Yash Case Digest

Case #3 - MACTAN-CEBU INTL AIRPORT AUTHORITY (MCIAA) VS. RTC CEBU CITY JUDGE MARCOS AND
CITY OF CEBU, REP. BY MAYOR OSMEA AND CESA. 1996 case

*This is a petition for review under Rule 45, ROC, on a pure question of LAW: basis of the decision of RTC
Cebu dismissing MCIAAs petition for declaratory relief and motion for reconsideration.

FACTS: Petitioner was created by virtue of RA 6958 mandated to principally undertake the economical,
efficient, and effective control, management, and supervision of the Mactan International Airport and
Lahug Airport, and such other airports as may be established in Cebu. Since its creation, it enjoyed
exemption for payment of realty taxes in accordance with Sec. 14 of its charter: Tax Exemptions. -- The
Authority shall be exempt from realty taxes imposed by the National Government or any of its political
subdivisions, agencies and instrumentalities. xxx

In 1994, Cebu City Treasurer required petitioner to pay realty taxes (2.2Mphp) for parcels of land it owns.
Petitioner objected, claiming it baseless and unjustified. When the City of Cebu was about to issue
warrant of levy against petitioners properties, the latter paid the tax under protest and filed a petitioner
for declaratory relief with RTC Cebu. The court a quo, ruled in favour of respondent; hence, this case at
bar.

ISSUE: WHETHER petitioner is a taxable entity and subject to realty taxes.

RULING: YES.
a. 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.
b. 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 strictissimi juris against the taxpayer and liberally in favor of the taxing authority. A
claim of exemption from tax payments must be clearly shown and based on language in the law
too plain to be mistaken. Elsewise stated, taxation is the rule, exemption therefrom is the
exception.
c. 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 delegation as before,
but pursuant to direct authority conferred by Section 5, Article X of the Constitution.
d. Although MCIAAs Charter exempts it from the payment of realty taxes imposed by the National
Government or any of its political subdivisions, agencies, and instrumentalities, since taxation is
the rule and exemption therefrom the exception, the exemption may thus be withdrawn at the
pleasure of the taxing authority.
e. True, Sec 133 of LGC provides that: xxx the exercise of the taxing powers of provinces, cities,
municipalities, and barangays shall not extend to the levy of the following:, xxx, o.) TAXES, FEES
OR CHARGES OF ANY KIND ON THE NATIONAL GOVERNMENT, ITS AGENCIES AND
INSTRUMENTALITIES, AND LOCAL GOVERNMENT UNITS..

But the same is repealed by Sec. 193, LGC Withdrawal of Tax Exemption Privileges. Unless
otherwise provided in this Code, tax exemptions or incentives granted to, or presently enjoyed by
all persons, whether natural or juridical, including government-owned or controlled corporations,
except local water districts, cooperatives duly registered under R.A. 6938, non-stock and non-
Yash Case Digest

profit hospitals and educational institutions, are hereby withdrawn upon the effectivity of this
Code.
f. Section 234 of the LGC provides for the exemptions from payment of real property taxes and
withdraws previous exemptions therefrom granted to natural and juridical persons, including
GOCCs, except as provided therein. It provides:

SEC. 234. Exemptions from Real Property Tax. The following are exempted from payment of the real
property tax:

(a) Real property owned by the Republic of the Philippines or any of its political subdivisions except
when the beneficial use thereof had been granted, for consideration or otherwise, to a taxable person;
(b) Charitable institutions, churches, parsonages or convents appurtenant thereto, mosques, nonprofit or
religious cemeteries and all lands, buildings and improvements actually, directly, and exclusively used for
religious, charitable or educational purposes;
(c) All machineries and equipment that are actually, directly and exclusively used by local water districts
and government-owned or controlled corporations engaged in the supply and distribution of water and/or
generation and transmission of electric power;
(d) All real property owned by duly registered cooperatives as provided for under R.A. No. 6938; and,
(e) Machinery and equipment used for pollution control and environmental protection.

Except as provided herein, any exemption from payment of real property tax previously granted to, or
presently enjoyed by, all persons, whether natural or juridical, including all government-owned or
controlled corporations are hereby withdrawn upon the effectivity of this Code.

g. The last paragraph of Section 234 further qualifies the retention of the realty tax exemption by
limiting it only to those enumerated therein; all others excluded lost the privilege upon the
effectivity of the LGC.
h. Petitioner is not qualified under Sec. 234 (a), because its own Charter provides that the parcels
of lands are under its ownership. Section 15 of the Charter involves a transfer of the lands,
among other things, to the petitioner and not just the transfer of the beneficial use thereof, with
the ownership being retained by the Republic of the Philippines. Hence, the petitioner is now
the owner of the land in question and the exception in Section 234(a) of the LGC is inapplicable.
i. Moreover, the petitioner cannot claim that it was never a taxable person under its Charter. It was
only exempted from the payment of real property taxes. The grant of the privilege only in
respect of this tax is conclusive proof of the legislative intent to make it a taxable person subject
to all taxes, except real property tax.
Yash Case Digest

Case #4 - PEPSI-COLA vs. Mun. of Tanauan Leyte (1976 CASE)

FACTS: Respondent municipality imposed municipal production tax by virtue of Mun. Ordinance No. 23
and 27. The former levies tax levies and collects "from soft drinks producers and manufacturers of one-
sixteenth (1/16) of a centavo for every bottle of soft drink corked." The latter levies and collects "on soft
drinks produced or manufactured within the territorial jurisdiction of this municipality a tax of ONE
CENTAVO (P0.01) on each gallon (128 fluid ounces, U.S.) of volume capacity."

Petitioner filed a complaint assailing the constitutionality of Sec. 2 of RA 2264, and asserting the same as
unjust and unfair. RTC dismissed the complaint, to which the petitioner appeal to CA. CA then referred
the case to SC, as involving only pure question of law, challenging the power of taxation delegated to
municipalities under the Local Autonomy Act.

ISSUE: Is Section 2, Republic Act No. 2264 an undue delegation of power, confiscatory and oppressive?

RULING: NO. Taxation is a power that is purely legislative and which the central legislative body cannot
delegate either to the executive or judicial department of the government without infringing upon the
theory of separation of powers. The exception, however, lies in the case of municipal corporations, to
which, said theory does not apply. Legislative powers may be delegated to local governments in respect
of matters of local concern. By necessary implication, the legislative power to create political
corporations for purposes of local self-government carries with it the power to confer on such local
governmental agencies the power to tax. Also, the 1973 Constitution provides: Art. XI Sec. 5 - Each local
government unit shall have the power to create its own sources of revenue and to levy taxes, subject to
limitations as may be provided by law. Thus, it cannot be said that Section 2 of Republic Act No. 2264
emanated from beyond the sphere of the legislative power to enact and vest in local governments the
power of local taxation.

The delegated authority cannot be declared unconstitutional on the theory of double taxation. It must
be observed that the delegating authority specifies the limitations and enumerates the taxes over which
local taxation may not be exercised. The reason is that the State has exclusively reserved the same for its
own prerogative. Moreover, double taxation, in general, is not forbidden by our fundamental law, so that
double taxation becomes obnoxious only where the taxpayer is taxed twice for the benefit of the same
governmental entity or by the same jurisdiction for the same purpose, but not in a case where one tax is
imposed by the State and the other by the city or municipality.

Unless the amount is so excessive as to be prohibitive, courts will go slow in writing off an ordinance as
unreasonable. Reluctance should not deter compliance with an ordinance such as Ordinance No. 27 if
the purpose of the law to further strengthen local autonomy were to be realized.

*expressio unius est exclusio alterius - when one or more things of a class are expressly mentioned
others of the same class are excluded.
*Exceptio firmat regulam in casibus non exceptis - an exception confirms the rule in cases not excepted.