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Republic of the PhilippinesSUPREME COURT
Manila
SECOND DIVISION
G.R. No. 152904 June 8, 2007
CITY SSESSOR O! CE"U CITY,petitioner,vs.SSOCITION O! "ENEVO# DE CE"U,INC.,respondent.
D E C I S I O N
VE#SCO, JR., J.:
Is a medical arts center built b a hospital to house itsdoctors a separate commercial establishment or anappurtenant to the hospital! "his is the core issue to be
resolved in the instant petition #here petitioner insists on a$%& assessment rate on the buildin' #hich he considerscommercial in nature contrar to respondent(s position thatit is a special real propert entitled to a )*& assessmentrate for purposes of realt ta+.
T$e C%&e
"his Petition for Revie# on Certiorari)
under Rule %assails the October $), -**) Decision-of the Court of
ppeals /C0 in C12.R. SP No. 3-%4, #hich affirmedthe 5anuar -, -*** Decision$and October -%, -***Resolutionof the Central 6oard of ssessment ppeals
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/C607 and the March )), -**- Resolution%of the samecourt denin' petitioner(s Motion for Reconsideration.3"heC6 upheld the 8ebruar )*, )999 Decision of the :ocal
6oard of ssessment ppeals /:60, #hich overturnedthe $%& assessment rate of respondent Cebu Citssessor and ruled that petitioner is entitled to a )*&assessment.
T$e !%'(&
Respondent ssociation of 6enevola de Cebu, Inc. is a
non1stoc;, non1profit or'ani
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that of C==. On September -%, )994, respondent formallfiled its appeal #ith the :6 #hich #as doc;eted asCase No. *3, "D No. (9> 2R1*1*-1*-%-9 entitled
ssociation 6enevola de Cebu, Inc. v. Cit ssessor.In the September $*, )994 Order, the :6 directedpetitioner to conduct an ocular inspection of the subectpropert and to submit a report on the scheduled date ofhearin'. In the October >, )994 hearin', the parties #erereuired to submit their respective position papers.
In its position paper, petitioner ar'ued that C==MC is ane#l constructed five1store buildin' situated about )**meters a#a from C== and, based on actual inspection,#as ascertained that it is not a part of the C== buildin'but a separate buildin' #hich is actuall used ascommercial clinicroom spaces for rentin' out tophsicians and, thus, classified as ?commercial.? Petitionercontended that in turn the medical specialists in C==MC
char'e consultation fees for patients #ho consult fordia'nosis and relief of bodil ailment to'ether #ith theancillar /or support0 services #hich include the areas ofanesthesia, radiolo', patholo', and more. Petitionerconcluded the fore'oin' set up to be ultimatel 'eared forcommercial purposes, and thus havin' the properclassification as ?commercial? under 6uildin' Permit No.
6*)19>%**4> pursuant to Section )* of the :ocalssessment Re'ulations No. )19- issued b theDepartment of 8inance /DO80.
On the other hand, respondent contended in its positionpaper that C==MC buildin' is actuall, directl, and
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e+clusivel part of C== and should have a specialassessment level of )*& as provided under Cit "a+Ordinance :FF. Respondent asserted that the C==MC
buildin' is similarl situated as the buildin's of C==,housin' its Dietar and Records Departments, arecompletel separate from the main C== buildin' and areimposed the )*& special assessment level. In fine,respondent ar'ued that the C==MC, thou'h not actuallindispensable, is nonetheless incidental and reasonablnecessar to C==(s operations.
T$e Ru)*n+ o ($e #o'%) "o%- o &&e&&/en( e%)&
On 8ebruar )*, )999, the :6 rendered aDecision,4the dispositive portion of #hich readsG
H=ERE8ORE, premises considered, the appealeddecision imposin' a thirt five /$%0 percent assessmentlevel of "D No. (9> 2R1*1*-1*-%-9 on the Chon' =ua
=ospital Medical rts buildin' is reversed and set asideand other @sicA one issued declarin' that the buildin' isentitled to a ten /)*0 percent assessment level.
In reversin' the rulin' of petitioner Cit ssessor of CebuCit, the :6 reasoned that it is of public ;no#led'e thathospitals have plent of spaces leased out to medicalpractitioners, #hich is both an accepted and desirable fact7
thus, respondent(s claim is not disputed that such is amust for a tertiar hospital li;e C==. "he :6 held that itis inconseuential that a separate buildin' #asconstructed for that purpose pointin' out that departments
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or services of other institutions and establishments arealso not al#as housed in the same buildin'.
"hus, the :6 pointed to the fact that respondent(s
Dietar and Records Departments #hich are housed inseparate buildin's #ere similarl imposed #ith C== thespecial assessment level of )*&, ratiocinatin' in turn thatthere is no reason therefore #h a hi'her level #ould beimposed for C==MC as it is similarl situated #ith theDietar and Records Departments of the C==.
T$e Ru)*n+ o ($e Cen(-%) "o%- o &&e&&/en(e%)&
''rieved, petitioner filed its March )%, )999 Notice ofppeal9and March )3, )999 ppeal Memorandum)*beforethe C6 isaas 8ield Office #hich doc;eted the appealas C6 Case No. 1)%, In ReG :6 Case No. *3, "DNo. (9> 2R1*1*-1*-%-9 entitled Cit ssessor of Cebu
Cit v. :ocal 6oard of ssessment ppeals of Cebu Citand ssociacion 6enevola de Cebu, Inc. On 5une $, )999,respondent filed its ns#er))to petitioner(s appeal.
Subseuentl, on 5anuar -, -***, the C6 rendered aDecision)-affirmin' in totothe :6 Decision andresolved the issue of #hether the subect buildin' ofC==MC is part and parcel of C==. It a'reed #ith the
above disuisition of the :6 that it is a matter of public;no#led'e that hospitals lease out spaces to itsaccredited medical practitioners, and in particular it is ofpublic ;no#led'e that before the C==MC #asconstructed, the accredited doctors of C== #ere housed
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in the main hospital buildin' of C==. Moreover,citin' Herrera v. Quezon City Board of Assessment
Appeals)$later applied inAbra Valley College, Inc. v.
Aquino,
)
the C6 held that the fact that the subectbuildin' is detached from the main hospital buildin' is ofno conseuence as the e+emption in favor of propertused e+clusivel for charitable or educational purposes isnot onl limited to propert actuall indispensable to thehospital, but also e+tends to facilities #hich are incidentaland reasonabl necessar for the accomplishment of suchpurposes.
"hrou'h its October -%, -*** Resolution,)%the C6denied petitioner(s Motion for Reconsideration.)3
T$e Ru)*n+ o ($e Cou-( o e%)&
Not satisfied, petitioner brou'ht before the C a petitionfor revie#)>under Rule $ of the Rules of Court, doc;eted
as C12.R. SP No. 3-%4, ascribin' error on the C6 indismissin' his appeal and in affirmin' the 8ebruar )*,)999 Decision)4of the :6.
On October $), -**), the appellate court rendered theassailed Decision)9#hich affirmed the 5anuar -, -***Decision of the C6. It a'reed #ith the C6 thatC==MC is part and parcel of C== in line #ith the rulin'
inHerrera-*on #hat the term ?appurtenant thereto? means."hus, the C held that the facilities and utilities ofC==MC are undoubtedl necessar and indispensablefor the C== to achieve its ultimate purpose.
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"he C li;e#ise ruled that the fact that rentals are paid bC== accredited doctors and medical specialists forspaces in C==MC has no bearin' on its classification as
a hospital since C==MC serves also as a place formedical chec;1up, dia'nosis, treatment, and care for itspatients as #ell as a speciali
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=ence, before us is the instant petition #ith the solitarissue, as follo#sG
H=E"=ER OR NO" "=ERE IS SERIOJS ERROR 6K
"=E COJR" O8 PPE:S IN 88IRMIN2 "=EDECISION O8 "=E CEN"R: 6ORD O8
SSESSMEN" PPE:S "=" "=E NEH 6JI:DIN2?C=ON2 =J =OSPI": ND MEDIC: R"SCEN"ER? /C==MC0 IS N ESSEN"I: PR" O8 "=EO:D 6JI:DIN2 LNOHN S ?C=ON2 =J =OSPI":.?IN "=E NE2"IE, H=E"=ER OR NO" "=E NEH
6JI:DIN2 IS :I6:E "O PK "=E $%& SSESSMEN":EE:. ND H=E"=ER OR NO" "=E COJR" O8
PPE:S COJ:D IN"ER8ERE HI"= "=E 8INDIN2SO8 "=E CEN"R: 6ORD O8 SSESSMEN"
PPE:S, 2OERNMEN" 2ENCK =IN2SPECI: "EC=NIC: LNOH:ED2E ND "RININ2ON "=E M""ER SJ65EC" O8 "=E PRESEN" CSE.--
T$e Cou-(& Ru)*n+
"he petition is devoid of merit.
It is petitioner(s stron' belief that the subect buildin',C==MC, #hich is built on a rented land and situatedabout )** meters from the main buildin' of C==, is not ane+tension nor an inte'ral part of C== and thus should not
eno the )*& special assessment. Petitioner anchors theclassification of C==MC as ?commercial,? first, on Sec.)* of :ocal ssessment Re'ulations No. )19- issued bthe DO8, #hich providesG
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SEC. )*. ctual use of Real Propert as basis ofssessment.Real Propert shall be classified, valuedand assessed on the basis of its actual use re'ardless of
#here located, #hoever o#ns it, and #hoever uses it./Sec. -)>, R.. >)3*0
. ?ctual use? refers to the purpose for #hich the propertis principall or predominantl utili)3*0
Secondl, the result of the inspection on subect buildin'
b the Cit ssessor(s inspection team sho#s thatC==MC is a commercial establishment based on thefollo#in'G /)0 C==MC is e+clusivel intended for lease todoctors7 /-0 there are neither operatin' rooms nor beds forpatients7 and /$0 the doctors rentin' the spaces earnincome from the patients #ho avail themselves of theirservices. "hus, petitioner ar'ues that C==MC isprincipall and actuall used for lease to doctors, and
respondent as o#ner of C==MC derives rental incomefrom it7 hence, C==MC #as built and is intended forprofit and functions commerciall.
Moreover, petitioner asserts that C==MC is not part ofthe C== main buildin' as it is e+clusivel used as privateclinics of phsicians #ho pa rental fees to petitioner. nd#hile the private clinics mi'ht be considered facilities, theare not incidental to nor reasonabl necessar for theaccomplishment of the hospital(s purposes as C== canstill function and accomplish its purpose #ithout thee+istence of C==MC. In addition, petitioner contendsthat theAbra Valley College, Inc.-$rulin' is not applicable
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to the instant case for schools, the subect matter in saidcase, are alread entitled to special assessment. 6esides,petitioner points C==MC is not amon' the facilities
mentioned in said case. 8urther, petitioner ar'ues thatC==MC is not in the same cate'or as nurses( homesand housin' facilities for the hospital staff as these areclearl not for profit, that is, not commercial, and areclearl incidental and reasonabl necessar for thehospital(s purposes.
He are not persuaded.
careful revie# of the records compels us to affirm theassailed C Decision as #e find no reversible error for usto reverse or alter it.
C$on+ u% o&*(%) Me*'%) -(& Cen(e- *& %n *n(e+-%)%-( o C$on+ u% o&*(%)
He so hold that C==MC is an inte'ral part of C==.It is undisputed that the doctors and medical specialistsholdin' clinics in C==MC are those dul accredited bC==, that is, the are consultants of the hospital and theones #ho can treat C==(s patients confined in it. "his factalone ta;es a#a C==MC from bein' cate'ori
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and the ?)949 Revised Rules and Re'ulations? 'overnin'the re'istration, licensure and operation of hospitals in thePhilippines. Jnder Sec. 3, sub1sec. 3.$, it is mandated b
la#, that respondent appellee in order to retain itsclassification as a ?"ER"IRK =OSPI":,? must be fulldepartmentali
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2iven our discussion above, the C==MC facilit, #hileseemin'l not indispensable to the operations of C==, isdefinitel incidental to and reasonabl necessar for the
operations of the hospital. Considerin' the le'alreuirements and the ramifications of the medical andclinical operations that have been transferred to theC==MC from the C== main buildin' in li'ht of theaccredited phsicians( transfer of offices in )994 after theC==MC buildin' #as finished, it cannot be 'ainsaid thatthe services done in C==MC are indispensable andessential to the hospital(s operation.
8or one, as found b the appellate court, the C==MCfacilit is primaril used b the hospital(s accreditedphsicians to perform medical chec;1up, dia'nosis,treatment, and care of patients. 8or another, it also servesas a speciali
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"hus, the importance of C==MC in the operation of C==cannot be over1emphasi
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devoted for the benefit of the C==(s patients, should beaccorded the )*& special assessment.
In this re'ard, #e point #ith approbation the appellate
court(s application of Sec. -)3 in relation #ith Sec. -)% ofthe :ocal 2overnment Code on the proper classification ofthe subect C==MC buildin' as ?special? and not?commercial.? Secs. -)% and -)3 pertinentl provideG
SEC. -)%. Classes of Real Propert for ssessmentPurposes.B8or purposes of assessment, real propert
shall be classified as residential, a'ricultural, commercial,industrial, mineral, timberland or &e'*%).
+ + + +
SEC. -)3. Special Classes of Real Propert.)) )%n&,u*)*n+&, %n o($e- */-oe/en(& ($e-eon %'(u%))3,*-e'()3 %n e')u&*e)3 u&e o- $o&*(%)&, cultural or
scientific purposes, and those o#ned and used b local#ater districts, and 'overnment1o#ned or controlledcorporations renderin' essential public services in thesuppl and distribution of #ater andor 'eneration andtransmission of electric po#er &$%)) e ')%&&**e %&&e'*%). /Emphasis supplied.0
"hus, applin' the above provisos in line #ith Cit "a+
Ordinance :FF of Cebu Cit, ($e 10: &e'*%)%&&e&&/en( &$ou) e */o&e o- ($e CMCu*)*n+ 6$*'$ &$ou) e ')%&&**e %& ;&e'*%).;
H=ERE8ORE, the petition is DENIED for lac; of meritand the October $), -**) Decision and March )), -**-
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Resolution of the C are hereb 88IRMED. Nopronouncement as to costs.
SO ORDERED.
PRES"ITERO J. VE#SCO, JR.ssociate 5ustice
HE CONCJRG
:EONRDO . JISJM6IN2ssociate 5ustice
Chairperson
N"ONIO ". CRPIO CONC=I" CRPIO MOR:ESssociate 5ustice ssociate 5ustice
DN"E O. "IN2ssociate 5ustice
" " E S " " I O NI attest that the conclusions in the above Decision hadbeen reached in consultation before the case #asassi'ned to the #riter of the opinion of the Court(sDivision.
:EONRDO . JISJM6IN2
ssociate 5usticeChairperson
C E R " I 8 I C " I O N
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Pursuant to Section )$, rticle III of the Constitution, andthe Division Chairperson(s ttestation, I certif that theconclusions in the above Decision had been reached in
consultation before the case #as assi'ned to the #riter ofthe opinion of the Court(s Division.
REYNTO S. PUNOChief 5ustice