G.R. No.

144104, June 29, 2004 [Constitutional Law - Article VI: Legislative Department; Taxation ]
FACTS:
Petitioner is a non-stock, non-profit entity established by virtue of PD No. 1823, seeks exemption
from real property taxes when the City Assessor issued Tax Declarations for the land and the
hospital building. Petitioner predicted on its claim that it is a charitable institution. The request was
denied, and a petition hereafter filed before the Local Board of Assessment Appeals of Quezon City
(QC-LBAA) for reversal of the resolution of the City Assessor. Petitioner alleged that as a charitable
institution, is exempted from real property taxes under Sec 28(3) Art VI of the Constitution. QCLBAA dismissed the petition and the decision was likewise affirmed on appeal by the Central Board
of Assessment Appeals of Quezon City. The Court of Appeals affirmed the judgment of the CBAA.
ISSUE:
1. Whether or not petitioner is a charitable institution within the context of PD 1823 and the 1973
and 1987 Constitution and Section 234(b) of RA 7160.
2. Whether or not petitioner is exempted from real property taxes.
RULING:
1. Yes. The Court hold that the petitioner is a charitable institution within the context of the 1973
and 1987 Constitution. Under PD 1823, the petitioner is a non-profit and non-stock corporation
which, subject to the provisions of the decree, is to be administered by the Office of the President
with the Ministry of Health and the Ministry of Human Settlements. The purpose for which it was
created was to render medical services to the public in general including those who are poor and
also the rich, and become a subject of charity. Under PD 1823, petitioner is entitled to receive
donations, even if the gift or donation is in the form of subsidies granted by the government.
2. Partly No. Under PD 1823, the lung center does not enjoy any property tax exemption privileges
for its real properties as well as the building constructed thereon.
The property tax exemption under Sec. 28(3), Art. VI of the Constitution of the property taxes only.
This provision was implanted by Sec.243 (b) of RA 7160.which provides that in order to be entitled
to the exemption, the lung center must be able to prove that: it is a charitable institution and; its
real properties are actually, directly and exclusively used for charitable purpose. Accordingly, the
portions occupied by the hospital used for its patients are exempt from real property taxes while
those leased to private entities are not exempt from such taxes.

CAMP JOHN HAY VS LIM G.R. No. 119775 MARCH 29, 2005
FACTS: Petitioners filed their Petition for prohibition, mandamus and declaratory relief
assailing (1) the
constitutionality of Proclamation No. 420 and (2) the legality of the Memorandum of
Agreement and Joint
Venture Agreement previously entered into between public respondent BCDA and private
respondents.
Section 3 of Proclamation No. 420 was declared NULL AND VOID and is accordingly
declared of no legal
force and effect.
Intervener CJHDC filed a Motion for Leave to Intervene alleging that it, together with its
consortium
partners, entered into a Lease Agreement dated October 19, 1996 with respondent BCDA
for the
development of the John Hay SEZ; and that it "stands to be most affected" by this Court's
Decision
"invalidating the grant of tax exemption and other financial incentives" in the John Hay
SEZ since "[i]ts
financial obligations and development and investment commitments under the Lease
Agreement were
entered into upon the premise that these incentives are valid and subsisting."
CJHDC, proffering grounds parallel to those of public respondents, prays that: (1) it be
granted leave to
intervene in this case; (2) its attached Motion for Reconsideration in Intervention be
admitted; and (3) this
Court's Decision of October 24, 2003 be reconsidered and petitioners' petition dismissed.
CJHDC's Motion for leave to Intervene was granted and noted its Motion for
Reconsideration in
Intervention.
ISSUE: Whether the tax exemptions and other financial incentives granted to the Subic
SEZ under
Section 12 of R.A. No. 7227 (Bases Conversion and Development Act of 1992), are
applicable to the
John Hay SEZ.
RULING: CJHDC's argument that the President's "power to create Special Economic Zones
carries with
it the power to provide for tax and financial incentives," does not lie. It is the legislative
branch which has
the inherent power not only to select the subjects of taxation but to grant exemptions.
Paragraph 4,
Section 28 of Article VI of the Constitution is crystal clear: "[n]o law granting any tax
exemption shall be
passed without the concurrence of a majority of all the Members of the Congress."
Hence, it is only the legislature, as limited by the provisions of the Constitution, which has
full power to

exempt any person or corporation or class of property from taxation. The Constitution
itself may provide
for specific tax exemptions or local governments may pass ordinances providing for
exemption from local
taxes, but, otherwise, it is only the legislative branch which has the power to grant tax
exemptions, its
power to exempt being as broad as its power to tax.
There is absolutely nothing in R.A. No. 7227 which can be considered a grant of tax
exemption in favor of
public respondent BCDA. Rather, the beneficiaries of the tax exemptions and other
incentives in Section
12 (the only provision in R.A. No. 7227 which expressly grants tax exemptions) are clearly
the business
enterprises located within the Subic SEZ.
Contrary to public respondents' interpretation, the Decision of October 24, 2003 does not
"tie the hands"
of executive or administrative agencies from implementing any present or future
legislation which affords
tax or other financial incentives to qualified persons doing business in the John Hay SEZ or
elsewhere.
The second sentence of Section 3 of Proclamation No. 420 was declared null and void only
insofar as it
purported to grant tax exemptions and other financial incentives to business enterprises
located in John
Hay SEZ. However, where there is statutory basis for exemptions or incentives, there is
nothing to
prevent qualified persons from applying for and availing thereof.