed by local governments. Sec. 243(a) of the LGC exempts from real estate tax any real property owned by the Republic of the Philippines. This exemption should be read in relation with Sec. 133( 133(o) o) of the the LGC, LGC, whic which h prov provid ides es that that the the exer exerci cise se of the the taxi taxing ng powe powers rs of loca locall governments shall not extend to the levy of taxes, fees or charges of any kind on the National Government, its agencies and instrumentalities. instrumentalities.

 These provisions recognize the basic principle that local governments cannot tax the national government, which historically merely delegated to local governments the power to tax.  The rule is that a tax is never presumed and there must be clear language in the law imposing the tax. This rule applies with greater force when local governments seek to tax national government instrumentalities. Moreover, a tax exemption is construed liberally in favor of national government instrumentalities. MIAA is not a GOCC, but an instrumentality of the government.  The Republic remains the beneficial owner of the properties. MIAA itself is owned solely by the Republic. At any time, the President can transfer back to the Republic title to the airport lands and buildings without the Republic paying MIAA any consideration. As long as the airport lands and buildings are reserved for public use, their ownership remains with the State. Unless the President issues a proclamation withdrawing these properties from public use, they remain properties of public dominion. As such, they are inalienable, hence, they are not subject to levy on execution or foreclosure sale, and they are exempt from real estate tax. Howeve However, r, portio portions ns of the airpor airportt lands lands and buildi buildings ngs that that MIAA MIAA lea leases ses to privat private e entities are not exempt from real estate tax. In such a case, MIAA has granted the beneficial use of such portions for a consideration to a taxable person.