Manila International Airport Authority v.

Court of Appeals,
G.R. No. 15560 (July 20, 3006)

Public Dominion

Facts:

MIAA received Final Notices of Real Estate Tax Delinquency from the City of Paraaque for the
taxable years 1992 to 2001. MIAAs real estate tax delinquency was estimated at P624 million. The
City of Paraaque, through its City Treasurer, issued notices of levy and warrants of levy on the
Airport Lands and Buildings. The Mayor of the City of Paraaque threatened to sell at public auction
the Airport Lands and Buildings should MIAA fail to pay the real estate tax delinquency.

MIAA filed a petition sought to restrain the City of Paraaque from imposing real estate tax on,
levying against, and auctioning for public sale the Airport Lands and Buildings.

The City of Paraaque contended that Section 193 of the Local Government Code expressly
withdrew the tax exemption privileges of government-owned and-controlled corporations upon the
effectivity of the Local Government Code. Thus, MIAA cannot claim that the Airport Lands and
Buildings are exempt from real estate tax.

MIAA argued that Airport Lands and Buildings are owned by the Republic. The government cannot
tax itself. The reason for tax exemption of public property is that its taxation would not inure to any
public advantage, since in such a case the tax debtor is also the tax creditor.

Issue:

Whether or not the City of Paraaque can impose real tax, levy against and auction for public sale the
Airport Lands and Buildings.

Held:

MIAA is Not a Government-Owned or Controlled Corporation. The Airport Lands and Buildings of
MIAA are property of public dominion and therefore owned by the State or the Republic of the
Philippines. No one can dispute that properties of public dominion mentioned in Article 420 of the
Civil Code, like roads, canals, rivers, torrents, ports and bridges constructed by the State, are
owned by the State. The term ports includes seaports and airports. The MIAA Airport Lands and
Buildings constitute a port constructed by the State.

Under Article 420 of the Civil Code, the MIAA Airport Lands and Buildings are properties of public
dominion and thus owned by the State or the Republic of the Philippines. The Airport Lands and
Buildings are devoted to public use because they are used by the public for international and
domestic travel and transportation. The fact that the MIAA collects terminal fees and other charges
from the public does not remove the character of the Airport Lands and Buildings as properties for
public use. The charging of fees to the public does not determine the character of the property
whether it is of public dominion or not. Article 420 of the Civil Code defines property of public
dominion as one intended for public use.

The Court has also ruled that property of public dominion, being outside the commerce of man,
cannot be the subject of an auction sale. Properties of public dominion, being for public use, are not
subject to levy, encumbrance or disposition through public or private sale. Any encumbrance, levy on
execution or auction sale of any property of public dominion is void for being contrary to public
policy. Essential public services will stop if properties of public dominion are subject to
encumbrances, foreclosures and auction sale. This will happen if the City of Paraaque can foreclose
and compel the auction sale of the 600-hectare runway of the MIAA for non-payment of real estate
tax.