Position Paper

GSIS Properties

Background

This position paper tackles the taxability of GSIS properties.

General Rule: Properties are exempt

from taxes.

Section 39 of RA 8291 is categorical in stating that GSIS shall be

exempt from any or all taxes. The said provision is quoted below:

Exception: If the beneficial use

of the properties is granted
to a taxable person.

Section 234 of the Local Government Code provides that

properties owned by the Republic of the Philippines or any of its
political subdivisions are exempt from real property taxes but when

SEC. 39. Exemption from Tax, Legal Process and Lien. - It is

hereby declared to be the policy of the State that the actuarial
solvency of the funds of the GSIS shall be preserved and maintained
at all times and that contribution rates necessary to sustain the
ATTY.benefits
RAYMOND M.under this Act FOR
ANDES | CONSULTANT shall be kept as low as possible in order notPAGE
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burden the
ADMINISTRATIVE members of the GSIS and their employers. Taxes imposed
SERVICES
on the GSIS tend to impair the actuarial solvency of its funds and
increase the contribution rate necessary to sustain the benefits of
this Act. Accordingly, notwithstanding any laws to the contrary, 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. Consequently, all
the beneficial use thereof has been granted to a taxable person, the
property is subject to tax.

GSIS is a government instrumentality as held by the

Supreme Court in GSIS vs. City Treasurer1. As such, is it within the
ambit of Section 234 of the LGC? Short answer is in the affirmative.

According to Manila International Airport Authority v. Court of

Appeals,2 a government instrumentality remains part of the “national
government machinery” although it may be operationally autonomous
and is outside of the department framework.

Therefore, Section 234 applies to its properties such that, if the

beneficial use thereof has been granted to taxable persons, the said
properties are subject to real property tax.

Meaning of Beneficial Use

“Beneficial use” has no definition in the Local Government

Code. Fortunately, in Herarc Corp. v. Provincial Treasurer,3 the
Supreme Court interpreted it to mean…

Summary

This paper is summed up in the case of Herarc Corp. v.

Provincial Treasurer, supra, in the following way:

In Bullet Points

The personal liability for the tax delinquency is generally on

1 G.R. No. 186242, December 23, 2009.

2 G.R. No. 155650, July 20, 2006.
3 G.R. No. 210736, September 05, 2018; citing National Power Corporation v. Province of Quezon, G.R. No. 171586,
January 25, 2010.

ATTY. RAYMOND M. ANDES | CONSULTANT FOR PAGE 2 OF 4

Beneficial use
ADMINISTRATIVE SERVICES means that the person or entity
has the use and possession of the property.
 1. GSIS properties are exempt from real property taxes.

2. However, if the beneficial use of the properties is granted to

taxable persons, the properties are subject to real property tax.

a. The personal liability is on any person who has such

beneficial use.

b. Beneficial use means that the person has the use and
possession of the property.

What the Certifications must include

Because ownership, use and possession are matters to be considered

on determining the taxability of a property, the certification must include…

1. Who the owner is

2. Who is in possession of the property

If both the owner and possessor of the property is GSIS, the property
is exempt from real property tax. However, if the possessor is a taxable
person, the property is subject to tax even though the owner is GSIS.

ATTY. RAYMOND M. ANDES | CONSULTANT FOR PAGE 3 OF 4

ADMINISTRATIVE SERVICES