MIAA v.

Court of Appeals
G.R. No. 155650, July 20, 2006
Carpio, J.
Facts:
The Manila International Airport Authority (MIAA) operates the Ninoy AquinoInternational Airport (NAIA) Complex in
Paraaque City under Executive Order No. 903 (MIAACharter), as amended. As such operator, it administers the land,
improvements andequipment within the NAIA Complex. In March 1997, the Office of the Government CorporateCounsel (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 21of its Charter. Thus, MIAA paid some of the real estate tax already due. In June 2001, it
receivedFinal Notices of Real Estate Tax Delinquency from the City of Paraaque for the taxableyears 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 showproof of exemption. According to the OGCC, Sec. 21 of the MIAA Charter is the proof thatMIAA is exempt from
real estate tax. MIAA, thus, filed a petition with the Court of Appealsseeking to restrain the City of Paraaque from imposing real
estate tax on, levying against,and auctioning for public sale the airport lands and buildings, but this was dismissed forhaving been
filed out of time.Hence, MIAA filed this petition for review, pointing out that it is exempt from realestate tax under Sec. 21 of its
charter and Sec. 234 of the LGC. It invokes the principle thatthe government cannot tax itself as a justification for exemption, since
the airport lands andbuildings, being devoted to public use and public service, are owned by the Republic of thePhilippines. On the
other hand, the City of Paraaque invokes Sec. 193 of the LGC, whichexpressly withdrew the tax exemption privileges of
government-owned and controlledcorporations (GOCC) upon the effectivity of the LGC.It asserts that an international airport is not
among the exceptions mentioned in thesaid law. Meanwhile, the City of Paraaque posted and published notices announcing
thepublic auction sale of the airport lands and buildings. In the afternoon before the scheduledpublic auction, MIAA applied with
the Court for the issuance of a TRO to restrain the auctionsale. The Court issued a TRO on the day of the auction sale, however, the
same wasreceived only by the City of Paraaque three hours after the sale.

Issue:
Whether or not MIAA is a GOCC thus exempt from tax?

Held:
There is no dispute that a government-owned or controlled corporation is not exempt from real estate tax. However, MIAA is not a
government-owned or controlled corporation. Section 2(13) of the Introductory Provisions of the Administrative Code of 1987 defines a
government-owned or controlled corporation as follows:
SEC. 2. General Terms Defined. x x x x
(13) Government-owned or controlled corporation refers to any agency organized as a stock or non-stock corporation,
vested with functions relating to public needs whether governmental or proprietary in nature, and owned by the Government
directly or through its instrumentalities either wholly, or, where applicable as in the case of stock corporations, to the extent of at
least fifty-one (51) percent of its capital stock: x x x. (Emphasis supplied)
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. MIAA has no
stockholders or voting shares.
Section 3 of the Corporation Code
10
defines a stock corporation as one whose "capital stock is divided into shares and x x x
authorized to distribute to the holders of such shares dividends x x x." MIAA has capital but it is not divided into shares of stock.
MIAA has no stockholders or voting shares. Hence, MIAA is not a stock corporation.
MIAA is also not a non-stock corporation because it has no members. Section 87 of the Corporation Code defines a non-stock
corporation as "one where no part of its income is distributable as dividends to its members, trustees or officers." A non-stock corporation
must have members. Even if we assume that the Government is considered as the sole member of MIAA, this will not make MIAA a non-
stock corporation. Non-stock corporations cannot distribute any part of their income to their members. Section 11 of the MIAA Charter
mandates MIAA to remit 20% of its annual gross operating income to the National Treasury.
11
This prevents MIAA from qualifying as a
non-stock corporation.
Section 88 of the Corporation Code provides that non-stock corporations are "organized for charitable, religious, educational,
professional, cultural, recreational, fraternal, literary, scientific, social, civil service, or similar purposes, like trade, industry, agriculture
and like chambers." MIAA is not organized for any of these purposes. MIAA, a public utility, is organized to operate an international and
domestic airport for public use.
Since MIAA is neither a stock nor a non-stock corporation, MIAA does not qualify as a government-owned or controlled
corporation.


2. MAGSAYSAY-LABRADOR vs. COURT OF APPEALS
G.R. No. 58168. December 19, 1989.Fernan,
C.J.
FACTS:
Private respondent Adelaida Rodriguez Magsaysay filed an action against Subic LandCorporation (SUBIC), among others, to
annul the deed of assignment and deed of mortgageexecuted in favor of the latter by her late husband.
Private respondent alleged that the subjectland of the two deeds was acquired through conjugal funds. Since her consent to
the dispositionof the same was not obtained, she claimed that the acts of assignment and mortgage weredone to defraud the
conjugal partnership. She further contended that the same were donewithout consideration and hence null and void.
Petitioners, sisters of the deceased husband of the private respondent, filed a motion for intervention on the ground that
their brother conveyedto them one-half of his shareholdings in SUBIC, or about 41%. The trial court denied the motionfor
intervention ruling that petitioners have no legal interest because SUBIC has a personalityseparate and distinct from its
stockholders. The CA confirmed the denial on appeal. Hence, thispetition.
ISSUE:
Whether petitioners, as stockholders of SUBIC, have a legal interest in the action for annulment of the deed of assignment
and deed of mortgage in favor of the corporation.
HELD:
NO. The Court noted that the interest which entitles person to intervene in a suitbetween other parties must be in the
matter in litigation and of such direct and immediatecharacter that the intervenor will either gain or lose by the direct legal
operation and effect of the judgment. In the instant petition, it was said that the interest, if it exists at all, of petitioners-movants is
indirect, contingent, remote, conjectural, consequential and collateral. At the veryleast, their interest is purely inchoate, or in sheer
expectancy of a right in the management of the corporation and to share in the profits thereof and in the properties and assets
thereof ondissolution, after payment of the corporate debts and obligations. While a share of stockrepresents a proportionate or
aliquot interest in the property of the corporation, it does not vestthe owner thereof with any legal right or title to any of the
property, his interest in the corporateproperty being equitable or beneficial in nature. Shareholders are in no legal sense the
ownersof corporate property, which is owned by the corporation as a distinct legal person.

3. BASECO vs PCGG
Bataan Shipyard & Engineering Co., Inc. vs Presidential Commission on Good Government
150 SCRA 181 Business Organization Corporation Law A Corporation Cannot Invoke the Right Against Self-Incrimination
When President Corazon Aquino took power, the Presidential Commission on Good Government (PCGG) was formed in order to recover
ill gotten wealth allegedly acquired by former President Marcos and his cronies. Aquino then issued two executive orders in 1986 and
pursuant thereto, a sequestration and a takeover order were issued against Bataan Shipyard & engineering Co., Inc. (BASECO). BASECO
was alleged to be in actuality owned and controlled by the Marcoses through the Romualdez family, and in turn, through dummy
stockholders.
The sequestration order issued in 1986 required, among others, that BASECO produce corporate records from 1973 to 1986 under pain of
contempt of the PCGG if it fails to do so. BASECO assails this order as it avers, among others, that it is against BASECOs right against
self incrimination and unreasonable searches and seizures.
ISSUE: Whether or not BASECO is correct.
HELD: No. First of all, PCGG has the right to require the production of such documents pursuant to the power granted to it. Second, and
more importantly, right against self-incrimination has no application to juridical persons. There is a reserve right in the legislature to
investigate the contracts of a corporation and find out whether it has exceeded its powers. It would be a strange anomaly to hold that a
state, having chartered a corporation like BASECO to make use of certain franchises, could not, in the exercise of sovereignty, inquire how
these franchises had been employed, and whether they had been abused, and demand the production of the corporate books and papers for
that purpose.
Neither is the right against unreasonable searches and seizures applicable here. There were no searches made and no seizure pursuant to
any search was ever made. BASECO was merely ordered to produce the corporate records.
4. LUXURIA VS CA
Aida Posadas was the owner of a 1.6 hectare land in Sucat, Muntinlupa. In 1989, she entered into an agreement with Jaime
Bravo for the latter to draft a development and architectural design for the said property. The contract price was P450,000.00.
Posadas gave a down payment of P25,000.00. Later, Posadas assigned her property to Luxuria Homes, Inc. One of the
witnesses to the deed of assignment and articles of incorporation was Jaime Bravo.
In 1992, Bravo finished the architectural design so he proposed that he and his company manage the development of the
property. But Posadas turned down the proposal and thereafter the business relationship between the two went sour. Bravo
then demanded Posadas to pay them the balance of their agreement as regards the architectural design (P425k). Bravo also
demanded payment for some other expenses and fees he incurred i.e., negotiating and relocating the informal settlers then
occupying the land of Posadas. Posadas refused to make payment. Bravo then filed a complaint for specific performance
against Posadas but he included Luxuria Homes as a co-defendant as he alleged that Luxuria Homes was a mere conduit of
Posadas; that the said corporation was created in order to defraud Bravo and avoid the payment of debt.
ISSUE: Whether or not Luxuria Homes should be impleaded.
HELD: No. It was Posadas who entered into a contract with Bravo in her personal capacity. Bravo was not able to prove that
Luxuria Homes was a mere conduit of Posadas. Posadas owns just 33% of Luxuria Homes. Further, when Luxuria Homes
was created, Bravo was there as a witness. So how can he claim that the creation of said corporation was to defraud him. The
eventual transfer of Posadas property to Luxuria was with the full knowledge of Bravo. The agreement between Posadas and
Bravo was entered into even before Luxuria existed hence Luxuria was never a party thereto. Whatever liability Posadas
incurred arising from said agreement must be borne by her solely and not in solidum with Luxuria. To disregard the separate
juridical personality of a corporation, the wrongdoing must be clearly and convincingly established. It cannot be presumed.