City Assessor of Cebu City versus

Association of Benevola De Cebu, Inc

G.R. No. 152904, June 08, 2007
Second Division, Velasco, Jr., J.

Facts: Benevola de Cebu (Benevola) is a registered non-stock, non-profit

organization who owns Chong Hua Hospital (CHH) in Cebu City. Assessor of
Cebu assessed the medical arts center (CHHMAC) constructed thereto of the
CHH as commercial with a market value of around 28MPhp, and an assessed
value of around 10MPhp at the assessment level of 35%. Benevola thus filed for
a letter petition with the Cebu City Local Board of Assessment Appeals (LBAA)
for reconsideration, claiming that CHHMAC is part of the CHH, where thus the
assessment rate must be 10%. The LBAA ruled in favor of Benevola which the
Central Board of Assessment Appeals (CBAA) affirmed in toto. The Court of
Appeals ruled the same, hence a petition for review on certiorari under rule 45
to the Supreme Court.

Issue(s): Is a medical arts center built by a hospital to house its doctors a

separate commercial establishment subject to a 35% assessment rate imposed
to buildings commercial in nature or an appurtenant to the hospital entitled to
a 10% assessment rate for purposes of real property tax.

Decision: The CHHMAC is appurtenant to the hospital, and thus entitled to a

10% assessment rate. Section 10 of the Local Assessment Regulations provide
that Real Property shall be classified, valued and assessed on the basis of its
actual use regardless of where located, whoever owns it, and whoever uses it.
Actual use referring to the principal purpose for the property to be utilized by
the person possessing it. Constructing the CHHMAC is expected of and
required of CHH since it is a duly licensed tertiary hospital. CHHMAC is an
integral part of CHH, as CHH is mandated by law to equip itself of the service
and capabilities needed to support certified medical specialists in various fields
of medicine. The ICCU and ancillary services needed by CHH is the primary
function of CHHMAC. Verily, being an integral part of CHH, CHHMAC should
be under the same special assessment level of as that of the former and thus,
is entitled to the 10% assessment rate and not 35%.

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