MIAA vs.

CA and City of Paranaque

G.R. No. 155650, July 20, 2006

FACTS:

The Manila International Airport Authority (MIAA) operates the NAIA

complex in Paraaque City under its charter. They operate and administer 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
withdrew the exemption from real estate tax granted to GOCCs under Section
21of its Charter. Thus, MIAA paid some of the real estate tax already due, 4.2
million out of the 625 million total.

The City Treasurer subsequently issued notices of levy and warrants of

levy on the airport lands and buildings, this prompted MIAA to seek clarification
of the OGCC opinion, where OGCC pointed 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.

MIAA contends that the government cannot tax itself stating that since
the airport lands and buildings, being devoted to public use and public service,
are owned by the Republic of the Philippines. The City of Paranaque on the
other hand states that MIAA is a GOCC thus the tax exemption granted to them
by their charter was already withdrawn by the passage of the LGC.

ISSUE:

1. Whether MIAA is a GOCC

2. Whether the properties of MIAA are considered that of public property
3. Whether MIAA is exempt from taxes

HELD:

1. No, MIAA is not a GOCC but an instrumentality of the Government.

A GOCC must be organized as a stock or non-stock corporation. MIAA is

not a stock corporation as it has no capital stock divided into shares and
MIAA has no stockholders or voting shares. A stock corporation as one
 whose "capital stock is divided into shares and authorized to distribute to
the holders of such shares dividends." MIAA has capital but it is not
divided into shares of stock. MIAA has no stockholders or voting shares.
Hence, MIAA is not a stock corporation.

MIAA is also not a non-stock corporation because it has no members.

Section 87 of the Corporation Code defines a non-stock corporation as
"one where no part of its income is distributable as dividends to its
members, trustees or officers." A non-stock corporation must have
members. Even if we assume that the Government is considered as the
sole member of MIAA, this will not make MIAA a non-stock corporation.
The MIAA Charter mandates MIAA to remit 20% of its annual gross
operating income to the National Treasury. This prevents MIAA from
qualifying as a non-stock corporation.

MIAA is a government instrumentality vested with corporate powers to

perform efficiently its governmental functions. When the law vests in a
government instrumentality corporate powers, the instrumentality does
not become a corporation. Unless the government instrumentality is
organized as a stock or non-stock corporation, it remains a government
instrumentality exercising not only governmental but also corporate
powers. Moreover, The Administrative Code allows real property owned
by the Republic to be titled in the name of agencies or instrumentalities
of the national government. Such real properties remain owned by the
Republic and continue to be exempt from real estate tax.

2. The Airport Lands and Buildings of MIAA are property of public dominion
and therefore owned by the State or the Republic of the Philippines. Art.
420 Sec. 1 Those intended for public use, such as roads, canals, rivers,
torrents, ports and bridges constructed by the State, banks, shores,
roadsteads, and others of similar character.

The term "ports" includes seaports and airports. The MIAA Airport Lands
and Buildings constitute a "port" constructed by the State.

3. MIAA being an instrumentality of the government exempts it from taxes.

According to the LGC Sec. 234(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, for consideration or otherwise,
to a taxable person.
Section 133(o) of the LGC, prohibits local governments from imposing
"[t]axes, fees or charges of any kind on the National Government, its
agencies and instrumentalities." The Republic may grant the beneficial
use of its real property to an agency or instrumentality of the national
government. This happens when title of the real property is transferred
to an agency or instrumentality even as the Republic remains the owner
of the real property. Such arrangement does not result in the loss of the
tax exemption.

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 land area for a consideration to a
taxable person and therefore such land area is subject to real estate tax.