Case Digest: HON. RAMON BAGATSING, et al. vs. HON. PEDRO A. RAMIREZ and FEDERATION OF MANILA MARKET VENDORS, INC.

G.R. No. L-41631               17 December 1976

MARTIN, J.

FACTS:

Sometime in 1974, the Municipal Board of Manila enacted Ordinance No. 7522, “An Ordinance Regulating the Operation of Public Markets and Prescribing Fees for the Rentals of Stalls and Providing Penalties for Violation Thereof and for Other Purposes.” City Mayor Bagatsing approved the ordinance 3 days later.

On 17 February 1975, respondent Federation of Manila Market Vendors, Inc. commenced a civil case before the CFI of Manila seeking declaration of the said ordinance mainly because the publication requirement under the Charter of Manila has not been complied with. Judge Ramirez rendered its decision declaring the nullity of the ordinance on the primary ground of non-compliance with the requirement of publication under the City Charter, which requires the ordinance to be published in two daily newspapers of general circulation in the city before its enactment.  Neither was it published after its approval, although it was posed in the legislative hall and in all city public markets and city public libraries.

For the petitioners’ part, they claim that only a post-publication is required under the Local Tax Code.

ISSUE: 

What law shall govern the publication of a tax ordinance enacted by the Municipal Board of Manila, the Revised City Charter, which requires publication of the ordinance before its enactment and after its approval, or the Local Tax Code, which only demands publication after its approval?

HELD:

There is no question that the Revised Charter of the City of Manila is a special act, whereas the Local Tax Code is a general law because it applies universally to all LGUs.  The rule commonly said is that the fact that one is special and the other is general creates a presumption that the special is to be considered.  However, the rule yields to a situation where the special statute refers to a subject in general which the general statute treats in particular.  This exactly is the circumstance in this case. The Revised Charter of the City of Manila refers merely to “ordinances,” while the Local Tax Code refers to “ordinances levying or imposing taxes, fees and other charges” in particular. Thus, in the realm of “ordinances levying or imposing taxes, fees and other charges” the Local Tax Code governs.  This is especially true since the Local Tax Code was enacted later than the Charter

Case Digest: RADIO COMMUNICATIONS OF THE PHILIPPINES, INC., et al. vs. NATIONAL TELECOMMUNICATIONS COMMISSION and PHILIPPINE LONG DISTANCE TELEPHONE COMPANY

G.R. No. L-66683 23 April 1990

FACTS:

On January 4, 1984, private respondent PLDT filed an application with respondent Commission for the Approval of Rates for Digital Transmission Service Facilities. The NTC and the Public Service Commission granted the same provisionally for 30 days.

ISSUE: 

Whether or not the NTC and the Public Service Commission can grant provisional rates without informing herein petitioners.

RULING:

Yes. Well-settled is the rule that the Public Service Commission now is empowered to approve provisionally rates of utilities without the necessity of a prior hearing. Under the Public Service Act, as amended (CA No. 146), the Board of Communications then, now the NTC, can fix a provisional amount for the subscriber's investment to be effective immediately, without hearing (par. 3 of Sec. 16, CA 146, as amended). Further, the Public Service Act makes no distinction between initial or revised rates. These rates are necessarily proposed merely, until the Commission approves them. Moreover, the Commission can hear and approve revised rates without published notices or hearing. The reason is easily discerned from the fact that provisional rates are by their nature temporary and subject to adjustment in conformity with the definitive rates approved after final hearing 

Case Digest: PEOPLE OF THE PHILIPPINES vs. CAROL M. DELA PIEDRA

G.R. No. 121777 24 January 2001

FACTS:

Dela Piedra was charged with illegal recruitment in a large scale. In an information filed against her, without any POEA license, she allegedly offered and promised for a fee employment in Singapore to Modesto, Amanita and Timbol, such that Modesto had already advanced the amount of Php2,000.00. Dela Piedra was arrested in her home after an investigation was made by Atty. Erlina Ramos, a lawyer of the POEA, who pretended to be an applicant, which led to an entrapment operation of the PNP-CIS for Region IX.

ISSUES:

1. Is Article 13(b) of the Labor Code defining recruitment and placement void for vagueness?
2. Whether herein appellant committed the crime of large scale illegal recruitment.

RULING:

1. NO. Section 13(b) is not overbroad. It encompasses what appellant apparently considers as customary and harmless acts such as labor or employment referral.
2. NO. A conviction for large scale illegal recruitment must be based on a finding in each case of illegal recruitment of three or more persons whether individually or as a group. In this case, only two persons, Amanita and Modesto, were proven to have been recruited by the appellant.

Case Digest: PEOPLE OF THE PHILIPPINES vs. HON. DOMINGO PANIS and SERAPIO ABUG

G.R. Nos. L-58674-77 11 July 1990

FACTS:

Four informations were filed in the CFI of Zamboanga City alleging that Serapio Abug, “without securing a license from the Ministry of Labor as holder of authority did then and there operate a fee-charging employment agency by charging fees and expenses and promising employment in Saudi Arabia”

ISSUE: 

Whether all the acts mentioned in Article 13(b) of PD 442 are indispensable requirements in order to constitute illegal recruitment and placement.

RULING:

NO. Article 13(b) states that “Recruitment and placement refers to any act of canvassing, enlisting, contracting, transporting, hiring, or procuring workers, and includes referrals, contract services, promising or advertising for employment, locally or abroad, whether for profit or not: Provided, that any person or entity which in any manner, offers or promises for a fee employment to two or more persons shall be deemed engaged in recruitment and placement”.

The number of persons dealt with is not an essential ingredient in the act of recruitment and placement of workers. Any of the acts mentioned in the basic rule in Article 13(B) will constitute recruitment and placement even if only one prospective worker is involved.

Case Digest: FRANCISCO S. TATAD, et al. vs. Secretary of DOTC JESUS B. GARCIA, JR., EDSA LRT CORPORATION, LTD.

G.R. No. 114222                 06 April 1995

Facts:

In 1989, the government planned to build a railway transit line along EDSA. No bidding was made but certain corporations were invited to prequalify. The only corporation to qualify was the EDSA LRT Consortium which was obviously formed for this particular undertaking. An agreement was then made between the government, through the Department of Transportation and Communication (DOTC), and EDSA LRT Consortium. The agreement was based on the Build-Operate-Transfer scheme provided for by law (RA 6957, amended by RA 7718). Under the agreement, EDSA LRT Consortium shall build the facilities, i.e., railways, and shall supply the train cabs. Every phase that is completed shall be turned over to the DOTC and the latter shall pay rent for the same for 25 years. By the end of 25 years, it was projected that the government shall have fully paid EDSA LRT Consortium. Thereafter, EDSA LRT Consortium shall sell the facilities to the government for $1.00.

However, Senators Francisco Tatad, John Osmeña, and Rodolfo Biazon opposed the implementation of said agreement as they averred that EDSA LRT Consortium is a foreign corporation as it was organized under Hongkong laws; that as such, it cannot own a public utility such as the EDSA railway transit because this falls under the nationalized areas of activities. The petition was filed against Jesus Garcia, Jr. in his capacity as DOTC Secretary.

Issue: 

Can respondent EDSA LRT Corporation, Ltd., a foreign corporation own EDSA LRT III; a public utility? 

Ruling:

What private respondent owns are the rail tracks, rolling stocks like the coaches, rail stations, terminals and the power plant, not a public utility. While a franchise is needed to operate these facilities to serve the public, they do not by themselves constitute a public utility. What constitutes a public utility is not their ownership but their use to serve the public.

In law, there is a clear distinction between the "operation" of a public utility and the ownership of the facilities and equipment used to serve the public. The right to operate a public utility may exist independently and separately from the ownership of the facilities thereof. One can own said facilities without operating them as a public utility, or conversely, one may operate a public utility without owning the facilities used to serve the public. The devotion of property to serve the public may be done by the owner or by the person in control thereof who may not necessarily be the owner thereof.

Case Digest: PEOPLE OF THE PHILIPPINES vs. MELISSA CHUA

G.R. No. 184058

Ponente: Carpio Morales, J.

DOCTRINE: An employee, even a temporary one, may be held liable for illegal recruitment as principal by direct participation, together with the employer.

FACTS:

Melissa Chua and one Josie Campos were charged with Large Scale Illegal Recruitment and Estafa for allegedly recruiting Erik Tan, Marilyn Macaranas, Napoleon Yu, Harry King and Roberto Angeles as factory workers in Taiwan. Chua, claimed to be merely working as a temporary cashier for Golden Gate, Inc., were paid by the private complainants placement fees in exchange for their promised employments abroad. Said placement fees ranged from Php25,000.00 to Php80,000.00 for which she issued receipts thereto.  After the failure to deploy the complainants and refund their placement fees, they found out that Golden Gate Inc.’s license had already expired.

Chua claims that she did not receive any money for she turned over the placement fees she received to the documentation officer, one Arlene Vega, and was ultimately remitted to Marilyn Calueng.

ISSUE: Whether or not Melissa Chua is guilty of illegal recruitment in a large scale despite being merely a temporary employee of Golden Gate, Inc.

RULING:

Yes. Article 38(a) of the Labor Code, as amended, under which Chua was charged defines illegal recruitment as “any recruitment activities, including the prohibited practices enumerated under Article 34 of this Code, to be undertaken by non-licensees or non-holders of authority shall be deemed illegal and punishable under Article 39 of this Code. x x x Illegal recruitment is deemed committed in large scale if committed against three (3) or more persons individually or as a group.” Any recruitment activities to be undertaken by a non-licensee, or in this case, an agency with an expired license, shall be deemed illegal and punishable under Article 39 of the Labor Code. 

Chua was positively identified as one of the persons who enticed the complainants to part with their money upon the fraudulent representation that they would be able to secure from them employment abroad. Even if Chua was a mere temporary cashier of Golden Gate, that did not make her any less liable for illegal recruitment as principal by direct participation, together with her employer, as it is shown that she actively and consciously participated in the recruitment process.

Case Digest: Eternal Gardens Memorial Park vs. Philam Life

ETERNAL GARDENS MEMORIAL PARK CORPORATION vs. THE PHILIPPINE AMERICAN LIFE INSURANCE COMPANY

G.R. No. 166245 09 April 2008

Facts:

Respondent Philamlife entered into an agreement denominated as Creditor Group Life Policy with petitioner. Under the policy, the clients of Eternal who purchased burial lots from it on installment basis would be insured by Philamlife. Among those insured was John Chuang who died with a balance of payments pf PhP100,000.00. More than a year after complying with the required documents, Philamlife had not furnished Eternal with any reply to the latter’s insurance claim. This prompted Eternal to demand from Philamlife the payment of the claim for PhP 100,000 on April 25, 1986. Only then did Philamlife respond that the deceased was not covered by the Policy.

The RTC said that since the contract is a group life insurance, once proof of death is submitted, payment must follow. The CA ruled that the non-accomplishment of the submitted application form violated Section 26 of the Insurance Code. Thus, the CA concluded, there being no application form, Chuang was not covered by Philamlifes insurance.

Issue: May the inaction of the insurer on the insurance application be considered approval of the application?

Ruling:

Yes. As earlier stated, Philamlife and Eternal entered into an agreement denominated as Creditor Group Life Policy No. P-1920 dated December 10, 1980. In the policy, it is provided that:

 

EFFECTIVE DATE OF BENEFIT.

 

The insurance of any eligible Lot Purchaser shall be effective on the date he contracts a loan with the Assured. However, there shall be no insurance if the application of the Lot Purchaser is not approved by the Company.

 

An examination of the above provision would show ambiguity between its two sentences.   A contract of insurance, being a contract of adhesion, par excellence, any ambiguity therein should be resolved against the insurer. Moreover, the mere inaction of the insurer on the insurance application must not work to prejudice the insured; it cannot be interpreted as a termination of the insurance contract. The termination of the insurance contract by the insurer must be explicit and unambiguous.

Case Digest: Philamcare vs. Court of Appeals and Trinos

PHILAMCARE HEALTH SYSTEMS, INC. vs. COURT OF APPEALS and JULITA TRINOS

G.R. No. 125678; 18 March 2002

Facts:

Ernani Trinos, deceased husband of private respondent Julita Trinos, was approved for a health care coverage with petitioner from March 1988 to March1989. The same was extended twice until June 1990. During the period of his coverage, Ernani was hospitalized several times, however, petitioner denied the claim of private respondent because the Health Care Agreement was allegedly void due to the alleged concealment of Ernani that he was not hypertensive, diabetic, and asthmatic, contrary to his answer in the application form.

Petitioner argues that the agreement merely granted living benefits, such as check-ups and hospitalisation, hence it is not an insurance contract. Petitioner further argues that it is not an insurance company, which is governed by the Insurance Commission, but a Health Maintenance Organization under the authority of the Department of Health.

Issues:

1. Whether or not the Health Care Agreement between the deceased and the petitioner falls under the ambit of an insurance contract.
2. Whether the alleged concealment of the deceased will invalidate the Agreement.

Ruling:

1. Yes. In the case at bar, the insurable interest of respondents husband in obtaining the health care agreement was his own health. Section 10 of the Insurance Code is clear that every person has an insurable interest in the life and health of himself.  The health care agreement was in the nature of non-life insurance, which is primarily a contract of indemnity. Once the member incurs hospital, medical or any other expense arising from sickness, injury or other stipulated contingent, the health care provider must pay for the same to the extent agreed upon under the contract
2. No. The answer assailed by petitioner was in response to the question relating to the medical history of the applicant. This largely depends on opinion rather than fact, especially coming from respondents husband who was not a medical doctor. Where matters of opinion or judgment are called for, answers made in good faith and without intent to deceive will not avoid a policy even though they are untrue. (A)lthough false, a representation of the expectation, intention, belief, opinion, or judgment of the insured will not avoid the policy if there is no actual fraud in inducing the acceptance of the risk, or its acceptance at a lower rate of premium, and this is likewise the rule although the statement is material to the risk, if the statement is obviously of the foregoing character, since in such case the insurer is not justified in relying upon such statement, but is obligated to make further inquiry. There is a clear distinction between such a case and one in which the insured is fraudulently and intentionally states to be true, as a matter of expectation or belief, that which he then knows, to be actually untrue, or the impossibility of which is shown by the facts within his knowledge, since in such case the intent to deceive the insurer is obvious and amounts to actual fraud. Under Section 27 of the Insurance Code, a concealment entitles the injured party to rescind a contract of insurance. The right to rescind should be exercised previous to the commencement of an action on the contract.

Reviewer: Tax Remedies of the Government

Note: The questions were lifted from previous bar exam questions

TAX REMEDIES OF THE GOVERNMENT

1. Antonio Cruz was appointed by the Regional Trial Court as administrator in the testate proceedings for the settlement of the estate of his deceased father. On February 12, 1987, the Commissioner of Internal Revenue issued a deficiency estate tax assessment for the estate in question in the amount of Php2,816,514.60.  The notice of deficiency assessment was received by the administrator on February 19, 1987, which was received by the latter’s office two days later, the administrator requested for reconsideration of the assessment on the ground that the same is contrary to law and is not supported by sufficient evidence.  He also requested for a period of fifteen (15) days within which to submit the estate’s position paper.  

On August 4, 1988, not having received the promised position paper, the Commissioner filed with the Court a motion for allowance of claim and for an order of payment of estate taxes, praying therein that the administrator be directed to pay the BIR the aforementioned deficiency tax.  The administrator opposed the motion alleging that by reason of the pendency of his request for reconsideration, the deficiency assessment has not become final and executory and, therefore, the absence of a decision on the disputed assessment is a bar against the collection of taxes.  He further argues that it is the Court of Tax Appeals and not the Regional Trial Court which has exclusive jurisdiction over the claim.  Resolve the motion and the issues raised. (1991 Bar)

SUGGESTED ANSWER:

The contention of the Antonio Cruz that it is the Court of Tax Appeals that has jurisdiction over the collection of the estate’s deficiency taxes is unmeritorious.  Nor is the filing of the motion for allowance of the claim or order of payment of estate deficiency tax correct.  Marcos II vs. Court of Tax Appeals, et al. (G.R. No. 120880, 05 June 1997) has been clear to point out that the enforcement and collection of estate tax is executive in character and the task is especially ascribed to the Bureau of Internal Revenue.  The approval of the Regional Trial Court, sitting in probate, is not a mandatory requirement for the collection of taxes. 

Moreover, Cruz’s request for reconsideration is a mere pro forma request which does not toll the running of the prescriptive period. (Commissioner of Internal Revenue vs. Philippine Global Communication, Inc., G.R. No. 167146, 31 October 2006)  However, without a proper final assessment notice, the collection against the estate of the deceased.

As decided in Atlas Consolidated Mining and Development Corporation vs. Court of Appeals (242 SCRA 289), assessments are prima facie presumed correct and made in good faith. It is the taxpayer and not the BIR who has the duty of proving otherwise.  In the absence of proof of any irregularities in the performance of official duties, an assessment will not be disturbed

2. What are the remedies under the National Internal Revenue Code (NIRC) for the collection of delinquent internal revenue taxes?

SUGGESTED ANSWER: 

Government remedies for the collection of internal revenue taxes imposed under the NIRC is classified under judicial remedies and administrative remedies.  Under judicial remedies are: (a.) criminal proceedings through criminal actions (Section 205[b]); and (b.) civil proceedings through civil actions (Section 228).

On the other hand, the following are available under administrative remedies:

1. enforcement of tax lien (Section 219);
2. the power of the Commissioner of Internal Revenue to compromise (Section 204[a]);
3. distraint on personal property, either actual or constructive (Sections 206 and 207);
4. levy on real estate (Section 207[b]);
5. enforcement of forfeiture of real and personal properties (Section 224);
6. the giving of rewards to informers who give information as to violations of tax laws (Section 282);
7. deportation of aliens who violate any tax legislation in the Philippines;
8. fixing of performance bond to assure compliance of certain tax laws or regulations; and
9. surcharges or penalties for the payment of tax.

3. ABI, a duly registered non-stock private educational institution received a final notice of assessment from the Commissioner of Internal Revenue ordering it to pay deficiency income taxes amounting to Php1,000,000.  The aforesaid assessment erroneously classified AVI as a domestic company engaged in trade or business subject to the regular tax of 35% of net income, whereas non-stock private educational institutions like ABI are subject only to 10% tax.  Sensing that a great injustice would result in the erroneous classification, counsel for ABI filed an injunction with the local Regional Trial Court praying, among others, to stop the BIR from enforcing the assessment.  Will the injunction prosper? (1988 Bar)

SUGGESTED ANSWER:

NO.  The injunction filed will not prosper.  By express provision of Section 218 of the 1997 NIRC, no court shall have the authority to grant injunction to restrain the collection of any national internal revenue tax, fee or charge imposed by the NIRC.  Income taxes that are being collected from ABI fall squarely under the ambit of the NIRC.  The only exception to this “no injunction rule” is stated under  R.A. 1125, as amended by R.A. 9282, that is, when upon appeal of the taxpayer of the Commissioner of Internal Revenue’s decision to the Court of Tax Appeals, the latter court is of the opinion that the collection of the tax will jeopardise the interest of the Government and/or the taxpayer.  Further, the taxpayer must either deposit the amount claimed or file a surety bond for not more than double the amount claimed.

4. When may the Commissioner of Internal Revenue compromise or abate taxes? (1989 Bar)

SUGGESTED ANSWER:

A compromise penalty could not be imposed by the BIR without the agreement and conformity of the taxpayer.  (Philippine International Fair, Inc. v. Collector of Customs)  Under Section 204[a] of the 1997 NIRC, the Commissioner of Internal Revenue may compromise taxes under the following circumstances:

1. when a reasonable doubt as to the validity of the claim against the taxpayer exists, provided that the minimum compromise entered into is equivalent to 40% of the basic tax; and
2. when the financial position of the taxpayer demonstrates a clear inability to pay the assessed tax, provided that the minimum compromise entered into is equivalent to 10% of the basic tax.

In the above instances, the Commissioner is allowed to enter into a compromise only if the basic tax involved does not exceed one million pesos (Php1,000,000.00), and the settlement offered is not less than the prescribed percentages. Additionally, it should be noted that all criminal violations may be compromised except those already filed in court and those involving fraud.

On the other hand, Section 204[b] of the same Code provides for the grounds in which abatement is authorized, to wit:

1. when the tax or any portion thereof appears to be unjustly or excessively assessed; or 
2. when the administration and collection costs involved to not justify the collection of the amount due.

5. R.A. 1125 grants the Court of Tax Appeals the authority to issue an injunction to restrain the collection of internal revenue taxes while taxpayer’s appeal is pending before said court.  What statutory requisites should be complied with by the taxpayer before the tax court may grant the injunction? Explain.

SUGGESTED ANSWER:

Under Section 11 of R.A. 1125, as amended by R.A. 9282, the taxpayer must be able to induce the opinion of the Court of Tax Appeals that:

1. the collection of the tax would jeopardise the government; or 
2. the collection of the tax would jeopardise the taxpayer.

Moreover, the taxpayer shall be required to deposit the amount claimed or to file a surety bond for not more than double the amount with the court.  Finally, as the Rules of Court applies suppletorily to the Rules of the Court of Tax Appeals, the manner of applying for an injunction under Rule 58 of the Rules of Court should be complied with.

Case Digest: Lucas vs. Tuaño

PETER PAUL PATRICK LUCAS, et al. vs. DR. PROSPERO MA. C. TUAÑO

G.R. NO. 178763 21 April 2009

Chico-Nazario, J.

DOCTRINES:

In a medical negligence suit, the patient or his heirs, in order to prevail, is required to prove by preponderance of evidence that the physician failed to exercise that degree of skill, care, and learning possessed by other persons in the same profession; and that as a proximate result of such failure, the patient or his heirs suffered damages.

There is breach of duty of care, skill and diligence, or the improper performance of such duty, by the attending physician when the patient is injured in body or in health constitutes the actionable malpractice.

FACTS:

Herein petitioner, Peter Lucas, first consulted respondent, Dr. Tuaño, on a complaint of soreness and redness on his right eye. The respondent, after a series of examinations, found that the former was suffering from conjunctivitis or “sore eyes” and prescribed the use of the Spersacet-C.  However, after the petitioner’s condition seemed to have worsened, he sought for the respondent’s second finding wherein the latter said that his condition had progressed to Epidemic Kerato Conjunctivitis (EKC), a viral infection.  The respondent then prescribed the use of Maxitrol, a steroid-based eye drop. The petitioner’s condition worsened overtime, yet he obediently complied with all the prescriptions and orders of the respondent.

Four months later and after the petitioner suffered from significant swelling of his right eyeball, headaches, nausea and blindness on this right eye, he sought for the opinion of another doctor, Dr. Aquino. Dr. Aquino found that the petitioner had been suffering from glaucoma and needed to undergo laser surgery, lest he might suffer from total blindness.

After reading the literature on the use of the medicine Maxitrol, Fatima, one of the petitioners herein and Peter Lucas’ wife, read that one of the adverse effects of prolonged use of steroid-based eye drops could possibly be glaucoma.  Peter, Fatima, and their two children instituted a civil case for damages against herein respondent for medical malpractice.

ISSUE:

Whether or not the petitioners amply proved that Dr. Tuaño failed to exercise diligence in the performance of his duty as petitioner Peter Lucas’ physician.

RULING:

No. Absent a definitive standard of care or diligence required of Dr. Tuaño under the circumstances, the Court has no yardstick upon which to evaluate the attendant facts of the case at hand to be able to state with confidence that the acts complained of, indeed, constituted negligence and, thus, should be the subject of pecuniary reparation.

In medical negligence cases, also called medical malpractice suits, there exist a physician-patient relationship between the doctor and the victim.  But just like any other proceeding for damages, four essential (4) elements i.e., (1) duty; (2) breach; (3) injury; and (4) proximate causation, must be established by the plaintiff/s.  All the four (4) elements must co-exist in order to find the physician negligent and, thus, liable for damages.

As the physician has the duty to use at least the same level of care as that of any other reasonably competent physician would use in the treatment of his patient, said standard level of care, skill and diligence must likewise be proven by expert medical testimony, because the standard of care in a medical malpractice case is a matter peculiarly within the knowledge of experts in the field. The same is outside the ken of the average layperson.

There is breach of duty of care, skill and diligence, or the improper performance of such duty, by the attending physician when the patient is injured in body or in health [and this] constitutes the actionable malpractice. Hence, proof of breach of duty on the part of the attending physician is insufficient. Rather, the negligence of the physician must be the proximate cause of the injury.

Case Digest: Lung Center of the Philippines vs. Quezon City and Constantino Rosas

G.R. No. 144104             June 29, 2004

FACTS:

The Petitioner is a non-stock, non-profit entity which owns a parcel of land in Quezon City.  Erected in the middle of the aforesaid lot is a hospital known as the Lung Center of the Philippines.  The ground floor is being leased to a canteen, medical professionals whom use the same as their private clinics, as well as to other private parties.  The right portion of the lot is being leased for commercial purposes to the Elliptical Orchids and Garden Center.  The petitioner accepts paying and non-paying patients. It also renders medical services to out-patients, both paying and non-paying. Aside from its income from paying patients, the petitioner receives annual subsidies from the government.

Petitioner filed a Claim for Exemption from realty taxes amounting to about Php4.5 million, predicating its claim as a charitable institution. The city assessor denied the Claim.  When appealed to the QC-Local Board of Assessment, the same was dismissed.  The decision of the QC-LBAA was affirmed by the Central Board of Assessment Appeals, despite the Petitioners claim that 60% of its hospital beds are used exclusively for charity.

ISSUE:

Whether or not the Petitioner is entitled to exemption from realty taxes notwithstanding the fact that it admits paying clients and leases out a portion of its property for commercial purposes.

HELD:

The Court held that the petitioner is indeed a charitable institution based on its charter and articles of incorporation.  As a general principle, a charitable institution does not lose its character as such and its exemption from taxes simply because it derives income from paying patients, whether out-patient or confined in the hospital, or receives subsidies from the government, so long as the money received is devoted or used altogether to the charitable object which it is intended to achieve; and no money inures to the private benefit of the persons managing or operating the institution.

Despite this, the Court held that the portions of real property that are leased to private entities are not exempt from real property taxes as these are not actually, directly and exclusively used for charitable purposes.  (strictissimi juris) Moreover, P.D. No. 1823 only speaks of tax exemptions as regards to:

•         income and gift taxes for all donations, contributions, endowments and equipment and supplies to be imported by authorized entities or persons and by the Board of Trustees of the Lung Center of the Philippines for the actual use and benefit of the Lung Center; and
•          taxes, charges and fees imposed by the Government or any political subdivision or instrumentality thereof with respect to equipment purchases (expression unius est exclusion alterius/expressium facit cessare tacitum).