SEPARATE OPINION

NACHURA, J.:

Are airport properties subject to real property tax? The question seriously begs for a definitive
resolution, in light of our ostensibly contradictory decisions1 that may have generated no small
measure of confusion even among lawyers and magistrates.

Hereunder, I propose a simple, direct and painless approach to arrive at an acceptable answer to
the question.

I.

Real property tax is a direct tax on the ownership of lands and buildings or other improvements
thereon, not specially exempted, and is payable regardless of whether the property is used or not,
although the value may vary in accordance with such factor. The tax is usually single or indivisible,
although the land and building or improvements erected thereon are assessed separately, except
when the land and building or improvements belong to separate owners.2

The power to levy this tax is vested in local government units (LGUs). Thus, Republic Act (R.A.) No.
7160, or the Local Government Code (LGC) of 1991,3 provides:

Under Book II, Title II, Chapter IV-Imposition of Real Property Tax

Section 232. Power to Levy Real Property Tax.—A province or city or a municipality within the
Metropolitan Manila Area may levy an annual ad valorem tax on real property such as land, building,
machinery, and other improvement not hereinafter specifically exempted.4

A significant innovation in the LGC is the withdrawal, subject to some exceptions, of all tax
exemption privileges of all natural or juridical persons, including government-owned and controlled
corporations (GOCCs), thus:

Under Book II, Title I, Chapter V-Miscellaneous Provisions

Section 193. Withdrawal of Tax Exemption Privileges.—Unless otherwise provided in this Code, tax
exemptions or incentives granted to, or presently enjoyed by all persons, whether natural or juridical,
including government-owned or controlled corporations, except local water districts, cooperatives
duly registered under R.A. No. 6938, non-stock and non-profit hospitals and educational institutions,
are hereby withdrawn upon the effectivity of this Code.5

This is where the controversy started. The airport authorities, formerly exempt from paying taxes, are
now being obliged to pay real property tax on airport properties.

To challenge the real property tax assessments, the airport authorities invoke two provisions of the
LGC—one is stated in Book II, Title I, Chapter I on General Provisions, which reads:

Section 133. Common Limitations on the Taxing Powers of Local Government Units.—Unless
otherwise provided herein, the exercise of the taxing powers of provinces, cities, municipalities, and
barangays shall not extend to the levy of the following:

(a) Income tax, except when levied on banks and other financial institutions;
 (b) Documentary stamp tax;

(c) Taxes on estates, inheritance, gifts, legacies and other acquisitions mortis causa, except
as otherwise provided herein;

(d) Customs duties, registration fees of vessel and wharfage on wharves, tonnage dues, and
all other kinds of customs fees, charges and dues except wharfage on wharves constructed
and maintained by the local government unit concerned;

(e) Taxes, fees, and charges and other impositions upon goods carried into or out of, or
passing through, the territorial jurisdictions of local government units in the guise of charges
for wharfage, tolls for bridges or otherwise, or other taxes, fees, or charges in any form
whatsoever upon such goods or merchandise;

(f) Taxes, fees or charges on agricultural and aquatic products when sold by marginal
farmers or fishermen;

(g) Taxes on business enterprises certified to by the Board of Investments as pioneer or non-
pioneer for a period of six (6) and four (4) years, respectively from the date of registration;

(h) Excise taxes on articles enumerated under the National Internal Revenue Code, as
amended, and taxes, fees or charges on petroleum products;

(i) Percentage or value-added tax (VAT) on sales, barters or exchanges or similar

transactions on goods or services except as otherwise provided herein;

(j) Taxes on the gross receipts of transportation contractors and persons engaged in the
transportation of passengers or freight by hire and common carriers by air, land or water,
except as provided in this Code;

(k) Taxes on premiums paid by way of reinsurance or retrocession;

(l) Taxes, fees or charges for the registration of motor vehicles and for the issuance of all
kinds of licenses or permits for the driving thereof, except tricycles;

(m) Taxes, fees, or other charges on Philippine products actually exported, except as
otherwise provided herein;

(n) Taxes, fees, or charges, on Countryside and Barangay Business Enterprises and
cooperatives duly registered under R.A. No. 6810 and Republic Act Numbered Sixty-nine
hundred thirty-eight (R.A. No. 6938) otherwise known as the "Cooperative Code of the
Philippines" respectively; and

(o) Taxes, fees or charges of any kind on the National Government, its agencies and
instrumentalities, and local government units.6

and the other in Book II, Title I, Chapter IV on Imposition of Real Property Tax:

Section 234. Exemptions from Real Property Tax.—The following are exempted from payment of the
real property tax:
 (a) Real property owned by the Republic of the Philippines or any of its political subdivisions
except when the beneficial use thereof has been granted, for consideration or otherwise, to a
taxable person;

(b) Charitable institutions, churches, parsonages or convents appurtenant thereto, mosques,

nonprofit or religious cemeteries and all lands, buildings, and improvements actually, directly,
and exclusively used for religious, charitable or educational purposes;

(c) All machineries and equipment that are actually, directly and exclusively used by local
water districts and government-owned or controlled corporations engaged in the supply and
distribution of water and/or generation and transmission of electric power;

(d) All real property owned by duly registered cooperatives as provided for under R.A. No.
6938; and

(e) Machinery and equipment used for pollution control and environmental protection.

Except as provided herein, any exemption from payment of real property tax previously granted to,
or presently enjoyed by, all persons, whether natural or juridical, including all government-owned or
controlled corporations are hereby withdrawn upon the effectivity of this Code.7

In Mactan Cebu International Airport Authority (MCIAA) v. Marcos,8 the Court ruled that Section
133(o) is qualified by Sections 232 and 234. Thus, MCIAA could not seek refuge in Section 133(o),
but only in Section 234(a) provided it could establish that the properties were owned by the Republic
of the Philippines. The Court ratiocinated, thus:

[R]eading together Sections 133, 232, and 234 of the LGC, we conclude that as a general rule, as
laid down in Section 133, the taxing powers of local government units cannot extend to the levy
of, inter alia, "taxes, fees and charges of any kind on the National Government, its agencies and
instrumentalities, and local government units"; however, pursuant to Section 232, provinces, cities,
and municipalities in the Metropolitan Manila Area may impose the real property tax except on, inter
alia, "real property owned by the Republic of the Philippines or any of its political subdivisions except
when the beneficial use thereof has been granted, for consideration or otherwise, to a taxable
person," as provided in item (a) of the first paragraph of Section 234.

As to tax exemptions or incentives granted to or presently enjoyed by natural or juridical persons,

including government-owned and controlled corporations, Section 193 of the LGC prescribes the
general rule, viz., they are withdrawn upon the effectivity of the LGC, except those granted to local
water districts, cooperatives duly registered under R.A. No. 6938, non-stock and non-profit hospitals
and educational institutions, and unless otherwise provided in the LGC. The latter proviso could refer
to Section 234 which enumerates the properties exempt from real property tax. But the last
paragraph of Section 234 further qualifies the retention of the exemption insofar as real property
taxes are concerned by limiting the retention only to those enumerated therein; all others not
included in the enumeration lost the privilege upon the effectivity of the LGC. Moreover, even as to
real property owned by the Republic of the Philippines or any of its political subdivisions covered by
item (a) of the first paragraph of Section 234, the exemption is withdrawn if the beneficial use of such
property has been granted to a taxable person for consideration or otherwise.

Since the last paragraph of Section 234 unequivocally withdrew, upon the effectivity of the LGC,
exemptions from payment of real property taxes granted to natural or juridical persons, including
government-owned or controlled corporations, except as provided in the said section, and the
petitioner is, undoubtedly, a government-owned corporation, it necessarily follows that its exemption
from such tax granted it in Section 14 of its Charter, R.A. No. 6958, has been withdrawn. Any claim
to the contrary can only be justified if the petitioner can seek refuge under any of the exceptions
provided in Section 234, but not under Section 133, as it now asserts, since, as shown above, the
said section is qualified by Sections 232 and 234.

In short, the petitioner can no longer invoke the general rule in Section 133 that the taxing powers of
the local government units cannot extend to the levy of:

(o) taxes, fees or charges of any kind on the National Government, its agencies or instrumentalities,
and local government units.9

In addition, the Court went on to hold that the properties comprising the Lahug International Airport
and the Mactan International Airport are no longer owned by the Republic, the latter having
conveyed the same absolutely to MCIAA.

About a decade later, however, the Court ruled in Manila International Airport Authority (MIAA) v.
Court of Appeals,10 that the airport properties, this time comprising the Ninoy Aquino International
Airport (NAIA), are exempt from real property tax. It justified its ruling by categorizing MIAA as a
government instrumentality specifically exempted from paying tax by Section 133(o) of R.A. No.
7160. It further reasoned that the subject properties are properties of public dominion, owned by the
Republic, and are only held in trust by MIAA, thus:

Under Section 2(10) and (13) of the Introductory Provisions of the Administrative Code, which
governs the legal relation and status of government units, agencies and offices within the entire
government machinery, MIAA is a government instrumentality and not a government-owned or
controlled corporation. Under Section 133(o) of the Local Government Code, MIAA as a government
instrumentality is not a taxable person because it is not subject to "[t]axes, fees or charges of any
kind" by local governments. The only exception is when MIAA leases its real property to a "taxable
person" as provided in Section 234(a) of the Local Government Code, in which case the specific real
property leased becomes subject to real estate tax. Thus, only portions of the Airport Lands and
Buildings leased to taxable persons like private parties are subject to real estate tax by the City of
Parañaque.

Under Article 420 of the Civil Code, the Airport Lands and Buildings of MIAA, being devoted to public
use, are properties of public dominion and thus owned by the State or the Republic of the
Philippines. Article 420 specifically mentions "ports x x x constructed by the State," which includes
public airports and seaports, as properties of public dominion and owned by the Republic. As
properties of public dominion owned by the Republic, there is no doubt whatsoever that the Airport
Lands and Buildings are expressly exempt from real estate tax under Section 234(a) of the Local
Government Code. This Court has also repeatedly ruled that properties of public dominion are not
subject to execution or foreclosure sale.11

II.

In this case, we are confronted by the very same issue.

A basic principle in statutory construction decrees that, to discover the general legislative intent, the
whole statute, and not only a particular provision thereof, should be considered. Every section,
provision or clause in the law must be read and construed in reference to each other in order to
arrive at the true intention of the legislature.12
Notably, Section 133 of the LGC speaks of the general limitations on the taxing power of LGUs. This
is reinforced by its inclusion in Title I, Chapter I entitled "General Provisions" on "Local Government
Taxation." On the other hand, Section 234, containing the enumeration of the specific exemptions
from real property tax, is in Chapter IV entitled "Imposition of Real Property Tax" under Title II on
"Real Property Taxation." When read together, Section 234, a specific provision, qualifies Section
133, a general provision.

Indeed, whenever there is a particular enactment and a general enactment in the same statute, and
the latter, taken in its most comprehensive sense, will overrule the former, the particular enactment
must be operative, and the general enactment must be taken to affect only the other parts of the
statute to which it may properly apply.13Otherwise stated, where there are two acts or provisions, one
of which is special and particular, and certainly includes the matter in question, and the other
general, which, if standing alone, will include the same matter and thus conflict with the special act
or provision, the special must be taken as intended to constitute an exception to the general act or
provision, especially when such general and special acts or provisions are contemporaneous, as the
legislature is not to be presumed to have intended a conflict.14

Mactan Cebu therefore adheres to the intendment of the law insofar as it holds that MCIAA cannot
seek refuge in Section 133(o); that it can only invoke Section 234(a) so long as it can establish that
the properties were owned by the Republic of the Philippines. To repeat, Section 234, which
specifies the properties exempted from real property tax, prevails over the general limitations on the
taxing power of LGUs stated in Section 133.

Thus, if Section 133(o) is not to be a haven, then, I respectfully submit that it is no longer necessary
to dichotomize between a government instrumentality and a GOCC. As stressed by the Court in
Mactan Cebu, what need only be ascertained is whether the airport properties are owned by the
Republic if the airport Authority is to be freed from the burden of paying the real property tax.
Similarly, in MIAA, with the Court’s finding that the NAIA lands and buildings are owned by the
Republic, the airport Authority does not have to pay real property tax to the City of Parañaque.

III.

As pointed out earlier, Mactan Cebu and MIAA ostensibly contradict each other. While the first
considers airport properties as subject to real property tax, the second exempts the same from this
imposition. The conflict, however, is more apparent than real. The divergent conclusions in the two
cases proceed from different premises; hence, the resulting contradiction.

To elucidate, in Mactan Cebu, the Court focused on the proper interpretation of Sections 133, 232
and 234 of the LGC, and emphasized the nature of the tax exemptions granted by law. Mactan Cebu
categorized the exemptions as based on the ownership, character and use of the property, thus:

(a) Ownership Exemptions. Exemptions from real property taxes on the basis of ownership
are real properties owned by: (i) the Republic, (ii) a province, (iii) a city, (iv) a municipality, (v)
a barangay, and (vi) registered cooperatives.

(b) Character Exemptions. Exempted from real property taxes on the basis of their character
are: (i) charitable institutions, (ii) houses and temples of prayer like churches, parsonages or
convents appurtenant thereto, mosques, and (iii) non-profit or religious cemeteries.

(c) Usage exemptions. Exempted from real property taxes on the basis of the actual, direct
and exclusive useto which they are devoted are: (i) all lands, buildings and improvements
which are actually directly and exclusively used for religious, charitable or educational
 purposes; (ii) all machineries and equipment actually, directly and exclusively used by local
water districts or by government-owned or controlled corporations engaged in the supply and
distribution of water and/or generation and transmission of electric power; and (iii) all
machinery and equipment used for pollution control and environmental protection.

To help provide a healthy environment in the midst of the modernization of the country, all machinery
and equipment for pollution control and environmental protection may not be taxed by local
governments.15

For the airport properties to be exempt from real property tax, they must fall within the mentioned
categories. Logically, the airport properties can only qualify under the first exemption–by virtue of
ownership. But, as already mentioned, the Court, nevertheless, ruled in Mactan Cebu that the said
properties are no longer owned by the Republic having been conveyed absolutely to the airport
Authority, thus:

Section 15 of the petitioner’s Charter provides:

Sec. 15. Transfer of Existing Facilities and Intangible Assets. — All existing public airport facilities,
runways, lands, buildings and other properties, movable or immovable, belonging to or presently
administered by the airports, and all assets, powers, rights, interests and privileges relating on
airport works or air operations, including all equipment which are necessary for the operations of air
navigation, aerodrome control towers, crash, fire, and rescue facilities are hereby transferred to the
Authority: Provided, however, that the operations control of all equipment necessary for the
operation of radio aids to air navigation, airways communication, the approach control office, and the
area control center shall be retained by the Air Transportation Office. No equipment, however, shall
be removed by the Air Transportation Office from Mactan without the concurrence of the Authority.
The Authority may assist in the maintenance of the Air Transportation Office equipment.

The "airports" referred to are the "Lahug Air Port" in Cebu City and the "Mactan International Airport
in the Province of Cebu," which belonged to the Republic of the Philippines, then under the Air
Transportation Office (ATO).

It may be reasonable to assume that the term "lands" refer to "lands" in Cebu City then administered
by the Lahug Air Port and includes the parcels of land the respondent City of Cebu seeks to levy on
for real property taxes. This section involves a "transfer" of the "lands," among other things, to the
petitioner and not just the transfer of the beneficial use thereof, with the ownership being retained by
the Republic of the Philippines.

This "transfer" is actually an absolute conveyance of the ownership thereof because the petitioner’s
authorized capital stock consists of, inter alia, "the value of such real estate owned and/or
administered by the airports." Hence, the petitioner is now the owner of the land in question and the
exception in Section 234(c) of the LGC is inapplicable.16

In MIAA, a different conclusion was reached by the Court on two grounds. It first banked on the
general provision limiting the taxing power of LGUs as stated in Section 133(o) of the LGC that,
unless otherwise provided in the Code, the exercise of the taxing powers of LGUs shall not extend to
the levy of taxes, fees or charges of any kind on the National Government, its agencies and
instrumentalities, and LGUs. The Court took pains in characterizing airport authorities as
government instrumentalities, quite obviously, in order to apply the said provision.

After doing so, the Court then shifted its attention and proceeded to focus on the issue of who owns
the property to determine whether the case falls within the purview of Section 234(a). Ratiocinating
that airport properties are of public dominion which pertain to the state and that the airport Authority
is a mere trustee of the Republic, the Court ruled that the said properties are exempt from real
property tax, thus:

2. Airport Lands and Buildings of MIAA are Owned by the Republic

a. Airport Lands and Buildings are of Public Dominion

The Airport Lands and Buildings of MIAA are property of public dominion and therefore owned by the
State or the Republic of the Philippines. The Civil Code provides:

xxxx

No one can dispute that properties of public dominion mentioned in Article 420 of the Civil Code, like
"roads, canals, rivers, torrents, ports and bridges constructed by the State," are owned by the State.
The term "ports" includes seaports and airports. The MIAA Airport Lands and Buildings constitute a
"port" constructed by the State. Under Article 420 of the Civil Code, the MIAA Airport Lands and
Buildings are properties of public dominion and thus owned by the State or the Republic of the
Philippines.

The Airport Lands and Buildings are devoted to public use because they are used by the public for
international and domestic travel and transportation. The fact that the MIAA collects terminal fees
and other charges from the public does not remove the character of the Airport Lands and Buildings
as properties for public use. The operation by the government of a tollway does not change the
character of the road as one for public use. Someone must pay for the maintenance of the road,
either the public indirectly through the taxes they pay the government, or only those among the
public who actually use the road through the toll fees they pay upon using the road. The tollway
system is even a more efficient and equitable manner of taxing the public for the maintenance of
public roads.

The charging of fees to the public does not determine the character of the property whether it is of
public dominion or not. Article 420 of the Civil Code defines property of public dominion as one
"intended for public use." Even if the government collects toll fees, the road is still "intended for
public use" if anyone can use the road under the same terms and conditions as the rest of the public.
The charging of fees, the limitation on the kind of vehicles that can use the road, the speed
restrictions and other conditions for the use of the road do not affect the public character of the road.

The terminal fees MIAA charges to passengers, as well as the landing fees MIAA charges to airlines,
constitute the bulk of the income that maintains the operations of MIAA. The collection of such fees
does not change the character of MIAA as an airport for public use. Such fees are often termed
user’s tax. This means taxing those among the public who actually use a public facility instead of
taxing all the public including those who never use the particular public facility. A user’s tax is more
equitable — a principle of taxation mandated in the 1987 Constitution.

The Airport Lands and Buildings of MIAA, which its Charter calls the "principal airport of the
Philippines for both international and domestic air traffic," are properties of public dominion because
they are intended for public use. As properties of public dominion, they indisputably belong to the
State or the Republic of the Philippines.

b. Airport Lands and Buildings are Outside the Commerce of Man

The Airport Lands and Buildings of MIAA are devoted to public use and thus are properties of public
dominion. As properties of public dominion, the Airport Lands and Buildings are outside the
commerce of man. The Court has ruled repeatedly that properties of public dominion are outside the
commerce of man. As early as 1915, this Court already ruled in Municipality of Cavite v. Rojas that
properties devoted to public use are outside the commerce of man, thus:

xxxx

Again in Espiritu v. Municipal Council, the Court declared that properties of public dominion are
outside the commerce of man:

xxxx

The Court has also ruled that property of public dominion, being outside the commerce of man,
cannot be the subject of an auction sale.

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. Essential public services will
stop if properties of public dominion are subject to encumbrances, foreclosures and auction sale.
This will happen if the City of Parañaque can foreclose and compel the auction sale of the 600-
hectare runway of the MIAA for non-payment of real estate tax.

Before MIAA can encumber the Airport Lands and Buildings, the President must first withdraw from
public use the Airport Lands and Buildings. Sections 83 and 88 of the Public Land Law or
Commonwealth Act No. 141, which "remains to this day the existing general law governing the
classification and disposition of lands of the public domain other than timber and mineral lands,"
provide:

xxxx

Thus, unless the President issues a proclamation withdrawing the Airport Lands and Buildings from
public use, these properties remain properties of public dominion and are inalienable. Since the
Airport Lands and Buildings are inalienable in their present status as properties of public dominion,
they are not subject to levy on execution or foreclosure sale. As long as the Airport Lands and
Buildings are reserved for public use, their ownership remains with the State or the Republic of the
Philippines.

The authority of the President to reserve lands of the public domain for public use, and to withdraw
such public use, is reiterated in Section 14, Chapter 4, Title I, Book III of the Administrative Code of
1987, which states:

xxxx

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.

c. MIAA is a Mere Trustee of the Republic

MIAA is merely holding title to the Airport Lands and Buildings in trust for the Republic. Section 48,
Chapter 12, Book I of the Administrative Code allows instrumentalities like MIAA to hold title to real
properties owned by the Republic, thus:

xxxx

In MIAA’s case, its status as a mere trustee of the Airport Lands and Buildings is clearer because
even its executive head cannot sign the deed of conveyance on behalf of the Republic. Only the
President of the Republic can sign such deed of conveyance.

d. Transfer to MIAA was Meant to Implement a Reorganization

The MIAA Charter, which is a law, transferred to MIAA the title to the Airport Lands and Buildings
from the Bureau of Air Transportation of the Department of Transportation and Communications.
The MIAA Charter provides:

xxxx

The MIAA Charter transferred the Airport Lands and Buildings to MIAA without the Republic
receiving cash, promissory notes or even stock since MIAA is not a stock corporation.

The whereas clauses of the MIAA Charter explain the rationale for the transfer of the Airport Lands
and Buildings to MIAA, thus:

xxxx

The transfer of the Airport Lands and Buildings from the Bureau of Air Transportation to MIAA was
not meant to transfer beneficial ownership of these assets from the Republic to MIAA. The purpose
was merely to reorganize a division in the Bureau of Air Transportation into a separate and
autonomous body. The Republic remains the beneficial owner of the Airport Lands and Buildings.
MIAA itself is owned solely by the Republic. No party claims any ownership rights over MIAA’s
assets adverse to the Republic.

The MIAA Charter expressly provides that the Airport Lands and Buildings "shall not be disposed
through sale or through any other mode unless specifically approved by the President of the
Philippines." This only means that the Republic retained the beneficial ownership of the Airport
Lands and Buildings because under Article 428 of the Civil Code, only the "owner has the right to x x
x dispose of a thing." Since MIAA cannot dispose of the Airport Lands and Buildings, MIAA does not
own the Airport Lands and Buildings.

At any time, the President can transfer back to the Republic title to the Airport Lands and Buildings
without the Republic paying MIAA any consideration. Under Section 3 of the MIAA Charter, the
President is the only one who can authorize the sale or disposition of the Airport Lands and
Buildings. This only confirms that the Airport Lands and Buildings belong to the Republic.

e. Real Property Owned by the Republic is Not Taxable

Section 234(a) of the Local Government Code exempts from real estate tax any "[r]eal property
owned by the Republic of the Philippines." Section 234(a) provides:

xxxx
This exemption should be read in relation with Section 133(o) of the same Code, which prohibits
local governments from imposing "[t]axes, fees or charges of any kind on the National Government,
its agencies and instrumentalities x x x." The real properties owned by the Republic are titled either
in the name of the Republic itself or in the name of agencies or instrumentalities of the National
Government. The Administrative Code allows real property owned by the Republic to be titled in the
name of agencies or instrumentalities of the national government. Such real properties remain
owned by the Republic and continue to be exempt from real estate tax.

The Republic may grant the beneficial use of its real property to an agency or instrumentality of the
national government. This happens when title of the real property is transferred to an agency or
instrumentality even as the Republic remains the owner of the real property. Such arrangement does
not result in the loss of the tax exemption. Section 234(a) of the Local Government Code states that
real property owned by the Republic loses its tax exemption only if the "beneficial use thereof has
been granted, for consideration or otherwise, to a taxable person." MIAA, as a government
instrumentality, is not a taxable person under Section 133(o) of the Local Government Code. Thus,
even if we assume that the Republic has granted to MIAA the beneficial use of the Airport Lands and
Buildings, such fact does not make these real properties subject to real estate tax.

However, portions of the Airport Lands and Buildings that MIAA leases to private entities are not
exempt from real estate tax. For example, the land area occupied by hangars that MIAA leases to
private corporations is subject to real estate tax. In such a case, MIAA has granted the beneficial use
of such land area for a consideration to a taxable person and therefore such land area is subject to
real estate tax. In Lung Center of the Philippines v. Quezon City, the Court ruled:

x x x x17

In the ultimate, I submit that the two rulings do not really contradict, but, instead, complement each
one. Mactan Cebu provides the proper rule that, in order to determine whether airport properties are
exempt from real property tax, it is Section 234, not Section 133, of the LGC that should be
determinative of the properties exempt from the said tax. MIAA then lays down the correct doctrine
that airport properties are of public dominion pertaining to the state, hence, falling within the ambit of
Section 234(a) of the LGC.

However, because of the confusion generated by the apparently conflicting decisions, a fine tuning
of Mactan Cebu and MIAA is imperative.

IV.

Parenthetically, while the basis of a real property tax assessment is actual use,18 the tax itself is
directed to the ownership of the lands and buildings or other improvements thereon.19 Public policy
considerations dictate that property of the State and of its municipal subdivisions devoted to
governmental uses and purposes is generally exempt from taxation although no express provision in
the law is made therefor.20 In the instant case, the legislature specifically provided that real property
owned by the Republic of the Philippines or any of its political subdivisions is exempt from real
property tax, except, of course, when the beneficial use thereof has been granted, for consideration
or otherwise, to a taxable person. The principal basis of the exemption is likewise ownership.21

Indeed, emphasis should be made on the ownership of the property, rather than on the airport
Authority being a taxable entity. This strategy makes it unnecessary to determine whether MIAA is
an instrumentality or a GOCC, as painstakingly expounded by the ponente.
Likewise, this approach provides a convenient escape from Justice Tinga’s proposition that the
MIAA is a taxable entity liable to pay real property taxes, but the airport properties are exempt from
levy on execution to satisfy the tax liability. I fear that this hypothesis may trench on the
Constitutional principle of uniformity of taxation,22 because a tax lawfully levied and assessed against
a taxable governmental entity will not be lienable while like assessments against all other taxable
entities of the same tax district will be lienable.23

The better option, then, is for the Court to concentrate on the nature of the tax as a tax on ownership
and to directly apply the pertinent real property tax provisions of the LGC, specifically those dealing
with the exemption based on ownership, to the case at bar.

The phrase, "property owned by the Republic" in Section 234, actually refers to those identified as
public property in our laws. Following MIAA, we go to Articles 420 and 421 of the Civil Code which
provide:

Art. 420. The following things are property of public dominion:

(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges
constructed by the State, banks, shores, roadsteads, and others of similar character;

(2) Those which belong to the State, without being for public use, and are intended for some
public service or for the development of the national wealth.

Art. 421. All other property of the State, which is not of the character stated in the preceding article,
is patrimonial property.

From the afore-quoted, we readily deduce that airport properties are of public dominion. The "port" in
the enumeration certainly includes an airport. With its beacons, landing fields, runways, and
hangars, an airport is analogous to a harbor with its lights, wharves and docks; the one is the landing
place and haven of ships that navigate the water, the other of those that navigate the air.24 Ample
authority further supports the proposition that the term "roads" include runways and landing
strips.25 Airports, therefore, being properties of public dominion, are of the Republic.

At this point, I cannot help but air the observation that the legislature may have really intended the
phrase "owned by the Republic" in Section 234 to refer to, among others, properties of public
dominion. This is because "public dominion" does not carry the idea of ownership. Tolentino, an
authority in civil law, explains:

This article shows that there is a distinction between dominion and ownership. Private ownership is
defined elsewhere in the Code; but the meaning of public dominion is nowhere defined. From the
context of various provisions, it is clear that public dominion does not carry the idea of ownership;
property of public dominion is not owned by the State, but pertains to the State, which as territorial
sovereign exercises certain juridical prerogatives over such property. The ownership of such
property, which has the special characteristics of a collective ownership for the general use and
enjoyment, by virtue of their application to the satisfaction of the collective needs, is in the social
group, whether national, provincial, or municipal. Their purpose is not to serve the State as a juridical
person, but the citizens; they are intended for the common and public welfare, and so they cannot be
the object of appropriation, either by the State or by private persons. The relation of the State to this
property arises from the fact that the State is the juridical representative of the social group, and as
such it takes care of them, preserves them and regulates their use for the general welfare.26
Be that as it may, the legislative intent to exempt from real property tax the properties of the
Republic remains clear. The soil constituting the NAIA airport and the runways cannot be taxed,
being properties of public dominion and pertaining to the Republic. This is true even if the title to the
said property is in the name of MIAA. Practical ownership, rather than the naked legal title, must
control, particularly because, as a matter of practice, the record title may be in the name of a
government agency or department rather than in the name of the Republic.

In this case, even if MIAA holds the record title over the airport properties, such holding can only be
for the benefit of the Republic,27 especially when we consider that MIAA exercises an essentially
public function.28 Further, where property, the title to which is in the name of the principal, is immune
from taxes, it remains immune even if the title is standing in the name of an agent or trustee for such
principal.29

Properties of public dominion are held in trust by the state or the Republic for the people.30 The
national government and the bodies it has created that exercise delegated authority are, pursuant to
the general principles of public law, mere agents of the Republic. Here, insofar as it deals with the
subject properties, MIAA, a governmental creation exercising delegated powers, is a mere agent of
the Republic, and the latter, to repeat, is the trustee of the properties for the benefit of all the
people.31

Our ruling in MIAA, therefore, insofar as it holds that the airport Authority is a "trustee of the
Republic," may not have been precise. It would have been more sound, legally that is, to consider
the relationship between the Republic and the airport Authority as principal and agent, rather than as
trustor and trustee.

The history of the subject airport attests to this proposition, thus:

The country's premier airport was originally a US Air Force Base, which was turned over to the
Philippine government in 1948. It started operations as a civil aviation airport with meager facilities,
then consisting of the present domestic runway as its sole landing strip, and a small building
northwest of this runway as its sole passenger terminal.

The airport's international runway and associated taxiway were built in 1953; followed in 1961 by the
construction of a control tower and a terminal building for the exclusive use of international
passengers at the southwest intersection of the two runways. These structures formed the key
components of an airport system that came to be known as the Manila International Airport (MIA).

Like other national airports, the MIA was first managed and operated by the National Airports
Corporation, an agency created on June 5, 1948 by virtue of Republic Act No. 224. This was
abolished in 1951 and [in] its stead, the MIA Division was created under the Civil Aeronautics
Administration (CAA) of the Department of Commerce and Industry.

On October 19, 1956, the entire CAA, including the MIA Division, was transferred to the Department
of Public Works, Transportation and Communications.

In 1979, the CAA was renamed Bureau of Air Transportation following the creation of an exclusive
Executive Department for Transportation and Communications.

It is worthwhile to note at this point that while the MIA General Manager then carried the rank of a
Division Chief only, it became a matter of policy and practice that he be appointed by no less than
the President of the Philippines since the magnitude of its impact on the country's economy has
acquired such national importance and recognition.
During the seventies, the Philippine tourism and industry experienced a phenomenal upsurge in the
country's manpower exports, resulting in more international flight frequencies to Manila which grew
by more than four times.

Executive Order No. 381 promulgated by then President Marcos authorized the development of
Manila International Airport to meet the needs of the coming decades.

A feasibility study/airport master plan was drawn up in 1973 by Airways Engineering Corporation, the
financing of which was source[d] from a US$29.6 Million loan arranged with the Asian Development
Bank (ADB). The detailed Engineering Design of the new MIA Development Project (MIADP) was
undertaken by Renardet-Sauti/Transplan/F.F. Cruz Consultants while the design of the IPT building
was prepared by Architect L.V. Locsin and Associates.

In 1974, the final engineering design was adopted by the Philippine Government. This was
concurred by the ADB on September 18, 1975 and became known as the "Scheme E-5 Modified
Plan." Actual work on the project started in the second quarter of 1978.

On March 4, 1982, EXECUTIVE ORDER NO. 778 was signed into law, abolishing the MIA Division
under the BAT and creating in its stead the MANILA INTERNATIONAL AIRPORT AUTHORITY
(MIAA), vested with the power to administer and operate the Manila International Airport (MIA).

Though MIAA was envisioned to be autonomous, Letter of Instructions (LOI) No. 1245, signed 31
May 1982, clarified that for purpose of policy integration and program coordination, the MIAA
Management shall be under the general supervision but not control of the then Ministry of
Transportation and Communications.

On July 21, 1983, Executive Order No. 903 was promulgated, providing that 65% of MIAA's annual
gross operating income be reverted to the general fund for the maintenance and operation of other
international and domestic airports in the country. It also scaled down the equity contribution of the
National Government to MIAA: from PhP 10 billion to PhP 2.5 billion and removed the provision
exempting MIAA from the payment of corporate tax.

Another revision in the MIAA Charter followed with the promulgation of Executive Order No. 909,
signed September 16, 1983, increasing the membership of the MIAA Board to nine (9) Directors with
the inclusion of two other members to be appointed by the Philippine President.

The last amendment to the MIAA Charter was made on July 26, 1987 through Executive Order No.
298 which provided for a more realistic income sharing arrangement between MIAA and the National
Government. It provided that instead of the 65% of gross operating income, only 20% of MIAA's
gross income, exclusive of income generated from the passenger terminal fees and utility charges,
shall revert to the general fund of the National Treasury. EO 298 also reorganized the MIAA Board
and raised the capitalization to its original magnitude of PhP 10 billion.

The post 1986 Revolution period will not be complete without mention of the renaming of MIA to
Ninoy Aquino International Airport with the enactment of Republic Act No. 6639 on August 17, 1987.
While this legislation renamed the airport complex, the MIA Authority would still retain its corporate
name since it did not amend the original or revised charters of MIAA.32

The MIAA Charter further provides that any portion of the airport cannot be disposed of by the
Authority through sale or through any other mode unless specifically approved by the President of
the Philippines.33 It is also noted that MIAA’s board of directors is practically controlled by the
national government, the members thereof being officials of the executive branch.34 Likewise, the
Authority cannot levy and collect dues, charges, fees or assessments for the use of the airport
premises, works, appliances, facilities or concessions, or for any service provided by it, without the
approval of several executive departments.35 These provisions are consistent with an agency
relationship. Let it be remembered that one of the principal elements of an agency relationship is the
existence of some degree of control by the principal over the conduct and activities of the agent. In
this regard, while an agent undertakes to act on behalf of his principal and subject to his control, a
trustee as such is not subject to the control of the beneficiary, except that he is under a duty to deal
with the trust property for the latter’s benefit in accordance with the terms of the trust and can be
compelled by the beneficiary to perform his duty.36

Finally, to consider MIAA as a "trustee of the Republic" will sanction the technical creation of a
second trust in which the Republic, which is already a trustee, becomes the second trustor and the
airport Authority a second trustee. Although I do not wish to belabor the point, I submit that the
validity of such a scenario appears doubtful. Sufficient authority, however, supports the proposition
that a trustee can delegate his duties to an agent provided he properly supervises and controls the
agent’s conduct.37 In this case, we can rightly say that the Republic, as the trustee of the public
dominion airport properties for the benefit of the people, has delegated to MIAA the administration of
the said properties subject, as shown above, to the executive department’s supervision and control.

In fine, the properties comprising the NAIA being of public dominion which pertain to the State, the
same should be exempt from real property tax following Section 234(a) of the LGC.

One last word. Given the foregoing disquisition, I find no necessity for this Court to abandon its ruling
in Mactan. On the premise that the rationale for exempting airport properties from payment of real
estate taxes is ownership thereof by the Republic, the Mactan ruling is impeccable in its logic and its
conclusion should remain undisturbed. Having harmonized the apparently divergent views, we need
no longer fear any fierce disagreements in the future.

I therefore vote to grant the petition.

ANTONIO EDUARDO B. NACHURA

Associate Justice