Lung center

The test whether an enterprise is charitable or not is whether it exists to carry out a purpose recognized
in law as charitable or whether it is maintained for gain, profit, or private advantage Lung Center of the
Philippines vs. Quezon City, 433 SCRA 119, G.R. No. 144104 June 29, 2004

As a general principle, a charitable institution does not lose its character as such and its exemption from
taxes simply because it derives income from paying patients, whether out-patient, or confined in the
hospital, or receives subsidies from the government, so long as the money received is devoted or used
altogether to the charitable object which it is intended to achieve, and no money inures to the private
benefit of the persons managing or operating the institution. Congregational Sunday School, etc. v.
Board of Review
MACTAN

SEC. 234. Exemptions from Real Property Tax. - The following are exempted
from payment of the real property tax: cha nrob les virtual law l ibra ry

(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;
(b) Charitable institutions, churches, parsonages or convents appurtenant
thereto, mosques, nonprofit or religious cemeteries and all lands, buildings,
and improvements actually, directly, and exclusively used for religious,
charitable or educational purposes;
(c) All machineries and equipment that are actually, directly and exclusively
used by local water districts and government-owned or -controlled
corporations engaged in the supply and distribution of water and/or
generation and transmission of electric power;
(d) All real property owned by duly registered cooperatives as provided for
under R. A. No. 6938; and c ralaw

(e) Machinery and equipment used for pollution control and environmental
protection. 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
corporations are hereby withdrawn upon the effectivity of this Code.

Camporedondo and Baluyot v. Holganza,[11] the test for determining whether a

corporation is a GOCC is simply whether it was created under its own charter for
the exercise of a public function or by incorporation under the general
corporation law.
Same; Same; “Agency” and “Instrumentality,” Explained.—An “agency” of the Government refers to
“any of the various units of the Government, including a department, bureau, office, instrumental“ity, or
government-owned or controlled corporation, or a local government or a distinct unit therein;” while an
“instrumentality” refers to “any agency of the National Government, not integrated within the
department framework, vested with special functions or jurisdiction by law, endowed with some if not
all corporate powers, administering special funds, and enjoying operational autonomy, usually through a
charter. This term includes regulatory agencies, chartered institutions and government-owned and
controlled corporations.”

Same; Local Government Units; Local Government Code; Reliance on Basco vs. Philippine Amusement
and Gaming Corporation, 197 SCRA 52 (1991), is unavailing since it was decided before the effectivity of
the LGC.—Accordingly, the position taken by the petitioner is untenable. Reliance on Basco vs.
Philippine Amusement and Gaming Corporation is unavailing since it was decided before the effectivity
of the LGC. Besides, nothing can prevent Congress from decreeing that even instrumentalities or
agencies of the Government performing governmental functions may be subject to tax. Where it is done
precisely to fulfill a constitutional mandate and national policy, no one can doubt its wisdom.
Manila Int airport

MIAA’s Airport Lands and Buildings are exempt from real estate tax imposed by local governments. First,
MIAA is not a government-owned or controlled corporation but an instrumentality of the National
Government and thus exempt from local taxation. Second, the real properties of MIAA are owned by the
Republic of the Philippines and thus exempt from real estate tax. Manila International Airport Authority
vs. Court of Appeals, 495 SCRA 591, G.R. No. 155650 July 20, 2006

There is no dispute that a government-owned or controlled corporation is not exempt from real estate
tax. However, MIAA is not a government-owned or controlled corporation. Section 2(13) of the
Introductory Provisions of the Administrative Code of 1987 defines a government-owned or controlled
corporation as follows: SEC. 2. General Terms Defined.—x x x x (13) Government-owned or controlled
corporation refers to any agency organized as a stock or non-stock corporation, vested with functions
relating to public needs whether governmental or proprietary in nature, and owned by the Government
directly or through its instrumentalities either wholly, or, where applicable as in the case of stock
corporations, to the extent of at least fifty-one (51) percent of its capital stock: x x x. (Emphasis supplied)
A government-owned or controlled corporation must be “organized as a stock or non-stock
corporation.” MIAA is not organized as a stock or non-stock corporation. MIAA is not a stock corporation
because it has no capital stock divided into shares. Manila International Airport Authority vs. Court of
Appeals, 495 SCRA 591, G.R. No. 155650 July 20, 2006

MIAA is also not a non-stock corporation because it has no members. Section 87 of the Corporation
Code defines a non-stock corporation as “one where no part of its income is distributable as dividends
to its members, trustees or officers.” A non-stock corporation must have members. Even if we assume
that the Government is considered as the sole member of MIAA, this will not make MIAA a non-stock
corporation. Non-stock corporations cannot distribute any part of their income to their members.
Section 11 of the MIAA Charter mandates MIAA to remit 20% of its annual gross operating income to the
National Treasury. This prevents MIAA from qualifying as a non-stock corporation. Manila International
Airport Authority vs. Court of Appeals, 495 SCRA 591, G.R. No. 155650 July 20, 2006