Manila Intl Airport Authority Vs CA July 20, 2006 (DIGEST)

DIGEST
MANILA INTERNATIONAL AIRPORT AUTHORITY (MIAA), petitioner,

vs.
COURT OF APPEALS, CITY OF PARAÑAQUE, CITY MAYOR OF PARAÑAQUE, SANGGUNIANG
PANGLUNGSOD NG PARAÑAQUE, CITY ASSESSOR OF PARAÑAQUE, and CITY TREASURER OF
PARAÑAQUE, respondents.
G.R. No. 155650 July 20, 2006
CARPIO, J.:
FACTS:
The controversy came into being when the City Government of Parañaque (City) imposed upon MIAA real
property tax over the latter’s Airport Lands and Buildings. The City anchored its assessment from a provision
in the Local Government Code (LGC) of 1991 which, the City believed, expressly withdrew realty tax
exemption enjoyed by MIAA based on the latter’s charter issued in 1983, as amended.
MIAA initially complied and paid some of the real estate tax due but later became delinquent in paying the
same. Resultantly, after serving final notices, the City issued notices of levy and warrants of levy on the Airport
Lands and Buildings threatening to sell at public auction said properties should MIAA fail to pay the real estate
tax due.
MIAA, after seeking a favorable opinion from the Office of the Government Corporate Counsel sought relief
before the CA to restrain the City of Parañaque from imposing real estate tax on, levying against, and
auctioning for public sale the Airport Lands and Buildings.
The, CA, however, dismissed the petition on technical ground. The subsequent MR met the same fate; hence,
the petition for review before the SC.
Before the SC, MIAA argued, among others, that as the operator of the Ninoy Aquino International Airport:
[a] It cannot claim ownership over subject properties since the real owner of the Airport Lands and Buildings
is the Republic of the Philippines.
[b] The MIAA Charter mandates MIAA to devote the Airport Lands and Buildings for the benefit of the
general public.
[c] Since the Airport Lands and Buildings are devoted to public use and public service, the ownership of
these properties remains with the State.
Thus, the Airport Lands and Buildings are inalienable and are not subject to real estate tax by local
governments.
Respondents, on one hand, invoked Section 193 of the LGC, which expressly withdrew the tax exemption
privileges of "government-owned and-controlled corporations" upon the effectivity of the LGC. An
international airport is not among the exceptions mentioned in Section 193 of the LGC. Thus, MIAA cannot
claim that the Airport Lands and Buildings are exempt from real estate tax.
ISSUE:
Whether or not the Airport Lands and Buildings of MIAA are exempt from real estate tax under existing laws?
RULING:
MIAA's Airport Lands and Buildings are exempt from real estate tax imposed by local governments. As
properties of public dominion, they indisputably belong to the State or the Republic of the Philippines.
Short Ruling (for recitation purposes)
a) Under Article 420 of the Civil Code, the Airport Lands and Buildings of MIAA, being devoted to public use,
are properties of public dominion and thus owned by the State or the Republic of the Philippines.
Article 420 specifically mentions "ports x x x constructed by the State," which includes public airports and
seaports, as properties of public dominion and owned by the Republic. As properties of public dominion
owned by the Republic, there is no doubt whatsoever that the Airport Lands and Buildings are expressly
exempt from real estate tax under Section 234(a) of the Local Government Code. This Court has also
repeatedly ruled that properties of public dominion are not subject to execution or foreclosure sale.
b) MIAA is not a government-owned or controlled corporation. It is a government instrumentality vested with
corporate powers and performing essential public services. As a government instrumentality, it is not a taxable
entity under the Local Government Code.
Actual / Long Ruling
1. 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.
ARTICLE 420 of the Civil Code enumerates the following properties of public dominion:
(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges
constructed by the State, banks, shores, roadsteads, and others of similar character;
(2) Those which belong to the State, without being for public use, and are intended for some public
service or for the development of the national wealth. (Emphasis supplied)
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.
Also, 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.
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.
The Airport Lands and Buildings of MIAA, which its Charter calls the "principal airport of the Philippines for
both international and domestic air traffic,"22 are properties of public dominion because they are intended
for public use. As properties of public dominion, they indisputably belong to the State or the
Republic of the Philippines.
[b] Airport Lands and Buildings are Outside the Commerce of Man
In several cases, the Court repeatedly ruled that properties of public dominion are outside the commerce
of man.
The Airport Lands and Buildings of MIAA are devoted to public use and thus are properties of public
dominion. As properties of public dominion, the Airport Lands and Buildings are outside the
commerce of man. The Court has ruled repeatedly that properties of public dominion 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.25
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.
Thus, unless the President issues a proclamation withdrawing the Airport Lands and Buildings from public
use, these properties remain properties of public dominion and are inalienable.
Since the Airport Lands and Buildings are inalienable in their present status as properties of public
dominion, they are not subject to levy on execution or foreclosure sale. As long as the Airport Lands and
Buildings are reserved for public use, their ownership remains with the State or the Republic of the
Philippines.
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.
2. MIAA is a government instrumentality not a government-owned and-controlled corporation. Thus, the

provision in the LGC withdrawing tax exemption privileges is not applicable to it.

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DIGEST

MANILA INTERNATIONAL AIRPORT AUTHORITY (MIAA), petitioner,

G.R. No. 155650 July 20, 2006

Short Ruling (for recitation purposes)

Actual / Long Ruling

1. Airport Lands and Buildings of MIAA are Owned by the Republic.

[a] Airport Lands and Buildings are of Public Dominion

2. MIAA is a government instrumentality not a government-owned and-controlled corporation. Thus, the

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