*

G.R.No.120082.September11,1996.

MACTAN CEBU INTERNATIONAL AIRPORT AUTHORITY,

petitioner,vs.HON.FERDINANDJ.MARCOS,inhiscapacityas
the Presiding Judge of the Regional Trial Court, Branch 20, Cebu
City, THE CITY OF CEBU, represented by its Mayor, HON.
TOMASR.OSMEA,andEUSTAQUIOB.CESA,respondents.
Taxation As a general rule, the power to tax is an incident of
sovereignty and is unlimited in its range, acknowledging in its very nature
no limits, so that security against its abuse is to be found only in the
responsibility of the legislature which imposes the tax on the constituency
who are to pay it.As a general rule, the power to tax is an incident of
sovereigntyandisunlimitedinitsrange,acknowledginginitsverynatureno
limits, so that security against its abuse is to be found only in the
responsibility of the legislature which imposes the tax on the constituency
whoaretopayit.Nevertheless,effectivelimitationsthereonmaybeimposed
by the people through their Constitutions. Our Constitution, for instance,
provides that the rule of taxation shall be uniform and equitable and
Congressshallevolveaprogressivesystemoftaxation.Sopotentindeedis
thepowerthatitwasonceopinedthatthepowertotaxinvolvesthepower
todestroy.
Same Statutory Construction Since taxation is a destructive power
which interferes with the personal and property rights of the people and
takesfromthemaportionoftheirpropertyforthesupport
______________
*THIRDDIVISION.

668

668

SUPREMECOURTREPORTSANNOTATED
MactanCebuInternationalAirportAuthorityvs.Marcos

of the government, tax statutes must be construed strictly against the

governmentandliberallyinfavorofthetaxpayerButsincetaxesarewhat
we pay for civilized society, or are the lifeblood of the nation, the law
frowns against exemptions from taxation and statutes granting tax
exemptions are thus construed strictissimi juris against the taxpayer and
liberally in favor of the taxing authority.Verily, taxation is a destructive
power which interferes with the personal and property rights of the people
and takes from them a portion of their property for the support of the
government.Accordingly,taxstatutesmustbeconstruedstrictlyagainstthe
government and liberally in favor of the taxpayer. But since taxes are what
we pay for civilized society, or are the lifeblood of the nation, the law
frowns against exemptions from taxation and statutes granting tax
exemptions are thus construed stricissimi juris against the taxpayer and
liberally in favor of the taxing authority. A claim of exemption from tax
paymentsmustbeclearlyshownandbasedonlanguageinthelawtooplain
tobemistaken.Elsewisestated,taxationistherule,exemptiontherefromis
the exception. However, if the grantee of the exemption is a political
subdivision or instrumentality, the rigid rule of construction does not apply
becausethepracticaleffectoftheexemptionismerelytoreducetheamount
of money that has to be handled by the government in the course of its
operations.
SameLocalGovernmentUnitsThepowertotaxisprimarilyvestedin
theCongressbutinourjurisdiction,itmaybeexercisedbylocallegislative
bodies, no longer merely by virtue of a valid delegation but pursuant to
direct authority conferred by the Constitution. The power to tax is
primarily vested in the Congress however, in our jurisdiction, it may be
exercised by local legislative bodies, no longer merely by virtue of a valid
delegationasbefore,butpursuanttodirectauthorityconferredbySection5,
ArticleXoftheConstitution.Underthelatter,theexerciseofthepowermay
be subject to such guidelines and limitations as the Congress may provide
which,however,mustbeconsistentwiththebasicpolicyoflocalautonomy.
Same Same NonImpairment Clause Since taxation is the rule and
exemption therefrom the exception, the exemption may be withdrawn at the
pleasure of the taxing authority, the only exception being where the
exemptionwasgrantedtoprivatepartiesbasedonmaterialconsiderationof
a mutual nature, which then becomes contractual and thus covered by the
nonimpairment clause of the Constitution.There can be no question that
underSection14ofR.A.
669

VOL.261,SEPTEMBER11,1996
MactanCebuInternationalAirportAuthorityvs.Marcos

669

No.6958thepetitionerisexemptfromthepaymentofrealtytaxesimposed
by the National Government or any of its political subdivisions, agencies,
andinstrumentalities.Nevertheless,sincetaxationistheruleandexemption
therefrom the exception, the exemption may thus be withdrawn at the
pleasureofthetaxingauthority.Theonlyexceptiontothisruleiswherethe
exemptionwasgrantedtoprivatepartiesbasedonmaterialconsiderationofa
mutual nature, which then becomes contractual and is thus covered by the
nonimpairmentclauseoftheConstitution.
Same Same Local Government Code Words and Phrases Fees
and Charges, Explained.Section 133 of the LGC prescribes the
common limitations on the taxing powers of local government units.
Needlesstosay,thelastitem(item0ofSec.133oftheLGC)ispertinentto
this case. The taxes, fees or charges referred to are of any kind hence,
they include all of these, unless otherwise provided by the LGC. The term
taxesiswellunderstoodsoastoneednofurtherelaboration,especiallyin
lightoftheaboveenumeration.Thetermfeesmeanschargesfixedbylaw
or ordinance for the regulation or inspection of business or activity, while
charges are pecuniary liabilities such as rents or fees against persons or
property.
SameSameSameSincethelastparagraphofSection234oftheLGC
unequivocally withdrew, upon the effectivity of the LGC, exemptions from
payment of real property taxes granted to natural or juridical persons,
includinggovernmentownedorcontrolledcorporations,exceptasprovided
in the said section, and Mactan Cebu International Airport Authority is a
governmentowned corporation, it necessarily follows that its exemption
from such tax granted it in Section 14 of its Charter, R.A 6958, has been
withdrawn.Since the last paragraph of Section 234 unequivocally
withdrew,upontheeffectivityoftheLGC,exemptionsfrompaymentofreal
propertytaxesgrantedtonaturalorjuridicalpersons,includinggovernment
ownedorcontrolledcorporations,exceptasprovidedinthesaidsection,and
the petitioner is, undoubtedly, a governmentowned corporation, it
necessarilyfollowsthatitsexemptionfromsuchtaxgranteditinSection14
of its Charter, R.A. No. 6958, has been withdrawn. Any claim to the
contrary can only be justified if the petitioner can seek refuge under any of
theexceptionsprovidedinSection234,butnotunderSection133,asitnow
asserts,since,asshownabove,thesaidsectionisqualifiedbySections232
and234.
670

670

SUPREMECOURTREPORTSANNOTATED
MactanCebuInternationalAirportAuthorityvs.Marcos

Same Words and Phrases The terms Republic of the Philippines

andNationalGovernmentarenotinterchangeabletheformerisbroader
andsynonymouswithGovernmentoftheRepublicofthePhilippineswhile
the latter refers to the entire machinery of the central government, as
distinguished from the different forms of local governments."The terms
Republic of the Philippines and National Government are not
interchangeable. The former is broader and synonymous with Government
of the Republic of the Philippines which the Administrative Code of 1987
definesasthecorporategovernmentalentitythroughwhichthefunctionsof
government are exercised throughout the Philippines, including, save as the
contrary appears from the context, the various arms through which political
authority is made effective in the Philippines, whether pertaining to the
autonomousregions,theprovincial,city,municipalorbarangaysubdivisions
or other forms of local government. These autonomous regions,
provincial, city, municipal or barangay subdivisions are the political
subdivisions.Ontheotherhand,NationalGovernmentrefers totheentire
machinery of the central government, as distinguished from the different
formsoflocalgovernments.TheNationalGovernmenttheniscomposedof
thethreegreatdepartments:theexecutive,thelegislativeandthejudicial.
Same Same Agency and Instrumentality, Explained.An
agency of the Government refers to any of the various units of the
Government, including a department, bureau, office, instrumentality, or
governmentowned or controlled corporation, or a local government or a
distinctunitthereinwhileaninstrumentalityreferstoanyagencyofthe
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. This term includes
regulatory agencies, chartered institutions and governmentowned and
controlledcorporations.
SameLocalGovernmentUnitsLocalAutonomyThe power to tax is
themosteffectiveinstrumenttoraiseneededrevenuestofinanceandsupport
myriadactivitiesoflocalgovernmentunitsforthedeliveryofbasicservices
essential to the promotion of the general welfare and the enhancement of
peace, progress, and prosperity of the people.The justification for this
restrictedexemptioninSection234(a)
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VOL.261,SEPTEMBER11,1996

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MactanCebuInternationalAirportAuthorityvs.Marcos

seems obvious: to limit further tax exemption privileges, especially in light

ofthegeneralprovisiononwithdrawaloftaxexemptionprivilegesinSection
193andthespecialprovisiononwithdrawalofexemptionfrompaymentof
real property taxes in the last paragraph of Section 234. These policy
considerations are consistent with the State policy to ensure autonomy to
localgovernmentsandtheobjectiveoftheLGCthattheyenjoygenuineand
meaningfullocalautonomytoenablethemtoattaintheirfullestdevelopment
asselfreliantcommunitiesandmakethemeffectivepartnersintheattainment
ofnationalgoals.Thepowertotaxisthemosteffectiveinstrumenttoraise
neededrevenuestofinanceandsupportmyriadactivitiesoflocalgovernment
units for the delivery of basic services essential to the promotion of the
general welfare and the enhancement of peace, progress, and prosperity of
thepeople.Itmayalsoberelevanttorecallthattheoriginalreasonsforthe
withdrawal of tax exemption privileges granted to governmentowned and
controlled corporations and all other units of government were that such
privilege resulted in serious tax base erosion and distortions in the tax
treatment of similarly situated enterprises, and there was a need for these
entitiestoshareintherequirementsofdevelopment,fiscalorotherwise,by
payingthetaxesandotherchargesduefromthem.
SameMactan Cebu International Airport Authority cannot claim that
it was never a taxable person under its Charterit was only exempted
from the payment of real property taxes.Moreover, the petitioner cannot
claim that it was never a taxable person under its Charter. It was only
exemptedfromthepaymentofrealpropertytaxes.Thegrantoftheprivilege
only in respect of this tax is conclusive proof of the legislative intent to
makeitataxablepersonsubjecttoalltaxes,exceptrealpropertytax.
SameLocalGovernmentUnitsLocal Government CodeReliance on
Basco vs. Philippine Amusement and Gaming Corporation, 197 SCRA 52
(1991),isunavailingsinceitwasdecidedbeforetheeffectivityoftheLGC.
Accordingly,thepositiontakenbythepetitionerisuntenable.Relianceon
Basco vs. Philippine Amusement and Gaming Corporation is unavailing
sinceitwasdecidedbeforetheeffectivityoftheLGC.Besides,nothingcan
prevent Congress from decreeing that even instrumentalities or agencies of
the Government performing governmental functions may be subject to tax.
Where it is done precisely to fulfill a constitutional mandate and national
policy,noonecandoubtitswisdom.
672

672

SUPREMECOURTREPORTSANNOTATED
MactanCebuInternationalAirportAuthorityvs.Marcos

PETITION for review on certiorari of a decision of the Court of

Appeals.
ThefactsarestatedintheopinionoftheCourt.
TheSolicitorGeneralforpetitioner.

TheOfficeoftheCityAttorneyforCityofCebu.
DAVIDE,JR.,J.:
ForreviewunderRule45oftheRulesofCourtonapurequestion
1
of law are the decision of 22 March 1995 of the Regional Trial
Court (RTC) of Cebu City, Branch 20, dismissing the petition for
declaratory relief in Civil Case No. CEB16900, entitled Mactan
CebuInternationalAirportAuthorityvs.CityofCebu,anditsorder
2
of4May1995 denyingthemotiontoreconsiderthedecision.
Weresolvedtogiveduecoursetothispetitionforitraisesissues
dwellingonthescopeofthetaxingpoweroflocalgovernmentunits
andthelimitsoftaxexemptionprivilegesofgovernmentownedand
controlledcorporations.
The uncontradicted factual antecedents are summarized in the
instantpetitionasfollows:
Petitioner Mactan Cebu International Airport Authority (MCIAA) was
Created by virtue of Republic Act No. 6958, mandated to principally
undertake the economical, efficient and effective control, management and
supervisionoftheMactanInternationalAirportintheProvinceofCebuand
the Lahug Airport in Cebu City, x x x and such other airports as may be
established in the Province of Cebu x x x (Sec. 3, RA 6958). It is also
mandatedto:
a) encourage, promote and develop international and domestic air
traffic in the Central Visayas and Mindanao regions as a means of
making the regions centers of international trade and tourism, and
accelerating the development of the means of transportation and
communicationinthecountryand,
______________
1Rollo,2729.PerJudgeFerdinandJ.Marcos.
2ld.,3031.

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VOL.261,SEPTEMBER11,1996

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MactanCebuInternationalAirportAuthorityvs.Marcos
b) upgrade the services and facilities of the airports and to formulate
internationally acceptable standards of airport accommodation and
service.
Since the time of its creation, petitioner MCIAA enjoyed the privilege of
exemptionfrompaymentofrealtytaxesinaccordancewithSection14ofits

Charter:
Sec.14.TaxExemptions.TheAuthorityshallbeexemptfromrealtytaxesimposed
by the National Government or any of its political subdivisions, agencies and
instrumentalitiesxxx,

On October 11, 1994, however, Mr. Eustaquio B. Cesa, Officerin

Charge, Office of the Trasurer of the City of Cebu, demanded payment for
realty taxes on several parcels of land belonging to the petitioner (Lot Nos.
913G,743,88SWO,948A,989A,474,109(931),IM,918,919,913F,
941, 942, 947, 77 Psd., 746 and 991A), located at Barrio Apas and Barrio
Kasambagan,Lahug,CebuCity,inthetotalamountofP2,229,078.79.
Petitioner objected to such demand for payment as baseless and
unjustified,claiminginitsfavortheaforecitedSection14ofRA6958which
exempts it from payment of realty taxes. It was also asserted that it is an
instrumentalityofthegovernmentperforminggovernmentalfunctions,citing
Section 133 of the Local Government Code of 1991 whichputs limitations
onthetaxingpowersoflocalgovernmentunits:
Section133.CommonLimitationsontheTaxingPowersofLocalGovernmentUnits.
Unless otherwise provided herein, the exercise of the taxing powers of provinces,
cities,municipalities,andbarangaysshallnotextendtothelevyofthefollowing:
a)xxx
xxx
o) Taxes, fees or charges of any kind on the National Government, its agencies and
instrumentalities,andlocalgovernmentunits.(italicssupplied)

Respondent City refused to cancel and set aside petitioners realty tax
account, insisting that the MCIAA is a governmentcontrolled corporation
whosetaxexemptionprivilegehasbeenwithdrawnbyvirtueofSections193
and234oftheLocalGovernmentCodethattookeffectonJanuary1,1992:
674

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SUPREMECOURTREPORTSANNOTATED
MactanCebuInternationalAirportAuthorityvs.Marcos

Section193.WithdrawalofTaxExemptionPrivilege.Unlessotherwiseprovidedin
thisCode,taxexemptionsorincentivesgrantedto,orpresentlyenjoyedbyallpersons
whethernaturalorjuridical,includinggovernmentownedorcontrolledcorporations,
except local water districts, cooperatives duly registered under RA No. 6938, non
stockandnonprofithospitalsandeducationalinstitutions,areherebywithdrawnupon
theeffectivityofthisCode.(italicssupplied)
xxx
Section234.ExemptionsfromRealPropertyTaxes.xxx
(a)xxx

xxx
(e)xxx
Except as provided herein, any exemption from payment of real property tax
previouslygrantedto,orpresentlyenjoyedbyallpersons,whethernaturalorjuridical,
includinggovernmentownedorcontrolledcorporationsareherebywithdrawnuponthe
effectivityofthisCode.

As the City of Cebu was about to issue a warrant of levy against the
properties of petitioner, the latter was compelled to pay its tax account
underprotestandthereafterfiledaPetitionforDeclaratoryReliefwiththe
Regional Trial Court of Cebu, Branch 20, on December 29, 1994. MCIAA
basicallycontendedthatthetaxingpowersoflocalgovernmentunitsdonot
extend to the levy of taxes or fees of any kind on an instrumentality of the
nationalgovernment.Petitionerinsistedthatwhileitisindeedagovernment
ownedcorporation,itnonethelessstandsonthesamefootingasanagencyor
instrumentality of the national government by the very nature of its powers
andfunctions.
Respondent City, however, asserted that MCIAA is not an
instrumentality of the government but merely a governmentowned
corporation performing proprietary functions. As such, all exemptions
previously granted to it were deemed withdrawn by operation of law, as
providedunderSections193and234oftheLocalGovernmentCodewhenit
3
tookeffectonJanuary1,1992.
______________
3Rollo,1013.

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MactanCebuInternationalAirportAuthorityvs.Marcos

The petition for declaratory relief was docketed as Civil Case No.
CEB16900.
4
In its decision of 22 March 1995, the trial court dismissed the
petitioninlightofitsfindings,towit:
A close reading of the New Local Government Code of 1991 or RA 7160
provides the express cancellation and withdrawal of exemption of taxes by
government owned and controlled corporation per Sections after the
effectivity of said Code on January 1, 1992, to wit: [proceeds to quote
Sections193and234]
Petitioners claimed that its real properties assessed by respondent City
Government of Cebu are exempted from paying realty taxes in view of the
exemptiongrantedunderRA6958topaythesame(citingSection14ofRA

6958).
However,RA7160expresslyprovidesthatAllgeneralandspeciallaws,
acts, city charters, decress [sic], executive orders, proclamations and
administrative regulations, or part or parts thereof which are inconsistent
with any of the provisions of this Code are hereby repealed or modified
accordingly.(//"/,Section534,RA7160).
WiththatrepealingclauseinRA7160,itissafetoinferandstatethatthe
tax exemption provided for in RA 6958 creating petitioner had been
expresslyrepealedbytheprovisionsoftheNewLocalGovernmentCodeof
1991.
So that petitioner in this case has to pay the assessed realty tax of its
propertieseffectiveafterJanuary1,1992untilthepresent.
ThisCourtsrulingfindsexpressiontogiveimpetusandmeaningtothe
overallobjectivesoftheNewLocalGovernmentCodeof1991,RA7160.It
is hereby declared the policy of the State that the territorial and political
subdivisionsoftheStateshallenjoygenuineandmeaningfullocalautonomy
toenablethemtoattaintheirfullestdevelopmentasselfreliantcommunities
and make them more effective partners in the attainment of national goals.
Toward this end, the State shall provide for a more responsive and
accountable local government structure instituted through a system of
decentralizationwherebylocalgovernmentunitsshallbegivenmorepowers,
authority,responsibilities,andresources.Theprocess
______________
4Supranote1.

676

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SUPREMECOURTREPORTSANNOTATED
MactanCebuInternationalAirportAuthorityvs.Marcos

of decentralization shall5proceed from the national government to the local

governmentunits.xxx"

Itsmotionforreconsiderationhavingbeendeniedbythetrialcourt
inits4May1995order,thepetitionerfiledtheinstantpetitionbased
onthefollowingassignmentoferrors:
I. RESPONDENT JUDGE ERRED IN FAILING TO RULE
THAT THE PETITIONER IS VESTED WITH
GOVERNMENT POWERS AND FUNCTIONS WHICH
PLACE IT IN THE SAME CATEGORY AS AN
INSTRUMENTALITY OR AGENCY OF THE
GOVERNMENT.
II. RESPONDENT JUDGE ERRED IN RULING THAT

PETITIONER IS LIABLE TO PAY REAL PROPERTY

TAXESTOTHECITYOFCEBU.
Anentthefirstassignederror,thepetitionerassertsthatalthoughitis
a governmentowned or controlled corporation, it is mandated to
perform functions in the same category as an instrumentality of
Government. An instrumentality of Government is one created to
perform governmental functions primarily
to promote certain
6
aspectsoftheeconomiclifeofthepeople. Consideringitstasknot
merely to efficiently operate and manage the MactanCebu
International Airport, but more importantly, to carry out the
Government policies of promoting and developing the Central
VisayasandMindanaoregionsascentersofinternationaltradeand
tourism, and accelerating the development of7 the means of
transportationandcommunicationinthecountry," andthatitisan
attached agency of the
Department of Transportation and
8
Communication(DOTC), thepetitionermaystandin[sic]thesame
footingasanagencyorinstrumentalityofthenationalgovernment.
Hence,itstaxexemptionprivilegeunderSection14
______________
5Rollo,2829.
6CitingGonzalesvs.Hechanova,118Phil.1065[1963].
7CitingSection3,R.A.No.6958.
8CitingSection2,Id.

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MactanCebuInternationalAirportAuthorityvs.Marcos

ofitsChartercannotbeconsideredwithdrawnwiththepassageof
the Local Government Code of 1991 (hereinafter LGC) because
Section 133 thereof specifically states that the taxing powers of
localgovernmentunitsshallnotextendtothelevyoftaxesorfees
orchargesofanykindonthenationalgovernment,itsagenciesand
instrumentalities.'"
As to the second assigned error, the petitioner contends that
being an instrumentality of the National Government, respondent
CityofCebuhasnopowernorauthoritytoimposerealtytaxesupon
it in accordance with the aforesaid Section 133 of the LGC, as
explained in Basco vs. Philippine Amusement and Gaming
Corporation:9
Local governments have no power to tax instrumentalities of the National

Government. PAGCOR is a government owned or controlled corporation

withanoriginalcharter,PD1869,Allofitssharesofstockareownedbythe
NationalGovernment....
PAGCORhasadualrole,tooperateandregulategamblingcasinos.The
latter role is governmental, which places it in the category of an agency or
instrumentality of the Government. Being an instrumentality of the
Government, PAGCOR should be and actually is exempt from local taxes.
Otherwise,itsoperationmightbeburdened,impededorsubjectedtocontrol
byamerelocalgovernment.
The states have no power by taxation or otherwise, to retard, impede,
burdenorinanymannercontroltheoperationofconstitutionallawsenacted
by Congress to carry into execution the powers vested in the federal
government.(McCullochv.Maryland,4Wheat316,4LEd.579)
This doctrine emanates from the supremacy of the National
Governmentoverlocalgovernments.
JusticeHolmes,speakingfortheSupremeCourt,madereferencetothe
entire absence of power on the part of the States to touch, in that way
(taxation) at least, the instrumentalities of the United States (Johnson v.
Maryland, 254 US 51) and it can be agreed that no state or political
subdivisioncanregulateafederalinstrumentalityinsuchawayastoprevent
it from consummating its federal responsibilities, or even to seriously
burdenitintheac
______________
9197SCRA52[1991].

678

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SUPREMECOURTREPORTSANNOTATED
MactanCebuInternationalAirportAuthorityus.Marcos

complishment of them. (Antieau, Modern Constitutional Law, Vol. 2, p.

140)
Otherwise, mere creatures of the State can defeat National policies thru
extermination of what local authorities may perceive to be undesirable
activitiesorenterpriseusingthepowertotaxasatoolforregulation(U.S.
v. Sanchez, 340 US 42). The power to tax which was called by Justice
Marshall as the power to destroy (Mc Culloch v. Maryland, supra)
cannotbeallowedtodefeataninstrumentalityorcreationoftheveryentity
whichhastheinherentpowertowieldit.(italicssupplied)

It then concludes that the respondent Judge cannot therefore

correctly say that the questioned provisions of the Code do not
contain any distinction between a government corporation
performing governmental functions as against one performing

merely proprietary ones such that the exemption privilege

withdrawn under the said Code would apply to all government
corporations.ForitisclearfromSection133,inrelationtoSection
234, of the LGC that the legislature meant to exclude
instrumentalitiesofthenationalgovernmentfromthetaxingpowers
ofthelocalgovernmentunits.
In its comment, respondent City of Cebu alleges that as a local
government unit and a political subdivision, it has the power to
impose, levy, assess, and collect taxes within
its jurisdiction. Such
10
power is guaranteed by the Constitution and enhanced further by
theLGC.WhileitmaybetruethatunderitsCharterthepetitioner
11
wasexemptfromthepaymentofrealtytaxes, this exemption was
withdrawn by Section 234 of the LGC. In response to the
petitioners claim that such exemption was not repealed because
beinganinstrumentalityoftheNationalGovernment,Section133of
theLGCprohibitslocalgovernmentunitsfromimposingtaxes,fees,
orchargesofanykindonit,respondentCityofCebupointsoutthat
the petitioner is likewise a governmentowned corporation, and
Section234thereofdoesnotdistinguishbetweengovernmentowned
orcontrolledcorporationsperforminggovernmental
______________
10Section5,ArticleX,1987Constitution.
11Section14,R.A.No.6958.

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VOL.261,SEPTEMBER11,1996

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MactanCebuInternationalAirportAuthorityvs.Marcos

and purely proprietary functions. Respondent City of Cebu urges

this Court to apply by analogy its ruling that the Manila
International12 Airport Authority is a governmentowned
corporation, and to reject the application ofBasco because it was
promulgated ... before the enactment and the signing into law of
R.A.No.7160,"andwasnot,therefore,decidedinthelightofthe
spiritandintentionoftheframersofthesaidlaw.
Asageneralrule,thepowertotaxisanincidentofsovereignty
and is unlimited in its range, acknowledging in its very nature no
limits, so that security against its abuse is to be found only in the
responsibility of the legislature which imposes the tax on the
constituency who are to pay it. Nevertheless, effective limitations13
thereonmaybeimposedbythepeoplethroughtheirConstitutions.
OurConstitution,forinstance,providesthattheruleoftaxationshall
be uniform and equitable and Congress shall evolve a progressive
14
systemoftaxation. Sopotentindeedisthepowerthatitwasonce

14

systemoftaxation. Sopotentindeedisthepowerthatitwasonce15
opined that the power to tax involves the power to destroy."
Verily, taxation is a destructive power which interferes with the
personal and property rights of the people and takes from them a
portion of their property for the support of the government.
Accordingly, tax statutes must be construed strictly against the
governmentandliberallyinfavorofthetax
______________
12Manila International Airport Authority (MIAA) vs. Commission on Audit, 238

SCRA714[1994].
13COOLEYonConstitutionalLaw,4thed.[1931],62.
14Section28(1),ArticleVI,1987Constitution.
15ChiefJusticeMarshallinMcCullochvs.Maryland,4Wheat,316,4Led.579,

607. Later Justice Holmes brushed this aside by declaring in Panhandle Oil Co. vs.
Mississippi(277U.S.218)thatthepowertotaxisnotthepowertodestroywhilethis
Courtsits.JusticeFrankfurterinGravesvs.NewYork(306U.S.466)alsoremarked
thatJusticeMarshallsstatementwasamereflourishofrhetoricandaproductof
theintellectualfashionofthetimestoindulgein afreecaseofabsolutes.(See
SINCO,PhilippinePoliticalLaw[1954],577578).
680

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SUPREMECOURTREPORTSANNOTATED
MactanCebuInternationalAirportAuthorityvs.Marcos
16

17

payer. Butsincetaxesarewhatwepayforcivilizedsociety, orare

thelifebloodofthenation,thelawfrownsagainstexemptionsfrom
taxation and statutes granting tax exemptions are thus construed
stricissimi juris18against the taxpayer and liberally in favor of the
taxingauthority. Aclaimofexemptionfromtaxpaymentsmustbe
clearly shown
and based on language in the law too plain to be
19
mistaken. Elsewisestated,taxationistherule,exemptiontherefrom
20
is the exception. However, if the grantee of the exemption is a
politicalsubdivisionorinstrumentality,therigidruleofconstruction
does not apply because the practical effect of the exemption is
merelytoreducetheamountofmoneythathastobehandledbythe
21
governmentinthecourseofitsoperations.
ThepowertotaxisprimarilyvestedintheCongresshowever,in
our jurisdiction, it may be exercised by local legislative bodies, no
longermerelybyvirtueofavaliddelegationasbefore,butpursuant
to direct authority
conferred by Section 5, Article X of the
22
Constitution. Under the latter, the exercise of the power may be
subject to such guidelines and limitations as the Congress may
providewhich,however,mustbeconsistentwiththebasicpolicyof

localautonomy.
TherecanbenoquestionthatunderSection14ofR.A.No.6958
thepetitionerisexemptfromthepaymentofrealtytaxesimposed
by the National Government or any of its political subdivisions,
agencies, and instrumentalities. Nevertheless, since taxation is the
ruleandexemptiontherefrom
______________
16AGPALO,RUBENE.,StatutoryConstruction[1990ed.],216.SeealsoSANDS,

DALLASC.,StatutesandStatutoryConstruction,vol.3[1974]179.
17 Justice Holmes in his dissent in Compania General vs. Collector of Internal

Revenue,275U.S.87,100[1927].
18AGPALO,op.cit., 217SANDS,op.cit.,207.
19SINCO,op.cit.,587.
20SANDS,op.cit.,207.
21Macedavs.Macaraig,Jr.,197SCRA771,799[1991],citing2COOLEYonthe

LawonTaxation,4thed.[1927],1414,andSANDS,op.cit.,207.
22CRUZ,ISAGANIA.,ConstitutionalLaw[1991],84.

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theexception,theexemptionmaythusbewithdrawnatthepleasure
ofthetaxingauthority.Theonlyexceptiontothisruleiswherethe
exemption was granted to private parties based on material
consideration of a mutual nature, which then becomes contractual
and is thus
covered by the nonimpairment clause of the
23
Constitution.
The LGC, enacted pursuant to Section 3, Article X of the
Constitution,providesfortheexercisebylocalgovernmentunitsof
their power to tax, the scope thereof or its limitations, and the
exemptionsfromtaxation.
Section 133 of the LGC prescribes the common limitations on
thetaxingpowersoflocalgovernmentunitsasfollows:
SEC.133.CommonLimitationsontheTaxingPowerofLocalGovernment
Units.Unlessotherwiseprovidedherein,theexerciseofthetaxingpowers
of provinces, cities, municipalities, and barangays shall not extend to the
levyofthefollowing:
(a) Income tax, except when levied on banks and other financial
institutions
(b) Documentarystamptax

(c) Taxes on estates, inheritance, gifts, legacies and other acquisitions

mortiscausa,exceptasotherwiseprovidedherein
(d) Customs duties, registration fees of vessel and wharfage on
wharves,tonnagedues,andallotherkindsofcustomsfees,charges
and dues except wharfage on wharves constructed and maintained
bythelocalgovernmentunitconcerned
(e) Taxes, fees and charges and other impositions upon goods carried
into or out of, or passing through, the territorial jurisdictions of
local government units in the guise of charges for wharfage, tolls
forbridgesorotherwise,orothertaxes,feesorchargesinanyform
whatsoeveruponsuchgoodsormerchandise
(f) Taxes, fees or charges on agricultural and aquatic products when
soldbymarginalfarmersorfishermen
(g) Taxes on business enterprises certified to by the Board of
Investments as pioneer or nonpioneer for a period of six (6) and
four(4)years,respectivelyfromthedateofregistration
______________
23Id.,Id.,9192SINCO,op.cit.,587.

682

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SUPREMECOURTREPORTSANNOTATED
MactanCebuInternationalAirportAuthorityvs.Marcos
(h) Excise taxes on articles enumerated under the National Internal
RevenueCode,asamended,andtaxes,feesorchargesonpetroleum
products
(i) Percentageorvalueaddedtax(VAT)onsales,bartersorexchanges
or similar transactions on goods or services except as otherwise
providedherein
(j) Taxes on the gross receipts of transportation contractors and
persons engaged in the transportation of passengers or freight by
hireandcommoncarriersbyair,landorwater,exceptasprovided
inthisCode
(k) Taxesonpremiumspaidbywayofreinsuranceorretrocession
(l) Taxes,feesorchargesfortheregistrationofmotorvehiclesandfor
the issuance of all kinds of licenses or permits for the driving
thereof,except,tricycles

(m) Taxes, fees, or other charges on Philippine products actually

exported,exceptasotherwiseprovidedherein
(n) Taxes, fees, or charges, on Countryside and Barangay Business
Enterprises and cooperatives duly registered under R.A. No. 6810

and Republic Act Numbered Sixtynine hundred thirtyeight (R.A.

No. 6938) otherwise known as the Cooperatives Code of the
Philippinesrespectivelyand
(o) TAXES, FEES OR CHARGES OF ANY KIND ON THE
NATIONAL
GOVERNMENT,
ITS
AGENCIES
AND
INSTRUMENTALITIES, AND LOCAL GOVERNMENT UNITS.
(emphasissupplied)

Needlesstosay,thelastitem(item0)ispertinenttothiscase.The
taxes, fees or charges referred to are of any kind hence, they
include all of these, unless otherwise provided by the LGC. The
termtaxesiswellunderstoodsoastoneednofurtherelaboration,
especiallyinlightoftheaboveenumeration.Thetermfeesmeans
chargesfixedbylaworordinancefortheregulationorinspectionof
24
businessoractivity, whilechargesarepecuniaryliabilitiessuch
25
asrentsorfeesagainstpersonsorproperty.
______________
24Section131(1),LocalGovernmentCodeof1991.
25Section131(g),Id.

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Among the taxes enumerated in the LGC is real property tax,

whichisgovernedbySection232.Itreadsasfollows:
SEC. 232. Power to Levy Real Property Tax.A province or city or a
municipality within the Metropolitan Manila Area may levy an annual ad
valorem tax on real property such as land, building, machinery, and other
improvementsnothereafterspecificallyexempted.

Section234oftheLGCprovidesfortheexemptionsfrompayment
ofrealpropertytaxesandwithdrawspreviousexemptionstherefrom
granted to natural and juridical persons, including government
owned and controlled corporations, except as provided therein. It
provides:
SEC. 234. Exemptions from Real Property Tax.The following are
exemptedfrompaymentoftherealpropertytax:
(a) Real property owned by the Republic of the Philippines or any of
itspoliticalsubdivisionsexceptwhenthebeneficialusethereofhad
beengranted,forconsiderationorotherwise,toataxableperson

(b) Charitable institutions, churches, parsonages or convents

appurtenantthereto,mosques,nonprofitorreligiouscemeteriesand
all lands, buildings and improvements actually, directly, and
exclusivelyusedforreligious,charitableoreducationalpurposes
(c) All machineries and equipment that are actually, directly and
exclusively used by local water districts and governmentowned or
controlled corporations engaged in the supply and distribution of
waterand/orgenerationandtransmissionofelectricpower
(d) Allrealpropertyownedbydulyregisteredcooperativesasprovided
forunderR.A.No.6938and
(e) Machinery and equipment used for pollution control and
environmentalprotection.
Exceptasprovidedherein,anyexemptionfrompaymentofrealproperty
tax previously granted to, or presently enjoyed by, all persons, whether
natural or juridical, including all governmentowned or controlled
corporationsareherebywithdrawnupontheeffectivityofthisCode.
684

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SUPREMECOURTREPORTSANNOTATED
MactanCebuInternationalAirportAuthorityvs.Marcos

Theseexemptionsarebasedontheownership,character,anduseof
theproperty.Thus:
(a) OwnershipExemptions.Exemptionsfromrealpropertytaxesonthe
basisofownership are real properties owned by: (i) the Republic,
(ii) a province, (iii) a city, (iv) a municipality, (v) a barangay, and
(vi)registeredcooperatives.
(b) Character Exemptions. Exempted from real property taxes on the
basis of their character are: (i) charitable institutions, (ii) houses
and temples of prayer like churches, parsonages or convents
appurtenant thereto, mosques, and (iii) nonprofit or religious
cemeteries.
(c) UsageExemptions.Exemptedfromrealpropertytaxesonthebasis
oftheactual,directandexclusiveusetowhichtheyaredevotedare:
(i) all lands, buildings and improvements which are actually,
directlyandexclusivelyusedforreligious,charitableoreducational
purposes (ii) all machineries and equipment actually, directly and
exclusivelyusedbylocalwaterdistrictsorbygovernmentownedor
controlled corporations engaged in the supply and distribution of
waterand/orgenerationandtransmissionofelectricpowerand(iii)
all machinery and equipment used for pollution control and
environmentalprotection.

Tohelpprovideahealthyenvironmentinthemidstofthemodernizationof
the country, all machinery and equipment for pollution control and
environmentalprotectionmaynotbetaxedbylocalgovernments.
2. Other Exemptions Withdrawn. All other exemptions previously
granted to natural or juridical persons including governmentowned
or
26
controlledcorporationsarewithdrawnupontheeffectivityoftheCode.

Section 193 of the LGC is the general provision on withdrawal of

taxexemptionprivileges.Itprovides:
SEC. 193. Withdrawal of Tax Exemption Privileges.Unless otherwise
providedinthisCode,taxexemptionsorincentivesgrantedto,orpresently
enjoyedbyallpersons,whethernaturalor
______________
26

PIMENTEL, AQUILINO, JR., The Local Government Code of 1991The Key to

NationalDevelopment[1933],329.

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MactanCebuInternationalAirportAuthorityvs.Marcos

juridical, including governmentowned or controlled corporations, except

local water districts, cooperatives duly registered under R.A. 6938, non
stock and nonprofit hospitals and educational institutions, are hereby
withdrawnupontheeffectivityofthisCode.

On the other hand, the LGC authorizes local government units to

granttaxexemptionprivileges.Thus,Section192thereofprovides:
SEC.192.AuthoritytoGrantTaxExemptionPrivileges.Localgovernment
units may, through ordinances duly approved, grant tax exemptions,
incentives or reliefs under such terms and conditions as they may deem
necessary.

The foregoing sections of the LGC speak of: (a) the limitations on
the taxing powers of local government units and the exceptions to
such limitations and (b) the rule on tax exemptions and the
exceptions thereto. The use of exceptions or provisos in these
sections,asshownbythefollowingclauses:
(1) unless otherwise provided herein in the opening
paragraphofSection133
(2) UnlessotherwiseprovidedinthisCodeinSection193
(3) nothereafterspecificallyexemptedinSection232and

ExceptasprovidedhereininthelastparagraphofSection
(4) 234
initially hampers a ready understanding of the sections. Note, too,
that the aforementioned clause in Section 133 seems to be
inaccurately worded. Instead of the clause unless otherwise
providedherein?withthehereintomean,ofcourse,thesection,
it should have used the clause unless otherwise provided in this
Code. The former results in absurdity since the section itself
enumerateswhatarebeyondthetaxingpowersoflocalgovernment
units and, where exceptions were intended, the exceptions are
explicitly indicated in the text. For instance, in item (a) which
excepts income taxes when levied on banks and other financial
institutions item (d) which excepts wharfage on wharves
constructedandmaintainedby
686

686

SUPREMECOURTREPORTSANNOTATED
MactanCebuInternationalAirportAuthorityvs.Marcos

the local government unit concerned and item (1) which excepts
taxes,feesandchargesfortheregistrationandissuanceoflicenses
orpermitsforthedrivingoftricycles.Itmayalsobeobservedthat
withinthebodyitselfofthesection,thereareexceptionswhichcan
be found only in other parts of the LGC, but the section
interchangeably uses therein the clause except as otherwise
provided herein as in items (c) and (i), or the clause except as
providedinthisCodeinitem(j).Theseclauseswouldbeobviously
unnecessaryormeresurplusagesiftheopeningclauseofthesection
were Unless otherwise provided in this Code instead of Unless
otherwiseprovidedherein.Inanyevent,evenifthelatterisused,
since under Section 232 local government units have the power to
levy real property tax, except those exempted therefrom under
Section 234, then Section 232 must be deemed to qualify Section
133.
Thus, reading together Sections 133, 232, and 234 of the LGC,
weconcludethatasageneralrule,aslaiddowninSection133,the
taxing powers of local government units cannot extend to the levy
of,interalia, taxes, fees and charges of any kind on the National
Government, its agencies and instrumentalities, and local
government units however, pursuant to Section 232, provinces,
cities, and municipalities in the Metropolitan Manila Area may
impose the real property tax except on, inter alia, real property
owned by the Republic of the Philippines or any of its political
subdivisions except when the beneficial use thereof has been

granted, for consideration or otherwise, to a taxable person, as

providedinitem(a)ofthefirstparagraphofSection234.
As to tax exemptions or incentives granted to or presently
enjoyed by natural or juridical persons, including government
owned and controlled corporations, Section 193 of the LGC
prescribes the general rule, viz., they are withdrawn upon the
effectivityoftheLGC,exceptthosegrantedtolocalwaterdistricts,
cooperatives duly registered under R.A. No. 6938, nonstock and
nonprofit hospitals and educational institutions, and unless
otherwise provided in the LGC. The latter proviso could refer to
Section234whichenumeratesthe
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propertiesexemptfromrealpropertytax.Butthelastparagraphof
Section234furtherqualifiestheretentionoftheexemptioninsofar
asrealpropertytaxesareconcernedbylimitingtheretentiononlyto
thoseenumeratedthereinallothersnotincludedintheenumeration
losttheprivilegeupontheeffectivityoftheLGC.Moreover,evenas
torealpropertyownedbytheRepublicofthePhilippinesoranyof
itspoliticalsubdivisionscoveredbyitem(a)ofthefirstparagraphof
Section 234, the exemption is withdrawn if the beneficial use of
suchpropertyhasbeengrantedtoataxablepersonforconsideration
orotherwise.
SincethelastparagraphofSection234unequivocallywithdrew,
upon the effectivity of the LGC, exemptions from payment of real
property taxes granted to natural or juridical persons, including
governmentownedorcontrolledcorporations,exceptasprovidedin
the said section, and the petitioner is, undoubtedly, a government
owned corporation, it necessarily follows that its exemption from
suchtaxgranteditinSection14ofitsCharter,R.A.No.6958,has
been withdrawn. Any claim to the contrary can only be justified if
thepetitionercanseekrefugeunderanyoftheexceptionsprovided
inSection234,butnotunderSection133,asitnowasserts,since,as
shownabove,thesaidsectionisqualifiedbySections232and234.
In short, the petitioner can no longer invoke the general rule in
Section 133 that the taxing powers of the local government units
cannotextendtothelevyof:
(o) taxes, fees or charges of any kind on the National Government, its
agenciesorinstrumentalities,andlocalgovernmentunits.

It must show that the parcels of land in question, which are real

property,areanyoneofthoseenumeratedinSection234,eitherby
virtueofownership,character,oruseoftheproperty.Mostlikely,it
could only be the first, but not under any explicit provision of the
saidsection,fornoneexists.Inlightofthepetitionerstheorythatit
isaninstrumentalityofthe
688

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SUPREMECOURTREPORTSANNOTATED
MactanCebuInternationalAirportAuthorityvs.Marcos

Government, it could only be within the first item of the first

paragraph of the section by expanding the scope of the term
RepublicofthePhilippinestoembraceitsinstrumentalitiesand
agencies.Forexpediency,wequote:
(a) real property owned by the Republic of the Philippines, or any of its
political subdivisions except when the beneficial use thereof has been
granted,forconsiderationorotherwise,toataxableperson.

This view does not persuade us. In the first place, the petitioners
claim that it is an instrumentality of the Government is based on
Section 133(o), which expressly mentions the word
instrumentalitiesand,inthesecondplace,itfailstoconsiderthe
fact that the legislature used the phrase National Government, its
agencies and instrumentalities in Section 133(o), but only the
phrase Republic of the Philippines or any of its political
subdivisionsinSection234(a).
The terms Republic of the Philippines and National
Government are not interchangeable. The former is broader and
synonymouswithGovernmentoftheRepublicofthePhilippines
which the Administrative Code of 1987 defines as the corporate
governmentalentitythroughwhichthefunctionsofgovernmentare
exercisedthroughoutthePhilippines,including,saveasthecontrary
appears from the context, the various arms through which political
authorityismadeeffectiveinthePhilippines,whetherpertainingto
theautonomousregions,theprovincial,city,municipalorbarangay
27
subdivisions or other forms of local government." These
autonomous regions, provincial, city, 28municipal or barangay
subdivisionsarethepoliticalsubdivisions.
On the other hand, National Government refers to the entire
machinery of the central government,
as distinguished from the
29
differentformsoflocalgovernments." TheNational
______________

27Section2(1),IntroductoryProvisions,AdministrativeCodeof1987.
28Section1,ArticleX,1987Constitution.
29Section2(2),IntroductoryProvisions,AdministrativeCodeof

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MactanCebuInternationalAirportAuthorityvs.Marcos

Government then is composed of the three

great departments: the
30
executive,thelegislativeandthejudicial.
An agency of the Government refers to any of the various
units of the Government, including a department, bureau, office,
instrumentality, or governmentowned or controlled corporation,
or
31
a local government or a distinct unit therein" while an
instrumentalityreferstoanyagencyoftheNationalGovernment,
notintegratedwithinthedepartmentframework,vestedwithspecial
functions or jurisdiction by law, endowed with some if not all
corporate powers, administering special funds, and enjoying
operationalautonomy,usuallythroughacharter.Thistermincludes
regulatory agencies, chartered
institutions and governmentowned
32
andcontrolledcorporations."
IfSection234(a)intendedtoextendtheexceptionthereintothe
withdrawal of the exemption from payment of real property taxes
under the last sentence of the said section to the agencies and
instrumentalitiesoftheNationalGovernmentmentionedinSection
133(o),thenitshouldhaverestatedthewordingofthelatter.Yet,it
didnot.Moreover,thatCongressdidnotwishtoexpandthescope
of the exemption in Section 234(a) to include real property owned
by other instrumentalities or agencies of the government including
governmentownedandcontrolledcorporationsisfurtherborneout
bythefactthatthesourceofthisexemptionisSection40(a)ofP.D.
No. 464, otherwise known as The Real Property Tax Code, which
reads:
SEC.40.Exemptions from Real Property Tax.The exemption shall be as
follows:
(a) Real property owned by the Republic of the Philippines or any of
itspoliticalsubdivisionsandanygovernment
______________
1987.
30Bacanivs.NationalCoconutCorporation,100Phil.468,472[1956].
31Section2(4),IntroductoryProvisions,AdministrativeCodeof1987.

32Section2(10),Id.,Id.

690

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SUPREMECOURTREPORTSANNOTATED
MactanCebuInternationalAirportAuthorityvs.Marcos

ownedorcontrolledcorporationsoexemptbyitscharter:Provided,
however,Thatthisexemptionshallnotapplytorealpropertyofthe
abovementioned entities the beneficial use of which has been
granted,forconsiderationorotherwise,toataxableperson.

Note that as reproduced in Section 234(a), the phrase and any

governmentowned or controlled corporation so exempt by its
charterwasexcluded.Thejustificationforthisrestrictedexemption
in Section 234(a) seems obvious: to limit further tax exemption
privileges,especiallyinlightofthegeneralprovisiononwithdrawal
oftaxexemptionprivilegesinSection193andthespecialprovision
onwithdrawalofexemptionfrompaymentofrealpropertytaxesin
the last paragraph of Section 234. These policy considerations are
consistent with
the State policy to ensure autonomy to local
33
governments andtheobjectiveoftheLGCthattheyenjoygenuine
andmeaningfullocalautonomytoenablethemtoattaintheirfullest
development as selfreliant communities and
make them effective
34
partnersintheattainmentofnationalgoals. Thepowertotaxisthe
most effective instrument to raise needed revenues to finance and
supportmyriadactivitiesoflocalgovernmentunitsforthedelivery
of basic services essential to the promotion of the general welfare
and the enhancement of peace, progress, and prosperity of the
people.Itmayalsoberelevanttorecallthattheoriginalreasonsfor
thewithdrawaloftaxexemptionprivilegesgrantedtogovernment
ownedandcontrolledcorporationsandallotherunitsofgovernment
were that such privilege resulted in serious tax base erosion and
distortionsinthetaxtreatmentofsimilarlysituatedenterprises,and
there was a need for these entities to share in the requirements of
development, fiscal or35otherwise, by paying the taxes and other
chargesduefromthem.
The crucial issues then to be addressed are: (a) whether the
parcelsoflandinquestionbelongtotheRepublicofthePhil
______________
33Section25,ArticleII,andSection2,ArticleX,Constitution.
34Section2(a),LocalGovernmentCodeof1991.
35P.D.No.1931.

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ippineswhosebeneficialusehasbeengrantedtothepetitioner,and
(b)whetherthepetitionerisataxableperson.
Section15ofthepetitionersCharterprovides:
Sec.15.TransferofExistingFacilitiesandIntangibleAssets.Allexisting
public airport facilities, runways, lands, buildings and other properties,
movable or immovable, belonging to or presently administered by the
airports, and all assets, powers, rights, interests and privileges relating on
airportworksorairoperations,includingallequipmentwhicharenecessary
for the operations of air navigation, aerodrome control towers, crash, fire,
and rescue facilities are hereby transferred to the Authority: Provided,
however, that the operations control of all equipment necessary for the
operation of radio aids to air navigation, airways communication, the
approach control office, and the area control center shall be retained by the
AirTransportationOffice.Noequipment,however,shallberemovedbythe
Air Transportation Office from Mactan without the concurrence of the
Authority. The Authority may assist in the maintenance of the Air
TransportationOfficeequipment.

TheairportsreferredtoaretheLahugAirPortinCebuCityand
36
theMactanInternationalAirportintheProvinceofCebu," which
belonged to the Republic of37 the Philippines, then under the Air
TransportationOffice(ATO).
It may be reasonable to assume that the term lands refer to
lands in Cebu City then administered by the Lahug Air Port and
includes the parcels of land the respondent City of Cebu seeks to
levyonforrealpropertytaxes.Thissectioninvolvesatransferof
the lands, among other things, to the petitioner and not just the
transfer of the beneficial use thereof, with the ownership being
retainedbytheRepublicofthePhilippines.
This transfer is actually an absolute conveyance of the
ownership thereof because the petitioners authorized capital stock
consistsof,interalia,thevalueofsuchrealestate
______________
36Section3,R.A.No.6958.
37Section18,Id.

692

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SUPREMECOURTREPORTSANNOTATED
MactanCebuInternationalAirportAuthorityvs.Marcos
38

ownedand/oradministeredbytheairports." Hence,thepetitioneris
nowtheownerofthelandinquestionandtheexceptioninSection
234(c)oftheLGCisinapplicable.
Moreover,thepetitionercannotclaimthatitwasneverataxable
personunderitsCharter.Itwasonlyexemptedfromthepaymentof
realpropertytaxes.Thegrantoftheprivilegeonlyinrespectofthis
taxisconclusiveproofofthelegislativeintenttomakeitataxable
personsubjecttoalltaxes,exceptrealpropertytax.
Finally,evenifthepetitionerwasoriginallynotataxableperson
for purposes of real property tax, in light of the foregoing
disquisitions,ithadalreadybecome,evenifitbeconcededtobean
agency or instrumentality of the Government, a taxable person
forsuchpurposeinviewofthewithdrawalinthelastparagraphof
Section234ofexemptionsfromthepaymentofrealpropertytaxes,
which,asearlieradvertedto,appliestothepetitioner.
Accordingly, the position taken by the petitioner is untenable.
Reliance on
Basco vs. Philippine Amusement and Gaming
39
Corporation is unavailing since it was decided before the
effectivityoftheLGC.Besides,nothingcanpreventCongressfrom
decreeingthateveninstrumentalitiesoragenciesoftheGovernment
performinggovernmentalfunctionsmaybesubjecttotax.Whereit
is done precisely to fulfill a constitutional mandate and national
policy,noonecandoubtitswisdom.
WHEREFORE,theinstantpetitionisDENIED.Thechallenged
decisionandorderoftheRegionalTrialCourtofCebu,Branch20,
inCivilCaseNo.CEB16900areAFFIRMED.
Nopronouncementastocosts.
SOORDERED.
Narvasa (C.J., Chairman), Melo, Francisco and
Panganiban,JJ.,concur.
______________
38Section9(b),Id.
39Supranote9,

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693

Petitiondenied.Judgmentandorderaffirmed.
Notes.Thedueprocessclausemaybeinvokedwhereataxing
statuteissoarbitrarythatitfindsnosupportintheConstitution.An
obviousexampleiswhereitcanbeshowntoamounttoconfiscation
of property. That would be a clear abuse of power. (Reyes vs.
Almanzor,196SCRA322[1991])
Anelementaryregardforthesacrednessoflawsandthestability
of judicial doctrines laid down by superior authority should have
constrained the respondent judge to be more circumspect in
rendering his decision and to spell out carefully and precisely the
reasons for his decision to invalidate such acts, instead of
imperiouslydecreeinganimpliedrepeal.(Tyvs.Trampe,251SCRA
500[1995])
o0o

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