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Saturday, July 22, 2006
High court declares Manila airport 'tax exempt'
THE Supreme Court (SC) has voided the P625 million tax assessment by the Parañaque City Government issued against the Airport Lands and Buildings (ALB) owned by the state-run Manila International Airport Authority (Miaa) on Feb. 7, 2003.
In an en banc decision penned by Associate Justice Antonio Carpio, the high court voted 11 to 3 in favor of petition of the Mias to exempt ALB from paying the City Government some P624.5 million in real estate tax and penalties for the taxable years 1992 to 2001.
The decision reversed the ruling of the Court of Appeals (CA) on Oct. 5, 2001 which denied the petition of Miaa, which operates the Ninoy Aquino International Airport (Naia) in Paranaque City, to restrain the City Government from imposing real estate tax against ALB and auctioning for public sale the said property.
The court ruled that there is no reason for local governments to tax National Government instrumentalities like the Miaa for rendering public services to inhabitants of local governments.
"There is no point in national and local governments taxing each other, unless a sound and compelling policy requires such transfer of public funds from one government pocket to another," the SC ruled.
The high court declared that the ALB are properties of public dominion devoted to public use and are thus exempt from real estate tax under Section 234 (A) of the 1991 Local Government Code (LGC).
"Properties of public dominion, being for public use, are not subject to levy, encumbrance or disposition through public or private sale. Any encumbrance, levy on execution or auction sale of any property of public dominion is void for being contrary to public policy," it said.
Only portions of the ALB leased to taxable persons like private parties are subject to real estate tax by the Parañaque City Government, the SC said.
The high court dismissed the argument raised by respondent Parañaque City Government that Miaa cannot claim that the ALB are exempt from real estate tax since Section 193 of the LGC has withdrew the tax exemption privileges of government-owned and-controlled corporations (GOCCs).
A GOCC is defined under the Administrative Code of 1987 as an agency organized as a stock or non-stock corporation.
"There is no dispute that a government-owned or controlled corporation is not exempt from real estate tax. However, Miaa is not a government-owned or controlled corporation," the SC said.
The Miaa, according to the SC, is not organized as a stock or non-stock corporation because it has no capital stock divided into shares and has no stockholders or voting shares. Being a government instrumentality, it is vested with corporate powers to perform governmental functions.
The court noted that Section 133 (O) of the LGC states that "unless otherwise provided" in the Code, the local governments cannot tax National Government instrumentalities.
"As a government instrumentality, Miaa is not subject to any kind of tax by local governments under Section 133 (O) of the Local Government Code," the SC said.
Records showed that as operator of the Naia, Miaa administers the land, improvements and equipment within the Naia complex. The Miaa Charter transferred to Miaa approximately 600 hectares of land, including the runways and buildings known as ALB then under the Bureau of Air Transportation (BAT).
On June 28, 2001, the Miaa received final notices of real estate tax delinquency from Parañaque for the taxable years 1992-2001 amounting to P624.5 million.
On July 17, 2001, Parañaque, through its city treasurer, issued notices of levy and warrants of levy on ALB. The local government also threatened to sell at public auction the ALB should Miaa fail to pay the real estate tax delinquency.
In January 2003, the Parañaque City Government announced the public action sale of the properties on Feb. 7, 2003. On the same day, the court issued a temporary restraining order (TRO) effective preventing the auction sale but the respondents received the TRO three hours after the public auction. (ECV/Sunnex)
(July 22, 2006 issue)
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