MANILA INTERNATIONAL AIRPORT AUTHORITY vs. COURT OF APPEALS G.R. No.

155650 July 20, 2006

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 with the Court of Appeals an original petition for prohibition and injunction, with prayer for
preliminary injunction or temporary restraining order. The 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. Paranaques Contention:
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. Respondents also argue that a basic rule of
statutory construction is that the express mention of one person, thing, or act excludes all others. An international airport is
not among the exceptions mentioned in Section 193 of the Local Government Code. Thus, respondents assert that MIAA
cannot claim that the Airport Lands and Buildings are exempt from real estate tax. MIAAs contention: 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:
WON Airport Lands and Buildings of MIAA are exempt from real estate tax under existing laws? Yes. Ergo, the real estate
tax assessments issued by the City of Paraaque, and all proceedings taken pursuant to such assessments, are void.
Held: 1. MIAA is Not a Government-Owned or Controlled Corporation MIAA is not a government-owned or controlled
corporation but an instrumentality of the National Government and thus exempt from local taxation. MIAA is not a stock
corporation because it has no capital stock divided into shares. MIAA has no stockholders or voting shares. MIAA is also
not a non-stock corporation because it has no members. A non-stock corporation must have members. MIAA is a
government instrumentality vested with corporate powers to perform efficiently its governmental functions. MIAA is like any
other government instrumentality, the only difference is that MIAA is vested with corporate powers. When the law vests in
a government instrumentality corporate powers, the instrumentality does not become a corporation. Unless the
government instrumentality is organized as a stock or non-stock corporation, it remains a government instrumentality
exercising not only governmental but also corporate powers. Thus, MIAA exercises the governmental powers of eminent
domain, police authority and the levying of fees and charges. At the same time, MIAA exercises all the powers of a
corporation under the Corporation Law, insofar as these powers are not inconsistent with the provisions of this Executive
Order. 2. Airport Lands and Buildings of MIAA are Owned by the Republic a. Airport Lands and Buildings are of Public
Dominion 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 terminal fees MIAA charges to passengers, as well as the landing fees MIAA charges to airlines, constitute the bulk of
the income that maintains the operations of MIAA. The collection of such fees does not change the character of MIAA as
an airport for public use. 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 including those who never use the particular public facility. b. Airport
Lands and Buildings are Outside the Commerce of Man 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. c. MIAA is a Mere Trustee of the Republic MIAA is merely holding title to the Airport Lands and
Buildings in trust for the Republic. Section 48, Chapter 12, Book I of the Administrative Code allows instrumentalities like
MIAA to hold title to real properties owned by the Republic. n MIAAs case, its status as a mere trustee of the Airport
Lands and Buildings is clearer because even its executive head cannot sign the deed of conveyance on behalf of the
Republic. Only the President of the Republic can sign such deed of conveyance. d. Transfer to Reorganization MIAA was
Meant to Implement a The transfer of the Airport Lands and Buildings from the Bureau of Air Transportation to MIAA was
not meant to transfer beneficial ownership of these assets from the Republic to MIAA. The purpose was merely
toreorganize a
division in the Bureau of Air Transportation into a separate and autonomous body. The Republic remains the beneficial
owner of the Airport Lands and Buildings. MIAA itself is owned solely by the Republic. No party claims any ownership
rights over MIAAs assets adverse to the Republic. e. Real Property Owned by the Republic is Not Taxable Sec 234 of the
LGC provides that real property owned by the Republic of the Philippines or any of its political subdivisions except when
the beneficial use thereof has been granted, for consideration or otherwise, to a taxable person following are exempted
from payment of the real property tax. However, portions of the Airport Lands and Buildings that MIAA leases to private
entities are not exempt from real estate tax. For example, the land area occupied by hangars that MIAA leases to private
corporations is subject to real estate tax. http://thestraydecision.wordpress.com/2010/07/02/manilainternational-airport-
authority-vs-court-of-appeals/ MIAA vs Court of Appeals MIAA v. Court of Appeals G.R. No. 155650, July 20, 2006 Facts:
The Manila International Airport Authority (MIAA) operates the Ninoy Aquino International Airport (NAIA) Complex in
Paraaque City under Executive Order No. 903 (MIAA Charter), as amended. As such operator, it administers the land,
improvements and equipment within the NAIA Complex. In March 1997, the Office of the Government Corporate Counsel
(OGCC) issued Opinion No. 061 to the effect that the Local Government Code of 1991 (LGC) withdrew the exemption
from real estate tax granted to MIAA under Section 21 of its Charter. Thus, MIAA paid some of the real estate tax already
due. In June 2001, it received Final Notices of Real Estate Tax Delinquency from the City of Paraaque for the taxable
years 1992 to 2001. The City Treasurer subsequently issued notices of levy and warrants of levy on the airport lands and
buildings. At the instance of MIAA, the OGCC issued Opinion No. 147 clarifying Opinion No. 061, pointing out that Sec.
206 of the LGC requires persons exempt from real estate tax to show proof of exemption. According to the OGCC, Sec. 21
of the MIAA Charter is the proof that MIAA is exempt from real estate tax. MIAA, thus, filed a petition with the Court of
Appeals seeking to restrain the City of Paraaque from imposing real estate tax on, levying against, and auctioning for
public sale the airport lands and buildings, but this was dismissed for having been filed out of time. Hence, MIAA filed this
petition for review, pointing out that it is exempt from real estate tax under Sec. 21 of its charter and Sec. 234 of the LGC.
It invokes the principle that the government cannot tax itself as a justification for exemption, since the airport lands and
buildings, being devoted to public use and public service, are owned by the Republic of the Philippines. On the other hand,
the City of Paraaque invokes Sec. 193 of the LGC, which expressly withdrew the tax exemption privileges of government-
owned and controlled corporations (GOCC) upon the effectivity of the LGC. It asserts that an international airport is not
among the exceptions mentioned in the said law. Meanwhile, the City of Paraaque posted and published notices
announcing the public auction sale of the airport lands and buildings. In the afternoon before the scheduled public auction,
MIAA applied with the Court for the issuance of a TRO to restrain the auction sale. The Court issued a TRO on the day of
the auction sale, however, the same was received only by the City of Paraaque three hours after the sale.
Issue: Whether or not the airport lands and buildings of MIAA are exempt from real estate tax?

Held: The Petition is GRANTED. The airport lands and buildings of MIAA are exempt from real estate tax imposed by local
governments. Sec. 243(a) of the LGC exempts from real estate tax any real property owned by the Republic of the
Philippines. This exemption should be read in relation with Sec. 133(o) of the LGC, which provides that the exercise of the
taxing powers of local governments shall not extend to the levy of taxes, fees or charges of any kind on the National
Government, its agencies and instrumentalities. These provisions recognize the basic principle that local governments
cannot tax the national government, which historically merely delegated to local governments the power to tax. The rule is
that a tax is never presumed and there must be clear language in the law imposing the tax. This rule applies with greater
force when local governments seek to tax national government instrumentalities. Moreover, a tax exemption is construed
liberally in favor of national government instrumentalities. MIAA is not a GOCC, but an instrumentality of the government.
The Republic remains the beneficial owner of the properties. MIAA itself is owned solely by the Republic. At any time, the
President can transfer back to the Republic title to the airport lands and buildings without the Republic paying MIAA any
consideration. As long as the airport lands and buildings are reserved for public use, their ownership remains with the
State. Unless the President issues a proclamation withdrawing these properties from public use, they remain properties of
public dominion. As such, they are inalienable, hence, they are not subject to levy on execution or foreclosure sale, and
they are exempt from real estate tax. However, portions of the airport lands and buildings that MIAA leases to private
entities are not exempt from real estate tax. In such a case, MIAA has granted the beneficial use of such portions for a
consideration to a taxable person. http://cbclawmatters.blogspot.com/2010/01/miaa-vs-courtof-appeals.html
Manila International Airport Authority vs CAGR No. 155650, July 20, 2006, 495 SCRA 591Facts:Manila International Airport Authority (MIAA)
is the operator of the Ninoy International Airportlocated at Paranaque City. The Officers of Paranaque City sent notices to MIAA
due to real estate taxdelinquency. MIAA then settled some of the amount. When MIAA failed to settle the entire amount, theofficers
of Paranaque city threatened to levy and subject to auction the land and buildings of MIAA,which they did. MIAA sought for
a Temporary Restraining Order from the CA but failed to do so withinthe 60 days reglementary period, so the petition was dismissed. MIAA
then sought for the TRO with theSupreme Court a day before the public auction, MIAA was granted with the TRO but unfortunately theTRO
was received by the Paranaque City officers 3 hours after the public auction.MIAA claims that although the charter provides that the title of
the land and building are withMIAA still the ownership is with the Republic of the Philippines. MIAA also contends that it is
aninstrumentality of the government and as such exempted from real estate tax. That the land and buildingsof MIAA are of public
dominion therefore cannot be subjected to levy and auction sale. On the other hand, the officers of Paranaque City claim that
MIAA is a government owned and controlled corporationtherefore not exempted to real estate tax.Issues:Whether or not MIAA is an
instrumentality of the government and not a government owned andcontrolled corporation and as such exempted from tax.Whether or not
the land and buildings of MIAA are part of the public dominion and thus cannot be the subject of levy and auction
sale.Ruling:Under the Local government code, government owned and controlled corporations are notexempted from
real estate tax. MIAA is not a government owned and controlled corporation, for to become one MIAA should either be a stock
or non stock corporation. MIAA is not a stock corporation for its capital is not divided into shares. It is not a non stock corporation since it has
no members. MIAA is aninstrumentality of the government vested with corporate powers and government functions.Under the civil code,
property may either be under public dominion or private ownership. Thoseunder public dominion are owned by the State and are utilized for
public use, public service and for thedevelopment of national wealth. The ports included in the public dominion pertain either to seaports
or airports. When properties under public dominion cease to be for public use and service, they form part
of t h e p a t r i m o n i a l p r o p e
r t y o f t h e S t a t e . The court held that the land
and buildings of MIAA are part of the public dominion. Since theairport is devoted for public use, for the domestic and
international travel and transportation. Even if MIAA charge fees, this is for support of its operation and for regulation and does not
change the character of the land and buildings of MIAA as part of the public dominion. As part of the public dominion the landand buildings
of MIAA are outside the commerce of man. To subject them to levy and public auction iscontrary to public policy. Unless the President
issues a proclamation withdrawing the airport land and buildings from public use, these properties remain to be of public dominion
and are inalienable. As longas the land and buildings are for public use the ownership is with the Republic of the Philippines.