Mactan Cebu International Airport Authority v Marcos (1996)

Mactan Cebu International Airport Authority v Marcos GR No 120082, September 11, 1996 FACTS: Petitioner was created by virtue of RA 6958. Section 1 thereof states that the authority shall be exempt from realty taxes imposed by the National Government or any of its political subdivisions, agencies and instrumentalities. However, the Treasurer of Cebu City demanded payment for realty taxes from petitioner. Petitioner filed a declaratory relief before the Regional Trial Court. The trial court dismissed the petitioner ruling that the Local Government Code withdrew the tax exemption granted to Government owned and controlled corporation. ISSUE: Whether the city of Cebu has the power to impose taxes on petitioner RULING: Yes. Taxation is the rule and exemption is the exception, the exemption may thus be withdrawn at the pleasure of the taxing authority. As to tax exemptions or incentives granted to or presently enjoyed by natural or juridical persons, including government- owned and controlled corporations, section 193 of the LGC prescribes the general rule, viz, they are withdrawn upon the effectivity of the LGC, except those granted to local water districts, cooperatives, duly registered under RA 6938, non stock and nonprofit hospitals and educational institutions and unless otherwise provided in the LGC.

MIAA v. Court of Appeals G.R. No. 155650, July 20, 2006

Carpio, J. Facts: The Manila International Airport Authority (MIAA) operates the Ninoy Aquino International Airport (NAIA) Complex in Parañaque City under Executive Order No. 903 (MIAA Charter), as amended. As such operator, it administers the land, improvements and equipment within the NAIA Complex. In March 1997, the Office of the Government Corporate Counsel (OGCC) issued Opinion No. 061 to the effect that the Local Government Code of 1991 (LGC) withdrew the exemption from real estate tax granted to MIAA under Section 21 of its Charter. Thus, MIAA paid some of the real estate tax already due. In June 2001, it received Final Notices of Real Estate Tax Delinquency from the City of Parañaque for the taxable years 1992 to 2001. The City Treasurer subsequently issued notices of levy and warrants of levy on the airport lands and buildings. At the instance of MIAA, the OGCC issued Opinion No. 147 clarifying Opinion No. 061, pointing out that Sec. 206 of the LGC requires persons exempt from real estate tax to show proof of exemption. According to the OGCC, Sec. 21 of the MIAA Charter is the proof that MIAA is exempt from real estate tax. MIAA, thus, filed a petition with the Court of Appeals seeking to restrain the City of Parañaque from imposing real estate tax on, levying against, and auctioning for public sale the airport lands and buildings, but this was dismissed for having been filed out of time.

Hence, MIAA filed this petition for review, pointing out that it is exempt from real estate tax under Sec. 21 of its charter and Sec. 234 of the LGC. It invokes the principle that the government cannot tax itself as a justification for exemption, since the airport lands and buildings, being devoted to public use and public service, are owned by the Republic of the Philippines. On the other hand, the City of Parañaque invokes Sec. 193 of the LGC, which expressly withdrew the tax exemption privileges of government-owned and controlled corporations (GOCC) upon the effectivity of the LGC. It asserts that an international airport is not among the exceptions mentioned in the said law. Meanwhile, the City of Parañaque posted and published notices announcing the public auction sale of the airport lands and buildings. In the afternoon before the scheduled public auction, MIAA applied with the Court for the issuance of a TRO to restrain the auction sale. The Court issued a TRO on the day of the auction sale, however, the same was received only by the City of Parañaque three hours after the sale. Issue: Whether or not the airport lands and buildings of MIAA are exempt from real estate tax? Held: The airport lands and buildings of MIAA are exempt from real estate tax imposed by local governments. Sec. 243(a) of the LGC exempts from real estate tax any real property owned by the Republic of the Philippines. This exemption should be read in relation with Sec. 133(o) of the LGC, which provides that the exercise of the taxing powers of local governments shall not extend to the levy of taxes, fees or charges of any kind on the National Government, its agencies and instrumentalities. These provisions recognize the basic principle that local governments cannot tax the national government, which historically merely delegated to local governments the power to tax. The rule is that a tax is never presumed and there must be clear language in the law imposing the tax. This rule applies with greater force when local governments seek to tax national government instrumentalities. Moreover, a tax exemption is construed liberally in favor of national government instrumentalities. MIAA is not a GOCC, but an instrumentality of the government. The Republic remains the beneficial owner of the properties. MIAA itself is owned solely by the Republic. At any time, the President can transfer back to the Republic title to the airport lands and buildings without the Republic paying MIAA any consideration. As long as the airport lands and buildings are reserved for public use, their ownership remains with the State. Unless the President issues a proclamation withdrawing these properties from public use, they remain properties of public dominion. As such, they are inalienable, hence, they are not subject to levy on execution or foreclosure sale, and they are exempt from real estate tax. However, portions of the airport lands and buildings that MIAA leases to private entities are not exempt from real estate tax. In such a case, MIAA has granted the beneficial use of such portions for a consideration to a taxable person.

LUNG CENTER OF THE PHILIPPINES, petitioner, vs. QUEZON CITY and CONSTANTINO P. ROSAS, in his capacity as City Assessor of Quezon City, respondents.

G.R. No. 144104 June 29, 2004

FACTS:

The Petitioner is a non-stock, non-profit entity which owns a parcel of land in Quezon City. Erected in

the middle of the aforesaid lot is a hospital known as the Lung Center of the Philippines. The ground

floor is being leased to a canteen, medical professionals whom use the same as their private clinics, as

well as to other private parties. The right portion of the lot is being leased for commercial purposes to

the Elliptical Orchids and Garden Center. The petitioner accepts paying and non-paying patients. It also

renders medical services to out-patients, both paying and non-paying. Aside from its income from

paying patients, the petitioner receives annual subsidies from the government.

Petitioner filed a Claim for Exemption from realty taxes amounting to about Php4.5 million, predicating

its claim as a charitable institution. The city assessor denied the Claim. When appealed to the QC-Local

Board of Assessment, the same was dismissed. The decision of the QC-LBAA was affirmed by the Central

Board of Assessment Appeals, despite the Petitioners claim that 60% of its hospital beds are used

exclusively for charity.

ISSUE:

Whether or not the Petitioner is entitled to exemption from realty taxes notwithstanding the fact that it

admits paying clients and leases out a portion of its property for commercial purposes.

HELD:

The Court held that the petitioner is indeed a charitable institution based on its charter and articles of

incorporation. As a general principle, a charitable institution does not lose its character as such and its

exemption from taxes simply because it derives income from paying patients, whether out-patient or

confined in the hospital, or receives subsidies from the government, so long as the money received is

devoted or used altogether to the charitable object which it is intended to achieve; and no money inures

to the private benefit of the persons managing or operating the institution.

Despite this, the Court held that the portions of real property that are leased to private entities are not

exempt from real property taxes as these are not actually, directly and exclusively used for charitable

purposes. (strictissimi juris) Moreover, P.D. No. 1823 only speaks of tax exemptions as regards to:

income and gift taxes for all donations, contributions, endowments and equipment and supplies to

be imported by authorized entities or persons and by the Board of Trustees of the Lung Center of the

Philippines for the actual use and benefit of the Lung Center; and

taxes, charges and fees imposed by the Government or any political subdivision or instrumentality

thereof with respect to equipment purchases (expression unius est exclusion alterius/expressium facit

cessare tacitum).