Lung Center of the Philippines vs.

Quezon City
GR No. 144104, June 29, 2004
Facts:
The petitioner which is a non-stock, non-profit corporation owns a property
located in Quezon City in which the hospital is constructed. There are other portions of
the property which the petitioner leases to private enterprises. The petitioner was
assessed by the Quezon City for its real property tax. The petitioner protested the
assessment contending that it is exempt from real property tax since it is a charitable
institution. The protest was denied. The case was brought to the LBAA and eventually
to CBAA which garnered a dismissal. When appealed to the CA, it affirmed the decision
of the CBAA finding the petitioner liable for tax. The case was then brought before the
Supreme Court. The petitioner contends that it is exempt pursuant to the Constitution
since it is a charitable institution. On the other, the respondent counters that it is liable to
tax since its properties are not actually, directly, and exclusively used for its charitable
purposes.
Issue:
Whether or not the petitioner is exempt from paying real property tax.
Ruling:
No.
Under the 1973 and 1987 Constitutions and Rep. Act No. 7160 in order to be
entitled to the exemption, the petitioner is burdened to prove, by clear and unequivocal
proof, that (a) it is a charitable institution; and (b) its real properties
are ACTUALLY, DIRECTLY and EXCLUSIVELY used for charitable purposes.
"Exclusive" is defined as possessed and enjoyed to the exclusion of others; debarred
from participation or enjoyment; and "exclusively" is defined, "in a manner to exclude; as
enjoying a privilege exclusively." If real property is used for one or more commercial
purposes, it is not exclusively used for the exempted purposes but is subject to
taxation the words "dominant use" or "principal use" cannot be substituted for the words
"used exclusively" without doing violence to the Constitutions and the law. Solely is
synonymous with exclusively.
The petitioner failed to discharge its burden to prove that the entirety of its real
property is actually, directly and exclusively used for charitable purposes. While portions
of the hospital are used for the treatment of patients and the dispensation of medical
services to them, whether paying or non-paying, other portions thereof are being leased
to private individuals for their clinics and a canteen. Further, a portion of the land is
being leased to a private individual for her business enterprise under the business name
"Elliptical Orchids and Garden Center." Indeed, the petitioner’s evidence shows that it
collected ₱1,136,483.45 as rentals in 1991 and ₱1,679,999.28 for 1992 from the said
lessees.