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MANILA INTERNATIONAL AIRPORT AUTHORITY v. CA

FACTS:

The petitioner, Manila International Airport Authority (MIAA), operates the Ninoy Aquino International Airport (NAIA) Complex in Parañaque City under its Revised Charter, issued via Executive Order No. 903 by President Ferdinand E. Marcos on 21 July 1983 and subsequently amended by Executive Orders No. 909 and 298. The NAIA Complex consists of approximately 600 hectares of land, including runways and buildings, transferred from the Bureau of Air Transportation to MIAA upon its creation. On 21 March 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, leading MIAA to begin negotiations and payments for real estate taxes to the City of Parañaque. On 28 June 2001, MIAA received final notices of real estate tax delinquency from the City of Parañaque for the years 1992 to 2001, amounting to over PHP 624 million. In response, the city issued notices and warrants of levy and announced a public auction to sell the Airport Lands and Buildings if MIAA failed to pay the taxes. MIAA sought clarification from OGCC, which later clarified that MIAA remained exempt from real estate tax. Subsequently, MIAA filed a petition with the Court of Appeals seeking to restrain the City of Parañaque from imposing taxes and auctioning the airport properties but was dismissed due to the petition being filed beyond the reglementary period. After the City of Parañaque posted and published auction notices in January 2003, MIAA urgently sought a temporary restraining order (TRO) from the Supreme Court, which was issued on 7 February 2003, though after the auction had concluded. The Supreme Court held oral arguments on 29 March 2005, and following this, MIAA argued that the properties belonged to the Republic of the Philippines, maintained for public use and thus inalienable and exempt from real estate tax. MIAA contended that it is merely holding these properties in trust for the Republic and invoked the principle that government entities are exempt from taxing each other. In contrast, respondents argued that the Local Government Code had expressly withdrawn such tax exemptions for government-owned and controlled corporations and cited previous court rulings to support their position.

ISSUES:

  1. Whether the Airport Lands and Buildings of the Manila International Airport Authority (MIAA) are exempt from real estate tax under existing laws.

RULING:

  1. The Airport Lands and Buildings of MIAA are exempt from real estate tax. MIAA is determined to be an instrumentality of the National Government and not a government-owned or controlled corporation, thereby exempt from local taxation. Furthermore, the real properties of MIAA are owned by the Republic of the Philippines and are thus exempt from real estate tax.

PRINCIPLES:

  1. Tax Exemption for Government Instrumentalities: Local governments cannot impose any kind of tax on the National Government, its agencies and instrumentalities.

  2. Property of Public Dominion: Properties intended for public use, such as roads, canals, and ports constructed by the State (which includes airports), are properties of public dominion and are owned by the State or the Republic of the Philippines.

  3. Non-Alienable Properties: Properties of public dominion are outside the commerce of man, and thus cannot be disposed of or encumbered.

  4. Real Property Ownership by the Republic: Real properties owned by the Republic are exempt from real estate tax unless such property is leased to a taxable person.

  5. Principle of Non-Cross Taxation: The principle that the government cannot tax itself underlies the tax exemption for properties owned by the government.

  6. Definition of Government-Owned or Controlled Corporation: Under the Administrative Code of 1987, a government-owned or controlled corporation refers to any agency organized as a stock or non-stock corporation vested with functions relating to public needs and owned by the Government.

  7. Instrumentality with Corporate Powers: Even if a government instrumentality is vested with corporate powers, it does not become a government-owned or controlled corporation unless it is organized as a stock or non-stock corporation.