TAXATION 1 | B2015

CASE DIGESTS
Mactan Cebu Intl Airport
Authority v. Marcos
September 11, 1996
Davide, Jr., J.
Raeses, Roberto Miguel O.
SUMMARY: The City of Cebu, through the Ofe of the
Tre!"urer, #e$!%#e# &!y$e%t of re!' &ro&erty t!(e" o%
"e)e% &!re'" of '!%# o*%e# by +CIAA, +CIAA %!tur!''y
ob-ete#, iti%g it" h!rter th!t e(e$&te# it fro$ the
&!y$e%t of re!'ty t!(e", It !'"o ite# the .GC of 1//1
*hih &ut" 'i$it!tio%" o% the t!(i%g &o*er" of .G0", The
City of Cebu, for it" &!rt, '!i$e# th!t the +CIAA *!" !
GOCC *ho"e t!( e(e$&tio% h!# !'re!#y bee% *ith#r!*%
by the .GC th!t too1 e2et o% 1//2, The SC !gree# *ith
the City of Cebu3" o%te%tio%", ru'i%g th!t the +CIAA *!"
%ot !% i%"tru$e%t!'ity !" it '!i$e# to be but r!ther !
GOCC *ho"e e(e$&tio% h!" bee% *ith#r!*% by the .GC
th!t too1 e2et o% 1//2,
DOCTRI!: The t!(i%g &o*er" of .G0" !%%ot e(te%# to
the 'e)y of, i%ter !'i!, 4t!(e", fee" !%# h!rge" of !%y 1i%#
o% the N!tio%!' Go)er%$e%t, it" !ge%ie" !%#
i%"tru$e%t!'itie", !%# 'o!' go)er%$e%t u%it",5 6o*e)er,
&ur"u!%t to Se, 272, &ro)i%e", itie", !%# $u%ii&!'itie"
i% the +etro&o'it!% +!%i'! Are! $!y i$&o"e the re!'
&ro&erty t!( e(e&t o%, inter alia, 4re!' &ro&erty o*%e# by
the 8e&ub'i of the 9hi'i&&i%e" or !%y of it" &o'iti!'
"ub#i)i"io%" e(e&t *he% the be%e:i!' u"e thereof h!"
bee% gr!%te#, for o%"i#er!tio% or other*i"e, to ! t!(!b'e
&er"o%,5 !" &ro)i#e# i% ite$ ;!< of the :r"t &!r!gr!&h of
Se, 23,
"ACTS: Si%e the ti$e of the re!tio% of the +!t!% Cebu
I%ter%!tio%!' Air&ort Authority ;+CIAA<, it h!# e%-oye# the
&ri)i'ege of e(e$&tio% fro$ &!y$e%t of re!'ty t!(e" i%
!or#!%e *ith Se, 1= of it" h!rter, 6o*e)er, o% Ot, 11,
1//=, Eu"t!>uio B, Ce"!, OIC of the Ofe of the Tre!"urer of
the City of Cebu, #e$!%#e# &!y$e%t of re!'ty t!(e" o%
"e)e% &!re'" of '!%# be'o%gi%g to +CIAA i% the !$ou%t of
92,22/, 0?@,?/,
+CIAA %!tur!''y ob-ete#, iti%g Se, 1= of 8A A/5@ *hih
e(e$&t it fro$ &!y$e%t of re!'ty t!(e", It !'"o ite# the .GC
of 1//1 *hih &ut" 'i$it!tio%" o% the t!(i%g &o*er" of
.G0"
1
, The City of Cebu refu"e# to !%e' the re!'ty t!(
!ou%t, i%"i"ti%g th!t, "i%e +CIAA i" ! GOCC *ho"e t!(
e(e$&tio% h!" bee% *ith#r!*% by Se, 1/7 !%# 27= of the
.GC th!t too1 e2et o% 1//2,
A" the City of Cebu *!" !bout to i""ue ! *!rr!%t of 'e)y
!g!i%"t the &ro&ertie" of &etitio%er, +CIAA *!" o$&e''e# to
&!y the t!(e" u%#er &rote"t, before :'i%g ! &etitio% for
#e'!r!tory re'ief *ith the 8TC of Cebu,
+CIAA !rgue# th!t the t!(i%g &o*er" of .G0" #o %ot e(te%#
to the 'e)y of t!(e" o% !% instrumentalit! of the %!tio%!'
go)er%$e%t, Bhi'e it o%e#e" th!t it i" ! GOCC, it i%"i"te#
th!t it "too# o% the "!$e footi%g !" !% !ge%y or
i%"tru$e%t!'ity of the go)er%$e%t by the %!ture of it"
&o*er" !%# fu%tio%",
Cebu City, o% the other h!%#, !""erte# th!t +CIAA *!" !
$ere GOCC &erfor$i%g &ro&riet!ry fu%tio%", A" "uh, !''
e(e$&tio%" gr!%te# to it *ere #ee$e# *ith#r!*% o% the
b!"i" of Se, 1/7, !%# 27= of the .GC,
The 8TC #i"$i""e# the !"e, o% the b!"i" of the re&e!'i%g
'!u"e fou%# i% 8A ?1A0, The 8TC i%ter&rete# the re&e!'i%g
'!u"e !" h!)i%g re&e!'e# the e(e$&tio% &re)iou"'y gr!%te#
1
Setio% 177, "ommon #imitations on t$e %a&ing 'o(ers o) #o*al
+overnment ,nits, CC 0%'e"" other*i"e &ro)i#e# herei%, the e(eri"e of the
t!(i%g &o*er" of &ro)i%e", itie", $u%ii&!'itie", !%# b!r!%g!y" "h!'' %ot
e(te%# to the 'e)y of the fo''o*i%gD
o< T!(e", fee" or h!rge" of !%y 1i%# o% the N!tio%!' Go)er%$e%t, it"
!ge%ie" !%# i%"tru$e%t!'itie", !%# 'o!' go)er%$e%t u%it", ;u%#er"ori%g
"u&&'ie#<
TAXATION 1 | B2015
CASE DIGESTS
to +CIAA, It" $otio% for reo%"i#er!tio% *!" "ub"e>ue%t'y
#e%ie#,
ISSU!S: BON the 8TC erre# i% ru'i%g th!t +CIAA i" 'i!b'e to
&!y re!' &ro&erty t!(e" to the City of Cebu,

RU#I$: o% +CIAA i" 'i!b'e to &!y re!' &ro&erty t!(e" to
the City of Cebu
RATIO: 0%#er Se, 1= of 8,A, No, A/5@, +CIAA i" e(e$&t
fro$ the &!y$e%t of re!'ty t!(e" i$&o"e# by the N!tio%!'
Go)er%$e%t or !%y of it" &o'iti!' "ub#i)i"io%", !ge%ie",
!%# i%"tru$e%t!'itie", Ne)erthe'e"", "i%e t!(!tio% i" the
ru'e !%# e(e$&tio% therefro$ the e(e&tio%, the e&emption
ma! t$us be (it$dra(n at t$e pleasure o) t$e ta&ing
aut$orit!, The o%'y e(e&tio% to thi" ru'e i" *here the
e(e$&tio% *!" gr!%te# to &ri)!te &!rtie" b!"e# o% $!teri!'
o%"i#er!tio% of ! $utu!' %!ture, *hih the% beo$e"
o%tr!tu!' !%# i" thu" o)ere# by the %o%Ci$&!ir$e%t
'!u"e of the Co%"titutio%,
The .GC, e%!te# &ur"u!%t to Setio% 7, Arti'e X of the
Co%"titutio%, &ro)i#e" for the e(eri"e by 'o!' go)er%$e%t
u%it" of their &o*er to t!(, the "o&e thereof or it"
'i$it!tio%", !%# the e(e$&tio%" fro$ t!(!tio%,
-tem O of Se, 177 i" &erti%e%t to thi" !"e, The 4t!(e", fee"
or h!rge"5 referre# to !re 4of !%y 1i%#5E he%e, they
i%'u#e !'' of the"e, u%'e"" other*i"e &ro)i#e# by the .GC,
The ter$ 4fee"5 $e!%" h!rge" :(e# by '!* or or#i%!%e for
the regu'!tio% or i%"&etio% of bu"i%e"" or !ti)ity, *hi'e
4h!rge"5 !re &eu%i!ry 'i!bi'itie",
A$o%g the 4t!(e"5 e%u$er!te# i% the .GC i" re!' &ro&erty
t!(, *hih i" go)er%e# by Setio% 272, Se, 27= of the .GC
&ro)i#e" for the e(e$&tio%" fro$ &!y$e%t of re!' &ro&erty
t!(e" !%# *ith#r!*" &re)iou" e(e$&tio%" therefro$
gr!%te# to %!tur!' !%# -uri#i!' &er"o%", i%'u#i%g GOCC",
e(e&t !" &ro)i#e# therei%,
8e!#i%g together Se*tions 133, 232, !%# 23 of the .GC,
the ge%er!' ru'e i" th!t, !" '!i# #o*% i% Setio% 177, the
t!(i%g &o*er" of 'o!' go)er%$e%t u%it" !%%ot e(te%# to
the 'e)y of, i%ter !'i!, 4t!(e", fee" !%# h!rge" of !%y 1i%#
o% the N!tio%!' Go)er%$e%t, it" !ge%ie" !%#
i%"tru$e%t!'itie", !%# 'o!' go)er%$e%t u%it"5E ho*e)er,
&ur"u!%t to Setio% 272, &ro)i%e", itie", !%# $u%ii&!'itie"
i% the +etro&o'it!% +!%i'! Are! $!y i$&o"e the re!'
&ro&erty t!( e(e&t o%, i%ter !'i!, 4re!' &ro&erty o*%e# by
the 8e&ub'i of the 9hi'i&&i%e" or !%y of it" &o'iti!'
"ub#i)i"io%" e(e&t *he% the be%e:i!' u"e thereof h!"
bee% gr!%te#, for o%"i#er!tio% or other*i"e, to ! t!(!b'e
&er"o%,5 !" &ro)i#e# i% ite$ ;!< of the :r"t &!r!gr!&h of
Se*tion 23,
A" to t!( e(e$&tio%" gr!%te# to or &re"e%t'y e%-oye# by
%!tur!' or -uri#i!' &er"o%", i%'u#i%g GOCC", Se*tion 193 of
the .GC &re"ribe" the ge%er!' ru'e, )iF., t$e! are
(it$dra(n upon t$e e.e*tivit! o) t$e #+", e&*ept t$ose
granted to lo*al (ater distri*ts, *ooperatives dul! registered
under R./. 0o. 6931, non2sto*3 and non2pro4t $ospitals and
edu*ational institutions, and unless ot$er(ise provided in
t$e #+", The '!tter &ro)i"o ou'# refer to Setio% 27= *hih
e%u$er!te" the &ro&ertie" e(e$&t fro$ re!' &ro&erty t!(,
But the '!"t &!r!gr!&h of Setio% 27= further >u!'i:e" the
rete%tio% of the e(e$&tio% i%"of!r !" re!' &ro&erty t!(e" !re
o%er%e# by 'i$iti%g the rete%tio% o%'y to tho"e
e%u$er!te# therei%E !'' other" %ot i%'u#e# i% the
e%u$er!tio% 'o"t the &ri)i'ege u&o% the e2eti)ity of the
.GC, +oreo)er, e)e% !" to re!' &ro&erty o*%e# by the
8e&ub'i of the 9hi'i&&i%e" or !%y of it" &o'iti!' "ub#i)i"io%"
o)ere# by ite$ ;!< of the :r"t &!r!gr!&h of Setio% 27=,
the e(e$&tio% i" *ith#r!*% if the be%e:i!' u"e of "uh
&ro&erty h!" bee% gr!%te# to ! t!(!b'e &er"o% for
o%"i#er!tio% or other*i"e,
I% or#er for +CIAA to ret!i% it" t!( e(e$&tio%, It $u"t "ho*
th!t the &!re'" of '!%# i% >ue"tio%, *hih !re re!' &ro&erty,
!re !%y o%e of tho"e e%u$er!te# i% Setio% 27=, either by
)irtue of o*%er"hi&, h!r!ter, or u"e of the &ro&erty, It
TAXATION 1 | B2015
CASE DIGESTS
ou'# o%'y be the :r"t, but %ot u%#er !%y e(&'iit &ro)i"io%
of the "!i# "etio%, Co%"i#eri%g +CIAA3" o%te%tio% th!t it
i" !% 4i%"tru$e%t!'ity of the Go)er%$e%t,5 it ou'# o%'y be
*ithi% the :r"t ite$ of the :r"t &!r!gr!&h of the "etio% by
e(&!%#i%g the "o&e of the ter$ 48e&ub'i of the
9hi'i&&i%e"5 to e$br!e it" 4i%"tru$e%t!'itie"5 !%#
4!ge%ie",5
The !bo)e )ie* !%%ot be gi)e% re#e%e !" i% the :r"t
&'!e, it" '!i$ th!t it i" !% i%"tru$e%t!'ity of the
Go)er%$e%t i" b!"e# o% Setio% 177;o<, *hih e(&re""'y
$e%tio%" the *or# 4i%"tru$e%t!'itie",5 I% the "eo%# &'!e,
it f!i'" to o%"i#er the f!t th!t the 'egi"'!ture u"e# the
&hr!"e 4N!tio%!' Go)er%$e%t, it" !ge%ie" !%#
i%"tru$e%t!'itie"5 i% Setio% 177;o<, but o%'y the &hr!"e
48e&ub'i of the 9hi'i&&i%e" or !%y of it" &o'iti!'
"ub#i)i"io%"5 i% Setio% 27=;!<, The t*o ter$" !re, >uite
ob)iou"'y, #i2ere%t fro$ o%e !%other,
Si%e +CIAA i" ! GOCC, it" e(e$&tio% fro$ &!y$e%t of
&ro&erty t!(e" gr!%te# by Se, 1= of it" h!rter h!" bee%
*ith#r!*%, by )irtue of Setio% 27= of the .o!' Go)er%$e%t
Co#e, +CIAA !%%ot '!i$ th!t it *!" %e)er ! t!(!b'e
&er"o% u%#er it" Ch!rter, It *!" o%'y e(e$&te# fro$ the
&!y$e%t of re!' &ro&erty t!(e", The gr!%t of the &ri)i'ege
o%'y i% re"&et of thi" t!( i" o%'u"i)e &roof of the
'egi"'!ti)e i%te%t to $!1e it ! t!(!b'e &er"o% "ub-et to !''
t!(e", e(e&t re!' &ro&erty t!(,
DIS&OSITI'!: B6E8EGO8E, the i%"t!%t &etitio% i" DENIED,
The h!''e%ge# #ei"io% !%# or#er of the 8egio%!' Tri!' Court
of Cebu, Br!%h 20, i% Ci)i' C!"e No, CEBC1A/00 !re
AGGI8+ED,