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.
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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