Republic of the Philippines
CENTRAL BOARD OF ASSESSMENT APPEALS M a n I l a

CITY ASSESSOR OF CEBU CITY, Respondent-Appellant,

– versus –

LOCAL BOARD OF ASSESSMENT APPEALS OF THE CITY OF CEBU,
Appellee,

CBAA CASE NO. V-15

In Re:

LBAA Case No. 4406

TD #97 GR-04-024-02529

– and –

ASSOCIACION BENEVOLA DE CEBU, INC.,
Petitioner-Appellee.
x——————————————————x

D E C I S I O N

This is an appeal filed by Respondent-Appellant Cebu City Assessor from

the decision rendered by the Local Board of Assessment Appeals of the City of

Cebu on February 10, 1999, the dispositive portion of which reads as follows:

“WHEREFORE, premises considered, the appealed decision imposing a thirty-five (35%) percent assessment level of TD No. ’97-GR-04-024-02529 on the Chong Hua Hospital Medical Arts building is reversed and set aside and other one issued declaring that the building is entitled to a ten (10%) percent assessment level.”

It appears from the records that the Cebu City Assessor assessed the

building in question under Tax Declaration No. 97GR-04-024-02529 as

“commercial” with a market value of P286,060,520.00 and an assessed value of

P9,821,180.00 at the assessment level of 35%. In view thereof, the Associacion

Benevola de Cebu, Inc., Petitioner-Appellee herein, in a letter-petition dated

September 15, 1998, requested the Local Board of Assessment Appeals of

Cebu City for reconsideration so that the property be subjected to the special

assessment level of 10%.

Petitioner-Appellee alleged that the same building “houses various clinics

exclusively by doctors duly accredited by Chong Hua Hospital and other

hospital facilities for the diagnosis, treatment and care of patients suffering from

illness, desease, injury or deformity, or in need of medical care.”

Reference: Book IX, pp. 235-239

Per Certificate of Registration No. P-VII-98 issued on September 01,

1998 by the Department of Trade and Industry, Region VII, Province of Cebu,

Chong Hua Hospital-Llorente St. Branch is the business name, or firm name or

style of Petitioner-Appellee.

On September 25, 1998, Petitioner-Appellee filed its formal appeal with

the Local Board.

In an Order dated September 30, 1998 the Local Board directed the City

Assessor, Respondent-Appellant herein, “to conduct an ocular inspection of the

subject properties and submit his report on the scheduled date of hearing.” The

hearing was reset to October 07, 1998 at 2:00 PM. On October 07, 1998 the

parties were required to submit their respective “Position Papers” within fifteen

(15) days.

In its “Position Paper” Petitioner-Appellee stated that “the building is

actually, directly and exclusively used as part of CHONG HUA HOSPITAL and

as such should have a SPECIAL ASSESSMENT LEVEL of 10% as provided in

the City Tax Ordinance LXX.” Petitioner-Appellee further stated that the subject

building is similarly situated as the Hospital’s buildings for its Dietary and

Records Departments which, although not joined or connected with the main

hospital building, are imposed an assessment level of only 10%; that the

subject building, although not actually indispensable to the hospital’s

operations, are nevertheless incidental to and reasonably necessary.

In his own “Position Paper” Respondent-Appellant stated that the subject

property “is newly constructed 5-storey building situated about 100 meters

away from the main building of Chong Hua Hospital” and that, upon inspection

“it was found out that Chong Hua Hospital Medical Arts Center is no longer a

part of the hospital building but a separate building which is actually used as a

commercial clinic/room spaces for renting out to the physicians and, therefore,

classified as commercial.”

Reference: Book IX, pp. 235-239

The City Assessor further stated that “ the said center usually charged

consultations fees for those patients who used to consult with their medical

specialist for diagnosis/relief of their bodily ailment coupled with their ancillary

services (support services) which include Anesthesia Department, Radiology

Department, Pathology Department, etc. wherein the patients are already

overburdened of their medical charges, hence, the predominant use of which is

ultimately geared for commercial purposes, thus, negating the application of the

10% assessment level as a special class of property; that however, as

annotated on the face of the aforesaid tax declaration covering the subject

structure, the same is a commercial clinic or room spaces which are for rent for

Doctors as classified thereof per Building Permit No. B01-9750087; that

pursuant to Sec. 10 (Local Assessment Regulations No. 1-92) provides 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.”

The instant appeal is filed by Respondent-Appellant City Assessor of

Cebu City on the ground that “The Local Board of Assessment Appeals erred

in: RULING THAT CHONG HUA HOSPITAL MEDICAL ARTS CENTER, BUILT

ON A RENTED LOT, AND INTENDED PRINCIPALLY FOR LEASE TO

DOCTORS ACCREDITED BY THE HOSPITAL IS AN INTEGRAL PART

THEREOF, HENCE, SPECIAL ASSESSMENT OF 10% MUST BE IMPOSED

INSTEAD OF 35% FOR COMMERCIAL ESTABLISHMENTS.”

The sole issue in this case is whether or not the subject building is part

and parcel of Chong Hua Hospital.

The City Assessor says it is not, for the following reasons: (1) the subject

building is built on a rented land and situated about 100 meters away from the

main building of Chong Hua Hospital; (2) the Hospital derives rental income

from the medical specialists who occupy spaces in the subject building; (3)

unlike the separate buildings for laundry and catering services without which

the hospital cannot function as such, the subject building is not an essential part

Reference: Book IX, pp. 235-239

of a hospital since it can still function as such without the same building; and (4)

the Certificate of Occupancy issued by the Office of the Building Official of

Cebu City indicates that the subject building was designed and constructed as

“Commercial” clinic under Building Permit No. B01-9750087.

On the matter of the subject building being detached from the main

hospital building, Petitioner-Appellee Associacion Benevola de Cebu, Inc.

argues that there is no basis for classifying the subject building differently from

the classification of its building housing the Dietary and Records departments.

The latter, like the subject building, is also detached from the main hospital

building and yet assessed at 10% of its fair market value.

We agree with the observations of the Local Board. It is indeed a matter

of public knowledge that hospitals, such as the Petitioner-Appellee, lease out

spaces to medical practitioners accredited with the said hospitals. In fact, it is of

public knowledge that, before the subject Medical Arts Center building was

constructed, the accredited medical practitioners of the hospital were housed in

the main hospital building.

The fact that the subject building is detached from the main hospital

building is of no consequence as far as this case is concerned. For, as the

Supreme Court said in Herrera vs. Quezon City Board of Assessment Appeals

(G.R. No. L-15270, September 30, 1961, 3 SCRA 186, cited in “Abra Valley

College, Inc. vs. Aquino”, G.R. No. L-39086, June 15, 1988, 162 SCRA 106), “.

. . the exemption in favor of property used exclusively for charitable or

educational purposes is not limited to property actually indispensable therefor

(Cooley on Taxation, Vol. 2, p. 1430), but extends to facilities which are

incidental and reasonably necessary for the accomplishment of said purposes,

such as, in the case of hospitals, a school for training nurses, a nurses’ home, a

property used to provide housing facilities, and other members of the hospital

staff, and recreational facilities for student nurses, interns, and residents (8

Reference: Book IX, pp. 235-239

C.J.S. 621); such as athletic fields, including a farm used for inmates of the

institutions (Cooley on Taxation, Vol. 2, p. 1430).”

WHEREFORE, premises considered, the decision rendered by the Local

Board of Assessment Appeals of Cebu City on February 10, 1999 in LBAA

Case No. 4406 is hereby AFFIRMED en toto.

SO ORDERED.

Manila, Philippines, January 24, 2000.

(Signed) CESAR S. GUTIERREZ
Chairman

(Signed)
ANGEL P. PALOMARES Member

(Signed) BENJAMIN M. KASALA
Member

Reference: Book IX, pp. 235-239