art 420 miaa v ca

6/10/13 G.R. No. 155650

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RepublicofthePhilippinesSUPREMECOURT

Manila

ENBANC

G.R.No.155650July20,2006

MANILAINTERNATIONALAIRPORTAUTHORITY,petitioner,vs.COURTOFAPPEALS,CITYOFPARAAQUE,CITYMAYOROFPARAAQUE,SANGGUNIANGPANGLUNGSODNGPARAAQUE,CITYASSESSOROFPARAAQUE,andCITYTREASUREROFPARAAQUE,respondents.

DECISION

CARPIO,J.:

TheAntecedents

Petitioner Manila International Airport Authority (MIAA) operates the Ninoy Aquino International Airport (NAIA)Complex in Paraaque City under Executive Order No. 903, otherwise known as theRevised Charter of theManilaInternationalAirportAuthority("MIAACharter").ExecutiveOrderNo.903wasissuedon21July1983bythenPresident FerdinandE.Marcos. Subsequently, ExecutiveOrderNos. 9091 and 2982 amended theMIAACharter.

Asoperatoroftheinternationalairport,MIAAadministerstheland,improvementsandequipmentwithintheNAIAComplex.TheMIAAChartertransferredtoMIAAapproximately600hectaresofland,3includingtherunwaysandbuildings("AirportLandsandBuildings")thenundertheBureauofAirTransportation.4TheMIAACharterfurtherprovides that no portion of the land transferred toMIAA shall be disposed of through sale or any othermodeunlessspecificallyapprovedbythePresidentofthePhilippines.5

On 21 March 1997, the Office of the Government Corporate Counsel (OGCC) issued Opinion No. 061. TheOGCCopinedthattheLocalGovernmentCodeof1991withdrewtheexemptionfromrealestatetaxgrantedtoMIAAunderSection21oftheMIAACharter.Thus,MIAAnegotiatedwithrespondentCityofParaaquetopaytherealestatetaximposedbytheCity.MIAAthenpaidsomeoftherealestatetaxalreadydue.

On28June2001,MIAAreceivedFinalNoticesofRealEstateTaxDelinquencyfromtheCityofParaaqueforthetaxableyears1992to2001.MIAA'srealestatetaxdelinquencyisbrokendownasfollows:

TAXDECLARATION

TAXABLEYEAR TAXDUE PENALTY TOTAL

E01601370 19922001 19,558,160.00 11,201,083.20 30,789,243.20E01601374 19922001 111,689,424.90 68,149,479.59 179,838,904.49E01601375 19922001 20,276,058.00 12,371,832.00 32,647,890.00E01601376 19922001 58,144,028.00 35,477,712.00 93,621,740.00E01601377 19922001 18,134,614.65 11,065,188.59 29,199,803.24

E01601378 19922001 111,107,950.40 67,794,681.59 178,902,631.99E01601379 19922001 4,322,340.00 2,637,360.00 6,959,700.00E01601380 19922001 7,776,436.00 4,744,944.00 12,521,380.00*E01601385 19982001 6,444,810.00 2,900,164.50 9,344,974.50*E01601387 19982001 34,876,800.00 5,694,560.00 50,571,360.00*E01601396 19982001 75,240.00 33,858.00 109,098.00

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GRANDTOTAL P392,435,861.95 P232,070,863.47 P624,506,725.42

19921997RPTwaspaidonDec.24,1997asperO.R.#9476102forP4,207,028.75

#9476101forP28,676,480.00

#9476103forP49,115.006

On17July2001,theCityofParaaque,throughitsCityTreasurer,issuednoticesoflevyandwarrantsoflevyonthe Airport Lands and Buildings. TheMayor of the City of Paraaque threatened to sell at public auction theAirport Lands and Buildings should MIAA fail to pay the real estate tax delinquency. MIAA thus sought aclarificationofOGCCOpinionNo.061.

On9August2001,theOGCCissuedOpinionNo.147clarifyingOGCCOpinionNo.061.TheOGCCpointedoutthatSection206of theLocalGovernmentCoderequirespersonsexempt fromrealestate tax toshowproofofexemption.TheOGCCopined thatSection21of theMIAACharter is theproof thatMIAA isexempt from realestatetax.

On1October2001,MIAA filedwith theCourtofAppealsanoriginalpetition forprohibitionand injunction,withprayer for preliminary injunction or temporary restraining order. The petition sought to restrain the City ofParaaquefromimposingrealestatetaxon,levyingagainst,andauctioningforpublicsaletheAirportLandsandBuildings.ThepetitionwasdocketedasCAG.R.SPNo.66878.

On 5 October 2001, the Court of Appeals dismissed the petition because MIAA filed it beyond the 60dayreglementaryperiod.TheCourtofAppealsalsodeniedon27September2002MIAA'smotionforreconsiderationand supplementalmotion for reconsideration.Hence,MIAA filed on 5December 2002 the present petition forreview.7

Meanwhile, in January 2003, the City of Paraaque posted notices of auction sale at the Barangay Halls ofBarangaysVitalez,Sto.Nio,andTambo,ParaaqueCityinthepublicmarketofBarangayLaHuertaandinthemainlobbyoftheParaaqueCityHall.TheCityofParaaquepublishedthenoticesinthe3and10January2003issues of the Philippine Daily Inquirer, a newspaper of general circulation in the Philippines. The noticesannouncedthepublicauctionsaleoftheAirportLandsandBuildingstothehighestbidderon7February2003,10:00a.m.,attheLegislativeSessionHallBuildingofParaaqueCity.

Adaybeforethepublicauction,oron6February2003,at5:10p.m.,MIAAfiledbeforethisCourtanUrgentExParteandReiteratoryMotionfortheIssuanceofaTemporaryRestrainingOrder.ThemotionsoughttorestrainrespondentstheCityofParaaque,CityMayorofParaaque,SangguniangPanglungsodngParaaque,CityTreasurer of Paraaque, and the City Assessor of Paraaque ("respondents") from auctioning the AirportLandsandBuildings.

On 7 February 2003, this Court issued a temporary restraining order (TRO) effective immediately. The Courtordered respondents to cease and desist from selling at public auction the Airport Lands and Buildings.Respondents received theTROon the sameday that theCourt issued it.However, respondents received theTROonlyat1:25p.m.orthreehoursaftertheconclusionofthepublicauction.

On10February2003,thisCourtissuedaResolutionconfirmingnuncprotunctheTRO.

On29March2005,theCourtheardthepartiesinoralarguments.Incompliancewiththedirectiveissuedduringthe hearing, MIAA, respondent City of Paraaque, and the Solicitor General subsequently submitted theirrespectiveMemoranda.

MIAAadmitsthattheMIAACharterhasplacedthetitletotheAirportLandsandBuildingsinthenameofMIAA.However,MIAApointsoutthatitcannotclaimownershipoverthesepropertiessincetherealowneroftheAirportLandsandBuildings is theRepublicof thePhilippines.TheMIAAChartermandatesMIAAtodevote theAirportLandsandBuildings for thebenefitof thegeneralpublic.Since theAirportLandsandBuildingsaredevoted topublicuseandpublicservice, theownershipof thesepropertiesremainswith theState.TheAirportLandsandBuildingsarethusinalienableandarenotsubjecttorealestatetaxbylocalgovernments.

MIAAalsopoints out thatSection21of theMIAACharter specifically exemptsMIAA from thepayment of realestate tax.MIAA insists that it isalsoexempt from realestate taxunderSection234of theLocalGovernmentCodebecausetheAirportLandsandBuildingsareownedbytheRepublic.Tojustifytheexemption,MIAAinvokestheprinciple that thegovernmentcannot tax itself.MIAApointsout that the reason for taxexemptionofpublicpropertyisthatitstaxationwouldnotinuretoanypublicadvantage,sinceinsuchacasethetaxdebtorisalsothetaxcreditor.

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RespondentsinvokeSection193oftheLocalGovernmentCode,whichexpresslywithdrew the taxexemptionprivilegesof"governmentownedandcontrolledcorporations"upon theeffectivityof theLocalGovernmentCode.Respondents also argue that a basic rule of statutory construction is that the express mention of oneperson,thing,oractexcludesallothers.AninternationalairportisnotamongtheexceptionsmentionedinSection193oftheLocalGovernmentCode.Thus,respondentsassertthatMIAAcannotclaimthattheAirportLandsandBuildingsareexemptfromrealestatetax.

RespondentsalsocitetherulingofthisCourtinMactanInternationalAirportv.Marcos8whereweheldthattheLocal Government Code has withdrawn the exemption from real estate tax granted to international airports.RespondentsfurtherarguethatsinceMIAAhasalreadypaidsomeoftherealestatetaxassessments,it isnowestoppedfromclaimingthattheAirportLandsandBuildingsareexemptfromrealestatetax.

TheIssue

ThispetitionraisesthethresholdissueofwhethertheAirportLandsandBuildingsofMIAAareexemptfromrealestate tax under existing laws. If so exempt, then the real estate tax assessments issued by the City ofParaaque,andallproceedingstakenpursuant tosuchassessments,arevoid. Insuchevent, theother issuesraisedinthispetitionbecomemoot.

TheCourt'sRuling

WerulethatMIAA'sAirportLandsandBuildingsareexemptfromrealestatetaximposedbylocalgovernments.

First, MIAA is not a governmentowned or controlled corporation but an instrumentality of the NationalGovernment and thus exempt from local taxation. Second, the real properties of MIAA are owned by theRepublicofthePhilippinesandthusexemptfromrealestatetax.

1.MIAAisNotaGovernmentOwnedorControlledCorporation

Respondents argue that MIAA, being a governmentowned or controlled corporation, is not exempt from realestatetax.Respondentsclaimthatthedeletionofthephrase"anygovernmentownedorcontrolledsoexemptbyits charter" in Section 234(e) of the Local Government Code withdrew the real estate tax exemption ofgovernmentownedorcontrolledcorporations.Thedeletedphraseappeared inSection40(a)of the1974RealPropertyTaxCodeenumeratingtheentitiesexemptfromrealestatetax.

There is no dispute that a governmentowned or controlled corporation is not exempt from real estate tax.However,MIAAisnotagovernmentownedorcontrolledcorporation.Section2(13)oftheIntroductoryProvisionsoftheAdministrativeCodeof1987definesagovernmentownedorcontrolledcorporationasfollows:

SEC.2.GeneralTermsDefined.xxxx

(13)Governmentowned or controlled corporation refers to any agencyorganized as a stock or nonstockcorporation,vestedwith functionsrelatingtopublicneedswhethergovernmentalorproprietary innature, and owned by the Government directly or through its instrumentalities either wholly, or, whereapplicableasinthecaseofstockcorporations,totheextentofatleastfiftyone(51)percentofitscapitalstock:xxx.(Emphasissupplied)

A governmentowned or controlled corporation must be "organized as a stock or nonstock corporation."MIAA isnotorganizedasastockornonstockcorporation.MIAA isnotastockcorporationbecause it hasnocapitalstockdividedintoshares.MIAAhasnostockholdersorvotingshares.Section10oftheMIAACharter9provides:

SECTION10.Capital.ThecapitaloftheAuthoritytobecontributedbytheNationalGovernmentshallbeincreased fromTwoandOnehalfBillion (P2,500,000,000.00)Pesos toTenBillion (P10,000,000,000.00)Pesostoconsistof:

(a)Thevalueoffixedassetsincludingairportfacilities,runwaysandequipmentandsuchotherproperties,movableandimmovable[,]whichmaybecontributedbytheNationalGovernmentortransferredbyitfromanyof itsagencies, thevaluationofwhichshallbedetermined jointlywith theDepartmentofBudgetandManagementandtheCommissiononAuditon thedateofsuchcontributionor transferaftermakingdueallowances fordepreciationandotherdeductions taking intoaccount the loansandother liabilitiesof theAuthorityatthetimeofthetakeoveroftheassetsandotherproperties

(b)ThattheamountofP605millionasofDecember31,1986representingaboutseventypercentum(70%)of the unremitted share of the National Government from 1983 to 1986 to be remitted to the NationalTreasuryasprovidedforinSection11ofE.O.No.903asamended,shallbeconvertedintotheequityofthe National Government in the Authority. Thereafter, the Government contribution to the capital of theAuthorityshallbeprovidedintheGeneralAppropriationsAct.


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AuthorityshallbeprovidedintheGeneralAppropriationsAct.

Clearly,underitsCharter,MIAAdoesnothavecapitalstockthatisdividedintoshares.

Section3of theCorporationCode10definesastockcorporationasonewhose"capitalstock isdivided intosharesandxxxauthorizedtodistributetotheholdersofsuchsharesdividendsxxx."MIAAhascapitalbutitisnotdividedintosharesofstock.MIAAhasnostockholdersorvotingshares.Hence,MIAAisnotastockcorporation.

MIAAisalsonotanonstockcorporationbecauseithasnomembers.Section87oftheCorporationCodedefinesanonstockcorporationas"onewherenopartofitsincomeisdistributableasdividendstoitsmembers,trusteesorofficers."Anonstockcorporationmusthavemembers.EvenifweassumethattheGovernmentisconsideredas the solemember ofMIAA, thiswill notmakeMIAAanonstock corporation.Nonstock corporations cannotdistributeanypartoftheirincometotheirmembers.Section11oftheMIAAChartermandatesMIAAtoremit20%of itsannualgrossoperating income to theNationalTreasury.11ThispreventsMIAA fromqualifyingasanonstockcorporation.

Section88oftheCorporationCodeprovidesthatnonstockcorporationsare"organizedforcharitable,religious,educational, professional, cultural, recreational, fraternal, literary, scientific, social, civil service, or similarpurposes, liketrade, industry,agricultureand likechambers."MIAAisnotorganizedforanyof thesepurposes.MIAA,apublicutility,isorganizedtooperateaninternationalanddomesticairportforpublicuse.

SinceMIAA is neither a stock nor a nonstock corporation,MIAA does not qualify as a governmentowned orcontrolledcorporation.WhatthenisthelegalstatusofMIAAwithintheNationalGovernment?

MIAA is a government instrumentality vested with corporate powers to perform efficiently its governmentalfunctions. MIAA is like any other government instrumentality, the only difference is that MIAA is vested withcorporatepowers.Section2(10)oftheIntroductoryProvisionsoftheAdministrativeCodedefinesagovernment"instrumentality"asfollows:


(10)InstrumentalityreferstoanyagencyoftheNationalGovernment,notintegratedwithinthedepartmentframework,vestedwithspecialfunctionsor jurisdictionbylaw,endowedwithsomeifnotallcorporatepowers,administeringspecial funds,andenjoyingoperationalautonomy,usuallythroughacharter.xxx(Emphasissupplied)

When the law vests in a government instrumentality corporate powers, the instrumentality does not becomeacorporation.Unlessthegovernmentinstrumentalityisorganizedasastockornonstockcorporation,itremainsagovernment instrumentalityexercisingnotonlygovernmentalbutalsocorporatepowers.Thus,MIAA exercisesthegovernmentalpowersofeminentdomain,12policeauthority13andthelevyingoffeesandcharges.14Atthesametime,MIAAexercises"allthepowersofacorporationundertheCorporationLaw,insofarasthesepowersarenotinconsistentwiththeprovisionsofthisExecutiveOrder."15

Likewise, when the law makes a government instrumentality operationally autonomous, the instrumentalityremainspartoftheNationalGovernmentmachineryalthoughnotintegratedwiththedepartmentframework.TheMIAACharter expressly states that transformingMIAA into a "separate and autonomousbody"16 willmake itsoperationmore"financiallyviable."17

Manygovernmentinstrumentalitiesarevestedwithcorporatepowersbuttheydonotbecomestockornonstockcorporations,whichisanecessaryconditionbeforeanagencyorinstrumentalityisdeemedagovernmentownedorcontrolledcorporation.ExamplesaretheMactanInternationalAirportAuthority,thePhilippinePortsAuthority,theUniversityofthePhilippinesandBangkoSentralngPilipinas.AllthesegovernmentinstrumentalitiesexercisecorporatepowersbuttheyarenotorganizedasstockornonstockcorporationsasrequiredbySection2(13)ofthe Introductory Provisions of the Administrative Code. These government instrumentalities are sometimeslooselycalledgovernmentcorporateentities.However,theyarenotgovernmentownedorcontrolledcorporationsin the strict senseas understoodunder theAdministrativeCode,which is the governing lawdefining the legalrelationshipandstatusofgovernmententities.

AgovernmentinstrumentalitylikeMIAAfallsunderSection133(o)oftheLocalGovernmentCode,whichstates:

SEC. 133.Common Limitations on the TaxingPowers of LocalGovernmentUnits. Unless otherwiseprovided herein, the exercise of the taxing powers of provinces, cities, municipalities, andbarangaysshallnotextendtothelevyofthefollowing:

xxxx

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(o) Taxes, fees or charges of any kind on the National Government, its agencies andinstrumentalitiesandlocalgovernmentunits.(Emphasisandunderscoringsupplied)

Section133(o)recognizesthebasicprinciplethat localgovernmentscannottaxthenationalgovernment,whichhistoricallymerely delegated to local governments the power to tax.While the 1987Constitution now includestaxationasoneofthepowersoflocalgovernments,localgovernmentsmayonlyexercisesuchpower"subjecttosuchguidelinesandlimitationsastheCongressmayprovide."18

When local governments invoke the power to tax on national government instrumentalities, such power isconstruedstrictlyagainst localgovernments.The rule is thata tax isneverpresumedand theremustbeclearlanguageinthelawimposingthetax.Anydoubtwhetheraperson,articleoractivityistaxableisresolvedagainsttaxation. This rule applies with greater force when local governments seek to tax national governmentinstrumentalities.

Anotherrule is thatataxexemption isstrictlyconstruedagainst thetaxpayerclaimingtheexemption.However,whenCongressgrantsanexemptiontoanationalgovernmentinstrumentalityfromlocaltaxation,suchexemptionis construed liberally in favor of the national government instrumentality. As thisCourt declared inMaceda v.Macaraig,Jr.:

Thereasonfortheruledoesnotapplyinthecaseofexemptionsrunningtothebenefitofthegovernmentitselfor itsagencies. Insuchcasethepracticaleffectofanexemption ismerely toreducetheamountofmoneythathastobehandledbygovernmentinthecourseofitsoperations.Forthesereasons,provisions

grantingexemptionstogovernmentagenciesmaybeconstruedliberally,infavorofnontaxliabilityofsuchagencies.19

Thereis,moreover,nopointinnationalandlocalgovernmentstaxingeachother,unlessasoundandcompellingpolicyrequiressuchtransferofpublicfundsfromonegovernmentpockettoanother.

Thereisalsonoreasonforlocalgovernmentstotaxnationalgovernmentinstrumentalitiesforrenderingessentialpublic services to inhabitants of local governments. The only exception is when the legislature clearlyintendedtotaxgovernmentinstrumentalitiesforthedeliveryofessentialpublicservicesforsoundandcompellingpolicyconsiderations.Theremustbeexpresslanguageinthelawempoweringlocalgovernmentsto tax national government instrumentalities. Any doubt whether such power exists is resolved against localgovernments.

Thus,Section133of theLocalGovernmentCodestates that "unlessotherwiseprovided" in theCode, localgovernments cannot tax national government instrumentalities. As this Court held in Basco v. PhilippineAmusementsandGamingCorporation:

The states have no power by taxation or otherwise, to retard, impede, burden or in anymannercontrol theoperationofconstitutional lawsenactedbyCongresstocarry intoexecutionthepowersvestedinthefederalgovernment.(MCCullochv.Maryland,4Wheat316,4LEd.579)

Thisdoctrineemanatesfromthe"supremacy"oftheNationalGovernmentoverlocalgovernments.

"JusticeHolmes,speakingfortheSupremeCourt,madereferencetotheentireabsenceofpoweronthe part of the States to touch, in that way (taxation) at least, the instrumentalities of the UnitedStates(Johnsonv.Maryland,254US51)anditcanbeagreedthatnostateorpoliticalsubdivisioncanregulatea federal instrumentality insuchawayas toprevent it fromconsummating its federalresponsibilities, or even to seriously burden it in the accomplishment of them." (Antieau, ModernConstitutionalLaw,Vol.2,p.140,emphasissupplied)

Otherwise, mere creatures of the State can defeat National policies thru extermination of what localauthoritiesmay perceive to be undesirable activities or enterprise using the power to tax as "a tool forregulation"(U.S.v.Sanchez,340US42).

ThepowertotaxwhichwascalledbyJusticeMarshallasthe"powertodestroy"(McCullochv.Maryland,supra)cannotbeallowedtodefeataninstrumentalityorcreationoftheveryentitywhichhastheinherentpowertowieldit.20

2.AirportLandsandBuildingsofMIAAareOwnedbytheRepublic

a.AirportLandsandBuildingsareofPublicDominion

TheAirportLandsandBuildingsofMIAAarepropertyofpublicdominionandthereforeownedbytheStateortheRepublicofthePhilippines.TheCivilCodeprovides:

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ARTICLE419.Propertyiseitherofpublicdominionorofprivateownership.

ARTICLE420.Thefollowingthingsarepropertyofpublicdominion:

(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridgesconstructedbytheState,banks,shores,roadsteads,andothersofsimilarcharacter

(2)ThosewhichbelongtotheState,withoutbeingforpublicuse,andareintendedforsomepublicserviceorforthedevelopmentofthenationalwealth.(Emphasissupplied)

ARTICLE421.AllotherpropertyoftheState,whichisnotofthecharacterstatedintheprecedingarticle,ispatrimonialproperty.

ARTICLE422.Propertyofpublicdominion,whenno longer intended forpublicuseor forpublicservice,shallformpartofthepatrimonialpropertyoftheState.

No one can dispute that properties of public dominionmentioned inArticle 420 of theCivil Code, like "roads,canals, rivers, torrents, ports and bridges constructed by the State," are owned by the State.The term"ports"includesseaportsandairports.TheMIAAAirportLandsandBuildingsconstitutea"port"constructedbytheState.UnderArticle420of theCivilCode, theMIAAAirportLandsandBuildingsarepropertiesofpublicdominionandthusownedbytheStateortheRepublicofthePhilippines.

The Airport Lands and Buildings are devoted to public use because they are used by the public forinternationalanddomestictravelandtransportation.ThefactthattheMIAAcollectsterminalfeesandotherchargesfromthepublicdoesnotremovethecharacteroftheAirportLandsandBuildingsaspropertiesforpublicuse.Theoperationbythegovernmentofatollwaydoesnotchangethecharacteroftheroadasoneforpublicuse.Someonemustpayforthemaintenanceoftheroad,eitherthepublic indirectlythroughthetaxestheypaythegovernment,oronly thoseamong thepublicwhoactuallyuse the road through the toll fees theypayuponusing the road. The tollway system is even amore efficient and equitablemanner of taxing the public for themaintenanceofpublicroads.

The charging of fees to the public does not determine the character of the property whether it is of publicdominionornot.Article420oftheCivilCodedefinespropertyofpublicdominionasone"intendedforpublicuse."Even if the government collects toll fees, the road is still "intended for public use" if anyone can use the roadunderthesametermsandconditionsastherestofthepublic.Thechargingoffees,thelimitationonthekindofvehiclesthatcanusetheroad,thespeedrestrictionsandotherconditionsfortheuseoftheroaddonotaffectthepubliccharacteroftheroad.

Theterminal feesMIAAchargestopassengers,aswellasthe landingfeesMIAAchargestoairlines,constitutethebulkof the incomethatmaintains theoperationsofMIAA.Thecollectionofsuch feesdoesnotchange thecharacterofMIAAasanairport forpublicuse.Suchfeesareoftentermeduser's tax.Thismeans taxing thoseamongthepublicwhoactuallyuseapublicfacilityinsteadoftaxingallthepublicincludingthosewhoneverusethe particular public facility. A user's tax is more equitable a principle of taxation mandated in the 1987Constitution.21

TheAirportLandsandBuildingsofMIAA,whichitsChartercallsthe"principalairportof thePhilippinesforbothinternationalanddomesticair traffic,"22arepropertiesofpublicdominionbecause theyare intended forpublicuse.As properties of public dominion, they indisputably belong to the State or the Republic of thePhilippines.

b.AirportLandsandBuildingsareOutsidetheCommerceofMan

TheAirportLandsandBuildingsofMIAAaredevotedtopublicuseandthusarepropertiesofpublicdominion.Aspropertiesofpublicdominion, theAirportLandsandBuildingsareoutside thecommerceofman. TheCourthasruledrepeatedlythatpropertiesofpublicdominionareoutsidethecommerceofman.Asearlyas1915,thisCourtalreadyruledinMunicipalityofCavitev.Rojasthatpropertiesdevotedtopublicuseareoutsidethecommerceofman,thus:

Accordingtoarticle344oftheCivilCode:"Propertyforpublicuseinprovincesandintownscomprisestheprovincialandtownroads,thesquares,streets,fountains,andpublicwaters,thepromenades,andpublicworksofgeneralservicesupportedbysaidtownsorprovinces."

ThesaidPlazaSoledadbeingapromenadeforpublicuse,themunicipalcouncilofCavitecouldnotin1907withdraw or exclude from public use a portion thereof in order to lease it for the sole benefit of thedefendantHilariaRojas.In leasingaportionofsaidplazaorpublicplacetothedefendantforprivateusetheplaintiffmunicipalityexceededitsauthorityintheexerciseofitspowersbyexecutingacontractoverathingofwhichitcouldnotdispose,norisitempoweredsotodo.


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thingofwhichitcouldnotdispose,norisitempoweredsotodo.

TheCivilCode,article1271,prescribesthateverythingwhichisnotoutsidethecommerceofmanmaybetheobjectofa contract, andplazasandstreetsareoutsideof thiscommerce, aswasdecidedby thesupremecourtofSpaininitsdecisionofFebruary12,1895,whichsays:"Communalthingsthatcannotbesoldbecausetheyarebytheirverynatureoutsideofcommercearethoseforpublicuse,such

astheplazas,streets,commonlands,rivers,fountains,etc."(Emphasissupplied)23

Again inEspirituv.MunicipalCouncil, theCourt declared that propertiesof public dominionareoutside thecommerceofman:

xxx Town plazas are properties of public dominion, to be devoted to public use and to be madeavailabletothepublicingeneral.Theyareoutsidethecommerceofmanandcannotbedisposedoforeven leased by the municipality to private parties.While in case of war or during an emergency, townplazas may be occupied temporarily by private individuals, as was done and as was tolerated by theMunicipalityofPozorrubio,whentheemergencyhasceased,saidtemporaryoccupationorusemustalsocease,andthetownofficialsshouldseeto it that thetownplazasshouldeverbekeptopentothepublicandfreefromencumbrancesorillegalprivateconstructions.24(Emphasissupplied)

TheCourthasalso ruled thatpropertyofpublicdominion,beingoutside thecommerceofman,cannotbe thesubjectofanauctionsale.25

Propertiesofpublicdominion,being forpublicuse,arenotsubject to levy,encumbranceordisposition throughpublicorprivatesale.Anyencumbrance,levyonexecutionorauctionsaleofanypropertyofpublicdominionisvoid for being contrary to public policy. Essential public services will stop if properties of public dominion aresubjecttoencumbrances,foreclosuresandauctionsale.ThiswillhappeniftheCityofParaaquecanforecloseandcompeltheauctionsaleofthe600hectarerunwayoftheMIAAfornonpaymentofrealestatetax.

BeforeMIAAcanencumber26 theAirport LandsandBuildings, thePresidentmust firstwithdraw frompublicusetheAirportLandsandBuildings.Sections83and88ofthePublicLandLaworCommonwealthActNo.141,which "remains to this day the existing general law governing the classification and disposition of lands of thepublicdomainotherthantimberandminerallands,"27provide:

SECTION 83. Upon the recommendation of the Secretary of Agriculture and Natural Resources, thePresidentmaydesignatebyproclamationanytractortractsoflandofthepublicdomainasreservationsforthe use of the Republic of the Philippines or of any of its branches, or of the inhabitants thereof, inaccordancewith regulationsprescribed for thispurposes,or forquasipublicusesorpurposeswhen thepublic interest requires it, includingreservations forhighways, rightsofway for railroads,hydraulicpowersites, irrigation systems, communalpasturesor lequascommunales,publicparks, publicquarries, publicfishponds,workingmen'svillageandotherimprovementsforthepublicbenefit.

SECTION88.ThetractortractsoflandreservedundertheprovisionsofSectioneightythreeshallbenonalienable and shall not be subject to occupation, entry, sale, lease, or other dispositionuntilagaindeclaredalienableundertheprovisionsofthisActorbyproclamationofthePresident.(Emphasisandunderscoringsupplied)

Thus,unless thePresident issuesaproclamationwithdrawing theAirportLandsandBuildings frompublicuse,thesepropertiesremainpropertiesofpublicdominionandareinalienable.SincetheAirportLandsandBuildingsareinalienableintheirpresentstatusaspropertiesofpublicdominion,theyarenotsubjecttolevyonexecutionorforeclosuresale.AslongastheAirportLandsandBuildingsarereservedforpublicuse,theirownershipremainswiththeStateortheRepublicofthePhilippines.

Theauthorityof thePresidenttoreservelandsofthepublicdomainforpublicuse,andtowithdrawsuchpublicuse,isreiteratedinSection14,Chapter4,TitleI,BookIIIoftheAdministrativeCodeof1987,whichstates:

SEC. 14. Power to Reserve Lands of the Public and Private Domain of the Government. (1) ThePresident shall have the power to reserve for settlement or public use, and for specific publicpurposes,anyofthelandsofthepublicdomain,theuseofwhichisnototherwisedirectedbylaw.The reserved land shall thereafter remain subject to the specific public purpose indicated untilotherwiseprovidedbylaworproclamation

xxxx.(Emphasissupplied)

Thereisnoquestion,therefore,thatunlesstheAirportLandsandBuildingsarewithdrawnbylaworpresidentialproclamation from public use, they are properties of public dominion, owned by the Republic and outside thecommerceofman.

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c.MIAAisaMereTrusteeoftheRepublic

MIAAismerelyholdingtitletotheAirportLandsandBuildingsintrustfortheRepublic.Section48,Chapter12,BookIoftheAdministrativeCodeallowsinstrumentalitieslikeMIAAtoholdtitletorealpropertiesownedbytheRepublic,thus:

SEC. 48.Official Authorized to ConveyReal Property.Whenever real property of theGovernment isauthorizedbylawtobeconveyed,thedeedofconveyanceshallbeexecutedinbehalfofthegovernmentbythefollowing:

(1)Forpropertybelonging toand titled in thenameof theRepublicof thePhilippines,by thePresident,unlesstheauthoritythereforisexpresslyvestedbylawinanotherofficer.

(2)ForpropertybelongingtotheRepublicofthePhilippinesbuttitledinthenameofanypoliticalsubdivisionor of any corporate agencyor instrumentality, by the executive head of the agency orinstrumentality.(Emphasissupplied)

In MIAA's case, its status as a mere trustee of the Airport Lands and Buildings is clearer because even itsexecutiveheadcannotsignthedeedofconveyanceonbehalfoftheRepublic.OnlythePresidentoftheRepubliccansignsuchdeedofconveyance.28

d.TransfertoMIAAwasMeanttoImplementaReorganization

TheMIAACharter,whichisalaw,transferredtoMIAAthetitletotheAirportLandsandBuildingsfromtheBureauofAirTransportationoftheDepartmentofTransportationandCommunications.TheMIAACharterprovides:

SECTION3.CreationoftheManilaInternationalAirportAuthority.xxxx

The land where the Airport is presently located as well as the surrounding land area ofapproximately six hundred hectares, are hereby transferred, conveyed and assigned to theownership and administration of the Authority, subject to existing rights, if any. The Bureau ofLandsandotherappropriategovernmentagenciesshallundertakeanactualsurveyoftheareatransferredwithinoneyear fromthepromulgationof thisExecutiveOrderand thecorresponding title tobe issued inthenameof theAuthority.Anyportion thereof shallnotbedisposed throughsaleor throughanyothermodeunlessspecificallyapprovedbythePresidentofthePhilippines.(Emphasissupplied)

SECTION22.TransferofExistingFacilitiesandIntangibleAssets.Allexistingpublicairportfacilities,runways,lands,buildingsandotherproperty,movableorimmovable,belongingtotheAirport,andallassets,powers,rights,interestsandprivilegesbelongingtotheBureauofAirTransportationrelatingtoairportworksorairoperations,includingallequipmentwhicharenecessaryfortheoperationofcrashfireandrescuefacilities,areherebytransferredtotheAuthority.(Emphasissupplied)

SECTION25.AbolitionoftheManilaInternationalAirportasaDivisionintheBureauofAirTransportationandTransitoryProvisions.TheManila InternationalAirport including theManilaDomesticAirportasadivisionundertheBureauofAirTransportationisherebyabolished.

xxxx.

The MIAA Charter transferred the Airport Lands and Buildings to MIAA without the Republic receiving cash,promissorynotesorevenstocksinceMIAAisnotastockcorporation.

ThewhereasclausesoftheMIAACharterexplaintherationaleforthetransferoftheAirportLandsandBuildingstoMIAA,thus:

WHEREAS,theManilaInternationalAirportastheprincipalairportof thePhilippinesforbothinternationalanddomesticairtraffic,isrequiredtoprovidestandardsofairportaccommodationandservicecomparablewiththebestairportsintheworld

WHEREAS, domestic and other terminals, general aviation and other facilities, have to be upgraded tomeetthecurrentandfutureairtrafficandotherdemandsofaviationinMetroManila

WHEREAS,amanagementandorganizationstudyhas indicated that theobjectivesofprovidinghighstandardsofaccommodationandservicewithinthecontextofafinanciallyviableoperation,willbestbeachievedbyaseparateandautonomousbodyand

WHEREAS, under Presidential Decree No. 1416, as amended by Presidential Decree No. 1772, thePresidentofthePhilippinesisgivencontinuingauthoritytoreorganizetheNationalGovernment,whichauthorityincludesthecreationofnewentities,agenciesandinstrumentalitiesoftheGovernment[.]

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authorityincludesthecreationofnewentities,agenciesandinstrumentalitiesoftheGovernment[.](Emphasissupplied)

ThetransferoftheAirportLandsandBuildingsfromtheBureauofAirTransportationtoMIAAwasnotmeanttotransferbeneficialownershipoftheseassetsfromtheRepublictoMIAA.Thepurposewasmerelytoreorganizea division in the Bureau of Air Transportation into a separate and autonomous body. The RepublicremainsthebeneficialowneroftheAirportLandsandBuildings.MIAAitself isownedsolelybytheRepublic.NopartyclaimsanyownershiprightsoverMIAA'sassetsadversetotheRepublic.

TheMIAACharterexpresslyprovidesthattheAirportLandsandBuildings"shallnotbedisposedthroughsaleor throughanyothermodeunlessspecificallyapprovedby thePresidentof thePhilippines." This onlymeans that the Republic retained the beneficial ownership of the Airport Lands and Buildings because underArticle428oftheCivilCode,onlythe"ownerhastherighttoxxxdisposeofathing."SinceMIAAcannotdisposeoftheAirportLandsandBuildings,MIAAdoesnotowntheAirportLandsandBuildings.

Atany time, thePresidentcan transferback to theRepublic title to theAirportLandsandBuildingswithout theRepublicpayingMIAAanyconsideration.UnderSection3oftheMIAACharter,thePresidentistheonlyonewhocanauthorizethesaleordispositionoftheAirportLandsandBuildings.ThisonlyconfirmsthattheAirportLandsandBuildingsbelongtotheRepublic.

e.RealPropertyOwnedbytheRepublicisNotTaxable

Section234(a)of theLocalGovernmentCodeexempts from realestate taxany "[r]ealpropertyownedby theRepublicofthePhilippines."Section234(a)provides:

SEC.234.Exemptions fromRealPropertyTax.The following are exempted frompayment of therealpropertytax:

(a)Real property owned by the Republic of the Philippines or any of its political subdivisionsexcept when the beneficial use thereof has been granted, for consideration or otherwise, to ataxableperson

xxx.(Emphasissupplied)

This exemption should be read in relation with Section 133(o) of the same Code, which prohibits localgovernmentsfromimposing"[t]axes,feesorchargesofanykindontheNationalGovernment, itsagenciesandinstrumentalitiesxxx."TherealpropertiesownedbytheRepublicaretitledeitherinthenameoftheRepublicitselforinthenameofagenciesorinstrumentalitiesoftheNationalGovernment.TheAdministrativeCodeallowsreal property owned by the Republic to be titled in the name of agencies or instrumentalities of the nationalgovernment.SuchrealpropertiesremainownedbytheRepublicandcontinuetobeexemptfromrealestatetax.

The Republicmay grant the beneficial use of its real property to an agency or instrumentality of the nationalgovernment.Thishappenswhentitleof therealproperty is transferredtoanagencyor instrumentalityevenastheRepublic remains the owner of the real property. Such arrangement does not result in the loss of the taxexemption.Section234(a)oftheLocalGovernmentCodestatesthatrealpropertyownedbytheRepubliclosesitstaxexemptiononlyifthe"beneficialusethereofhasbeengranted,forconsiderationorotherwise,toataxableperson." MIAA, as a government instrumentality, is not a taxable person under Section 133(o) of the LocalGovernmentCode. Thus, even if we assume that theRepublic has granted toMIAA the beneficial use of theAirportLandsandBuildings,suchfactdoesnotmaketheserealpropertiessubjecttorealestatetax.

However,portionsoftheAirportLandsandBuildingsthatMIAAleasestoprivateentitiesarenotexemptfromrealestatetax.Forexample,thelandareaoccupiedbyhangarsthatMIAAleasestoprivatecorporationsissubjecttorealestate tax. Insuchacase,MIAAhasgranted thebeneficialuseofsuch landarea foraconsideration toataxablepersonandthereforesuchlandareaissubjecttorealestatetax.InLungCenterofthePhilippinesv.QuezonCity,theCourtruled:

Accordingly,wehold that theportionsof the land leased toprivateentitiesaswell as thosepartsof thehospitalleasedtoprivateindividualsarenotexemptfromsuchtaxes.Ontheotherhand,theportionsoftheland occupied by the hospital and portions of the hospital used for its patients, whether paying or nonpaying,areexemptfromrealpropertytaxes.29

3.RefutationofArgumentsofMinority

The minority asserts that the MIAA is not exempt from real estate tax because Section 193 of the LocalGovernmentCodeof1991withdrewthetaxexemptionof"allpersons,whethernaturalorjuridical"upontheeffectivityoftheCode.Section193provides:

SEC. 193. Withdrawal of Tax Exemption Privileges Unless otherwise provided in this Code, taxexemptionsorincentivesgrantedto,orpresentlyenjoyedbyallpersons,whethernaturalorjuridical,


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exemptionsorincentivesgrantedto,orpresentlyenjoyedbyallpersons,whethernaturalorjuridical,including governmentowned or controlled corporations, except local water districts, cooperatives dulyregisteredunderR.A.No.6938,nonstockandnonprofithospitalsandeducationalinstitutionsareherebywithdrawnuponeffectivityofthisCode.(Emphasissupplied)

The minority states that MIAA is indisputably a juridical person. The minority argues that since the LocalGovernmentCodewithdrewthetaxexemptionofalljuridicalpersons,thenMIAAisnotexemptfromrealestatetax.Thus,theminoritydeclares:

It is evident from the quoted provisions of the Local Government Code that the withdrawnexemptionsfromrealtytaxcovernotjustGOCCs,butallpersons.Torepeat,theprovisionslaydowntheexplicitpropositionthatthewithdrawalofrealtytaxexemptionappliestoallpersons.ThereferencetoortheinclusionofGOCCsisonlyclarificatoryorillustrativeoftheexplicitprovision.

The term "All persons" encompasses the two classes of persons recognized under our laws,naturalandjuridicalpersons.Obviously,MIAAisnotanaturalperson.Thus,thedeterminativetestisnot justwhetherMIAA isaGOCC,butwhetherMIAA isa juridicalpersonatall. (Emphasis andunderscoringintheoriginal)

The minority posits that the "determinative test" whether MIAA is exempt from local taxation is its status whetherMIAAisajuridicalpersonornot.Theminorityalsoinsiststhat"Sections193and234maybeexaminedinisolationfromSection133(o)toascertainMIAA'sclaimofexemption."

Theargumentoftheminorityisfatallyflawed.Section193oftheLocalGovernmentCodeexpresslywithdrewthetaxexemptionofall juridicalpersons"[u]nlessotherwiseprovidedinthisCode."Now,Section133(o)of theLocal Government Code expressly provides otherwise, specifically prohibiting local governments fromimposinganykindoftaxonnationalgovernmentinstrumentalities.Section133(o)states:

SEC. 133.Common Limitations on the Taxing Powers of Local Government Units. Unless otherwiseprovidedherein,theexerciseofthetaxingpowersofprovinces,cities,municipalities,andbarangaysshallnotextendtothelevyofthefollowing:

xxxx

(o)Taxes, feesor chargesof any kindson theNationalGovernment, its agencies and instrumentalities,andlocalgovernmentunits.(Emphasisandunderscoringsupplied)

ByexpressmandateoftheLocalGovernmentCode,localgovernmentscannotimposeanykindoftaxonnationalgovernment instrumentalities like the MIAA. Local governments are devoid of power to tax the nationalgovernment, its agencies and instrumentalities. The taxing powers of local governments do not extend to thenationalgovernment,itsagenciesandinstrumentalities,"[u]nlessotherwiseprovidedinthisCode"asstatedinthesavingclauseofSection133.ThesavingclausereferstoSection234(a)ontheexceptiontotheexemptionfromrealestatetaxofrealpropertyownedbytheRepublic.

Theminority,however,theorizesthatunlessexemptedinSection193itself,alljuridicalpersonsaresubjecttotaxbylocalgovernments.TheminorityinsiststhatthejuridicalpersonsexemptfromlocaltaxationarelimitedtothethreeclassesofentitiesspecificallyenumeratedasexemptinSection193.Thus,theminoritystates:

xxxUnderSection193,theexemptionislimitedto(a)localwaterdistricts(b)cooperativesdulyregisteredunder Republic Act No. 6938 and (c) nonstock and nonprofit hospitals and educational institutions. ItwouldbebelaboringtheobviouswhytheMIAAdoesnotfallwithinanyoftheexemptentitiesunderSection193.(Emphasissupplied)

Theminority'stheorydirectlycontradictsandcompletelynegatesSection133(o)oftheLocalGovernmentCode.Thistheorywillresultingrossabsurdities.Itwillmakethenationalgovernment,whichitself isajuridicalperson,subjecttotaxbylocalgovernmentssincethenationalgovernmentisnotincludedintheenumerationofexemptentitiesinSection193.Underthistheory, localgovernmentscanimposeanykindof localtax,andnotonlyrealestatetax,onthenationalgovernment.

Under theminority's theory,many national government instrumentalitieswith juridical personalitieswill also besubject toanykindof local tax,andnotonlyrealestate tax.Someof thenationalgovernment instrumentalitiesvestedbylawwithjuridicalpersonalitiesare:BangkoSentralngPilipinas,30PhilippineRiceResearchInstitute,31LagunaLake

Development Authority,32 Fisheries Development Authority,33 Bases Conversion Development Authority,34

Philippine Ports Authority,35 Cagayan de Oro Port Authority,36 San Fernando Port Authority,37 Cebu PortAuthority,38andPhilippineNationalRailways.39

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The minority's theory violates Section 133(o) of the Local Government Code which expressly prohibits localgovernments from imposingany kindof taxonnational government instrumentalities.Section 133(o) does notdistinguish between national government instrumentalitieswith orwithout juridical personalities.Where the lawdoes not distinguish, courts should not distinguish. Thus, Section 133(o) applies to all national governmentinstrumentalities,withorwithoutjuridicalpersonalities.ThedeterminativetestwhetherMIAAisexemptfromlocaltaxation isnotwhetherMIAA isa juridicalperson,butwhether it isanationalgovernment instrumentalityunderSection 133(o) of the LocalGovernmentCode.Section 133(o) is the specific provision of law prohibiting localgovernmentsfromimposinganykindoftaxonthenationalgovernment,itsagenciesandinstrumentalities.

Section 133 of the Local Government Code starts with the saving clause "[u]nless otherwise provided in thisCode."ThismeansthatunlesstheLocalGovernmentCodegrantsanexpressauthorization, localgovernmentshave no power to tax the national government, its agencies and instrumentalities. Clearly, the rule is localgovernmentshavenopowertotaxthenationalgovernment,itsagenciesandinstrumentalities.Asanexceptionto this rule, local governmentsmay tax the national government, its agencies and instrumentalities only if theLocalGovernmentCodeexpresslysoprovides.

ThesavingclauseinSection133referstotheexceptiontotheexemptioninSection234(a)oftheCode,whichmakesthenationalgovernmentsubjecttorealestatetaxwhenitgivesthebeneficialuseofitsrealpropertiestoataxableentity.Section234(a)oftheLocalGovernmentCodeprovides:

SEC. 234.Exemptions fromReal Property Tax The following are exempted from payment of the realpropertytax:

(a)RealpropertyownedbytheRepublicofthePhilippinesoranyof itspoliticalsubdivisionsexceptwhenthebeneficialusethereofhasbeengranted,forconsiderationorotherwise,toataxableperson.

xxx.(Emphasissupplied)

UnderSection234(a),realpropertyownedbytheRepublicisexemptfromrealestatetax.Theexceptiontothisexemptioniswhenthegovernmentgivesthebeneficialuseoftherealpropertytoataxableentity.

TheexceptiontotheexemptioninSection234(a)istheonlyinstancewhenthenationalgovernment,itsagenciesandinstrumentalitiesaresubjecttoanykindoftaxbylocalgovernments.Theexceptiontotheexemptionappliesonlytorealestatetaxandnottoanyothertax.Thejustificationfortheexceptiontotheexemptionisthattherealproperty,althoughownedbytheRepublic,isnotdevotedtopublicuseorpublicservicebutdevotedtotheprivategainofataxableperson.

TheminorityalsoarguesthatsinceSection133precedesSection193and234oftheLocalGovernmentCode,thelaterprovisionsprevailoverSection133.Thus,theminorityasserts:

xxxMoreover,sequentiallySection133antecedesSection193and234.Followinganaccepted ruleofconstruction, in caseof conflict thesubsequentprovisionsshouldprevail.Therefore,MIAA,asa juridicalperson, is subject to real property taxes, the general exemptions attaching to instrumentalities underSection133(o)of theLocalGovernmentCodebeingqualifiedbySections193and234of thesame law.(Emphasissupplied)

TheminorityassumesthatthereisanirreconcilableconflictbetweenSection133ononehand,andSections193and 234 on the other. No one has urged that there is such a conflict, much less has any one presentedapersuasiveargument that there is sucha conflict.Theminority'sassumptionof an irreconcilable conflict in thestatutoryprovisionsisanegregiouserrorfortworeasons.

First, there isnoconflictwhatsoeverbetweenSections133and193becauseSection193expresslyadmits itssubordinationtootherprovisionsoftheCodewhenSection193states"[u]nlessotherwiseprovidedinthisCode."Byitsownwords,Section193admitsthesuperiorityofotherprovisionsoftheLocalGovernmentCodethatlimittheexerciseofthetaxingpowerinSection193.Whenaprovisionoflawgrantsapowerbutwithholdssuchpoweroncertainmatters,thereisnoconflictbetweenthegrantofpowerandthewithholdingofpower.Thegranteeofthepowersimplycannotexercisethepoweronmatterswithheldfromitspower.

Second,Section133isentitled"CommonLimitationsontheTaxingPowersofLocalGovernmentUnits."Section133limitsthegranttolocalgovernmentsofthepowertotax,andnotmerelytheexerciseofadelegatedpowertotax.Section133statesthatthetaxingpowersoflocalgovernments"shallnotextendtothelevy"ofanykindoftaxonthenationalgovernment,itsagenciesandinstrumentalities.Thereisnoclearerlimitationonthetaxingpowerthanthis.

SinceSection133prescribes the"common limitations"on the taxingpowersof localgovernments,Section133logicallyprevailsoverSection193whichgrantslocalgovernmentssuchtaxingpowers.Bytheirverymeaningandpurpose,the"commonlimitations"onthetaxingpowerprevailoverthegrantorexerciseof thetaxingpower. IfthetaxingpoweroflocalgovernmentsinSection193prevailsoverthelimitationsonsuchtaxingpowerinSection

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thetaxingpoweroflocalgovernmentsinSection193prevailsoverthelimitationsonsuchtaxingpowerinSection133, then local governments can impose any kind of tax on the national government, its agencies andinstrumentalitiesagrossabsurdity.

Localgovernmentshavenopowertotaxthenationalgovernment, itsagenciesandinstrumentalities,exceptasotherwiseprovidedintheLocalGovernmentCodepursuanttothesavingclauseinSection133stating"[u]nlessotherwiseprovidedinthisCode."ThisexceptionwhichisanexceptiontotheexemptionoftheRepublicfromreal estate tax imposed by local governments refers to Section 234(a) of the Code. The exception to theexemption in Section 234(a) subjects real property owned by the Republic, whether titled in the name of thenationalgovernment, itsagenciesor instrumentalities, torealestate tax if thebeneficialuseofsuchproperty isgiventoataxableentity.

The minority also claims that the definition in the Administrative Code of the phrase "governmentowned orcontrolledcorporation" isnotcontrolling.Theminoritypointsout thatSection2of the IntroductoryProvisionsoftheAdministrativeCodeadmitsthatitsdefinitionsarenotcontrollingwhenitprovides:

SEC.2.GeneralTermsDefined.Unless thespecificwordsof the text,or thecontextasawhole,oraparticularstatute,shallrequireadifferentmeaning:

xxxx

TheminoritythenconcludesthatrelianceontheAdministrativeCodedefinitionis"flawed."

Theminority'sargument isanonsequitur.True,Section2of theAdministrativeCoderecognizes thatastatutemay require a different meaning than that defined in the Administrative Code. However, this does notautomaticallymeanthatthedefinitionintheAdministrativeCodedoesnotapplytotheLocalGovernmentCode.Section2oftheAdministrativeCodeclearlystatesthat"unlessthespecificwordsxxxofaparticularstatuteshallrequireadifferentmeaning,"thedefinitioninSection2oftheAdministrativeCodeshallapply.Thus,unlessthereis specific language in the Local Government Code defining the phrase "governmentowned or controlledcorporation" differently from the definition in the AdministrativeCode, the definition in the AdministrativeCodeprevails.

Theminority doesnot point to anyprovision in theLocalGovernmentCodedefining thephrase "governmentownedorcontrolledcorporation"differentlyfromthedefinitionintheAdministrativeCode.Indeed,thereisnone.The Local Government Code is silent on the definition of the phrase "governmentowned or controlledcorporation."TheAdministrativeCode,however,expresslydefinesthephrase"governmentownedorcontrolledcorporation."The inescapable conclusion is that theAdministrativeCodedefinitionof thephrase "governmentownedorcontrolledcorporation"appliestotheLocalGovernmentCode.

ThethirdwhereasclauseoftheAdministrativeCodestatesthattheCode"incorporatesinaunifieddocumentthemajorstructural,functionalandproceduralprinciplesandrulesofgovernance."Thus,theAdministrativeCodeisthegoverninglawdefiningthestatusandrelationshipofgovernmentdepartments,bureaus,offices,agenciesandinstrumentalities. Unless a statute expressly provides for a different status and relationship for a specificgovernmentunitorentity,theprovisionsoftheAdministrativeCodeprevail.

Theminorityalsocontends that thephrase "governmentownedorcontrolledcorporation"shouldapplyonly tocorporations organized under the Corporation Code, the general incorporation law, and not to corporationscreated by special charters. The minority sees no reason why government corporations with special chartersshouldhaveacapitalstock.Thus,theminoritydeclares:

Isubmitthatthedefinitionof"governmentownedorcontrolledcorporations"undertheAdministrativeCoderefer to those corporations owned by the government or its instrumentalities which are created not bylegislativeenactment,butformedandorganizedundertheCorporationCodethroughregistrationwiththeSecuritiesandExchangeCommission.Inshort,theseareGOCCswithoutoriginalcharters.

xxxx

ItmightaswellbeworthpointingoutthatthereisnopointinrequiringacapitalstructureforGOCCswhosefullownershipislimitedbyitschartertotheStateorRepublic.SuchGOCCsarenotempoweredtodeclaredividendsoralienatetheircapitalshares.

Thecontentionoftheminorityisseriouslyflawed.ItisnotinaccordwiththeConstitutionandexistinglegislations.Itwillalsoresultingrossabsurdities.

First, the Administrative Code definition of the phrase "governmentowned or controlled corporation" does notdistinguishbetweenoneincorporatedundertheCorporationCodeorunderaspecialcharter.Wherethelawdoesnotdistinguish,courtsshouldnotdistinguish.

Second,Congress has created through special charters several governmentowned corporations organized as

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Second,Congress has created through special charters several governmentowned corporations organized asstock corporations. Prime examples are the Land Bank of the Philippines and the Development Bank of thePhilippines.Thespecialcharter40oftheLandBankofthePhilippinesprovides:

SECTION81.Capital.Theauthorizedcapitalstockof theBankshallbeninebillionpesos,dividedintosevenhundredandeightymillioncommonshareswithaparvalueoftenpesoseach,whichshallbefullysubscribedby theGovernment,andonehundredandtwentymillionpreferredshareswithaparvalueoften pesos each,which shall be issued in accordancewith the provisions ofSections seventyseven andeightythreeofthisCode.(Emphasissupplied)

Likewise,thespecialcharter41oftheDevelopmentBankofthePhilippinesprovides:

SECTION7.AuthorizedCapitalStock Par value.The capital stock of theBank shall beFiveBillionPesostobedividedintoFiftyMillioncommonshareswithparvalueofP100pershare.Thesesharesareavailable for subscription by the National Government. Upon the effectivity of this Charter, the NationalGovernmentshallsubscribetoTwentyFiveMillioncommonsharesofstockworthTwoBillionFiveHundredMillionwhichshallbedeemedpaidforbytheGovernmentwiththenetassetvaluesoftheBankremainingafterthetransferofassetsandliabilitiesasprovidedinSection30hereof.(Emphasissupplied)

Other governmentowned corporations organized as stock corporations under their special charters are thePhilippine Crop Insurance Corporation,42 Philippine International Trading Corporation,43 and the PhilippineNational Bank44 before it was reorganized as a stock corporation under the Corporation Code. All thesegovernmentownedcorporationsorganizedunderspecialchartersasstockcorporationsaresubjecttorealestatetax on real properties ownedby them.To rule that they are not governmentownedor controlled corporationsbecause they are not registered with the Securities and Exchange Commission would remove them from thereachofSection234oftheLocalGovernmentCode,thusexemptingthemfromrealestatetax.

Third,thegovernmentownedorcontrolledcorporationscreatedthroughspecialchartersarethosethatmeetthetwoconditionsprescribedinSection16,ArticleXIIoftheConstitution.Thefirstconditionisthatthegovernmentowned or controlled corporationmust be established for the common good. The second condition is that thegovernmentownedorcontrolledcorporationmustmeetthetestofeconomicviability.Section16,ArticleXIIofthe1987Constitutionprovides:

SEC. 16. The Congress shall not, except by general law, provide for the formation, organization, orregulation of private corporations. Governmentowned or controlled corporations may be created orestablished by special charters in the interest of the common good and subject to the test of economicviability.(Emphasisandunderscoringsupplied)

The Constitution expressly authorizes the legislature to create "governmentowned or controlled corporations"through special charters only if these entities are required to meet the twin conditions of common good andeconomic viability. In other words, Congress has no power to create governmentowned or controlledcorporationswithspecialchartersunlesstheyaremadetocomplywiththetwoconditionsofcommongoodandeconomicviability.Thetestofeconomicviabilityappliesonlytogovernmentownedorcontrolledcorporationsthatperformeconomicorcommercialactivitiesandneedtocompeteinthemarketplace.Beingessentiallyeconomicvehicles of the State for the common good meaning for economic development purposes thesegovernmentownedorcontrolledcorporationswithspecialchartersareusuallyorganizedasstockcorporationsjustlikeordinaryprivatecorporations.

In contrast, government instrumentalities vestedwith corporatepowersandperforminggovernmental or publicfunctionsneednotmeet the testofeconomicviability.These instrumentalitiesperformessentialpublicservicesfor thecommongood,services thateverymodernStatemustprovide itscitizens.These instrumentalitiesneednot be economically viable since the government may even subsidize their entire operations. Theseinstrumentalitiesarenotthe"governmentownedorcontrolledcorporations"referredtoinSection16,ArticleXIIofthe1987Constitution.

Thus,theConstitutionimposesnolimitationwhenthelegislaturecreatesgovernmentinstrumentalitiesvestedwithcorporatepowersbutperformingessentialgovernmentalorpublic functions.Congresshasplenaryauthority tocreate government instrumentalities vested with corporate powers provided these instrumentalities performessentialgovernmentfunctionsorpublicservices.However,whenthelegislaturecreatesthroughspecialcharterscorporations that performeconomicor commercial activities, suchentitiesknownas "governmentownedorcontrolledcorporations"mustmeetthetestofeconomicviabilitybecausetheycompeteinthemarketplace.

ThisisthesituationoftheLandBankofthePhilippinesandtheDevelopmentBankofthePhilippinesandsimilargovernmentownedorcontrolledcorporations,whichderivetheirincometomeetoperatingexpensessolelyfromcommercial transactions in competitionwith the private sector. The intent of theConstitution is to prevent thecreationofgovernmentownedorcontrolledcorporationsthatcannotsurviveontheirowninthemarketplaceandthusmerelydrainthepubliccoffers.

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Commissioner Blas F. Ople, proponent of the test of economic viability, explained to the ConstitutionalCommissionthepurposeofthistest,asfollows:

MR.OPLE:MadamPresident, the reason for this concern is really thatwhen the government creates acorporation, there is a sense in which this corporation becomes exempt from the test of economicperformance.Weknowwhat happened in thepast. If a government corporation loses, then itmakes itsclaimupon the taxpayers'money throughnewequity infusions from thegovernmentandwhat isalwaysinvokedisthecommongood.Thatisthereasonwhythisyear,outofabudgetofP115billionfortheentiregovernment, about P28 billion of this will go into equity infusions to support a few government financialinstitutions.Andthisisalltaxpayers'moneywhichcouldhavebeenrelocatedtoagrarianreform,tosocialserviceslikehealthandeducation,toaugmentthesalariesofgrosslyunderpaidpublicemployees.Andyetthisisallgoingdownthedrain.

Therefore, when we insert the phrase "ECONOMIC VIABILITY" together with the "common good," thisbecomesarestraintonfutureenthusiastsforstatecapitalismtoexcusethemselvesfromtheresponsibilityof meeting the market test so that they become viable. And so, Madam President, I reiterate, for thecommittee's consideration and I am glad that I am joined in this proposal by Commissioner Foz, theinsertion of the standard of "ECONOMIC VIABILITY OR THE ECONOMIC TEST," together with thecommongood.45

FatherJoaquinG.Bernas,aleadingmemberoftheConstitutionalCommission,explainsinhistextbookThe1987ConstitutionoftheRepublicofthePhilippines:ACommentary:

The second sentence was added by the 1986 Constitutional Commission. The significant addition,however, is thephrase"in the interestof thecommongoodandsubject to thetestofeconomicviability."Theadditionincludestheideasthattheymustshowcapacitytofunctionefficientlyinbusinessandthattheyshouldnotgo intoactivitieswhich theprivate sector candobetter.Moreover, economic viability ismorethan financialviabilitybutalso includescapability tomakeprofitandgeneratebenefitsnotquantifiable infinancialterms.46(Emphasissupplied)

Clearly, the test of economic viability doesnot apply to government entities vestedwith corporate powers andperformingessentialpublicservices.TheState isobligatedtorenderessentialpublicservicesregardlessof theeconomicviabilityofprovidingsuchservice.ThenoneconomicviabilityofrenderingsuchessentialpublicservicedoesnotexcusetheStatefromwithholdingsuchessentialservicesfromthepublic.

However,governmentownedorcontrolledcorporationswithspecialcharters,organizedessentiallyforeconomicor commercial objectives, must meet the test of economic viability. These are the governmentowned orcontrolledcorporationsthatareusuallyorganizedundertheirspecialchartersasstockcorporations,liketheLandBank of the Philippines and the Development Bank of the Philippines. These are the governmentowned orcontrolled corporations, along with governmentowned or controlled corporations organized under theCorporationCode,thatfallunderthedefinitionof"governmentownedorcontrolledcorporations"inSection2(10)oftheAdministrativeCode.

TheMIAAneednotmeetthetestofeconomicviabilitybecausethelegislaturedidnotcreateMIAAtocompeteinthemarketplace.MIAAdoesnotcompeteinthemarketplacebecausethereisnocompetinginternationalairportoperated by the private sector. MIAA performs an essential public service as the primary domestic andinternational airport of the Philippines. The operation of an international airport requires the presence ofpersonnelfromthefollowinggovernmentagencies:

1. The Bureau of Immigration and Deportation, to document the arrival and departure of passengers,screeningoutthosewithoutvisasortraveldocuments,orthosewithholddepartureorders

2.TheBureauofCustoms,tocollectimportdutiesorenforcethebanonprohibitedimportations

3.Thequarantineofficeof theDepartment ofHealth, to enforcehealthmeasuresagainst the spreadofinfectiousdiseasesintothecountry

4.TheDepartmentofAgriculture, toenforcemeasuresagainst thespreadofplantandanimaldiseasesintothecountry

5.TheAviationSecurityCommandof thePhilippineNationalPolice, toprevent theentryof terroristsand

theescapeofcriminals,aswellastosecuretheairportpremisesfromterroristattackorseizure

6.TheAirTrafficOfficeoftheDepartmentofTransportationandCommunications,toauthorizeaircrafttoenterorleavePhilippineairspace,aswellastolandon,ortakeofffrom,theairportand

7. The MIAA, to provide the proper premises such as runway and buildings for the government


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personnel,passengers,andairlines,andtomanagetheairportoperations.

All these agencies of government perform government functions essential to the operation of an internationalairport.

MIAA performs an essential public service that everymodernStatemust provide its citizens.MIAA derives itsrevenues principally from the mandatory fees and charges MIAA imposes on passengers and airlines. Theterminal fees thatMIAAchargeseverypassengerare regulatoryoradministrative fees47 andnot income fromcommercialtransactions.

MIAAfallsunderthedefinitionofagovernmentinstrumentalityunderSection2(10)oftheIntroductoryProvisionsoftheAdministrativeCode,whichprovides:


(10)InstrumentalityreferstoanyagencyoftheNationalGovernment,notintegratedwithinthedepartmentframework, vested with special functions or jurisdiction by law, endowed with some if not all corporatepowers,administeringspecial funds,andenjoyingoperationalautonomy,usually throughacharter.xxx(Emphasissupplied)

The fact alone that MIAA is endowed with corporate powers does not make MIAA a governmentowned orcontrolled corporation. Without a change in its capital structure, MIAA remains a government instrumentalityunderSection2(10)oftheIntroductoryProvisionsoftheAdministrativeCode.Moreimportantly,aslongasMIAArendersessentialpublicservices,itneednotcomplywiththetestofeconomicviability.Thus,MIAAisoutsidethescope of the phrase "governmentowned or controlled corporations" under Section 16, Article XII of the 1987Constitution.

Theminority belittles the use in the Local Government Code of the phrase "governmentowned or controlledcorporation" as merely "clarificatory or illustrative." This is fatal. The 1987 Constitution prescribes explicitconditions for the creation of "governmentownedor controlled corporations." TheAdministrativeCode defineswhat constitutes a "governmentowned or controlled corporation." To belittle this phrase as "clarificatory orillustrative"isgraveerror.

Tosummarize,MIAAisnotagovernmentownedorcontrolledcorporationunderSection2(13)oftheIntroductoryProvisionsoftheAdministrativeCodebecauseitisnotorganizedasastockornonstockcorporation.NeitherisMIAA a governmentowned or controlled corporation under Section 16, Article XII of the 1987 ConstitutionbecauseMIAAisnotrequiredtomeetthetestofeconomicviability.MIAAisagovernmentinstrumentalityvestedwith corporate powers and performing essential public services pursuant to Section 2(10) of the IntroductoryProvisionsoftheAdministrativeCode.Asagovernmentinstrumentality,MIAAisnotsubjecttoanykindoftaxbylocal governments under Section 133(o) of the Local Government Code. The exception to the exemption inSection234(a)doesnotapplytoMIAAbecauseMIAAisnotataxableentityundertheLocalGovernmentCode.Such exception applies only if the beneficial use of real property owned by theRepublic is given to a taxableentity.

Finally,theAirportLandsandBuildingsofMIAAarepropertiesdevotedtopublicuseandthusarepropertiesofpublicdominion.Propertiesof public dominionareownedby theStateor theRepublic.Article 420 of theCivilCodeprovides:

Art.420.Thefollowingthingsarepropertyofpublicdominion:

(1)Thoseintendedforpublicuse,suchasroads,canals,rivers,torrents,portsandbridgesconstructedbytheState,banks,shores,roadsteads,andothersofsimilarcharacter

(2)ThosewhichbelongtotheState,withoutbeingforpublicuse,andareintendedforsomepublicserviceorforthedevelopmentofthenationalwealth.(Emphasissupplied)

Theterm"portsxxxconstructedbytheState"includesairportsandseaports.TheAirportLandsandBuildingsofMIAAare intendedforpublicuse,andat thevery least intendedforpublicservice.Whether intendedforpublicuseorpublicservice, theAirportLandsandBuildingsarepropertiesofpublicdominion.Aspropertiesofpublicdominion,theAirportLandsandBuildingsareownedbytheRepublicandthusexemptfromrealestatetaxunderSection234(a)oftheLocalGovernmentCode.

4.Conclusion

UnderSection2(10)and(13)oftheIntroductoryProvisionsoftheAdministrativeCode,whichgovernsthelegalrelationandstatusofgovernmentunits,agenciesandofficeswithintheentiregovernmentmachinery,MIAAisagovernmentinstrumentalityandnotagovernmentownedorcontrolledcorporation.UnderSection133(o)of theLocalGovernmentCode,MIAAasagovernmentinstrumentalityisnotataxablepersonbecauseitisnotsubject


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LocalGovernmentCode,MIAAasagovernmentinstrumentalityisnotataxablepersonbecauseitisnotsubjectto"[t]axes, feesorchargesofanykind"by localgovernments.Theonlyexception iswhenMIAAleases itsrealproperty toa"taxableperson"asprovided inSection234(a)of theLocalGovernmentCode, inwhichcase thespecific real property leased becomes subject to real estate tax. Thus, only portions of the Airport Lands andBuildingsleasedtotaxablepersonslikeprivatepartiesaresubjecttorealestatetaxbytheCityofParaaque.

UnderArticle420of theCivilCode, theAirportLandsandBuildingsofMIAA,beingdevoted topublicuse,areproperties of public dominion and thus owned by the State or the Republic of the Philippines. Article 420specifically mentions "ports x x x constructed by the State," which includes public airports and seaports, asproperties of public dominion and owned by the Republic. As properties of public dominion owned by theRepublic, there is no doubt whatsoever that the Airport Lands and Buildings are expressly exempt from realestate tax under Section 234(a) of the Local Government Code. This Court has also repeatedly ruled thatpropertiesofpublicdominionarenotsubjecttoexecutionorforeclosuresale.

WHEREFORE, weGRANT the petition.WeSETASIDE the assailedResolutions of theCourt of Appeals of 5October2001and27September2002inCAG.R.SPNo.66878.WeDECLAREtheAirportLandsandBuildingsoftheManilaInternationalAirportAuthorityEXEMPTfromtherealestatetaximposedbytheCityofParaaque.WedeclareVOIDalltherealestatetaxassessments,includingthefinalnoticesofrealestatetaxdelinquencies,issuedbytheCityofParaaqueontheAirportLandsandBuildingsoftheManilaInternationalAirportAuthority,except for the portions that the Manila International Airport Authority has leased to private parties. We alsodeclareVOID the assailed auction sale, and all its effects, of the Airport Lands and Buildings of the ManilaInternationalAirportAuthority.

Nocosts.

SOORDERED.

Panganiban, C.J., Puno, Quisumbing, YnaresSantiago, SandovalGutierrez, AustriaMartinez, Corona, CarpioMorales,Callejo,Sr.,Azcuna,Tinga,ChicoNazario,Garcia,Velasco,Jr.,J.J.,concur.

xx

DISSENTINGOPINION

TINGA,J.:

The legally correct resolutionof this petitionwouldhavehad theaddedbenefit of anutterly fair andequitableresultarecognitionof theconstitutionalandstatutorypowerof theCityofParaaqueto imposerealpropertytaxesontheManila InternationalAirportAuthority(MIAA),butat thesametime,upholdingastatutory limitationthat prevents theCityofParaaque fromseizingandconductinganexecution saleover the real propertiesofMIAA.Intheend,allthattheCityofParaaquewouldholdovertheMIAAisalimitedlien,unenforceableasitisthroughthesaleordispositionofMIAAproperties.Notonlyisthisthelegaleffectofalltherelevantconstitutionaland statutory provisions applied to this case, it also leaves the room for negotiation for amutually acceptableresolutionbetweentheCityofParaaqueandMIAA.

Instead,withblindbutmeasuredrage,themajoritytodayveerswildlyoffcourse,shatteringstatutesandjudicialprecedents left and right in order to protect the precious Ming vase that is the Manila International AirportAuthority (MIAA). While the MIAA is left unscathed, it is surrounded by the wreckage that once was theconstitutionalpolicy,dulyenactedintolaw,thatwaslocalautonomy.Makenomistake,themajorityhasvirtuallydeclaredwar on the seventy nine (79) provinces, one hundred seventeen (117) cities, and one thousand fivehundred(1,500)municipalitiesofthePhilippines.1

Theicingonthisinediblecakeisthestrainedandpurposelyvaguerationaleusedtojustifythemajorityopinion.DecisionsoftheSupremeCourtareexpectedtoprovideclaritytothepartiesandtostudentsofjurisprudence,astowhatthelawofthecaseis,especiallywhenthedoctrinesoflongstandingaremodifiedorclarified.Withallduerespect,thedecisioninthiscaseisplainlyso,sowrongonmanylevels.Moreegregious,inthemajority'sresolveto spare the Manila International Airport Authority (MIAA) from liability for real estate taxes, no clearcut ruleemerges on the important question of the power of local government units (LGUs) to tax governmentcorporations,instrumentalitiesoragencies.

Themajoritywouldoverturnsubsilencio,amongothers,atleastonedozenprecedentsenumeratedbelow:

1)MactanCebu International Airport Authority v. Hon.Marcos,2 the leading case penned in 1997 by recentlyretiredChiefJusticeDavide,whichheldthattheexpresswithdrawalbytheLocalGovernmentCodeofpreviouslygranted exemptions from realty taxes applied to instrumentalities and governmentowned or controlledcorporations(GOCCs)suchastheMactanCebuInternationalAirportAuthority(MCIAA).Themajorityinvokesthe

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corporations(GOCCs)suchastheMactanCebuInternationalAirportAuthority(MCIAA).Themajorityinvokestheruling inBascov.Pagcor,3aprecedentdiscredited inMactan,andavanguardofadoctrinesonoxious to theconcept of local government rule that the Local Government Code was drafted precisely to counter suchphilosophy.TheefficacyofseveralrulingsthatexpresslyrelyonMactan,suchasPHILRECAv.DILGSecretary,4

CityGovernmentofSanPablov.Hon.Reyes5isnowputinquestion.

2)Therulings inNationalPowerCorporationv.CityofCabanatuan,6wherein theCourt, throughJusticePuno,declaredthattheNationalPowerCorporation,aGOCC,isliableforfranchisetaxesundertheLocalGovernmentCode,andsucceedingcasesthathavereliedonitsuchasBatangasPowerCorp.v.BatangasCity7ThemajoritynowstatesthatdeemsinstrumentalitiesasdefinedundertheAdministrativeCodeof1987aspurportedlybeyondthereachofany formof taxationbyLGUs,stating"[l]ocalgovernmentsaredevoidofpower to tax thenationalgovernment,itsagenciesandinstrumentalities."8Unfortunately,usingthedefinitionemployedbythemajority,asprovided by Section 2(d) of the Administrative Code, GOCCs are also considered as instrumentalities, thusleadingtotheastoundingconclusionthatGOCCsmaynotbetaxedbyLGUsundertheLocalGovernmentCode.

3)LungCenterofthePhilippinesv.QuezonCity,9whereinaunanimousenbancCourtheldthattheLungCenterofthePhilippinesmaybeliableforrealpropertytaxes.Usingthemajority'sreasoning,theLungCenterwouldbeproperlyclassifiedasaninstrumentalitywhichthemajoritynowholdsasexemptfromallformsoflocaltaxation.10

4)City ofDavao v.RTC,11 where theCourt held that theGovernment Service InsuranceSystem (GSIS)wasliable for realproperty taxes for theyears1992 to1994, itspreviousexemptionhavingbeenwithdrawnby theenactmentoftheLocalGovernmentCode.12Thisdecision,whichexpresslyreliedonMactan,wouldbedirectlythoughsilentlyoverruledbythemajority.

5) The common essence of the Court's rulings in the two Philippine Ports Authority v. City of Iloilo,13 casespennedbyJusticesCallejoandAzcunarespectively,whichreliedinpartonMactaninholdingthePhilippinePortsAuthority(PPA)liableforrealtytaxes,notwithstandingthefactthat it isaGOCC.Basedonthereasoningofthemajority, thePPAcannotbeconsideredaGOCC.The relianceof thesecasesonMactan,and its rationale forholdinggovernmentalentitieslikethePPAliableforlocalgovernmenttaxationismootedbythemajority.

6)The1963precedentofSocialSecuritySystemEmployeesAssociationv.Soriano,14whichdeclaredtheSocialSecurityCommission(SSC)asaGOCCperformingproprietaryfunctions.Basedontherationaleemployedbythemajority,theSocialSecuritySystemisnotaGOCC.Orperhapsmoreaccurately,"nolonger"aGOCC.

7)ThedecisionpennedbyJustice(nowChiefJustice)Panganiban,LightRailTransitAuthorityv.CentralBoardofAssessment.15 The characterization therein of the Light Rail Transit Authority (LRTA) as a "serviceorientedcommercial endeavor"whosepatrimonial property is subject to local taxation isnow rendered inconsequential,owingtothemajority'sthinkingthatanentitysuchastheLRTAisitselfexemptfromlocalgovernmenttaxation16,irrespectiveofthefunctionsitperforms.Moreover,basedonthemajority'scriteria,LRTAisnotaGOCC.

8) The cases of Teodoro v. National Airports Corporation17 and Civil Aeronautics Administration v. Court ofAppeals.18whereintheCourtheldthatthepredecessoragencyoftheMIAA,whichwassimilarlyengagedintheoperation,administrationandmanagementof theManila InternationalAgency,wasengaged in theexerciseofproprietary,asopposedtosovereignfunctions.ThemajoritywouldholdotherwisethatthepropertymaintainedbyMIAAisactuallypatrimonial,thusimplyingthatMIAAisactuallyengagedinsovereignfunctions.

9)Myownmajority inPhividec IndustrialAuthority v.CapitolSteel,19 wherein theCourt held that thePhividecIndustrial Authority, aGOCC,was required to secure the services of theOffice of theGovernment CorporateCounselforlegalrepresentation.20Basedonthereasoningofthemajority,PhividecwouldnotbeaGOCC,andthemandateoftheOfficeoftheGovernmentCorporateCounselextendsonlytoGOCCs.

10)TwodecisionspromulgatedbytheCourtjustlastmonth(June2006),NationalPowerCorporationv.ProvinceofIsabela21andGSISv.CityAssessorofIloiloCity.22Intheformer,theCourtpronouncedthat"[a]lthoughasageneralrule,LGUscannotimposetaxes,fees,orchargesofanykindontheNationalGovernment,itsagenciesand instrumentalities, this rule admits of an exception, i.e., when specific provisions of the LGC authorize theLGUs to impose taxes, fees or charges on the aforementioned entities." Yet the majority now rules that theexceptions in the LGC no longer hold, since "local governments are devoid of power to tax the nationalgovernment,itsagenciesandinstrumentalities."23Therulinginthelattercase,whichheldtheGSISasliableforrealpropertytaxes,isnowputinjeopardybythemajority'sruling.

There are certainly many other precedents affected, perhaps all previous jurisprudence regarding localgovernment taxationvisavisgovernmententities,aswellasanypreviousdefinitionsofGOCCs,andpreviousdistinctionsbetweentheexerciseofgovernmentalandproprietaryfunctions(adistinctionlaiddownbythisCourtas far back as 191624). What is the reason offered by the majority for overturning or modifying all these

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as far back as 191624). What is the reason offered by the majority for overturning or modifying all theseprecedents and doctrines? None is given, for the majority takes comfort instead in the pretense that theseprecedentsneverexisted.Onlychildrenshouldbepermittedtosubscribetothetheorythatsomethingbadwillgoawayifyoupretendhardenoughthatitdoesnotexist.

I.

CaseShouldHaveBeenDecided

FollowingMactanPrecedent

Thecoreissueinthiscase,whethertheMIAAisliabletotheCityofParaaqueforrealpropertytaxesundertheLocalGovernmentCode, has already been decided by thisCourt in theMactan case, and should have beenresolvedbysimplyapplyingprecedent.

MactanExplained

Abrief recallof theMactancase is inorder.TheMactanCebu InternationalAirportAuthority (MCIAA)claimedthat it was exempt from payment of real property taxes to the City of Cebu, invoking the specific exemptiongrantedinSection14ofitscharter,RepublicActNo.6958,anditsstatusasaninstrumentalityofthegovernmentperforminggovernmental functions.25Particularly,MCIAA invokedSection133of theLocalGovernmentCode,preciselythesameprovisionutilizedbythemajorityasthebasisforMIAA'sexemption.Section133reads:

Sec.133.CommonLimitationson theTaxingPowersofLocalGovernmentUnits.Unlessotherwiseprovidedherein,theexerciseofthetaxingpowersofprovinces,cities,municipalities,andbarangaysshallnotextendtothelevyofthefollowing:

xxx

(o)Taxes,feesorchargesofanykindontheNationalGovernment,itsagenciesandinstrumentalitiesandlocalgovernmentunits.(emphasisandunderscoringsupplied).

However, theCourt inMactan noted that Section 133 qualified the exemption of theNationalGovernment, itsagencies and instrumentalities from local taxation with the phrase "unless otherwise provided herein." It thenconsideredtheotherrelevantprovisionsoftheLocalGovernmentCode,particularlythefollowing:

SEC.193.WithdrawalofTaxExemptionPrivileges.Unlessotherwiseprovided in thisCode, taxexemptionorincentivesgranted to, or enjoyedbyall persons,whether natural or juridical, includinggovernmentownedandcontrolledcorporations,exceptlocalwaterdistricts,cooperativesdulyregisteredunderR.A.No.6938,nonstockandnonprofithospitalsandeducationalinstitutions,areherebywithdrawnupontheeffectivityofthisCode.26

SECTION232.Power toLevyRealPropertyTax.Aprovinceor cityoramunicipalitywithin theMetropolitanManilaareamay levyanannualadvalorem taxon realproperty suchas land,building,machinery,andotherimprovementsnothereafterspecificallyexempted.27

SECTION 234. Exemptions from Real Property Tax. The following are exempted from payment of the realpropertytax:

(a)Real property ownedby theRepublic of thePhilippines or any of its political subdivisions exceptwhen thebeneficialusethereofhasbeengranted,forconsiderationorotherwise,toataxableperson:

(b) Charitable institutions, churches, parsonages or convents appurtenant thereto, mosques, nonprofit orreligious cemeteries and all lands, buildings, and improvements actually, directly, and exclusively used forreligiouscharitableoreducationalpurposes

(c) All machineries and equipment that are actually, directly and exclusively used by local water districts andgovernmentowned and controlled corporations engaged in the distribution of water and/or generation andtransmissionofelectricpower

(d)AllrealpropertyownedbydulyregisteredcooperativesasprovidedforunderR.A.No.6938and

(e)Machineryandequipmentusedforpollutioncontrolandenvironmentalprotection.

Exceptasprovidedherein,anyexemptionfrompaymentofrealpropertytaxpreviouslygrantedto,orpresentlyenjoyedby, all persons,whethernatural or juridical, includingall governmentownedor controlled corporationsareherebywithdrawnupontheeffectivityofthisCode.28

Clearly,Section133wasnot intendedtobesoabsoluteaprohibitiononthepowerofLGUstotaxtheNationalGovernment, its agencies and instrumentalities, as evidenced by these cited provisions which "otherwise

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Government, its agencies and instrumentalities, as evidenced by these cited provisions which "otherwiseprovided."Butwhatwas theextent of the limitationunderSection133?This is how theCourt, correctly tomymind,definedtheparametersinMactan:

TheforegoingsectionsoftheLGCspeakof:(a)thelimitationsonthetaxingpowersoflocalgovernmentunitsandthe exceptions to such limitations and (b) the rule on tax exemptions and the exceptions thereto. The use ofexceptionsorprovisosinthesesections,asshownbythefollowingclauses:

(1)"unlessotherwiseprovidedherein"intheopeningparagraphofSection133

(2)"UnlessotherwiseprovidedinthisCode"inSection193

(3)"nothereafterspecificallyexempted"inSection232and

(4)"Exceptasprovidedherein"inthelastparagraphofSection234

initiallyhampersareadyunderstandingofthesections.Note,too,thattheaforementionedclauseinSection133seemstobe inaccuratelyworded. Insteadof theclause"unlessotherwiseprovidedherein,"with the"herein" tomean,ofcourse,thesection,itshouldhaveusedtheclause"unlessotherwiseprovidedinthisCode."Theformerresults inabsurditysince thesection itselfenumerateswhatarebeyond the taxingpowersof localgovernmentunits and,where exceptionswere intended, the exceptions are explicitly indicated in the next. For instance, initem (a) which excepts income taxes "when levied on banks and other financial institutions" item (d) whichexcepts"wharfageonwharvesconstructedandmaintainedbythelocalgovernmentunitconcerned"anditem(1)whichexceptstaxes,feesandchargesfortheregistrationandissuanceof licensesorpermitsforthedrivingof"tricycles." Itmayalsobeobservedthatwithin thebody itselfof thesection, thereareexceptionswhichcanbefound only in other parts of the LGC, but the section interchangeably uses therein the clause, "except asotherwise provided herein" as in items (c) and (i), or the clause "except as provided in this Code" in item (j).Theseclauseswouldbeobviouslyunnecessaryormeresurplusages if theopeningclauseof thesectionwere"UnlessotherwiseprovidedinthisCode"insteadof"Unlessotherwiseprovidedherein."Inanyevent,evenifthelatter isused,sinceunderSection232 localgovernmentunitshave thepower to levy realproperty tax,exceptthoseexemptedtherefromunderSection234,thenSection232mustbedeemedtoqualifySection133.

Thus,readingtogetherSections133,232,and234oftheLGC,weconcludethatasageneralrule,aslaiddowninSection133, thetaxingpowersof localgovernmentunitscannotextendto the levyof, interalia,"taxes, feesandchargesofanykindon theNationalGovernment, itsagenciesand instrumentalities,and localgovernmentunits"however,pursuanttoSection232,provinces,cities,andmunicipalitiesintheMetropolitanManilaAreamayimposetherealpropertytaxexcepton,interalia,"realpropertyownedbytheRepublicofthePhilippinesoranyofitspoliticalsubdivisionsexceptwhenthebeneficialusethereofhasbeengranted,forconsiderationorotherwise,toataxableperson,"asprovidedinitem(a)ofthefirstparagraphofSection234.

As to tax exemptions or incentives granted to or presently enjoyed by natural or judicial persons, includinggovernmentownedandcontrolledcorporations,Section193oftheLGCprescribesthegeneralrule,viz.,theyarewithdrawn upon the effectivity of the LGC, except those granted to local water districts, cooperatives dulyregistered under R.A. No. 6938, nonstock and nonprofit hospitals and educational institutions, and unlessotherwiseprovided in the LGC.The latter proviso could refer toSection 234whichenumerates the propertiesexempt from real property tax. But the last paragraph

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