6. Ferrer v. Baustista, 760 SCRA 652, G.R. No.

210551 30 June 2015

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JOSE J. FERRER, JR. VS. CITY MAYOR HERBERT BAUTISTA

G.R. No. 210551               June 30, 2015

FACTS
Respondent Quezon City Council enacted an ordinance, Socialized Housing Tax of
Quezon City, which will collect 0.5% on the assessed value of land in excess of Php
100,000.00. This shall accrue to the Socialized Housing Programs of the Quezon City
Government. The special assessment shall go to the General Fund under a special
account to be established for the purpose. On the other hand, Ordinance No. SP-2235
and S-2013 was enacted collecting garbage fees on residential properties which shall be
deposited solely and exclusively in an earmarked special account under the general
fund to be utilized for garbage collections. Petitioner, a Quezon City property owner,
questions the validity of the said ordinances.

ISSUES
1.      Whether the Socialized Housing Tax is valid.
2.      Whether the ordinance on Garbage Fee violates the rule on double taxation.

RULING
1.      The SHT is valid. The tax is within the power of Quezon City Government to impose.
LGUs may be considered as having properly exercised their police power only if there
is a lawful subject and a lawful method. Herein, the tax is not a pure exercise of taxing
power or merely to raise revenue; it is levied with a regulatory purpose. The levy is
primarily in the exercise of the police power for the general welfare of the entire city. It
is greatly imbued with public interest. On the question of inequality, the disparities
between a real property owner and an informal settler as two distinct classes are too
obvious and need not be discussed at length. The differentiation conforms to the
practical dictates of justice and equity and is not discriminatory within the meaning of
the Constitution. Notably, the public purpose of a tax may legally exist even if the
motive which impelled the legislature to impose the tax was to favor one over another.
Further, the reasonableness of Ordinance No. SP-2095 cannot be disputed. It is not
confiscatory or oppressive since the tax being imposed therein is below what the UDHA
actually allows. Even better, on certain conditions, the ordinance grants a tax credit.
2.   No. Pursuant to Section 16 of the LGC and in the proper exercise of its corporate powers
under Section 22 of the same, the Sangguniang Panlungsod of Quezon City, like other
local legislative bodies, is empowered to enact ordinances, approve resolutions, and
appropriate funds for the general welfare of the city and its inhabitants. In this regard,
the LGUs shall share with the national government the responsibility in the
management and maintenance of ecological balance within their territorial jurisdiction.
The Ecological Solid Waste Management Act of 2000, affirms this authority as it
expresses that the LGUs shall be primarily responsible for the implementation and
enforcement of its provisions. Necessarily, LGUs are statutorily sanctioned to impose
and collect such reasonable fees and charges for services rendered. The fee imposed for
garbage collections under Ordinance No. SP-2235 is a charge fixed for the regulation of
an activity as provided by the same. As opposed to petitioner’s opinion, the garbage fee
is not a tax. Hence, not being a tax, the contention that the garbage fee under Ordinance
No. SP-2235 violates the rule on double taxation must necessarily fail.

7. Tolentino v. Comelec, G.R. No. 148334 21 January 2004

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TOLENTINO & MOJICA vs. COMELEC, RECTO & HONASAN

G.R. No. 148334
January 21, 2004

This is a petition for prohibition to set aside Resolution No. NBC 01-005 dated 5 June
2001 (“Resolution No. 01-005”) and Resolution No. NBC 01-006 dated 20 July 2001
(“Resolution No. 01-006”) of respondent Commission on Elections (“COMELEC”).
Resolution No. 01-005 proclaimed the 13 candidates elected as Senators in the 14 May
2001 elections while Resolution No. 01-006 declared “official and final” the ranking of
the 13 Senators proclaimed in Resolution No. 01-005.

FACTS:

Following the appointment of Senator Teofisto Guingona as Vice-President of the

Philippines, the Senate on February 8, 2001 passed Resolution No. 84, calling on
COMELEC to fill the vacancy through a special election to be held simultaneously with
the regular elections on May 14, 2001. Twelve senators, with 6-year term each, were due
to be elected in that election. The resolution further provides that the “Senatorial
candidate garnering the 13th highest number of votes shall serve only for the unexpired
term of former Senator Teofisto Guingona, Jr. which ends on June 30, 2004.

On June 5, 2001, after canvassing the election results, the COMELEC proclaimed 13
candidates as the elected Senators, with the first 12 Senators to serve the unexpired term
of 6 years and the 13th Senator to serve the full term of 3 years of Senator Teofisto
Guingona, Jr. Gregorio Honasan ranked 13th.
Petitioners Arturo Tolentino and Arturo Mojica, as voters and taxpayers, filed the
instant petition for prohibition, praying for the nullification of Resolution No. 01-005.
They contend that COMELEC issued Resolution 01-005 without jurisdiction because: (1)
it failed to notify the electorate of the position to be filled in the special election as
required under Section 2 of RA 6645; (2) it failed to require senatorial candidates to
indicate in their certificates of candidacy whether they seek election under the special or
regular elections as allegedly required under Section 73 of BP 881; and, consequently,
(3) it failed to specify in the Voters Information Sheet the candidates seeking election
under the special or regular senatorial elections as purportedly required under Section
4, paragraph 4 of RA 6646. Tolentino and Mojica add that because of these omissions,
COMELEC canvassed all the votes cast for the senatorial candidates in the 14 May 2001
elections without distinction such that “there were no two separate Senate elections
held simultaneously but just a single election for thirteen seats, irrespective of term.”
Tolentino and Mojica sought the issuance of a temporary restraining order during the
pendency of their petition. Without issuing any restraining order, the Supreme Court
required COMELEC to Comment on the petition. Honasan questioned Tolentino’s and
Mojica's standing to bring the instant petition as taxpayers and voters because they do
not claim that COMELEC illegally disbursed public funds; nor claim that they sustained
personal injury because of the issuance of Resolutions 01-005 and 01-006.

Issue:

WON the Special Election held on May 14, 2001 should be nullified:
(1) for failure to give notice by the body empowered to and
(2) for not following the procedure of filling up the vacancy pursuant to R.A. 6645.

Decision:

WHEREFORE, we DISMISS the petition for lack of merit.

Ratio Decidendi:

(1) Where the law does not fix the time and place for holding a special election but
empowers some authority to fix the time and place after the happening of a condition
precedent, the statutory provision on the giving of notice is considered mandatory, and
failure to do so will render the election a nullity.
The test in determining the validity of a special election in relation to the failure to give
notice of the special election is whether want of notice has resulted in misleading a
sufficient number of voters as would change the result of special election. If the lack of
official notice misled a substantial number of voters who wrongly believed that there
was no special election to fill vacancy, a choice by small percentage of voters would be
void.
(2) There is no basis in the petitioners’ claim that the manner by which the COMELEC
conducted the special Senatorial election on May 14, 2001 is a nullity because the
COMELEC failed to document separately the candidates and to canvass separately the
votes cast for the special election. No such requirement exists in our election laws. What
is mandatory under Section 2 of R.A. 6645 is that the COMELEC “fix the date of
election,” if necessary, and state among others, the office/s to be voted for.

Significantly, the method adopted by the COMELEC in conducting the special election
on May 14, 2001 merely implemented the procedure specified by the Senate in
Resolution No. 84. Initially, the original draft of said resolution as introduced by
Senator Francisco Tatad made no mention of the manner by which the seat vacated by
former Senator Guingona would be filled. However, upon the suggestion of Senator
Raul Roco, the Senate agreed to amend the resolution by providing as it now appears,
that “the senatorial cabdidate garnering the 13th highest number of votes shall serve
only for the unexpired term of former Senator Teofisto Giongona, Jr.”
8. Landbank of the Philippines v. Cacayuran, G.R. No. 191667 17 April 2013

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The Facts

From 2005 to 2006, the Municipality's Sangguniang Bayan (SB) passed certain resolutions

to implement a multi-phased plan (Redevelopment Plan) to redevelop the Agoo Public
Plaza (Agoo Plaza) where the Imelda Garden and Jose Rizal Monument were situated.

To finance phase 1 of the said plan, the SB initially passed Resolution No. 68-2005 [4] on
April 19, 2005, authorizing then Mayor Eufranio Eriguel (Mayor Eriguel) to obtain a
loan from Land Bank and incidental thereto, mortgage a 2,323.75 square meter lot
situated at the southeastern portion of the Agoo Plaza (Plaza Lot) as collateral. To serve
as additional security, it further authorized the assignment of a portion of its internal
revenue allotment (IRA) and the monthly income from the proposed project in favor of
Land Bank.[5] The foregoing terms were confirmed, approved and ratified on October 4,
2005 through Resolution No. 139-2005.[6] Consequently, on November 21, 2005, Land
Bank extended a P4,000,000.00 loan in favor of the Municipality (First Loan),[7] the
proceeds of which were used to construct ten (10) kiosks at the northern and southern
portions of the Imelda Garden. After completion, these kiosks were rented out. [8]

On March 7, 2006, the SB passed Resolution No. 58-2006,[9] approving the construction

of a commercial center on the Plaza Lot as part of phase II of the Redevelopment Plan.
To finance the project, Mayor Eriguel was again authorized to obtain a loan from Land
Bank, posting as well the same securities as that of the First Loan. All previous
representations and warranties of Mayor Eriguel related to the negotiation and
obtention of the new loan[10] were ratified on September 5, 2006 through Resolution No.
128-2006.[11] In consequence, Land Bank granted a second loan in favor of the
Municipality on October 20, 2006 in the principal amount of P28,000,000.00 (Second
Loan).[12]

Unlike phase 1 of the Redevelopment Plan, the construction of the commercial center at
the Agoo Plaza was vehemently objected to by some residents of the Municipality. Led
by respondent Eduardo Cacayuran (Cacayuran), these residents claimed that the
conversion of the Agoo Plaza into a commercial center, as funded by the proceeds from
the First and Second Loans (Subject Loans), were "highly irregular, violative of the law,
and detrimental to public interests, and will result to wanton desecration of the said
historical and public park."[13] The foregoing was embodied in a Manifesto,[14] launched
through a signature campaign conducted by the residents and Cacayuran.

In addition, Cacayuran wrote a letter[15] dated December 8, 2006 addressed to Mayor

Eriguel, Vice Mayor Antonio Eslao (Vice Mayor Eslao), and the members of the SB
namely, Violeta Laroya-Balbin, Jaime Boado, Jr., Rogelio De Vera, James Dy, Crisogono
Colubong, Ricardo Fronda, Josephus Komiya, Erwina Eriguel, Felizardo Villanueva,
and Gerard Mamuyac (Implicated Officers), expressing the growing public clamor
against the conversion of the Agoo Plaza into a commercial center. He then requested
the foregoing officers to furnish him certified copies of various documents related to the
aforementioned conversion including, among others, the resolutions approving the
Redevelopment Plan as well as the loan agreements for the sake of public information
and transparency.

Unable to get any response, Cacayuran, invoking his right as a taxpayer, filed a
Complaint[16] against the Implicated Officers and Land Bank, assailing, among others,
the validity of the Subject Loans on the ground that the Plaza Lot used as collateral
thereof is property of public dominion and therefore, beyond the commerce of man. [17]

Upon denial of the Motion to Dismiss dated December 27, 2006,[18] the Implicated
Officers and Land Bank filed their respective Answers.

For its part, Land Bank claimed that it is not privy to the Implicated Officers' acts of
destroying the Agoo Plaza. It further asserted that Cacayuran did not have a cause of
action against it since he was not privy to any of the Subject Loans.[19]

During the pendency of the proceedings, the construction of the commercial center was
completed and the said structure later became known as the Agoo's People Center
(APC).

On May 8, 2007, the SB passed Municipal Ordinance No. 02-2007,[20] declaring the area
where the APC stood as patrimonial property of the Municipality.

The Ruling of the RTC

In its Decision dated April 10, 2007,[21] the RTC ruled in favor of Cacayuran, declaring
the nullity of the Subject Loans.[22] It found that the resolutions approving the said loans
were passed in a highly irregular manner and thus, ultra vires; as such, the Municipality
is not bound by the same.[23] Moreover, it found that the Plaza Lot is proscribed from
collateralization given its nature as property for public use. [24]
Aggrieved, Land Bank filed its Notice of Appeal on April 23, 2007.[25] On the other hand,
the Implicated Officers' appeal was deemed abandoned and dismissed for their failure
to file an appellants' brief despite due notice.[26] In this regard, only Land Bank's appeal
was given due course by the CA.

Ruling of the CA

In its Decision dated March 26, 2010,[27] the CA affirmed with modification the RTC's
ruling, excluding Vice Mayor Eslao from any personal liability arising from the Subject
Loans.[28]

It held, among others, that: (1) Cacayuran had Locus Standi to file his complaint,
considering that (a) he was born, raised and a bona fide  resident of the Municipality; and
(b) the issue at hand involved public interest of transcendental importance; [29] (2)
Resolution Nos. 68-2005, 139-2005, 58-2006, 128-2006 and all other related resolutions
(Subject Resolutions) were invalidly passed due to the SB's non-compliance with certain
sections of Republic Act No. 7160, otherwise known as the "Local Government Code of
1991" (LGC); (3) the Plaza Lot, which served as collateral for the Subject Loans, is
property of public dominion and thus, cannot be appropriated either by the State or by
private persons;[30] and (4) the Subject Loans are ultra vires because they were transacted
without proper authority and their collateralization constituted improper disbursement
of public funds.

Dissatisfied, Land Bank filed the instant petition.

Issues Before the Court

The following issues have been raised for the Court's resolution: (1) whether Cacayuran
has standing to sue; (2) whether the Subject Resolutions were validly passed; and (3)
whether the Subject Loans are ultra vires.

The Court's Ruling

The petition lacks merit.

A. Cacayuran's standing to sue

Land Bank claims that Cacayuran did not have any standing to contest the construction
of the APC as it was funded through the proceeds coming from the Subject Loans and
not from public funds. Besides, Cacayuran was not even a party to any of the Subject
Loans and is thus, precluded from questioning the same.

The argument is untenable.

It is hornbook principle that a taxpayer is allowed to sue where there is a claim that
public funds are illegally disbursed, or that public money is being deflected to any
improper purpose, or that there is wastage of public funds through the enforcement of
an invalid or unconstitutional law. A person suing as a taxpayer, however, must show
that the act complained of directly involves the illegal disbursement of public funds
derived from taxation. In other words, for a taxpayer's suit to prosper, two requisites
must be met namely, (1) public funds derived from taxation are disbursed by a political
subdivision or instrumentality and in doing so, a law is violated or some irregularity is
committed; and (2) the petitioner is directly affected by the alleged act. [31]

Records reveal that the foregoing requisites are present in the instant case.

First, although the construction of the APC would be primarily sourced from the
proceeds of the Subject Loans, which Land Bank insists are not taxpayer's money, there
is no denying that public funds derived from taxation are bound to be expended as the
Municipality assigned a portion of its IRA as a security for the foregoing loans.
Needless to state, the Municipality's IRA, which serves as the local government unit's
just share in the national taxes,[32] is in the nature of public funds derived from taxation.
The Court believes, however, that although these funds may be posted as a security, its
collateralization should only be deemed effective during the incumbency of the public
officers who approved the same, else those who succeed them be effectively deprived of
its use.

In any event, it is observed that the proceeds from the Subject Loans had already been
converted into public funds by the Municipality's receipt thereof. Funds coming from
private sources become impressed with the characteristics of public funds when they
are under official custody.[33]

Accordingly, the first requisite has been clearly met.

Second, as a resident-taxpayer of the Municipality, Cacayuran is directly affected by the

conversion of the Agoo Plaza which was funded by the proceeds of the Subject Loans. It
is well-settled that public plazas are properties for public use[34] and therefore, belongs
to the public dominion.[35] As such, it can be used by anybody and no one can exercise
over it the rights of a private owner.[36] In this light, Cacayuran had a direct interest in
ensuring that the Agoo Plaza would not be exploited for commercial purposes through
the APC's construction. Moreover, Cacayuran need not be privy to the Subject Loans in
order to proffer his objections thereto. In Mamba v. Lara, it has been held that a taxpayer
need not be a party to the contract to challenge its validity; as long as taxes are
involved, people have a right to question contracts entered into by the government. [37]

Therefore, as the above-stated requisites obtain in this case, Cacayuran has standing to
file the instant suit.

B. Validity of the Subject Resolutions

Land Bank avers that the Subject Resolutions provided ample authority for Mayor
Eriguel to contract the Subject Loans. It posits that Section 444(b)(1)(vi) of the LGC
merely requires that the municipal mayor be authorized by the SB concerned and that
such authorization need not be embodied in an ordinance.[38]

A careful perusal of Section 444(b)(1)(vi) of the LGC shows that while the authorization
of the municipal mayor need not be in the form of an ordinance, the obligation which
the said local executive is authorized to enter into must be made pursuant to a law or
ordinance, viz:

Sec. 444.  The Chief Executive: Powers, Duties, Functions and Compensation. -

x x x x

(b) For efficient, effective and economical governance the purpose of which is the general welfare
of the municipality and its inhabitants pursuant to Section 16 of this Code, the municipal mayor
shall:

x x x x

(vi) Upon authorization by the  sangguniang bayan, represent the municipality in all its
business transactions and sign on its behalf  all bonds, contracts, and obligations, and such
other documents made  pursuant to law or ordinance; (Emphasis and underscoring
supplied)

In the present case, while Mayor Eriguel's authorization to contract the Subject Loans
was not contained as it need not be contained in the form of an ordinance, the said loans
and even the Redevelopment Plan itself were not approved pursuant to any law or
ordinance but through mere resolutions. The distinction between ordinances and
resolutions is well-perceived. While ordinances are laws and possess a general and
permanent character, resolutions are merely declarations of the sentiment or opinion of
a lawmaking body on a specific matter and are temporary in nature. [39] As opposed to
ordinances, "no rights can be conferred by and be inferred from a resolution." [40] In this
accord, it cannot be denied that the SB violated Section 444(b)(1)(vi) of the LGC
altogether.

Noticeably, the passage of the Subject Resolutions was also tainted with other
irregularities, such as (1) the SB's failure to submit the Subject Resolutions to
the Sangguniang Panlalawigan  of La Union for its review contrary to Section 56 of the
LGC;[41] and (2) the lack of publication and posting in contravention of Section 59 of the
LGC.[42]

In fine, Land Bank cannot rely on the Subject Resolutions as basis to validate the Subject
Loans.

C. Ultra vires nature of the Subject Loans

Neither can Land Bank claim that the Subject Loans do not constitute  ultra vires acts of
the officers who approved the same.

Generally, an ultra vires act is one committed outside the object for which a corporation
is created as defined by the law of its organization and therefore beyond the powers
conferred upon it by law.[43] There are two (2) types of ultra vires acts. As held
in Middletown Policemen's Benevolent Association v. Township of Middletown:[44]

There is a distinction between  an act utterly beyond the jurisdiction of a municipal

corporation  and the  irregular exercise of a basic power under the legislative grant in
matters not in themselves jurisdictional. The  former are ultra vires in the primary sense
and  void; the  latter,  ultra vires  only in a secondary sense which  does not preclude
ratification or the application of the doctrine of estoppel in the interest of equity and
essential justice. (Emphasis and underscoring supplied)

In other words, an act which is outside of the municipality's jurisdiction is considered as

a void ultra vires act, while an act attended only by an irregularity but remains within
the municipality's power is considered as an ultra vires act subject to ratification and/or
validation. To the former belongs municipal contracts which (a) are entered into beyond
the express, implied or inherent powers of the local government unit; and (b) do not
comply with the substantive requirements of law e.g., when expenditure of public
funds is to be made, there must be an actual appropriation and certificate of availability
of funds; while to the latter belongs those which (a) are entered into by the improper
department, board, officer of agent; and (b) do not comply with the formal requirements
of a written contract e.g., the Statute of Frauds.[45]

Applying these principles to the case at bar, it is clear that the Subject Loans belong to
the first class of ultra vires acts deemed as void.

Records disclose that the said loans were executed by the Municipality for the purpose
of funding the conversion of the Agoo Plaza into a commercial center pursuant to the
Redevelopment Plan. However, the conversion of the said plaza is beyond the
Municipality's jurisdiction considering the property's nature as one for public use and
thereby, forming part of the public dominion. Accordingly, it cannot be the object of
appropriation either by the State or by private persons. [46] Nor can it be the subject of
lease or any other contractual undertaking. [47] In Villanueva v. Castañeda, Jr.,
[48]
 citing Espiritu v. Municipal Council of Pozorrubio,[49] the Court pronounced that:

x x x Town plazas are properties of public dominion, to be devoted to public use and to be made
available to the public in general. They are outside the commerce of man and cannot be disposed
of or even leased by the municipality to private parties.

In this relation, Article 1409(1) of the Civil Code provides that a contract whose purpose
is contrary to law, morals, good customs, public order or public policy is considered
void[50] and as such, creates no rights or obligations or any juridical relations.
[51]
 Consequently, given the unlawful purpose behind the Subject Loans which is to fund
the commercialization of the Agoo Plaza pursuant to the Redevelopment Plan, they are
considered as ultra vires  in the primary sense thus, rendering them void and in effect,
non-binding on the Municipality.

At this juncture, it is equally observed that the land on which the Agoo Plaza is
situated cannot be converted into patrimonial property as the SB tried to when it
passed Municipal Ordinance No. 02-2007[52] absent any express grant by the national
government.[53] As public land used for public use, the foregoing lot rightfully belongs
to and is subject to the administration and control of the Republic of the Philippines.
[54]
 Hence, without the said grant, the Municipality has no right to claim it as
patrimonial property.

Nevertheless, while the Subject Loans cannot bind the Municipality for being ultra vires,
the officers who authorized the passage of the Subject Resolutions are personally liable.
Case law states that public officials can be held personally accountable for acts claimed
to have been performed in connection with official duties where they have acted ultra
vires,[55] as in this case.

WHEREFORE, the petition is DENIED. Accordingly, the March 26, 2010 Decision of the
Court of Appeals in CA-G.R. CV. No. 89732 is hereby AFFIRMED.

9. LRTA vs. CBAA, G.R. No. 127316 12 October 2000

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Light Rail Transit Authority vs Central Board of Assessment Appeals

342 SCRA 692 [GR No. 127316 October 12, 2000]

Facts: The LRTA is a government-owned and controlled corporation created and

organized under EO 603, dated July 12, 1980 primarily responsible for the construction,
operation, maintenance and/or lease of light rail transit system in the Philippines,
giving due regard to the reasonable requirements of the public transportation of the
country. LRTA acquired real properties, constructed structional improvements, such as
buildings, carriage ways, passenger terminal stations and installed various kinds of
machinery and equipment and facilities for the purpose of its operations. For an
effective maintenance, operation and management, it entered into a contract of
management with the MERALCO transit organization in which the latter undertook to
manage, operate and maintain the light rail transit system owned by the LRTA subject
to the specific stipulations contained in said agreement, including payments of a
management fee and real property taxes. That it commenced its operations in 1984, and
that sometime that year, respondent-appellee city of assessor of manila assessed the real
properties of petitioner consisting of lands, buildings, carriage ways and passenger
terminal stations machinery and equipment which he considered real property under
the real property tax code, to commence with the year 1985. That petitioner paid its real
property taxes on all its real property holdings, except the carriage ways and passenger
terminal stations including the land where it constructed on the ground that the same
are not real properties under the real property tax code, and if the same are real
property, these are for public use/purpose, therefore exempt from realty taxation which
claim was denied by the respondent-appellee city assessor of Manila.

Issue: Whether or not petitioner’s carriage ways and passenger terminal stations are
subject to real property tax.

Held: No. Under the real property tax code, real property owned by the Republic of the
Philippines or any of its political subdivisions and any government-owned or
controlled corporation so exempt by its charter, provided, however, that this exemption
shall not apply to real property of the above named entities the beneficial use of which
has been granted, for consideration or otherwise, to a taxable person.

EO 603, the charter of petitioner, does not provide for any real estate tax exemption in
its favor. Its exemption is limited to direct and indirect taxes, duties or fees in
connection with the importation of equipment not locally available.

Even granting that the national government indeed owns the carriage ways and
terminal stations, the exemption would not apply because their beneficial use has been
granted to petitioner, a taxable entity.

Taxation is the rule and exemption is the exception. Any claim for tax exemption is
strictly construed against the claimant. LRTA has not shown its eligibility for
exemption; hence, it’s subject to tax.

10. MCIAA v. Marcos, G.R. No.120082 11 September 1996

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MACTAN CEBU INTERNATIONAL AIRPORT AUTHORITY, petitioner, vs. HON.

FERDINAND J. MARCOS, in his capacity as the Presiding Judge of the Regional
Trial Court, Branch 20, Cebu City, THE CITY OF CEBU, represented by its Mayor,
HON. TOMAS R. OSMEA, and EUSTAQUIO B. CESA, respondents. (G.R. No.
120082; September 11, 1996)
FACTS:

Under its charter, the MCIAA shall be exempt from realty taxes imposed by the
National Government or any of its political subdivisions, agencies and
instrumentalities. In 1994, the Local Government Unit (LGU) of Cebu City demanded
payment for realty taxes on several parcels of land belonging to MCIAA.

MCIAA objected to the same as baseless and unjustified, claiming its exemption under
its charter. Also, it cites the LGC stating that LGUs taxing power does not extend to
taxes, fees or charges of any kind on the National Government, its agencies and
instrumentalities, and local government units.

Cebu City countered, however, citing Sections 193 and 234 of the LGC which withdraw
tax exemptions of GOCCs and realty tax exemptions previously granted to ore
presently enjoyed by all persons, whether natural or juridical, including GOCCs.

MCIAA paid tax under protest. It insisted that the taxing powers of LGUs do not extend
to the levy of taxes or fees of any kind on an instrumentality of the national
government. It also insisted that while it is indeed a GOCC, it nonetheless stands on the
same footing as an agency or instrumentality of the national government by the very
nature of its powers and functions.

ISSUES:

[1] Is MCIAA a taxable person?

[2] Is MCIAA exempt from realty taxation?

HELD:

[1] Yes, although it previously enjoyed exemption from realty tax under its charter
(which has already been withdrawn by the LGC), this exemption extended only to said
tax, not to other taxes. Hence, MCIAA is still a taxable person.

[2] No, MCIAA is not exempt from realty tax by the City of Cebu. First, its tax
exemption under its charter has already been withdrawn. Second, while it is true that
LGUs cannot levy tax on property of the Republic of the Philippines or the National
Government (outside Metro Manila), the beneficial use of property should not be given
to a taxable person.

Here, MCIAA is already the owner of the parcels of land in question. Hence, even the
exemption under the LGC cannot apply.