Franco Luis G.

Lopez
Law 102 (Property)
Atty. Mia G. Gentugaya

1. Describe the principal pillar relied upon by the Supreme Court on the Mactan case.
The principal pillar the Court had relied upon in Mactan is that the airport in question (i.e.
MCIAA) is a government owned and controlled corporation (GOCC) whose exemption from
taxation, granted to it in Section 14 of its Charter (R.A. No. 6958), has already been withdrawn
by the Local Government Code (LGC), and by virtue of its charter, became the owner of the land
in question, thereby taking it outside the purview of the exemptions under the same Code.

The Court held in Mactan that the petitioner airport can be subject to real property taxes,
considering that its exemption to the same has been revoked under both Sections 193 and Section
234 of the LGC, under its last paragraph. The same provision provides for the exemptions from
payment of real property taxes and withdraws previous exemptions therefrom granted to natural
and juridical persons, including GOCCs such as petitioner. These exemptions are then based on
the ownership, character, and use of the property in question.

Under Section 234(a) of the LGC, only property that is owned by the Republic or any of its
political subdivisions are exempted from payment. However, Section 15 of MCIAA’s Charter
expressly provided for an express transfer of land. The land referred to in the Charter once
belonged to the Republic of the Philippines, then under the Air Transportation Office (ATO), and
was transferred to the petitioner. This is the very same land which respondent city sought to levy
on for real property taxes.

The Court interpreted the “transfer” to be an absolute conveyance of the ownership thereof,
considering that the petitioner’s authorized capital stock consisted of, “the value of such real
estate owned and/or administered by the airports. Therefore, the petitioner was held to be the
owner of the land in question. The exception from payment of real property taxes in Section
234(a) of LGC therefore, did not apply.

2. How different/similar is the fact pattern of the MIAA cases vs. the Mactan case, with
respect to the entity owning the property being taxed?
The fact patterns between the MIAA cases and the Mactan case are similar, albeit with a key
difference that lead to the contrasting rulin: MIAA was held to be an instrumentality, while
MCIAA was held to be a GOCC.

In the former cases, the property being taxed was held to be owned by the Republic, with MIAA
being a mere instrumentality of the State, and a trustee of the properties sought to be taxed. The
Court held that airport lands and buildings, such as MIAA, are properties of public dominion, as
defined under Article 420(1) of the New Civil Code, with the properties being intended for
public use, being a port, and having been constructed by the State.

The transfer in this case was held to be a mere reorganization of the former Bureau of Air
Transportation to a new body (i.e. MIAA). It was not meant to transfer beneficial ownership of
these assets from the Republic to MIAA. MIAA was held to be only holding the lands in trust of
the Republic, with the latter retaining ownership of the lands, as allowed by Section 48, Chapter
12, Book I of the Administrative Code. With the lands being owned by the Republic, titled in
the name of MIAA as an instrumentality, they were therefore held to be exempt from real
property tax by virtue of Sections 133 and 234(a) of LGC.

In the latter case, the property being taxed was held to be owned by MCIAA, since it was
considered to be a government owned and controlled corporation (GOCC), not as an
instrumentality allowed to hold title to real properties owned by the Republic. As discussed in
the previous question, Section 15 of MCIAA’s charter was interpreted to be an absolute
conveyance of the ownership of the property being taxed from the Republic, then under the Air
Transportation Office (ATO) to MCIAA.

It must be noted that Justice Tinga points out in his dissenting opinion in MIAA v. City of
Paranaque that the majority overlooked Mactan as a precedent. Justice Tinga points out that the
MCIAA and the MIAA are “similary situated”—both are GOCCs commonly engaged in the
business of operating an airport, both maintain and hold title over properties in their name, and
both entities are owned by the State.