CASE DIGEST : Mactan Cebu International Airport Authority (MCIAA) v. Marcos, et al. G.R. No. 120082, September 11, 1996

 

FACTS

The Mactan Cebu International Airport Authority (MCIAA) was created under Republic Act No. 6958 to manage and operate the Mactan International Airport and other airports in Cebu. Section 14 of its charter granted it exemption from the payment of real property taxes imposed by the National Government or any of its political subdivisions. However, after the enactment of the Local Government Code of 1991 (Republic Act No. 7160), the City Treasurer of Cebu assessed and demanded payment of real property taxes on several parcels of land owned by MCIAA, claiming that its tax exemption had been withdrawn by Sections 193 and 234 of the Local Government Code, which generally repealed tax exemptions previously granted to government-owned or controlled corporations unless expressly preserved by law.

MCIAA refused to pay, arguing that it was an instrumentality of the National Government rather than an ordinary government-owned or controlled corporation. It invoked Section 133(o) of the Local Government Code, which prohibits local government units from imposing taxes on the National Government, its agencies, and instrumentalities. After paying the assessed taxes under protest, MCIAA filed a petition for declaratory relief before the Regional Trial Court, which dismissed the petition and ruled that its tax exemption had been repealed. MCIAA then elevated the matter to the Supreme Court.

ISSUE

Whether the Mactan Cebu International Airport Authority is exempt from the payment of real property taxes under its charter and as a government instrumentality, despite the enactment of the Local Government Code of 1991, particularly Sections 193, 234, and 133(o) thereof.

HELD

The Supreme Court denied the petition and held that MCIAA is liable for real property taxes. It ruled that while MCIAA's charter under R.A. No. 6958 originally granted it exemption from real property taxes, such exemption was effectively withdrawn by Sections 193 and 234 of the Local Government Code, which expressly repealed tax exemptions previously enjoyed by government-owned or controlled corporations unless specifically retained by the Code. The Court explained that tax exemptions are never presumed and must be expressed in clear and unmistakable language. Since the Local Government Code did not preserve MCIAA's exemption, it ceased to exist upon the Code's effectivity.

The Court further clarified that Section 133(o), which prohibits local governments from imposing taxes on the National Government and its instrumentalities, pertains to the power to levy taxes, whereas real property tax is specifically governed by Section 234 of the Local Government Code, which enumerates the properties exempt from such tax. The Court emphasized that Congress has the constitutional authority to withdraw tax exemptions in furtherance of local fiscal autonomy under the Constitution. Accordingly, MCIAA's properties, not falling within the exemptions under Section 234, remained subject to local real property taxation, and the RTC's dismissal of the petition was affirmed.