Marcos 1996
Topic: taxing power of local gov’t units and the limits of tax exemption privileges of
GOCCs.
Nature: A petition for review assailing the decision of RTC Cebu in dismissing the petition
for declaratory relief and denying the motion to reconsider the decision.
Facts:
That petitioner MCIAA was created by virtue of Republic Act No. 6958
That MCIAA was mandated to “principally undertake the economical, efficient and
effective control, management and supervision of the Mactan International Airport
in the Province of Cebu and the Lahug Airport in Cebu City”
That MCIAA was exempted from paying taxes under Sec. 14 of its chapter which
states that the authority shall be exempt from realty taxes imposed by the National
government or any of its political subdivisions, agencies and instrumentalities.
That on October 11, 1994, Mr. Eustaquio B. Cesa, Officer-in-Charge of the Office of
the Treasurer of Cebu, demanded payment for realty taxes on several parcels of land
belonging to the petitioner.
That the petitioner objected to such demand because it was baseless and unjustified
because of their exemption under Sec. 14 of RA 6958
That this tax exemption was withdrawn during the implementation of the local
government code in January 1, 1992
That the petitioner paid in protest and filed the following action in court.
Issue/s: Whether the local government can levy taxes or fees on instrumentalities of the
national government or GOCCs
Laws/Jurisprudence: RA 7160- “All general and special laws, acts, city charters, decrees, executive
orders, proclamations and administrative regulations, or part of parts thereof which are inconsistent
with any of the provisions of this Code are hereby repealed or modified accordingly.
Secondary Action:
Issue/s: (errors) –that respondent judged erred in failing to rule that the petitioner is vested
with government powers and functions which place it in the same category as a government
instrumentality or agency of the government
-that respondent judge erred in ruling that the petitioner is liable to pay realty taxes to the
city of Cebu
Ruling: The SC denied the petition and affirmed the challenged decision of the RTC of
Cebu
Reasoning: MCIAA was indeed exempted from paying realty tax but this was lifted during
the effectivity of the local government code
Nothing can prevent Congress from decreeing that even instrumentalities or agencies of the
Government performing governmental functions may be subject to tax. Where it is done
precisely to fulfil constitutional mandate and policy, no one can doubt its wisdom.
-end-