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Medardo S. Arenasa Jr.

Case: MIAA vs CA Facts: The government has organized MIAA in order to administer the operation and assets of the Manila International Airport. Said airport properties were previously administered by the Bureau of Air Transportation under the Department of Transportation and Communication. Real property tax is levied upon MIAA but it is now refusing to pay the same even though it has been paying real property taxes from the previous periods. According to MIAA, they are part of the national government; hence, they are exempt from taxation. The respondents, on the other hand, held a public auction relating to the airport properties due to failure of MIAA to pay real property tax. As claimed by the respondents, MIAA is not exempted from taxation for the reason that it is considered to be a government owned and controlled corporation. Issues: Should MIAA be considered as a GOCC? Is it appropriate to levy taxes on it? Held: No, MIAA should not be considered as a GOCC, either stock or non-stock. First, based on its charter, it doesnt have stocks which are divided and owned by different stockholders. Therefore, it is not a stock corporation. Second, to be considered as a non-stock corporation, it should have members or trustees and none of its profit should be distributed to its members. MIAA, though have one and only member which is the national government, remits 20% of its annual gross operating income to the national treasury disqualifying it to be classified as a nonstock corporation. No, it is not appropriate to levy taxes on MIAA because Art 133 of the local government code explicitly exempts the national government, its agencies and instrumentalities from taxation. MIAA, being a government instrumentality, shall be exempted from taxation except in cases of income derived from activities which redound benefits to private individuals. Art 193 of the local government code, as raised by respondents, provides the removal of all currently enjoyed tax exemptions to all persons, personal and juridical. But, contrary to this, Art 133 of the local government code provides that tax exemptions provided to the national government, including its agencies and instrumentalities shall be retained. It will be absurd to accept an interpretation

wherein the government shall levy tax on itself. GOCCs shall not be exempted from taxation because they are established for purposes of common good and earning income. Instrumentalities, on the other hand, are created for public service only and not for income generating purposes. A government instrumentality shall not be abolished even if it does not reflect economic viability. GOCCs on the other hand, may be abolished if it is shown that their financial performance is not enough to be able to sustain their very existence.