Mactan Cebu vs City of Lapu-Lapu

Mactan Cebu vs City of Lapu-Lapu

G.R. No. 181756. June 15, 2015.

Facts:

Petitioner Mactan-Cebu International Airport Authority (MCIAA) was created by Congress to undertake the effective control and management and supervision of the Mactan International Airport, Lahug Airport, and other airports as may be established by the Province of Cebu. MCIAA enjoyed exemption from realty taxes as per RA 6958. However, the Supreme Court ruled in another case that MCIAA was no longer exempt from real estate taxes upon the effectivity of the Local Government Code of 1991.

Respondent City issued to MCIAA a Statement of Real Estate Tax assessment over the lots of Mactan International Airport. But the Petitioner contends that the said lots are solely utilized solely and exclusively for public purposes and should be exempt from real property tax, as per the DOJ Opinion No. 50. Respondent still issued notices of levy on the 18 sets of real properties of petitioner.

Petitioner filed a petition for prohibition, with a prayer for a temporary restraining order and/or writ of preliminary injunction before the RTC of Lapu-lapu City which sought to enjoin respondent City from issuing the warrant of levy against petitioner’s properties from selling them at public auction for delinquency in realty tax obligations. Petitioner claims herein that it had discovered that respondent City did not pass any ordinance authorizing the collection of real property tax, a tax for the special education fund (SEF), and a penalty interest for its nonpayment. Petitioner argued that without the corresponding tax ordinances, respondent City could not impose and collect real property tax, an additional tax for the SEF, and penalty interest from petitioner.

RTC ruled in favor of the petitioners, thereby granting the application for a writ of preliminary injunction. But it was subsequently lifted by the same court. On appeal, the CA ruled that petitioner’s airport terminal building, airfield, runway, taxiway, and the lots on which they are situated are not exempt from real estate tax because as stated in the the Local Government Code (LGC), all natural and juridical persons, including government-owned or controlled corporations (GOCCs), instrumentalities and agencies, are no longer exempt from local taxes even if previously granted an exemption. The only exemptions from local taxes are those specifically provided under the Code itself, or those enacted through subsequent legislation.

Issue:
Whether or not the petitioner is a government instrumentality exempt from paying real property taxes

Held:

Yes. Petitioner is an instrumentality of the government; thus, its properties actually, solely and exclusively used for public purposes, consisting of the airport terminal building, airfield, runway, taxiway and the lots on which they are situated, are not subject to real property tax and respondent City is not justified in collecting taxes from petitioner over said properties. MCIAA is vested with corporate powers but it is not a stock or non-stock corporation, which is a necessary condition before an agency or instrumentality is deemed a government-owned or controlled corporation. MCIAA has capital under its charter but it is not divided into shares of stock. It also has no stockholders or voting shares. 

The airport lands and buildings of MCIAA are properties of public dominion because they are intended for public use. As properties of public dominion, they indisputably belong to the State or the Republic of the Philippines, and are outside the commerce of man. This, unless petitioner leases its real property to a taxable person, the specific property leased becomes subject to real property tax; in which case, only those portions of petitioner's properties which are leased to taxable persons like private parties are subject to real property tax by the City of Lapu-Lapu.