FACTS
By virtue of RA No. 6958, the Mactan Cebu International Airport Authority (MCIAA) was created to “principally undertake the economical, efficient and effective control, management and supervision of the Mactan International Airport.”
Sec. 14 of its charter exempts the MCIAA from payment of realty taxes imposed by the National Government or any of its political subdivisions, agencies, and instrumentalities. In 1994, however, the Cebu City Treasurer demanded payment for realty taxes on several parcels of land belonging to the MCIAA.
The latter challenged the validity of said assessment, arguing that by the nature of its powers and functions, it has the same footing of an agency or instrumentality of the national government and should therefore be exempt from said tax.
RULING
The Court ruled in favor of the City of Cebu.
RATIO: MCIAA’s exemption from payment of taxes was already withdrawn by virtue of Sections 193 and 234 of Local Government Code. Since the last paragraph of Section 234 of the LGC withdrew exemptions from payment of real property taxes granted to natural or juridical persons, including GOCCs, it necessarily follows that MCIAA's exemption from such tax granted it in Section 14 of its Charter has been withdrawn, too.
The SC held that taxation is the rule and exemption is the exception, the exemption may thus be withdrawn at the pleasure of the taxing authority. Statutes granting tax exemptions shall be strictly construed against the taxpayer and liberally construed in favor of the taxing authority.
