Sample Case Mactan Cebu Internation Airport (MCIA) vs. Hon.
Marcos
The power to tax is primarily vested in the Congress; however, in our jurisdiction, it may be
exercised by local legislative bodies, no longer merely by virtue of a valid delegation as before, but
pursuant to direct authority conferred by Section 5, Article X of the Constitution. 22 Under the latter, the
exercise of the power may be subject to such guidelines and limitations as the Congress may provide
which, however, must be consistent with the basic policy of local autonomy.
There can be no question that under Section 14 of R.A. No. 6958 the petitioner is exempt from the
payment of realty taxes imposed by the National Government or any of its political subdivisions,
agencies, and instrumentalities. Nevertheless, since taxation is the rule and exemption therefrom the
exception, the exemption may thus be withdrawn at the pleasure of the taxing authority. The only
exception to this rule is where the exemption was granted to private parties based on material
consideration of a mutual nature, which then becomes contractual and is thus covered by the
nonimpairment clause of the Constitution. 23
The LGC, enacted pursuant to Section 3, Article X of the constitution provides for the exercise by
local government units of their power to tax, the scope thereof or its limitations, and the exemption
from taxation.
The supreme court held that the real properties of MIAA are owned by the Republic of the
Philippines and thus exempt from real estate tax. A government instrumentality like MIAA falls under
Section 133(o) of the Local Government Code, which states — xxx, the exercise of the taxing
powers of provinces, cities, municipalities, and barangays shall not extend to the levy of the
following: xxx (o) Taxes, fees or charges of any kind on the National Government, its agencies and
instrumentalities and local government units.