Herrera v Quezon City Board of Assessment

GR No L-15270, September 30, 1961

FACTS:
In 1952, the Director of the Bureau of Hospitals authorized Jose V. Herrera and
Ester Ochangco Herrera to establish and operate the St. Catherine�s Hospital. In
1953, the Herreras sent a letter to the Quezon City Assessor requesting exemption
from payment of real estate tax on the hospital, stating that the same was
established for charitable and humanitarian purposes and not for commercial gain.
The exemption was granted effective years 1953 to 1955. In 1955, however, the
Assessor reclassified the properties from �exempt� to �taxable� effective 1956, as
it was ascertained that out of the 32 beds in the hospital, 12 of which are for
pay-patients. A school of midwifery is also operated within premises of the
hospital.

ISSUE:
Whether St. Catherine�s is exempt from realty tax

RULING:
Yes. The admission of pay-patients does not detract from the charitable character
of a hospital, if all its funds are devoted exclusively to the maintenance of the
institution as a public charity. The exemption extends to facilities which are
incidental to and reasonably necessary for the accomplishment of said purpose � a
school for training nurses, a nurses� home, etc.

CITY ASSESSOR OF CEBU VS. ASSOCIATION OF BENEVOLA DE CEBU

G.R 152904 June 28, 2007

Facts:
Respondent is a non-stock non-profit organization and hospital. In 1990 it
constructed a Medical Arts building right beside it. In 1998 the petitioner, CITY
ASSESSOR OF CEBU issued a certification classifying the new building as commercial
and assessed the building at the assessment level of 35% and not 10% which was then
currently imposed on private respondent. Petitioner in this case claimed that the
building is used as commercial clinic/spaces for renting out physicians and thus
classified as commercial. Respondent contended that the building is used ACTUALLY,
DIRECTLY AND EXCLUSIVELY part of the hospital and should have an assessment level
of 10% as it was currently imposed.

ISSUE:
Whether or not the new building is liable to pay at the 35% assessment level.

Ruling:
NO. Being a TERTIARY HOSPITAL, it is mandated to be fully departmentalized and be
equipped with the service capabilities needed to support certified medical
specialists and other licensed physicians.

The fact that they are holding office in a separate building does not take away the
essence and nature of their services in relation to the overall operation of the
hospital and to its patients.

Under the Local Government Code, Sec. 216: �ALL BUILDINGS AND OTHER IMPROVEMENTS
THEREON actually, directly, and exclusively used for hospitals, cultural or
scientific purposes and those owned and used by local water districts.. shall be
classified as SPECIAL (NOT COMMERCIAL).

CIR v CA (YMCA)
298 SCRA 83

Facts:
In 1980, YMCA earned an income of 676,829.80 from leasing out a portion of its
premises to small shop owners, like restaurants and canteen operators and 44,259
from parking fees collected from non-members. The CIR issued an assessment to YMCA
for deficiency taxes which included the income from lease of YMCA�s real property.
YMCA formally protested the assessment but the CIR denied the claims of YMCA. On
appeal, the CTA ruled in favor of YMCA and excluded income from lease to small shop
owners and parking fees. However, the CA reversed the CTA but affirmed the CTA upon
motion for reconsideration.

Issue:
Whether the rental income of YMCA is taxable

Ruling:
Yes. The exemption claimed by the YMCA is expressly disallowed by the very wording
of the last paragraph of then Sec. 27 of the NIRC; court is duty-bound to abide
strictly by its literal meaning and to refrain from resorting to any convoluted
attempt at construction. The said provision mandates that the income of exempt
organizations (such as YMCA) from any of their properties, real or personal, be
subject to the tax imposed by the same Code. Private respondent is exempt from the
payment of property tax, but not income tax on rentals from its property.

JESUS SACRED HEART COLLEGE VS. CIR

95 SCRA 16

FACTS:
Jesus Sacred Heart College was an educational organization authorized to operate in
Lucena, Quezon. It offered public elementary, secondary and collegiate courses. It
realized net incomes from tuition and other fees in carrying on its educational
activity for the years 1947, 1948 and 1949. The school paid its income tax and
penalties for the net incomes and compromise for late filing of its income tax
returns for said years. It filed a claim for refund with the CIR but was denied. In
a suit filed by the school against the CIR, CFI Manila sentenced the CIR to refund
to the school the sum paid by the school by way of income tax for the years 1947,
1948 and 1949 on the ground that the school is exempt from taxation under section
27(e) of the NIRC.

Issue:
Whether or not the income of the school was taxable

Ruling:
No. Section 27(e) of the National Internal Revenue Code, as amended byRepublic Act
No. 82 (section 5), exempts from taxation the "net income" of corporations
organized and operated exclusively for educational purposes provided no part of the
net income of which inures to the benefit of any private stockholder or individual.

In this case, it was conceded that the school belonged to this class. To hold that
an educational Institution is subject to income tax whenever it is so administered
as to reasonably assure that it will not incur in deficit, is to nullify and defeat
the aforementioned exemption.

The amount of fees charged by a school, college or university depends, ultimately,

upon the policy of a given administration, at a particular time. It is not
conclusive of the purpose of the institution. Otherwise, such purpose would vary
with the particular in charge of the administration of the organization.
Board of Assessment Appeals of Laguna vs CTA
GR No. L-18125
Facts:
National Waterworks and Sewerage Authority (NWSA), a public corporation owned by
the Government of the Philippines was assessed by the Provincial Assessor of
Laguna, for purposes of real estate taxes, on the real properties owned by Cabuyao
Waterworks, which the former took over. NWSA protested claiming it is exempted from
the payment of real estate taxes in view of the nature and kind of said property
and functions and activities of NWSA. Petitioner denied the protest arguing that
such real properties are subject to real estate tax because although said
properties belong to the Republic of the Philippines, the same holds it, not in its
governmental, political or sovereign capacity, but in a private, proprietary or
patrimonial character, which, allegedly, is not covered by the exemption contained
in section 3(a) of Republic Act No. 470.

ISSUE: Are the real properties owned by the respondent public corporation subject
to real estate tax?

RULING:
No. Republic Act No. 470 makes no distinction between property held in a sovereign,
governmental or political capacity and those possessed in a private, proprietary or
patrimonial character.

Moreover, taxes are financial burdens imposed for the purpose of raising revenues
with which to defray the cost of the operation of the Government, and a tax on
property of the Government, whether national or local, would merely have the effect
of taking money from one pocket to put it in another pocket. Hence, it would not
serve, in the final analysis, the main purpose of taxation. What is more, it would
tend to defeat it, on account of the paper work, time and consequently, expenses it
would entail.

PHILIPPINE FISHERIES DEVELOPMENT AUTHORITY vs. The Municipality of Navotas

G.R. No. 150301

Facts:
Municipality of Navotas assessed the real estate taxes allegedly due from
petitioner, Philippine Fisheries Development Authority (PFDA) for the period 1981 �
1990 on properties under its jurisdiction, management and operation located inside
the Navotas Fishing Port Complex (NFPC). The assessed taxes remained unpaid despite
the demands made by the municipality which prompted it to give notice to petitioner
that the NFPC will be sold at public auction in order that the municipality will be
able to collect on petitioners delinquent realty taxes. Plaintiff sought the
deferment of the auction sale claiming that the NFPC is owned by the Republic of
the Philippines, and pursuant to PD No. 977, it (PFDA) is not a taxable entity.

Issue:
Whether or not petitioner is liable to pay real property tax

Held:
No. Section 234 (a) of the LGC states that real property owned by the Republic of
the Philippines or any of its political subdivisions is exempted from payment of
the real property tax "except when the beneficial use thereof has been granted, for
consideration or otherwise, to a taxable person."
Thus, as a rule, petitioner PFDA, being an instrumentality of the national
government, is exempt from real property tax but the exemption does not extend to
the portions of the NFPC that were leased to taxable or private persons and
entities for their beneficial use.

Manila International Airport Authority (MIAA) vs. Court of Appeals

G.R. No. 15560

Facts:
MIAA received Final Notices of Real Estate Tax Delinquency from the City of
Para�aque for the taxable years 1992 to 2001. MIAA filed a petition sought to
restrain the latter from imposing real estate tax on, levying against, and
auctioning for public sale the Airport Lands and Buildings. The City of Para�aque
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. MIAA argued that Airport Lands and
Buildings are owned by the Republic and the government cannot tax itself.

Issue:
Whether or not the City of Para�aque can impose real estate tax, levy against and
auction for public sale the Airport Lands and Buildings.

Ruling:
No. 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. Properties 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.

Mactan Cebu International Airport Authority vs Marcos

GR No 120082

FACTS:
Petitioner was created by virtue of RA 6958. Section 1 states that the authority
shall be exempt from realty taxes imposed by the National Government or any of its
political subdivisions, agencies and instrumentalities. However, the Treasurer of
Cebu City demanded payment for realty taxes from petitioner. Petitioner filed a
declaratory relief before the Regional Trial Court. The trial court dismissed the
petitioner ruling that the Local Government Code withdrew the tax exemption granted
to Government owned and controlled corporation.

ISSUE:
Whether the city of Cebu has the power to impose taxes on petitioner

RULING:
Yes. Taxation is the rule and exemption is the exception, the exemption may thus be
withdrawn at the pleasure of the taxing authority. As to tax exemptions or
incentives granted to or presently enjoyed by natural or juridical persons,
including government- owned and controlled corporations, section 193 of the LGC
prescribes the general rule, namely, they are withdrawn upon the effectivity of the
LGC, except those granted to local water districts, cooperatives, duly registered
under RA 6938, non stock and nonprofit hospitals and educational institutions and
unless otherwise provided in the LGC.