Dissenting Opinion | Corporations | Precedent

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  DISSENTING OPINIONTINGA,  J . : The legally correct resolution of this petition would have had the added benefit of an utterly fair and equitable result – arecognition of the constitutional and statutory power of the City of Parañaque to impose real property taxes on the ManilaInternational irport uthority !MI # but at the same time# upholding a statutory limitation that prevents the City of Parañaque from sei$ing and conducting an execution sale over the real properties of MI% In the end# all that the City of Parañaque would hold over the MI is a limited lien# unenforceable as it is through the sale or disposition of MIproperties% &ot only is this the legal effect of all the relevant constitutional and statutory provisions applied to this case# italso leaves the room for negotiation for a mutually acceptable resolution between the City of Parañaque and MI%Instead# with blind but measured rage# the ma'ority today veers wildly off(course# shattering statutes and 'udicial precedentsleft and right in order to protect the precious Ming vase that is the Manila International irport uthority !MI % )hile theMI is left unscathed# it is surrounded by the wrec*age that once was the constitutional policy# duly enacted into law# thatwas local autonomy% Ma*e no mista*e# the ma'ority has virtually declared war on the seventy nine !+, provinces# onehundred seventeen !--+ cities# and one thousand five hundred !-#.// municipalities of the Philippines% - The icing on this inedible ca*e is the strained and purposely vague rationale used to 'ustify the ma'ority opinion% 0ecisions of the 1upreme Court are expected to provide clarity to the parties and to students of 'urisprudence# as to what the law of thecase is# especially when the doctrines of long standing are modified or clarified% )ith all due respect# the decision in thiscase is plainly so# so wrong on many levels% More egregious# in the ma'ority2s resolve to spare the Manila International irport uthority !MI from liability for real estate taxes# no clear(cut rule emerges on the important question of the power of local government units !345s to tax government corporations# instrumentalities or agencies%The ma'ority would overturn sub silencio# among others# at least one do$en precedents enumerated below6- Mactan(Cebu International irport uthority v% 7on% Marcos# 8  the leading case penned in -,,+ by recently retired Chief 9ustice 0avide# which held that the express withdrawal by the 3ocal 4overnment Code of previously granted exemptionsfrom realty taxes applied to instrumentalities and government(owned or controlled corporations !4:CCs such as theMactan(Cebu International irport uthority !MCI % The ma'ority invo*es the ruling in ;asco v% Pagcor# <  a precedentdiscredited in Mactan# and a vanguard of a doctrine so noxious to the concept of local government rule that the 3ocal4overnment Code was drafted precisely to counter such philosophy% The efficacy of several rulings that expressly rely onMactan# such as P7I3=>C v% 0I34 1ecretary# ? City 4overnment of 1an Pablo v% 7on% =eyes .  is now put in question%8 The rulings in &ational Power Corporation v% City of Cabanatuan# @  wherein the Court# through 9ustice Puno# declared thatthe &ational Power Corporation# a 4:CC# is liable for franchise taxes under the 3ocal 4overnment Code# and succeedingcases that have relied on it such as ;atangas Power Corp% v% ;atangas City +  The ma'ority now states that deemsinstrumentalities as defined under the dministrative Code of -,A+ as purportedly beyond the reach of any form of taxationby 345s# stating BlDocal governments are devoid of power to tax the national government# its agencies andinstrumentalities%B A  5nfortunately# using the definition employed by the ma'ority# as provided by 1ection 8!d of the dministrative Code# 4:CCs are also considered as instrumentalities# thus leading to the astounding conclusion that4:CCs may not be taxed by 345s under the 3ocal 4overnment Code%< 3ung Center of the Philippines v% Eue$on City# ,  wherein a unanimous en banc Court held that the 3ung Center of thePhilippines may be liable for real property taxes% 5sing the ma'ority2s reasoning# the 3ung Center would be properlyclassified as an instrumentality which the ma'ority now holds as exempt from all forms of local taxation% -/ ? City of 0avao v% =TC# --  where the Court held that the 4overnment 1ervice Insurance 1ystem !41I1 was liable for realproperty taxes for the years -,,8 to -,,?# its previous exemption having been withdrawn by the enactment of the 3ocal4overnment Code% -8  This decision# which expressly relied on Mactan# would be directly though silently overruled by thema'ority%. The common essence of the Court2s rulings in the two Philippine Ports uthority v% City of Iloilo# -<  cases penned by9ustices Calle'o and $cuna respectively# which relied in part on Mactan in holding the Philippine Ports uthority !PP liablefor realty taxes# notwithstanding the fact that it is a 4:CC% ;ased on the reasoning of the ma'ority# the PP cannot beconsidered a 4:CC% The reliance of these cases on Mactan# and its rationale for holding governmental entities li*e the PPliable for local government taxation is mooted by the ma'ority%  @ The -,@< precedent of 1ocial 1ecurity 1ystem >mployees ssociation v% 1oriano# -?  which declared the 1ocial 1ecurityCommission !11C as a 4:CC performing proprietary functions% ;ased on the rationale employed by the ma'ority# the1ocial 1ecurity 1ystem is not a 4:CC% :r perhaps more accurately# Bno longerB a 4:CC%+ The decision penned by 9ustice !now Chief 9ustice Panganiban# 3ight =ail Transit uthority v% Central ;oard of  ssessment% -.  The characteri$ation therein of the 3ight =ail Transit uthority !3=T as a Bservice(oriented commercialendeavorB whose patrimonial property is sub'ect to local taxation is now rendered inconsequential# owing to the ma'ority2sthin*ing that an entity such as the 3=T is itself exempt from local government taxation -@ # irrespective of the functions itperforms% Moreover# based on the ma'ority2s criteria# 3=T is not a 4:CC%A The cases of Teodoro v% &ational irports Corporation -+  and Civil eronautics dministration v% Court of ppeals% -A  whereinthe Court held that the predecessor agency of the MI# which was similarly engaged in the operation# administration andmanagement of the Manila International gency# was engaged in the exercise of proprietary# as opposed to sovereignfunctions% The ma'ority would hold otherwise that the property maintained by MI is actually patrimonial# thus implying thatMI is actually engaged in sovereign functions%, My own ma'ority in Phividec Industrial uthority v% Capitol 1teel# -,  wherein the Court held that the Phividec Industrial uthority# a 4:CC# was required to secure the services of the :ffice of the 4overnment Corporate Counsel for legalrepresentation% 8/  ;ased on the reasoning of the ma'ority# Phividec would not be a 4:CC# and the mandate of the :ffice of the 4overnment Corporate Counsel extends only to 4:CCs%-/ Two decisions promulgated by the Court 'ust last month !9une 8//@ # &ational Power Corporation v% Province of Isabela 8-  and 41I1 v% City ssessor of Iloilo City% 88  In the former# the Court pronounced that BaDlthough as a general rule#345s cannot impose taxes# fees# or charges of any *ind on the &ational 4overnment# its agencies and instrumentalities# thisrule admits of an exception# i%e%# when specific provisions of the 34C authori$e the 345s to impose taxes# fees or chargeson the aforementioned entities%B Fet the ma'ority now rules that the exceptions in the 34C no longer hold# since Blocalgovernments are devoid of power to tax the national government# its agencies and instrumentalities%B 8<  The ruling in thelatter case# which held the 41I1 as liable for real property taxes# is now put in 'eopardy by the ma'ority2s ruling%There are certainly many other precedents affected# perhaps all previous 'urisprudence regarding local government taxationvis(a(vis government entities# as well as any previous definitions of 4:CCs# and previous distinctions between the exerciseof governmental and proprietary functions !a distinction laid down by this Court as far bac* as -,-@ 8? % )hat is the reasonoffered by the ma'ority for overturning or modifying all these precedents and doctrinesG &one is given# for the ma'ority ta*escomfort instead in the pretense that these precedents never existed% :nly children should be permitted to subscribe to thetheory that something bad will go away if you pretend hard enough that it does not exist%I%Case 1hould 7ave ;een 0ecidedHollowing Mactan PrecedentThe core issue in this case# whether the MI is liable to the City of Parañaque for real property taxes under the 3ocal4overnment Code# has already been decided by this Court in the Mactan case# and should have been resolved by simplyapplying precedent%Mactan >xplained  brief recall of the Mactan case is in order% The Mactan(Cebu International irport uthority !MCI claimed that it wasexempt from payment of real property taxes to the City of Cebu# invo*ing the specific exemption granted in 1ection -? of itscharter# =epublic ct &o% @,.A# and its status as an instrumentality of the government performing governmentalfunctions% 8.  Particularly# MCI invo*ed 1ection -<< of the 3ocal 4overnment Code# precisely the same provision utili$ed bythe ma'ority as the basis for MI2s exemption% 1ection -<< reads61ec% -<<% Common 3imitations on the Taxing Powers of 3ocal 4overnment 5nits% 5nless otherwise provided herein# theexercise of the taxing powers of provinces# cities# municipalities# and barangays shall not extend to the levy of the following6x x x  !o Taxes# fees or charges of any *ind on the &ational 4overnment# its agencies and instrumentalities and local governmentunits% !emphasis and underscoring supplied %7owever# the Court in Mactan noted that 1ection -<< qualified the exemption of the &ational 4overnment# its agencies andinstrumentalities from local taxation with the phrase Bunless otherwise provided herein%B It then considered the other relevantprovisions of the 3ocal 4overnment Code# particularly the following61>C% -,<% )ithdrawal of Tax >xemption Privileges% – 5nless otherwise provided in this Code# tax exemption or incentivesgranted to# or en'oyed by all persons# whether natural or 'uridical# including government(owned and controlled corporations#except local water districts# cooperatives duly registered under =%% &o% @,<A# non(stoc* and non(profit hospitals andeducational institutions# are hereby withdrawn upon the effectivity of this Code% 8@ 1>CTI:& 8<8% Power to 3evy =eal Property Tax% –  province or city or a municipality within the Metropolitan Manila areamay levy an annual ad valorem tax on real property such as land# building# machinery# and other improvements not hereafter specifically exempted% 8+ 1>CTI:& 8<?% >xemptions from =eal Property Tax% (( The following are exempted from payment of the real property tax6!a =eal property owned by the =epublic of the Philippines or any of its political subdivisions except when the beneficial usethereof has been granted# for consideration or otherwise# to a taxable person6!b Charitable institutions# churches# parsonages or convents appurtenant thereto# mosques# non(profit or religiouscemeteries and all lands# buildings# and improvements actually# directly# and exclusively used for religious charitable or educational purposesJ!c ll machineries and equipment that are actually# directly and exclusively used by local water districts and government(owned and controlled corporations engaged in the distribution of water andKor generation and transmission of electric powerJ!d ll real property owned by duly registered cooperatives as provided for under =%% &o% @,<AJ and!e Machinery and equipment used for pollution control and environmental protection%>xcept as provided herein# any exemption from payment of real property tax previously granted to# or presently en'oyed by#all persons# whether natural or 'uridical# including all government(owned or controlled corporations are hereby withdrawnupon the effectivity of this Code% 8A Clearly# 1ection -<< was not intended to be so absolute a prohibition on the power of 345s to tax the &ational 4overnment#its agencies and instrumentalities# as evidenced by these cited provisions which Botherwise provided%B ;ut what was theextent of the limitation under 1ection -<<G This is how the Court# correctly to my mind# defined the parameters in Mactan6The foregoing sections of the 34C spea* of6 !a the limitations on the taxing powers of local government units and theexceptions to such limitationsJ and !b the rule on tax exemptions and the exceptions thereto% The use of exceptions or provisos in these sections# as shown by the following clauses6!- Bunless otherwise provided hereinB in the opening paragraph of 1ection -<<J!8 B5nless otherwise provided in this CodeB in 1ection -,<J!< Bnot hereafter specifically exemptedB in 1ection 8<8J and!? B>xcept as provided hereinB in the last paragraph of 1ection 8<?initially hampers a ready understanding of the sections% &ote# too# that the aforementioned clause in 1ection -<< seems tobe inaccurately worded% Instead of the clause Bunless otherwise provided herein#B with the BhereinB to mean# of course# thesection# it should have used the clause Bunless otherwise provided in this Code%B The former results in absurdity since thesection itself enumerates what are beyond the taxing powers of local government units and# where exceptions wereintended# the exceptions are explicitly indicated in the next% Hor instance# in item !a which excepts income taxes Bwhenlevied on ban*s and other financial institutionsBJ item !d which excepts Bwharfage on wharves constructed and maintainedby the local government unit concernedBJ and item !- which excepts taxes# fees and charges for the registration and  issuance of licenses or permits for the driving of Btricycles%B It may also be observed that within the body itself of the section#there are exceptions which can be found only in other parts of the 34C# but the section interchangeably uses therein theclause# Bexcept as otherwise provided hereinB as in items !c and !i # or the clause Bexcept as provided in this CodeB in item!' % These clauses would be obviously unnecessary or mere surplusages if the opening clause of the section were B5nlessotherwise provided in this CodeB instead of B5nless otherwise provided herein%B In any event# even if the latter is used# sinceunder 1ection 8<8 local government units have the power to levy real property tax# except those exempted therefrom under 1ection 8<?# then 1ection 8<8 must be deemed to qualify 1ection -<<%Thus# reading together 1ections -<<# 8<8# and 8<? of the 34C# we conclude that as a general rule# as laid down in 1ection-<<# the taxing powers of local government units cannot extend to the levy of# inter alia# Btaxes# fees and charges of any *indon the &ational 4overnment# its agencies and instrumentalities# and local government unitsBJ however# pursuant to 1ection8<8# provinces# cities# and municipalities in the Metropolitan Manila rea may impose the real property tax except on# inter alia# Breal property owned by the =epublic of the Philippines or any of its political subdivisions except when the beneficialuse thereof has been granted# for consideration or otherwise# to a taxable person#B as provided in item !a of the firstparagraph of 1ection 8<?% s to tax exemptions or incentives granted to or presently en'oyed by natural or 'udicial persons# including government(owned and controlled corporations# 1ection -,< of the 34C prescribes the general rule# vi$%# they are withdrawn upon theeffectivity of the 34C# except those granted to local water districts# cooperatives duly registered under =%% &o% @,<A# non(stoc* and non(profit hospitals and educational institutions# and unless otherwise provided in the 34C% The latter provisocould refer to 1ection 8<? which enumerates the properties exempt from real property tax% ;ut the last paragraph of 1ection8<? further qualifies the retention of the exemption insofar as real property taxes are concerned by limiting the retention onlyto those enumerated thereinJ all others not included in the enumeration lost the privilege upon the effectivity of the 34C%Moreover# even as to real property owned by the =epublic of the Philippines or any of its political subdivisions covered byitem !a of the first paragraph of 1ection 8<?# the exemption is withdrawn if the beneficial use of such property has beengranted to a taxable person for consideration or otherwise%1ince the last paragraph of 1ection 8<? unequivocally withdrew# upon the effectivity of the 34C# exemptions from paymentof real property taxes granted to natural or 'uridical persons# including government(owned or controlled corporations# exceptas provided in the said section# and the petitioner is# undoubtedly# a government(owned corporation# it necessarily followsthat its exemption from such tax granted it in 1ection -? of its Charter# =%% &o% @,.A# has been withdrawn% ny claim to thecontrary can only be 'ustified if the petitioner can see* refuge under any of the exceptions provided in 1ection 8<?# but notunder 1ection -<<# as it now asserts# since# as shown above# the said section is qualified by 1ections 8<8 and 8<?% 8, The Court in Mactan ac*nowledged that under 1ection -<<# instrumentalities were generally exempt from all forms of localgovernment taxation# unless otherwise provided in the Code% :n the other hand# 1ection 8<8 Botherwise providedB insofar asit allowed 345s to levy an ad valorem real property tax# irrespective of who owned the property% t the same time# theimposition of real property taxes under 1ection 8<8 is in turn qualified by the phrase Bnot hereinafter specifically exempted%BThe exemptions from real property taxes are enumerated in 1ection 8<?# which specifically states that only real propertiesowned Bby the =epublic of the Philippines or any of its political subdivisionsB are exempted from the payment of the tax%Clearly# instrumentalities or 4:CCs do not fall within the exceptions under 1ection 8<?% </ Mactan :verturned thePrecedents &ow =elied5pon by the Ma'ority;ut the petitioners in Mactan also raised the Court2s ruling in ;asco v% P4C:=# <-  decided before the enactment of the3ocal 4overnment Code% The Court in ;asco declared the P4C:= as exempt from local taxes# 'ustifying the exemption inthis wise63ocal governments have no power to tax instrumentalities of the &ational 4overnment% P4C:= is a government owned or controlled corporation with an srcinal charter# P0 -A@,% ll of its shares of stoc*s are owned by the &ational 4overnment% Inaddition to its corporate powers !1ec% <# Title II# P0 -A@, it also exercises regulatory powers xxxP4C:= has a dual role# to operate and to regulate gambling casinos% The latter role is governmental# which places it in thecategory of an agency or instrumentality of the 4overnment% ;eing an instrumentality of the 4overnment# P4C:= shouldbe and actually is exempt from local taxes% :therwise# its operation might be burdened# impeded or sub'ected to control by amere 3ocal government%
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