Manila International Airport Authority vs. CA July 20, 2006; G.R. No.

155650 (Exemption of Govt Entities, Agencies, and Instrumentality) Facts: - MIAA operates the NAIA Complex; it administers the land, improvements, and equipment within the NAIAComplex. - The Office of the Government Corporate Counsel (OGCC) opined that the Local Gov. Code withdrew the exemption from real estate tax granted to MIAA by its Charter (sec 21). MIAA negotiated with the City of Paranaque - The MIAA failed to pay real estate tax delinquency despite having received final notices of real estate tax delinquency from the City of Paranaque for the taxable years 1992-2001. Then in July 2001, the City of Paranaque issued notices of levy and warrants on Airport lands and Buildings, and the mayor threatened to sell at public auction. - MIAA filed petition to restrain the city from imposing real estate tax on the airport lands and buildings. It argued that: o The real owner is the Republic of the Phil. o It is for the benefit of the general public; hence it is for public use and public service o Sec 21 of the MIAA charter exempts them - The City of Paranaque argued that Sec 193 of the LGC withdrew the tax exemption privileges of GOCCs Issues: 1. WON MIAA is a GOCC? NO 2. WON exempt from real estate tax? YES

Held: 1. No; MIAA is an instrumentality of the National Government - GOCCs are NOT exempt from real estate tax. However, MIAA is not a GOCC - A GOCC must be organized as a stock or non-stock corporation. MIAA is neither. o It is not a stock corporation since even if it has capital, it is not divided into shares of stocks. It also has no stock holders or voting shares o It is not a non-stock corporation either. It has no members. Even if we assume that the government is its member, it is still not a non-stock corporation because 20% of its gross operating income goes to the national treasury. Non-stock corporations are not supposed to distribute any part of its income to its member. Furthermore, MIAA is neither organized for charitable, religious, educational, professional etc purposes. - HENCE, MIAA IS A GOVERNMENT INSTRUMENTALITY. The only difference with other instrumentalities is that it is vested with corporate powers o It remains part of the government machinery although not integrated with development framework - Sec 133 (o) of the LGC recognizes the basic principle that LGUs cannot tax the national government, which merely delegated to local governments the power to tax. The tax powers of the LGUs s granted by the constitution, but are subject to such guidelines and limitations as the Congress may provide. - General Rule: tax exemption is construed against the taxpayer claiming exemption

- Exemption: The power to tax national government instrumentalities is construed against the local government. Any doubts whether a person, article, or acitivity is taxable is resolved against taxation - Also, there is also no reason for LGUs to tax instrumentalities rendering essential public services to inhabitants of local governments. The only exemption is when Congress clearly intended to tax instrumentalities for the delivery of public services for sound and compelling policy considerations. 2. Yes, it is exempted from real estate tax since MIAA is owned by the republic of the Phil. - the Airport buildings and lands are property of public dominion, according to Article 420 of Civil Code which states which are property of public dominion. (those intended for public use, like ports) - the lands and buildings of MIAA are devoted to public use because they are used by the public for international and domestic travel. The fact that MIAA collects terminal fees and other charges does not remove the character as property for public use. Someone must pay for the maintenance. Such fees are often termed users tax. This means taxing those among the public who actually use a public facility instead of taxing all the public. - Since they are for public use, they are outside the commerce of men. They cannot be subject to levy, encumbrance or disposition. - Unless the president issues a proclamation withdrawing the land and buildings from public use, they remain public dominion and are inalienable.

- The minority asserts that MIAA is not exempt from real estate tax because section 193 of the LGC withdrew tax exemption from all persons. They argue that MIAA is a juridical person. The minority is flawed. Sec 193 of the LGC withdrew tax exemption of all persons exempt when otherwise provided in the Code. Sec 133 (o) expressly provides otherwise. - Hence even if MIAA fails to pay the real property taxes, said portion cannot be sold at public auction HELD: the real property tax assessments and notices of delinquencies issued by the city of pasay to MIAA are void; except those pertaining to portions of the aiport which are leased to private properties. This is based on Section 234 (a) Dissent of Tinga - they pretended that Mactan International Airport Case does not exist. Such a case states that airports are taxable. The majority does not even engage in the Mactan case in anyway. - There is really no prohibition against the government taxing itself, and nothing obscene with allowing government entities exercising propriety functions to be taxed for the purposes of raising the coffers of the LGU