MANILA INTERNATIONAL AIRPORT AUTHORITY vs. COURT OF APPEALS G.R. No.

155650 July 20, 2006 Facts: MIAA received Final Notices of Real Estate Tax Delinquency from the City of Paraaque for the taxable years 1992 to 2001. MIAAs real estate tax delinquency was estimated at P624 million. The City of Paraaque, through its City Treasurer, issued notices of levy and warrants of levy on the Airport Lands and Buildings. The Mayor of the City of Paraaque threatened to sell at public auction the Airport Lands and Buildings should MIAA fail to pay the real estate tax delinquency. MIAA filed with the Court of Appeals an original petition for prohibition and injunction, with prayer for preliminary injunction or temporary restraining order. The petition sought to restrain the City of Paraaque from imposing real estate tax on, levying against, and auctioning for public sale the Airport Lands and Buildings. Paranaques Contention: Section 193 of the Local Government Code expressly withdrew the tax exemption privileges of government-owned and-controlled corporations upon the effectivity of the Local Government Code. Respondents also argue that a basic rule of statutory construction is that the express mention of one person, thing, or act excludes all others. An international airport is not among the exceptions mentioned in Section 193 of the Local Government Code. Thus, respondents assert that MIAA cannot claim that the Airport Lands and Buildings are exempt from real estate tax. MIAAs contention: Airport Lands and Buildings are owned by the Republic. The government cannot tax itself. The reason for tax exemption of public property is that its taxation would not inure to any public advantage, since in such a case the tax debtor is also the tax creditor. Issue: WON Airport Lands and Buildings of MIAA are exempt from real estate tax under existing laws? Yes. Ergo, the real estate tax assessments issued by the City of Paraaque, and all proceedings taken pursuant to such assessments, are void. Held:

1. MIAA is Not a Government-Owned or Controlled Corporation MIAA is not a government-owned or controlled corporation but an instrumentality of the National Government and thus exempt from local taxation. MIAA is not a stock corporation because it has no capital stock divided into shares. MIAA has no stockholders or voting shares. MIAA is also not a non-stock corporation because it has no members. A non-stock corporation must have members. MIAA is a government instrumentality vested with corporate powers to perform efficiently its governmental functions. MIAA is like any other government instrumentality, the only difference is that MIAA is vested with corporate powers. When the law vests in a government instrumentality corporate powers, the instrumentality does not become a corporation. Unless the government instrumentality is organized as a stock or non-stock corporation, it remains a government instrumentality exercising not only governmental but also corporate powers. Thus, MIAA exercises the governmental powers of eminent domain, police authority and the levying of fees and charges. At the same time, MIAA exercises all the powers of a corporation under the Corporation Law, insofar as these powers are not inconsistent with the provisions of this Executive Order. 2. Airport Lands and Buildings of MIAA are Owned by the Republic a. Airport Lands and Buildings are of Public Dominion The Airport Lands and Buildings of MIAA are property of public dominion and therefore owned by the State or the Republic of the Philippines. No one can dispute that properties of public dominion mentioned in Article 420 of the Civil Code, like roads, canals, rivers, torrents, ports and bridges constructed by the State, are owned by the State. The term ports includes seaports and airports. The MIAA Airport Lands and Buildings constitute a port constructed by the State. Under Article 420 of the Civil Code, the MIAA Airport Lands and Buildings are properties of public dominion and thus owned by the State or the Republic of the Philippines. The Airport Lands and Buildings are devoted to public use because they are used by the public for international and domestic travel and transportation. The fact that the MIAA

collects terminal fees and other charges from the public does not remove the character of the Airport Lands and Buildings as properties for public use. The charging of fees to the public does not determine the character of the property whether it is of public dominion or not. Article 420 of the Civil Code defines property of public dominion as one intended for public use. The terminal fees MIAA charges to passengers, as well as the landing fees MIAA charges to airlines, constitute the bulk of the income that maintains the operations of MIAA. The collection of such fees does not change the character of MIAA as an airport for public use. Such fees are often termed users tax. This means taxing those among the public who actually use a public facility instead of taxing all the public including those who never use the particular public facility. b. Airport Lands and Buildings are Outside the Commerce of Man The Court has also ruled that property of public dominion, being outside the commerce of man, cannot be the subject of an auction sale. Properties of public dominion, being for public use, are not subject to levy, encumbrance or disposition through public or private sale. Any encumbrance, levy on execution or auction sale of any property of public dominion is void for being contrary to public policy. Essential public services will stop if properties of public dominion are subject to encumbrances, foreclosures and auction sale. This will happen if the City of Paraaque can foreclose and compel the auction sale of the 600-hectare runway of the MIAA for non-payment of real estate tax. c. MIAA is a Mere Trustee of the Republic MIAA is merely holding title to the Airport Lands and Buildings in trust for the Republic. Section 48, Chapter 12, Book I of the Administrative Code allows instrumentalities like MIAA to hold title to real properties owned by the Republic. n MIAAs case, its status as a mere trustee of the Airport Lands and Buildings is clearer because even its executive head cannot sign the deed of conveyance on behalf of the Republic. Only the President of the Republic can sign such deed of conveyance. d. Transfer to Reorganization MIAA was Meant to Implement a

The transfer of the Airport Lands and Buildings from the Bureau of Air Transportation to MIAA was not meant to transfer beneficial ownership of these assets from the Republic to MIAA. The purpose was merely toreorganize a

division in the Bureau of Air Transportation into a separate and autonomous body. The Republic remains the beneficial owner of the Airport Lands and Buildings. MIAA itself is owned solely by the Republic. No party claims any ownership rights over MIAAs assets adverse to the Republic. e. Real Property Owned by the Republic is Not Taxable Sec 234 of the LGC provides that real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial use thereof has been granted, for consideration or otherwise, to a taxable person following are exempted from payment of the real property tax. However, portions of the Airport Lands and Buildings that MIAA leases to private entities are not exempt from real estate tax. For example, the land area occupied by hangars that MIAA leases to private corporations is subject to real estate tax. http://thestraydecision.wordpress.com/2010/07/02/manilainternational-airport-authority-vs-court-of-appeals/ MIAA vs Court of Appeals MIAA v. Court of Appeals G.R. No. 155650, July 20, 2006 Facts: The Manila International Airport Authority (MIAA) operates the Ninoy Aquino International Airport (NAIA) Complex in Paraaque 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 Paraaque 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 Paraaque 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 Paraaque 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 Paraaque 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 Paraaque three hours after the sale. Issue: Whether or not the airport lands and buildings of MIAA are exempt from real estate tax? Held: The Petition is GRANTED. 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. http://cbclawmatters.blogspot.com/2010/01/miaa-vs-courtof-appeals.html Manila International Airport Authority vs CAGR No. 155650, July 20, 2006, 495 SCRA 591 Facts:Manila International Airport Authority (MIAA) is the operator of the Ninoy International Airportlocated at Paranaque City. The Officers of Paranaque City sent notices to MIAA due to real estate taxdelinquency. MIAA then settled some of the amount. When MIAA failed to settle the entire amount, theofficers of Paranaque city threatened to levy and subject to auction the land and buildings of MIAA,which they did. MIAA sought for a Temporary Restraining Order from the CA but failed to do so withinthe 60 days reglementary period, so the petition was dismissed. MIAA then sought for the

TRO with theSupreme Court a day before the public auction, MIAA was granted with the TRO but unfortunately theTRO was received by the Paranaque City officers 3 hours after the public auction.MIAA claims that although the charter provides that the title of the land and building are withMIAA still the ownership is with the Republic of the Philippines. MIAA also contends that it is aninstrumentality of the government and as such exempted from real estate tax. That the land and buildingsof MIAA are of public dominion therefore cannot be subjected to levy and auction sale. On the other hand, the officers of Paranaque City claim that MIAA is a government owned and controlled corporationtherefore not exempted to real estate tax. Issues:Whether or not MIAA is an instrumentality of the government and not a government owned andcontrolled corporation and as such exempted from tax.Whether or not the land and buildings of MIAA are part of the public dominion and thus cannot be the subject of levy and auction sale. Ruling:Under the Local government code, government owned and controlled corporations are notexempted from real estate tax. MIAA is not a government owned and controlled corporation, for to become one MIAA should either be a stock or non stock corporation. MIAA is not a stock corporation for its capital is not divided into shares. It is not a non stock corporation since it has no members. MIAA is aninstrumentality of the government vested with corporate powers and government functions.Under the civil code, property may either be under public dominion or private ownership. Thoseunder public dominion are owned by the State and are utilized for public use, public service and for thedevelopment of national wealth. The ports included in the public dominion pertain either to seaports or airports. When properties under public dominion cease to be for public use and service, they form part of the patrimonial property of the State.The court held that the land and buildings of MIAA are part of the public dominion. Since theairport is devoted for public use, for the domestic and international travel and transportation. Even if MIAA charge fees, this is for support of its operation and for regulation and does not change the character of the land and buildings of MIAA as part of the public dominion. As part of the

public dominion the landand buildings of MIAA are outside the commerce of man. To subject them to levy and public auction iscontrary to public policy. Unless the President issues a proclamation withdrawing the airport land and buildings from public use, these properties remain to be of public dominion and are inalienable. As longas the land and buildings are for public use the ownership is with the Republic of the Philippines.

only been leased, not owned, by petitioners; and ruled that the "words of the contract are clear and leave no doubt upon the true intention of the contracting parties." ISSUE: Whether or not the machineries became real property by virtue of immobilization. Ruling: Petitioners contend that the subject machines used in their factory were not proper subjects of the Writ issued by the RTC, because they were in fact real property. Writ of Replevin: Rule 60 of the Rules of Court provides that writs of replevin are issued for the recovery of personal property only. Article 415 (5) of the Civil Code provides that machinery, receptacles, instruments or implements intended by the owner of the tenement for an industry or works which may be carried on in a building or on a piece of land, and which tend directly to meet the needs of the said industry or works In the present case, the machines that were the subjects of the Writ of Seizure were placed by petitioners in the factory built on their own land.They were essential and principal elements of their chocolate-making industry.Hence, although each of them was movable or personal property on its own, all of them have become immobilized by destination because they are essential and principal elements in the industry. However, contracting parties may validly stipulate that a real property be considered as personal. After agreeing to such stipulation, they are consequently estopped from claiming otherwise.Under the principle of estoppel, a party to a contract is ordinarily precluded from denying the truth of any material fact found therein. Section 12.1 of the Agreement between the parties provides The PROPERTY is, and shall at all times be and remain, personal property notwithstanding that the PROPERTY or any part thereof may now be, or hereafter become, in any manner affixed or attached to or embedded in, or permanently resting

Serg's v. PCI Leasing Sergs Products, Inc. vs. PCI Leasing G.R. No. 137705. August 22, 2000 FACTS:

PCI Leasing and Finance filed a complaint for sum of money, with an application for a writ of replevin. Judge issued a writ of replevin directing its sheriff to seize and deliver the machineries and equipment to PCI Leasing after 5 days and upon the payment of the necessary expenses. The sheriff proceeded to petitioner's factory, seized one machinery, with word that he would return for other machineries. Petitioner (Sergs Products) filed a motion for special protective order to defer enforcement of the writ of replevin. PCI Leasing opposed the motion on the ground that the properties were still personal and therefore can still be subjected to seizure and writ of replevin. Petitioner asserted that properties sought to be seized were immovable as defined in Article 415 of the Civil Code. Sheriff was still able to take possession of two more machineries

In its decision on the original action for certiorari filed by the Petitioner, the appellate court, Citing the Agreement of the parties, held that the subject machines were personal property, and that they had

upon, real property or any building thereon, or attached in any manner to what is permanent. The machines are personal property and they are proper subjects of the Writ of Replevin G.R. No. 92013. July 25, 1990 G.R. No. 92047, July 25, 1990 OJEDA, petitioner, vs. EXECUTIVE SECRETARY MACARAIG, JR., et al FACTS: These are two petitions for prohibition seeking to enjoin respondents, their representatives and agents from proceeding with the bidding for the sale of the 3,179 square meters of land at 306 Ropponggi, 5-Chome Minato-ku, Tokyo, Japan scheduled on February 21, 1990. The subject property in this case is one of the four (4) properties in Japan acquired by the Philippine government under the Reparations Agreement entered into with Japan on May 9, 1956, and is part of the indemnification to the Filipino people for their losses in life and property and their suffering during World War II. As intended, the subject property became the site of the Philippine Embassy until the latter was transferred to Nampeidai on July 22, 1976. Due to the failure of our government to provide necessary funds, the Roppongi property has remained undeveloped since that time. A proposal was presented to President Corazon C. Aquino by former Philippine Ambassador to Japan, Carlos J. Valdez, to make the property the subject of a lease agreement with a Japanese firm where, at the end of the lease period, all the three leased buildings shall be occupied and used by the Philippine government. On August 11, 1986, President Aquino created a committee to study the disposition/utilization of Philippine government properties in Tokyo and Kobe. On July 25, 1987, the President issued Executive Order No. 296 entitling non-Filipino citizens or entities to avail of reparations capital goods and services in the event of sale, lease or disposition. The four properties in Japan including the Roppongi were specifically mentioned in the first Whereas clause. Amidst opposition by various sectors, the Executive branch of the government has been pushing, with great vigor, its decision to sell the reparations properties starting with the Roppongi lot. The

property has twice been set for bidding at a minimum floor price at $225 million. ISSUES: The petitioner in G.R. No. 92013 raises the following issues: (1) Can the Roppongi property and others of its kind be alienated by the Philippine Government?; and (2) Does the Chief Executive, her officers and agents, have the authority and jurisdiction, to sell the Roppongi property? In G.R. NO. 92047, apart from questioning the authority of the government to alienate the Roppongi property assails the constitutionality of Executive Order No. 296, the petitioner also questions the bidding procedures of the Committee on the Utilization or Disposition of Philippine Government Properties in Japan for being discriminatory against Filipino citizens and Filipino-owned entities by denying them the right to be informed about the bidding requirements. HELD: The petition is granted. As property of public dominion, the Roppongi lot is outside the commerce of man. It cannot be alienated. Its ownership is a special collective ownership for general use and enjoyment, an application to the satisfaction of collective needs, and resides in the social group. The purpose is not to serve the State as a juridical person, but the citizens; it is intended for the common and public welfare and cannot be the object of appropriation. (Taken from 3 Manresa, 66-69; cited in Tolentino, Commentaries on the Civil Code of the Philippines, 1963 Edition, Vol. II, p. 26). The Roppongi property is correctly classified under paragraph 2 of Article 420 of the Civil Code as property belonging to the State and intended for some public service. The fact that the Roppongi site has not been used for a long time for actual Embassy service does not automatically convert it to patrimonial property. Any such conversion happens only if the property is withdrawn from public use (Cebu Oxygen and Acetylene Co. v. Bercilles, 66 SCRA 481 [1975]). A property continues to be part of the public domain, not available for private appropriation or ownership until there is a formal declaration on the part of the government to withdraw it from being such (Ignacio v. Director of Lands, 108 Phil. 335 [1960]). An abandonment of the intention to use the Roppongi property for public service and to make it patrimonial property under Article 422 of the Civil Code must be definite. Abandonment cannot be inferred from the non-use alone specially if the non-use was attributable not to the governments own deliberate and indubitable will but to a lack of financial support to repair and improve the property (See Heirs of Felino Santiago v. Lazarao,

166 SCRA 368 [1988]). Abandonment must be a certain and positive act based on correct legal premises. A mere transfer of the Philippine Embassy to Nampeidai in 1976 is not relinquishment of the Roppongi propertys original purpose. Executive Order No. 296, though its title declares an authority to sell, does not have a provision in this text expressly authorizing the sale of the four properties procured from Japan for the government sector. It merely intends to make the properties available to foreigners and not to Filipinos alone in case of a sale, lease or other disposition. Rep Act No. 6657, does not authorize the Executive Department to sell the Roppongi property. It merely enumerates possible sources of future funding to augment (as and when needed) the Agrarian Reform Fund created under Executive Order No. 299. Moreover, President Aquinos approval of the recommendation by the investigating committee to sell the Roppongi property was premature or, at the very least, conditioned on a valid change in the public character of the Roppongi property. It does not have the force and effect of law since the President already lost her legislative powers. The Congress had already convened for more than a year. Assuming that the Roppongi property is no longer of public dominion, there is another obstacle to its sale by the respondents. There is no law authorizing its conveyance, and thus, the Court sees no compelling reason to tackle the constitutional issue raised by petitioner Ojeda. FACTS: The subject Roppongi property is one of the properties acquired by the Philippines from Japan pursuant to a Reparations Agreement. The property is where the Philippine Embassy was once located, before it transferred to the Nampeidai property. It was decided that the properties would be available to sale or disposition. One of the first properties opened up for public auction was the Roppongi property, despite numerous oppositions from different sectors.

HELD: The Roppongi property was acquired together with the other properties through reparation agreements. They were assigned to the government sector and that the Roppongi

property was specifically designated under the agreement to house the Philippine embassy. It is of public dominion unless it is convincingly shown that the property has become patrimonial. The respondents have failed to do so. As property of public dominion, the Roppongi lot is outside the commerce of man. It cannot be alienated. Its ownership is a special collective ownership for general use and payment, in application to the satisfaction of collective needs, and resides in the social group. The purpose is not to serve the State as the juridical person but the citizens; it is intended for the common and public welfare and cannot be the object of appropriation. The fact that the Roppongi site has not been used for a long time for actual Embassy service doesnt automatically convert it to patrimonial property. Any such conversion happens only if the property is withdrawn from public use. A property continues to be part of the public domain, not available for private appropriation or ownership until there is a formal declaration on the part of the government to withdraw it from being such.