Manila International Airport Authority

v. Court of Appeals, City of Parañaque, et al.

[G.R. No. 155650, July 20, 2006]

FACTS:
Background

 Manila International Airport Authority (MIAA) operates the Ninoy Aquino International Airport
(NAIA) complex in Parañaque City in accordance with the revised charter of the MIAA.

 As operator, MIAA administers, among other matters, the land within the NAIA complex. The
MIAA charter transferred to MIAA approximately 600 hectares of land, including the runways
and buildings.

 The MIAA charter also provides that no portion of the land transferred to MIAA shall be
disposed of through sale or any other mode unless specifically approved by the President.

Taxing of MIAA

 MIAA received notices of real estate tax delinquency from the City of Parañaque for the taxable
years 1992 to 2001. MIAA’s real estate tax delinquency has ballooned to P624,506,725.42.

 The Office of the Government Corporate Counsel (OGCC) issued an Opinion stating that the
Local Government Code withdrew the exemption from real estate tax granted to MIAA.

 Thus, MIAA negotiated with respondent city of Parañaque to pay the real estate tax imposed by
the city. MIAA then paid some of the real estate tax already due.

 The City of Parañaque then issued notices of levy and warrants of levy on the airport lands and
buildings.

 The Mayor of the City of Parañaque threatened to sell at public auction the airport lands and
buildings should MIAA fail to pay the real estate tax delinquency.

Contentions:
City of Parañaque:

 Section 193 of the LGC expressly withdrew the tax exemption privileges of “government-owned
and-controlled corporations” upon the effectivity of the Local Government Code.
 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.
MIAA:

 Airport Lands and Buildings are owned by the Republic. The government cannot tax itself.

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  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.

ISSUES:
1. WON MIAA is a GOCC
2. WON the airport lands and buildings are exempt from real estate tax.

HELD:
1. MIAA is a government instrumentality, not a GOCC
Granted, a GOCC is not exempt from real estate tax. However, MIAA is not a GOCC. Government-
owned or controlled corporations must be organized as a stock or non-stock corporation. MIAA is not
organized as any.
As regards being stock:

 MIAA is not a stock corporation because it has no capital stock divided into shares (as found in
Section 10 of the MIAA charter).
 MIAA has no stockholders or voting shares.
As regards being non-stock:

 MIAA is also not a non-stock corporation because it has no members.

 Section 11 of the MIAA Charter mandates MIAA to remit 20% of its annual gross operating
income to the National Treasury. This prevents MIAA from qualifying as a non-stock
corporation.
As regards its legal status:

 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.
 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."
 The MIAA Charter also expressly states that MIAA is a "separate and autonomous body" not
integrated with the department framework of Government.

2. Government instrumentalities, such as MIAA, are exempted from local taxation under the
LGC

 “SEC. 133. Common Limitations on the Taxing Powers of Local Government Units. – Unless
otherwise provided herein, the exercise of the taxing powers of provinces, cities,
municipalities, and barangays shall not extend to the levy of the following:
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 (o) Taxes, fees or charges of any kind on the National Government, its agencies and
instrumentalities and local government units.”

 Local governments cannot tax national government instrumentalities for rendering essential
public services to inhabitants of local governments.
EXCEPTION: When the legislature clearly intended to tax government instrumentalities
for the delivery of essential public services for sound and compelling policy
considerations.

3. Government instrumentalities, like MIAA, are exempted from levy

 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.
 Before MIAA can encumber the Airport Lands and Buildings, the President must first
withdraw from public use the Airport Lands and Buildings.
 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 Parañaque can
foreclose and compel the auction sale of the 600-hectare runway of the MIAA for non-
payment of real estate tax.