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Mactan Cebu International Airport vs.

Marcos 1996

Topic: taxing power of local gov’t units and the limits of tax exemption privileges of

Ponente: David, Jr.

Parties: Mactan Cebu International Airport (Petitioner)

Hon. Ferdinand J. Marcos (Judge, RTC Cebu)

Nature: A petition for review assailing the decision of RTC Cebu in dismissing the petition
for declaratory relief and denying the motion to reconsider the decision.


 That petitioner MCIAA was created by virtue of Republic Act No. 6958
 That MCIAA was mandated to “principally undertake the economical, efficient and
effective control, management and supervision of the Mactan International Airport
in the Province of Cebu and the Lahug Airport in Cebu City”
 That MCIAA was exempted from paying taxes under Sec. 14 of its chapter which
states that the authority shall be exempt from realty taxes imposed by the National
government or any of its political subdivisions, agencies and instrumentalities.
 That on October 11, 1994, Mr. Eustaquio B. Cesa, Officer-in-Charge of the Office of
the Treasurer of Cebu, demanded payment for realty taxes on several parcels of land
belonging to the petitioner.
 That the petitioner objected to such demand because it was baseless and unjustified
because of their exemption under Sec. 14 of RA 6958
 That this tax exemption was withdrawn during the implementation of the local
government code in January 1, 1992
 That the petitioner paid in protest and filed the following action in court.

First Action/Initiatory Action

Filed by: MCIAA, petitioner

Kind of action: petition for declaratory relief

Court: RTC of Cebu

Issue/s: Whether the local government can levy taxes or fees on instrumentalities of the
national government or GOCCs

Ruling: petition dismissed

Mactan Cebu International Airport vs. Marcos 1996

Reasoning: There is an express cancellation and withdrawal of exemption of taxes by

GOCC after the effectivity of the Local Government Code.

Laws/Jurisprudence: RA 7160- “All general and special laws, acts, city charters, decrees, executive
orders, proclamations and administrative regulations, or part of parts thereof which are inconsistent
with any of the provisions of this Code are hereby repealed or modified accordingly.

Petitioner filed for a motion for reconsideration but it was denied.

Secondary Action:

Filed by: MCIAA (petitioner)

Kind of action: petition for review (refer to the nature)

Court: Supreme Court

Issue/s: (errors) –that respondent judged erred in failing to rule that the petitioner is vested
with government powers and functions which place it in the same category as a government
instrumentality or agency of the government

-that respondent judge erred in ruling that the petitioner is liable to pay realty taxes to the
city of Cebu

Ruling: The SC denied the petition and affirmed the challenged decision of the RTC of

Reasoning: MCIAA was indeed exempted from paying realty tax but this was lifted during
the effectivity of the local government code

Laws/Jurisprudence: Sec. 193. Withdrawal of Tax Exemption Privilege- 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 RA 6938, non-
stock and non-profit hospitals and educational institutions, are hereby withdrawn upon the
effectivity of this code.

Nothing can prevent Congress from decreeing that even instrumentalities or agencies of the
Government performing governmental functions may be subject to tax. Where it is done
precisely to fulfil constitutional mandate and policy, no one can doubt its wisdom.