CASE DIGEST: MCIAA vs. Marcos (G.R. No. 120082; September 11, 1996)

CASE DIGEST: MACTAN CEBU INTERNATIONAL AIRPORT AUTHORITY, petitioner, vs. HON. FERDINAND J. MARCOS, in his capacity as the Presiding Judge of the Regional Trial Court, Branch 20, Cebu City, THE CITY OF CEBU, represented by its Mayor, HON. TOMAS R. OSMEA, and EUSTAQUIO B. CESA, respondents. (G.R. No. 120082; September 11, 1996)

Under its charter, the MCIAA shall be exempt from realty taxes imposed by the National Government or any of its political subdivisions, agencies and instrumentalities. In 1994, the Local Government Unit (LGU) of Cebu City demanded payment for realty taxes on several parcels of land belonging to MCIAA.

MCIAA objected to the same as baseless and unjustified, claiming its exemption under its charter. Also, it cites the LGC stating that LGUs taxing power does not extend to taxes, fees or charges of any kind on the National Government, its agencies and instrumentalities, and local government units.

Cebu City countered, however, citing Sections 193 and 234 of the LGC which withdraw tax exemptions of GOCCs and realty tax exemptions previously granted to ore presently enjoyed by all persons, whether natural or juridical, including GOCCs.

MCIAA paid tax under protest. It insisted that the taxing powers of LGUs do not extend to the levy of taxes or fees of any kind on an instrumentality of the national government. It also insisted that while it is indeed a GOCC, it nonetheless stands on the same footing as an agency or instrumentality of the national government by the very nature of its powers and functions.
[1] Is MCIAA a taxable person?
[2] Is MCIAA exempt from realty taxation?

[1] Yes, although it previously enjoyed exemption from realty tax under its charter (which has already been withdrawn by the LGC), this exemption extended only to said tax, not to other taxes. Hence, MCIAA is still a taxable person.

[2] No, MCIAA is not exempt from realty tax by the City of Cebu. First, its tax exemption under its charter has already been withdrawn. Second, while it is true that LGUs cannot levy tax on property of the Republic of the Philippines or the National Government (outside Metro Manila), the beneficial use of property should not be given to a taxable person.

Here, MCIAA is already the owner of the parcels of land in question. Hence, even the exemption under the LGC cannot apply.