Manila International Airport Authority v. City of Pasay
REITERATIONFacts
1. The Antecedents: The Manila International Airport Authority (MIAA) operates the Ninoy Aquino International Airport (NAIA) Complex, which spans approximately 600 hectares of land transferred to MIAA under Executive Order No. 903. The NAIA Complex is situated along the border of Pasay City and Parañaque City. In August 2001, MIAA received Final Notices of Real Property Tax Delinquency from the City of Pasay for its NAIA Pasay properties, totaling over P1 billion in taxes and penalties for the years 1992 to 2001. Subsequently, the City of Pasay issued notices of levy and warrants of levy against these properties and threatened to sell them at public auction. 2. Procedural History: In response to the tax delinquency notices and impending auction, MIAA filed a petition for prohibition and injunction with the Court of Appeals on October 29, 2001. MIAA sought to prevent the City of Pasay from imposing real property taxes on, levying against, and auctioning its NAIA Pasay properties. The Court of Appeals, in a decision dated October 30, 2002, dismissed MIAA's petition, upholding the City of Pasay's authority to impose and collect realty taxes on the properties. MIAA's motion for reconsideration was subsequently denied, leading to the present petition. 3. The Petition: MIAA filed this petition for review on certiorari under Rule 45 of the Rules of Civil Procedure, seeking to set aside the Court of Appeals' decision and resolution. The core issue presented to the Supreme Court is whether the NAIA Pasay properties owned by MIAA are exempt from real property tax. MIAA argues that its status as a government instrumentality and the nature of the airport properties as being of public dominion exempt them from such taxes, citing previous Supreme Court rulings.
Issue(s)
Whether the NAIA Pasay properties of MIAA are exempt from real property tax. Whether MIAA is a government-owned or controlled corporation subject to the withdrawal of tax exemptions under the Local Government Code; and whether MIAA is a government instrumentality exempt from local taxation.
Ruling
The Supreme Court granted the petition, set aside the Court of Appeals' decision and resolution, declared the NAIA Pasay properties of MIAA exempt from real property tax imposed by the City of Pasay, and declared void all real property tax assessments, except for portions leased to private parties.
Ratio Decidendi
On the exemption of NAIA Pasay properties from real property tax: The Court reiterated its ruling in the 2006 MIAA case, holding that the airport lands and buildings of MIAA are properties of public dominion intended for public use. Citing Article 420 of the Civil Code, which defines properties of public dominion as those intended for public use or for some public service, the Court concluded that these properties are owned by the Republic and are thus exempt from real estate tax under Section 234(a) of the Local Government Code. The exception under Section 234(a), which subjects properties to tax when their beneficial use is granted to a taxable person, was clarified to apply only to properties owned by the Republic and leased to taxable entities, not to MIAA's own properties. On MIAA's legal status and exemption from local taxation: The Court clarified that MIAA is not a government-owned or controlled corporation (GOCC) as defined under Section 2(13) of the Administrative Code. It is not organized as a stock or non-stock corporation, lacking capital stock divided into shares or members. Instead, MIAA is a government instrumentality vested with corporate powers to perform essential public services, as defined under Section 2(10) of the Administrative Code. As a government instrumentality, MIAA is exempt from any kind of tax imposed by local governments under Section 133(o) of the Local Government Code. This exemption is absolute for properties devoted to public use and service, with the sole exception being portions leased to private parties, which become subject to real property tax.
Main Doctrine
The airport lands and buildings of the Manila International Airport Authority (MIAA) are properties of public dominion and are devoted to public use, thus exempt from real property tax. MIAA itself is a government instrumentality, not a government-owned or controlled corporation, and is therefore exempt from local government taxation under Section 133(o) of the Local Government Code, except for portions leased to private parties.