Case Summary (G.R. No. 181756)
Key Dates
• July 31, 1990 – RA 6958 creates the MCIAA and grants it realty-tax exemption.
• January 1, 1992 – Effectivity of Republic Act No. 7160 (Local Government Code).
• September 11, 1996 – 1996 MCIAA decision declares MCIAA no longer tax-exempt under LGC.
• January 7, 1997 – Lapu-Lapu City issues tax assessment on MCIAA properties.
• October 8, 2007 – Court of Appeals decision upholds realty-tax liability.
• February 12, 2008 – CA denies MCIAA’s motion for reconsideration.
• June 15, 2015 – Supreme Court decision on petition for certiorari.
Applicable Law
• 1987 Philippine Constitution, Article X, § 5 (local autonomy, power to tax subject to legislative guidelines).
• Republic Act No. 7160 (Local Government Code of 1991):
– § 133(o): local governments may not tax national government instrumentalities “unless otherwise provided.”
– § 234(a): real property “owned by the Republic” is exempt unless beneficial use is granted to a taxable person.
• Republic Act No. 6958 (MCIAA Charter): grants MCIAA corporate powers, tax exemption, mandates conveyance restrictions.
• Administrative Code of 1987, Introductory Provisions:
– § 2(10) defines “instrumentality” (agency with corporate powers, operational autonomy).
– § 2(13) defines “government-owned or controlled corporation” (must be organized as stock or non-stock).
• Civil Code, Art. 420: properties devoted to public use belong to the State and are outside commerce of man.
Procedural Background
MCIAA’s charter initially exempted it from realty taxes. After the LGC took effect, the Supreme Court in 1996 ruled that MCIAA’s exemption was withdrawn. Lapu-Lapu City assessed over ₱150 million in real estate taxes on airport lots and facilities; MCIAA paid partially under protest. MCIAA sought injunctive relief in the RTC to enjoin foreclosures and auctions; after mixed rulings, the CA issued a decision (Oct 2007) declaring MCIAA a GOCC subject to local tax, voiding MCIAA’s preliminary injunction, and upholding the City’s assessment and sale actions. MCIAA moved for reconsideration; the CA denied it in February 2008.
Issue
Whether MCIAA, as a national government instrumentality whose airport lands and buildings are devoted exclusively to public use, is exempt from local real property tax under the 1987 Constitution, the Local Government Code, and related statutory and constitutional provisions.
Court of Appeals Ruling
• Held MCIAA is a GOCC, not an instrumentality, because it is “vested with corporate powers” and could have been organized under the Corporation Code.
• Applied the 1996 MCIAA precedent to conclude that the LGC withdrew prior exemptions, rendering MCIAA properties taxable.
• Upheld the City’s omnibus tax ordinance (Ordinance No. 44) as subsisting under LGC § 529 and IRR Art. 278.
• Validated imposition of basic realty tax, 1 % Special Education Fund levy (RA 5447), and penalty interest—limited to 2 % per month not to exceed 36 months.
• Void ed the auction sale of 27 parcels only insofar as foreclosure of public-dominion property is prohibited by MCIAA’s charter.
Petitioner’s Arguments
• Cites Manila International Airport Authority v. CA (2006) en banc, final Nov 2006, classifying airport authorities (including MCIAA) as national government instrumentalities exempt from local tax.
• Highlights statutory charter parallels with MIAA and other instrumentalities: corporate powers without stock or members, police authority, borrowing-subject approvals, Civil Service coverage, restricted alienation of security-sensitive assets.
• Asserts that tax imposition and auctions lacked proper enabling ordinances; that the SEF and penalty interest also required local ordinance.
Supreme Court Ruling
The petition for certiorari is granted. The CA decisions of October 8, 2007 and February 12, 2008 are reversed and set aside.
Rationale
- MCIAA is a national government instrumentality, not a GOCC:
– Its charter establishes corporate powers w
Case Syllabus (G.R. No. 181756)
Facts
- Republic Act No. 6958 (July 31, 1990) created the Mactan-Cebu International Airport Authority (MCIAA) to manage Mactan International and Lahug Airports in Cebu.
- Section 14 of R.A. 6958 initially exempted MCIAA from realty taxes; subsidiaries were not covered.
- In 1996, the Supreme Court’s MCIAA v. Marcos decision held that upon effectivity of R.A. 7160 (Local Government Code, LGC), MCIAA’s charter exemption was withdrawn.
- January 7, 1997: City of Lapu-Lapu issued a P162,058,959.52 real estate tax statement to MCIAA; later amended to P151,376,134.66 after MCIAA’s protests.
- MCIAA paid P4 million monthly initially, later P6 million, totaling P275,728,313.36 by December 2003.
- DOJ Opinion No. 50 (1998) and DOF indorsements concluded airfield, runway, taxiway and their lots are State-owned, held in trust by MCIAA, and exempt from local real property taxes.
- City Treasurer’s 2002 tax balance statement (P246,395,477.20) again included public-use lots; 18 Notices of Levy issued.
- MCIAA filed a prohibition petition in RTC Lapu-Lapu (SCA No. 6056-L) and secured, then lost, a preliminary injunction; 27 properties were auctioned, forfeited, and certificates of sale issued to the City.
Procedural History
- December 2003–December 2005 (RTC Lapu-Lapu City, Branch 53): TRO issued, preliminary injunction granted (Dec 28, 2004), then lifted (Dec 5, 2005).
- December 2005: 27 MCIAA properties sold by the City to satisfy tax delinquency.
- Petition for certiorari (CA-G.R. SP No. 01360) filed with the Court of Appeals (CA), Cebu City; TRO and preliminary injunction reinstated (Jan–Feb 2006).
- October 8, 2007: CA Decision declared MCIAA’s airport properties non-exempt from realty tax, upheld SEF levy and interest (limited to 2%/month up to 36 months), voided auction sale but affirmed City’s limited lien.
- February 12, 2008: CA Resolution denied MCIAA’s motion for partial reconsideration, refusing to apply the 2006 MIAA en banc ruling.
- June 15, 2015: Supreme Court GR No. 181756 granted MCIAA’s Rule 45 petition, reversing CA.
Issues
- Is MCIAA a government-owned or controlled corporation (GOCC) or a national government instrumentality?
- Are MCIAA’s airport terminal, airfield, runway, taxiway and their lots exempt from local real property tax, SEF levy, and penalty interest?
- Can the City of Lapu-Lapu impose real property tax, SEF levy, and interest without a specific local ordinance?
- Are the City’s tax assessments, levy notices, auction sale, forfeiture and Certificates of Sale void or enforceable?
Petitioner's Arguments
- MCIAA is a national government instrumentality, not a GOCC, per Section 2(10) & (13) of the