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Title: Manila International Airport Authority v. Court of Appeals

G.R. No. 155650

Date: July 20, 2006


Ponente: Carpio, J.








The Manila International Airport Authority (MIAA) operates the Ninoy Aquino International Airport (NAIA) Complex in

Parañaque 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 21of 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 Parañaque 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 Parañaque 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 Parañaque 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 Parañaque 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 Parañaque three hours after the sale.


Whether or not MIAA is an instrumentality of the government and not a government owned and controlled corporation and as such exempted from tax. YES


The Airport Lands and Buildings of MIAA are property of public dominion and therefore owned by the State or the Republic of the Philippines. No one can dispute that properties of public dominion mentioned in Article 420 of the Civil Code, like “roads, canals, rivers, torrents, ports and bridges constructed by the State,” are owned by the State. The term “ports” includes seaports and airports. The MIAA Airport Lands and Buildings constitute a “port” constructed by the State.

The Airport Lands and Buildings are devoted to public use because they are used by the public for international and

domestic travel and transportation. The fact that the MIAA collects terminal fees and other charges from the public does not remove the character of the Airport Lands and Buildings as properties for public use. The charging of fees to the public does not determine the character of the property whether it is of public dominion or not. Article 420 of the Civil Code defines property of public dominion as one “intended for public use.”

The Court has also ruled that property of public dominion, being outside the commerce of man, cannot be the subject of an auction sale. Properties of public dominion, being for public use, are not subject to levy, encumbrance or

disposition through public or private sale. Any encumbrance, levy on execution or auction sale of any property of

public dominion is void for being contrary to public policy. Essential public services will stop if properties of public

dominion are subject to encumbrances, foreclosures and auction sale. This will happen if the City of Parañaque can foreclose and compel the auction sale of the 600-hectare runway of the MIAA for non-payment of real estate tax.

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.

Section 133 (0) recognizes the basic principles that local governments cannot tax the national government, which

historically, merely delegated to the local governments the power to tax. While the 1987 constitution now includes taxation as one of the powers of the local governments, local governments may only exercise such powers subject to such guidelines and limitations as the congress may provide.

Under the LGC, GOCCs are not exempted from real estate tax. MIAA is not a GOCC, for to become one, MIAA should either be a stock or non-stock corporation. MIAA is not a stock corporation for its capital is not divided into shares. MIAA is a government instrumentality vested with corporate powers to perform efficiently its governmental functions. MIAA is like any other government instrumentality, the only difference is that MIAA is vested with corporate powers. Sec. 2 (10) of the introductory provisions of the administrative code defines a government instrumentality as follows:


Instrumentality refers to any agency of the 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.

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. Thus, MIAA exercises the governmental powers of eminent domain, police authority and the surging of fees and charges. At the same time, MIAA exercises all the powers of a corporation under the corporation law, in so far as these powers are not inconsistent with the provisions of this executive order.

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 a consideration to a taxable person.


WHEREFORE, we GRANT the petition. We SET ASIDE the assailed Resolutions of the Court of Appeals of 5 October 2001

and 27 September 2002 in CA-G.R. SP No. 66878. We DECLARE the Airport Lands and Buildings of the Manila

International Airport Authority EXEMPT from the real estate tax imposed by the City of Parañaque. We declare VOID all the real estate tax assessments, including the final notices of real estate tax delinquencies, issued by the City of Parañaque on the Airport Lands and Buildings of the Manila International Airport Authority, except for the portions that the Manila International Airport Authority has leased to private parties. We also declare VOID the assailed auction sale, and all its effects, of the Airport Lands and Buildings of the Manila International Airport Authority.


(SANTOS, 2B 2017-2018)