F.

CLASSIFICATION OF CORP (DIGESTED CASES) any public advantage, since in such a case the tax debtor is also the tax
creditor.
1. National Coal Co. vs Collector of Internal Revenue 46 Phil 583
Posted on January 26, 2018 by ARDEEND Leave a comment Issue:
DOCTRINE: The plaintiff is a private corporation. The mere fact that
the Government happens to the majority stockholder does not make it Whether or not the City of Parañaque can impose real tax, levy against
a public corporation. Act No. 2705, as amended by Act No. 2822, and auction for public sale the Airport Lands and Buildings.
makes it subject to all of the provisions of the Corporation Law, in so
far as they are not inconsistent with said Act (No. 2705). As a private Held:
corporation, it has no greater rights, powers or privileges than any
other corporation which might be organized for the same purpose MIAA is Not a Government-Owned or Controlled Corporation. The
under the Corporation Law, and certainly it was not the intention of Airport Lands and Buildings of MIAA are property of public dominion
the Legislature to give it a preference or right or privilege over other and therefore owned by the State or the Republic of the Philippines. No
legitimate private corporations in the mining of coal. one can dispute that properties of public dominion mentioned in Article
420 of the Civil Code, like “roads, canals, rivers, torrents, ports and
FACTS: The National Coal Company was created by Act No. 2705 bridges constructed by the State,” are owned by the State. The term
and was granted the general powers of a corporation “and such other “ports” includes seaports and airports. The MIAA Airport Lands and
powers as may be necessary to enable it to prosecute the business of Buildings constitute a “port” constructed by the State.
developing coal deposits in the Philippine Island and of mining,
extracting, transporting and selling the coal contained in said Under Article 420 of the Civil Code, the MIAA Airport Lands and
deposits.” Two months later, the Philippine Legislature passed Act No. Buildings are properties of public dominion and thus owned by the State
2719 to provide for the leasing and development of coal lands in the or the Republic of the Philippines. The Airport Lands and Buildings are
Philippine Islands. Seven months after the company’s creation, the devoted to public use because they are used by the public for
National Coal Company took possession of coal lands within a international and domestic travel and transportation. The fact that the
reservation in the Zambaonaga Peninsula. Plaintiff harvested coal on MIAA collects terminal fees and other charges from the public does not
public lands between 1920 and 1922 collecting a total of 24,089.3 remove the character of the Airport Lands and Buildings as properties for
tons of coal. public use. The charging of fees to the public does not determine the
character of the property whether it is of public dominion or not. Article
Appellant CIR then subjected the mined coal to a specific tax of P0.50 420 of the Civil Code defines property of public dominion as one
per metric ton under Act 1496 which subjected coal collected by non- “intended for public use.”
owners of land for P12,044.68. Plaintiff claimed a refund from the
CIR arguing exemption from taxes under the provision of sections 14 The Court has also ruled that property of public dominion, being outside
and 15 of Act No. 2719, and prayed for a judgment ordering the the commerce of man, cannot be the subject of an auction sale. Properties
defendant to refund to the plaintiff said sum of P12, 044.68, with legal of public dominion, being for public use, are not subject to levy,
interest from the date of the presentation of the complaint, and costs encumbrance or disposition through public or private sale. Any
against the defendant. encumbrance, levy on execution or auction sale of any property of public
dominion is void for being contrary to public policy. Essential public
The trial court decided in favor of Plaintiff extending the definition of services will stop if properties of public dominion are subject to
ownership and should be understood to mean “lands held in lease or encumbrances, foreclosures and auction sale. This will happen if the City
usufruct” and should be taxed only P0.04 per ton of coal under of Parañaque can foreclose and compel the auction sale of the 600-
Section 15 of Act No. 2719. hectare runway of the MIAA for non-payment of real estate tax.

ISSUE: Whether the plaintiff is subject to the taxes under section 15

of Act No. 2719, or to the specific taxes under section 1496 of the
Administrative Code?

HELD: Plaintiff is liable for the taxes imposed under Section 1496 of
the Administrative Code.

Plaintiff is neither a lessee nor an owner of coal-bearing lands, and is,

therefore, not subject to any other provisions of Act No. 2719. It
having been demonstrated that the plaintiff has produced coal in the
Philippine Islands and is not a lessee or owner of the land from which
the coal was produced, we are clearly of the opinion, and so hold, that
it is subject to pay the internal revenue tax under the provisions of
section 1496 of the Administrative Code, and is not subject to the
payment of the internal revenue tax under section 15 of Act No. 2719,
nor to any other provisions of said Act.

2. Manila International Airport Authority v. Court of Appeals,

G.R. No. 15560 (July 20, 3006) Case Digest
Public Dominion

Facts:

MIAA received Final Notices of Real Estate Tax Delinquency from

the City of Parañaque for the taxable years 1992 to 2001. MIAA’s real
estate tax delinquency was estimated at P624 million. The City of
Parañaque, through its City Treasurer, issued notices of levy and
warrants of levy on the Airport Lands and Buildings. The Mayor of
the City of Parañaque threatened to sell at public auction the Airport
Lands and Buildings should MIAA fail to pay the real estate tax
delinquency.

MIAA filed a petition sought to restrain the City of Parañaque from

imposing real estate tax on, levying against, and auctioning for public
sale the Airport Lands and Buildings.

The City of Parañaque contended that Section 193 of the Local

Government Code expressly withdrew the tax exemption privileges of
“government-owned and-controlled corporations” upon the effectivity
of the Local Government Code. Thus, MIAA cannot claim that the
Airport Lands and Buildings are exempt from real estate tax.

MIAA argued that Airport Lands and Buildings are owned by the
Republic. The government cannot tax itself. The reason for tax
exemption of public property is that its taxation would not inure to
1. MIAA is Not a Government-Owned or Controlled Corporation d. Transfer to MIAA was Meant to Implement a Reorganization

MIAA is not a government-owned or controlled corporation but an The transfer of the Airport Lands and Buildings from the Bureau of Air
instrumentality of the National Government and thus exempt from Transportation to MIAA was not meant to transfer beneficial ownership
local taxation. 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
MIAA is not a stock corporation because it has no capital stock and autonomous body. The Republic remains the beneficial owner of the
divided into shares. MIAA has no stockholders or voting shares. Airport Lands and Buildings. MIAA itself is owned solely by the
Republic. No party claims any ownership rights over MIAA’s assets
MIAA is also not a non-stock corporation because it has no members. adverse to the Republic.
A non-stock corporation must have members.
e. Real Property Owned by the Republic is Not Taxable
MIAA is a government instrumentality vested with corporate powers
to perform efficiently its governmental functions. MIAA is like any Sec 234 of the LGC provides that real property owned by the Republic of
other government instrumentality, the only difference is that MIAA is the Philippines or any of its political subdivisions except when the
vested with corporate powers. beneficial use thereof has been granted, for consideration or otherwise, to
a taxable person following are exempted from payment of the real
When the law vests in a government instrumentality corporate powers, property tax.
the instrumentality does not become a corporation. Unless the
government instrumentality is organized as a stock or non-stock However, portions of the Airport Lands and Buildings that MIAA leases
corporation, it remains a government instrumentality exercising not to private entities are not exempt from real estate tax. For example, the
only governmental but also corporate powers. Thus, MIAA exercises land area occupied by hangars that MIAA leases to private corporations
the governmental powers of eminent domain, police authority and the is subject to real estate tax.
levying of fees and charges. At the same time, MIAA exercises “all
the powers of a corporation under the Corporation Law, insofar as
these powers are not inconsistent with the provisions of this Executive
Order.” 3. CASE DIGEST ON BARLIN V. RAMIREZ [7 P 41] - F: The def.,
Ramirez, having been appointed by the pltff parish priest, took
2. Airport Lands and Buildings of MIAA are Owned by the Republic possession of the church on 7/5/01. He administered if as such under the
orders of his superiors until 11/14/02. His successor having been then
a. Airport Lands and Buildings are of Public Dominion appointed, the latter made a demand on this def. for the delivery to him
of the church, convent, and cemetery, and the sacred ornaments, books,
The Airport Lands and Buildings of MIAA are property of public jewels, money, and other prop. of the church. The def., by a written
dominion and therefore owned by the State or the Republic of the document of that date, refused to make such delivery, stating that "the
Philippines. town of Lagonoy, in conjunction w/ the parish priest of thereof, has seen
fit to sever connection w/ the Pope at Rome and his representatives in
No one can dispute that properties of public dominion mentioned in these Islands, and to join the Filipino Church, the head of w/c is at Mla.
Article 420 of the Civil Code, like “roads, canals, rivers, torrents, In 1/4, the pltff. brought this action against def., alleging in his amended
ports and bridges constructed by the State,” are owned by the State. complaint that the Roman Catholic Church was the owner of the church
The term “ports” includes seaports and airports. The MIAA Airport bldg, the convent, cemetery, the books, money, and other prop. belonging
Lands and Buildings constitute a “port” constructed by the State. thereto, and asking that it be restored to the possession thereof and that
Under Article 420 of the Civil Code, the MIAA Airport Lands and the def. render an account of the prop. w/c he had received and w/c was
Buildings are properties of public dominion and thus owned by the retained by him, and for other relief. The CFI-Ambos Camarines ruled in
State or the Republic of the Philippines. favor of the pltff.

The Airport Lands and Buildings are devoted to public use because HELD: It is suggested by the appellant that the Roman Catholic Church
they are used by the public for international and domestic travel and has no legal personality in the Philippine Islands. This suggestion, made
transportation. The fact that the MIAA collects terminal fees and other with reference to an institution w/c antedates by almost a thousand years
charges from the public does not remove the character of the Airport any other personality in Europe, and w/c existed "when Grecian
Lands and Buildings as properties for public use. eloquence still flourished in Antioch, and when idols were still
worshipped in the temple of Mecca," does not require serious
The charging of fees to the public does not determine the character of consideration.
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.” 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.

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

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.

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. n 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.