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Case digest · Airport lands as property of public dominion; exemption from real estate tax; void auction sale
Manila International Airport Authority vs. Court of Appeals
Parañaque City demanded over P624 million in real estate tax and penalties from the airport authority, levied on the NAIA lands and buildings, and auctioned them. The Supreme Court’s restraining order reached the city three hours after the auction ended.
Facts
July 21, 1983
Executive Order No. 903, the charter of the Manila International Airport Authority (MIAA), transferred to MIAA approximately 600 hectares of land, including the runways and buildings then under the Bureau of Air Transportation. MIAA operates the Ninoy Aquino International Airport complex in Parañaque City, and the charter placed the title to the airport lands and buildings in MIAA’s name.
1997
After the Office of the Government Corporate Counsel opined that the Local Government Code of 1991 had withdrawn MIAA’s exemption from real estate tax, MIAA negotiated with the City of Parañaque and paid some of the tax already due.
June–July 2001
On June 28, 2001, MIAA received from the city final notices of real estate tax delinquency for 1992 to 2001, totaling P624,506,725.42 with penalties. It issued warrants of levy on the airport lands and buildings, and the mayor threatened to sell them at public auction.
2001–2002
MIAA asked the Court of Appeals to restrain the city, but the petition was dismissed for being filed beyond the 60-day reglementary period. On December 5, 2002, MIAA filed its petition for review in the Supreme Court.
February 6–7, 2003
The city set the auction for February 7, 2003, at 10:00 a.m. MIAA asked the Supreme Court for a restraining order at 5:10 p.m. the day before. The Court issued it on February 7, but the respondents received it only at 1:25 p.m., three hours after the auction had ended.
Issue
Are the airport lands and buildings of MIAA exempt from the real estate tax imposed by the City of Parañaque?
Ruling
Yes. The Court declared the airport lands and buildings exempt, voided the city’s tax assessments except on the portions MIAA leases to private parties, and voided the auction sale and all its effects.
The Court gave two reasons. First, MIAA is not a government-owned or controlled corporation, because it is not organized as a stock or non-stock corporation, but an instrumentality of the National Government, and so is exempt from local taxation. Second, the airport lands and buildings are owned by the Republic. Airports are “ports” constructed by the State under Art. 420 of the Civil Code, used by the public for travel and transportation, so they are property of public dominion; collecting terminal fees does not change that, just as a tollway remains a road for public use. As property of public dominion, they are outside the commerce of man and cannot be levied upon or sold at auction. Unless they are withdrawn from public use by law or presidential proclamation, they remain property of public dominion, and MIAA merely holds title to them in trust for the Republic. Portions leased to private entities, such as land occupied by hangars leased to private corporations, are not exempt. Tinga, J., dissented.
“Any encumbrance, levy on execution or auction sale of any property of public dominion is void for being contrary to public policy.”
Doctrine
Property of public dominion intended for public use, such as ports, is owned by the State and is outside the commerce of man. “There is no question, therefore, that unless the Airport Lands and Buildings are withdrawn by law or presidential proclamation from public use, they are properties of public dominion, owned by the Republic and outside the commerce of man.” Charging fees does not change the character of the property: “The operation by the government of a tollway does not change the character of the road as one for public use.” But when MIAA grants the beneficial use of a portion to a taxable person for a consideration, as when it leases land to private corporations, that portion is subject to real estate tax.
Compare: public service, not public use
In Laurel vs. Garcia, G.R. Nos. 92013 and 92047, July 25, 1990, the Roppongi embassy lot was property of public dominion intended for public service: “The fact that the Roppongi site has not been used for a long time for actual Embassy service does not automatically convert it to patrimonial property.”
Bar tip
Ask who owns the property and what it is devoted to. Airport lands are “ports” constructed by the State, owned by the Republic and outside the commerce of man, so they cannot be levied upon or auctioned. Fees do not change their character, and holding title in trust for the Republic does not make MIAA the owner; but portions leased to private parties are taxable.
Hear it explained
Land Titles Jurisprudence Ep. 6, at 8:46
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This digest is general legal information for education, not legal advice, and it is not a substitute for reading the decision. Quoted passages are taken word for word from the full text.