SCCTAL ‘p sountay SYST vs. == = § ‘Geles GUSH Nos 2279 CIEY oF CBO ond CrrY. ". BOARD GF abs Moret. A f. ' Ar PGALS c | + ae 4 Respentents. cae 4 a a ae a DeCcis ion. The gocdal Security aysten is the ragistetes owner of & parcel of Loot in the City of Cebu on whieh At erected en office build~ ins. tn duly 19705 the City sasepsor of Cabu City | + Abetaret the satt Lot, building and other inprovenents | | Subject te the veut property TAX in the aggragate | amount of #615765.25. retitioner sought raconsidera~- ‘ 1970. Upon appael, the, this appeal. | Petitions? relses mainly on the decisions of the Suproné Court in Bosra of assessment Appeals of ©" asus We CoBekes GeRs Nov L“LUL2, May 3Ly 2963, 8 SCRA 225, and Nawasa ve quezon City, Wells Nos b= 253A0y April 26, 196%, 23 SORA 286, wherein it was trolled eonperations fs property owne’ by tho lepublie

| oi ‘EPUBLIC OF THE PHILIPPINES | ea COURT. OF TAX APPEALS . QUEZON CITY _ SCCTAL ‘p sountay SYST, Petitioner, i “Versus - == = § ‘Geles GUSH Nos 2279 CIEY oF CBO ond CrrY .

" . BOARD GF abs Moret . A

f. ' Ar PGALS c | + ae 4 Respentents. cae 4 a a ae a DeCcis ion . The gocdal Security aysten (popularly known us the 89S) is the ragistetes owner of & parcel of Loot in the City of Cebu on whieh At erected en office build~ ins. tn duly 19705 the City sasepsor of Cabu City | + Abetaret the satt Lot, building and other inprovenents | | Subject te the veut property tax in the aggragate | amount of #615765.25. retitioner sought raconsidera~- ‘(an 0:/ee, Sneeinniaas which vat denied by the City Ageessor in bis Letter of August 20) 1970. Upon appael, the @eeision of the Gity Assessor was affirned by the City Beart of assecsnect Appeals. Wenee, this appeal. | Petitions? relses mainly on the decisions of the Suproné Court in Bosra of assessment Appeals of ©" asus We CoBekes GeRs Nov L“LUL2, May 3Ly 2963, 8 SCRA 225, and Nawasa ve quezon City, Wells Nos b= 253A0y April 26, 196%, 23 SORA 286, wherein it was trolled eonperations fs property owne’ by tho lepublie CTA CASE No. 2279 Of the PhAlippines and ts, therefore, exempt fron voul property tax, pursuant to Section 52 of Republic | At os 3857 (charter of Geba City). On the other hand» rasponiehts allege <- . We Will Liret consider the issue whether er net tion. In support of their contention that the sss is not a government Corporation, they capitalize -on the allegation in the petition fer ‘review that ‘to the organization o: petitioner “was ite initial nominal appropriation to start the 595," and that | this, the conelusion fs drawn that the land ana in- a ee a ee eee - : , ’ »| “ ———.

ee a ae ee Ya ie = area ON ie a

GEA GASE Nos 2279

. z.

cannot be consiidersd to belong to the Governnent of © the Philippines. | :

the S58 ves orcanised pursuant to iepubie set ¥: NOs IL6L, vection 2 of which provitess SG. & 2 hereby wg gg ll 38 ish grad.

security sys ter ‘to the of the ion t the hagards cf unemployment, iis- Ly piaedans uit coe cal aootk, Congress has specifically deelared it “to be the . ‘policy of the ‘epublic of the Philippines to develep, estsbLich greduslly ant perfect 2 soeial socurity | | system hich shall bs suitable to the needs of the . ‘prope throughout thé Philippines" se os to “provite ‘protection against the huzarés of unemploynént, adis-. ability, sickness, old age and death.“ and for this PUryOsey the Seeiel Geeurity Act established the 88s to carry out an! inplenent the sai? national policy. — Shere is no doubt in our minds that the 99S hes been - organized primarily to perform a governmental fune- tion. em irae orn, eeu pitas - it pol of the amé perfect a so shail be suitable le throughout the x Ae Oe ei — —— ge ' ie eee ee, ee Ducts Jon -—— .

OTA CASE Noe 2279 a .

paving beon eatata te’ 208 to sain a state fumetion, the Social Security Sys- tem is wanifea thy at inctrumentality of the Jovermment. It ic pertinent to note thet the Seeicl Seeurtity Commission, whieh @irects ané controls the Systen, is vested by. law with quae whe stake its and quasi~juticial powsrs. in the United Sta it hes been. vale that "the state Seeisl Seeurity ao ee is ‘an executive , es (* tate . @u Tels F. 252 aw ane oo? ).

(ep. Bos 975 Ss ye 190.)

“Tt as true bhat.tho only invewteent 0° the Jovern= meant in the Go5 is the initial anount of £1,5000,000,00" ‘be Cover the. organizations) expenses af the Systen, Bub thie fact can nok affeet toe nutare of the 886 as a yovernesnt eerporation, vo private indsviduad or Sorporation has an investuent in the 866 se thut upon its @issolation all property of the corporation shall revert to the Governrent. in fact, all funds of the S82 ave treated in Like nanner os government funds, Seetion 25 af Republic AGt Boy 1241 providess “Ail moneys paid te or collected by the Systen every year unter this Aét, and all eeerusls thereto shall be @epugited, administered ani @4sbursed in the sexe mannan wel vider ie eae contitions sti recultessnie This 4s a strong inifestion thit the SoS was crested Leng original emount as grevided: in see. 3% cf Rape. Act Greased Go #1 400G,000- 38 fs we st , g 5 s é e” ary ae ee —

CTA CASE Bos 2279

Io =

t ae | another argument of respontents $1 rejecting tna elsia of petitioner for tux exenption is thet ite Charter Gees 16, Sepe Aet hoe 116k) enumerates the.

things whieh are exenpt fron taxation, the implica~ Sion being that whet fe not included tn the enumera~ thon to thereby exeluted from tue operation of the e@xanption. Tt ic. contented that tax exemption statutes ‘be extenied by inphicstion. this argument would be ‘tenable af petitioner ds cledming exemption ander its axomption unde? a specifie provision of Xepublie Act ad? thot the prikeiple thet tax exeuption statutes are to be eons trued mest strigtly against the taxpayer and cannot ba extented by injpldeation dees not apply te the Government, ite agencies end instrumentalitios.

= ptovlatonsy proviiea it is So~ Voted to uses in their pature.

DECI IG -

CTA Cab? Hos 2279 Rhee Fox-ine pepeant or the so leit. (5 Am dure 590-5R.

Attenten ds algo fram to tho fact that the charter of tha MMGA (bOw MAS) else contsine a provi- sion azampting 1t from tuzation on'benis issued by At ‘Wee. Sy Mape Sot To, 1353). 16 was only on Juna - 225 19635 by virtue of Nepubliec act Hos 3597, chur WWGA wes given emomption from gh, kagee, I¢ was eon- - tended by saspon*ent qWezon City that the pessage of exemption prior to thet tins. its was disposed of — ‘by the Suprerie Qourt fn the following Languases cetiimesemieemmm ee

DSCTS10K

CTA CASE to, 2279 tonto ant Fametase acibowtiy stu City, 23 seta Be).

Tt As Lfkewiee contented on behalf of responéenta thas petitioner is not entitled to exanytion becouse the propertice tn quistion are being utilized for in- Vos taent parpores, pertions of thie building ewned by petitioner ure Deing leaset-te the City of Cebu _ané others fron whieh sabstantial anount of rental " Ghé pertinent portions @f.geetion $2 of the Charter of Geba City reads follows: °~ | | The above-quoted provision of Section 52'of the Charter ef Cabs City exempts from taxation three types of property, vizs (1) lands or bulidings owned by the devernnest of the Philippines, prevines or the Gity of Cebuy (2) burying grounds, churches and ‘thedr afjscent parsonagesy and (3) ante er butidings

DRCTS ICH «

. OTA- GSE Bde 2279 or use? exclusively cov sl davai charktehiey solontil ics or educational purpossa. The enumeration ef the “properties exempt fren taxation as followet by tha previse that “euch exenption shail not extend to lands or buildings held for inves tient, though the incone theref'ren be devoted te rolisiows, charitable, seientil~ 1@y. oF educational paryosess" 4 Close scrutiny of the watt proviae loads to the @omelusion that 1t 4s in= toriod to apply solely to lands or bulldings wed for _ Paligious, charitable, scientific, or educational pure ‘pant Of the Philippines, provines, or City of Cebu, or to burying grounis, churches and their efjaceat par- soneses. ‘This is evident from the very wording of the provision that lena on bullsings held for invest- Sven ageuning thst the end proviso applies alee ‘to onde ar bufldings ovmed by tuo dovarnront of the PhiLdppinss, we are still Of the opinion tat the said propertics owned by the 68S ato exempt from the reel | property tux imposed by Kepublie Act fice 3857. the Law provides thet lanés or buildings hold for invest= cont shall not be exempt Toon taxation’ Afe tho Lund ani - muting ‘te quemtion hela by the sus for tnvtateai? - paces ren = CTA CASE les 2279 | om il = % oF | ‘We 40 not think se. Th is true that a portion of the building ts Leased to the City ef Ceba one other — private cowporations, but 1¢ appears that ths lets were acquired ong the bail@ing erected by the 8! primsrily for its we. It may be that the building as constructed | "4g more then wht the SoS presently needs to house its various ‘offices in Gsba, but it ic obvious thst cons i4er- oom hae te provita te tte members throughout the Philip~ pines, it hes to provide not only for prasént needs bat also for future expans fon. Considering the ever in~ | arousing coverage of s0@tal security nenbarship snd bone~ fits afforded to uenbers, thave te no doubt that the ; entire building will be nected by the oss itealf in the not too Gistant future, It would not be a goo? poliey for ‘the £06 to erect a bulliing te provise solely for {ts prosemt needs ond then think of making add ttions | whan the need arises. ‘Fraotiesl cous ideret tons desand that puovis ion be soe not only for the present but alco for the foresessbis future nees. ‘the s88 should not be vonsiltsei for weting wisaly and tn soeordunes with -Ate charter.

Section 2243), article VI of the Cone tatesien exempts fron tewotion aL Lands y budléingsy and improve= mente ued exclusively for relistowsy ssaseeneaedbadl 10 | @ugntionel purposes. Under’ thie provision of the Constitution, At bas teen held thot the incidental — ace of proparty for purposes other than religious, charitables or edusational, Aor net defeat the oxen ULOD» The term wexelus ively” = bean cons trusd to fean “prinerily" ratuer than ‘tgpoLely. " (see Francis ‘Re ReUULLdele Fountation Ve Commes 270 Pod. 2a, 643}. (1960 30a Chee seas ongood Ve COtifisy 227 He 2s 907 . (1955 6th tre Pr Herrera Ws juozon City Board at age ‘ sessment Appeals, 4.4. Nos L-159205 Septe JO, 196s 3 SGas 186, Mepital 4e Wan Juan do Dow Ye Pasay Chty, Ge Me Tine L*U937Ly Pods. 28, 1966, 26 sora 225.) eines, 95 stated above, the ses Dullding in cebu wes erected prinerily to house its Various offices, the fact tnat | & portion thereat ts ineidentally lease? to other par~ ; sete or corporations would not defeat the exemption. | ‘Repub de ACT Noe LOM, whieh pfeviless | _ SRORION Le ARL corporations, agen- hes Been eited to justify denial of the exemption of the Gebu properties of petitioner. i¢ is enowh to

NSCs IOW =

CTA Caet Ko. 2279 swote here what the Supreme Court said on this {issues thie provision ( (referring to cee. ls NOD. Ab inapplicabie to the ease at bur for it vueoe' a only to 4utiec, taxes, foes ant other charges ~<a “Sramsaction, business, ind dstry or ineome” and foes net incluie a property Lile real. estate tax. (Hoord =” Appeals, Laguna Ve Ve leroy o -'@ government corporation an¢ tts properties’ are owned hy the Jovernnent of the Philippines ana are, thera~ fore, exerpt from taxation under Seetion $2 of Repub- Lic Act lio. 3857. in line with the deets ion of the Suprone ourt tn Beart of iesessrent Appacls of Lague 2 sn & SCRA 225, reiterated dn KAMASA Vo ua> zon City, 23 tora 286. - (See alee Op. NOs Wy a 197, Of the Secs of Justice.) Accordingly, the ¢e@ision “ - pesled fron is hereby reversed.

+ 60 ORDERED. | Quezon City, April 29, 1972.

| Repel

Presiding Judge

he AL VAdDs aeseeta te Jugge bon ——~" RAvOR be AVANCBKa aseoetate Judge