[ G. R.No.163072.Apr i l 2,2009. ] MANI LAI NTERNATI ONALAI RPORTAUTHOR ORI TY, pet i t i oner ,vs. CI TYOFPASAY,SANGGUNI ANG PANGLUNGSOD NG PASAY, CI TY MAYOR OF PASAY,CI TY TREASURER OF PASAY,and CI TYASSESSOROFPASAY, r e s po nde nt s .
DECISIO N
CARPI O,J: p
Thi si sa pet i t i on f orr ev i ew onc ft he Dec i s i on2dat ed 30 Oct ober er t i or ar i 1o 2002andt heResol ut i ondat ed19Mar ch2004oft heCour tofAppeal si nCAG. R.SPNo.67416. TheFact s
Pet i t i onerMani l aI nt er nat i onalAi r por tAut hor i t y( MI AA)oper at esandadmi ni s t er s t heNi no yAqui noI nt er nat i onalAi r por t( NAI A)Compl e xunder Ex e c ut i v eOr derNo. 903( EO 903) ,3ot her wi se known as t he Revi sedChar t er of t he Mani l a I n t e r n at i o na lAi r p or tAut h or i t y .EO 9 03wa si s s u ed o n2 1J u l y1 98 3b yt h en Pr esi dent Fer di nand E. Ma Mar cos. Under Sect i ons 34an d 225ofEO 90 3, appr o xi mat el y600hec t ar esofl and,i nc l udi ngt her unwa ys ,t heai r por tt ower ,and o t herai r por tbui l di ngs ,wer et r ans f er r edt oMI AA.TheNAI A Compl e xi sl oc at ed a l o ngt h eb or d erb et we enPa s ayCi t ya ndPa r a ñaq ueCi t y . On 28 August 2001, MI AA r ecei ved Fi nalNot i ces of RealPr oper t y Tax Del i nquenc yf r om t heCi t yofPas a yf ort het ax a bl ey e ar s1992t o2001.MI AA' s r ealpr oper t yt axdel i nquenc yf ori t sr ealpr oper t i esl oc at ed i nNAI A Compl e x, Ni noy Aqui no Avenue,Pasay Ci t y( NAI A Pasay pr oper t i es)i st abul at ed as f ol l ows : EI cSDC
T AXT AXABLETAXDUEPENALTYTOTAL DECLARATI ONYEAR
A7 1 83 0 83 4619 97 2 00 12 43 , 5 22 , 8 55 . 0 01 23 , 3 51 , 7 28 . 1 83 66 , 8 74 , 5 83 . 1 8
A7 1 83 0 52 2419 92 2 00 11 13 , 5 82 , 4 66 . 0 07 1, 1 59 , 4 14 . 9 81 84 , 7 41 , 8 80 . 9 8 A7 1 91 0 08 431 99 22 00 15 4, 4 54 , 8 00 . 0 03 4, 1 15 , 9 32 . 2 08 8, 5 70 , 7 32 . 2 0 A7 1 91 0 01 401 99 22 00 11 , 6 32 , 9 60 . 0 01 , 0 23 , 0 49 . 4 42 , 6 56 , 0 09 . 4 4 A7 1 91 0 01 391 99 22 00 16 , 0 68 , 4 48 . 0 03 , 8 01 , 8 82 . 8 59 , 8 70 , 3 30 . 8 5 A7 1 83 0 54 091 99 22 00 15 9, 1 29 , 5 20 . 0 03 7, 0 44 , 6 44 . 2 89 6, 1 74 , 1 64 . 2 8 A7 1 83 0 54 101 99 22 00 12 0, 6 19 , 7 20 . 0 01 2, 9 18 , 2 54 . 5 83 3, 5 37 , 9 74 . 5 8 A7 1 83 0 54 131 99 22 00 17 , 9 08 , 2 40 . 0 04 , 9 54 , 5 12 . 3 61 2, 8 62 , 7 52 . 3 6 A7 1 83 0 54 121 99 22 00 11 8, 4 41 , 9 81 . 2 01 1, 5 53 , 9 01 . 1 32 9, 9 95 , 8 82 . 3 3 A7 1 83 0 54 1119 92 2 00 11 09 , 9 46 , 7 36 . 0 06 8, 8 81 , 6 30 . 1 31 78 , 8 28 , 3 66 . 1 3 A7 1 83 0 52 451 99 22 00 17 , 4 40 , 0 00 . 0 04 , 6 61 , 1 60 . 0 01 2, 1 01 , 1 60 . 0 0 ——————— ——————— ——————— GRANDTOTAL P642, 747, 726. 20P373, 466, 110. 13P1, 016, 213, 836. 33 ======================================
On24Augus t2001,t heCi t yofPas ay ,t hr oughi t sCi t yT r eas ur er ,i s s uednot i c es ofl e v yandwar r ant sofl e vyf ort heNAI A Pas a ypr oper t i es .MI AA r ec ei v edt he no t i c esandwar r ant sofl e vyon28Augus t2001.Ther eaf t er ,t heCi t yMa y orof Pas a yt hr eat ened t os el latp ubl i c auc t i on t he NAI A Pas a y pr oper t i es i ft he del i nquentr ealpr oper t yt ax esr emai nunpai d. On 29 Oct ober2001,MI AA fil ed wi t ht he Cour tofAppeal s a pet i t i on f or pr ohi bi t i on and i nj unc t i on wi t h pr ay erf orpr el i mi nar yi nj unc t i on ort empor ar y r es t r ai ni ngor der .Thepet i t i ons oughtt oenj oi nt heCi t yofPas ayf r om i mpos i ng r ealpr oper t yt ax eson,l ev yi ngagai ns t ,andauc t i oni ngf orp ubl i cs al et heNAI A Pas aypr oper t i es . On30Oc t ober2002,t heCour tofAppeal sdi s mi mi s s edt hepe t i t i onanduphel dt he po weroft heCi t yofPas a yt oi mpos eandc ol l ec tr eal t yt ax e sont heNAI APas a y pr oper t i es .MI AA fi l edamo t i onf orr ec ons i der at i on,whi c ht heCour tofAppeal s deni ed.Henc e,t hi spet i t i on. TheCour tofAppeal s'Rul i ng
The Cour tofAppeal s hel dt hatSect i ons 193 and 234 ofRepubl i c ActNo. 7160ort heLocalGov er nme mentCode,whi ch t ook effecton 1 Januar y 1992,
A7 1 83 0 52 2419 92 2 00 11 13 , 5 82 , 4 66 . 0 07 1, 1 59 , 4 14 . 9 81 84 , 7 41 , 8 80 . 9 8 A7 1 91 0 08 431 99 22 00 15 4, 4 54 , 8 00 . 0 03 4, 1 15 , 9 32 . 2 08 8, 5 70 , 7 32 . 2 0 A7 1 91 0 01 401 99 22 00 11 , 6 32 , 9 60 . 0 01 , 0 23 , 0 49 . 4 42 , 6 56 , 0 09 . 4 4 A7 1 91 0 01 391 99 22 00 16 , 0 68 , 4 48 . 0 03 , 8 01 , 8 82 . 8 59 , 8 70 , 3 30 . 8 5 A7 1 83 0 54 091 99 22 00 15 9, 1 29 , 5 20 . 0 03 7, 0 44 , 6 44 . 2 89 6, 1 74 , 1 64 . 2 8 A7 1 83 0 54 101 99 22 00 12 0, 6 19 , 7 20 . 0 01 2, 9 18 , 2 54 . 5 83 3, 5 37 , 9 74 . 5 8 A7 1 83 0 54 131 99 22 00 17 , 9 08 , 2 40 . 0 04 , 9 54 , 5 12 . 3 61 2, 8 62 , 7 52 . 3 6 A7 1 83 0 54 121 99 22 00 11 8, 4 41 , 9 81 . 2 01 1, 5 53 , 9 01 . 1 32 9, 9 95 , 8 82 . 3 3 A7 1 83 0 54 1119 92 2 00 11 09 , 9 46 , 7 36 . 0 06 8, 8 81 , 6 30 . 1 31 78 , 8 28 , 3 66 . 1 3 A7 1 83 0 52 451 99 22 00 17 , 4 40 , 0 00 . 0 04 , 6 61 , 1 60 . 0 01 2, 1 01 , 1 60 . 0 0 ——————— ——————— ——————— GRANDTOTAL P642, 747, 726. 20P373, 466, 110. 13P1, 016, 213, 836. 33 ======================================
On24Augus t2001,t heCi t yofPas ay ,t hr oughi t sCi t yT r eas ur er ,i s s uednot i c es ofl e v yandwar r ant sofl e vyf ort heNAI A Pas a ypr oper t i es .MI AA r ec ei v edt he no t i c esandwar r ant sofl e vyon28Augus t2001.Ther eaf t er ,t heCi t yMa y orof Pas a yt hr eat ened t os el latp ubl i c auc t i on t he NAI A Pas a y pr oper t i es i ft he del i nquentr ealpr oper t yt ax esr emai nunpai d. On 29 Oct ober2001,MI AA fil ed wi t ht he Cour tofAppeal s a pet i t i on f or pr ohi bi t i on and i nj unc t i on wi t h pr ay erf orpr el i mi nar yi nj unc t i on ort empor ar y r es t r ai ni ngor der .Thepet i t i ons oughtt oenj oi nt heCi t yofPas ayf r om i mpos i ng r ealpr oper t yt ax eson,l ev yi ngagai ns t ,andauc t i oni ngf orp ubl i cs al et heNAI A Pas aypr oper t i es . On30Oc t ober2002,t heCour tofAppeal sdi s mi mi s s edt hepe t i t i onanduphel dt he po weroft heCi t yofPas a yt oi mpos eandc ol l ec tr eal t yt ax e sont heNAI APas a y pr oper t i es .MI AA fi l edamo t i onf orr ec ons i der at i on,whi c ht heCour tofAppeal s deni ed.Henc e,t hi spet i t i on. TheCour tofAppeal s'Rul i ng
The Cour tofAppeal s hel dt hatSect i ons 193 and 234 ofRepubl i c ActNo. 7160ort heLocalGov er nme mentCode,whi ch t ook effecton 1 Januar y 1992,
wi t hdr ew t hee x empt i onf r om pa ymentofr ealpr oper t yt ax esgr ant edt onat ur alor j ur i di c alper s ons ,i nc l udi nggov er nment ownedorc ont r ol l edc or por at i ons ,ex cept l oc alwat erd i s t r i c t s ,c ooper at i v esdul yr egi s t er edunderRepubl i cAc tNo.6938, nons t oc kandnonpr ofi thos pi t al sandeduc at i onali ns t i t ut i ons .Si nc eMI AA i sa gov er nment ownedc or por at i on,i tf ol l owst hati t st axex empt i onunderSec t i on21 ofEO 903has been wi t hdr awn upon t he effect i vi t y oft heLocalGov er nme ment Code. TheI ssue Thei ssuer ai sed i nt hi spet i t i on i swhet hert heNAI A Pasaypr oper t i esof MI AAar eexemp mptf r om r ealpr oper t yt ax. TheCour t ' sRul i ng
Thepet i t i oni sme mer i t or i ous . I nr ul i ng t hatMI AA i sno te x e m mp p tf r om pa y i ng r ealpr oper t yt ax ,t he Cour tof Appeal sci t edSect i ons193and234oft heLocalGover nme mentCodewhi chr ead: t hdr a walofT axEx e mp mpt i onPr i v i l eg es — . SEC.193.Wi Unl es so t her wi s e
pr o v i d ed i nt h i s Co de ,t ax e x e mp mp t i o ns ori n c en t i v e s gr an t e dt o ,or pr es ent l yenj oy edbyal lper s ons ,whet hern at ur alorj ur i di c al ,i nc l udi ng g ov e r n me me nt o wn ed o rc o nt r o l l e d c o r p or a t i o ns ,e x c ept l o c al wa t e r di s t r i c t s ,c ooper at i v esdul yr egi s t er ed underR. A.No.6 938,n ons t oc k an d n onp r o fit h os p i t a l sa nd ed uc at i o na li n s t i t ut i o ns ,a r e h er e by wi t hdr awnupont heeff ec t i v i t yoft hi sCode. i o ns f r o m Re alPr o pe r t yT a x .— The f SEC.234.Exempt ol l owi ng ar e
e x emp t edf r om pa y me mentoft her eal pr oper t yt ax : ( a)Realpr oper t yownedb yt heRepubl i coft hePhi l i ppi nesoran yofi t s po l i t i c als ubdi v i s i onse x c eptwh ent heb enefi c i alus et her eofhasbeen gr ant ed,f orc ons i der at i onorot her wi s et oat ax abl eper s on; ( b )Ch ar i t a bl e i n s t i t u t i o ns , c h ur c h es , p ar s o na ge s o r c o nv e n t s appur t enantt her et o,mos ques ,nonpr ofi torr el i gi ousc emet er i esandal l l ands ,bui l di ngs and i mpr ov ement s ac t ual l y ,di r ec t l y ,and ex c l us i v el y us edf orr el i gi ous ,c har i t abl eoreduc at i onal pur pos es ;
( c )Al lma mac hi ner i es a nd equi pmentt hatar e ac t ual l y ,di r ec t l y and e x c l u s i v e l yu s ed b yl o c alwa t e rd i s t r i c t sa nd g ov e r n me me nto wn ed o r c ont r ol l edc or por at i onsengagedi nt hes uppl yanddi s t r i but i onofwat er and/ orgener at i onandt r ans mi mi s si onofel ec t r i cpower ; ( d)Al lr ealpr oper t yownedb ydul yr egi s t er edc ooper at i v esaspr ov i ded f oru nd erR. A.No .6 93 8;a nd ( e)Mac hi ner yandequi pmentus edf orpol l ut i onc ont r ola nden vi r onment pr ot ec t i on. Ex c eptaspr o v i dedher ei n,an ye x empt i onf r om pa y me mentofr ealpr oper t y t axpr ev i ous l ygr ant edt o,orpr es ent l yenj oy edby ,al lper s ons ,whet her nat ur al or j ur i di c al ,i nc l udi ng al l gov er nment o wned or c ont r ol l ed c or por at i onsar eher ebywi t hdr awnupont heeff ec t i v i t yoft hi sCode.
Th eCo ur tofApp ea l she l dt h ata sag ov e r n me men t o wne dc o r p or a t i o n,MI AA' st a x exemp mpt i on underSect i on 21 ofEO 903hasal r eadybeen wi t hdr awn upon t he eff ec t i v i t yoft heLoc al Go v er nmentCodei n1992. Ma Mani l aI nt er nat i onalAi r por tAut hor i t yv .Cour tofAppeal s6 I n ( 2006MI AA cas e) , t hi sCour tal r eadyr es ol v edt hei s sueofwhet hert heai r por tl andsandbui l di ngsof MI AA ar eexemp mptf r om t axunderexi st i ngl aws.The2006MI AA caseor i gi nat ed f r om apet i t i onf orpr ohi bi t i onandi nj unc t i onwhi c hMI AA fi l edwi t ht heCour tof Appeal s ,s eek i ngt or es t r ai nt heCi t yofPar añaquef r om i mpos i ngr ealpr oper t y t ax on,l ev y i ng agai ns t ,a nd auc t i oni ng f orpubl i cs al et he ai r por tl ands and bui l di ngsl oc at edi nPar añaqueCi t y .Theonl ydi ff er enc ebe t weent he2006MI AA case and t hi s case i st hatt he 2006 MI AA case i nvol ved ai r por tl ands and bui l di ngsl oc at edi nPar añaqueCi t ywhi l et hi sc as ei n vol v edai r por tl andsand b ui l d i n gsl o c at e di nPa s ayCi t y .Th e2 00 6 MI AA c a s ea ndt h i sc a s er a i s e dt h e s amet hr es hol di s s ue:whe t hert hel oc al go v er nmentc ani mpos er ealpr oper t yt ax on t he ai r por tl ands ,c ons i s t i ng mos t l yoft he r unwa y s,aswel last he ai r por t bui l di ngs ,ofMI AA.I nt he2006MI AAc as e,t hi sCour thel d: To summar i ze, MI MI AA i s not a gov er nme ment owned or cont r ol l ed c or por at i on underSec t i on2( 13)o ft heI nt r oduc t or yPr o vi s i onsoft he Admi ni s t r at i v eCodebec aus ei ti snotor gani z edasas t oc kornons t oc k cor por at i on. Nei t her i s MI AA a gover nme ment owned or cont r ol l ed
c or por at i on
under
Sec t i on
16,
Ar t i c l e
XI I
of
t he
1 98 7Co ns t i t u t i o nb ec a us e MI AA i sn otr e qu i r e dt o me ett h et e s to f ec onomi cv i abi l i t y .MI AA i s a go v er nmenti ns t r ument al i t yv e st ed wi t h c or por at epower sandper f or mi nges s ent i alpubl i cs er v i c espur s uantt o Sec t i on2( 10)oft heI nt r oduc t or yPr ov i s i onsoft heAdmi ni s t r at i v eCode. Asago v er nmenti ns t r ument al i t y ,MI AA i snots ubj ec tt oan yk i ndoft ax by l ocalgover nme ment sunderSect i on 133( o)oft heLocalGover nme ment i on t ot he exemp mpt i on i n Sect i on 234( a)doesnot Code.Theexcept appl yt oMI AAbecauseMI MI AA i snotat axabl eent i t yundert heLocal Gover nmentCode.Suchexcept i onappl i esonl yi ft hebenefici aluse ofr e alpr ope r t yowne dbyt heRe publ i ci sgi v ent oat a xa bl ee nt i t y . Fi nal l y ,t heAi r por tLandsandBui l di ngsofMI AAar epr oper t i esde v ot ed Pr oper t i esof t opubl i cus eandt husar epr o per t i esofpub l i cd omi ni on. publ i cdomi ni onar eownedbyt heSt at eort heRepubl i c.Ar t i c l e420of
t heCi v i l Codepr ov i des :
TSEHcA
Ar t . 420.The f ol l owi ng t hi ngs ar epr oper t y of publ i c domi ni on:
nt e nde df orpubl i cus e,s ( 1 )Th os ei uc hasr oads ,c anal s ,r i v er s , o r t sa r uct ed by t he St at e,b t or r ent s ,p nd b r i d ge sconst anks, he r sofs i mi l a rc har a ct er s hor es ,r oads t eads ,andot ;
( 2)Thos ewhi c hbel ongt ot heSt at e,wi t houtbei ngf orpubl i cus e, and ar ei r f or t he nt ended f or some me publ i c ser vi ceo dev el opmentoft henat i onal weal t h. por t s ...c ons t r uc t ed b yt he St at e"i r por t sand The t er m" nc l udesai
s e ap or t s .Th e Ai r p or tL an dsa nd Bu i l d i n gso fMI AA a r ei n t e nd ed f o r publ i cus e,andatt hev er yl eas ti nt endedf orpubl i cs er v i c e.Whet her i nt endedf orpubl i cus eorpubl i cser v i c e,t heAi r por tLandsandBui l di ngs pr oper t i esofpubl i cdomi ni on.Aspr ar e oper t i esofpubl i cdomi ni on,t he
Ai r p or tL an dsan dBu i l d i n gsar eo wn edb yt h eRe pu bl i can dt h use x e mp mp t f r o m r e ale s t a t et a xu nd erSe c t i o n2 34 ( a )oft h eL oc a lGo v e r n me me nt Code.7( Emphas i si nt heor i gi nal )
Th e de fi ni t i o no f" nd er Sec t i o n2 ( 10 )o ft h eI n t r o du ct o r y i nst r ument al i t y"u Pr o v i s i onsoft heAdmi ni s t r at i v eCodeof1987us est he phr as e" i nc l udes...
g ov e r n me nt o wn edo rc o nt r o l l e dc o r p or a t i on s "wh i c hme an st h atag ov e r n men t " i nst r ument al i t y" may or may not be a " gover nment owned or cont r ol l ed c or por at i on" .Obv i ous l y ,t he t er m gov er nment" i ns t r ument al i t y "i sbroader t han i on2( 1 0) t het er m" gov er nment ownedorc ont r ol l edc or por at i on" .Sect pr o vi des : al Ter msDefined. SEC.2.Gener — ...
( 10)I e f e r st oan ya ge nc yoft h en at i o na lGo v er n men t , ns t r ument al i t yr no ti nt egr at ed wi t h i nt he depar t mentf r ame wor k ,v es t ed wi t hs pec i al f unc t i onsorj ur i s di c t i onbyl aw,endowedwi t hs omei fnotal lc or por at e power s ,admi ni s t er i ngs pec i alf unds ,andenj o yi ngoper at i onal aut onomy , us ual l yt hr ough a c har t er .Thi st er m i nc l udes r egul at or y ag enc i es , c har t er edi ns t i t ut i onsandgov er nment ownedorc ont r ol l edc or por at i ons .
go ver nment ownedorc ont r ol l edc or por at i on"hasas Thet er m" epar at edefi ni t i on underSec t i on2( 13)8 oft heI nt r oduc t or yPr ov i s i onsoft heAdmi ni s t r at i v eCodeof 1987: al Ter msDefined. SEC.2.Gener — ... nment owned or cont r ol l ed cor por at i onr ( 13)Gover e f e r st o a ny
ag en c yo r g an i z e da sas t o ck o rno ns t oc kc or p or a t i o n,v e s t ed wi t h f unc t i onsr el at i ngt opubl i cneedswhet hergov er nment alorpr opr i et ar yi n nat ur e, and owned by t he Gov er nment di r ect l y or t hr ough i t s i ns t r ument al i t i esei t herwhol l y ,or ,wher e appl i c abl e asi nt he c as e of s t oc kc or por at i ons ,t ot heex t entofatl eas tfi f t y one( 51)p er c entofi t s Pr o v i d ed,That gov c api t al s t oc k : er nment owned
or cont r ol l ed
c or p or at i o nsma yf ur t h erb ec a t eg or i z e db yt hed ep ar t me nto fBu dge t , t h e Ci v i lSe r v i c e Co mmi s s i o n,a nd t h e Co mmi s s i o no n Au di tf o rt h e p ur p os eo ft h ee x e r c i s ea nd d i s c h ar g eo ft h ei rr e s pe c t i v ep owe r s , f unc t i onsandr es pons i bi l i t i eswi t hr es pec tt os uc hc or por at i ons .
Thef ac tt hatt wot er msha v es epar at edefi ni t i onsmeanst hatwhi l ea go v er nment" i ns t r ument al i t y "ma yi nc l udea" go v er nment ownedorc ont r ol l ed c or por at i on" ,t her emaybeagov er nment" i ns t r ument al i t y "t hatwi l lnotqual i f y asa" go v er nment ownedorc ont r ol l edc or por at i on" .
Ac l os es cr ut i nyoft hedefi ni t i onof" gov er nment ownedorc ont r ol l edc or por at i on" AA i nSec t i on2( 13)wi l ls how t hatMI AAwoul dnotf al lunders uc hdefi ni t i on.MI i sagover nment"i nst r ument al i t y"t hatdoesnotqual i f yasa"gover nment .Ase x pl a i n edi nt h e2 00 6MI AAc a s e: ownedorcont r ol l edcor por at i on" Ag ov e r n me nt o wn edo rc o n t r ol l e dc o r po r a t i o nmu s tb e" o r g an i z e da sa s t oc korn on s t o c kc or p or at i o n" .MI AA i sn oto r g an i z ed a sa s t oc ko r nons t oc kc or por at i on.MI AAi snotas t oc kc or por at i onbec aus ei thasno c api t als t oc kdi v i dedi nt os har es .MI AA hasnos t oc k hol der sorv ot i ng s har es .... Sect i on 3oft heCor por at i onCodedefinesast ockcor por at i on as c api t als t ocki sdi vi dedi nt oshar esand...aut hor i z ed onewhose" t o di s t r i but et ot hehol de r sofs uc hs ha r e s di v i de nds.... " MI AA
ha sc api t a lbuti ti snotdi v i de di nt os ha r e sofs t oc k.MI AA ha sno st ockhol der s or vot i ng shar es. Hence, MI AA i s not a st ock c or por a t i on.
x x xx x xx x x MI AA i s al so not a nonst ock cor por at i on because i t has no member s.Sect i on 87oft heCor por at i on Codedefinesanonst ock c or por a t i ona s" onewhe r enopa r tofi t si nc omei sdi s t r i but a bl ea s di vi dends t oi t s member s, t r ust ees or officer s" . A nonst ock
en i fwe ass ume t hatt he cor por at i on must ha ve member s.Ev Go v e r n me nti sc o ns i d er e da st h es o l e me mb ero fMI AA,t h i swi l ln ot make MI AA a nonst ock cor por at i on.Nonst ock cor por at i ons cannot di s t r i but ean ypar toft hei ri nc omet ot hei rmember s .Sec t i on11oft he MI AACha r t erman dat esMI AAt or e mi t2 0% o fi t sa nnu al g r os so per at i n g i nc omet ot heNat i onal T r eas ur y .Thi spr ev ent sMI AAf r om qual i f y i ngasa nons t oc kcor por at i on. Sec t i on88oft heCor por at i onCodepr ov i dest hatnons t oc kcor por at i ons ar e " or gani z ed f or c har i t abl e, r el i gi ous , educ at i onal , pr of es si onal , c ul t ur al ,r ec r eat i onal ,f r at er nal ,l i t er ar y ,s c i ent i fi c ,s oc i al ,c i v i ls er v i c e,o r s i mi l arpur pos es ,l i k et r ade,i ndus t r y ,agr i c ul t ur e and l i k ec hamber s " . MI AAi snotor gani z edf oranyoft hes epur pos es .MI AA,apubl i cut i l i t y ,i s or gani z edt ooper at eani nt er nat i onal anddomes t i cai r por tf orpubl i cus e.
Si nceMI AA i snei t herast ocknoranonst ockcor por at i on,MI AA doesnotqual i f yasagover nment ownedorcont r ol l edcor por at i on. What t hen i st he l egal st at us of MI AA wi t hi n t he Nat i onal Gove r nment ?
MI AA i sago v er nmenti ns t r ument al i t yv es t edwi t hc or por at epo wer st o per f or m effic i ent l yi t sgo v er nment alf u nc t i ons .MI AA i sl i k e an yo t her heonl ydi ffe r e nc ei st ha tMI AAi sv es t e d gov er nmenti ns t r ument al i t y,t wi t hc or por a t epowe r s .... When t he l aw vest si n a gover nmenti nst r ument al i t y cor por at e powe r s ,t hei ns t r ume nt a l i t ydoe snotbe comeac or por a t i on.Unl e ss t he gover nmenti nst r ument al i t yi s or gani zed as a st ock ornonst ock cor por at i on, i tr emai ns a gover nment i nst r ument al i t y exer ci si ngnotonl ygover nment albutal socor por at epower s.Thus, MI AA ex er ci ses t he gover nment alpower s of emi nent domai n, pol i ceaut hor i t yandt hel evyi ngoff eesandchar ges.Att hesame t i me,MI AA exer ci ses "al lt he power s ofa cor por at i on undert he Cor por a t i onLa w,i ns of a ra st he sepowe r sa r enoti nc ons i s t e ntwi t h t hepr ov i si onsoft hi sEx ec ut i v eOr der . "9
Thus, MI AA i s not a gover nment owned or cont r ol l ed cor por at i on but a go v er nmenti ns t r ument al i t ywh i c hi se x emp tf r om an yk i ndoft axf r om t hel oc al go v er nment s .I ndeed,t hee x er c i s eoft het ax i ngpowerofl oc algo v er nmentuni t s i ssubj ec tt ot hel i mi t at i onsenumer at edi nSec t i on133oft heLoc alGo v er nment Code.10Under Sect i on 133 ( o)11of t heLocal Gov er nment Code, l ocal gover nmentuni t s have no power t ot ax i nst r ument al i t i es of t he nat i onal go v er nmentl i k et heMI AA.Henc e,MI AAi snotl i abl et opa yr ealpr oper t yt axf or t heNAI APas a ypr oper t i es . aCITEH
Fur t her mor e,t he ai r por tl andsand bui l di ngsofMI AA ar e pr oper t i esofpubl i c domi ni oni nt endedf orpubl i cus e,andass uc har ee x emptf r om r ealpr oper t yt ax underSect i on234( a)oft heLocalGover nmentCode.However ,undert hesame pr o vi s i on,i fMI AA l eas es i t sr ealpr oper t yt oat ax abl e per s on,t he s pec i fi c pr oper t yl eas edbec omess ubj ec tt or ealpr oper t yt ax .12 I nt hi sc as e,onl yt hos e por t i onsoft heNAI A Pas aypr oper t i eswhi c har el eas edt ot ax abl eper s onsl i k e pr i v at epar t i esar es ubj ec tt or ealpr oper t yt axbyt heCi t yofPas ay .
WHEREFORE,weGRANT DEt t hepet i t i on.WeSETASI h e De c i s i o nd at e d3 0 Oc t o be r2 00 2a ndt h eRe s ol u t i o nd at e d1 9Ma r c h2 00 4o ft h eCou r to fAp pea l si n CAG. R.SPNo.67416.WeDECLARE t heNAI APas a ypr oper t i esoft heMani l a I nt er nat i onalAi r por tAut hor i t yEXEMPTf r o m r e alpr o pe r t yt axi mp os e db yt h e D Ci t yofPas a y .Wedec l ar eVOI a l lt her ealpr oper t yt axas ses sment s ,i nc l udi ng t hefi nalnot i c esofr ealpr oper t yt axdel i nquenc i es ,i s suedbyt heCi t yofPas ayon t heNAI APas aypr oper t i esoft heMani l aI nt er nat i onalAi r por tAut hor i t y ,ex c eptf or t hepor t i onst hatt heMani l aI nt er nat i onalAi r por tAut hor i t yhasl eas edt opr i v at e par t i es .
Nocost s. SO ORDERED. Puno,C. J . ,Qui s umbi ng,Cor ona,Car pi oMor al es ,Chi c oNaz ar i o,Vel as c o,J r . , Leonar dodeCas t r o,Br i on al t a,J J . , andPer c onc ur .
eas es eedi s s ent i ngopi ni on. Ynar es Sant i ago,J . ,pl Aus t r i aMar t i nez ,J . , j oi nst hes epar at eopi ni onofJ .Nac hur a. Ti nga,J . ,pl eas es eedi s sent i ngopi ni on. Nac hur a,J . ,pl eas es ees epar at eopi ni on.
Separ at eOpi ni ons YNARESSANTI AGO, J . ,di s s ent i ng:
I ndeed,as poi nt ed outby Just i ce Ant oni o T.Car pi o,t he Cour thas t wi ce r eaffir med t he r ul i ng i nMani l aI nt er nat i onal Ai r por t Aut hor i t yv . Cour t of Appeal s l i ppi neFi s her i esDe v el opmentAut hor i t y i nt h es u bs e que ntc a s esofPhi 1 v .Cour tofAppeal s2 l i ppi neFi s her i esDev el opmentAut hor i t yv .Cour tof andPhi Appeal s .3 Ho we v er ,uponf ur t hers t udyoft hei s s uespr es ent edi ns ai dc as es ,I Mani l aI nt er nat i onalAi r por tAut hor i t y agr eewi t hJ us t i c eDant eO.Ti ngat hatt he ( MI AA)r ul i ng was i nc or r ec t l y r at i onal i z ed, par t i c ul ar l y on t he unwi el dy c har ac t er i z at i onofMI AA asas pec i esofago v er nmenti ns t r ument al i t y .Is ubmi t
po ne nc i aofJ t hatt he pr es ent us t i c e Car pi o per pet uat est he er r orwhi c h Ifi nd i mper at i v ef ort heCour tt oc or r ec t .
Nev er t hel es s,unl i k eJ us t i c eTi nga' sr at i onal i z at i on,Ifi ndt hatt her ei snomor e need t o bel abort he i ss ue ofwhet hert he MI AA i s a gover nment owned or c ont r ol l ed c or por at i on ( GOCC)ora go v er nmenti ns t r ument al i t yi n or dert o r es ol v et hei s s ueofwhet hert heai r por tpr oper t i esar es ubj ec tt or ealpr oper t y t a x . I ns t ead,Is ubs c r i bet ot he" s i mpl e,di r ec tandpai nl es sappr oac h"p r opos edby fi net une" J us t i c eAnt oni oEduar doB.Nac hur at hati ti si mper at i v et o" t heCour t ' s t an Cebu I nt er nat i onalAi r por tAut hor i t yv .Mar c os4v r ul i ng i nMac i s àv i st hat l aI nt er nat i onalAi r por tAut hor i t yv .Cour tofAppeal s i nMani ;5and t hatwhat needsonl yt obeas c er t ai nedi swhet hert heai r por tpr oper t i esar eownedb yt he Republ i c ;andi fs uc h,t hens ai dpr oper t i esar ee x emptf r om r ealpr oper t yt ax ,by appl yi ng Sect i on 234 ofRepubl i c ActNo.7160( R. A.No.7160)ort heLocal Gov er nmentCode( LGC) . Pur s uantt oSec t i on232oft heL GC,apr ov i nc eorc i t yormuni c i pal i t ywi t hi nt he Met r opol i t an Mani l a Ar ea i s vest ed wi t ht he power t ol evy an annualad v al or em t a xo nr e alp r o pe r t ys u c ha sl a nd ,bu i l d i n g,ma c hi n er y ,a nd o t h er i mpr ov ementnother eaf t ers pec i fi cal l ye x empt ed.Cor ol l ar i l y ,Sec t i on234t her eof pr o v i desanenumer at i onofc er t ai npr oper t i eswhi c har ee x emptf r om pa y mentof t her ealpr oper t yt ax ,amongwhi c hi s" r ealpr oper t yownedbyt heRepubl i coft he Phi l i ppi nesora nyofi t spol i t i c als ubdi v i s i onse x ceptwhen t he benefi ci alus e t her eofhasbeengr ant ed,f orc ons i der at i onorot her wi s e,t oat ax abl eper s on" . Ar t i c l e420oft heCi v i lCodeenumer at est hepr oper t i esofpubl i cdomi ni on,t owi t : Ar t .420.Thef ol l owi ngt hi ngsar epr oper t yofpubl i cdomi ni on: ( 1)Thos ei nt endedf orpubl i cus e,s uc hasr oads ,c anal s ,r i v er s ,t or r ent s , p or t sa nd b r i d ge sc o ns t r u c t e db yt h e St a t e ,ba nk s ,s h o r e s , r oads t eads ,andot her sofs i mi l arc har ac t er ; ( 2)Thos ewhi c hb el on gt ot heSt at e,wi t houtbei ngf orp ubl i cu se,and ar ei nt endedf ors omepubl i cser v i c eorf ort hedev el opmentoft he nat i onal weal t h.
Ther ei s no ques t i on t hatt he ai r por tand al li t si ns t al l at i ons ,f ac i l i t i es and equi pment ,a r ei nt ended f orpubl i c us e and ar e,t hus ,p r oper t i es ofp ubl i c d omi n i o n. t an Cebu I nt er nat i onalAi r por tAut hor i t yv . Conc ededl y ,t he Cour tr ul ed i nMac Mar cos6 t hat : Thec r uc i ali s s uest hent obeaddr es s edar e:( a)whe t hert hepar c el sof l a nd i nq ue s t i o nb el o ng t ot h e Re pu bl i co ft h e Ph i l i p pi n es wh os e benefi c i alus ehasbeengr a nt edt ot hepe t i t i oner ,and( b)whe t hert he pet i t i oneri sa" t ax abl eper s ons " . Sec t i on15of[ MCI AA' s ]Char t erpr o vi des : ans f erofEx i s t i ngFac i l i t i esandI nt angi bl eAs set s .— Al Sec .15.Tr
ex i s t i ng publ i c ai r por tf ac i l i t i es ,r unway s,l ands ,bui l di ngs and ot herpr oper t i es ,mov abl eori mmo v abl e,bel ongi ngt oorpr es ent l y admi ni s t er ed b yt he a i r por t s ,and al la s s et s ,po wer s ,r i ght s , i nt er es t sandpr i v i l egesr el at i ngonai r por twor k sorai roper at i ons , i nc l udi ngal lequi pmentwhi c har enec es s ar yf ort heoper at i onsof ai rna vi gat i on,aer odomec ont r olt ower s ,c r as h,fi r e,andr es c ue f ac i l i t i es ar e her eby t r ans f er r ed t ot he Aut hor i t y : Pr ov i ded, howe v er ,t hatt heoper at i onsc ont r olofal lequi pmentnec es s ar y f o rt h e o pe r a t i on of r a di o ai d st oa i rn av i g at i o n, a i r wa y s c o mmu ni c at i o n,t hea pp r o ac hc on t r o lo ffic e ,a ndt hea r e ac o nt r o l c e nt ers h al lb er e t a i ne db yt h e Ai rT r a ns po r t a t i on Offic e .No equi pment ,ho we v er ,s hal lber emo v edb yt heAi rT r ans por t at i on Offic ef r o m Mac t a nwi t h outt h ec o nc u r r e nc eo ft h eAu t h or i t y .The Aut hor i t ymayas si s ti nt hemai nt enanc eoft heAi rT r ans por t at i on Officeequi pment .
The" ai r por t s "r ef er r edt oar et he" LahugAi rPor t "i nCebuCi t yandt he " Mac t anI nt er nat i onalAi r por ti nt hePr o vi nc eofCebu" ,whi c hbel onged t ot he Republ i coft he Phi l i ppi nes ,t hen undert he Ai rT r ans por t at i on Office( ATO) .
SHI ETa
I tma yber eas onabl et oas s umet hatt het er m" l ands "r ef ert o" l ands "i n Ce bu Ci t yt h en a dmi n i s t e r e db yt h eL ah ug Ai rPo r ta nd i n c l u de st h e pa r c e l so fl a ndt h er e s po nd en tCi t yo fCe bus e ek st ol e v yonf o rr e al pr oper t yt ax es .Thi ss ec t i oni nv ol v esa" t r ans f er "o ft he" l ands "among ot hert hi ns ,t ot hepet i t i onerandnotj us tt het r ans f eroft hebenefi ci alus e t h er e of ,wi t ht h eo wn er s hi pb ei ng r e t ai n ed b yt h e Re pub l i co ft he Phi l i ppi nes . Thi s" t r ans f er "i s ac t ual l ya n abs ol ut ec on v ey a nc e oft he o wner s hi p nt er t her eofbec aus et hepet i t i oner ' saut hor i z edc api t al s t oc kc ons i s t sof ,i al i a," t hev a l ueofs uc hr eales t at eo wnedand/ oradmi ni s t er edb yt he
ai r por t s " .Henc e,t hepet i t i oneri snow t heowneroft hel andi nques t i on andt hee x cept i oni nSec t i on234( c )oft heL GCi si nappl i c abl e.
Meanwhi l e,Ex ecut i ve Or derNo.9037o rt h e Re v i s e dCh ar t e ro ft h e Ma ni l a I nt er nat i onalAi r por tAut hor i t y,pr ov i desi nSec t i on3t her eoft hat— x x xx x xx x x The l and wher et he Ai r por ti s pr esent l yl ocat ed as wel las t he s ur r oundi ngl andar eaofappr o xi mat el ys i xhundr edhec t ar es ,ar eher eby t r ans f er r ed,c onv e y edandas s i gnedt ot heowner s hi pandadmi ni s t r at i on oft heAut hor i t y ,s ubj ec tt oex i s t i ngr i ght s ,i fany .TheBur eauofLands an do t he ra pp r o pr i a t eg ov e r n me nta ge nc i e ss h al lu nd er t a k ea na c t ua l s ur v eyoft hear eat r ans f er r edwi t hi noney earf r om t hepr omul gat i onof t hi sEx ec ut i v eOr derandt hec or r es pondi ngt i t l et obei s s uedi nt hename oft heAut hor i t y .Anypor t i ont her eofs hal l notbedi s pos edt hr oughs al eor t hr oughan yo t hermodeunl es ss pec i fi c al l yappr o v edb yt hePr es i dentof t hePhi l i ppi nes .
Regar dl es s oft he appar entt r ans f eroft i t l e oft he s ai d pr oper t i est o MI AA,I s ubmi tt hatt hel at t eri sonl yhol di ngt hepr oper t i esf ort hebenefi toft heRepubl i c i ni t sc apac i t yasagentt her eof .I ti st obenot edt hatdes pi t et hec onv ey anc eof t het i t l et ot hes ai dpr oper t i est ot heMI AA,howev er ,t hel at t erc oul dnoti nany way di spose oft he same t hr ough sal e ort hr ough any ot hermode unl ess s pec i fi cal l yappr ov edbyt hePr es i dentoft heRepubl i c .8 EvenMI AA' sbor r owi ng po weri sdi c t at eduponb yt hePr es i dent .Thus ,MI AA c oul dr ai s ef unds ,ei t her f r om l oc alori nt er nat i onals our c es ,b ywayofl oans ,c r edi t sors ec ur i t i es ,a nd
ot herbor r owi ngi ns t r ument s ,c r eat epl edges ,mor t gagesandot herv ol unt ar yl i nes orenc umbr anc esonanyofi t sas set sorpr oper t i es ,onl yaf t erc ons ul t at i onwi t h t he Sec r et ar yofFi nanc e and wi t ht he appr o v aloft he Pr es i dent .I n addi t i on, MI AA' st o t alo ut s t an di n gi n de bt e dn es sc o ul de x c e ed i t sn etwo r t ho nl yu po n ex pr es saut hor i z at i onbyt hePr es i dent .9 If ul l yagr eewi t hJ us t i c eNac hur at hat" ev eni fMI AAhol dst her ec or dt i t l eov ert he ai r por tpr oper t i es ,s uc hhol di ngc anonl ybef ort hebenefi toft heRepubl i c ,t hat MI AAex er c i s esanes sent i al l ypubl i cf unc t i on" . I ns um,t heai r por tandal li t si ns t al l at i ons ,f ac i l i t i esandequi pmentoft heMI AA, a r ep r o per t i e so fp ub l i cdo mi n i ona nds h ou l dt h usbee x e mp t edf r o mp ay me nto f r ealpr oper t yt ax ,e x c eptt hos epr oper t i eswher et hebenefi c i alus et her eofhas beengr ant ed,f orc ons i der at i onorot her wi s e,t oat ax abl eper s on. ACCORDI NGL Y,Iv ot et ogr antt hepet i t i on. TI NGA, J . ,di s s ent i ng: AA v .Ci t y of Imai nt ai n my di ssentexpr essed i nt he 2006 r ul i ng i nMI ( t he" ) Par añaque1 Pa r a ñaq uec as e . "
Th ema j o r i t yr e l i e sont woma i np oi n t sd r a wnf r o mt h e2 00 6 as ei n Par añaquec t hi si ns t anc easi tr ul esonc eagai nt hatt heMI AA i se x emptf r om r eal t yt ax es ass ess ed by t he Ci t y of Pasa y . Fi r st , becaus e MI AA i s a gov er nment i ns t r ument al i t y ,i ts omehowfi ndsi t s el fe x emptf r om t hes ai dt ax es ,s uppos edl yby o pe r at i o no ft h eLo c alGo v er nme ntCo de.Se c on d,t h es u bj e c tp r o per t i e sa r e al l egedl yownedbyt heRepubl i coft hePhi l i ppi nes ,not wi t hs t andi ngt hatl egalt i t l e t her et oi si nt henameoft heMI AA,whi c hi sadi s t i nc tandi ndependentj ur i di c al per s onal i t yf r om t heRepubl i c . HEI Sca
I .
Onc e agai n, at t empt s ar e dr awn t o c l as s i f y MI AA as a gov er nment i ns t r ument al i t y ,andnotasago v er nmento wnedorc ont r ol l edc or por at i on.Suc h c har ac t er i z at i on wasappar ent l yi ns i s t edupon i nor dert ot ai l or fi tt he MI AA t o Se c t i o n1 33oft h eL oc a lGo v er nme ntCod e,wh i c hr e ad s :
mi t at i ons on t he T ax i ng Power s of Loc al Sec. 133.Common Li Go v e r n me ntUn i t s .— Unl e ssot he r wi s epr ov i de dhe r e i n,t heex er c i s e
oft het ax i ngpower sofpr ov i nc es ,c i t i es ,muni c i pal i t i es ,andbar angay s s hal l notex t endt ot hel ev yoft hef ol l owi ng: x x xx x xx x x ,f ees or char ges of any ki nd on t he Nat i onal 1 5 .Taxes Gover nment ,i t s agenci es and i nst r ument al i t i esand l ocal
go v er nmentu ni t s .( emph as i sandunder s c or i ngs uppl i ed) .
añaquec Howwast hePar as eabl et odefi net heMI AAasai ns t r ument al i t yoft he Nat i onalGov er nment ?Thecasepr opoundedt hatMI AAwasnotaGOCC: Ther ei snodi s put et hatago v er nment ownedorc ont r ol l edc or por at i oni s n ote x e mp tf r o mr e ale s t a t et a x .Ho we v e r ,MI AA i sn otag ov e r n me nt o wned or c ont r ol l ed c or por at i on.Sec t i on 2( 13)oft he I nt r oduc t or y Pr o v i s i o nso ft h e Ad mi n i s t r a t i v eCo de o f1 987 d efi n esa g ov e r n me nt ownedorc ont r ol l edc or por at i onasf ol l ows : al Ter msDefined. SEC.2.Gener — ...
( 13)Go v er nment o wned o rc ont r ol l ed c or por at i on r ef er st o an y agenc yor gani z edasas t oc kornons t oc kcor por at i on,v es t edwi t h f u nc t i o ns r e l a t i n gt op ub l i cn ee ds wh et h er g ov e r n me nt a lor p r o pr i e t a r yi nn at u r e ,a ndo wn edb yt h e Go v er n men td i r ec t l yo r t hr oughi t si ns t r ument al i t i esei t herwhol l y ,or ,wher eappl i c abl eas i nt hec as eofs t oc kc or por at i ons ,t ot heex t entofatl eas tfi f t y one ( 51)per c entofi t sc api t al s t oc k :....( Emphas i ss uppl i ed) Ag ov e r n me nt o wn edo rc o n t r ol l e dc o r po r a t i o nmu s tb e" o r g an i z e da sa s t oc korn on s t o c kc or p or at i o n" .MI AA i sn oto r g an i z ed a sa s t oc ko r nons t oc kc or por at i on.MI AAi snotas t oc kc or por at i onbec aus ei thasno c api t als t oc kdi v i dedi nt os har es .MI AA hasnos t oc k hol der sorv ot i ng s h a r e s . x x xx x xx x x Cl ear l y ,u nderi t s Ch ar t er ,MI AA d oes no tha v ec ap i t als t oc kt hati s di v i dedi nt os har es .
Sec t i o n3oft h eCor p or a t i onCo de1 0d efi n esas t oc kc or p or a t i o na so ne whos e" c api t als t oc ki s di v i ded i nt os har es and ...a ut hor i z ed t o di s t r i but et ot hehol der sofs uc hs har esdi v i dends.... "MI AAhascapi t al buti ti snotdi v i dedi nt os har esofs t oc k .MI AA hasnos t oc k hol der sor v ot i ngs har es .Henc e,MI AAi snotas t oc kcor por at i on. MI AA i sal s on otan on s t o c kc o r p or a t i o nb ec a us ei th asnome mb er s . Sec t i o n8 7oft heCo r p or a t i o nCod ed efi n esano ns t o c kc o r p or a t i ona s " one wher e no par tofi t si nc ome i sdi s t r i but abl e asdi v i dendst oi t s member s,t r ust ees orofficer s" .A nonst ock cor por at i on musthave me mb er s .Ev e ni fweas s u met h att h eGo v e r n me nti sc o ns i d er e da st h e s ol eme mb ero fMI AA,t h i swi l lno tma k eMI AAan on s t o c kc or p or a t i o n. Nons t oc kc or por at i onsc annotdi s t r i but eanypar toft hei ri nc omet ot hei r member s.Sect i on11oft heMI AAChar t ermandat esMI AAt or emi t20% ofi t san nua lgr os soper at i ng i nc omet ot he Nat i onalT r eas ur y .11 Thi s pr ev ent sMI AAf r om qual i f y i ngasanons t oc kcor por at i on. Sec t i on88oft heCor por at i onCodepr ov i dest hatnons t oc kcor por at i ons ar e " or gani z ed f or c har i t abl e, r el i gi ous , educ at i onal , pr of es si onal , c ul t ur al ,r ec r eat i onal ,f r at er nal ,l i t er ar y ,s c i ent i fi c ,s oc i al ,c i v i ls er v i c e,o r s i mi l arpur pos es ,l i k et r ade,i ndus t r y ,agr i c ul t ur e and l i k ec hamber s " . MI AAi snotor gani z edf oranyoft hes epur pos es .MI AA,apubl i cut i l i t y ,i s or gani z ed t o oper at e an i nt er nat i onaland domes t i cai r por tf orpubl i c u s e .2
Thi s" bl ac korwhi t e"c at egor i z at i onof" s t oc k"a nd" nons t oc k"c or por at i onsut t er l y di s r egar ds t he f ac tt hatno t hi ng i nt heCons t i t ut i onpr ev ent s Congr es sf r om c r eat i ng go v er nmento wned orc o nt r ol l ed c or por at i onsi n what ev ers t r uc t ur ei t deems necessar y . Not e t hat t hi s defini t i ons of " st ock" and " nonst ock" c or por at i onsar et ak enf r om t heAdmi ni s t r at i v eCode,andnott heCons t i t ut i on. TheAdmi ni s t r at i v eCodei sas t at ut e,andi st husnots uper i ori nhi er ar c hyt oany o t hers ubs equents t at ut ec r eat edbyCongr es s ,i nc l udi ngt hechar t er sf orGOCCs . Si nce MI AA was pr esumed nott o be a st ock ornonst ock cor por at i on,t he Par añaquec maj or i t yi nt he as et hens t r i v edt ofi ti ti nt oac at egor y .
Si n c eMI AA i sn ei t h eras t oc kn oran on s t oc kc o r p or a t i o n,MI AA do es no tqual i f yasago v er nment o wnedorc ont r ol l edc or por at i on.Whatt hen i st hel egal s t at usofMI AAwi t hi nt heNat i onal Go v er nment ? MI AA i sago v er nmenti ns t r ument al i t yv es t edwi t hc or por at epo wer st o per f or m effic i ent l yi t sgo v er nment alf u nc t i ons .MI AA i sl i k e an yo t her go v er nmenti ns t r ument al i t y ,t heonl ydi ff er enc ei st hatMI AA i sv es t ed wi t hc or por at epower s .Sec t i on2( 10)oft heI nt r oduc t or yPr ov i s i onsoft he Admi ni s t r at i v eCodedefi nesago v er nment" i ns t r ument al i t y "asf ol l ows : al Ter msDefined. SEC.2.Gener — ...
( 1 0)I n s t r u me nt a l i t y r e f e r s t o a ny a ge nc y o ft h e Na t i o na l Go v e r n me nt ,n oti n t e gr a t e d wi t h i nt h ed ep ar t me ntf r a me wo r k , v es t edwi t hs pec i alf unc t i onsorj ur i s di c t i onbyl aw,endowedwi t h s omei fnotal lc or por at epower s ,admi ni s t er i ngs pec i alf unds ,and enj oy i ng oper at i onalaut onomy ,us ual l yt hr ough a c har t er .... ( Emp has i ss up pl i e d) Wh ent h el a wv e s t si nago v er n men ti n s t r ume nt a l i t yc o r p or at ep ower s , t he i nst r ument al i t y does not become a cor por at i on. Unl ess t he g ov e r n me nti n s t r u me nt a l i t yi so r g an i z e da sas t o c ko rn on s t o c k c or por at i on,i tr emai nsagov er nmenti ns t r ument al i t yex er c i s i ngnotonl y g ov e r n me nt a lb uta l s oc o r p or a t ep owe r s .Th us ,MI AA e x e r c i s e st h e gover nment alpower s ofemi nentdomai n,pol i ce aut hor i t y and t he l e vy i ngoff eesan dc har ges .Att hes amet i me,MI AA e x er c i s es" al lt he po we r so fac o r p or a t i onun de rt h e Co r p or a t i o nL aw,i n s of a rast h es e power sar enoti nc ons i s t entwi t ht hepr ov i s i onsoft hi sEx ec ut i v eOr der " .3
Unf or t unat el y ,t hi sc i t eds t at ut or ydefi ni t i onofan" i ns t r ument al i t y "i si nc ompl et e. Wor s e ,t h eo mi t t e dp or t i o nf r o m Se c t i o n2( 1 0)c omp l e t el yc o nt r a di c t st h e pr emi se oft he hatan i ns t r ument al i t yi s mut ual l ye x c l us i v ef r om a p on en t et GOCC.Fort he pr o vi s i on r eads i nf ul l ,wi t ht he omi t t ed por t i on hi ghl i ght ed, t h u s : cCaIET
ns t r ument al i t y ( 1 0 )I r ef er st oa nyag enc yoft h eNa t i o na lGo v er n me ntn ot
i n t e gr a t e d wi t h i n t h e d ep ar t me nt f r a me wo r k ,v e s t e d wi t h s p ec i a l
f unc t i onsorj ur i s di c t i onbyl aw,endowedwi t hs omei fnotal lc or por at e power s ,admi ni s t er i ngs pec i alf unds ,andenj o yi ngoper at i onal aut onomy , st er m i ncl udes r egul at or y agenci es, us ual l yt hr ough a c har t er .Thi char t er ed i nst i t ut i ons and gover nment owned or cont r ol l ed c or por a t i ons.
Thi spr e vi ousomi s s i onhadnotes c apedt heat t ent i onoft heout s i dewor l d.For añaquecase ex ampl e,l awy erGr egor i oBat i l l er ,J r . ,haswr i t t enapaperont hePar ent i t l ed" AT al eofT woAi r por t s " ,whi c hi spubl i s hedont heI nt er net .4 Henot es t her ei n: Al s oofi nt er es twast hedi s sent i ngopi ni onofJ us t i c eDant eTi ngat ot he effec tt hatt he maj or i t yopi ni on f ai l ed t o quot ei nf ul lt he defi ni t i on of " gov er nmenti ns t r ument al i t y " : The Maj or i t y gi v es t he i mpr ess i on t hat a gov er nment i nst r ument al i t y i s a di st i nct concept f r om a gover nment c or por at i on.Mos tt el l i ngl y ,t hemaj or i t ys el ec t i v el yc i t esapor t i on ofSec t i on2( 10)oft heAdmi ni s t r at i v eCodeof1987,asf ol l ows : I n s t r u me nt a l i t yr e f e r st oa ny a ge nc yo ft h e Na t i o na l Gov er nment not i nt egr at ed wi t hi n t he depar t ment f r amewor k ,v es t edwi t hs pec i alf unc t i onsorj ur i s di c t i onby l aw,endowed wi t h some i fnotal lcor por at e power s, a dmi ni s t e r i n g s p ec i a lf u nd s ,a nd e nj o y i n g o pe r a t i o na l a ut o no my ,us u al l yt h r o ug hac h ar t e r ... .( e mp ha s i s omi t t ed) " Ho we v er ,Sec t i on2( 10)o ft heAdmi ni s t r at i v eCod e,whenr eadi nf ul l , mak esani mpor t antc l ar i fi c at i onwhi c ht hemaj or i t ydoesno ts ho w.The por t i onsomi t t edbyt hemaj or i t yar ehi ghl i ght edbel ow:... " ( 1 0)I n s t r ume nt a l i t yr ef er st o a ny ag en c y o ft he Na t i o nal Go v e r n me ntn o ti n t e gr a t e d wi t h i nt h ed ep ar t me ntf r a me wo r k , v es t edwi t hs pec i alf unc t i onsorj ur i s di c t i onby ,l aw endowedwi t h s omei fnotal lc or por at epower s ,admi ni s t er i ngs pec i alf unds ,and enj oy i ng oper at i onalaut onomy ,us ual l yt hr ough a c har t er .Thi s t er m i nc l udes r egul at or y agenc i es ,c har t er ed i ns t i t ut i ons and go v er nment o wnedorc ont r ol l edc or por at i ons .
Sot hemaj or i t yopi ni oneffec t i v el ybeggedt heques t i oni nfi ndi ngt hatt he MI AAwasnotaGOCC butamer egover nmenti nst r ument al i t y ,whi chi s ot hert hanaGOCC.5
Th e Offic eo ft h e Pr e s i d en ti t s e l fwa sa l a r medb yt h er e de fi ni t i onma deb yt h e MI AA case ofi nst r ument al i t i es,causi ng i ton 29 December2006 t oi ssue Execut i ve Or der No. 596 cr eat i ng t he unwi el dy cat egor y of " Gover nment I ns t r ument al i t yVes t edwi t hCor por at ePower sorGo v er nmentCor por at eEnt i t i es " j us ts ot hat i t was c l ear t hat t hes e newl y defi ned " i ns t r ument al i t i es " or " gov er nmentc or por at eent i t i es "st i l lf el lwi t hi nt hej ur i s di c t i onoft heOffic eoft he Go v er n me ntCo r p or a t eCo un s el .Th eE. O.r e ad si np ar t : EXECUTI VEORDERNO.596 DEFI NI NG AND I NCLUDI NG " GOVERNMENT I NSTRUMENTRALI TY VESTED WI TH CORPORATE POWERS" OR " GOVERNMENT CORPORATE ENTI TI ES" UNDER THE JURI SDI CTI ON OF THE OFFI CE OF THE GOVERNMENT CORPORATE COUNSEL ( OGCC) AS PRI NCI PAL LAW OFFI CE OF GOVERNMENTOWNED OR CONTROLLED CORPORATI ONS ( GOCCs) AND FOR OTHER PURPOSES. WHEREAS,t heOfficeoft heGover nmentCor por at eCounsel( OGCC) ,
as t he pr i nci pall aw office ofal lGover nment Owned orCont r ol l ed Cor por at i ons ( GOCCs ) ,i nc l udi ng t hei rs ubs i di ar i es ,o t herc or por at e off s pr i n gsa ndg ov e r n me nta c qui r e d as s e t sc or p or a t i o ns ,p l a y sav e r y s i gni fi cantr ol ei ns af eguar di ngt hel egali nt er es t sandpr ov i di ngt hel egal r e qu i r e me nt so fa l l GOCCs ; WHEREAS,t her ei san i mper at i v e need t oi nt egr at e,s t r engt hen and
r at i onal i z et hepower sandj ur i s di c t i onoft heOGCC i nt hel i ghtoft he Deci si on oft he Supr eme Cour tdat ed Jul y20,2006,i nt he case of Ma ni l aI nt e r n at i ona lAi r por tAut hor i t yv s.Cour tofAppe al s ,Ci t yof " Par añaque, et al . "( G. R. No. 155650) , wher e t he Hi gh Cour t
di ffer ent i at ed" gover nment cor por at e
and" ent i t i es" gover nment
f r om GOCCsf orpur posesof i ns t r ument a l i t i eswi t hc or por a t epowe r s " t h ep r o v i s i o nsoft h eL oc a lGo v er n men tCo deonr ea le s t at et a x es ,a nd o t herf eesa ndc har gesi mpos edbyl oc al go v er nmentuni t s ;
WHEREAS,i nt hei nt er es tofaneffec t i v eadmi ni s t r at i onofj us t i c e,t he
appl i cat i on and defini t i on oft he t er m " GOCCs"need t o be f ur t her c l ar i fi edandr at i onal i z edt ohav ec ons i s t enc yi nr ef er r i ngt ot het er m and t oa v oi duni nt endedc onfl i c t sand/ orc onf us i on' NOW,THEREFORE,I ,GLORI A MACAPAGALARROYO, Pr es i dentof
t heRepubl i coft hePhi l i ppi nes ,byv i r t ueoft hepower sv es t edi nmyby l aw,doher ebyor der : SEC.1.TheOfficeoft heGover nmentCor por at eCounsel( OGCC)shal l
be t he pr i nci pall aw officeofal lGOCCs,exceptasmayot her wi sebe pr ov i dedbyt hei rr es pec t i v ec har t eroraut hor i z edbyt hePr es i dent ,t hei r s u bs i d i a r i e s ,c o r p or a t eo ffs p r i n gs ,an dg ov e r n me nt a c qu i r e da s s et cor por at i ons. The OGCC shal ll i kewi se be t he pr i nci pal l aw of gover nment i nst r ument al i t y ves t ed wi t h cor por at e t h e" , as defi ned by t he power s"or" gover nment cor por at e ent i t y" MI AA v.Cour tofAppeal s,Ci t y of Supr eme Cour ti nt he case of" Pa r a ña que ,e ta l . , "s u p r a ,n ot abl e exampl es ofwhi ch ar e: Mani l a
I nt er nat i onalAi r por t Aut hor i t y( MI AA) , Mac t an I nt er nat i onalAi r por t Aut hor i t y ,t he Phi l i ppi ne Por t s Aut hor i t y( PPA) ,Phi l i ppi ne Depos i t I nsur ance Cor por at i on ( PDI C) , Met r opol i t an Wat er and Sewer age Ser v i c es( MWSS) ,Ph i l i p pi n e Ri c e Re se ar c hI n s t i t ut e( PRRI ) ,La gu na La k e De v el o pme ntAut ho r i t y( L LDA) ,Fi s h er i e s De v el o pme ntAu t h or i t y ( FDA) ,Bases Conver si on Devel opmentAut hor i t y( BCDA) ,Cebu Por t Au t h or i t y( CPA) ,Ca ga y and eOr oPo r tAut h or i t y ,a ndSa nFe r na nd oPo r t Aut hor i t y .
aATEDS
SEC.2.Asp r o v i d edun de rPD 2 02 9,s e r i e sof1 98 6,t h et e r m GOCCsi s
defined as a st ock or nonst ock cor por at i on,whet her per f or mi ng gov er nment alorp r opr i et ar yf unc t i ons ,whi c hi sdi r ec t l yc har t er edbya s pec i al l awori for gani z edundert hegener al c or por at i onl aw,i sownedor c ont r ol l ed by t he gov er nmentdi r ec t l y ,ori ndi r ec t l y ,t hr ough a par ent c or por at i onors ubs i di ar yc or por at i on,t ot heex t entofatl eas tmaj or i t yof i t sout s t andi ngc api t al s t oc korofi t sout s t andi ngv ot i ngc api t al s t oc k. UnderSec t i on2( 10)oft heI nt r oduc t or yPr ov i s i onsoft heAdmi ni s t r at i v e Codeof1987,ago v er nment" i ns t r ument al i t y "r ef er st oan yagenc yoft he
Nat i onalGo v er nment ,no ti nt egr at edwi t hi nt hedepar t mentf r ame wor k , v es t edwi t hs pec i alf unc t i onsorj ur i s di c t i onbyl aw,endowedwi t hs ome, i fnotal lc or por at e power s ,a dmi ni s t er i ng s pec i alf unds ,and enj oy i ng oper at i onal aut onomy ,us ual l yt hr oughac har t er . SEC.3.Th ef o l l o wi n gc o r p or a t i o nsa r ec o ns i d er e d GOCCsu nd ert h e
c ondi t i onsand/ orc i r c ums t anc esi ndi c at ed: a)A c o r po r a t i on or g ani z e du nd ert h eg en er a lc o r p or a t i o nl a wu nd er pr i v at eowner s hi patl eas tamaj or i t yoft hes har esofs t oc kofwhi c hwer e c onv e y edt oago v er nmentfi nanc i ali ns t i t ut i on,whet herbyf or ec l os ur eor o t her wi s e,o ra s ubs i di ar yc or por at i on ofa go v er nmentc or por at i on or gani z ede x c l us i v e l yt oo wnandmana ge,orl eas e,oroper at es pec i fi c as set sac qui r edbyagov er nmentfi nanc i ali ns t i t ut i oni ns at i s f ac t i onof debt si nc ur r edt her e wi t handwhi c hi nan yc as eb yenunc i at edpol i c yof t hegov er nmenti sr equi r edt obedi s pos edoft opr i v at eowner s hi pwi t hi n as p ec i fi e dp er i o do ft i me,s h al ln otb ec o ns i d er e daGOCC b ef o r es u c h di s pos i t i onandev eni ft heowner s hi porc ont r olt her eofi ss ubs equent l y t r a ns f e r r e dt oan ot h erGOCC; b)Ac or por at i onc r eat edbyspec i all awwhi c hi sex pl i c i t l yi nt endedunder t hatl aw f orul t i mat et r ans f ert opr i v at eowner s hi punderc er t ai ns pec i fi ed c ondi t i onsshal lbec ons i der edaGOCC,unt i li ti st r ans f er r edt opr i v at e o wn er s h i p ; c )A c or por at i ont hati saut hor i z edt obees t abl i s hedbys pec i all aw,but whi c hi ss t i l lr equi r edundert hatl aw t or egi s t erwi t ht heSec ur i t i esand Ex c hangeCommi s s i oni nor dert oac qui r eaj ur i di c alper s onal i t y ,s hal l no t ,o nt hebas i soft hespec i al l a w al on e,becons i der edaGOCC. x x xx x xx x x
Readi ngt hi sEx e c ut i v eOr der ,onec anno th el pbutge tt hei mpr es s i ont hatt he añaquecase, Republ i coft hePhi l i ppi nes ,os t ens i bl yt hev i c t or i ouspar t yi nt hePar f el tt hatt he2006 edefi ni ng" i ns t r ument al i t i es "waswr ong.Os t ens i bl y , po ne nc i ar t he Office oft he Gover nmentCor por at e Counsel ,t he wi nni ng counseli nt he MI AAc as e,c ooper at edi nt hedr af t i ngoft hi sE. O.andpr obabl yal s of el tt hatt he r edefi ni t i onof" i ns t r ument al i t i es "waswr ong.Ihadpoi nt edouti nmyDi s sentt o
t heMI AAcaset hatundert hef r amewor kpr opoundedi nt hatcase,GOCCssuch ast hePhi l i ppi nePor t sAut hor i t y ,t heBas esConv er s i onDev el opmentAut hor i t y , t he Phi l i ppi ne Ec onomi c Zone Aut hor i t y ,t he Li ghtRai lT r ans i tAut hor i t y ,t he Bangk oSent r alngPi l i pi nas ,t heNat i onalPo werCor por at i on,t heLungCent erof t he Phi l i ppi nes ,and ev en t he Phi l i ppi ne I ns t i t ut e ofTr adi t i onaland Al t er nat i v e Heal t hCar eha v ebeenr ec l as s i fi edasi ns t r ument al i t i esi ns t eadofGOCCs . Not abl y ,GOCCsar emandat edbyRepubl i cActNo.7656t or emi t50% oft hei r annualnetear ni ngs as cash,st ock or pr oper t y di vi dends t ot he Nat i onal Go v er nment .Byden y i ngc at egor i z at i onoft hos eabo v ement i onedc or por at i ons MI AAeffec asGOCCs,t heCour ti n t i v el ygav ei t si mpr i mat urt ot hos eent i t i est o wi t hhol dr emi t t i ng50% oft hei rannualnetear ni ngst ot heNat i onalGo v er nment . Hence,t he necessi t y ofE. O.No.596 t o undo t he dest r uct i ve effect s of t he as eont henat i onalc off er s . Par añaquec I nawe l c o med ev e l o pme nt ,t h ema j o r i t yno wa c k no wl e dg est h ee x i s t en c eo ft h at second cl ause i n Sect i on 2 ( 10) of t he I nt r oduct or y Pr ovi si ons of t he Admi ni st r at i ve Code, t he cl ause whi ch made expl i ci tt hat gover nment i ns t r ument al i t i es i nc l ude GOCCs .I nt r ut h,Ihad nev erqui t e under s t ood t hi s hes i t at i oni npl ai nl ys ay i ngt hatGOCCsar ei ns t r ument al i t i es .Thatf ac ti sr eal l yof l i t t l ec ons equenc ei nde t er mi ni ngwhe t herorno tt heMI AA oro t hergo v er nment i ns t r ument al i t i esorGOCCsar ee x emptf r om r ealpr oper t yt ax es .
As Ihad c ons i s t ent l y ex pl ai ned,t he l i abi l i t y ofs uc h ent i t i es i s mandat ed by Sec t i on232,i nr el at i onwi t hSec t i on234oft heLoc alGo v er nmentCode.Sec t i on 232l ay sdownt hegener alr ul et hatpr ov i nc es ,c i t i esormuni c i pal i t i eswi t hi nMet r o Mani l amayl evyanadv axonr ealpr oper t y" nother ei naf t ers pec i fi cal l y al or em t exempt ed" .Such speci ficexempt i onsar eenumer at ed i nSect i on 234,andt he onl yex empt i ont i edt ogo v er nmentpr oper t i ese xt endst o" r ealpr oper t yownedb y t heRepubl i coft hePhi l i ppi nesoranyofi t spol i t i c als ubdi v i s i onsex ceptwhent he benefi ci alus et her eofhasbeengr ant ed...t oat ax abl eper s on" .6 Mor eo ver ,t hefi nalpar agr aphofSec t i on234e xpl ai nst hat" [ e] x c eptaspr o vi ded h er e i n[ i n Se c t i o n2 34 ] ,a n ye x e mp t i o nf r o m p ay me nto fr e alp r o per t yt a x pr ev i ous l ygr ant ed t o,orpr es ent l yenj o y ed byal lper s ons ,whet hern at ur alor
j ur i di c al ,i nc l udi ngal lgov er nment ownedorc ont r ol l edc or por at i onsar eher eby wi t hdr awnupont heeffec t i v i t yoft hi sCode" . Whatar et he i mpl i c at i onsofSec t i on232 i nr el at i on t o Sec t i on234ast ot he l i abi l i t yf orr ealpr oper t yt ax esofgov er nmenti ns t r ument al i t i essuc hasMI AA? 1)Al lper s ons ,whet hernat ur alorj ur i di c al ,i nc l udi ngGOCCsar el i abl ef orr eal pr oper t yt ax es . 2 )Th eo nl ye x e mp tp r o per t i e sa r et h os eo wn ed b yt h e Re pu bl i co ra nyo fi t s pol i t i c als ubdi v i s i ons . 3)Soc al l ed " go v er nmentc or por at e ent i t i es " ,s ol ong as t he y ha v ej ur i di c al per s onal i t ydi s t i nc tf r om t he Republ i coft he Phi l i ppi nesoranyofi t spol i t i c al s ubdi v i s i ons ,ar el i abl ef orr ealpr oper t yt ax es . 4)Af t er t he enact ment of t heLocalGover nment Codei n 1991, Congr ess r emai nedf r eet or eenac tt axe x empt i onsf r om r ealpr oper t yt ax e st ogo v er nment i ns t r ument al i t i es ,asi tdi d wi t ht he Go v er nmentSer v i c eI ns ur anc e Sy s t em i n 1 99 7. aI ETCA
I ti st hats i mpl e.Themos thones ti nt el l ec t ualar gumentf av or i ngt heex empt i onof t h e MI AA f r o m r e alp r o pe r t yt a x esc o r r e sp on dswi t ht h ei s s u eo fwh et h eri t s pr oper t i es may be deemed as " owned by t he Republ i corany ofi t spol i t i cal s ubdi v i s i ons " .Themat t erofwhe t herMI AAi saGOCC orani ns t r ument al i t yora " go v er nment c or por at e ent i t y "s houl di nf ac t be i r r el e v ant . Ho we v er ,t he p on en t ebegi añaquec f r a me wo r ke s t a bl i s h ed b yt h e nni ng wi t ht hePar as e has i n ex p l i c a bl ya ndu nn ec e s s ar i l yi n c l u de dt heq ue s t i o no fwh ati saGOCC?Th at i s s ue,ut t er l yi r r el ev antt os et t l i ngt heques t i onofMI AA' st axl i abi l i t y ,hasc aus ed not hi ngbutdi s t r ac t i onandc onf us i on. Par añaquec I ts houl dber emember edt hatpr i ort ot he as e,t hepr ev ai l i ngr ul eon t anCebuI nt er nat i onalAi r por tv . t axat i on ofGOCCswasasenunci at ed i nMac Hon.Mar cos .7Thatr ul e wasa hi ghl ys ens i bl er ul et hatg av e due r es pec tt o nat i onalgo v er nmentpr er og at i v esandt hede v ol ut i on oft ax i ngpo wer st ol oc al t an Ceb upr gover nment s. Nei t her di dMac event Congr ess f r om enact i ng l egi s l at i onex empt i ngs el ec t edGOCCst obeex emptf r om r ealpr oper t yt ax es .
añaquec As i g ni fi c a ntp or t i o no fmy Di s s e nt i ng Op i n i o ni nt h ePar as e was t an Cebu,and c po nen c i af de vo t ed t oe xpl ai ni ngMac r i t i c i z i ng t he ori mpl i c i t l y r ej ec t i ng t hatdoc t r i ne wi t houtcat egor i c al l ys ay i ng s o.I nt he y ear ss i nc e, Mac t anCebu s i gni fi c antc onf us i onhasar i s enonwhe t her and t he f r amewor ki t es t abl i s hed i nr ealpr oper t yt ax at i on ofGOCCsand i ns t r ument al i t i es ,r emai ns e xt ant .Bat i l l ermak est he s ame poi nti nhi spaper ,e xpr es s l yas k i ngwh y" t he Supr eme Cour tdi d no te x pl i c i t l y dec l ar et hatt he Mac t an Cebu I nt er nat i onal Ai r por tcasewasdeemedr epeal ed" .Headded: I ne vi t abl y ,t he r ef us alo ft he Supr eme Cour tt oc l ar i f y whe t heri t s De c i s i o ni nt h e Ma c t a n Ce bu I n t e r n at i o na lAi r p or tc a s ei sd ee me d r ep eal e dwo ul dl ea v eu swi t ha na mbi g uou ss i t ua t i onwh er et wo( 2)o f ourmaj ori nt er nat i onalai r por t sar et r eat eddi ffer ent l yt axwi s e:o nei n Cebuwhi chi sdeemedt obeaGOCC subj ectt or ealest at et axesand t h eo t h eri nMa ni l awh i c hi sno taGOCC a nde x e mp tf r o mr e ale s t a t e t a x e s . Wher el i est hes ubs t ant i aldi ff er enc ebet weent het wo( 2)ai r por t s ?Your g ue s si sasgo odasmi n e.8
Mact an Ther e ar e no good r easons why t he Cour tshoul d notr easser tt he Cebudoc t r i ne.Undert hatr ul i ng,r ealpr oper t i esownedbyt heRepubl i coft he Phi l i ppi nesoranyofi t spol i t i c als ubdi v i s i onsar ee x empt edf r om t hepa ymentof r ealpr oper t yt ax es ,whi l ei ns t r ument al i t i esorGOCCsar e gener al l ye x empt ed f r om l oc algo v er nmentt ax e s ,s a v ef orr ealpr oper t yt ax e s .Att he s ame t i me, Congr ess i sf r ee shoul d i t so desi r e t o ex empt par t i cul ar GOCCs or i ns t r ument al i t i esf r om r ealpr oper t yt ax esbyenac t i ngl egi s l at i onf ort hatpur pos e. añaque Thi spar adi gm i semi nent l ymor es obert hant hatc r eat edb yt hePar case, wh i c ha t t e mp t e dt o ame nd t h eCo ns t i t u t i o nb ye l e v at i n ga sac o ns t i t u t i o nal pr i nc i pl e,t he r ealpr oper t yt ax ex empt i on ofal lgov er nmenti ns t r ument al i t i es , mos tofwhi c hal s ohappent obeGOCCs .Cons i der i ngt hatt heCons t i t ut i oni t s el f i ss upr emel ydef er ent i alt ot henot i onofl oc algo v er nmentr ul eandt hepowerof l oc algov er nment st ogener at er ev enuet hr oughl oc alt ax es ,t hei deat hatnotev en t hel oc algov er nmentc odec oul ds ubj ec ts uc h" i ns t r ument al i t i es "t ol oc alt ax esi s pl ai nl yabs ur d. I I .
Idor ec ogni z et hatt hepr es entmaj or i t yopi ni onhasc hos ent ol a yequal ,i fnot gr eat eremphasi son t he pr emi se t hatt he MI AA pr oper t i esar e supposedl yof publ i cdomi ni on,andass uc har ee x emp tf r om r eal t yt ax e sunderSec t i on234( a) oft heLoc al Gov er nmentCode.Agai n,Ir es pec t f ul l ydi s agr ee. I ti sAr t i c l e420oft heCi v i lCodewhi c h defi neswhatar epr oper t i esofpubl i c domi ni on.Idono tdoubtt hatAr t i c l e420c anbei nt er pr et edi ns uc hawa yt hat ai r por tpr oper t i es ,s uc hasi t sr unway s ,hangar sandt hel i k e,c anbec ons i der ed ak i nt opor t sorr oads ,bo t hofwhi c har eamongt hos epr oper t i esc ons i der edas par toft hepubl i cdomi ni onunderAr t i c l e420( 1) .I tmayl i k ewi s ebepos si bl et hat t hos epr oper t i escons i der edas" pr oper t yofpubl i cdomi ni on"underAr t i c l e420of t heCi v i lCodear eal s o" pr oper t yo wnedb yt heRepubl i c " ,whi c hunderSec t i on 234oft heLoc alGo v er nmentCode,ar eex e mptf r om r ealpr oper t yt ax e s . Th en ec e s s ar yq ue s t i on t oa s ki s wh et h erpr o pe r t i e s wh i c ha r es i mi l a ri n c har ac t ert ot hos eenumer at edunderAr t i c l e420( 1)ma ybec ons i der eds t i l lpar t oft hepubl i cdomi ni oni f ,byv i r t ueofs t at ut e,owner s hi pt her eofi sv es t edi na GOCC wh i c h ha si n de pe nde ntj u r i d i c a lp er s o nal i t yf r o m t h e Re pu bl i co ft h e Phi l i ppi nes.The quest i on becomes even mor e compl ex i f ,as i nt he case of MI AA,t hel awi t s el faut hor i z essuc hGOCCt os el l t hepr oper t i esi nques t i on. Oneoft hemos tr ec ogni z abl ec har ac t er i s t i c sofpubl i cdomi ni onpr oper t i esi st hat t h eyar ep l a c edou t s i d et h ec o mme r c eo fma na ndc a nn otb ea l i e na t e do rl e as e d orot her wi s ebet hes ubj ec tmat t erofc ont r ac t s .9 Th ef a c ti st h att h eMI AAma y , byl aw,al i enat e,l eas e orp l ac et heai r por tpr oper t i esast hes ubj ec tmat t ero f c ont r ac t s .Thef ol l owi ngpr o vi s i onsoft heMI AAc har t ermak et hatc l ear : t i ons ,Po wer s ,andDut i es . SEC.5.Func — Th eAut h or i t ys ha l lh av et h e
f ol l owi ngf unc t i ons ,power sanddut i es : x x xx x xx x x r e ,p ur c ha se ,own,a dmi ni s t e r ,l e as e,mor t ga ge ,s e l lor ( i )Toacqui ot her wi sedi sposeofanyl and,bui l di ng,ai r por tf aci l i t y ,orpr oper t y
et h ermo v a bl eo ri mmo v a bl e ,o ra ny ofwhat everki ndandnat ur e,wh i nt er es tt her ei n; x x xx x xx x x
r o wi n g Po we r .— The Aut hor i t y may,af SEC.16.Bor t ercons ul t at i on
wi t ht heMi ni s t erofFi nanc eandwi t ht heappr ov aloft hePr es i dentoft he Phi l i pp i n es ,a sr e co mme nd ed b yt h e Mi ni s t e rofT r a ns po r t a t i o n an d a i s ef unds ,e i t he rf r om l oc alor i nt e r na t i ona l Communi cat i ons,r s our c es ,bywa yofl oa ns ,c r e di t sors ec ur i t i e s,a ndot he rbor r owi ng i nst r ument s,wi t ht he power t o cr eat e pl edges,mor t gages and ot hervol unt ar yl i ens orencumbr ances on any ofi t s asset s or pr oper t i es.
Ther ei st hust hatc ont r adi c t i onwher epr oper t ywhi c hos t ens i bl yi sc l as si fi edas par toft hepubl i cdomi ni onunderAr t i c l e420oft heCi v i lCodei snonet hel es s c l as s i fi edt ol i ewi t hi nt hec ommer c eofmanb yv i r t ueofas ubs equentl a ws uc h ast heMI AAc har t er .I nor derf ort heCour tt oc l as si f yt heMI AApr oper t i esaspar t ofpubl i cdomi ni on,i twi l lbenec es sar yt oi nv al i dat et hepr ov i s i onsoft heMI AA c har t eral l owi ngt heAut hor i t yt ol eas e,s el l ,c r eat epl edges ,mor t gagesandot her v ol unt ar yl i ensorenc umbr anc esonan yoft heai r por tpr oper t i es .Thepr o vi s i ons oft heMI AA c har t erc o ul dno tv e r ywel lbei n v al i dat ed wi t ht heCi v i lCodeas bas i s ,s i nc et heMI AA c har t erandt heCi v i lCodear ebo t hs t at ut es ,andt husof equalr anki nt hehi er ar c h yofl a ws ,andmor es i gni fi c ant l yt heCi v i lCodewas enac t edear l i erandt her ef or ec oul dnotbet her epeal i ngl aw. I ft her ei s a pr o vi s i on i nt heCons t i t ut i ont hatadopt ed t he defi ni t i on ofand l i mi t at i onson publ i cdomi ni on pr oper t i esasf ound i nt he Ci v i lCode,t hen t he af or equot edpr ov i s i onsf r om t heMI AA c har t eral l owi ngt heAut hor i t yt opl ac ei t s pr oper t i es wi t hi n t he c ommer c e of man may be i nv al i dat ed. TheCons t i t ut i onh owev e rdoesno td os o,c onfi ni ng i t s el fi ns t ead t o a gener al s t at ementt hat" al ll andsoft hepubl i cdomai n,wat er s ,mi ner al s ,c oal ,pet r ol eum, andot hermi ner aloi l s ,al lf or c esofpot ent i alener gy ,fi sher i es ,f or es t sort i mber , wi l dl i f e,fl or aandf auna,ando t hernat ur alr es our c esar eo wnedbyt heSt at e" . Not et hough t hat under Ar t i cl e 420, publ i c domi ni on pr oper t i es ar e not nec es s ar i l yo wned b yt he St at e,t he t wo s ubs ec t i ons t her e t or ef er r i ng t o( a) pr oper t i esi nt endedf orpubl i cus e;and( b)t hos ewhi c hbel ongt ot heSt at eand a r ei n t en de df o rs ome p ub l i cs e r v i c eo rf o rt h ed ev e l o pme nto ft h en at i o na l elv .Gar c i a,11 weal t h.10I nLaur t heCour tno t abl yac k no wl edgedt hat" pr oper t yof publ i cdomi ni oni snotownedbyt heSt at ebutper t ai nst ot heSt at e" .Thus ,t her e
i snoequi v a l enc ebe t weent hec onc ep tofpubl i cdomi ni onundert heCi v i lCode, andofpubl i cdomai nundert heCons t i t ut i on. DCSTAH
Ac cor di ngl y ,t hef r amewor kofpubl i cdomi ni onpr oper t i esi sonet hati ss t at ut or y , r at hert hanc ons t i t ut i onali ndes i gn.Thatbei ngt hec as e,Congr es si sabl ebyl aw t os egr egat epr oper t i eswhi c hos t ens i bl yar e,byt hei rnat ur e,par toft hepubl i c domi ni on underAr t i c l e 420 ( 1)oft he Ci v i lCode,and pl ac et hem wi t hi nt he c ommer c eofmanbyv es t i ngt i t l et her et oi nani ndependentj ur i di c alper s onal i t y s uc hast heMI AA,andaut hor i z i ngt hei rs al e,l eas e,mor t gageandot hers i mi l ar e nc u mb r a nc e s.Wh enCo ng r e s sa c c omp l i s he st h atb yl a w,t h ep r o per t i e sc o ul d nol ongerbec ons i der edaspar toft hepubl i cdomi ni on.
Thi spoi nthasbeenr ec ogni z edbypr ev i ousj ur i s pr udenc ewhi c hIhadc i t edi nmy añaquec l i ppi nePor t sAut hor i t yv .Ci t y di s s enti nt hePar as e.Fore x ampl e,i nPhi ofI l oi l o,t heCour ts t at edt hat" pr oper t i esofpubl i cdomi ni onar eownedb yt he gener alpubl i candc anno tbedec l ar edt obeo wnedb yapubl i ccor por at i on,s uc h as[ t hePhi l i ppi nePor t sAut hor i t y ] " .12 Ihadl i k ewi s epr ev i ous l yex pl ai ned: Th es e c on d Pu bl i c Por t s Au t h or i t yc a se ,p en ne db yJ u s t i c e Ca l l e j o , l i k ewi s el ay sdownus ef uldoc t r i nesi nt hi sr egar d.TheCour tr ef ut edt he c l ai mt hatt hepr oper t i esoft hePPAwer eo wn edb yt heRepubl i coft he Phi l i ppi nes ,not i ng t hatPPA' sc har t ere xpr es sl yt r ans f er r ed owner s hi p ov ert hes epr oper t i est ot hePPA,as i t uat i onwhi c hs i mi l ar l yobt ai nswi t h MI AA.Th eCo ur te v enwe nta sf a ra ss a y i ngt h att h ef a ctt h att h ePPA " hadnotbeeni s suedanyt or r enst i t l eov ert hepor tandpor tf ac i l i t i esand appur t enanc esi sofnol egalc ons equenc e.A t or r enst i t l edoesno t ,b y i t s el f ,v es towner s hi p;i ti smer el yanev i denc eoft i t l eov erpr oper t i es .... I th asne v erb eenr e c og ni z eda samo deo fa c qui r i n go wne r s hi po v err e al pr oper t i es . " Th eCo ur tf u r t h era dd ed : ...Thebar ef ac tt hatt hepor tandi t sf ac i l i t i esandappur t enanc es ar eac c es s i bl et ot hegener alpubl i cdoesnote x empti tf r om t he pa ymentofr ealpr oper t yt ax es .I tmus tbes t r es s edt hatt hes ai d por tf ac i l i t i es and appur t enanc es ar et he pet i t i oner ' sc or por at e
pat r i moni al pr oper t i es ,notf orpubl i cus e,andt hatt heoper at i onof t hepor tandi t sf ac i l i t i esandt headmi ni s t r at i onofi t sbui l di ngsar e i nt he nat ur e ofo r di nar y bus i nes s .The pet i t i oneri sc l ot hed, underP . D.No.857,wi t hc or por at es t at usandc or por at epower si n t hef ur t her anc e ofi t spr opr i et ar yi nt er es t s...Thepet i t i oneri s e v enempo wer edt oi n v es ti t sf undsi ns uc hgo v er nments ec ur i t i es appr o v edb yt heBoar dofDi r ec t or s ,andder i v e si t si nc omef r om r at es ,c har gesorf eesf ort heus ebyv es s el soft hepor tpr emi s es , appl i anc esorequi pment ....Cl ear l yt hen,t he pet i t i oneri sa pr ofi t ear ni ng c or por at i on;henc e,i t s pat r i moni alp r oper t i es ar e s ubj ec tt ot ax . Ther ei snodoubtt hatt hepr oper t i esoft heMI AA,aswi t ht hePPA,ar ei n ght ase ns e,f orp ubl i cu se.As i mi l arar gumentwaspr opoundedbyt heLi Rai lT r ans i tAut hor i t yi nLi ghtRai lT r ans i tAut hor i t yv .Cent r alBoar dof As s es s ment ,118wh i c h wa sc i t e di n Ph i l i p pi n e Por t s Au t h or i t y an d
des er v e sr ene wedemphas i s .TheL i ghtRa i lT r ans i tAut hor i t y( LRT A) ,a bodyc or por at e," pr ov i desv al uabl et r ans por t at i onf ac i l i t i est ot hepay i ng publ i c . "119I tc l ai med t hati t sc ar r i ageway s and t er mi nals t at i onsar e i mmo v ab l yat t a ch edt og ov e r n me nt o wn edna t i o nal r o ad s ,a ndt oi mp os e r ealpr oper t yt ax e st her euponwou l dbet oi mpos et ax e sonpub l i cr oads . Thi svi ew di dnotper suadet heCour t ,whosedeci si onwaspennedby J us t i c e( nowChi efJ us t i c e)Pangani ban.I twasnot ed: Th ou ght hec r e at i onoft h eL RT A wa si mp el l edb ypu bl i cs e r v i c e — t op r o v i d e mas st r a ns p or t at i o nt oa l l e v i a t et h et r a ffic a nd t r a ns p or t a t i o n s i t u at i o n i n Me t r o Ma ni l a — i t s o pe r a t i o n undeni abl y par t ak es ofor di nar y bus i nes s.Pet i t i oneri sc l ot hed wi t hc or p or at es t at usandc or p or at epo wer si nt hef ur t her anc eof i t spr opr i et ar yobj ec t i v es .I ndeed,i toper at esmuc hl i k eanypr i v at e c or por at i onengagedi nt hemas st r ans por ti ndus t r y .Gi v ent hati t i se ng ag ed i nas e r v i c e o r i e nt e d c o mme r c i a l en de av o r ,i t s c ar r i age wa y s and t er mi nal s t at i ons ar e pat r i moni al p r oper t y s ubj ec tt ot ax ,not wi t hs t andi ngi t sc l ai m ofbei ngago v er nment ownedorc ont r ol l edcor por at i on. x x xx x xx x x
Pet i t i onerar guest hati tmer el yoper at esandmai nt ai nst heLRT sys t em,and t hatt he act ualuser s oft he car r i ageways and t er mi nals t at i onsar et hec ommut i ngpubl i c .I taddst hatt hepubl i c us ec har ac t eroft heLRTi snotnegat edb yt hef ac tt hatr ev enuei s obt ai nedf r om t hel at t er ' soper at i ons . Wed on ota gr e e.Un l i k ep ub l i cr o ad swh i c ha r eo pe nf o ru s eb y ever yone,t he LRT i s accessi bl e onl yt ot hose who pay t he r equi r ed f ar e.I ti st husappar entt hatpet i t i onerdoesnote x i s t s o l el yf o rp ub l i cs er v i c e,a nd t h att he L RT c ar r i a ge wa y sa nd t er mi nals t at i ons ar e note x cl us i v el yf orpubl i c us e.Al t hough pet i t i oneri s a publ i c ut i l i t y ,i ti s nonet hel es s pr ofi t ear ni ng.I t ac t ual l y us es t hos ec ar r i age wa y s an dt er mi nals t at i ons i ni t s publ i cut i l i t ybus i nes sandear nsmoneyt her ef r om. x x xx x xx x x Ev e ng r a nt i n gt h att h en at i o na lg ov e r n me nti n de ed o wn st h e c a r r i ag ewa y sa nd t e r mi n als t a t i on s ,t he e x emp t i o n wo ul dn ot appl ybec aus et hei rbenefi c i alus ehasbeengr ant edt opet i t i oner , at ax abl eent i t y . Ther ei snos ubs t ant i aldi s t i nc t i onbet weent hepr oper t i eshel dbyt he PPA,t h eL RT A,a ndt h eMI AA.Th es et h r eee nt i t i e sa r ei nt h eb us i n es s ofoper at i ngf ac i l i t i est hatpr omot epubl i ct r ans por t at i on. The maj or i t yf ur t heras s er t st hatMI AA' spr oper t i es ,b ei ng par to ft he publ i cdomi ni on,ar eout s i det hec ommer c eofman.Buti ft hi si sso,t hen wh yd oe s Se c t i o n 3o fMI AA' sc h ar t e rau t h or i z et he Pr es i d ento ft h e Phi l i ppi nest oappr o v et hes al eofanyoft hes epr oper t i es ?I nf ac t ,wh y doesMI AA' sc har t eri nt he fi r s tpl ac e aut hor i z et he t r ans f ero ft hes e ai r p or tpr oper t i es ,as s umi ngt hati ndeedt hes ear ebe y ondt hec ommer c e ofman?13
I I I .
I nt hepr es entc as e,t heCi t yofPas ayhadi s s uednot i c esofl e vyandwar r ant sof l ev yf ort heNAI APas aypr oper t i es ,l eadi ngMI AAt ofi l ewi t ht heCour tofAppeal s apet i t i onf orpr ohi bi t i onandi nj unc t i on,s eek i ngt oenj oi nt heCi t yofPas ayf r om
i mpos i ngr ealpr oper t yt ax es ,l ev y i ngagai ns tandauc t i oni ngf orp ubl i cs al et he NAI APa s aypr o pe r t i e s . añaquec I nt hePar as e,Ihade xpr es sedt hatwhi l eMI AAwasl i abl ef ort her eal t y t ax es ,i t spr oper t i esc oul dnotbef or ec l os eduponb yt hel oc algo v er nmentuni t s eek i ngt het ax es .Iex pl ai nedt hen: cSI ADH
Des pi t et hef ac tt hatt heCi t yofPar añaquei nel uc t abl yhast hepowert o i mpos er ealpr oper t yt ax e so v ert heMI AA,t her ei sanequal l yr el e v ant s t at ut or yl i mi t at i onont hi spowert hatmus tbef ul l yuphel d.Sec t i on3of t he MI AA c har t ers t at est hat" [ a] nypor t i on [ oft he [ l andst r ans f er r ed, c on v e y eda nda s si g nedt ot h eo wn er s h i pa nda dmi n i s t r a t i o no ft h eMI AA] s ha l ln otb ed i s p os e dt h r o ughs a l eo rt h r o ugha nyo t he rmo deu nl es s s pec i fi cal l yappr ov edbyt hePr es i dentoft hePhi l i ppi nes " . Not hi ng i nt heLocalGover nmentCode,even wi t hi t s wi de gr antof power st o LGUs,can be deemed as r epeal i ng t hi spr ohi bi t i on under Sec t i on3,ev eni fi teff ec t i v el yf or ec l os esonepos s i bl er emedyoft he L GU i nt hec ol l ec t i onofdel i nquentr ealpr oper t yt ax es .Whi l et heLoc al Go v er nmentCode wi t hdr e w al l pr e vi ousl oc alt axe x emp t i onso ft heMI AA andot hernat ur alandj ur i di c alper s ons ,i tdi dnots i mi l ar l ywi t hdr aw any pr evi ousl y enact ed pr ohi bi t i ons on pr oper t i es owned by GOCCs, agenc i es or i ns t r ument al i t i es .Mor eo v er ,t he r es ul t i ng l egale ffec t , s u bj e c t i n go no neh an dt h eMI AA t ol o c alt a x e sb uto nt h eo t h erh an d s hi el di ng i t s pr oper t i es f r om an yf or m ofs a l e ordi s pos i t i on,i s not c ont r adi c t or yorpar ado xi c al ,oner ousasi t seff ec tma ybeont heL GU.I t s i mp l yme an st h att heL GU h ast ofi n da no t h erwa yt oc o l l e ctt h et a x es due f r om MI AA, t hus pavi ng t he way f or a mut ual l y acc ept abl e negot i at eds ol ut i on.
Ac cor di ngl y ,Ibel i ev et hatMI AA i sent i t l edt oawr i tofpr ohi bi t i onandi nj unc t i v e r el i efenj oi ni ngt heCi t yofPas ayf r om auc t i oni ngf orpubl i cs al et heNAI APas ay pr oper t i es .Thus ,t heCour tofAppeal ser r edwheni tdeni edt hos er el i ef st ot he MI AA. IVOTEt oPARTI hepet i t i onandt oi s suet heWr i tofPr ohi bi t i on ALL Y GRANTt i ns of ara si twoul denj oi nt heCi t yofPas ayf r om auc t i oni ngf orp ubl i cs al et he NAI APas aypr oper t i es .I nal l ot herr es pec t s,Ir es pec t f ul l ydi s sent .
NACHURA,J . :
Ar eai r por tpr oper t i ess ubj ec tt or ealpr oper t yt ax ?Theques t i ons er i ous l ybegs f oradefi ni t i v er es ol ut i on,i nl i ghtofouros t ens i bl yc ont r adi ct or ydec i s i ons1 t hat mayhavegener at edno smal lmeasur eofconf usi onevenamong l awy er sand magi s t r at es . Her eunder ,Ipr opos eas i mpl e,di r ec tand pai nl es sappr oac ht o ar r i v e atan ac c ept abl eans wert ot heques t i on. I . Realpr oper t yt axi sadi r ec tt axont heowner s hi pofl andsandbui l di ngsorot her i mp r o v eme nt st h er e on ,n ots p ec i a l l ye x e mp t ed ,a nd i sp ay a bl er e ga r dl e s so f whe t hert hepr oper t yi sus edorno t ,al t hought hev a l uema yv a r yi nac c or danc e wi t hs uc hf ac t or .Thet axi sus ual l ys i ngl eori ndi v i s i bl e,al t hought hel andand bui l di ngori mpr o v ement ser ec t edt her eonar eas s es s eds epar at el y ,e x c eptwhen t hel andandbui l di ngori mpr o v ement sbel ongt os epar at eo wner s .2 The power t ol evy t hi st ax i s vest ed i nl ocalgover nmentuni t s( LGUs) . Thus,Republ i cAct( R. A. )No.7160,ort heLocalGover nmentCode( LGC)of 1 99 1,3pr ov i des : UnderBookI I ,Ti t l eI I ,Chapt erI VI mpos i t i onofReal Pr oper t yTax we rt oL ev yRe alPr o pe r t yT ax .— A pr ov i nc eorc i t yor Sec t i on232.Po a muni ci pal i t y wi t hi nt he Met r opol i t an Mani l a Ar ea may l evy an annualad val ax on r ealpr oper t y such as l and,bui l di ng, or em t machi ner y,and ot her i mpr ovementnot her ei naf t er speci fical l y ex empt ed.4
As i gni fi canti nnov at i oni nt heL GCi st hewi t hdr awal ,s ubj ec tt os ome ex cept i ons ,ofal l t axex empt i onpr i v i l egesofal l nat ur alorj ur i di c alper s ons , i nc l udi nggo v er nment o wnedandc ont r ol l edc or por at i ons( GOCCs ) ,t hus : UnderBookI I ,Ti t l eI ,Chapt erVMi s cel l aneousPr ov i s i ons t h dr a wa lo fT a x Ex e mp t i o n Pr i v i l e ge s .— Unl ess Sect i on 193.Wi ot her wi se pr ovi ded i nt hi s Code,t ax exempt i ons or i ncent i ves gr a nt e dt o,orpr e se nt l ye nj oy edbya l lpe r s ons ,whe t he rn at ur a lor j ur i di c al ,i nc l udi ng gov er nme nt owne d orc ont r ol l e dc or por a t i ons ,
except l ocal wat er di st r i ct s, cooper at i ves dul y r egi st er ed underR. A. No. 6938, nonst ock and nonpr ofit hospi t al s and e duc at i ona li ns t i t ut i ons ,a r ehe r e bywi t hdr a wnupont hee ffe ct i v i t y oft hi sCode.5
Thi si swher et hec ont r ov er s ys t ar t ed.Theai r por taut hor i t i es ,f or mer l ye x empt f r om pa y i ng t ax e s ,a r e no w bei ng obl i ged t o pa yr ealpr oper t yt axon ai r por t pr oper t i es .
T oc hal l enget her ealpr oper t yt axas ses sment s ,t heai r por taut hor i t i esi nv ok et wo pr o v i s i onsoft heL GC— onei ss t at edi nBookI I ,Ti t l eI ,Chapt erIonGener al Pr ov i s i ons ,whi c hr eads : mi t at i ons on t he Tax i ng Power s ofLoc al Sec t i o n1 33 .Common Li Go v e r n me ntUn i t s.— Un l es so t her wi s epr o v i dedher ei n,t hee x er c i s eof
t he
t axi ng
power s
of
pr ovi nces,
ci t i es,
muni ci pal i t i es,
a r a n g a y s andb s hal l notex t endt ot hel ev yoft hef ol l owi ng:
( a)I ncome t ax,ex ceptwhen l evi ed on banks and ot her financi al i ns t i t ut i ons ; ( b )Do c ume nt a r ys t a mpt a x ; ( c)Taxes on est at es, i nher i t ance, gi f t s, l egaci es and ot her t i sc aus a,e ac qui s i t i onsmor x ceptasot her wi s epr o vi dedher ei n;
( d )Cu s t o ms d ut i e s ,r e gi s t r a t i o n f e es o fv e s s e la nd wh ar f a ge o n wh ar v e s ,t o nn aged ue s,a ndal lo t h erk i nd so fc u s t o msf e es ,c h ar ge s andduesexceptwhar f ageonwhar vesconst r uct edandmai nt ai nedby t hel oc al go v er nmentuni tc onc er ned; ( e)T ax e s,f ees ,andc har gesa ndo t heri mpos i t i onsupong oodsc ar r i ed i nt o oroutof ,orpas si ng t hr ough,t he t er r i t or i alj ur i s di c t i onsofl oc al gov er nmentuni t si nt hegui s eofc har gesf orwhar f age,t ol l sf orbr i dges oro t her wi s e,oro t hert ax e s,f ees ,orc har gesi nan yf or m what s oe v er uponsuchgoodsormer chandi se; ( f )T ax es ,f eesorc har gesonagr i c ul t ur al andaquat i cpr oduc t swhens ol d b ymar gi n al f a r mer so rfi s he r me n;
( g)Tax es on busi ness ent er pr i ses cer t i fied t o by t he Boar d of I nv es t ment saspi oneerornonpi oneerf oraper i odofs i x( 6)andf our( 4) y ear s ,r es pec t i v el yf r om t hedat eofr egi s t r at i on; ( h )Ex c i s et ax e so n ar t i c l es e numer at ed u nd ert h e Na t i o nalI n t e r na l RevenueCode,asamended,andt axes,f eesorchar gesonpet r ol eum p r o d u c t s ; ( i )Per c ent ageo rv a l ueaddedt ax( VAT)o ns al es ,bar t er sore x c han ges o rs i mi l a rt r a ns a c t i o ns o ng oo ds o rs e r v i c e se x c e p ta so t h er wi s e pr ov i dedher ei n; ( j )T ax esont hegr os sr ec ei pt soft r ans por t at i onc ont r ac t or sandper s ons en ga ged i nt h et r an s por t at i o no fpa s s en ge r s orf r e i g htb yh i r ea nd c ommo nc ar r i er sb ya i r ,l a nd o rwa t e r ,e x c e pta sp r o v i d ed i nt h i s Code;
TI EHDC
( k )T ax e sonpr emi umspai db ywa yofr ei ns ur anc eo rr e t r oc es s i on; ( l )T ax es ,f eesorc har gesf ort her egi s t r at i onofmot orv ehi c l esandf or t hei s suanc eofal lk i ndsofl i c ens esorper mi t sf ort hedr i v i ngt her eof , ex ceptt r i c y cl es ; ( m)T ax e s ,f e es ,or o t he rc ha r g es o n Ph i l i p pi n ep r o du c t sa c t u al l y ex por t ed,ex c eptasot her wi s epr o vi dedher ei n; angay ( n )T a x e s ,f e es ,o rc h ar g es ,o n Co un t r y s i d ea ndBar Bu s i n es s
Ent er p r i s esa ndc o op er a t i v e sd ul yr e gi s t er e du nd erR. A.No .6 81 0a nd Repub l i cAc tNumber edSi x t y ni nehundr edt hi r t y ei ght( R. A.No.693 8) ot her wi se known as t he " Cooper at i ve Codeof t he Phi l i ppi nes" r es pec t i v el y ;and eesorchar gesofanyki ndont heNat i onalGover nment , ( o)Taxes,f i t sage nc i e sa ndi nst r ume nt a l i t i es ,a ndl oc algov er nmentuni t s .6
andt heot heri nBookI I ,Ti t l eI ,Chapt erI VonI mpos i t i onofRealPr oper t yTax : e mp t i o nsf r o m Re alPr o pe r t yT ax . Sec t i on2 34.Ex — Thef ol l owi ngar e
e x emp t edf r om pa y mentoft her eal pr oper t yt ax :
ope r t yowne db yt heRe publ i coft hePhi l i ppi ne sora nyof ( a)Realpr i t spol i t i ca ls ubdi vi s i onsex ce ptwhent hebenefici a lus et he r e ofha s be engr a nt e d,f orc ons i de r a t i onorot he r wi s e,t oat a xa bl epe r s on;
( b )Ch ar i t a bl e i n s t i t u t i o ns , c h ur c h es , p ar s o na ge s o r c o nv e n t s appur t enantt her et o,mos ques ,nonpr ofi torr el i gi ouscemet er i esandal l l ands ,bui l di ngs ,and i mpr ov ement s ac t ual l y ,d i r ec t l y ,a nd ex c l us i v el y us edf orr el i gi ous ,c har i t abl eoreduc at i onal pur pos es ; ( c )Al lmac hi ner i es a nd equi pmentt hatar e ac t ual l y ,di r ec t l y and e x c l u s i v e l y us e db yl oc a lwa t e rd i s t r i c t sa nd g ov e r n me nt o wn ed o r c ont r ol l edc or por at i onsengagedi nt hes uppl yanddi s t r i but i onofwat er and/ orgener at i onandt r ans mi s si onofel ec t r i cpower ; ( d)Al lr ealpr oper t yownedb ydul yr egi s t er edc ooper at i v esaspr ov i ded f oru nd erR. A.No .6 93 8;a nd ( e)Machi ner y and equi pment used f or pol l ut i on cont r ol and env i r onment al pr ot ec t i on. Exceptas pr ovi ded her ei n,any exempt i on f r om paymentofr eal pr ope r t yt a x pr e v i ous l y gr a nt e dt o,orpr e se nt l ye nj o ye d by ,a l l pe r s ons ,whe t he r na t ur a lo rj ur i di c al ,i nc l udi ng a l lgov er nme nt owned orcont r ol l ed cor por at i onsar eher eby wi t hdr awn upon t he effe ct i v i t yoft hi sCode.7
t an Cebu I nt er nat i onalAi r por tAut hor i t y( MCI AA)v .Mar c os I nMac ,8t he Cour t r u l e dt h atSe c t i o n1 33( o )i sq ua l i fi e db ySe c t i o ns2 32a nd2 34 .Th us ,MCI AA c oul dnots eekr ef ugei nSec t i on133( o) ,butonl yi nSec t i on234( a)pr o vi dedi t c oul des t abl i s ht hatt hepr oper t i eswer eownedbyt heRepubl i coft hePhi l i ppi nes . TheCour tr at i oc i nat ed,t hus : [ R] e ad i n gt og et h erSe c t i o ns13 3,2 32 ,a nd2 34o ft h eL GC,wec o nc l ud e t hatasagener alr ul e,asl ai ddowni nSec t i on133,t het ax i ngpower sof nt eral i a, l oc algo v er nmentuni t sc an no te x t end t ot he l e vyof ,i " t ax es ,
f ee sa ndc ha r g eso fa nyk i n dont h eNa t i o na lGo v er n me nt ,i t sa ge nc i es andi ns t r ument al i t i es ,andl oc algov er nmentuni t s " ;howev er ,pur s uantt o Sec t i on 232,p r ov i nc es ,c i t i es ,and muni c i pal i t i es i nt he Met r opol i t an nt eral i a, Ma ni l aAr e ama yi mpo s et h er e alp r o pe r t yt a xe x c ep to n,i " r eal
pr oper t yownedbyt heRepubl i coft hePhi l i ppi nesoranyofi t spol i t i c al s ub di v i s i o nse x c ep twhe nt h ebe ne fi c i a lus et h er eo fh asb ee ng r a nt e d, f orc ons i der at i onorot her wi s e,t oat ax abl eper s on" ,aspr ov i dedi ni t em ( a)oft hefi r s tpar agr aphofSec t i on234. Ast ot axe x empt i onsori nc ent i v esgr ant edt oorp r es ent l yenj o y edb y nat ur alorj ur i di c alper s ons ,i nc l udi nggov er nment ownedandc ont r ol l ed i z . c or por at i o ns ,Sec t i on 1 93oft heLGCpr es c r i best hegener alr ul e,v , t hdr a wn t he yar ewi u pont heeff ec t i v i t yoft heL GC,except t hos egr ant ed
t ol oc al wat erdi s t r i c t s ,c ooper at i v esdul yr egi s t er edunderR. A.No.6938, nons t oc k and nonpr ofi th os pi t al s and educ at i onali ns t i t ut i ons ,a nd pr ov i s o un l es so t her wi s epr o vi dedi nt heL GC.Thel at t er c oul dr ef ert o
Sec t i on234whi c henumer at est hepr oper t i ese x emptf r om r ealpr oper t y t ax .Butt hel as tpar agr aphofSec t i on234f ur t herq ual i fi est her et ent i on oft heex empt i oni ns of arasr ealpr oper t yt ax esar ec onc er nedbyl i mi t i ng t her et ent i ononl yt ot hos eenumer at edt her ei n;al lot her snoti nc l udedi n t h ee nu me r a t i o nl os tt he p r i v i l eg eu po nt he e ffe c t i v i t yo ft h eL GC. Mor eover ,even as t or ealpr oper t y owned by t he Republ i c oft he Phi l i ppi nesora nyofi t spol i t i c als ubdi v i s i onsc ov er edbyi t em ( a)oft he fi r s tp ar a gr a ph o fSe c t i o n2 34 ,t h ee x e mp t i o ni s wi t h dr a wn i ft h e benefi c i alus eofs uc hpr oper t yhasbe engr ant edt oat ax a bl eper s onf or c ons i der at i onorot her wi s e. Si nc et hel as tp ar agr aphofSec t i on2 34u nequi v oc al l ywi t hdr e w,upon t h e eff ec t i v i t yo ft h eL GC,e x e mp t i o ns f r om p ay me ntofr e alp r o pe r t y t ax es gr ant ed t o nat ur alorj ur i di c alper s ons ,i nc l udi ng go v er nment ownedorc ont r ol l edc or por at i ons ,ex c eptaspr ov i dedi nt hes ai ds ec t i on, andt hepet i t i oneri s ,undoubt edl y ,ago v er nment ownedc or por at i on,i t nec es sar i l yf ol l owst hati t sex empt i onf r om s uc ht axgr ant edi ti nSec t i on 14ofi t sChar t er ,R. A.No.69 58,hasbeenwi t hdr a wn.An yc l ai mt ot he c ont r ar yc anonl ybej us t i fi edi ft hepet i t i onerc ans eekr ef ugeunderany oft hee x cept i onspr o vi dedi nSec t i on234,butnotunderSec t i on133,as i tno w as s er t s ,s i nc e,ass ho wnabo v e,t hes ai ds ec t i oni squal i fi edb y Sect i ons232and234.
I ns hor t ,t hepet i t i onerc annol ongeri nv ok et hegener alr ul ei nSec t i on 133t hatt het ax i ngpo wer soft hel o calgo v er nmentu ni t sc anno te xt end t ot hel ev yof : ( o)t axes ,f ees or char ges of any ki nd on t he Nat i onal Go v er nment ,i t s agenc i es ori ns t r ument al i t i es ,a nd l oc al go v er nmentuni t s .9
I naddi t i on,t heCour twentont ohol dt hatt hepr oper t i esc ompr i s i ngt heLahug I nt er nat i onalAi r por tandt heMac t anI nt er nat i onalAi r por tar enol ongerownedby t heRepubl i c ,t hel at t erha vi ngc onv e y edt hes ameabs ol ut el yt oMCI AA. l aI nt er nat i onalAi r por t Abouta dec ade l at er ,ho we v er ,t he Cour tr ul ed i nMani Aut hor i t y( MI AA)v .Cour tofAppeal s ,10t hatt he ai r por tpr oper t i es ,t hi st i me c ompr i s i ngt heNi no yAqui noI nt er nat i onalAi r por t( NAI A) ,ar ee x emptf r om r eal p r o per t yt a x .I tj u s t i fi e di t sr u l i n gb yc a t e gor i z i n g MI AA a sag ov e r n me nt i ns t r ument al i t ys pec i fi c al l ye x empt edf r om pa yi ngt axb ySec t i on133( o)ofR. A. No.7160.I tf ur t herr eas onedt hatt hes ubj ec tpr oper t i esar epr oper t i esofpubl i c domi ni on,o wnedb yt heRepubl i c ,andar eonl yhel di nt r us tbyMI AA,t hus : Un derSe c t i o n2 ( 1 0)an d( 1 3)oft h eI nt r o du ct or y Pr o v i s i o ns o ft he Admi ni s t r at i v e Code,whi c h go v er ns t he l egalr el at i on and s t at us of g ov e r n me ntu ni t s ,a ge nc i e sa nd o ffic e s wi t h i nt h ee nt i r eg ov e r n me nt mac hi ner y , MI AA i s a gov er nmenti nst r ument al i t yand not a go v er n men t o wn ed o rc on t r o l l ed c o r p or at i o n.Un de rSe ct i o n1 33 ( o )of nst r ument al i t yi t heLocalGov er nmentCode,MI AA asagover nmenti s notat ax abl eper s onbec aus ei ti snots ubj ec tt o" [ t ] ax es ,f eesorc har ges o fa nyk i n d"b yl o c alg ov e r n me nt s .Th eo nl ye x c e pt i o ni swh enMI AA l eas esi t sr ealpr oper t yt oa" t ax abl e per s on"aspr o vi ded i n Sec t i on 2 34 ( a )o ft h eLo c alGo v e r n me ntCo de ,i nwh i c hc a s et h es p ec i fi cr e al pr oper t yl eas edbec omess ubj ec tt or eales t at et ax .Thus ,onl ypor t i ons oft heAi r por tLandsandBui l di ngsl eas edt ot ax abl eper s onsl i k epr i vat e ar es ubj ec tt or eal es t at et axbyt heCi t yofPar añaque. par t i es
cSHI aA
UnderAr t i c l e420oft heCi v i lCode,t heAi r por tL andsandBui l di ngsof i c MI AA, bei ng devot ed t o publ i c use, ar e pr oper t i es ofpubl domi ni onand t hus owned by t he St at e or t he Republ i c of t he p o r t s Phi l i ppi nes .Ar t i c l e420s pec i fi cal l yment i ons" ...c ons t r uc t edby
t heSt at e" ,whi c hi nc l udespubl i cai r por t sands eapor t s ,aspr oper t i esof pu bl i cd omi n i o na nd o wne db yt h e Re pu bl i c .Asp r o pe r t i eso fp u bl i c do mi n i o no wne db yt heRe pu bl i c ,t h er ei sn odo ub twh at s o ev e rt h att h e Ai r por tLandsandBui l d i ngsar ee x pr es s l ye x emptf r om r eales t at et ax underSect i on 234( a)oft heLocalGover nmentCode.Thi sCour thas al s or epeat edl yr ul edt hatpr oper t i esofpubl i cdomi ni onar enots ubj ec tt o ex ec ut i onorf or ec l os ur es al e.11
I I . I nt hi sc as e,wear ec onf r ont edb yt hev er ys amei s s ue.
A bas i cpr i nc i pl ei ns t at ut or yc ons t r uc t i ondec r eest hat ,t odi s cov ert hegener al l egi s l at i v ei nt ent ,t hewhol es t at ut e,andnotonl yapar t i c ul arpr ov i s i ont her eof , s houl dbec ons i der ed.Ev er ysec t i on,pr o vi s i onorc l aus ei nt hel a w mus tber ead andc ons t r uedi nr ef er enc et oeac hot heri nor dert oar r i v eatt het r uei nt ent i onof t hel egi s l at ur e.12 Not abl y ,Sec t i on133oft heL GCs peak soft hegener all i mi t at i onsont het ax i ng powerofL GUs .Thi si sr ei nf or c edbyi t si nc l us i oni nTi t l eI ,Chapt erIent i t l ed " Gener alPr ovi si ons"on " LocalGover nmentTaxat i on" .On t he ot herhand, Se c t i o n 23 4,c o nt a i n i n gt h ee nu me r a t i o no ft h es p ec i fi ce x e mp t i on sf r o mr e al pr oper t yt ax ,i si nChapt erI V ent i t l ed" I mpos i t i onofRealPr oper t yT ax "under Ti t l eI Ion" RealPr oper t yT ax at i on" .Whenr eadt oget her ,Sec t i on234,as pec i fi c pr ov i s i on,qual i fi esSec t i on133,agener alpr ov i s i on. I ndeed,whene v ert her ei sapar t i c ul arenac t mentandagener alenac t menti nt he s ames t at ut e,andt hel at t er ,t ak eni ni t smos tc ompr ehens i v es ens e,wi l lov er r ul e t he f or mer ,t he par t i cul ar enact mentmustbe oper at i ve,and t he gener al enac t mentmus tbet ak ent oaff ec tonl yt heo t herpar t soft hes t at ut et owhi c hi t ma ypr oper l yappl y .13 Ot her wi s es t at ed,wher et her ear et woac t sorpr o vi s i ons , one ofwhi c hi ss pec i aland par t i c ul ar ,a nd c er t ai nl yi nc l udes t he mat t eri n ques t i on,andt heot herg ener al ,whi c h,i fs t andi ngal one,wi l li nc l udet hes ame mat t era ndt husc onfl i c twi t ht hes pec i alac torp r o vi s i on,t hes pec i almus tbe t ak en asi nt ended t oc ons t i t ut e an e x c ept i on t ot he gener alac torp r o vi s i on, especi al l y when suc h gener al and spec i al act s or pr ov i si ons ar e
c o nt emp or a neo us ,a st h el e gi s l a t u r ei sn ott ob ep r es u medt oh av ei n t e nde da c onfl i c t .14 Mac t anCebut her ef or eadher est ot hei nt endmentoft hel aw i ns of arasi thol ds t hatMCI AAc anno ts eekr ef ugei nSec t i on133( o) ;t hati tc anonl yi n vok eSec t i on 234 ( a)so l ong as i tcan est abl i sh t hatt he pr oper t i es wer e owned by t he Re pu bl i co ft h e Ph i l i p pi n es .T or e pea t ,Se c t i o n2 34 , wh i c hs p ec i fi e st h e pr oper t i esex empt edf r om r ealpr oper t yt ax ,pr ev ai l sov ert hegener all i mi t at i ons ont het ax i ngpo werofL GUss t at edi nSec t i on133.
Thus ,i fSec t i on133( o)i snott obeahav en,t hen,Ir es pec t f ul l ys ubmi tt hati ti s nol ongernec es s ar yt odi c hot omi z ebe t weenago v er nmenti ns t r ument al i t yanda Mact anCebu,wha GOCC.Asst r essedbyt heCour ti n tn eedo nl ybea s c er t a i n ed i swhet hert heai r por tpr oper t i esar eownedbyt heRepubl i ci ft heai r por tAut hor i t y i st o be f r eed f r om t he bur den ofp ay i ng t he r ealpr oper t yt ax .Si mi l ar l y , MI AA,wi i n t ht heCour t ' sfi ndi ngt hatt heNAI Al andsandbui l di ngsar eo wnedb y t heRepubl i c ,t heai r por tAut hor i t ydoesnothav et opa yr ealpr oper t yt axt ot he Ci t yo fPar añaque. I I I . Mac t anCebuand MI AA Aspoi nt edoutear l i er , o st ens i bl yc ont r adi c te ac hot her . Whi l et hefi r s tc ons i der sai r por tpr oper t i esass ubj ec tt or ealpr oper t yt ax ,t he s e c on de x e mp t st hes a mef r o mt h i si mp os i t i o n.Th ec o nfl i c t ,h owe v er ,i smo r e appar entt hanr eal .Thedi v e r gentc onc l us i onsi nt he t wo c as espr oc eed f r om di ffer entpr emi s es ;henc e,t her es ul t i ngc ont r adi c t i on.
Toel uc i dat e,i n t heCour tf oc us edont hepr operi nt er pr et at i onof Mac t anCebu , Sect i ons133,232and234oft heLGC,andemphasi zedt henat ur eoft het ax Mac t anCebuc e x e mp t i o nsg r a nt edb yl a w. a t e go r i z edt h ee x e mpt i o nsa sb as e d ont heowner s hi p,c har ac t erandus eoft hepr oper t y ,t hus : s h i pEx e mp t i o ns .Ex ( a)Owner e mp t i onsf r om r ealpr oper t yt ax e sont he wn er s h i p bas i sofo a r er ealpr oper t i esownedby :( i )t heRepubl i c , a r a n g a y ,and ( i i )apr ov i nc e,( i i i )ac i t y ,( i v )amuni c i pal i t y ,( v )ab
( v i )r egi s t er edc ooper at i v es . ar a c t e rEx e mp t i o ns .Ex ( b)Ch e mp t e df r o m r e alp r o pe r t yt a x e so nt h e
bas i soft hei rc har ac t erar e:( i )c har i t abl ei ns t i t ut i ons ,( i i )hous es
a nd t e mp l e so fp r a y e rl i k ec h ur c h es ,p a r s o na ge so rc on v e nt s appur t enantt her et o,mos ques ,and ( i i i )nonpr ofi torr el i gi ous c eme t er i es . e mp t i o ns . ( c )Usageex Ex e mpt edf r om r eal pr o per t yt ax e sont hebas i sof
t heac t ual ,di r ec tandex cl us i v euse t owhi c ht he yar ede v ot edar e: ( i )al ll ands ,bui l di ngs and i mpr o v ement s whi c h ar e ac t ual l y di r ec t l y and e x c l us i v el y us ed f or r el i gi ous ,c har i t abl e or educ at i onalpur pos es ;( i i )al lmac hi ner i esandequi pmentac t ual l y , di r ec t l y and e x c l us i v e l y us ed b yl oc alwat er d i s t r i c t s or b y g ov e r n me nt o wn ed o rc o nt r o l l e dc o r p or a t i o ns e ng ag ed i nt h e suppl y and di st r i but i on of wat er and/ or gener at i on and t r ans mi s s i on ofel ec t r i c po wer ;and ( i i i ) al lmac hi ner ya nd equi pmentus edf orpol l ut i onc ont r ol andenv i r onment al pr ot ec t i on. T ohel ppr o vi deaheal t h yenv i r onmenti nt hemi ds toft hemoder ni z at i on oft he c ount r y ,al lmac hi ner yand equi pmentf orp ol l ut i on c ont r oland en vi r onment al pr o t ec t i onma yno tb et ax e db yl oc al go v er nment s .15
Fort he ai r por tpr oper t i est o be e x emptf r om r ealpr oper t yt ax ,t he y mus tf al l wi t hi nt hement i onedc at egor i es .Logi c al l y ,t heai r por tpr oper t i esc anonl yqual i f y undert hefi r s te x empt i on— b yv i r t ueofo wner s hi p.But ,asal r eadyment i oned, t an Cebut t he Cour t ,nev er t hel es s,r ul ed i nMac hatt he s ai d pr oper t i esar e no l o ng ero wn edb yt h e Re pu bl i ch av i n gb ee nc o nv e y e da bs o l u t e l yt ot h ea i r p or t Aut hor i t y ,t hus : Sec t i on15oft hepet i t i oner ' sChar t erpr ov i des : r ans f erofEx i s t i ngFac i l i t i esand I nt angi bl eAs set s .— Se c .1 5.T
Al lex i s t i ngpubl i cai r por tf ac i l i t i es ,r unway s,l ands ,bui l di ngsand ot herpr oper t i es ,mov abl eori mmo v abl e,bel ongi ngt oorpr es ent l y admi ni s t er ed b yt he a i r por t s ,and al la s s et s ,po wer s ,r i ght s , i nt er es t sandpr i v i l egesr el at i ngonai r por twor k sorai roper at i ons , i nc l udi ngal lequi pmentwhi c har enec es s ar yf ort heoper at i onsof ai rn av i gat i on,aer odr omec ont r olt ower s ,c r as h,fi r e,andr es c ue f ac i l i t i es ar e her eby t r ans f er r ed t ot he Aut hor i t y : Pr ov i ded, howe v er ,t hatt heoper at i onsc ont r olofal lequi pmentnec es s ar y f o rt h e o pe r a t i on of r a di o ai d st oa i rn av i g at i o n, a i r wa y s
c o mmu ni c at i o n,t hea pp r o ac hc on t r o lo ffic e ,a ndt hea r e ac o nt r o l c e nt ers h al lb er e t a i ne db yt h e Ai rT r a ns po r t a t i on Offic e .No equi pment ,ho we v er ,s hal lber emo v edb yt heAi rT r ans por t at i on Offic ef r o m Mac t a nwi t h outt h ec o nc u r r e nc eo ft h eAu t h or i t y .The Aut hor i t ymayas si s ti nt hemai nt enanc eoft heAi rT r ans por t at i on Officeequi pment . The" ai r por t s "r ef er r edt oar et he" LahugAi rPor t "i nCebuCi t yandt he " Mac t anI nt er nat i onalAi r por ti nt hePr o vi nc eofCebu" ,whi c hbel onged t ot he Republ i coft he Phi l i ppi nes ,t hen undert he Ai rT r ans por t at i on Office( ATO) .
ASHaDT
I tma yber eas onabl et oas s umet hatt het er m" l ands "r ef ert o" l ands "i n Ce bu Ci t yt h en a dmi n i s t e r e db yt h eL ah ug Ai rPo r ta nd i n c l u de st h e pa r c e l so fl a ndt h er e s po nd en tCi t yo fCe bus e ek st ol e v yonf o rr e al ss ec t i on i nv ol v e s a" t r a ns f e r " oft he " l a nds " , pr oper t yt ax es .Thi amongot he rt hi ngs ,t ot hepe t i t i one ra ndnotj us tt het r ansf eroft he benefici aluse t her eof ,wi t ht he owner shi p bei ng r et ai ned by t he Republ i coft hePhi l i ppi ne s. Thi s" t r a ns f e r "i sac t ua l l yana bs ol ut ec onv e ya nc eoft heowne r s hi p t he r e ofbec aus et hepe t i t i one r ' sa ut hor i z e d ca pi t als t oc kc onsi s t s of , " t he va l ue of such r ea l est at e owned and/ or i nt er al i a, a dmi ni s t e r e db yt he a i r por t s " .He nc e,t he pe t i t i one ri s now t he owne roft hel a ndi nque st i ona ndt hee x ce pt i oni nSe ct i on2 34 ( c )of t heLGCi si na ppl i c abl e.16
MI AA,adi I n ff er entc onc l us i onwasr eac hedb yt heCour tont wogr ounds .I tfi r s t bank edont hegener alpr o vi s i onl i mi t i ngt het ax i ngpowerofL GUsasst at edi n Se c t i o n1 33 ( o )oft h eLGCt h at ,u n l e s so t h er wi s ep r o v i de di nt h e Co de ,t h e e x er c i s eoft het ax i ngpower sofL GUsshal lnote xt endt ot hel ev yoft ax es ,f ees or char ges of any ki nd on t he Nat i onalGover nment ,i t s agenci es and i ns t r ument al i t i es ,and L GUs .The Cour tt ook pai ns i nc har ac t er i z i ng ai r por t aut hor i t i esasgov er nmenti ns t r ument al i t i es ,qui t eobv i ous l y ,i nor dert oappl yt he s ai dpr ov i s i on.
Af t erdoi ngs o,t heCour tt hens hi f t edi t sat t ent i onandpr oc eededt of oc usont he i s s ueofwhoo wnst hepr oper t yt ode t er mi newhe t hert hec as ef al l swi t hi nt he
pur v i ew ofSec t i on 234 ( a) .Rat i oc i nat i ng t hata i r por tp r oper t i esar e ofp ubl i c domi ni on whi c h per t ai nt ot he s t at e and t hatt he ai r por tAut hor i t yi sa mer e t r us t eeoft heRepubl i c ,t heCour tr ul edt hatt hes ai dpr oper t i esar eex emptf r om r ealpr oper t yt ax ,t hus : r por tLandsandBui l di ngsofMI AAar eOwnedbyt heRepubl i c 2.Ai r por tLandsandBui l di ngsar eofPubl i cDomi ni on a.Ai i c The Ai r por t Lands and Bui l di ngs of MI AA ar e pr oper t y ofpubl domi ni onandt her ef or eownedbyt heSt at eort heRepubl i coft he Phi l i ppi nes.TheCi v i l Codepr o vi des :
x x xx x xx x x No o ne c a nd i s p ut et h atp r o pe r t i e so fp ub l i cd omi n i on me nt i o ne di n r oa ds ,c ana l s , r i v er s , Ar t i cl e 420 of t he Ci vi l Code, l i ke " t or r e nt s ,por t sandbr i dge sc ons t r uc t e dbyt heSt a t e" ,ar eownedby er m " por t s" i ncl udes seapor t s and ai r por t s.The t he St at e.The t port MI AAAi r p or tLandsandBui l di n gscons t i t ut ea" "c ons t r uc t edbyt he
St at e.UnderAr t i c l e42 0oft heCi v i lCode,t heMI AA Ai r por tLandsand Bui l di ngsar epr oper t i esofpubl i cdomi ni onandt husownedbyt heSt at e ort heRepubl i coft hePhi l i ppi nes . TheAi r por tLandsandBui l di ngsar ede v ot edt opubl i cus ebec aus et he y he publ i cf ori nt e r na t i ona la nd dome st i ct r a v ela nd a r eused by t t r anspor t at i on.Thef ac tt hatt heMI AAc ol l ec t st er mi nalf eesandot her
c ha r g esf r o mt hep ub l i cd oe sn otr e mo v et hec h ar a c t e ro ft heAi r p or t Landsan dBui l di ngsaspr oper t i esf orpubl i cus e.Theoper at i o nb yt he go v er n men to fat o l l wa yd oesn otc h an get hec h ar ac t e ro ft her o adas o nef o rp u bl i cus e .So me on emu s tp a yf o rt h ema i n t e na nc eo ft h er o ad , ei t hert hepubl i ci ndi r ec t l yt hr ought het ax est heypayt hegov er nment ,or onl yt hos eamon gt hepubl i cwh oac t ual l yus et her o adt hr ought het ol l f e est h eyp ayup onu s i n gt h er o ad .Th et o l l wa ys y s t e mi sev e namo r e effic i entandequi t abl emanneroft ax i ngt hepubl i cf ort hemai nt enanc eof publ i cr oads . Thec har gi ngoff eest ot hepubl i cdoesno tde t er mi net hec har ac t erof t hepr oper t ywhet heri ti sofpubl i cdomi ni onornot .Ar t i c l e420oft he
Ci v i lCo de d efi n es p r o pe r t yo fp ub l i cd omi n i o na so ne " i n t e nd ed f o r publ i cus e" .Ev eni ft hegov er nmentc ol l ec t st ol lf ees ,t her oadi ss t i l l " i n t en de df o rp ubl i cu s e"i fa ny o nec a nu s et h er o adu nd ert hes ame t er msandc ondi t i onsast her es toft hepubl i c .Thec har gi ngoff ees ,t he l i mi t at i on o nt he k i nd ofv ehi c l es t hatc an u se t he r oad,t he s peed r es t r i c t i onsandot herc ondi t i onsf ort heus eoft her oaddonotaffec tt he publ i cchar ac t eroft her oad.
Th et e r mi n alf e esMI AA c h ar g est op as s e ng er s ,a swe l last h el an di ng f eesMI AA c har gest o ai r l i nes ,c ons t i t ut et he b ul koft he i nc ome t hat mai nt ai nst heoper at i onsofMI AA.Thec ol l ec t i onofs uc hf eesdoesno t c hanget hec har ac t erofMI AAasanai r por tf orpubl i cus e.Suc hf eesar e of t ent er me dus e r ' st ax .Th i sme an st ax i n gt ho s ea mo ngt hep ub l i cwh o ac t ual l yus e a publ i cf ac i l i t yi ns t ead oft ax i ng al lt he publ i ci nc l udi ng t hos ewhonev eru set hepar t i c ul arpubl i cf ac i l i t y .A us er ' st axi smor e equi t abl e— apr i nc i pl eoft ax at i onmandat edi nt he1987Cons t i t ut i on. The Ai r p or tLandsandBui l d i ngsofMI AA,whi c hi t sChar t erc al l st he " pr i nc i pal ai r por toft hePhi l i ppi nesf orbot hi nt er nat i onalanddomes t i cai r t r affic " ,ar epr oper t i esofpubl i cdomi ni onbec aus et he yar ei nt endedf or oper t i es ofpubl i c domi ni on,t hey i ndi sput abl y publ i c us e.As pr be l ongt ot heSt a t eort heRepubl i coft hePhi l i ppi nes .
b.Ai r por tLandsandBui l di ngsar eOut si det heCommer ceofMan Th eAi r p or tL an dsan dBu i l d i n gsofMI AAa r ed ev o t e dt op ub l i cus ea nd oper t i es of publ i c t h us a r e pr op er t i e s ofpub l i cd omi n i o n.As pr domi ni on, t he Ai r por t Lands and Bui l di ngs ar e out si de t he commer ceofman.TheCour thasr ul edr epeat edl yt hatpr o per t i esof
publ i cdomi ni onar eout s i det hec ommer c eofman.Asear l yas1915,t hi s Cour tal r eadyr ul edi nMuni t hatpr oper t i es c i pal i t yofCa vi t ev .Roj a s de v ot e dt op ub l i cus ear eo ut s i d et hec omme r c eo fman ,t h us : x x xx x xx x x Agai ni nEspi t he Cour t decl ar ed t hat r i t u v. Muni ci pal Counci l , pr oper t i esofpubl i cdomi ni onar eo ut s i det hec ommer c eofman:
x x xx x xx x x TheCour thasal s or ul edt hatpr oper t yofpubl i cdomi ni on,bei ngout s i de t h ec o mme r c eo fma n,c a nno tb et hes ub j e cto fa na uc t i o ns a l e. Pr oper t i esofpubl i cdomi ni on,bei ngf orp ubl i cus e,ar enots ubj ec tt o l e vy ,e nc umbr a nc e ordi s pos i t i on t hr oug h pu bl i co rpr i v a t es al e.An y enc umbr anc e,l ev yone x ec ut i onorauc t i ons al eofan ypr oper t yofpubl i c domi ni on i sv oi df orbei ng c ont r ar yt o publ i c pol i c y .Es sent i alpubl i c s er v i c es wi l ls t op i fpr oper t i es ofpub l i c domi ni on ar es ubj ec tt o enc umbr anc es ,f or ec l os ur esand a uc t i on s al e.Thi swi l lha ppen i ft he Ci t yofPar añaquec anf or ec l os eandc ompelt heauc t i ons al eoft he600hec t ar er unwa yoft heMI AAf orno npa y mentofr eal es t at et ax . Bef or e MI AA can encumbert he Ai r por tLands and Bui l di ngs,t he t hdr aw f r om publ i cuset Pr es i dentmus tfi r s twi heAi r po r tL and sa nd Bu i l d i n gs .Se c t i o ns8 3a nd8 8o ft h ePu bl i cL an dL aw o rCo mmo nwe al t h Ac tNo .14 1,wh i c h" r e ma i n st ot h i sd ay t h ee x i s t i n gg en er a ll a w gov er ni ngt hec l as si fi cat i onanddi s pos i t i onofl andsoft hepubl i cdomai n ot hert hant i mberandmi ner al l ands " ,pr ov i de: x x xx x xx x x Thus ,unl es st hePr es i denti s s uesapr oc l amat i onwi t hdr awi ngt heAi r por t LandsandBui l di ngsf r om publ i cus e,t hes epr oper t i esr emai npr oper t i es nal i enabl e.Si o fp ubl i cd omi n i o na nd a r ei n c et h e Ai r p or tL an dsa nd Bui l di ngsar ei nal i enabl ei nt hei rp r es ents t at usaspr oper t i esofpubl i c domi ni on,t he yar enots ubj ec tt ol ev yone x ec ut i onorf or ec l os ur es al e. Asl ongast heAi r por tLandsandBui l di ngsar er es er v e df orp ubl i cus e, t hei r owner shi pr emai ns wi t ht he St at e or t he Republ i c of t he Phi l i ppi nes .
cSEaDA
Theaut hor i t yoft hePr es i dentt or es er v el andsoft hepubl i cdomai nf or publ i cus e,andt owi t hdr aw s uc hpubl i cus e,i sr ei t er at edi nSec t i on14, Chapt er4 ,Ti t l eI ,BookI I Ioft heAdmi ni s t r at i v eCodeof1987,whi c h s t a t e s : x x xx x xx x x
Th er ei sn oq ue s t i o n,t h er e f or e ,t h atu nl es st h e Ai r p or tL and s an d Bui l di ngsar ewi t hdr awnbyl a w orp r es i dent i alpr oc l amat i onf r om publ i c us e,t he yar epr op er t i esofpubl i cdomi ni on,o wnedb yt heRep ubl i ca nd out si det hecommer ceofman. AAi saMer eTr ust eeoft heRepubl i c c .MI
MI AAi smer el yhol di ngt i t l et ot heAi r por tLandsandBui l di ngsi nt r us tf or he Admi ni s t r at i v e t h e Re pu bl i c .Se c t i o n4 8,Ch ap t e r12 ,Bo ok Io ft Code al l ows i nst r ument al i t i es l i ke MI AA t o hol dt i t l et or eal
hus : pr oper t i esownedbyt heRepubl i c,t x x xx x xx x x I nMI AA' sc as e,i t ss t at usasamer et r us t eeoft heAi r p or tLandsa nd Bui l di n gsi sc l ear erb ec aus ee v en i t se x ec ut i v ehe ad c anno ts i gn t he deedofc on v ey anc eonb eha l foft heRepubl i c .Onl yt hePr es i dentoft he Re pu bl i cc a ns i g ns u c hd ee do fc o nv e y a n c e. ansf ert oMI AAwasMeantt oI mpl ementaReor gani zat i on d.Tr
TheMI AA Ch ar t er ,whi c hi sal a w,t r ans f er r edt oMI AA t het i t l et ot he Ai r por tLandsandBui l di ngsf r om t heBur eauofAi rT r ans por t at i onoft he Depar t mentofTr anspor t at i onandCommuni cat i ons.TheMI AA Char t er pr ov i des : x x xx x xx x x Th eMI AA Ch ar t ert r a ns f e r r e dt h eAi r po r tL an dsa ndBu i l d i n gst oMI AA wi t h outt h e Re pu bl i cr e c ei v i ng c as h ,p r o mi s s o r yno t eso rev e ns t o c k s i nc eMI AAi snotas t oc kcor por at i on. Thewher eascl a us esoft heMI AA Char t ere x pl ai nt her at i onal ef ort he t r ans f eroft heAi r por tLandsandBui l di ngst oMI AA,t hus : x x xx x xx x x Thet r ans f eroft heAi r por tL andsandBui l di ngsf r om t heBur eauofAi r T r ans por t at i ont oMI AAwasno tmeantt ot r ans f erbenefi c i a lo wner s hi pof t hese asset sf r om t he Republ i ct o MI AA.The pur pose was mer el y t or e or ga ni z eadi v i s i on i nt heBur e auofAi rT r a ns por t a t i on i nt oa pub l i cr emai n st h eb en efi c i a l separ at eandaut onomousbody.TheRe
owneroft heAi r por tLandsandBui l di ngs .MI AAi t s el fi sowneds ol el yby t heRepub l i c .Nopar t yc l ai msan yo wner s hi pr i ght sov e rMI AA' sas s et s adv e r s et ot heRepubl i c . The MI AA Char t erexpr essl y pr ovi des t hatt he Ai r por tLands and shal lnotbedi sposed t hr oughsal eort hr oughanyot her Bui l di ngs" mode unl ess speci fical l y appr oved by t he Pr esi dent of t he Phi l i ppi nes" .Thi so nl ymeanst hatt heRepubl i cr et ai nedt heb enefi c i al
o wner s hi poft heAi r por tLandsandBui l di ngsbec aus eu nderAr t i c l e428 oft heCi v i l Code,onl yt he" ownerhast her i ghtt o...di s pos eofat hi ng" . Si n c e MI AA c a nn otd i s p os eo ft h e Ai r p or tL an dsa ndBu i l d i n gs ,MI AA doesno to wnt heAi r por tLa ndsa ndBui l di ngs . Atanyt i me,t hePr es i dentc ant r ans f erb ac kt ot heRepubl i ct i t l et ot he Ai r p or tL an ds a nd Bu i l d i n gs wi t h ou tt h e Re pu bl i cp a y i n g MI AA a ny c ons i der at i on.UnderSec t i on3oft heMI AAChar t er ,t hePr es i denti st he onl yonewhoc anaut hor i z et hes al eordi s pos i t i onoft heAi r por tLands andBui l di ngs .Th i sonl yc onfi r mst hatt heAi r por tLa ndsan d Bui l di ngs bel ongt ot heRepubl i c . oper t yOwnedbyt heRepubl i ci sNotTaxabl e e.RealPr
Sec t i o n2 34 ( a )o ft h eL oc alGo v er n me ntCo dee x emp t sf r o mr e ale s t a t e t ax an y" [ r ] ealpr o per t yo wned b yt he Republ i c oft he Ph i l i ppi nes " . Sec t i on234( a)pr ov i des : x x xx x xx x x Thi se x empt i on s houl d be r ead i nr el at i on wi t h Sec t i on 1 33( o)oft he s ameCod e,wh i c hp r o hi b i t sl oc a lgo v er nmen t sf r o mi mp os i n g" [ t ] a x es , f ee so rc h ar g eso fa nyk i ndo nt h e Na t i o na lGo v er n me nt ,i t sag en c i e s andi "Ther ealpr oper t i esownedbyt heRepubl i c nst r ument al i t i es.... ar et i t l ed ei t heri nt he name oft he Republ i ci t s el fo ri nt he name of agenci es or i nst r ument al i t i es of t he Nat i onal Gover nment . The Ad mi n i s t r at i v eCod ea l l o wsr ea lp r o pe r t yo wn edb yt h e Rep ub l i ct ob e t i t l ed i nt he name ofage nc i es ori ns t r ument al i t i es oft he nat i ona l g ov e r n me nt .Su c hr e alp r o pe r t i e sr e ma i no wn ed b yt h e Re pu bl i ca nd c ont i nuet obee x emptf r om r eal es t at et ax .
Th e Rep ub l i cma yg r a ntt h eb en efi c i a lus eo fi t sr e alp r o per t yt oa n ag en c y ori ns t r u me nt a l i t y oft h en at i o nalg ov e r n me nt .Th i sh app ens when t i t l e of t he r eal pr oper t yi st r ansf er r ed t o an agency or i ns t r u me nt a l i t ye v en a st h e Re pu bl i cr e ma i n st h eo wn ero ft he r ea l p r o pe r t y .Su c ha r r a ng eme ntd oe sn otr e s ul ti nt h el o s so ft h et a x e x e mp t i o n.Se c t i o n2 34 ( a )oft h eLo c alGo v e r n me ntCo des t a t e st h at r ealpr oper t yownedbyt heRepubl i cl os esi t st axe x empt i ononl yi ft he " benefi c i alus et her eofhasbeengr ant ed,f orc ons i der at i onorot her wi s e, a x abl epe r s on" t oat .MI AA,asago v er nmenti ns t r ument al i t y ,i snota t axabl e per son underSect i on 133( o)oft heLocalGover nmentCode. Thus,even i fwe assume t hatt he Republ i chasgr ant ed t o MI AA t he be ne fi c i a lus eo ft heAi r p or tL an dsan d Bui l d i n gs ,s u c hf a c td oe sn ot mak et hes er eal pr oper t i essubj ec tt or eal es t at et ax . Howev er ,por t i onsoft heAi r por tLandsandBui l di ngst hatMI AAl eas est o pr i v at eent i t i esar enote x emptf r om r eales t at et ax .Fore x ampl e,t he l andar eaoc c upi e db yhangar st hatMI AAl eas est opr i v a t ec or por at i ons i ss u bj e c tt or e ales t at et a x.I ns u c h ac a s e,MI AA h asg r a nt e dt h e axabl e benefici aluse ofsuch l and ar ea f or a consi der at i on t o at nd t h er ef or es u c hl a nd a r e ai ss ub j e c tt or e ale s t a t et a x . persona I nLungCent t heCour tr ul ed: eroft hePhi l i ppi nesv.QuezonCi t y, x x xx x xx x x17
I nt heul t i mat e,Is ubmi tt hatt het wor ul i ngsdonotr eal l yc ont r adi c t ,but ,i ns t ead, compl ementeachone.Mact anCebupr ovi dest hepr operr ul et hat ,i nor dert o de t e r mi newhe t he ra i r por tpr ope r t i e sa r eex emptf r om r ea lpr ope r t yt a x,i ti s Se ct i on2 34 ,notSe ct i on1 33 ,oft heLGCt ha ts houl dbede t e r mi na t i v eoft he pr oper t i es exemptf r om t he sai dt ax. MI AAt hen l ays down t he cor r ect doc t r i ne t ha ta i r por tp r ope r t i e sa r e ofp ubl i c domi ni on pe r t a i ni ng t ot he st at e,hence,f al l i ngwi t hi nt heambi tofSect i on234( a)oft heLGC. Ho we v er ,b ec a us e oft h ec o nf u s i o ng en er a t e db yt h ea pp ar en t l yc o nfl i c t i n g t anCebuand MI AAi dec i s i ons ,afi net uni ngofMac si mper at i v e. I V.
Par ent he t i c al l y ,whi l et he bas i s ofa r ealpr oper t yt ax as s es s menti sac t ual us e,18t he t axi t s el fi sdi r ec t ed t ot heowner s hi poft he l andsand bui l di ngsor o t heri mpr o v ement st her eon.19 Publ i cpol i c yc ons i der at i onsdi c t at et hatpr oper t y oft heSt at eandofi t smuni c i pals ubdi v i s i onsdev ot edt ogo v er nment alus esand pur pos esi sgener al l ye x emptf r om t ax at i onal t houghnoe xpr es spr o vi s i oni nt he l aw i smadet her ef or .20I nt hei ns t antc as e,t hel egi s l at ur es pec i fi cal l ypr ov i ded t hatr ealpr oper t yownedbyt heRepubl i coft hePhi l i ppi nesoranyofi t spol i t i c al s ubdi v i s i ons i se x emptf r om r ealpr oper t yt ax ,e x c e pt ,ofc our s e,when t he benefi c i alus et her eofhasbeen gr ant ed,f orc o ns i der at i on oro t her wi s e,t oa t ax abl eper s on.Thepr i nc i pal bas i soft heex empt i oni sl i k ewi s eowner s hi p.21 aTADCE
I ndeed,emphas i ss houl dbemadeont heo wner s hi poft hepr oper t y ,r at hert han ont heai r por tAut hor i t ybei ngat ax abl eent i t y .Thi sst r at egymak esi tunnec es sar y t od et e r mi n e wh et he rMI AA i sa ni n s t r u men t a l i t yo raGOCC,a sp ai n s t a k i ng l y p on en t e . expoundedbyt he L i k e wi s e ,t h i sa pp r o ac hp r o v i de sac o nv e ni e nte s c ape f r o m J u s t i c e Ti n ga ' s pr opos i t i ont hatt heMI AAi sat ax abl eent i t yl i abl et opayr ealpr oper t yt ax es ,but t heai r por tpr oper t i esar eex emptf r om l ev yonex ec ut i ont os at i s f yt het axl i abi l i t y . If eart hatt hi shy pot hes i smayt r enc hont heCons t i t ut i onalpr i nc i pl eofuni f or mi t y oft ax at i on,22b ec a us eat a xl a wf u l l yl e v i e da nd a s s es s e da ga i n s ta t a x ab l e gov er nment alent i t ywi l lnotbel i enabl ewhi l el i k eas ses sment sagai ns tal lot her t ax abl eent i t i esoft hes amet axdi s t r i c twi l l bel i enabl e.23 Thebet t eropt i on,t hen,i sf ort heCour tt oc onc ent r at eont henat ur eoft het axas at axonowner s hi pandt odi r ec t l yappl yt heper t i nentr ealpr oper t yt axpr ov i s i ons oft heL GC,s pec i fi c al l yt hos edeal i ngwi t ht hee x empt i onbas edonowner s hi p,t o t hec as eatbar . Thephr as e," pr oper t yo wnedbyt heRepubl i c "i nSec t i on234,ac t ual l yr ef er st o MI AA, t hos ei dent i fi edaspubl i cpr oper t yi nourl aws .Fol l owi ng wegot oAr t i c l es 420and421oft heCi v i l Codewhi c hpr o v i de: Ar t .420.Thef ol l owi ngt hi ngsar epr oper t yofpubl i cdomi ni on:
( 1)Thos ei nt endedf orpubl i cus e,s uc hasr oads ,c anal s ,r i v er s ,t or r ent s , por t san dbr i dgesc ons t r uc t edb yt heSt at e,b ank s ,s hor es ,r oads t eads , andot her sofs i mi l arc har ac t er ; ( 2)Thos ewhi c hb el on gt ot heSt at e,wi t houtbei ngf orp ubl i cu se,and ar ei n t e nd ed f ors o me p ubl i cs e r v i c e orf ort h ed ev e l o pme ntoft h e nat i onal weal t h. Ar t .421.Al lot herp r oper t yoft heSt at e,whi c hi snotoft hec har ac t er s t at edi nt hepr ec edi ngar t i c l e,i spat r i moni al pr oper t y .
Fr om t heaf or equot ed,wer eadi l ydeduc et hatai r por tpr oper t i esar eofpubl i c domi ni on.The" por t "i nt heenumer at i onc er t ai nl yi nc l udesanai r por t .Wi t hi t s b ea c on s ,l a nd i n gfi e l d s ,r u nwa y s ,a n dh an gar s ,an a i r p or ti sa na l o go us t oa har borwi t hi t sl i ght s ,whar v esanddoc k s;t heonei st hel andi ngpl ac eandhav en ofs hi pst hatnav i gat et hewat er ,t heot heroft hos et hatnav i gat et heai r .24 Ampl e aut hor i t yf ur t hers uppor t st hepr opos i t i ont hatt het er m" r oads "i nc l uder unway s andl andi ngs t r i ps .25 Ai r por t s ,t her ef or e,bei ngpr oper t i esofpubl i cdomi ni on,ar e oft heRepubl i c . Att hi spoi nt ,Ic annothel pbutai rt heobs er v at i ont hatt hel egi s l at ur emayhav e r eal l yi nt endedt hephr as e" o wnedbyt heRepubl i c "i nSec t i on234t or ef ert o, amongo t her s ,pr oper t i esofpubl i cdomi ni on.Thi si sbec aus e" publ i cdomi ni on" doesnotc ar r yt hei deaofowner s hi p.Tol ent i no,anaut hor i t yi nc i v i ll aw,ex pl ai ns : Thi s
ar t i c l e
s ho ws
t ha t
t her e
omi n i o n wn er s h i p .Pr bet weend ando i v at e
i s
a
owner s hi p
di s t i nc t i on i s
defi ned
el s e wh er ei nt heCo de;b utt h eme an i n gofp ub l i cdo mi n i o ni sno wh er e publ i c defi ned.F r om t he c ont e xtofv ar i ouspr o vi s i ons ,i ti sc l eart hat d omi n i o nd oes n otc a r r yt h ei d ea o fown er s hi p;p r o pe r t yo fpu bl i c
domi ni o ni sno to wnedb yt heSt at e,b utp er t ai nst ot heSt at e,whi c has t er r i t or i als ov er ei gn ex er c i s es c er t ai nj ur i di c alpr er ogat i v es ov ers uc h pr oper t y .The owner shi p ofsuch pr oper t y ,whi ch has t he speci al c har ac t er i s t i c s ofa c ol l ec t i v eo wner s hi pf ort he gener alu s e and enj o yment ,by v i r t ue oft hei rappl i c at i on t ot he s at i s f ac t i on oft he c ol l ec t i v eneeds ,i si nt hes oc i algr oup,whet hernat i onal ,pr ov i nc i al ,or muni c i pal .Thei rpur pos ei snott os er v et heSt at easaj ur i di c alper s on, butt hec i t i z ens ;t he yar ei nt endedf ort hec ommona ndpubl i cwel f ar e,
ands ot he yc annotbet heobj ec tofappr opr i at i on,ei t herbyt heSt at eor bypr i v at eper s ons .Ther el at i onoft heSt at et ot hi spr oper t yar i s esf r om t hef ac tt hatt heSt at ei st hej ur i di c alr epr es ent at i v eoft hes oc i algr oup, an dass u c hi tt a k esc a r eoft he m,p r e s er v e st h em a ndr e gu l a t e st h ei r us ef ort hegener al wel f ar e.26
Be t hatasi tmay ,t he l egi s l at i v ei nt entt oe x emptf r om r ealpr oper t yt axt he pr oper t i esoft heRepubl i cr emai nsc l ear .Thes oi lc ons t i t ut i ngt heNAI A ai r por t and t he r unways cannotbe t axed,bei ng pr oper t i es ofpubl i c domi ni on and per t ai ni ngt ot heRepubl i c .Thi si st r ueev eni ft het i t l et ot hes ai dpr oper t yi si n t henameofMI AA.Pr ac t i c alo wner s hi p,r at hert hant henak edl egalt i t l e,mus t c ont r ol ,par t i c ul ar l ybec aus e,asamat t erofpr ac t i c e,t her ec or dt i t l emaybei n t henameofagover nmentagencyordepar t mentr at hert hani nt henameoft he Republ i c . I nt hi sc as e,ev eni fMI AAhol dst her ec or dt i t l eov ert heai r por tpr oper t i es ,s uc h hol di ng can onl y be f ort he benefitoft he Republ i c,27especi al l y when we c ons i dert hatMI AA e x er c i s es an es sent i al l y publ i cf unc t i on.28Fur t her ,wher e pr oper t y ,t het i t l et owhi c hi si nt henameoft hepr i nc i pal ,i si mmunef r om t ax es ,i t r emai nsi mmuneev eni ft het i t l ei sst andi ngi nt henameofanagentort r us t eef or s uc hpr i nc i pal .29 Pr oper t i esofpubl i cdomi ni onar ehel di nt r us tbyt hes t at eort heRepubl i cf ort he peopl e.30 Thenat i onalgo v er nmentandt hebodi esi thasc r eat edt hate x er c i s e del egat edaut hor i t yar e,pur s uantt ot hegener alpr i nc i pl esofpubl i cl aw,mer e agent soft he Republ i c .Her e,i ns of arasi td eal swi t ht he s ubj ec tp r oper t i es , MI AA,ago v er nment alc r eat i one x er c i s i ngdel egat edpo wer s ,i samer eagentof t he Republ i c ,and t he l at t er ,t or epeat ,i st he t r us t ee oft he pr oper t i esf ort he benefi tofal l t hepeopl e.31 MI AA,t Ourr ul i ngi n her ef or e,i ns of arasi thol dst hatt heai r por tAut hor i t yi sa " t r us t eeoft heRepubl i c " ,ma yno tha v ebeenpr ec i s e.I twoul dha v ebeenmor e s ound,l egal l yt hati s ,t oc ons i dert her el at i ons hi pbet weent heRepubl i candt he ai r por tAut hor i t yaspr i nc i palandagent ,r at hert hanast r us t orandt r us t ee.
Thehi s t or yoft hes ubj ec tai r por tat t es t st ot hi spr opos i t i on,t hus :
Thec ount r y ' spr emi erai r por twasor i gi nal l yaUSAi rFor c eBas e,whi c h wa st u r n ed o v e rt ot h e Ph i l i p pi n eg ov e r n me nti n1 94 8.I ts t a r t e d oper at i ons as a c i v i lav i at i on ai r por t wi t h meager f ac i l i t i es ,t hen c ons i s t i ngoft hepr es entdomes t i cr unwayasi t ssol el andi ngs t r i p,anda s mal l bui l di ngnor t hwes toft hi sr unwayasi t ssol epas sengert er mi nal . Theai r por t ' si nt er nat i onalr unwayandas soc i at edt ax i waywer ebui l ti n 19 53 ;f o l l o we di n1 96 1b yt h ec o ns t r u c t i on o fac o nt r olt o we ran da t er mi nalbui l di ngf ort heex cl us i v eus eofi nt er nat i onalpas senger satt he s out hwes ti nt er s ec t i onoft het wor unwa ys .Thes es t r uc t ur esf or medt he keycomponent sofan ai r por tsy st em t hatcame t o be known ast he Mani l aI nt er nat i onal Ai r por t( MI A) . Li k eo t hernat i o nalai r por t s ,t heMI Awasfi r s tmana gedando per at edb y t heNat i onal Ai r por t sCor por at i on,anagenc yc r eat edonJ une5,1948b y v i r t ueofRepubl i cAc tNo.224.Thi swasabol i s hedi n1951and[ i n]i t s s t e ad ,t h e MI A Di v i s i o n wa sc r e at e du nd ert h e Ci v i lAe r o na ut i c s Ad mi n i s t r at i o n( CAA)oft h eDe par t me nto fCo mme r c ea ndI n dus t r y .
cAEaSC
OnOc t ob er1 9,1 956 ,t hee nt i r eCAA,i n cl u di n gt h eMI A Di v i s i on ,wa s t r a ns f e r r e dt ot h e De pa r t me nto fPu bl i c Wo r k s ,T r a ns p or t a t i o na nd Communi cat i ons. I n1 97 9,t h e CAA wa sr e namedBur e auo fAi rT r a ns po r t a t i onf o l l o wi n g t hec r eat i onofane x cl us i v eEx ec ut i v eDepar t mentf orT r ans por t at i onand Communi cat i ons. I ti swor t hwhi l et onot eatt hi spoi ntt hatwhi l et heMI AGener alManager t hen c ar r i ed t he r ankofa Di v i s i on Chi efo nl y ,i tbec ame amat t ero f pol i c yandpr ac t i c et hathebeappoi nt edbynol es st hant hePr es i dentof t h e Ph i l i p pi ne ss i n c et h e mag ni t u de ofi t si mp ac to nt h ec o unt r y ' s ec o no myha sa c qui r e ds uc hn at i o na li mp or t a nc ea ndr e c og ni t i o n. Dur i ngt hes ev ent i es ,t hePhi l i ppi net our i s m andi ndus t r ye xper i enc eda ph en ome na lu ps u r g ei nt he c o unt r y ' sma npo we re x po r t s ,r es u l t i n gi n mor ei nt er nat i onalfl i g htf r equenc i est oMani l awhi c hgr e wb ymor et han f ourt i mes .
Ex ecut i v e Or der No. 381pr omul gat ed by t hen Pr esi dent Mar cos aut hor i z edt hedev el opmentofMani l aI nt er nat i onalAi r por tt omeett he needsoft hecomi ngdecades. Af eas i bi l i t yst udy / ai r por tmas t erpl anwasdr awnupi n1973byAi r wa ys Eng i n ee r i ngCo r p or a t i o n,t hefi n an c i n g ofwhi c hwa ss o ur c e[ d]f r o ma US$ 29 . 6Mi l l i o nl o ana r r a ng edwi t ht h eAs i a nDe v e l o pme ntBa nk( ADB) . Th ed et a i l e dEn gi n ee r i n gDe s i g no ft h en ew MI A De v e l o pme ntPr o j e c t ( MI ADP) was under t aken by Renar det Saut i / Tr anspl an/ F. F. Cr uz Co ns u l t a nt s wh i l et h ed es i g no ft h eI PT b ui l d i n g wa sp r e pa r e db y Ar c hi t ec tL. V.Loc si nandAs soc i at es . I n1 97 4,t h efi na le ng i n eer i n gd es i g n wa sa do pt ed b yt he Ph i l i p pi n e Gov er nment .Thi swasconcur r edbyt heADB onSept ember18,1975 andbecameknownast he" SchemeE5Modi fiedPl an" .Act ualwor kon t hepr oj ec ts t ar t edi nt hes ec ondquar t erof1978. OnMar c h4,1982,EXECUTI VE ORDER NO.778wass i gnedi nt ol aw, abol i s hi ngt heMI A Di v i s i onundert heBATandc r eat i ngi ni t ss t eadt he MANI LA I NTERNATI ONALAI RPORTAUTHORI TY ( MI AA) ,v es t edwi t h t he po wert o admi ni s t eran d oper at et he Man i l aI nt er nat i onalAi r por t ( MI A) . Th ou ghMI AA wa se nv i s i o ne dt ob ea ut o no mo us ,L et t e ro fI ns t r u c t i on s ( L OI )No.1245,s i gned3 1Ma y1982,c l ar i fi edt hatf orpur pos eofpol i c y i n t e gr a t i o na ndp r o gr a mc o or d i n at i o n,t h e MI AA Ma na ge me nts h al lb e undert he gener als uper v i s i on butno tc ont r oloft he t hen Mi ni s t r yof T r a ns po r t a t i onan dCommu ni c a t i o ns . OnJ u l y21 ,1 98 3,Ex e c ut i v eOr d erNo .9 03wa sp r o mu l g at e d,p r o v i d i n g t h at6 5% o fMI AA' sa nn ua lg r o s so pe r a t i n gi n c omeb er e v e r t e dt ot h e gener alf un df ort he ma i nt enanc e an d oper at i on ofo t heri nt er nat i onal and d omes t i cai r por t si nt he c ount r y .I tal s os c al ed do wn t he equi t y c ont r i but i onoft heNat i onalGo v er nmentt oMI AA:f r om PhP10bi l l i ont o PhP2. 5 bi l l i on and r emoved t he pr ovi si on exempt i ng MI AA f r om t he pa y me ntofc or por at et ax . Ano t herr e vi s i on i nt he MI AA Char t erf ol l o wed wi t ht he pr omul gat i on ofEx e c ut i v eOr d erNo .9 09 ,s i g ne dSe pt e mb er1 6,1 98 3,i n cr e as i n gt h e
member s hi poft heMI AABoar dt on i ne( 9)Di r ec t or swi t ht hei nc l us i onof t woo t hermemb er st obeappoi nt edb yt hePhi l i ppi nePr es i dent .
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Thel astamendmentt ot heMI AA Char t erwasmadeonJul y26,1987 t h r o ug hEx e c ut i v e Or d erNo.2 98wh i c hp r o v i d ed f o ra mor er e al i s t i c i nc ome s har i ng ar r ange ment bet ween MI AA and t he Nat i onal Go v er n me nt .I tp r o v i d ed t ha ti n s t e ad o ft h e6 5% o fg r o ss o pe r a t i ng i ncome, onl y 20% of MI AA' s gr oss i ncome, ex cl usi v e of i ncome gener at ed f r om t he pas s eng ert er mi nalf eesa nd ut i l i t yc har ges ,s hal l r e v e r tt ot h eg en er a lf u nd o ft h e Na t i o na lT r e as u r y .EO 2 98a l s o r eor gani z edt heMI AA Boar dandr ai s edt hec api t al i z at i ont oi t sor i gi nal magn i t udeofPhP10bi l l i on. Thep os t1986Re v ol ut i onp er i odwi l lno tbec ompl e t ewi t houtment i o nof t h er e na mi n go fMI At o Ni n oy Aq ui no I nt er n at i o na lAi r p or twi t ht h e enact mentofRepubl i c ActNo.6639on August17,1987.Whi l et hi s l egi s l at i on r enamed t he ai r por tc ompl ex ,t he MI A Aut hor i t ywoul ds t i l l r et ai ni t sc or por at enames i nc ei tdi dnotamendt heor i gi nalorr ev i s ed c har t er sofMI AA.32
The MI AA Char t erf ur t herp r o v i des t hatan y por t i on oft he ai r por tc anno tb e d i s p os e do fb yt h e Au t h or i t yt h r ou gh s a l eo rt h r o ug ha nyo t h ermo de u nl e s s s pec i fi cal l yappr ov edbyt hePr es i dentoft hePhi l i ppi nes .33I ti sal s onot edt hat MI AA' sboar dofdi r ect or si spr ac t i c al l ycont r ol l edbyt henat i onalgov er nment ,t he member st her eofbei ngoffic i al soft hee x ec ut i v ebr anc h.34 Li k ewi s e,t heAut hor i t y c anno tl e vyandc ol l ec tdues ,c har ges ,f eesoras s es s ment sf ort heus eoft he ai r por tpr emi ses ,wor k s,appl i anc es ,f ac i l i t i esorc onc es si ons ,orf oranys er v i c e pr ov i dedbyi t ,wi t houtt heappr ov alofs ev er ale x ec ut i v edepar t ment s .35 These pr ov i s i onsar ec ons i s t entwi t hanagenc yr el at i ons hi p.Leti tber emember edt hat oneoft hepr i nc i palel ement sofanagenc yr el at i ons hi pi st hee xi s t enc eofs ome degr eeofc ont r olbyt hepr i nc i palov ert hec onduc tandac t i v i t i esoft heagent .I n t hi sr egar d,whi l e an agentu nder t ak e st o ac to n behal fo fh i s pr i nc i paland s ubj ec tt o hi sc ont r ol ,a t r us t ee as s uc hi snots ubj ec tt ot he c ont r oloft he benefi ci ar y ,ex c eptt hathei sunderadut yt odealwi t ht het r us tpr oper t yf ort he
