Mactan Airport Exempt from Property Taxes — SC

The Supreme Court (SC) has declared the properties of the Mactan-Cebu International Airport Authority (MCIAA), consisting of the “airport terminal building, airfield, runway, taxiway and the lots on which they are situated,” exempt from the real property tax imposed by the City of Lapu-Lapu.

In a 42-page ruling dated July 15, 2015 and written by Associate Justice Teresita J. Leonardo-de Castro, the SC First Division granted the petition for certiorari filed by MCIAA that sought to annul all real property tax assessments made on lots utilized solely and exclusively for public or governmental purpose.

The SC also declared null and void the sale in public auction of 27 of MCIAA’s properties, which were earlier sold in public auction for delinquency in realty tax obligations.

It noted the MCIAA is a government instrumentality and all its airport lands and buildings are exempt from real estate taxes imposed by the local government unit (LGU).

“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,” the ruling said.

Only portions of the Airport Lands and Buildings leased to taxable persons like private parties are subject to real estate tax.

The petition arose from tax assessments made over MCIAA’s properties in 1997.

Up to the year 2002, MCIAA incurred a Real Property Tax Balance of PHP246.4 million resulting in a public auction of its properties, all of which were forfeited and purchased by the LGU due to a lack of interested bidders.

This prompted the petitioner to seek redress before the SC.

In its ruling, the SC welcomed what it said was a “clear opportunity” to clarify the effects of its two previous rulings, issued a decade apart, on the power of LGUs to collect real property taxes from airport authorities located within their area, and the nature or the juridical personality of said airport authorities.

The SC cited its 1996 ruling in the case of “MCIAA v. Marcos” that effectively declared MCIAA as subject to real property taxes as against its 2006 ruling in the case of “Manila International Airport Authority (MIAA) v. Court of Appeals”, which exempted MIAA from the taxing powers of the City of Parañaque.

The SC said the 1996 decision has been effectively reversed by the ruling in the “MIAA v. CA”, which was decided En Banc and cited in numerous cases.

“To reiterate, petitioner 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 corporation. Like MIAA, petitioner MCIAA has capital under its charter, but is not divided into shares of stocks,“ the ruling said.

The SC added unlike government-owned and controlled corporations (GOCCs), there is no reason for LGUs to tax national government instrumentalities for rendering essential public service, unless legislature clearly intended otherwise. (PNA) JBP/PTR/PJN