MCIAA VS.

MARCOS stands on the same footing as an agency or

G.R. No. 120082 / September 11, 1996 / DAVIDE, JR., J. / Real instrumentality of the national government by the very
Property Taxation nature of its powers and functions.
SUMMARY. Mactan Cebu International Airport Authority  Cebu City: MCIAA is not an instrumentality of the
(MCIAA), which was created by virtue of R.A. 6958, was government but merely a government-owned corporation
mandated to principally undertake the economical, efficient, performing proprietary functions As such, all exemptions
and effective control, management, and supervision of the previously granted to it were deemed withdrawn by operation
Mactan International Airport and Lahug Airport, and such other of law, as provided under Sections 193 and 234 of the LGC.
airports as may be established in Cebu. Since the time of its  The RTC dismissed the petition and ruled: a close reading of
creation, petitioner MCIAA enjoyed the privilege of exemption the LGC provides the express cancellation and withdrawal of
from payment of realty taxes in accordance with Section 14 of exemption of taxes by government owned and controlled
its charter. However, on October 11, 1994, the OIC of the corporation per Sections after the effectivity of said Code.
Office of the Treasurer of the City of Cebu demanded payment
from realty taxes in the total amount. Petitioner objected to ISSUES & RATIO.
such demand for payment as baseless and unjustified claiming 1. WON WON MCIAA is liable to pay the tax. – YES.
in its favor the aforecited Sec. 14 of R.A. 6958. It was also  Section 1331 of the LGC prescribes the common
asserted that it is an instrumentality of the government limitations on the taxing powers of local government
performing governmental functions, citing Section 133 of the units.
LGC. The Court ruled that MCIAA’s exemption from payment  The "taxes, fees or charges" referred to are "of any
of taxes is withdrawn by virtue of Sections 193 and 234 of kind", hence they include all of these, unless
LGC. The petitioner cannot also claim that it was never a otherwise provided by the LGC. The term "taxes" is
“taxable person” under its Charter. It was only exempted from well understood so as to need no further elaboration,
the payment of realty taxes. The grant of the privilege only in especially in the light of the above enumeration. The
respect of this tax is conclusive proof of the legislative intent to term "fees" means charges fixed by law or Ordinance
make it a taxable person subject to all taxes, except real for the regulation or inspection of business activity,
property tax. while "charges" are pecuniary liabilities such as rents
DOCTRINE. Since the last paragraph of Section 234 of the or fees against person or property.
LGC unequivocally withdrew, upon the effectivity of the LGC,  Among the "taxes" enumerated in the LGC is real
exemptions from payment of real property taxes granted to property tax, which is governed by Section 232. It
natural or juridical persons, including government-owned or reads as follows: Sec. 232. Power to Levy Real
controlled corporations, except as provided in the said section, Property Tax. — A province or city or a municipality
and Mactan Cebu International Airport Authority is a within the Metropolitan Manila Area may levy on an
government-owned corporation, it necessarily follows that its annual ad valorem tax on real property such as land,
exemption from such tax granted it in Section 14 of its Charter, building, machinery and other improvements not
R.A 6958, has been withdrawn. hereafter specifically exempted.
 Section 2342 of LGC provides for the exemptions from
FACTS. payment of real property taxes and withdraws
 Mactan Cebu International Airport Authority (MCIAA) was previous exemptions therefrom granted to natural and
created by virtue of RA No. 6958, mandated to "principally juridical persons, including government owned and
undertake the economical, efficient and effective control, controlled corporations, except as provided therein.
management and supervision of the Mactan International  Section 1933 of the LGC is the general provision on
Airport in the Province of Cebu and the Lahug Airport in withdrawal of tax exemption privileges.
Cebu City, and such other Airports as may be established in
 On the other hand, the LGC authorizes local
the Province of Cebu.
government units to grant tax exemption privileges.
 Since the time of its creation, petitioner MCIAA enjoyed the Thus, Section 192 thereof provides: Sec. 192.
privilege of exemption from payment of realty taxes in Authority to Grant Tax Exemption Privileges. — Local
accordance with Sec. 14 of its Charter. government units may, through ordinances duly
 October 11, 1994: Cesa, OIC of the Office of the Treasurer approved, grant tax exemptions, incentives or reliefs
of the City of Cebu, demanded payment for realty taxes on under such terms and conditions as they may deem
several parcels of land belonging to the petitioner necessary.
 Petitioner objected to such demand for payment as baseless
and unjustified, claiming in its favor the aforecited Section 14
of RA 6958 which exempts it from payment of realty taxes. It 1
Section 133. Common Limitations on the Taxing Powers of Local
was also asserted that it is an instrumentality of the Government Units.—Unless otherwise provided herein, the exercise of
government performing governmental functions, citing the taxing powers of provinces, cities, municipalities, and barangays shall
section 133 of the LGC. not extend to the levy of the following: x x x
 Respondent City refused to cancel and set aside petitioner's o) Taxes, fees or charges of any kind on the National Government, its
realty tax account, insisting that the MCIAA is a government- agencies and instrumentalities, and local government units.
2
controlled corporation whose tax exemption privilege has Section 234. Exemptions from Real Property Taxes.— x x x (e) x x x
been withdrawn by virtue of Sections 193 and 234 of the Except as provided herein, any exemption from payment of real property
LGC. tax previously granted to, or presently enjoyed by all persons, whether
 As the City of Cebu was about to issue a warrant of levy natural or juridical, including government-owned or controlled
corporations are hereby withdrawn upon the effectivity of this Code.
against the properties of petitioner, the latter was compelled 3
to pay its tax account "under protest" and thereafter filed a Section 193. Withdrawal of Tax Exemption Privilege.—Unless
Petition for Declaratory Relief with the RTC of Cebu. otherwise provided in this Code, tax exemptions or incentives granted to,
or presently enjoyed by all persons whether natural or juridical,
 MCIAA: the taxing powers of local government units do including government-owned or controlled corporations, except local
not extend to the levy of taxes or fees of any kind on an water districts, cooperatives duly registered under RA No. 6938, nonstick
instrumentality of the national government. While it is and nonprofit hospitals and educational institutions, are hereby
indeed a government-owned corporation, it nonetheless withdrawn upon the effectivity of this Code.
 The foregoing sections of the LGC speaks of: (a) the local government units cannot extend to the levy
limitations on the taxing powers of local government of taxes, fees, or charges of any kind on the
units and the exceptions to such limitations; and (b) National Government, its agencies, or
the rule on tax exemptions and the exceptions instrumentalities, and local government units. It
thereto. The use of exceptions of provisos in these must show that the parcels of land in question,
section, as shown by the following clauses: (1) which are real property, are any one of those
"unless otherwise provided herein" in the opening enumerated in Section 234, either by virtue of
paragraph of Section 133; (2) "Unless otherwise ownership, character, or use of the property. Most
provided in this Code" in section 193; (3) "not likely, it could only be the first, but not under any
hereafter specifically exempted" in Section 232; and explicit provision of the said section, for one
(4) "Except as provided herein" in the last paragraph exists.
of Section 234  The petitioner's claim that it is an instrumentality of
 Reading together Sec. 133, 232 and 234 of the the Government is based on Section 133(o), which
LGC, we conclude that as a general rule, as laid down expressly mentions the word "instrumentalities"; and
in Section 133 the taxing powers of LGUs cannot in the second place it fails to consider the fact that the
extend to the levy of inter alia, "taxes, fees, and legislature used the phrase "National Government, its
charges of any kind of the National Government, its agencies and instrumentalities" "in Section 133(o), but
agencies and instrumentalties, and local government only the phrase "Republic of the Philippines or any of
units"; however, pursuant to Sec. 232, provinces, its political subdivision "in Section 234(a) 4. The terms
cities, municipalities in the Metropolitan Manila Area "Republic of the Philippines" and "National
may impose the real property tax except on, inter alia, Government" are not interchangeable. If Section
"real property owned by the Republic of the 234(a) intended to extend the exception therein to the
Philippines or any of its political subdivisions except withdrawal of the exemption from payment of real
when the beneficial used thereof has been granted, property taxes under the last sentence of the said
for consideration or otherwise, to a taxable person", section to the agencies and instrumentalities of the
as provided in item (a) of the first paragraph of Sec. National Government mentioned in Section 133(o),
234. then it should have restated the wording of the latter.
 As to tax exemptions or incentives granted to or Yet, it did not.
presently enjoyed by natural or juridical persons,
including government-owned and controlled [MINOR ISSUES]
corporations, Sec. 193 of the LGC prescribes the 2. WON the parcels of land in question belong to the
general rule, viz., they are withdrawn upon the Republic of the Philippines whose beneficial use has
effectivity of the LGC, except those granted to local been granted to the petitioner. – YES.
water districts, cooperatives duly registered under  Section 15 of the petitioner's Charter involves a
R.A. No. 6938, non-stock and non-profit hospitals and "transfer" of the "lands" among other things, to the
educational institutions, and unless otherwise petitioner and not just the transfer of the beneficial
provided in the LGC. The latter proviso could refer to use thereof, with the ownership being retained by the
Section 234, which enumerates the properties exempt Republic of the Philippines. This "transfer" is actually
from real property tax. But the last paragraph of an absolute conveyance of the ownership thereof
Section 234 further qualifies the retention of the because the petitioner's authorized capital stock
exemption in so far as the real property taxes are consists of, inter alia "the value of such real estate
concerned by limiting the retention only to those owned and/or administered by the airports." Hence,
enumerated there-in; all others not included in the the petitioner is now the owner of the land in
enumeration lost the privilege upon the effectivity of question and the exception in Section 234(c) of
the LGC. Moreover, even as the real property is the LGC is inapplicable.
owned by the Republic of the Philippines, or any of its
political subdivisions covered by item (a) of the first 3. WON the petitioner is a "taxable person". – YES.
paragraph of Section 234, the exemption is withdrawn  The petitioner cannot claim that it was never a
if the beneficial use of such property has been "taxable person" under its Charter. It was only
granted to taxable person for consideration or exempted from the payment of real property
otherwise. taxes. The grant of the privilege only in respect of this
 Since the last paragraph of Sec. 234 tax is conclusive proof of the legislative intent to make
unequivocally withdrew, upon the effectivity of the it a taxable person subject to all taxes, except real
LGC, exemptions from real property taxes granted property tax. Even if the petitioner was originally not a
to natural or juridical persons, including taxable person for purposes of real property tax, in
government-owned or controlled corporations, light of the forgoing disquisitions, it had already
except as provided in the said section, and the become even if it be conceded to be an "agency" or
petitioner is, undoubtedly, a government-owned "instrumentality" of the Government, a taxable person
corporation, it necessarily follows that its for such purpose in view of the withdrawal in the last
exemption from such tax granted it in Section 14 paragraph of Section 234 of exemptions from the
of its charter, R.A. No. 6958, has been withdrawn. payment of real property taxes, which, as earlier
Any claim to the contrary can only be justified if the adverted to, applies to the petitioner.
petitioner can seek refuge under any of the
exceptions provided in Section 234, but not under DECISION.
Section 133, as it now asserts, since, as shown Petition DENIED.
above, the said section is qualified by Section 232
and 234. 4
(a) Real property owned by the Republic of the Philippines or any of its
 The petitioner can no longer invoke the general political subdivisions except when the beneficial use thereof has been
rule in Section 133 that the taxing powers of the granted, for consideration or otherwise, to a taxable person;