claim that the Airport Lands and Buildings are exempt from real

LAND BANK OF THE PHILIPPINES VS EUSEBIO estate tax.

GR NO 160143 JULY 2, 2014
Facts:
Respondent Eusebio, Jr., owner of a 790.4-hectare parcel
of land situated in Masbate, voluntarily offered to sell his land to
the government through the Department of Agrarian Reform for
P19.5 million. DAR offered to purchase the land for P3 million but it
was rejected by respondent. Petitioner Land Bank made a
revaluation of the land but was rejected again by respondent.
Meanwhile, LBP opened a trust account in favor of Eusebio, and
then the DAR immediately took physical possession of the property,
had the TCT cancelled in favor of the Republic of the Philippines,
and distributed the property to the farmer-beneficiaries. The parties
then referred the determination of just compensation with the
DARAB. Respondent still finding the valuation unacceptable, filed
before the RTC-Special Agrarian Court an action for determination
and payment of just compensation against DAR and LBP. During
trial, separate valuation reports were submitted, with the DAR and
LBP using the guidelines/formula under RA 6657 in their
computation. In its judgment, the RTC-SAC brushed aside the
valuations fixed by DAR and LBP, and found instead as
considerable just compensation the amount (P25 million) prayed
for by respondent. Both parties appealed, but CA affirmed the
judgment in toto.
Issue:
Whether the RTC-SAC committed grave abuse of
discretion in the determination of just compensation for the
property
Ruling:
YES.
The determination of just compensation is essentially a
judicial function that the Courts exercise within the parameters of
the law; the RTC-SAC’s valuation in this case is erroneous for having
been rendered outside the contemplation of the law.
In the exercise of the essentially judicial function of determining just
compensation, the RTC-SAC is not granted unlimited discretion. It
must consider and apply the R.A. No. 6657-enumerated factors
and the DAR formula (that reflects these factors) as they provide
the uniform framework or structure by which just compensation for
property subject to agrarian reform should be determined.
A determination of just compensation based merely on
“conscience” – a consideration entirely outside the contemplation
of the law – is the precise situation that we find in this case. To be
clear, other than in “conscience,” the RTC-SAC did not point to
any particular consideration that impelled it to set the just
compensation at ₱25 million. In fact, a reading of the RTC-SAC’s
decision reveals a marked absence of any grounds by which it
anchored its determination, more so of any explanation why it
fixed the amount of ₱25 million. This marked absence of basis,
taken together with these other considerations, convinced us that
the RTC-SAC completely, even arbitrarily, relied on the amount that
respondent prayed for in their complaint in fixing the property’s just
compensation. This blind reliance on respondent’s prayer and the
utter disregard of the prescribed factors and formula clearly
amount to grave abuse of discretion for having been taken outside
the contemplation of the law.
Thus, the court set aside, as grave abuse of discretion, the
just compensation of ₱25 million that the RTC-SAC fixed for
Eusebio’s property. Accordingly, the court likewise set aside, for
grave error, the CA’s decision that affirmed in toto this RTC-SAC’s
valuation.
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 any public advantage, since in such a case the tax debtor is
also the tax creditor.
Issue:
Whether or not the City of Parañaque can impose real
tax, levy against and auction for public sale the Airport Lands and
Buildings.
Held:
MIAA is Not a Government-Owned or Controlled
Corporation. The Airport Lands and Buildings of MIAA are property
of public dominion and therefore owned by the State or the
Republic of the Philippines. 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
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.”
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.

Manila International Airport Authority v. Court of Appeals,

G.R. No. 15560 (July 20, 3006)

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

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