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G.R. No. 155650 July 20, 2006 E-016-01375 1992-2001 20,276,058.00 12,371,832.00 32,647,890.

00
E-016-01376 1992-2001 58,144,028.00 35,477,712.00 93,621,740.00
MANILA INTERNATIONAL AIRPORT AUTHORITY, petitioner, E-016-01377 1992-2001 18,134,614.65 11,065,188.59 29,199,803.24
vs. E-016-01378 1992-2001 111,107,950.40 67,794,681.59 178,902,631.99
COURT OF APPEALS, CITY OF PARAÑAQUE, CITY MAYOR OF PARAÑAQUE,
E-016-01379 1992-2001 4,322,340.00 2,637,360.00 6,959,700.00
SANGGUNIANG PANGLUNGSOD NG PARAÑAQUE, CITY ASSESSOR OF
PARAÑAQUE, and CITY TREASURER OF PARAÑAQUE, respondents. E-016-01380 1992-2001 7,776,436.00 4,744,944.00 12,521,380.00
*E-016-013-85 1998-2001 6,444,810.00 2,900,164.50 9,344,974.50
DECISION *E-016-01387 1998-2001 34,876,800.00 5,694,560.00 50,571,360.00
*E-016-01396 1998-2001 75,240.00 33,858.00 109,098.00
CARPIO, J.: GRAND TOTAL P392,435,861.95 P232,070,863.47 P 624,506,725.42

The Antecedents 1992-1997 RPT was paid on Dec. 24, 1997 as per O.R.#9476102 for
P4,207,028.75
Petitioner Manila International Airport Authority (MIAA) operates the Ninoy Aquino
International Airport (NAIA) Complex in Parañaque City under Executive Order No. 903, #9476101 for P28,676,480.00
otherwise known as the Revised Charter of the Manila International Airport
Authority ("MIAA Charter"). Executive Order No. 903 was issued on 21 July 1983 by then #9476103 for P49,115.006
President Ferdinand E. Marcos. Subsequently, Executive Order Nos. 9091 and
2982 amended the MIAA Charter.
On 17 July 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
As operator of the international airport, MIAA administers the land, improvements and Parañaque threatened to sell at public auction the Airport Lands and Buildings should
equipment within the NAIA Complex. The MIAA Charter transferred to MIAA approximately MIAA fail to pay the real estate tax delinquency. MIAA thus sought a clarification of OGCC
600 hectares of land,3 including the runways and buildings ("Airport Lands and Buildings") Opinion No. 061.
then under the Bureau of Air Transportation.4 The MIAA Charter further provides that no
portion of the land transferred to MIAA shall be disposed of through sale or any other mode
On 9 August 2001, the OGCC issued Opinion No. 147 clarifying OGCC Opinion No. 061.
unless specifically approved by the President of the Philippines.5
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
On 21 March 1997, the Office of the Government Corporate Counsel (OGCC) issued 21 of the MIAA Charter is the proof that MIAA is exempt from real estate tax.
Opinion No. 061. The OGCC opined that the Local Government Code of 1991 withdrew
the exemption from real estate tax granted to MIAA under Section 21 of the MIAA Charter.
On 1 October 2001, MIAA filed with the Court of Appeals an original petition for prohibition
Thus, MIAA negotiated with respondent City of Parañaque to pay the real estate tax
and injunction, with prayer for preliminary injunction or temporary restraining order. The
imposed by the City. MIAA then paid some of the real estate tax already due.
petition sought 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 petition was
On 28 June 2001, MIAA received Final Notices of Real Estate Tax Delinquency from the docketed as CA-G.R. SP No. 66878.
City of Parañaque for the taxable years 1992 to 2001. MIAA's real estate tax delinquency
is broken down as follows:
On 5 October 2001, the Court of Appeals dismissed the petition because MIAA filed it
beyond the 60-day reglementary period. The Court of Appeals also denied on 27
TAX September 2002 MIAA's motion for reconsideration and supplemental motion for
TAXABLE YEAR TAX DUE PENALTY TOTAL
DECLARATION
reconsideration. Hence, MIAA filed on 5 December 2002 the present petition for review.7
E-016-01370 1992-2001 19,558,160.00 11,201,083.20 30,789,243.20
E-016-01374 1992-2001 111,689,424.90 68,149,479.59 179,838,904.49

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being a government-owned or controlled corporation. is MIAA also points out that Section 21 of the MIAA Charter specifically exempts MIAA from not exempt from real estate tax.Meanwhile. The notices withdrew the tax exemption privileges of "government-owned and-controlled announced the public auction sale of the Airport Lands and Buildings to the highest bidder corporations" upon the effectivity of the Local Government Code. and Tambo. public use and public service. respondent City of Parañaque. Respondents claim that the deletion of the phrase "any the payment of real estate tax. respondents assert that A day before the public auction. or on 6 February 2003. the other issues raised in this petition become moot. Since the Airport Lands and Buildings are devoted to tax. To justify the exemption. In such event. thing. this Court issued a temporary restraining order (TRO) effective immediately. and all proceedings taken pursuant to such On 10 February 2003. Niño. MIAA insists that it is also exempt from real estate tax under government-owned or controlled so exempt by its charter" in Section 234(e) of the Local Section 234 of the Local Government Code because the Airport Lands and Buildings are Government Code withdrew the real estate tax exemption of government-owned or owned by the Republic. Parañaque City. in the public the tax debtor is also the tax creditor. respondents received the TRO only at 1:25 p. a newspaper of general circulation in the Philippines. MIAA has already paid some of the real estate tax assessments. MIAA invokes the principle that the controlled corporations. MIAA points out that the reason for tax exemption of public Property Tax Code enumerating the entities exempt from real estate tax. since in such a case Barangay Halls of Barangays Vitalez.m. The deleted phrase appeared in Section 40(a) of the 1974 Real government cannot tax itself. the real properties Philippines. and the Solicitor General subsequently submitted their respective Memoranda.m. However. are void. Respondents further argue that since Airport Lands and Buildings. assessments. The MIAA Charter mandates MIAA to devote the Airport Lands and Buildings of MIAA are owned by the Republic of the Philippines and thus exempt from real estate for the benefit of the general public. The City of Parañaque published the notices in the 3 and 10 January 2003 issues of the Philippine Respondents invoke Section 193 of the Local Government Code. which expressly Daily Inquirer. in January 2003. Thus. Respondents also on 7 February 2003. Sangguniang Panglungsod ng Parañaque. The Airport Lands and Buildings are thus inalienable and are not subject to real estate tax 1. The Court ordered respondents to cease and desist from selling at public The Issue auction the Airport Lands and Buildings. On 7 February 2003. MIAA is Not a Government-Owned or Controlled Corporation by local governments. City. 10:00 a. or three This petition raises the threshold issue of whether the Airport Lands and Buildings of MIAA hours after the conclusion of the public auction. The motion sought to restrain respondents — the City of Parañaque. are exempt from real estate tax under existing laws. it is now estopped from claiming that the Airport Lands and Buildings are exempt from real estate tax. at 5:10 p. In compliance with the The Court's Ruling directive issued during the hearing. or act excludes all others. MIAA points out that it cannot claim ownership over these First. We rule that MIAA's Airport Lands and Buildings are exempt from real estate tax imposed by local governments. market of Barangay La Huerta. An international airport is not among the exceptions mentioned in Section 193 of the Local Government Code. the ownership of these properties remains with the State. Respondents also cite the ruling of this Court in Mactan International Airport v. Respondents received the TRO on the same day that the Court issued it. MIAA. and the City Assessor of Parañaque ("respondents") — from auctioning the from real estate tax granted to international airports. If so exempt. On 29 March 2005. at the Legislative Session Hall Building of Parañaque argue that a basic rule of statutory construction is that the express mention of one person.m. Second. MIAA filed before MIAA cannot claim that the Airport Lands and Buildings are exempt from real estate tax. Respondents argue that MIAA. 2 . City Mayor of Parañaque. Sto. MIAA admits that the MIAA Charter has placed the title to the Airport Lands and Buildings in the name of MIAA. MIAA is not a government-owned or controlled corporation but an instrumentality of properties since the real owner of the Airport Lands and Buildings is the Republic of the the National Government and thus exempt from local taxation. this Court issued a Resolution confirming nunc pro tunc the TRO. City Treasurer of Marcos8 where we held that the Local Government Code has withdrawn the exemption Parañaque. However. the City of Parañaque posted notices of auction sale at the property is that its taxation would not inure to any public advantage... this Court an Urgent Ex-Parte and Reiteratory Motion for the Issuance of a Temporary Restraining Order. then the real estate tax assessments issued by the City of Parañaque. the Court heard the parties in oral arguments. and in the main lobby of the Parañaque City Hall.

MIAA does not have capital stock that is divided into shares. General Terms Defined. Thereafter. MIAA exercises the governmental powers of eminent domain. Section 2(10) of the valuation of which shall be determined jointly with the Department of Budget and Introductory Provisions of the Administrative Code defines a government Management and the Commission on Audit on the date of such contribution or "instrumentality" as follows: transfer after making due allowances for depreciation and other deductions taking into account the loans and other liabilities of the Authority at the time of the SEC. A government-owned or controlled corporation must be "organized as a stock or non. Section 87 of the Corporation Code defines a non-stock corporation as "one where no part of its income is (13) Government-owned or controlled corporation refers to any agency organized distributable as dividends to its members.000. shall be converted into the equity of the National a charter. Unless the government instrumentality is organized as a Clearly. — The capital of the Authority to be contributed by the National Government shall be increased from Two and One-half Billion Since MIAA is neither a stock nor a non-stock corporation. and enjoying operational autonomy.500. Section 10 of the MIAA Charter9provides: chambers.12 police authority13 and the levying of fees and charges.] which may be contributed efficiently its governmental functions. cultural. and owned by the member of MIAA. Even if we assume that the Government is considered as the sole needs whether governmental or proprietary in nature. x x x (Emphasis supplied) Government in the Authority. recreational. movable and immovable[. –– x x x x takeover of the assets and other properties. However. stock is divided into shares and x x x authorized to distribute to the holders of such Section 2(13) of the Introductory Provisions of the Administrative Code of 1987 defines a shares dividends x x x. this will not make MIAA a non-stock corporation." MIAA is not organized for any of these purposes.00) Pesos to Ten Billion (P10. like trade. or. is organized to operate an international and domestic airport for public use. 2. the Government contribution to the capital of the Authority shall be provided in the General Appropriations Act. Hence." MIAA is not organized as a stock or non-stock corporation. 1986 representing about integrated within the department framework.000. not a stock corporation because it has no capital stock divided into shares. General Terms Defined. the the only difference is that MIAA is vested with corporate powers. not (b) That the amount of P605 million as of December 31. vested with special functions or seventy percentum (70%) of the unremitted share of the National Government from jurisdiction by law. the instrumentality does not become a corporation. O. When the law vests in a government instrumentality corporate powers. under its Charter. agriculture and like no stockholders or voting shares. 2." MIAA has capital but it is not divided into shares of stock. or similar purposes. MIAA government-owned or controlled corporation as follows: has no stockholders or voting shares. social.There is no dispute that a government-owned or controlled corporation is not exempt from Section 3 of the Corporation Code10 defines a stock corporation as one whose "capital real estate tax. civil service. 903 as amended. MIAA is for charitable. Non-stock corporations Government directly or through its instrumentalities either wholly. – x x x x MIAA is also not a non-stock corporation because it has no members. by the National Government or transferred by it from any of its agencies. runways and equipment MIAA is a government instrumentality vested with corporate powers to perform and such other properties. SEC. MIAA is not a government-owned or controlled corporation.000. vested with functions relating to public must have members. a public utility. Thus. literary. MIAA is like any other government instrumentality. 1983 to 1986 to be remitted to the National Treasury as provided for in Section 11 administering special funds. What then is the legal status of MIAA within of: the National Government? (a) The value of fixed assets including airport facilities. professional.11 This prevents MIAA from qualifying as a non-stock corporation. stock or non-stock corporation. (Emphasis supplied) Treasury. No. fraternal. industry. Section 88 of the Corporation Code provides that non-stock corporations are "organized stock corporation. (10) Instrumentality refers to any agency of the National Government. religious.000.14 At the same 3 . Capital. endowed with some if not all corporate powers.00) Pesos to consist government-owned or controlled corporation. MIAA. MIAA has scientific. where cannot distribute any part of their income to their members. educational. SECTION 10. usually through of E. MIAA is not a stock corporation. trustees or officers. Section 11 of the MIAA Charter applicable as in the case of stock corporations. it remains a government instrumentality exercising not only governmental but also corporate powers." A non-stock corporation as a stock or non-stock corporation.000. to the extent of at least fifty-one mandates MIAA to remit 20% of its annual gross operating income to the National (51) percent of its capital stock: x x x. MIAA does not qualify as a (P2.

time. tax-liability of such agencies. The rule is that a tax is never 4 . For these reasons. pocket to another. when the law makes a government instrumentality operationally autonomous. which is the governing law defining a sound and compelling policy requires such transfer of public funds from one government the legal relationship and status of government entities. The MIAA Charter expressly states that Another rule is that a tax exemption is strictly construed against the taxpayer claiming the transforming MIAA into a "separate and autonomous body"16 will make its operation more exemption.: Many government instrumentalities are vested with corporate powers but they do not become stock or non-stock corporations. There must be express language in the law provinces. Section 133 of the Local Government Code states that "unless otherwise provided" in the Code. 4 L Ed. in favor of non as required by Section 2(13) of the Introductory Provisions of the Administrative Code. and barangays shall not extend to the levy empowering local governments to tax national government instrumentalities. xxxx Thus.(Emphasis and Corporation: underscoring supplied) The states have no power by taxation or otherwise. provisions granting exercise corporate powers but they are not organized as stock or non-stock corporations exemptions to government agencies may be construed liberally. 4 Wheat 316. 579) governments."17 instrumentality from local taxation. Jr. In such case the practical effect of the Mactan International Airport Authority. the exercise of the taxing powers of compelling policy considerations. As this Court declared in Maceda v. Philippine Amusements and Gaming agencies and instrumentalities and local government units. moreover. unless sense as understood under the Administrative Code.19 These government instrumentalities are sometimes loosely called government corporate entities. which historically merely delegated to local governments the power enacted by Congress to carry into execution the powers vested in the to tax. Macaraig. Section 133(o) recognizes the basic principle that local governments cannot tax the burden or in any manner control the operation of constitutional laws national government. which states: for rendering essential public services to inhabitants of local governments. which is a necessary condition before an agency The reason for the rule does not apply in the case of exemptions running to the or instrumentality is deemed a government-owned or controlled corporation. insofar presumed and there must be clear language in the law imposing the tax. As this Court held in Basco v. no point in national and local governments taxing each other. the Philippine Ports Authority. instrumentalities for the delivery of essential public services for sound and – Unless otherwise provided herein."15 whether a person. The only exception is when the legislature clearly intended to tax government SEC. such exemption is construed liberally in favor of the national government instrumentality. Any doubt of the following: whether such power exists is resolved against local governments."18 This doctrine emanates from the "supremacy" of the National Government over local governments. impede. However. the University of an exemption is merely to reduce the amount of money that has to be handled by the Philippines and Bangko Sentral ng Pilipinas. such power is construed strictly against local governments. instrumentalities. its instrumentalities. Examples are benefit of the government itself or its agencies. All these government instrumentalities government in the course of its operations. the instrumentality remains part of the National Government machinery although not integrated with the department framework. However. Maryland. This rule applies with greater force when local governments seek to tax national government Likewise. municipalities. Any doubt as these powers are not inconsistent with the provisions of this Executive Order. fees or charges of any kind on the National Government. A government instrumentality like MIAA falls under Section 133(o) of the Local There is also no reason for local governments to tax national government instrumentalities Government Code. cities. (MC Culloch v. local governments cannot tax national government (o) Taxes. 133. article or activity is taxable is resolved against taxation. Common Limitations on the Taxing Powers of Local Government Units. When local governments invoke the power to tax on national government instrumentalities. local governments may only exercise such power "subject to such guidelines and limitations as the Congress may provide. to retard. MIAA exercises "all the powers of a corporation under the Corporation Law. While the 1987 Constitution now includes taxation as one of the powers of local federal government. they are not government-owned or controlled corporations in the strict There is. when Congress grants an exemption to a national government "financially viable.

the particular public facility. which is not of the character stated b. Maryland. 2. ARTICLE 421. shores. The Civil Code provides: The terminal fees MIAA charges to passengers. emphasis supplied) The Airport Lands and Buildings are devoted to public use because they are used by the public for international and domestic travel and transportation. and are intended the Philippines for both international and domestic air traffic. Modern Constitutional Law. the limitation on the kind of vehicles that can use the road. torrents. either the public indirectly through the taxes they pay the government. Airport Lands and Buildings of MIAA are Owned by the Republic it is of public dominion or not. The Airport Lands and Buildings of MIAA.S. "Justice Holmes. without being for public use. 140. which its Charter calls the "principal airport of (2) Those which belong to the State. 20 The charging of fees to the public does not determine the character of the property whether 2. the instrumentalities of the United States (Johnson v. The operation by the enterprise using the power to tax as "a tool for regulation" (U. supplied) they indisputably belong to the State or the Republic of the Philippines. like "roads. ARTICLE 420. made reference to the No one can dispute that properties of public dominion mentioned in Article 420 of the Civil entire absence of power on the part of the States to touch. is patrimonial property. mere creatures of the State can defeat National policies thru collects terminal fees and other charges from the public does not remove the character of extermination of what local authorities may perceive to be undesirable activities or the Airport Lands and Buildings as properties for public use. 254 US 51) and it can be agreed that no state or political MIAA Airport Lands and Buildings constitute a "port" constructed by the State. The fact that the MIAA Otherwise. The tollway system is even a more (Mc Culloch v. constitute the bulk of the income that maintains the operations of MIAA. seriously burden it in the accomplishment of them. US 42). Vol. The charging of fees. (Emphasis dominion because they are intended for public use. supra) cannot be allowed to defeat an instrumentality or efficient and equitable manner of taxing the public for the maintenance of public roads. creation of the very entity which has the inherent power to wield it. The term "ports" includes seaports and airports. The Airport Lands and Buildings of MIAA are devoted to public use and thus are properties ARTICLE 422. or even to dominion and thus owned by the State or the Republic of the Philippines. rivers. banks. such as roads. Airport Lands and Buildings are of Public Dominion road is still "intended for public use" if anyone can use the road under the same terms and conditions as the rest of the public. the MIAA Airport Lands and Buildings are properties of public prevent it from consummating its federal responsibilities. when no longer intended for public use of public dominion. As properties of public dominion. State. canals. speaking for the Supreme Court. The Maryland. The following things are property of public dominion: Such fees are often termed user's tax. As properties of public dominion. owned by the State or the Republic of the Philippines. rivers. Property is either of public dominion or of private ownership. Someone must pay for the maintenance of the road. to airlines. Under subdivision can regulate a federal instrumentality in such a way as to Article 420 of the Civil Code.21 roadsteads." Even if the government collects toll fees. as well as the landing fees MIAA charges ARTICLE 419. the speed restrictions and other conditions for the use of The Airport Lands and Buildings of MIAA are property of public dominion and therefore the road do not affect the public character of the road. shall form part of the patrimonial property of the State. The collection of such fees does not change the character of MIAA as an airport for public use. canals. the a. Sanchez. Article 420 of the Civil Code defines property of public dominion as one "intended for public use. ports and bridges constructed by the State. A user's tax is more equitable — a principle of taxation torrents." (Antieau. and others of similar character. are outside the commerce of man. The Court has ruled repeatedly that properties of 5 . mandated in the 1987 Constitution. v. 340 government of a tollway does not change the character of the road as one for public use." are owned by the State. p. This means taxing those among the public who actually use a public facility instead of taxing all the public including those who never use (1) Those intended for public use. the Airport Lands and Buildings or for public service. or only those among the public who actually use the road The power to tax which was called by Justice Marshall as the "power to destroy" through the toll fees they pay upon using the road. Property of public dominion. Airport Lands and Buildings are Outside the Commerce of Man in the preceding article."22 are properties of public for some public service or for the development of the national wealth. All other property of the State. in that way Code. ports and bridges constructed by the (taxation) at least.

24 (Emphasis supplied) withdraw such public use. the use of which is not otherwise directed by law. and public works of general service supported first withdraw from public use the Airport Lands and Buildings. this Court already Essential public services will stop if properties of public dominion are subject to ruled in Municipality of Cavite v. Municipal Council. Before MIAA can encumber26 the Airport Lands and Buildings. any of the lands or disposition through public or private sale. to be devoted to public use Thus. being outside the commerce of man. the Court declared that properties of public alienable under the provisions of this Act or by proclamation of the dominion are outside the commerce of man: President. these properties remain properties of public dominion and commerce of man and cannot be disposed of or even leased by the municipality are inalienable. by the Municipality of Pozorrubio. the municipal council than timber and mineral lands. is reiterated in Section 14. They are outside the Buildings from public use. According to article 344 of the Civil Code: "Property for public use in provinces and in towns comprises the provincial and town roads. levy on execution or of the public domain. fountains. communal pastures or are outside of this commerce. or for quasi-public uses or purposes The Civil Code. Rojas that properties devoted to public use are outside encumbrances. article 1271. irrigation systems. rivers. such as the plazas. or of the inhabitants thereof. While in case of war or during an emergency. hydraulic power sites. and plazas and streets way for railroads. entry. the President must and public waters." (Emphasis supplied) 23 Section eighty-three shall be non-alienable and shall not be subject to occupation. foreclosures and auction sale.public dominion are outside the commerce of man. sale. nor is it empowered so to do. which states: The Court has also ruled that property of public dominion. including reservations for highways. As long as the Airport Lands and Buildings are reserved for public use. Any encumbrance. The auction sale of any property of public dominion is void for being contrary to public policy. sold because they are by their very nature outside of commerce are those for public use. rights of commerce of man may be the object of a contract. Book III of the Administrative Code of 1987. — (1) The President shall have the power to reserve for Properties of public dominion. the President may designate by proclamation any tract or municipality exceeded its authority in the exercise of its powers by executing a tracts of land of the public domain as reservations for the use of the Republic of contract over a thing of which it could not dispose. common lands. streets. Sections 83 and 88 of by said towns or provinces. the squares. lease. This will happen if the City of Parañaque the commerce of man. public fishponds. cannot be the subject of an auction sale. in accordance with regulations prescribed for this purposes. temporary occupation or use must also cease. Chapter 4. town plazas may status as properties of public dominion. Upon the recommendation of the Secretary of Agriculture and portion of said plaza or public place to the defendant for private use the plaintiff Natural Resources."27 provide: of Cavite could not in 1907 withdraw or exclude from public use a portion thereof in order to lease it for the sole benefit of the defendant Hilaria Rojas. 14. 1895. and the town officials should see to it that the town plazas should ever be kept open to the public and free from The authority of the President to reserve lands of the public domain for public use. As early as 1915. streets. as was done and as was tolerated foreclosure sale. the promenades. the Philippines or of any of its branches.25 SEC. or other disposition until again declared Again in Espiritu v. unless the President issues a proclamation withdrawing the Airport Lands and and to be made available to the public in general. said their ownership remains with the State or the Republic of the Philippines. Since the Airport Lands and Buildings are inalienable in their present to private parties. they are not subject to levy on execution or be occupied temporarily by private individuals. and to encumbrances or illegal private constructions. The tract or tracts of land reserved under the provisions of etc. public quarries. 6 . which says: "Communal things that cannot be village and other improvements for the public benefit." the Public Land Law or Commonwealth Act No. public parks. working men's its decision of February 12. are not subject to levy. In leasing a SECTION 83. thus: can foreclose and compel the auction sale of the 600-hectare runway of the MIAA for non- payment of real estate tax. which "remains to this day the existing general law governing the classification and disposition of lands of the public domain other The said Plaza Soledad being a promenade for public use. prescribes that everything which is not outside the when the public interest requires it. encumbrance settlement or public use. fountains. when the emergency has ceased. and for specific public purposes. Title I. being for public use. 141. (Emphasis and underscoring supplied) xxx Town plazas are properties of public dominion. Power to Reserve Lands of the Public and Private Domain of the Government. as was decided by the supreme court of Spain in lequas communales. SECTION 88.

transferred to MIAA the title to the Airport Lands and WHEREAS. Transfer to MIAA was Meant to Implement a Reorganization in the world. will best be achieved by a land area of approximately six hundred hectares. Official Authorized to Convey Real Property. that unless the Airport Lands and Buildings are withdrawn shall not be disposed through sale or through any other mode unless by law or presidential proclamation from public use. Abolition of the Manila International Airport as a Division in the of the Government is authorized by law to be conveyed. 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. are hereby MIAA to hold title to real properties owned by the Republic. (Emphasis supplied) owned by the Republic and outside the commerce of man. The MIAA Charter. promissory notes or even stock since MIAA is not a stock name of any political subdivision or of any corporate agency or corporation. a management and organization study has indicated that the objectives of providing high standards of accommodation and service within The land where the Airport is presently located as well as the surrounding the context of a financially viable operation. the deed of conveyance Bureau of Air Transportation and Transitory Provisions. thus: transferred to the Authority. domestic and other terminals. which is a law. are hereby transferred. SECTION 22. they are properties of public dominion. The MIAA Charter provides: of aviation in Metro Manila. by the President. — Whenever real property SECTION 25. movable or immovable. Only the President of the Republic can sign such deed of conveyance. Transportation relating to airport works or air operations. the Manila International Airport as the principal airport of the Philippines for both international and domestic air traffic. — All c. therefore. specifically approved by the President of the Philippines. Buildings from the Bureau of Air Transportation of the Department of Transportation and have to be upgraded to meet the current and future air traffic and other demands Communications. belonging to the Airport. The Bureau of Lands and other appropriate government agencies shall undertake an actual survey of the area x x x x. and all assets. is required to provide standards of airport accommodation and service comparable with the best airports d. if any. subject to existing rights. instrumentality. interests and privileges belonging to the Bureau of Air MIAA is merely holding title to the Airport Lands and Buildings in trust for the Republic. law in another officer. (Emphasis supplied) The whereas clauses of the MIAA Charter explain the rationale for the transfer of the Airport Lands and Buildings to MIAA. including all equipment Section 48. by the executive head of the agency or instrumentality. general aviation and other facilities. reserved land shall thereafter remain subject to the specific public purpose conveyed and assigned to the ownership and administration of the indicated until otherwise provided by law or proclamation. rights. Creation of the Manila International Airport Authority. The MIAA Charter transferred the Airport Lands and Buildings to MIAA without the (2) For property belonging to the Republic of the Philippines but titled in the Republic receiving cash. buildings and other property. separate and autonomous body. lands. 48. Book I of the Administrative Code allows instrumentalities like which are necessary for the operation of crash fire and rescue facilities. powers. (1) For property belonging to and titled in the name of the Republic of the Philippines. thus: In MIAA's case. SECTION 3. MIAA is a Mere Trustee of the Republic existing public airport facilities. runways. Any portion thereof There is no question. — x x x x WHEREAS. unless the authority therefor is expressly vested by x x x x.28 WHEREAS. (Emphasis supplied) transferred within one year from the promulgation of this Executive Order and the corresponding title to be issued in the name of the Authority. — The Manila International shall be executed in behalf of the government by the following: Airport including the Manila Domestic Airport as a division under the Bureau of Air Transportation is hereby abolished. Transfer of Existing Facilities and Intangible Assets. Authority. (Emphasis supplied) SEC. Chapter 12. and 7 .

or presently enjoyed by all persons. except local water districts. only the "owner has the right to x x x dispose of a thing. Real Property Owned by the Republic is Not Taxable as those parts of the hospital leased to private individuals are not exempt from such taxes. The Administrative Code allows real property owned by the Republic to be titled in the name of agencies or instrumentalities The transfer of the Airport Lands and Buildings from the Bureau of Air Transportation to of the national government. whether paying or non-paying.] owned by the Republic are titled either in the name of the Republic itself or in the name of (Emphasis supplied) agencies or instrumentalities of the National Government." The real properties of new entities. Quezon City. portions of the Airport Lands and Buildings that MIAA leases to private entities are not exempt from real estate tax." MIAA. the President is the only one who can authorize the sale or disposition of therefore such land area is subject to real estate tax. property owned by the Republic of the Philippines. MIAA.29 SEC. the President can transfer back to the Republic title to the Airport Lands and MIAA leases to private corporations is subject to real estate tax. In Lung Center of the Philippines the Airport Lands and Buildings. (Emphasis supplied) in this Code. Exemptions from Real Property Tax. For example. SEC. as a government instrumentality. agencies and instrumentalities of the Government[. This happens when title of the real property is Republic. real property. Accordingly. which authority includes the creation National Government. such fact does not make these real properties subject to real estate tax. fees or charges of any kind on the reorganize the National Government. 193. we hold that the portions of the land leased to private entities as well e. 1772. The Republic remains the The Republic may grant the beneficial use of its real property to an agency or beneficial owner of the Airport Lands and Buildings. as amended by Presidential This exemption should be read in relation with Section 133(o) of the same Code. Withdrawal of Tax Exemption Privileges – Unless otherwise provided x x x. MIAA has Buildings without the Republic paying MIAA any consideration. the President of the Philippines is given continuing authority to prohibits local governments from imposing "[t]axes. WHEREAS. for consideration or otherwise. under Presidential Decree No. MIAA does not own the Airport Lands and Buildings." This only means that the Republic retained the is not a taxable person under Section 133(o) of the Local Government Code. However. for disposed through sale or through any other mode unless specifically approved by consideration or otherwise. the land area occupied by hangars that At any time. 1416. Under Section 3 of the granted the beneficial use of such land area for a consideration to a taxable person and MIAA Charter. whether natural or juridical. Section 193 provides: granted. Thus. 234. MIAA itself is owned solely by the instrumentality of the national government. The purpose was merely to reorganize a division in the Bureau of Air Transportation into a separate and autonomous body. — The following are exempted 3. cooperatives duly registered 8 . In such a case. which Decree No. even beneficial ownership of the Airport Lands and Buildings because under Article 428 of the if we assume that the Republic has granted to MIAA the beneficial use of the Airport Lands Civil Code." Since MIAA cannot and Buildings. Such arrangement does not result in the loss of the tax exemption. tax exemptions or incentives granted to. Section 234(a) of the Local Government Code states that real property owned by the Republic The MIAA Charter expressly provides that the Airport Lands and Buildings "shall not be loses its tax exemption only if the "beneficial use thereof has been granted. to a taxable person. Refutation of Arguments of Minority from payment of the real property tax: The minority asserts that the MIAA is not exempt from real estate tax because Section 193 (a) Real property owned by the Republic of the Philippines or any of its of the Local Government Code of 1991 withdrew the tax exemption of "all persons. the President of the Philippines. to a taxable person. political subdivisions except when the beneficial use thereof has been whether natural or juridical" upon the effectivity of the Code." Section 234(a) provides: are exempt from real property taxes. the Court ruled: belong to the Republic. This only confirms that the Airport Lands and Buildings v. including government-owned or controlled corporations. On the other hand. its agencies and instrumentalities x x x. Such real properties remain owned by the Republic and MIAA was not meant to transfer beneficial ownership of these assets from the Republic to continue to be exempt from real estate tax. dispose of the Airport Lands and Buildings. the portions of the land occupied by the hospital Section 234(a) of the Local Government Code exempts from real estate tax any "[r]eal and portions of the hospital used for its patients. No party claims any ownership rights over MIAA's assets adverse to the transferred to an agency or instrumentality even as the Republic remains the owner of the Republic.

Thus. MIAA is not a (Emphasis supplied) natural person. and (c) non-stock and non-profit hospitals and educational institutions. It would be belaboring the obvious The term "All persons" encompasses the two classes of persons recognized why the MIAA does not fall within any of the exempt entities under Section 193. Section 133(o) applies to all national supplied) government instrumentalities. the determinative test is not just whether MIAA is a GOCC. 6938. (b) inclusion of GOCCs is only clarificatory or illustrative of the explicit provision. Section 133(o) is the specific provision of law prohibiting local any kind of tax on national government instrumentalities like the MIAA. Obviously. (Emphasis taxing powers of local governments do not extend to the national government. No.38 and Philippine National – Unless otherwise provided herein. subject to tax by local governments The minority posits that the "determinative test" whether MIAA is exempt from local since the national government is not included in the enumeration of exempt entities in taxation is its status — whether MIAA is a juridical person or not. Section 133(o) of the Local Government Code expressly Bangko Sentral ng Pilipinas. "[u]nless otherwise provided in this Code" as stated in the saving clause of Section 133. and that "Sections 193 and 234 may be examined in isolation from Section 133(o) to ascertain not only real estate tax. To repeat. non-stock and non-profit hospitals and educational are devoid of power to tax the national government. however. Common Limitations on the Taxing Powers of Local Government Units. local governments cannot impose Government Code. which itself is a juridical person.A. It will make the national government. and barangays shall not extend to the levy of the following: The minority's theory violates Section 133(o) of the Local Government Code which xxxx expressly prohibits local governments from imposing any kind of tax on national government instrumentalities.34Philippine Ports Authority. the exemption is limited to (a) local water districts. Thus. municipalities. Some expressly withdrew the tax exemption of all juridical persons "[u]nless otherwise of the national government instrumentalities vested by law with juridical personalities are: provided in this Code. theorizes that unless exempted in Section 193 itself. its agencies and instrumentalities." Under the minority's theory.36 San Fernando Port Authority. (Emphasis and The minority's theory directly contradicts and completely negates Section 133(o) of the underscoring in the original) Local Government Code. its agencies supplied) and instrumentalities. Under this theory. its agencies government instrumentalities with or without juridical personalities. and local government units. Thus. but whether MIAA is a juridical person at all." Now. on the national government. since the Local Government Code withdrew the tax exemption of all juridical persons. the minority states: persons. This theory will result in gross absurdities.33 Bases Conversion Development Authority. then MIAA is not exempt from real estate tax. MIAA's claim of exemption. cooperatives duly registered under Republic Act No. the provisions lay down the explicit proposition that the withdrawal of realty tax exemption applies to all persons. Thus. all juridical persons are subject to tax by local governments. the minority declares: The minority. but whether it is a national government instrumentality under Section 133(o) of the Local By express mandate of the Local Government Code. under our laws. Railways. the exercise of the taxing powers of provinces.37 Cebu Port Authority. Section 133(o) does not distinguish between national (o) Taxes. under R.32 Fisheries Development Authority. 133. fees or charges of any kinds on the National Government.35 Cagayan de Oro Port SEC. Section 133(o) states: Development Authority. 6938.39 cities. local governments can impose any kind of local tax. specifically prohibiting local governments from imposing any kind of tax on national government instrumentalities. The saving clause refers to Section 234(a) on the exception to the The minority states that MIAA is indisputably a juridical person. Local governments 9 . The minority also insists Section 193. The reference to or the x x x Under Section 193. Authority. Where the law does and instrumentalities. but all enumerated as exempt in Section 193. and not only real estate tax.30 Philippine Rice Research Institute. with or without juridical personalities.31Laguna Lake provides otherwise. courts should not distinguish. The minority insists that the juridical It is evident from the quoted provisions of the Local Government Code that persons exempt from local taxation are limited to the three classes of entities specifically the withdrawn exemptions from realty tax cover not just GOCCs. Section 193 of the Local Government Code personalities will also be subject to any kind of local tax. natural and juridical persons. The determinative test whether MIAA is exempt from local taxation is not whether MIAA is a juridical person. many national government instrumentalities with juridical The argument of the minority is fatally flawed. The institutions are hereby withdrawn upon effectivity of this Code. The minority argues that exemption from real estate tax of real property owned by the Republic. (Emphasis and underscoring not distinguish.

Following an accepted rule of construction. estate tax if the beneficial use of such property is given to a taxable entity. its agencies and instrumentalities. The exception to this exemption is when the government gives the beneficial use of the Since Section 133 prescribes the "common limitations" on the taxing powers of local real property to a taxable entity. then local governments can impose any kind of tax on the governments. any other tax. (Emphasis supplied) government. (a) Real property owned by the Republic of the Philippines or any of its political Second. The justification for the exception to the exemption is that the real property. except as otherwise provided in the Local Government Code pursuant to the saving clause in Section 133 stating "[u]nless otherwise provided in this Code." Section 133 limits the grant to local governments of the power to tax. Clearly. Exemptions from Real Property Tax – The following are exempted from withholding of power. the general exemptions attaching to instrumentalities under instrumentalities. its agencies and instrumentalities. The exception to the exemption applies only to real estate tax and not to national government. although owned by the Republic. for Government Units. to real x x x Moreover. its agencies or instrumentalities. consideration or otherwise. local governments may tax the national government. in case of conflict the subsequent provisions should prevail. Section 133 logically prevails over Section 193 which grants local governments such taxing powers. there is no conflict between the grant of power and the SEC. real property owned by the Republic is exempt from real estate tax. its agencies is an egregious error for two reasons. MIAA. its agencies and instrumentalities are subject to any kind of tax by local taxing power in Section 133. Under Section 234(a). sequentially Section 133 antecedes Section 193 and 234. (Emphasis supplied) Section 133 of the Local Government Code starts with the saving clause "[u]nless otherwise provided in this Code. its agencies and instrumentalities. the "common limitations" on the taxing power prevail over the grant or exercise of the taxing power. Section 133 states that the taxing powers of local governments "shall not extend to the levy" of any kind of tax on the national x x x. and Sections 193 and 234 on the other. whether titled in the name of the national government. Thus. governments. Local governments have no power to tax the national government. which makes the national government subject to real estate tax when it gives "[u]nless otherwise provided in this Code. much less has any one presenteda persuasive argument that there is such a no power to tax the national government. Section 133 is entitled "Common Limitations on the Taxing Powers of Local subdivisions except when the beneficial use thereof has been granted. 234. Section 234(a) of the Local superiority of other provisions of the Local Government Code that limit the exercise of the Government Code provides: taxing power in Section 193. there is no conflict whatsoever between Sections 133 and 193 because Section 193 The saving clause in Section 133 refers to the exception to the exemption in Section 234(a) expressly admits its subordination to other provisions of the Code when Section 193 states of the Code. When a provision of law grants a power but withholds such power on certain matters. the rule is local governments have conflict. local governments have no power to tax the national hand. If The exception to the exemption in Section 234(a) is the only instance when the national the taxing power of local governments in Section 193 prevails over the limitations on such government. to a taxable person. the minority imposed by local governments — refers to Section 234(a) of the Code. The exception to asserts: the exemption in Section 234(a) subjects real property owned by the Republic. as a juridical person. its agencies and instrumentalities. is not devoted to public use or public service but devoted to the private gain of a taxable person. There is no clearer limitation on the taxing power than this." This means that unless the Local Government Code The minority assumes that there is an irreconcilable conflict between Section 133 on one grants an express authorization. Therefore. No one has urged that there is such a government. The minority's assumption of an irreconcilable conflict in the statutory provisions exception to this rule. First." By its own words." This The minority also argues that since Section 133 precedes Section 193 and 234 of the Local exception — which is an exception to the exemption of the Republic from real estate tax Government Code. is subject to real 10 .governments from imposing any kind of tax on the national government. As an conflict. the later provisions prevail over Section 133. The grantee of the power simply cannot exercise the power on payment of the real property tax: matters withheld from its power. By their very meaning and purpose. its agencies and property taxes. and not merely the exercise of a delegated power to tax. its agencies and instrumentalities — a gross absurdity. Section 133(o) of the Local Government Code being qualified by Sections 193 and 234 of the same law. Section 193 admits the the beneficial use of its real properties to a taxable entity. and instrumentalities only if the Local Government Code expressly so provides.

Authorized Capital Stock – Par value. expressly defines the phrase "government-owned or controlled SECTION 81. General Terms Defined. unless there is specific language in the Local Government Code or under a special charter. Unless a statute expressly provides for a different status and relationship for a specific SECTION 7. the National should apply only to corporations organized under the Corporation Code. — The capital stock of the Bank government unit or entity. definition in the Administrative Code. agencies and instrumentalities." The inescapable conclusion is that the Administrative Code definition of the billion pesos. courts should not defining the phrase "government-owned or controlled corporation" differently from the distinguish. Prime examples are the Land Bank of the phrase "government-owned or controlled corporation" differently from the definition in the Philippines and the Development Bank of the Philippines. (Emphasis supplied) a unified document the major structural. the Administrative Code definition of the phrase "government-owned or controlled statute shall require a different meaning. (Emphasis supplied) 11 . It will also result in gross absurdities." Thus. however. The minority sees Two Billion Five Hundred Million which shall be deemed paid for by the no reason why government corporations with special charters should have a capital stock. shall be Five Billion Pesos to be divided into Fifty Million common shares with par value of P100 per share. functional and procedural principles and rules of governance. Such GOCCs are not empowered to declare dividends or alienate their capital shares. In short. Administrative Code does not apply to the Local Government Code.The minority also claims that the definition in the Administrative Code of the phrase I submit that the definition of "government-owned or controlled corporations" under "government-owned or controlled corporation" is not controlling. shall require a different meaning: xxxx xxxx It might as well be worth pointing out that there is no point in requiring a capital structure for GOCCs whose full ownership is limited by its charter to the State or The minority then concludes that reliance on the Administrative Code definition is "flawed. there is none. Where the law does not distinguish. the Administrative Code is the governing law defining the status and Likewise. True. these are GOCCs without original charters. SEC. The Local Government Code is silent on the Bank of the Philippines provides: definition of the phrase "government-owned or controlled corporation. and not to corporations created by special charters. However. The special charter40 of the Land Administrative Code." the definition in Section 2 of the Administrative corporation" does not distinguish between one incorporated under the Corporation Code Code shall apply. — The authorized capital stock of the Bank shall be nine corporation. which shall be issued in accordance with the provisions of Sections seventy- The third whereas clause of the Administrative Code states that the Code "incorporates in seven and eighty-three of this Code. offices. divided into seven hundred and eighty million common shares with phrase "government-owned or controlled corporation" applies to the Local Government a par value of ten pesos each. 2. the provisions of the Administrative Code prevail. Congress has created through special charters several government-owned The minority does not point to any provision in the Local Government Code defining the corporations organized as stock corporations. Section 2 of the Administrative Code clearly states that "unless the specific words x x x of a particular First." The Administrative Code. the definition in the Administrative Code prevails. Indeed. The minority's argument is a non sequitur. Second. but formed and definitions are not controlling when it provides: organized under the Corporation Code through registration with the Securities and Exchange Commission. the minority declares: assets and liabilities as provided in Section 30 hereof. — Unless the specific words of the text. which shall be fully subscribed by the Government. and one hundred and twenty million preferred shares with a par value of ten pesos each. Capital. These shares are available for subscription by the The minority also contends that the phrase "government-owned or controlled corporation" National Government. Code. It is not in accord with the Constitution Administrative Code. Section 2 of the Administrative Code recognizes that a statute may require a different meaning than that defined in the The contention of the minority is seriously flawed. the general Government shall subscribe to Twenty-Five Million common shares of stock worth incorporation law. Government with the net asset values of the Bank remaining after the transfer of Thus. or a particular statute. this does not automatically mean that the definition in the and existing legislations." Republic. bureaus. Upon the effectivity of this Charter. The minority points out the Administrative Code refer to those corporations owned by the government or that Section 2 of the Introductory Provisions of the Administrative Code admits that its its instrumentalities which are created not by legislative enactment. Thus. the special charter41 of the Development Bank of the Philippines provides: relationship of government departments. or the context as a whole.

then it makes its claim The Constitution expressly authorizes the legislature to create "government-owned or upon the taxpayers' money through new equity infusions from the government and controlled corporations" through special charters only if these entities are required to meet what is always invoked is the common good. 16. Code. there is a sense in which this corporation (Emphasis and underscoring supplied) becomes exempt from the test of economic performance. as follows: organization.45 every modern State must provide its citizens. This is the situation of the Land Bank of the Philippines and the Development Bank of the Third. when we insert the phrase "ECONOMIC VIABILITY" together with the corporations with special charters are usually organized as stock corporations just like "common good." this becomes a restraint on future enthusiasts for state capitalism ordinary private corporations. Ople. market place. out the twin conditions of common good and economic viability. government creates a corporation. explains These instrumentalities are not the "government-owned or controlled corporations" in his textbook The 1987 Constitution of the Republic of the Philippines: A Commentary: referred to in Section 16. Father Joaquin G. such entities corporations because they are not registered with the Securities and Exchange — known as "government-owned or controlled corporations" — must meet the test of Commission would remove them from the reach of Section 234 of the Local Government economic viability because they compete in the market place.42 Philippine International Trading instrumentalities vested with corporate powers but performing essential governmental or Corporation. To rule that they are not government-owned or controlled special charters corporations that perform economic or commercial activities. I reiterate. The first condition is that the government-owned or controlled corporation with the private sector. which derive their are those that meet the two conditions prescribed in Section 16.43 and the Philippine National Bank44 before it was reorganized as a stock public functions. Article XII of the 1987 Constitution provides: Commissioner Blas F. governmental or public functions need not meet the test of economic viability. OPLE: Madam President. to excuse themselves from the responsibility of meeting the market test so that they become viable. proponent of the test of economic viability. Congress has plenary authority to create government instrumentalities corporation under the Corporation Code. In other words. 12 . The test of economic viability applies only to government-owned or controlled social services like health and education. services that TEST." together with the common good. when the legislature creates through real properties owned by them. These the insertion of the standard of "ECONOMIC VIABILITY OR THE ECONOMIC instrumentalities perform essential public services for the common good. a leading member of the Constitutional Commission. except by general law. government-owned or controlled corporations that cannot survive on their own in the owned or controlled corporation must meet the test of economic viability. Article XII of the 1987 Constitution. The intent of the Constitution is to prevent the creation of must be established for the common good. The second condition is that the government.Other government-owned corporations organized as stock corporations under their special Thus. Bernas. And this unless they are made to comply with the two conditions of common good and economic is all taxpayers' money which could have been relocated to agrarian reform. These instrumentalities need not be economically viable since the government may even subsidize their entire operations. for the committee's In contrast. That is the reason why this year. And yet this is all going down the drain. the government-owned or controlled corporations created through special charters Philippines and similar government-owned or controlled corporations. However. about P28 billion of this will no power to create government-owned or controlled corporations with special charters go into equity infusions to support a few government financial institutions. Madam President. explained to the SEC. the Constitution imposes no limitation when the legislature creates government charters are the Philippine Crop Insurance Corporation. to viability. If a government corporation loses. We know what happened in the past. Congress has of a budget of P115 billion for the entire government. Constitutional Commission the purpose of this test. government instrumentalities vested with corporate powers and performing consideration and I am glad that I am joined in this proposal by Commissioner Foz. or regulation of private corporations. All these government-owned corporations vested with corporate powers provided these instrumentalities perform essential organized under special charters as stock corporations are subject to real estate tax on government functions or public services. Article XII of the income to meet operating expenses solely from commercial transactions in competition Constitution. provide for the formation. Being essentially economic vehicles of the State for the common good — meaning for economic development purposes — these government-owned or controlled Therefore. Section 16. to augment the salaries of grossly corporations that perform economic or commercial activities and need to compete in the underpaid public employees. thus exempting them from real estate tax. Government-owned or controlled corporations may be created or established by special charters in the MR. the reason for this concern is really that when the interest of the common good and subject to the test of economic viability. And so. The Congress shall not. market place and thus merely drain the public coffers.

screening out those without visas or travel documents." The addition includes the ideas that premises from terrorist attack or seizure. MIAA performs an essential public service as the primary domestic and international airport of the Philippines. endowed with some if not all corporate powers. is the phrase "in the interest of the common good entry of terrorists and the escape of criminals. as long as MIAA renders essential public services. MIAA does not compete in the market place SEC. The quarantine office of the Department of Health. 4. Section 16. The Bureau of Immigration and Deportation. organized under the Corporation Code. The Department of Agriculture. that fall under the definition of "government-owned or controlled corporations" in Section 2(10) of the Administrative Code. The operation of an international airport requires the presence of (10) Instrumentality refers to any agency of the National Government. The second sentence was added by the 1986 Constitutional Commission. the airport. The 1987 Constitution prescribes explicit conditions for the creation of "government-owned or 13 . the test of economic viability does not apply to government entities vested with 7. The Bureau of Customs. as well as to secure the airport and subject to the test of economic viability. General Terms Defined. All these agencies of government perform government functions essential to the operation of an international airport. administering special funds. and Clearly. however.46 (Emphasis supplied) take off from. Without a change in its capital structure. Article XII of the 1987 Constitution. Provisions of the Administrative Code. The Aviation Security Command of the Philippine National Police. or those with hold departure orders. service. as well as to land on. to enforce health measures is outside the scope of the phrase "government-owned or controlled corporations" under against the spread of infectious diseases into the country. vested with special functions or jurisdiction by law. economic 6. or and generate benefits not quantifiable in financial terms. x x x 1. 2. The MIAA. More importantly." This is fatal. owned or controlled corporation" as merely "clarificatory or illustrative. and to manage the airport render essential public services regardless of the economic viability of providing such operations. government-owned or controlled corporations with special charters. to provide the proper premises — such as runway and buildings — corporate powers and performing essential public services. like the Land Bank of the Philippines imposes on passengers and airlines. MIAA performs an essential public service that every modern State must provide its These are the government-owned or controlled corporations that are usually organized citizens. Thus. to collect import duties or enforce the ban on prohibited MIAA remains a government instrumentality under Section 2(10) of the Introductory importations. to enforce measures against the spread of plant The minority belittles the use in the Local Government Code of the phrase "government- and animal diseases into the country. The Air Traffic Office of the Department of Transportation and Communications. The non-economic viability of rendering such essential public service does not excuse the State from withholding such essential services from the public. organized essentially for economic or commercial objectives. MIAA derives its revenues principally from the mandatory fees and charges MIAA under their special charters as stock corporations. The State is obligated to for the government personnel. must meet the test of economic viability. it need not comply with the test of economic viability. The 5. to document the arrival and (Emphasis supplied) departure of passengers. viability is more than financial viability but also includes capability to make profit to authorize aircraft to enter or leave Philippine airspace. they must show capacity to function efficiently in business and that they should not go into activities which the private sector can do better. Moreover. The terminal fees that MIAA charges every and the Development Bank of the Philippines. 2. These are the government-owned or passenger are regulatory or administrative fees47 and not income from commercial controlled corporations. to prevent the significant addition. MIAA falls under the definition of a government instrumentality under Section 2(10) of the Introductory Provisions of the Administrative Code. MIAA 3. usually through a charter. not personnel from the following government agencies: integrated within the department framework. and airlines. which provides: The MIAA need not meet the test of economic viability because the legislature did not create MIAA to compete in the market place. – x x x x because there is no competing international airport operated by the private sector. However. and enjoying operational autonomy. along with government-owned or controlled corporations transactions. passengers. The fact alone that MIAA is endowed with corporate powers does not make MIAA a government-owned or controlled corporation.

government-owned or controlled corporation.controlled corporations." To belittle this phrase as "clarificatory or illustrative" is Government Code. real estate tax under Section 234(a) of the Local Government Code. Thus. The only exception is when MIAA leases its real property to a "taxable person" as provided in To summarize. MIAA is not subject to any kind of tax by local governments under Section Republic of the Philippines. except for the portions that the Manila International Airport Authority has leased to private parties. for public service. The Airport Lands and Buildings of MIAA are intended for public use. in which case the specific real property 2(13) of the Introductory Provisions of the Administrative Code because it is not organized leased becomes subject to real estate tax. Whether intended for public use or public service. We (1) Those intended for public use. shores. the Manila International Airport Authority. torrents. without being for public use. Article 420 of the Civil Code provides: WHEREFORE. As properties of public dominion owned by the Republic. As properties of public dominion. issued by the City of Parañaque on the Airport Lands and Buildings of character. and all its effects. there Code. and others of similar tax delinquencies. This Court has also repeatedly ruled that properties of public dominion are not subject to execution or Finally. the Airport Lands and Buildings of MIAA are properties devoted to public use and foreclosure sale. 4. 420. (Emphasis supplied) No costs. such as roads. The exception to the exemption in Section 234(a) the State. roadsteads. thus are properties of public dominion. Properties of public dominion are owned by the State or the Republic. the Airport Lands and Buildings are owned by the Republic and thus exempt from real estate tax under Section 234(a) of the Local Government Code. As a government to public use. ports and declare VOID all the real estate tax assessments. the Airport Lands and Buildings of MIAA. The following things are property of public dominion: We DECLARE the Airport Lands and Buildings of the Manila International Airport Authority EXEMPT from the real estate tax imposed by the City of Parañaque. and are intended International Airport Authority. the Airport Lands and Buildings are properties of public dominion. We also declare VOID the assailed auction sale. Article 420 specifically mentions "ports x x x constructed by 133(o) of the Local Government Code. MIAA as a government instrumentality is not a taxable person because grave error. Art. Conclusion Under Section 2(10) and (13) of the Introductory Provisions of the Administrative Code. We SET ASIDE the assailed Resolutions of the Court of Appeals of 5 October 2001 and 27 September 2002 in CA-G. 66878." The Administrative Code defines what constitutes a "government. agencies and offices within the entire government machinery. rivers. banks. required to meet the test of economic viability. which governs the legal relation and status of government units. we GRANT the petition. MIAA is not a government-owned or controlled corporation under Section Section 234(a) of the Local Government Code. Article XII of the 1987 Constitution because MIAA is not City of Parañaque. canals. MIAA is a government instrumentality vested with corporate powers and performing essential public services pursuant to Section Under Article 420 of the Civil Code. being devoted 2(10) of the Introductory Provisions of the Administrative Code. are properties of public dominion and thus owned by the State or the instrumentality. only portions of the Airport Lands and as a stock or non-stock corporation. The term "ports x x x constructed by the State" includes airports and seaports. fees or charges of any kind" by local governments. it is not subject to "[t]axes. including the final notices of real estate bridges constructed by the State. and at the very least intended SO ORDERED.R. MIAA is a government instrumentality and not a 14 . SP No. Such exception applies only if the beneficial use of real property owned by the is no doubt whatsoever that the Airport Lands and Buildings are expressly exempt from Republic is given to a taxable entity. Neither is MIAA a government-owned or controlled Buildings leased to taxable persons like private parties are subject to real estate tax by the corporation under Section 16. Under Section 133(o) of the Local owned or controlled corporation." which includes public airports and seaports. of the Airport Lands and Buildings of the Manila (2) Those which belong to the State. as properties of public dominion does not apply to MIAA because MIAA is not a taxable entity under the Local Government and owned by the Republic. for some public service or for the development of the national wealth.