CITY ASSESSOR OF CEBU CITY v. ASSOCIATION OF BENEVOLA DE CEBU, INC.

G.R. No. 152904; Ju! ", 200#; J. VELASCO, JR.,

C$%! D&'!%( o)* +.E. D! E,,o
I $ Nu(%-!,,*
A non-stock, non-profit organization is an owner of a hospital. The organization has constructed a
building away from the hospital. The new building houses doctors and medical specialists holding clinics
therein. They are duly accredited by the hospital. The separate building has been classified by the City
Assessor as commercial one and has been given a 3! assessment rate. The organization contests the
assessment given.
"ltimately, the separate building is declared by the #upreme Court as an integral part of the $ospital and
is definitely incidental to and reasonably necessary for the operations of the same. $ence, the assessment
should only be %&! as (-! .u&,/&' &% $ %0!1&$, 2!$, 02o0!2(3, and not a commercial one.
F$1(%'
(espondent
Association of )enevola *e Cebu,
+nc.
,etitioner
City Assessor of Cebu City
-)AA
- is a non-stock, non-profit
organization organized under the
laws of the (epublic of the
,hilippines and is the owner of
Chong $ua $ospital .C$$/ in Cebu
City
-ate %00&1s constructed the C$$ 2edical Arts
Center .C$$2AC/
Thereafter, an April %3, %004
Certificate of 5ccupancy was issued
to the center with a classification of
6Commercial 7Clinic8.6
assessed the C$$2AC
building under a Ta9
*eclaration as 6commercial6
with a market value of ,h,
:4,&;&,:& and an assessed
value of ,h, 0,4:%,%4& at the
assessment level of 3! for
commercial buildings
filed its #eptember %, %004 letter-
petition with the Cebu City -)AA
for reconsideration, asserting that
C$$2AC is part of C$$ and
ought to be imposed the same
special assessment level of %&!
with that of C$$ 7and its other
separate buildings8.
#eptember
:, %004
+t later formally filed its appeal
thereto.
#eptember
3&, %004
directed
petitioner to
conduct an
ocular inspection
of the sub<ect
property and to
submit a report
on the scheduled
date of hearing
+n the
5ctober 3,
%004
hearing
the parties were
re=uired to
submit their
respective
position papers
,osition
,aper
C$$2AC building is actually,
directly, and e9clusively part of
C$$ and should have a special
assessment level of %&! as provided
under City Ta9 5rdinance ->>
+t was ascertained that it is not
a part of the C$$ building but
a separate building which is
actually used as commercial
clinic?room spaces for renting
out to physicians and, thus,
classified as 6commercial.6
asserts that the C$$2AC building
is similarly situated as the buildings
of C$$, housing its *ietary and
(ecords *epartments, are
completely separate from the main
C$$ building and are imposed the
%&! special assessment level.
contends that in turn the
medical specialists in
C$$2AC charge consultation
fees for patients who consult
for diagnosis and relief of
bodily ailment together with
the ancillary .or support/
services which include the
areas of anesthesia, radiology,
pathology, and more.
-- the foregoing set up to be
ultimately geared for
commercial purposes, and thus
having the proper classification
as 6commercial6 999.
+n fine, respondent argued that the
C$$2AC, though not actually
indispensable, is nonetheless
incidental and reasonably necessary
to C$$1s operations
Cebu City Assessor - 3! assessment rate
-ocal )oard of Assessment Appeals .-)AA/ @ overturned the City Assessor' petitioner is
entitled to a %&! assessment
(eason' it is of public knowledge that hospitals
have plenty of spaces leased out to medical
practitioners, which is both an accepted and
desirable fact
Central )oard of Assessment Appeals .C)AA/ - upheld the -)AA' %&!
(eason' the fact that the sub<ect building is
detached from the main hospital building is of
no conse=uence as the e9emption in favor of
property used e9clusively for charitable or
educational purposes is not only limited to
property actually indispensable to the hospital,
but also e9tends to facilities which are incidental
and reasonably necessary for the
accomplishment of such purposes
CA - affirmed the C)AA' %&!
(eason' C$$2AC is part and parcel of C$$ in
line with the ruling in Herrera Case on what the
term 6appurtenant thereto6 means.
I%%u!4%'
+s a medical arts center built by a hospital to house its doctors a separate commercial establishment or an
appurtenant to the hospitalA
5!,/'
C$(!'o2&1$, A%6!2
+t is appurtenant to the hospital'
%/ C-o' 5u$ 5o%0&($, 7!/&1$, A2(% C!(!2 &% $ &(!'2$, 0$2( o) C-o' 5u$ 5o%0&($, and
:/ T-! C557AC )$1&,&(3 &% /!)&&(!,3 &1&/!($, (o $/ 2!$%o$.,3 !1!%%$23 )o2 (-! o0!2$(&o% o)
C-o' 5u$ 5o%0&($,
@ meaning, it is a special real property entitled to a %&! assessment rate for purposes of realty ta9.
B$%!%*
F$1(u$, B$%&% 8
+t is undisputed that the doctors and medical specialists holding clinics in C$$2AC are those duly
accredited by C$$, that is, they are consultants of the hospital and the ones who can treat C$$1s patients
confined in it.
Application to the Case @
This fact alone takes away C$$2AC from being categorized as 6commercial6 since a tertiary hospital
like C$$ is re=uired by law to have a pool of physicians who comprises the re=uired medical
departments in various medical fields.
L!'$, B$%&% 8
#ec. ;.3, Administrative 5rder Bo. .A5/ ;4-A, #eries of %040, (evised (ules and (egulations Coverning
the (egistration, -icensure and 5peration of $ospitals in the ,hilippines.
Application to the Case @
)ased on 7this8, these physicians holding offices or clinics in C$$2AC, duly appointed or accredited by
C$$, precisely fulfill and carry out their roles in the hospital1s services for its patients through the
C$$2AC. The fact that they are holding office in a separate building, like at C$$2AC, does not take
away the essence and nature of their services vis-D-vis the over-all operation of the hospital and the
benefits to the hospital1s patients. Civen what the law re=uires, it is clear that C$$2AC is an integral
part of C$$.
Co22!,$(&o (o $o(-!2 L!'$, B$%&% 8
+n this regard, 7the #C8 points with approbation the appellate court1s application of #ec. :%; in relation
with #ec. :% of the -ocal Covernment Code on the proper classification of the sub<ect C$$2AC
building as 6special6 and not 6commercial.6 #ecs. :% and :%; pertinently provide'
#EC. :%. Classes of (eal ,roperty for Assessment ,urposes.FGor purposes of assessment, real property
shall be classified as residential, agricultural, commercial, industrial, mineral, timberland or %0!1&$,.
9 9 9 9
#EC. :%;. #pecial Classes of (eal ,roperty.@@A,, ,$/%, .u&,/&'%, $/ o(-!2 &902ov!9!(% (-!2!o
$1(u$,,3, /&2!1(,3 $/ !:1,u%&v!,3 u%!/ )o2 -o%0&($,%, cultural or scientific purposes, and those owned
and used by local water districts, and government-owned or controlled corporations rendering essential
public services in the supply and distribution of water and?or generation and transmission of electric
power %-$,, .! 1,$%%&)&!/ $% %0!1&$,. .Emphasis supplied./
Co1,u%&o 8
Thus, applying the above provisos in line with City Ta9 5rdinance ->> of Cebu City, the %&! special
assessment should be imposed for the C$$2AC building which should be classified as 6special.6