Manila International Airport Authority vs Court of Appeals
GR No. 155650 July 20, 2006
Facts: Petitioner Manila International Airport Authority (MIAA) operates the Ninoy Aquino International Airport (NAIA) complex in Parañaque City under Executive Order No. 9303, otherwise known as the revised charter of the MIAA. EO 903 was issued on July 21, 1983 by then President Ferdinand E. Marcos. Subsequently EO 909 and 298 amended the MIAA charter as operator of the international operator, MIAA administers the land, improvements, and equipments within the NAIA complex. The MIAA charter transferred to MIAA approximately 600 hectares of land, including the runways and buildings then under the Bureau of Air Transportation. The MIAA charter 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 of the Philippines. On March 21, 1997, the Office of the Government Corporate Counsel issued opinion no. 061. The OGCC opined that the local government code of 1991 withdraw the exemption from real estate tax granted to MIAA under section 21 of the MIAA charter. 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. On July 17, 2001, the City of Parañaque, through its city treasurer 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 deliquency. MIAA thus sought clarification of OGCC opinion no. 061. On August 9, 2001, the OGCC issued opinion no. 147 clarifying OGCC opinion no. 061. The OGCC pointed out that section 206 of the local government code requires persons exempt from real estate tax to show proof of exemption. The OGCC opined that section 21 of the MIAA charter is the proof that MIAA is exempt from real estate tax.
Issue: Whether or not the airport lands and buildings are exempt from real estate tax.
Held: Yes. 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. Section 21 (10) of the introductory provisions of the administrative code defines a government instrumentality as follows:
Sec 2 General terms defined
10.) Instrumentality refers to any agency of the national government, not integrated within the department framework, vested with special functions or jurisdiction by law, endowed with some if not all corporate powers, administering special funds, and enjoying operational autonomy, usually through a charter.
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 surging of fees and charges. At the same time, MIAA exercises all the powers of a corporation under the corporation law, in so far as these powers are not inconsistent with the provisions of this executive order.
A government instrumentality like MIAA falls under section 133 (o) of the local government code, which states:
Sec 133 Common limitations on the taxing powers of the local government units – Unless otherwise provided herein, the exercise of the taxing power of the provinces, cities, municipalities and barangays shall not extend to the levy of the following:
o.) Taxes, fees or charges of any kind on the national government, its agencies and instrumentalities and local government units.
Section 133 (0) recognizes the basic principles that local governments cannot tax the national government, which historically, merely delegated to the local governments the power to tax. While the 1987 constitution now includes taxation as one of the powers of the local governments, local governments may only exercise such powers subject to such guidelines and limitations as the congress may provide.