mactan cebu v. marcos, sept. 11, 1996

7/24/2019 Mactan Cebu v. Marcos, Sept. 11, 1996

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Republic of the PhilippinesSUPREME COURT

Manila

THIRD DIVISION

G.R. No. 120082 September 11, 1996

MACTAN CEBU INTERNATIONAL AIRPORT AUTORIT!, petitioner,vs.ON. "ER#INAN# $. MARCOS, %& '%( )*p*)%t+ *( t'e Pre(%%&- $-e o/ t'e Re-%o&* Tr%* Cort,Br*&)' 20, Ceb C%t+, TE CIT! O" CEBU, repre(e&te b+ %t( M*+or ON. TOMAS R. OSMEA,*& EUSTAUIO B. CESA, respondents.

#A3I#E, $R., J.:

or revie! under Rule "# of the Rules of $ourt on a pure %uestion of la! are the decision of &&March '((#1of the Re)ional Trial $ourt *RT$+ of $ebu $it, -ranch &, dis/issin) the petitionfor declarator relief in $ivil $ase No. $0-1'2( entitled 3Mactan $ebu International 4irport

4uthorit vs. $it of $ebu3, and its order of ", Ma '((# 2denin) the /otion to reconsider thedecision.

5e resolved to )ive due course to this petition for its raises issues d!ellin) on the scope of theta6in) po!er of local )overn/ent1o!ned and controlled corporations.

The uncontradicted factual antecedents are su//ari7ed in the instant petition as follo!s8

Petitioner Mactan $ebu International 4irport 4uthorit *M$I44+ !as created b virtue ofRepublic 4ct No. 2(#9, /andated to 3principall underta:e the econo/ical, efficient andeffective control, /ana)e/ent and supervision of the Mactan International 4irport in theProvince of $ebu and the ;ahu) 4irport in $ebu $it, . . . and such other 4irports as /abe established in the Province of $ebu . . . *Sec. oed the privile)e of e6e/ption fro/pa/ent of realt ta6es in accordance !ith Section '" of its $harter.

Sec. '". Tax Exemptions. ? The authorit shall be e6e/pt fro/ realtta6es i/posed b the National @overn/ent or an of its politicalsubdivisions, a)encies and instru/entalities . . .

On October '', '((", ho!ever, Mr. 0usta%uio -. $esa, Officer1in1$har)e, Office of theTreasurer of the $it of $ebu, de/anded pa/ent for realt ta6es on several parcels ofland belon)in) to the petitioner *;ot Nos. ('


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ta6es. It !as also asserted that it is an instru/entalit of the )overn/ent perfor/in))overn/ental functions, citin) section '


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In its decision of && March '((#,5the trial court dis/issed the petition in li)ht of its findin)s, to!it8

4 close readin) of the Ne! ;ocal @overn/ent $ode of '((' or R4 A'2 provides thee6press cancellation and !ithdra!al of e6e/ption of ta6es b )overn/ent o!ned andcontrolled corporation per Sections after the effectivit of said $ode on Eanuar ', '((&,

to !it8 Fproceeds to %uote Sections '(< and &o )enuine and/eanin)ful local autono/ to enable the/ to attain their fullest develop/ent as self1reliant co//unities and /a:e the/ /ore effective partners in the attain/ent of national)oals. To!ards this end, the State shall provide for a /ore responsive and accountablelocal )overn/ent structure instituted throu)h a sste/ of decentrali7ation !hereb local)overn/ent units shall be )iven /ore po!ers, authorit, responsibilities, and resources.

The process of decentrali7ation shall proceed fro/ the national )overn/ent to the local)overn/ent units. . . .

Its /otion for reconsideration havin) been denied b the trial court in its " Ma '((# order, thepetitioner filed the instant petition based on the follo!in) assi)n/ent of errors8

I R0SPOND0NT ECD@0 0RR0D IN 4I;IN@ TO RC;0 TH4T TH0P0TITION0R IS V0ST0D 5ITH @OV0RNM0NT PO50RS 4NDCN$TIONS 5HI$H P;4$0 IT IN TH0 S4M0 $4T0@OR 4S 4NINSTRCM0NT4;IT OR 4@0N$ O TH0 @OV0RNM0NT.

II R0SPOND0NT ECD@0 0RR0D IN RC;IN@ TH4T P0TITION0R IS

;I4-;0 TO P4 R04; PROP0RT T40S TO TH0 $IT O $0-C.

4nent the first assi)ned error, the petitioner asserts that althou)h it is a )overn/ent1o!ned orcontrolled corporation it is /andated to perfor/ functions in the sa/e cate)or as aninstru/entalit of @overn/ent. 4n instru/entalit of @overn/ent is one created to perfor/)overn/ental functions pri/aril to pro/ote certain aspects of the econo/ic life of thepeople.6$onsiderin) its tas: 3not /erel to efficientl operate and /ana)e the Mactan1$ebuInternational 4irport, but /ore i/portantl, to carr out the @overn/ent policies of pro/otin) anddevelopin) the $entral Visaas and Mindanao re)ions as centers of international trade andtouris/, and acceleratin) the develop/ent of the /eans of transportation and co//unication inthe countr,37and that it is an attached a)enc of the Depart/ent of Transportation and$o//unication *DOT$+,8the petitioner 3/a stand in FsicG the sa/e footin) as an a)enc orinstru/entalit of the national )overn/ent.3 Hence, its ta6 e6e/ption privile)e under Section '"of its $harter 3cannot be considered !ithdra!n !ith the passa)e of the ;ocal @overn/ent $odeof '((' *hereinafter ;@$+ because Section '


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;ocal )overn/ents have no po!er to ta6 instru/entalities of the National @overn/ent.P4@$OR is a )overn/ent o!ned or controlled corporation !ith an ori)inal character, PD'92(. 4ll its shares of stoc: are o!ned b the National @overn/ent. . . .

P4@$OR has a dual role, to operate and re)ulate )a/blin) casinos. The latter >o:e is)overn/ental, !hich places it in the cate)or of an a)enc or instru/entalit of the

@overn/ent. %eing an instrumentalit! of the Government, P&GC'" should e andactuall! is exempt from local taxes( 'therwise, its operation might e urdened, impededor su)ected to control ! a mere Local government.

The states have no po!er b ta6ation or other!ise, to retard, i/pede, burden or in an/anner control the operation of constitutional la!s enacted b $on)ress to carr intoe6ecution the po!ers vested in the federal )overn/ent. *Mc$ulloch v. Marland, " 5heat


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the lifeblood of the nation, the la! fro!ns a)ainst e6e/ptions fro/ ta6ation and statutes )rantin)ta6 e6e/ptions are thus construed strictissimi )urisa)ainst the ta6paers and liberall in favor ofthe ta6in) authorit.184 clai/ of e6e/ption fro/ ta6 pa/ent /ust be clearl sho!n and basedon lan)ua)e in the la! too plain to be /ista:en.190lse!ise stated, ta6ation is the rule, e6e/ptiontherefro/ is the e6ception.20Ho!ever, if the )rantee of the e6e/ption is a political subdivision orinstru/entalit, the ri)id rule of construction does not appl because the practical effect of thee6e/ption is /erel to reduce the a/ount of /one that has to be handled b the )overn/ent inthe course of its operations.21

The po!er to ta6 is pri/aril vested in the $on)ress= ho!ever, in our >urisdiction, it /a bee6ercised b local le)islative bodies, no lon)er /erel b virtue of a valid dele)ation as before,but pursuant to direct authorit conferred b Section #, 4rticle of the $onstitution. 22Cnder thelatter, the e6ercise of the po!er /a be sub>ect to such )uidelines and li/itations as the$on)ress /a provide !hich, ho!ever, /ust be consistent !ith the basic polic of localautono/.

There can be no %uestion that under Section '" of R.4. No. 2(#9 the petitioner is e6e/pt fro/the pa/ent of realt ta6es i/posed b the National @overn/ent or an of its politicalsubdivisions, a)encies, and instru/entalities. Nevertheless, since ta6ation is the rule and

e6e/ption therefro/ the e6ception, the e6e/ption /a thus be !ithdra!n at the pleasure of theta6in) authorit. The onl e6ception to this rule is !here the e6e/ption !as )ranted to privateparties based on /aterial consideration of a /utual nature, !hich then beco/es contractual andis thus covered b the non1i/pair/ent clause of the $onstitution.24

The ;@$, enacted pursuant to Section


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*i+ Percenta)e or value added ta6 *V4T+ on sales, barters or e6chan)esor si/ilar transactions on )oods or services e6cept as other!iseprovided herein=

*>+ Ta6es on the )ross receipts of transportation contractor and personen)a)e in the transportation of passen)ers of frei)ht b hire and

co//on carriers b air, land, or !ater, e6cept as provided in this code=

*:+ Ta6es on pre/iu/s paid b !as reinsurance or retrocession=

*l+ Ta6es, fees, or char)es for the re)istration of /otor vehicles and forthe issuance of all :inds of licenses or per/its for the drivin) of thereof,e6cept, triccles=

*/+ Ta6es, fees, or other char)es on Philippine product actuall e6ported,e6cept as other!ise provided herein=

*n+ Ta6es, fees, or char)es, on $ountrside and -aran)a -usiness0nterprise and $ooperatives dul re)istered under R.4. No. 29' and

Republic 4ct Nu/bered Si6t nine hundred thirt1ei)ht *R.4. No. 2(


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*e+ Machiner and e%uip/ent used for pollution control andenviron/ental protection.

06cept as provided herein, an e6e/ptions fro/ pa/ent of realpropert ta6 previousl )ranted to or presentl en>oed b, all persons!hether natural or >uridical, includin) all )overn/ent o!ned or controlled

corporations are hereb !ithdra!n upon the effectivit of his $ode.

These e6e/ptions are based on the o!nership, character, and use of the propert. Thus=

*a+ 'wnership Exemptions. 06e/ptions fro/ real propert ta6es on thebasis of o!nership are real properties o!ned b8 *i+ the Republic, *ii+ aprovince, *iii+ a cit, *iv+ a /unicipalit, *v+ a baran)a, and *vi+ re)isteredcooperatives.

*b+ Character Exemptions. 06e/pted fro/ real propert ta6es on thebasis of their character are8 *i+ charitable institutions, *ii+ houses andte/ples of praer li:e churches, parsona)es or convents appurtenantthereto, /os%ues, and *iii+ non profit or reli)ious ce/eteries.

*c+ Usage exemptions. 06e/pted fro/ real propert ta6es on the basis ofthe actual, direct and e6clusive useto !hich the are devoted are8 *i+ alllands buildin)s and i/prove/ents !hich are actuall, directed ande6clusivel used for reli)ious, charitable or educational purpose= *ii+ all/achineries and e%uip/ent actuall, directl and e6clusivel used or blocal !ater districts or b )overn/ent1o!ned or controlled corporationsen)a)ed in the suppl and distribution of !ater andJor )eneration andtrans/ission of electric po!er= and *iii+ all /achiner and e%uip/entused for pollution control and environ/ental protection.

To help provide a health environ/ent in the /idst of the /oderni7ation of the countr, all/achiner and e%uip/ent for pollution control and environ/ental protection /a not be

ta6ed b local )overn/ents.

&. 'ther Exemptions Withdrawn. 4ll other e6e/ptions previousl )rantedto natural or >uridical persons includin) )overn/ent1o!ned or controlledcorporations are !ithdra!n upon the effectivit of the $ode. 26

Section '(< of the ;@$ is the )eneral provision on !ithdra!al of ta6 e6e/ption privile)es. Itprovides8

Sec. '(oed b all persons,!hether natural or >uridical, includin) )overn/ent1o!ned, or controlled corporations,

e6cept local !ater districts, cooperatives dul re)istered under R.4. 2(


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*+. These clauses !ould be obviouslunnecessar or /ere surplus1a)es if the openin) clause of the section !ere3 3Cnless other!ise

provided in this $ode3 instead of 3Cnless other!ise provided herein3. In an event, even if thelatter is used, since under Section &


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ter/s Republic of the Philippines3 to e/brace . . . . . . 3instru/entalities3 and 3a)encies3 ore6pedienc !e %uote8

*a+ real propert o!ned b the Republic of the Philippines, or an of thePhilippines, or an of its political subdivisions e6cept !hen the beneficialuse thereof has been )ranted, for consideration or other!ise, to a

ta6able person.

This vie! does not persuade us. In the first place, the petitioners clai/ that it is an instru/entalitof the @overn/ent is based on Section 'udicial.40

4n 3a)enc3 of the @overn/ent refers to 3an of the various units of the @overn/ent, includin) adepart/ent, bureau, office instru/entalit, or )overn/ent1o!ned or controlled corporation, or alocal )overn/ent or a distinct unit therein=3 41!hile an 3instru/entalit3 refers to 3an a)enc ofthe National @overn/ent, not inte)rated !ithin the depart/ent fra/e!or:, vested !ith special

functions or >urisdiction b la!, endo!ed !ith so/e if not all corporate po!ers, ad/inisterin)special funds, and en>oin) operational autono/= usuall throu)h a charter. This ter/ includesre)ulator a)encies, chartered institutions and )overn/ent1o!ned and controlled corporations3.42

If Section &ustification for this restrictede6e/ption in Section &ective of the ;@$ that the en>o )enuine and /eanin)ful localautono/ to enable the/ to attain their fullest develop/ent as self1reliant co//unities and /a:ethe/ effective partners in the attain/ent of national )oals.45The po!er to ta6 is the /osteffective instru/ent to raise needed revenues to finance and support /riad activities of local)overn/ent units for the deliver of basic services essential to the pro/otion of the )eneral


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!elfare and the enhance/ent of peace, pro)ress, and prosperit of the people. It /a also berelevant to recall that the ori)inal reasons for the !ithdra!al of ta6 e6e/ption privile)es )rantedto )overn/ent1o!ned and controlled corporations and all other units of )overn/ent !ere thatsuch privile)e resulted in serious ta6 base erosion and distortions in the ta6 treat/ent of si/ilarlsituated enterprises, and there !as a need for this entities to share in the re%uire/ents of thedevelop/ent, fiscal or other!ise, b pain) the ta6es and other char)es due fro/ the/.4

The crucial issues then to be addressed are8 *a+ !hether the parcels of land in %uestion belon) tothe Republic of the Philippines !hose beneficial use has been )ranted to the petitioner, and *b+!hether the petitioner is a 3ta6able person3.

Section '# of the petitioners $harter provides8

Sec. '#. Transfer of Existing 0acilities and 4ntangile &ssets. ? 4ll e6istin) public airportfacilities, run!as, lands, buildin)s and other properties, /ovable or i//ovable,belon)in) to or presentl ad/inistered b the airports, and all assets, po!ers, ri)hts,interests and privile)es relatin) on airport !or:s, or air operations, includin) alle%uip/ent !hich are necessar for the operations of air navi)ation, acrodro/e controlto!ers, crash, fire, and rescue facilities are hereb transferred to the 4uthorit8 Provided

however

, that the operations control of all e%uip/ent necessar for the operation of radioaids to air navi)ation, air!as co//unication, the approach control office, and the areacontrol center shall be retained b the 4ir Transportation Office. No e%uip/ent, ho!ever,shall be re/oved b the 4ir Transportation Office fro/ Mactan !ithout the concurrence ofthe authorit. The authorit /a assist in the /aintenance of the 4ir Transportation Officee%uip/ent.

The 3airports3 referred to are the 3;ahu) 4ir Port3 in $ebu $it and the 3Mactan International4irPort in the Province of $ebu3, 46!hich belon)ed to the Republic of the Philippines, then underthe 4ir Transportation Office *4TO+. 47

It /a be reasonable to assu/e that the ter/ 3lands3 refer to 3lands3 in $ebu $it thenad/inistered b the ;ahu) 4ir Port and includes the parcels of land the respondent $it of $ebu

see:s to lev on for real propert ta6es. This section involves a 3transfer3 of the 3lands3 a/on)other thin)s, to the petitioner and not >ust the transfer of the beneficial use thereof, !ith theo!nership bein) retained b the Republic of the Philippines.

This 3transfer3 is actuall an absolute conveance of the o!nership thereof because thepetitioners authori7ed capital stoc: consists of, inter alia3the value of such real estate o!nedandJor ad/inistered b the airports.3 48Hence, the petitioner is no! the o!ner of the land in%uestion and the e6ception in Section &ect to ta6. 5here it isdone precisel to fulfill a constitutional /andate and national polic, no one can doubt its !isdo/.

5H0R0OR0, the instant petition is D0NI0D. The challen)ed decision and order of the Re)ionalTrial $ourt of $ebu, -ranch &, in $ivil $ase No. $0-1'2( are 4IRM0D.

No pronounce/ent as to costs.

SO ORD0R0D.

+arvasa, C((, elo, 0rancisco and Panganian, (, concur(

mactan cebu v. marcos, sept. 11, 1996

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