CTA Case No. 851 (Decision)

., ' f'lE PUBLIC OF THE PHILTPPIN ES GOU RT OF T A'X APPEAL8 QUEZON CITY � ...�, ';' . T HUlHCIPn.L :OOARD , in Represen- C. T. A. CASE NO . 851 tation of the City of Cebu , Petitioner , versus BOJ~�an OF' AS,:JE8S1-:iENT APPEALS , and Agustin Jereza , for and in behalf of the University of Southern Philippines Foundation , Respondents . X - - - - - - - - - - -- - - - X D E C I S I 0 l'J . �This is an appeal from the decision of respondent Board of Assessment .t~ppeals of the City of Cebu, dated May 30 , 1960 , declaring six (6) parcels of land leased to the Gniversity of Southern Philippines Foundation exempt from realty tax . The facts of the case are stated in our decision dated July 20 , 1961, to wit: On February 11 , 1960 , ~~gustj_n Jereza , for and in:. behalf of the DniYersi ty of South- ern }hilippines Foundation, applied to the City Assessor of Cebu City for exemption from payment of realty taxes of the follow- ing parcels of la~d situated in Cebu City , said parcels of land being used exclusive- ly for educational purposes' Lot N<l&_ Tax.DeclaratiQJ] l\jo . 495-A & lt95-B 7321t4 66203 - ~~6 41158 21751t 317 13261 313

DECISION ''I CTA CASE NO . 851 2 493 65827 460-A 108973 460- B 108972 342 9)"266 31r1 95265 (B.A.A. rec . P � 26 .) � The City Assessor granted the ap- plication for exemption, except as to lots numbered 3l.rG , 317 , 313 , 460- E, 342 and 341 . Agustin Jereza appealed to the Board of Assessment .n.ppeals of' Cebu City the decision of the City Assessor with re- spect only to that portion denying exemp- tion to lots numbered 340 , 317, 313 , 460- B, 342 and 341 (B . A. A. rec . PP � 1-4) . In a decision dated May 30 , 1960, the Board of Assessment Apoeals reversed the decision of the City Assessor and de- clared lots numbered 313, 460- B, 340, 34-2 and 341 exempt from taxation (B . A. A. rec . pp . 44- 50) . However , for reasons not appearing on the face of the decision, � no declaration or � pronouncement was made as to lot :Jo . 31'7 . Feeling itself aggrieved by the deci- sion of the Board of &ssessment A1peals, the l1unicipal ~oard of the City of Cebu , in representation of the same city , filed a petition for review before this Court on June 3C , 1960 . The parties submitted the case for decision on a stipulation of f&cts, with- out presentation of further evidence . The stipulation of facts reads~ 11 1 � 'J.lt1~ t I1ot s Nos . 34-0, 317 , 313, 460- B, 341 and 342 are used exclusively for educational purposes b; the (~iversity of Ccuthern Philippines Foundation and not by the owners thereof; 11 2 . That Lot Ho . 340 ('l'ax Declarat ion l':o . 82~-4) , with an area o~ 189 square meters, assessed at P4 , '730 . 'JO , ovmed by_Agustin Jereza is leased to the I~iver - sity of Southern Philippines � Foundation for monthly rental of

DECISION CTl\ CASE ~TO . 8 51 '3 �50 . 00; that Lot No . 313 (Tax Declaration No . 106576) , with an area of 377 square meters , asses sed at !=15, 080 , 0\1ned by Agustin Jereza , is leased to the Foundation for ~40 . 00 per month; that Lot Ko . 341 ('rax Declara- tion No . 95265) , with an area of 282 square meters, assessed at ~7 , 050 and, Lot ~IJo o 342 (Tax Declaration No . 95264), 1.Vi th an area of 3C9 square meters, assessed at P7 , 73C, both owned by the heirs of Filomena Duter�te, � are both leased to the Founda- tion for f'85 . 00 per month; and Lot No . 460-B (1'ax Declaration ~Jo . 1089'12), with an are<?<� of 350 souare ~ete rs, assessed at ~ 12,250 and owned by Soledad D. ~da . de Sanson, is leased to the ,,mmdation for the amount of i50 . JC per month; 113. That the realty taxes due on the lots above-mentioned have been paid by the ~bove mentioned owners up to the year 1959; . 114. That only the lots here:.n above-mentioned are the subject of this appeal; 11 5� T. .na t .7...o t s d,,..os . 31,..".)' , 495 A & B, 339 and 493 have been exemrted by the City Assessor from ti1e payment of realty taxes for tne period beginning 1960, except the following: t (a) L0t ~-Jo . 343 was exempted since 1948. 1 (b) Lot :-.;o . 460-A was exempted in 1952, being a pert of the Colon Street widening; u6 . '.rhat Lot .Jo . 749 in the vicinity of the lots in question (See Sketch marked ~x hibit B) or5.gin4lly belo~ging to l�'ile['lCn Sotto and containing an area of 214 square meters '\vas sold to ArseD.:.o V. ::adarang I)

DECISIOIJ - CT;l CASE ~�;o . 851 tr. at i'4�5 . 00 per square meter or the ~~ornt of �9 , 630 . 00 as per 'Deed of Absolvte Sale Ci.atec1 ....pril 27 , 1959 , certified tr�ue copy of which Deed of Sa1e .is hereto attached and marked as Annex ' A' in this stipulation of fects ; "7 . That Lot lk . 390- B situated at the corner of :~bini and Colon Gtreets in the vicinity of the lots in question is pres- ently leased by the owners to the Standard Vacuum Cil Company at :f!-0 . ?.3 per square meter per month. ' 118 . 'l'ha t the resnondent Agustin Jereza is the ~resident of the Univer si ty of Soutr..ern Philippines Foundation; 119 � That tr..e University of Southern Philjppines Foundation is & non- stock , non- profit cor- poratioD , as shovm by a Certifi - cate of Incorporation No . 15418 , issued by t he Securities and Zx- change Commission on I�1ay 28 , 1959 ; 11 10 . 'l'ha t the heirs cf Filonena Duterte , owner of Lots ~os . 341 and 342 , are Beatriz de Jereza and Soledad D. Vda . de San- son; 11 11 . That Lots l~�os . li-95- A and B (Tax Declaration I'Jo . 1 06577) , assessed at ~1 08 , 800 , with an area of 2, 500 square meters; Lot No . 493 (Tax Declaration No . 1065'79), \.Ji th an area of 627 square meters , a~sessed at ~25 , C80 , and Lot No . 339 (Tax Declaration ~~o . 1065''78) , with an area of 930 square meters , assessed at 037 , 200 , all owned by ~gustin Jereza , are leased to the University of Southern Philip- pines Foundation for nominal - rents ranging from �1 . 00 to r5 . 00 per month; 11 12 . That some of the in- corporators of the said' University

DECISION - j C'l'A CASE NO . 851 I 5 of Southern ?hili~pines Foun- (J.ation are Agustin Jereza , �- ea- triz de Jereza and Soledad D. Sanson . X X X x" (CT..f:.. rec . rYr . '12- 74 . ) (See PP � 111 - 114, C. T: A. rec . ) Our aforesaid decision dismissed ~etitioner's appeal on the ground that it had no personaljty to appeal to this Court . r_;�etitioner elevated our deci- sion to the ,Supreme Court v1hich on December 26 , 1964, in G. B . No. L-1 89l.t-6 , set a side our decision and remanded to us the case for further proceedings (~p . 124- 120 , CTA rec . ) . During the hearing of the case on September 12, 1966 , the parties submitted the case on the basis of their stipulation of facts (p . 136, CTA rec . ) . The principal issues involved in thjs case are: 1 . vmether or not the Board of Assessment � :r:peals of the City of CebL. has the poHer to declare real properties exempt from the payment of realty tax; 2 . ~rnether or not the 'Jniversi ty of Southern PhiJippines Foundation can ask an exemption from real property tax of properties owned by private indi- viduals , but used by the said institution exclusively for educational purposes; and 3 . '.'[nether or not lots numbered 340 ,. 31 '7 , 313, 460- B, 3~2 and 341, which are leased for consideration by their owners to the University of .Southern Philip-

DECISION - . C7A CASE NC . 851 ; I 6 pines Foundation and used by the latter exclusively for educational purposes are exmnpt from the payment of realty tax. As regards the first issue , this Court , in a similar case and involving the same respondent Board of Assessment Appeals of the City of Cebu, held: Respondents first contend that under the Charter of the City of Cebu (Com.rnonwealth Act No . 58) , the :Board of ~ssessillent (Tax) A~p eals has no power to exempt real properties from taxation . t~fer Section 5U of said Charter the City AtasxseXsspour rappospersaiasneds all real estate for J prepares a list of real estate so valued which is exempt from taxation and separate list of the taxable real estate . The taxpayer aggrieved by the decision of the City Assessor may appeal the same to the Board of assess~eot Appeals (Section 58) . Under Section 61 , the Board of ~ssessment Appeals is clothed with the "authority to caLse to be amended the listing and valuation of the property in respect to which any appeal lills been perfected by order signed by the ~oard or a i:lajority thereof . x x x" Clearly, this authority involves t\>JO separate and distinct functions . The first function relates to the listing of the real proper- ties . The second relates to the valuation thereof . The listing of properties con- sists of the enumeration of oro~erties which are subject to real estat~ tax and properties \>Jhich are exempt therefrom as / prE,par~d under� ..Jectior: 50 . ":;nd~r the author1ty , as afore- c1ted , the Board of Assessment (Tax) Appeals may cause the amendment of the list of properties by striking out from the list of 1Jroperties subject to realty taxes a piece of real property and transferring the same to a list of tax- exempt properties or vice versa . ~nd when it does , the ~card , in effect , exercises the power to exempt re~l proper- ties frcm the burden of realty taxes, which power is incidental , if not a necessary consequence , to the exercise by the Board " of the authority to cause the amendme nt of the list of ~roperties . (Soutlrue stern Colleges , Inc . v . The Ci ty assessor of the City of Cebu, et al . , Res olution, CTh. Case 7o . 295, i~pril 23, 1957 . )

DECISI0 1~ - Cl.H. CASE JC . 851 '7 7 Petitioner questions the personality of re- spondent Vniversi ty of Southern Fhilip1:�ines F oundation~ (t..--:-niversity for short) to ask for the exemption of the lots in question � f r om r�ealty tax on the ground that it is not t~e owner , but a mere lessee of said real properties . In short , it is argued that the University is not the real party in interest to a pply for the exemption . '.Ie are of the opinion that res :c�onden t "Jni versi ty \ has ~a pacity to apply for exemption of t he lots in question from realty tax . I t is a cardinal rule that action must be ' prosec uted not onl y by the real pa r t y in interest , but in the name of the real party in i.::1terest , and not in the name o:[ a repre sentaU.v,.g , unless this is expressly authorized by the rules or bi the law . (See 3ec . 2 , Rule 3, ~ules of Court; Moran's Commen ts on the Rules of Court, Vol . I , p . 117 , 1963 ed . ) ~nc er Section 58 of the Charter of the City of Cebu (Com. a. ct .l\!o . 58) , now ;_,ection 59 of the Bevised Charter (Rep . Act No . 3857) , the Jvfunicipal Board , or any m.;ner of real estate or his autnorized agent may appeal to the Bo~rd of A�sessment Apneals from the decision of the Citv As�essor . The facts c. nd circum- stances of this case show that the University had been impliedly authorized by the owners of the lots to apply for their exemption . The owners of the lots are Agustin ~ereza , ~rs . Soledad D. Sanson and the heirs of Filorne na Duterte . Agustin Jereza is the

DECISION - .,. CTA CASE HG. 851 I r uQ president of the University and one of its stociD1olders . The heirs of Filomena Duterte are also stockholders of the University. Although there is no showing that the OT.wners expressly authorized the University to apply for exeruption of the lots, it is very obvious that it has been impliedly authorized to apply for their exemp- tion , because, aside from the fact that the University, is the lessee , the ovmers of the lots are t~�J.emselves stockholders of the University . ~oreover , it is now / too late for petitioner to question the cape-city of responde nt University when it could have done so before the City Assessor , and later in the Board of Assessment Appeals . It has been ruled that where the complaint failed to state a cause of action for lack of suffi- cie~t interest on the part of plai~tiff and the same was not raised at all in the trial court but only on oral argument in the Court of Appeals , it must� be considered vJaived. (Eeyes v . Court of Appeals, L- 5618, / j" LJ.ly 31 ' 1954) � The last issue to be resolved by us is \vhether or not the lots in question are exempt from r�ealty tax . Petitioner contends that the lots are not en- titled to exemption under the Constitution because they are not devoted by Lheir owners to educational purposes but for profit . The constitutional and statutory provisions material to this issue are: "Cemeteries, churches , and parson- ages or convents appurtenant thereto , and all lands , buildings , improvenents used exclusively for religious, charitable or

DECISION - ct a case no . 8 _!:,"{1 9 educational purposes shall be exempt from taxation . n C~rt . VI , Sec . 22 , ?ar . 3 , Constitution of the Philippines . ) 11Sec . 51 . Frogerty exgmnt from realty tax . - (a)Lands and buildiDgs owned by the United States of America , the Government of the Philip,~ine Islands , or the City of Cebu , and bur;}ring grounds , churches and their adjacent parsonages , and convents and lands or buildings used exclusively for religious , charitable , scientific , or educational purposes , and not for profit; but such exemption shall not extend to lands and buildings held for invest::nents , though the income there- from be devoted to religious , charitable , scientific or educational purposes . 11 (Com . Act IJo . 5B , Sec . 51, Charter of Cebu City . ) I t is to be noted that the Assessm~nt Law is not apolicable . to the City of Cebu (3ec . 2, Com . Act :i:Jo . 470) . It is true that the University is the one using the lots for educational purposes and not the owners thereof . But our Constitution does not require that the user must at the same time be the owner in order to exempt the land from taxation . It is enough that the land is used exclusively for any of the exempt . purposes even b:;r persons not their owners, as in this case . ':"his Court in resolving a similar issue held: The Constitution is qui te clear and precise that 11all lands, buildings , and im~)r ovements used exclusively for reli - gious , charitable , scientific or educa- tional nur~oses shall be exempt from taxa tion11 � li'rom the context of the provision , we note that the sole deter- �minative factor for exemption from real- ty� taxes is the ttusen to which the prop- erty is devoted . {I

DECISION - C'TA CACE NO. 851 10 � 11 If the Constitution � � � provides that property ' used ' for certain purposes shall be exempted, it is the use and not the owner- ship which determines the right to the exemption , and the owner of the property may claim the exemp- tion , although the use is by ano- ther . n (61 C. J . 401 citing : An- niston Cj_ty Land Co . vs . State , 48 So . 659 , 160 Ala . 253: Sco t t vs . _JS~ciety of Russian Israelites , 81 h . ;J . 624- , 59 iJeb . 57 1� ) This viev1 appears to have been adopted by our Supreme Court in the cases of Apos - tolic Prefect of =�1ountain Province vs . City Treasurer of ~aguio (71 Phil . 547) and Bishop of i.~ueva J egovia vs . ?rovin- cial Board of Ilocos Norte (51 Phil . 352) . And where ttuse 11 is the test , the O\mer- ship is immaterial . The fact that the property is not owned by the educational institution does not remove it from the influence of the exemption as long as the property is used exclusively for educa- tional purposes . / 11Under a constitutional provision for eY.em; t i on of real property used exclusively for schools , and statutory provisions for exemption of real and personal property owned and used by the oerson to '\vhom assessed exclusive- ly for schools�, use for schools is sufficient to exemot real property irre s pective '� of owner - ship, since use , not ownership is the determining factor . Ac- cordingly the exem1ition has been allowed as to land used exclusive- ly for school purposes even though it is leased at a profitable rent to th e scho ol di st r i c57t 5.b�y) the own- er � ( �J �v... � 11 8'~ ~._..,. .p . "If the exenuJt :i.on depends on t he use made of t he property , rather than the ownership , the title to the property is irn.materi- al , i . e ., the title need not be

DBCISION - CTA CASE NO . 851 T 11 in the user claiming exemption. In such case, it is the use , and not the o\-mershi'!J vlhich determines the right-to the exenmtion. � It follov;s that the ovmer may claim the exemption although the use is by another . " (II Cooley , 'rhe Law of Taxation , 1924 ed ., p . 1425.) (Southern Colleges , Inc . vs. City ~ssessor , et al ., CTA Case No . 295, January 22, 1958 . ) / The fact that the mmers of the lots derive profits by way of rentals from the University�is im- material. All that the Constitution requires is that the property be used exclusi~ely for religious , chari - table or educational purposes to be entitled to exemp- tion regardless of whether or not profit is derived from its�use . Furthermore, the additional condition 11 and not for profit 11 found in Section 51 of Co1nmon- �wealth Act No . � 58 cannot prevail over v1hat is provided in the Constitution (Southwestern Colleges v . The City hSsessor , supr&) . Respondent University appealed tha�t portion of the d?cision of the City Assessor denying exemption to six (6) lots numbered 340 , 317 , 313 , 46D- B, 342 and 341. i:he Board of .Assessment Appeals reversed the decision of the City Assessor and declared five (5) lots numbered 340 , 313 , 460-:'B , 34�2 and 341 exemut from taxation . The decision did not make any pro- nouncement as to lot No . 317 . The reason for the exemptio.i1 of the 5 "lots applies to lot No . 317, and we are at a loss why the dispositive portion of the decision did not include lot No . 317 . li!e consider

D~CISIC~i - C'l'...-.. CaSS NO . 8 51 12 this omission as mere oversight . Besides , petitioner j_n its rnemorand,.lm considered that the decision of the Board of Assessme~1t b.p_peals i <lCluded lot =~o . 317 among the exempted lots ~p . 7'1, C. T�."1. . rec . ) .. .;1:-EREFORE , the decision appealed from is hereby affirmed . Lot5 numbered 340 , 31'7 , 313 , 460- E, 342 and 341 covered by ~~ax Declaration r~os . 411 58 , 21754 , 13261 , 1089'72 , 95266 a nd 95265, res pectively , of the City of Cebu , are hereby declared exempt from realty tax beginning the year 1960 . ..ri thout pronouncement as to costs . SO ORDEHED . ~uezon City , J'anuary 23 , 1967 . ~:~ ~-residing Judge ~~~~ Associate _Judge -;?/ ."""--- J "~ ' . " RAl.iON L . AVANCEr~A Associate Judge I