Lung Center of the Philippines vs Quezon City

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. QC-LBAA 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.
PUNSALAN VS. MUNICIPAL BOARD OF MANILA
[95 PHIL 46; NO.L-4817; 26 MAY 1954]

Facts: Petitioners, who are professionals in the city, assail Ordinance No. 3398 together with the law
authorizing it (Section 18 of the Revised Charter of the City of Manila). The ordinance imposes a
municipal occupation tax on persons exercising various professions in the city and penalizes non-
payment of the same. The law authorizing said ordinance empowers the Municipal Board of the city to
impose a municipal occupation tax on persons engaged in various professions. Petitioners, having
already paid their occupation tax under section 201 of the National Internal Revenue Code, paid the tax
under protest as imposed by Ordinance No. 3398. The lower court declared the ordinance invalid and
affirmed the validity of the law authorizing it.

Issue: Whether or Not the ordinance and law authorizing it constitute class legislation, and authorize
what amounts to double taxation.

Held: The Legislature may, in its discretion, select what occupations shall be taxed, and in its discretion
may tax all, or select classes of occupation for taxation, and leave others untaxed. It is not for the courts
to judge which cities or municipalities should be empowered to impose occupation taxes aside from that
imposed by the National Government. That matter is within the domain of political departments. The
argument against double taxation may not be invoked if one tax is imposed by the state and the other is
imposed by the city. It is widely recognized that there is nothing inherently terrible in the requirement
that taxes be exacted with respect to the same occupation by both the state and the political
subdivisions thereof. Judgment of the lower court is reversed with regards to the ordinance and
affirmed as to the law authorizing it. Ndnd
LLADOC VS. COMMISSIONER OF INTERNAL
REVENUE [14 SCRA 292; NO.L-19201; 16 JUN 1965]

Facts: Sometime in 1957, M.B. Estate Inc., of Bacolod City, donated 10,000.00 pesos in cash to Fr. Crispin
Ruiz, the parish priest of Victorias, Negros Occidental, and predecessor of Fr. Lladoc, for the construction
of a new Catholic church in the locality. The donated amount was spent for such purpose.

On March 3, 1958, the donor M.B. Estate filed the donor's gift tax return. Under date of April 29, 1960.
Commissioner of Internal Revenue issued an assessment for the donee's gift tax against the Catholic
Parish of Victorias of which petitioner was the parish priest.

Issue: Whether or not the imposition of gift tax despite the fact the Fr. Lladoc was not the Parish priest
at the time of donation, Catholic Parish priest of Victorias did not have juridical personality as the
constitutional exemption for religious purpose is valid.

Held: Yes, imposition of the gift tax was valid, under Section 22(3) Article VI of the Constitution
contemplates exemption only from payment of taxes assessed on such properties as Property taxes
contra distinguished from Excise taxes The imposition of the gift tax on the property used for religious
purpose is not a violation of the Constitution. A gift tax is not a property by way of gift inter vivos.

The head of the Diocese and not the parish priest is the real party in interest in the imposition of the
donee's tax on the property donated to the church for religious purpose.