MONTERO // 3A TAX DIGESTS

AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

GSIS vs. City Treasurer and City Assessor of the City of

Held:

Manila (Villarin, L.)

1) Prior to the enactment of the LGC (which was on 1992) and pursuant to

[GR. No. 186242; December 23, 2009]

Property of Government Instrumentality are tax exempt, except if leased to a
taxable person.
Recit-Ready:
Facts:
GSIS owns two (2) parcels of land, Katigbak property and ConcepcionArroceros property. One of the parcels of land, the Katigbak property, was
under lease to Manila Hotel Corporation (MHC). The City Treasurer of
Manila addressed a letter to GSIS informing of the unpaid real property
taxes due on the aforementioned properties for years 1992 to 2002. The
letter warned of the inclusion of the subject properties public auction of all
delinquent properties in Manila should the unpaid taxes remain unsettled.
The City Treasurer of Manila issued separate Notices of Realty Tax
Delinquency with warning of seizure and/or sale. GSIS wrote back
emphasizing the GSIS' exemption from all kinds of taxes, including realty
taxes, under Republic Act No. (RA) 8291.

Sec. 33 of P.D. 1146, GSIS enjoyed tax exemption from real estate taxes,
among other tax burdens. The LGC had withdrawn the real property tax
exemption of GSIS starting from January 1, 1992. However, RA 8291
restored in 1997 the tax exempt status of GSIS by reenacting under its
Sec. 39 what was once Sec. 33 of P.D. 1146. Thus, the Court stated that
if any real estate tax is due to the City of Manila, it is, only for the interim
period, or from 1992 to 1996, to be precise.
2) Sec. 234 (a) of the LGC allows the Republic to grant the beneficial use
of its property to an agency or instrumentality of the national government.
Such grant does not necessarily result in the loss of the tax exemption.
The tax exemption is lost only if beneficial use thereof has been granted,
for a consideration or otherwise, to a taxable person. As GSIS had leased
the property to MHC, a taxable person, the Katigbak property lost its tax
exemption status. Thus, the real estate tax assessment of Php
54,826,599.37 covering 1992 to 2002 over the subject Katigbak property is
valid insofar as said tax delinquency.
3) A valid tax levy presupposes a corresponding tax liability. Nonetheless,

Issue:
1. WON GSIS is exempt from the payment of real property taxes from
1992 to 2002;
2. WON GSIS is exempt from the payment of real property taxes on the
property it leased to a taxable entity; and
3. WON GSIS real properties are exempt from warrants of levy and from
tax sale for non-payment of real property taxes.

it will not be remiss to note that it is without doubt that the subject GSIS
properties are exempt from any attachment, garnishment, execution, levy,
or other legal processes. As the property are not subject to tax liability, it is
not subject to levy or warrant.
Facts:

GSIS owns or used to own two (2) parcels of land, Katigbak property
and Concepcion-Arroceros property. Both the GSIS and the Metropolitan
Trial Court (MeTC) of Manila occupy the Concepcion-Arroceros property,

MONTERO // 3A TAX DIGESTS

AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

while the Katigbak property was under lease with Manila Hotel

Corporation (MHC).
The City Treasurer of Manila assessed GSIS unpaid real property taxes
due from 1992 to 2002, broken down as follows: (a) PhP54,826,599.37

Government Service Insurance Act of 1977 provided for a new tax

o

1992 (effective 1992) withdrew all real property tax. 2 From the foregoing

Arroceros property. The letter warned of the inclusion of the subject

provisos, full tax exemption granted to GSIS under PD 1146, particular

unpaid taxes remain unsettled.

The City Treasurer of Manila issued separate Notices of Realty Tax

emphasizing the GSIS' exemption from all kinds of taxes, including realty

Pursuant to Sec. 33 of PD 1146, GSIS enjoyed tax exemption from real

restraining and injunctive relief before the Manila RTC. RTC dismissed

LGC took effect and withdrew exemptions from payment of real estate

GSIS petition and ruled that it is liable.

taxes privileges granted under PD 1146; (2) RA 8291 restored in 1997

estate taxes, among other tax burdens, until January 1, 1992 when the

the tax exempt status of GSIS by reenacting under its Sec. 39 what was
once Sec. 33 of P.D. 1146; and (3) If any real estate tax is due to the

WON GSIS is exempt from the payment of real property taxes from 1992

City of Manila, it is, only for the interim period, or from 1992 to 1996, to
be precise.

not subject to tax.

WON GSIS is exempt from the payment of real property taxes on the
property it leased to a taxable entity. Yes, MHC will have to pay the tax.
3.

WON GSIS real properties are exempt from warrants of levy and from
tax sale for non-payment of real property taxes. No.

Held/Ratio:
1)

restored.
Given the foregoing perspectives, the following may be assumed: (1)

taxes, under Republic Act No. (RA) 8291.

GSIS filed a petition for certiorari and prohibition with prayer for a

to 2002. GSIS may be subject to tax from 1992 to 1996. 1997-2002,

2.

Full tax exemption privilege of GSIS was

Issue:
1.

insofar as realty tax was deemed withdrawn.

PD 1146 was further amended and expanded by RA 8291 which took
effect on June 24, 1997.

Delinquency with warning of seizure and/or sale. GSIS wrote back

treatment for GSIS.1

However, due to the enactment of the Local Government Code (LGC) of

for the Katigbak property; and (b) PhP48,498,917.01 for the Concepcionproperties public auction of all delinquent properties in Manila should the

In 1977, Sec. 33 of PD 1146 otherwise known as the Revised

GSIS may be subject to tax from 1992 to 1996.

Section 33. Exemption from Tax, Legal Process and Lien. the System, its assets,
revenues including all accruals thereto, and benefits paid, shall be exempt from all taxes,
assessments, fees, charges or duties of all kinds.
2

SEC. 234. Exemption from Real Property Tax. . . . Except as provided herein, any

exemption from payment of real property tax previously granted to, or presently enjoyed by,
all persons, whether natural or juridical, including all government-owned or controlled
corporation are hereby withdrawn upon the effectivity of this Code.
3

SEC. 39. Exemption from Tax, Legal Process and Lien. the GSIS, its assets,

revenues including all accruals thereto, and benefits paid, shall be exempt from all taxes,
assessments, fees, charges or duties of all kinds. These exemptions shall continue unless
expressly and specifically revoked and any assessment against the GSIS as of the approval
of this Act are hereby considered paid

MONTERO // 3A TAX DIGESTS

AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

2)

person who had actual or beneficial use and possession of it regardless

The leased Katigbak property is taxable pursuant to the "beneficial use"

of whether or not he is the owner."

In Republic v. City of Kidapawan, actual use refers to the

principle under Sec. 234 (a) of the LGC. It would be paid by MHC and
o

not GSIS.
Sec. 234 (a) exempts from real estate taxes real property owned by the

purpose for which the property is principally or predominantly

Republic, unless the beneficial use of the property is, for consideration,
o

transferred to a taxable person.4

Sec. 234 (a) of the LGC allows the Republic to grant the beneficial use of

property since November 1991, MHC is liable for the realty

its property to an agency or instrumentality of the national government.

taxes assessed over the Katigbak property from 1992 to 2002.

Considering, however, that MHC has not been impleaded in the

Such grant does not necessarily result in the loss of the tax exemption.
The tax exemption status of the property of the Republic or its

instant case, the remedy of the City of Manila is to serve the

instrumentality ceases only if beneficial use thereof has been

MHC and to pursue other available remedies in case of

granted, for a consideration or otherwise, to a taxable person.

In this case, GSIS, as a government instrumentality, is not a taxable

juridical person under Sec. 133 (o) of the LGC.

As GSIS had leased the property to MHC, a taxable person, the

Katigbak property lost its tax exemption status.

Thus, the real estate tax assessment of Php 54,826,599.37 covering

realty tax assessment covering the subject Katigbak property to

nonpayment, for said property cannot be levied upon as shall be
explained below.
3)

said tax delinquency.

As the Court declared in Testate Estate of Concordia T. Lim, "the unpaid

A valid tax levy presupposes a corresponding tax liability. Nonetheless, it

will not be remiss to note that it is without doubt that the subject GSIS
properties are exempt from any attachment, garnishment, execution,

1992 to 2002 over the subject Katigbak property is valid insofar as

o

utilized by the person in possession thereof.

Being in possession and having actual use of the Katigbak

levy, or other legal processes.

o

R.A. 8291 (GSIS Law) provides that [t]he funds and/or the properties
referred to herein as well as the benefits, sums or monies corresponding

tax attaches to the property and is chargeable against the taxable

to the benefits under this Act shall be exempt from attachment,

garnishment, execution, levy or other processes issued by the courts,
quasi-judicial agencies or administrative bodies.

SEC. 234. Exemptions from Real Property Tax. The following are exempted from
payment of the real property tax: (a) Real property owned by the Republic of the Philippines
or any of its political subdivisions except when the beneficial use thereof has been granted,
for consideration or otherwise, to a taxable person.

xxx xxx xxx

(o) Taxes, fees or charges of any kinds on the National Government, its agencies and
instrumentalities, and local government units.

Thus, the Katigbak property is not subject to tax.

Summary In sum, the Court finds that GSIS enjoys under its charter full tax
exemption. Moreover, as an instrumentality of the national government, it is
itself not liable to pay real estate taxes assessed by the City of Manila
against its Katigbak and Concepcion-Arroceros properties. Following the

MONTERO // 3A TAX DIGESTS

AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

"beneficial use" rule, however, accrued real property taxes are due from the
Katigbak property, leased as it is to a taxable entity. But the corresponding
liability for the payment thereof devolves on the taxable beneficial user. The
Katigbak property cannot in any event be subject of a public auction sale,
notwithstanding its realty tax delinquency. This means that the City of Manila
has to satisfy its tax claim by serving the accrued realty tax assessment on
MHC, as the taxable beneficial user of the Katigbak property and, in case of
nonpayment, through means other than the sale at public auction of the
leased property.