Case Summary (G.R. No. 191178)
Procedural history: Court of Appeals and Supreme Court review
The Court of Appeals dismissed MIAA’s petition on 30 October 2002, upholding the City of Pasay’s authority to impose and collect real property taxes on the NAIA Pasay properties. MIAA’s motion for reconsideration was denied by the Court of Appeals (resolution 19 March 2004). MIAA then filed a petition for review on certiorari to the Supreme Court under Rule 45; the Supreme Court granted relief in the petition and set aside the Court of Appeals’ decision.
Issue presented
Whether the NAIA Pasay properties of MIAA are exempt from real property tax imposed by the City of Pasay.
Court of Appeals’ reasoning (as reviewed)
The Court of Appeals relied on Sections 193 and 234 of the Local Government Code to conclude that tax exemptions previously enjoyed by juridical persons, including government-owned or controlled corporations (GOCCs), were withdrawn upon the Code’s effectivity (1 January 1992), except for enumerated exceptions. It held that MIAA, being a government-owned corporation, lost any tax exemption conferred by Section 21 of EO 903 when the Local Government Code took effect; thus MIAA was subject to local real property tax.
Supreme Court holding (majority): NAIA Pasay properties are exempt from real property tax
The Supreme Court granted MIAA’s petition and declared the NAIA Pasay properties exempt from real property tax imposed by the City of Pasay. The Court set aside the Court of Appeals’ decision and ruled the City’s real property tax assessments and notices of delinquency void insofar as they pertain to portions of the NAIA Pasay properties that remain devoted to public use and are not leased to private (taxable) persons.
Legal reasoning — instrumentality status and definitions under the Administrative Code
The Court relied on the Administrative Code of 1987 definitions. It analyzed Section 2(10) (definition of “instrumentality”) and Section 2(13) (definition of “government‑owned or controlled corporation”) and concluded that MIAA is a government instrumentality vested with corporate powers but is not a GOCC as defined in Section 2(13) because it is not organized as a stock or non‑stock corporation (no capital stock divided into shares; not a non‑stock corporation with members). The Court emphasized that an instrumentality may have corporate powers without being a corporation for purposes of classification under the Administrative Code.
Legal reasoning — limitation on local taxing power and Section 133(o)
Under Section 133(o) of the Local Government Code, local government units are barred from levying “taxes, fees or charges of any kind on the National Government, its agencies and instrumentalities, and local government units.” Because MIAA was characterized as a national government instrumentality (not a GOCC), the Court held MIAA is not a “taxable person” under the Local Government Code and therefore not subject to the taxing power of local governments under Section 133(o).
Legal reasoning — properties of public dominion and Section 234(a)
Independently, the Court held that the airport lands and buildings are properties devoted to public use and therefore properties of public dominion under Civil Code Article 420 (which expressly includes “ports … constructed by the State,” a category that encompasses airports). As properties of public dominion they belong to the State (the Republic). Section 234(a) of the Local Government Code exempts “real property owned by the Republic of the Philippines or any of its political subdivisions” from real property tax, except where the beneficial use has been granted to a taxable person. Consequently, the airport lands and buildings—being properties of public dominion owned by the Republic—are exempt from local real property tax.
Lease exception and scope of exemption
The Court clarified that the exemption does not extend to portions of airport property whose beneficial use has been granted, for consideration or otherwise, to taxable persons. Thus any areas of NAIA Pasay leased to private parties (taxable persons) are subject to real property tax; only those portions that remain devoted to public use and held for the State are exempt.
Reliance on prior jurisprudence and harmonization
The Court’s opinion reaffirmed its earlier decision in Manila International Airport Authority v. Court of Appeals (G.R. No. 155650, July 20, 2006) that MIAA is an instrumentality and that airport properties are properties of public dominion and thus exempt under Section 234(a). The majority saw the present case as materially the same as the 2006 MIAA case, differing only in the local government (Pasay vs. Parañaque).
Disposition
The Supreme Court: granted the petition, set aside the Court of Appeals’ decision and resolution, declared the NAIA Pasay properties of MIAA exempt from real property tax imposed by the City of Pasay, and declared void the City of Pasay’s real property tax assessments and final notices of real property tax delinquency with respect to those properties—except for portions leased to private parties. No costs were awarded.
Dissenting views — Justice Ynares‑Santiago (summary)
Justice Ynares‑Santiago agreed with granting the petition but criticized the majority’s continuing characterization of MIAA as a unique “government instrumentality” species distinct from GOCCs. She preferred a narrower analytical approach (advocated by Justice Nachura) focusing on whether the airport properties are owned by the Republic under Section 234(a) of the Local Government Code and Article 420 of the Civil Code. She emphasized that, even if record title appears in MIAA’s name under EO 903, that title is held for the benefit of the Republic (evidenced by presidential approval requirements for disposition and executive control over borrowing and disposition), so the properties remain of public dominion and exempt from real property tax except where beneficial use has been granted to taxable persons.
Dissenting opinion — Justice Tinga (summary)
Justice Tinga maintained his earlier dissent in the Parañaque case and would not fully accept the majority’s reclassification of MIAA as a non‑GOCC instrumentality to achieve tax exemption. He argued the dispositive inquiry should be ownership under Section 234(a); he stressed that Congress and prior jurisprudence (notably Mactan Cebu) permit local taxation of GOCC properties in certain circumstances. He further contended that properties which are placed into commerce by statute (i.e., where the charter autho
...continue readingCase Syllabus (G.R. No. 191178)
Case Caption, Docket and Decision Data
- Full caption as stated in the source: MANILA INTERNATIONAL AIRPORT AUTHORITY, PETITIONER, VS. CITY OF PASAY, SANGGUNIANG PANG LUNGSOD NG PASAY, CITY MAYOR OF PASAY, CITY TREASURER OF PASAY, AND CITY ASSESSOR OF PASAY.
- G.R. No.: 163072.
- Promulgation / Decision date: April 2, 2009.
- Report citation: 602 Phil. 160 (EN BANC).
- Opinion author: Justice Antonio T. Carpio (ponencia).
- Vote/participation: Puno, C.J., Quiumbing, Corona, Carpio Morales, Chico-Nazario, Velasco, Jr., Leonardo-De Castro, Brion and Peralta, JJ., concurred; Ynares-Santiago and Tinga, JJ., filed dissenting opinions; Austria-Martinez, J., joined the separate opinion of Justice Nachura; Nachura, J., filed a separate opinion. No costs were awarded.
Nature of the Case and Relief Sought
- This was a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, challenging the Court of Appeals Decision dated October 30, 2002 and its Resolution dated March 19, 2004 in CA-G.R. SP No. 67416.
- Petitioner MIAA sought prohibition and injunctive relief (preliminary injunction / temporary restraining order) to enjoin the City of Pasay from imposing real property taxes on, levying against, and auctioning the NAIA properties located within Pasay City.
Factual Background — MIAA, EO 903 and the NAIA Complex
- MIAA operates and administers the Ninoy Aquino International Airport (NAIA) Complex pursuant to Executive Order No. 903 (EO 903), issued July 21, 1983, titled the Revised Charter of the Manila International Airport Authority.
- Under EO 903 (Sections 3 and 22), approximately 600 hectares of land including runways, the airport tower and other airport buildings were transferred, conveyed and assigned to the ownership and administration of MIAA; EO 903 also transferred existing public airport facilities, runways, lands, buildings and other property and related assets from the Bureau of Air Transportation to MIAA.
- The NAIA Complex is located along the border between Pasay City and Parañaque City.
Tax Assessment Events and Administrative Acts by Respondent
- On August 28, 2001, MIAA received Final Notices of Real Property Tax Delinquency from the City of Pasay for taxable years 1992–2001.
- On August 24, 2001, the City of Pasay, through its City Treasurer, issued notices of levy and warrants of levy; MIAA received these notices and warrants of levy on August 28, 2001.
- The Mayor of Pasay threatened to sell at public auction the NAIA Pasay properties if delinquent real property taxes remained unpaid.
- MIAA filed the petition for prohibition and injunction in the Court of Appeals on October 29, 2001.
Tax Delinquency — Tabulation Presented in the Record
- The source provides the MIAA real property tax delinquency by tax declaration as assessed by the City of Pasay for taxable years 1992–2001 (some items 1997–2001), summarized as follows:
- A7-183-08346 (1997–2001): Tax Due P642,747,726.20; Penalty P373,466,110.13; Total P1,016,213,836.33.
- A7-183-05224 (1992–2001): Tax Due P243,522,855.00; Penalty P123,351,728.18; (Note: the source table shows aggregated totals—see grand total below).
- A7-191-00843 (1992–2001): Tax Due P113,582,466.00; Penalty P71,159,414.98.
- A7-191-00140 (1992–2001): Tax Due P54,454,800.00; Penalty P34,115,932.20.
- A7-191-00139 (1992–2001): Tax Due P1,632,960.00; Penalty P1,023,049.44.
- A7-183-05409 (1992–2001): Tax Due P6,068,448.00; Penalty P3,801,882.85.
- A7-183-05410 (1992–2001): Tax Due P59,129,520.00; Penalty P37,044,644.28.
- A7-183-05413 (1992–2001): Tax Due P20,619,720.00; Penalty P12,918,254.58.
- A7-183-05412 (1992–2001): Tax Due P7,908,240.00; Penalty P4,954,512.36.
- A7-183-05411 (1992–2001): Tax Due P18,441,981.20; Penalty P11,553,901.13.
- A7-183-05245 (1992–2001): Tax Due P109,946,736.00; Penalty P68,881,630.13.
- Grand totals shown in the source: Tax Due P642,747,726.20; Penalty P373,466,110.13; Combined Total P1,016,213,836.33.
- (Note: the source text presents the tabulation; these figures are reproduced here exactly as given in the source material.)
Procedural History in the Courts Below
- Court of Appeals: On October 30, 2002, the Court of Appeals dismissed MIAA’s petition for prohibition and injunction and upheld the City of Pasay’s power to impose and collect real property taxes on the NAIA Pasay properties; the CA panel’s opinion was penned by Associate Justice Ruben T. Reyes with Associate Justices Remedios Salazar-Fernando and Edgardo F. Sundiam concurring.
- MIAA filed a motion for reconsideration in the Court of Appeals which was denied (Resolution dated March 19, 2004).
- MIAA elevated the case to the Supreme Court by petition for review on certiorari under Rule 45.
Central Issue Presented to the Supreme Court
- Whether the NAIA Pasay properties of the Manila International Airport Authority are exempt from real property tax imposed by the City of Pasay.
Statutory Provisions and Legal Authorities Relied Upon in the Decision
- Executive Order No. 903 (EO 903), Revised Charter of the Manila International Airport Authority (issued July 21, 1983) — Sections 3 and 22 described and quoted in the record concerning creation of MIAA and transfer of airport lands and facilities.
- Local Government Code, Republic Act No. 7160 (effectivity January 1, 1992):
- Section 193 — Withdrawal of tax exemption privileges (withdrawing prior tax exemptions enjoyed by persons, natural or juridical, including GOCCs, except specified exceptions).
- Section 232 — Power to levy real property tax (provinces, cities, municipalities within Metro Manila may levy annual ad valorem tax on real property not otherwise exempted).
- Section 234 — Exemptions from real property tax (enumeration including real property owned by the Republic, with qualification: exception when beneficial use has been granted to a taxable person; other enumerated exemptions; last paragraph withdrawing prior exemptions except those enumerated).
- Section 133(o) — Common limitations on taxing powers of LGUs, including prohibition on taxing the National Government, its agencies and instrumentalities.
- Introductory Provisions of the Administrative Code of 1987:
- Section 2(10) — Definition of “Instrumentality,” including the phrase that the term includes government-owned or controlled corporations.
- Section 2(13) — Definition of “Government-owned or controlled corporation” (GOCC), requiring organization as a stock or non-stock corporation among other criteria.
- Civil Code of the Philippines:
- Article 420 — Definition of “property of public dominion,” including things intended for public use (explicitly listing ports and noting that ports include airports).
- Relevant precedents cited in the record:
- Manila International Airport Authority v. Court of Appeals, G.R. No. 155650, July 20, 2006 (referred to as the 2006 MIAA case).
- Mactan Cebu International Airport Authority v. Marcos, 330 Phil. 392 (1996) (MCIAA v. Marcos).
- Philippine Fisheries Development Authority v. Court of Appeals, G.R. No. 150301, October 2, 2007.
- Other authorities and earlier jurisprudence cited within the opinions (e.g., Philippine Ports Authority cases, Light Rail Transit Authority cases) are referenced in the opinions and separate opinions reproduced in the source.
Summary of the Court of Appeals’ Ruling (as described in the record)
- The Court of Appeals held that Sections 193 and 234 of the Local Government Code withdrew prior tax exemptions enjoyed by government-owned or controlled corporations; because MIAA was a government-owned corporation, its exemption under Section 21 of EO 903 had been withdrawn upon the effectivity of the Local Government Code in 1992.
- The CA concluded that MIAA was not exempt from real property taxation by the City of Pasay.
Supreme Court Majority Holding and Disposition
- The petition is GRANTED.
- The Decision dated October 30, 2002 and the Resolution dated March 19, 2004 of the Court of Appeals in CA‑G.R. SP No. 67416 are SET ASIDE.
- The NAIA Pasay properties of the Manila International Airport Authority are DECLARED EXEMPT from real property tax imposed by the City of Pasay.
- All real property tax assessments, including the final notices of real property tax delinquencies, issued by the City of Pasay on the NAIA Pasay properties are declared VOID, EXCEPT for portions of the properties that MIAA has leased to private parties (those leased portions remain subject to real property tax).
- No costs were imposed.