Manila International Airport Authority v. Court of Appeals
MODIFICATIONFacts
The Antecedents: Petitioner Manila International Airport Authority (MIAA) operates the Ninoy Aquino International Airport (NAIA) Complex in Parañaque City. The MIAA Charter, issued in 1983 and subsequently amended, transferred approximately 600 hectares of land, including runways and buildings, to MIAA for its administration. MIAA is mandated to devote these Airport Lands and Buildings for public use and service, with any disposition of these properties requiring presidential approval. In 1997, the Office of the Government Corporate Counsel (OGCC) opined that the Local Government Code of 1991 withdrew MIAA's exemption from real estate tax. Consequently, MIAA began negotiating with the City of Parañaque and paid some of its real estate tax liabilities. Procedural History: In 2001, MIAA received final notices of real estate tax delinquency from the City of Parañaque, totaling over P624 million. The City Treasurer issued notices and warrants of levy on the Airport Lands and Buildings, threatening an auction sale. MIAA sought clarification from the OGCC, which subsequently issued an opinion clarifying that Section 21 of the MIAA Charter served as proof of MIAA's exemption from real estate tax. On October 1, 2001, MIAA filed a petition for prohibition and injunction with the Court of Appeals (CA) to stop Parañaque City from imposing and auctioning its properties. The CA dismissed the petition on October 5, 2001, for being filed out of time, and denied MIAA's motion for reconsideration on September 27, 2002. MIAA then filed the present petition for review with the Supreme Court on December 5, 2002. Despite the pending petition, Parañaque City proceeded with notices of auction sale and published them in a newspaper. MIAA filed an urgent motion for a Temporary Restraining Order (TRO) with the Supreme Court on February 6, 2003, the day before the scheduled auction. The Supreme Court issued a TRO on February 7, 2003, but it was received by the respondents after the auction had concluded. The Court later confirmed the TRO. The Petition: MIAA filed this petition for review under Rule 45 of the Rules of Civil Procedure, seeking to set aside the resolutions of the Court of Appeals. MIAA argues that the Airport Lands and Buildings are properties of public dominion, owned by the Republic of the Philippines, and thus inalienable and exempt from real estate tax. MIAA also contends that it is a government instrumentality, not a government-owned or controlled corporation, and therefore exempt from local taxation under Section 133(o) of the Local Government Code. Furthermore, MIAA asserts that Section 21 of its Charter specifically exempts it from real estate tax. The City of Parañaque, conversely, argues that Section 193 of the Local Government Code withdrew all tax exemptions, including those of government-owned or controlled corporations, and that MIAA, being a juridical person, is subject to real estate tax. They also cite previous rulings that international airports are not exempt from real estate tax.
Issue(s)
Whether the Airport Lands and Buildings of MIAA are exempt from real estate tax under existing laws; and whether portions of the airport leased to private entities are also exempt.
Ruling
WHEREFORE, we GRANT the petition. We SET ASIDE the assailed Resolutions of the Court of Appeals of 5 October 2001 and 27 September 2002 in CA-G.R. SP No. 66878. We DECLARE the Airport Lands and Buildings of the Manila International Airport Authority EXEMPT from the real estate tax imposed by the City of Parañaque. We declare VOID all the real estate tax assessments, including the final notices of real estate tax delinquencies, issued by the City of Parañaque on the Airport Lands and Buildings of the Manila International Airport Authority, except for the portions that the Manila International Airport Authority has leased to private parties. We also declare VOID the assailed auction sale, and all its effects, of the Airport Lands and Buildings of the Manila International Airport Authority.
Ratio Decidendi
On the issue of MIAA's tax exemption: Yes, the Airport Lands and Buildings of MIAA are exempt from real estate tax. The Court provided two main grounds for this conclusion. First, MIAA is a government instrumentality, not a government-owned or controlled corporation (GOCC). The Court analyzed the definitions in the Administrative Code of 1987, which defines a GOCC as an agency organized as a stock or non-stock corporation. MIAA is not a stock corporation because it has no capital stock divided into shares, and it is not a non-stock corporation because it has no members and is required to remit a portion of its income to the National Treasury. Instead, MIAA fits the definition of a government instrumentality: an agency of the National Government with a special charter, vested with corporate powers but not integrated within the department framework. Under Section 133(o) of the Local Government Code, local government units are prohibited from levying taxes, fees, or charges of any kind on the National Government, its agencies, and instrumentalities. Therefore, MIAA is not a taxable person. Second, the real properties of MIAA are owned by the Republic of the Philippines and are properties of public dominion. Under Article 420 of the Civil Code, properties intended for public use, such as 'ports... constructed by the State,' are properties of public dominion. The airport lands and buildings fall under this category as they are used by the public for travel and transportation. As properties of public dominion, they are owned by the State, are outside the commerce of man, and cannot be subject to levy, encumbrance, or auction sale. Section 234(a) of the LGC expressly exempts real property owned by the Republic of the Philippines from real property tax. While there is an exception when the beneficial use is granted to a taxable person, this does not apply because MIAA, as a government instrumentality, is not a taxable person. However, portions of the airport leased to private entities are not exempt from real estate tax.
Main Doctrine
The Manila International Airport Authority (MIAA) is a government instrumentality, not a government-owned or controlled corporation (GOCC). As an instrumentality of the National Government, it is exempt from local taxation, including real property tax, under Section 133(o) of the Local Government Code. Furthermore, its airport lands and buildings are properties of public dominion owned by the Republic of the Philippines, intended for public use, and are thus expressly exempt from real property tax under Section 234(a) of the same code. These properties are outside the commerce of man and cannot be subject to levy or auction sale.