MIAA v. Court of Appeals G.R. No. 155650, July 20, 2006 Carpio, J.

Facts:
The Manila International Airport Authority (MIAA) operates the Ninoy Aquino International
Airport (NAIA) Complex in Paraaque City under Executive Order No. 903 (MIAA Charter), as
amended. As such operator, it administers the land, improvements and equipment within the
NAIA Complex.
In March 1997, the Office of the Government Corporate Counsel (OGCC) issued Opinion No.
061 to the effect that the Local Government Code of 1991 (LGC) withdrew the exemption from
real estate tax granted to MIAA under Section 21 of its Charter. Thus, MIAA paid some of the
real estate tax already due.
In June 2001, it received Final Notices of Real Estate Tax Delinquency from the City of
Paraaque for the taxable years 1992 to 2001. The City Treasurer subsequently issued notices of
levy and warrants of levy on the airport lands and buildings.
At the instance of MIAA, the OGCC issued Opinion No. 147 clarifying Opinion No. 061,
pointing out that Sec. 206 of the LGC requires persons exempt from real estate tax to show proof
of exemption. According to the OGCC, Sec. 21 of the MIAA Charter is the proof that MIAA is
exempt from real estate tax.
MIAA, thus, filed a petition with the Court of Appeals seeking to restrain the City of Paraaque
from imposing real estate tax on, levying against, and auctioning for public sale the airport lands
and buildings, but this was dismissed for having been filed out of time.
Hence, MIAA filed this petition for review, pointing out that it is exempt from real estate tax
under Sec. 21 of its charter and Sec. 234 of the LGC. It invokes the principle that the government
cannot tax itself as a justification for exemption, since the airport lands and buildings, being
devoted to public use and public service, are owned by the Republic of the Philippines.
On the other hand, the City of Paraaque invokes Sec. 193 of the LGC, which expressly withdrew
the tax exemption privileges of government-owned and controlled corporations (GOCC) upon
the effectivity of the LGC. It asserts that an international airport is not among the exceptions
mentioned in the said law.
Meanwhile, the City of Paraaque posted and published notices announcing the public auction
sale of the airport lands and buildings. In the afternoon before the scheduled public auction,
MIAA applied with the Court for the issuance of a TRO to restrain the auction sale. The Court
issued a TRO on the day of the auction sale, however, the same was received only by the City of
Paraaque three hours after the sale.
Issue: Whether or not the airport lands and buildings of MIAA are exempt from real estate tax?
Held: The airport lands and buildings of MIAA are exempt from real estate tax imposed by local
governments. Sec. 243(a) of the LGC exempts from real estate tax any real property owned
by the Republic of the Philippines. This exemption should be read in relation with Sec. 133(o)
of the LGC, which provides that the exercise of the taxing powers of local governments
shall not extend to the levy of taxes, fees or charges of any kind on the National
Government, its agencies and instrumentalities.
These provisions recognize the basic principle that local governments cannot tax the national
government, which historically merely delegated to local governments the power to tax.
The rule is that a tax is never presumed and there must be clear language in the law imposing the
tax. This rule applies with greater force when local governments seek to tax national government
instrumentalities.
Moreover, a tax exemption is construed liberally in favor of national government
instrumentalities.
MIAA is not a GOCC, but an instrumentality of the government. The Republic remains
the beneficial owner of the properties. MIAA itself is owned solely by the Republic. At any
time, the President can transfer back to the Republic title to the airport lands and
buildings without the Republic paying MIAA any consideration.
As long as the airport lands and buildings are reserved for public use, their ownership remains
with the State. Unless the President issues a proclamation withdrawing these properties from
public use, they remain properties of public dominion. As such, they are inalienable, hence, they
are not subject to levy on execution or foreclosure sale, and they are exempt from real estate tax.
However, portions of the airport lands and buildings that MIAA leases to private entities are not
exempt from real estate tax. In such a case, MIAA has granted the beneficial use of such portions
for consideration to a taxable person.