Facts:

The case involves the Social Security System (SSS) as the petitioner, and the City of Bacolod along with its City Treasurer, Miguel Reynaldo, as respondents. The case was decided by the Second Division of the Supreme Court on July 21, 1982. The dispute arose from the forfeiture of certain real properties owned by the SSS due to their failure to pay real estate taxes amounting to P104,956.06 for the years 1968, 1969, and 1970, including penalties. The SSS, established under Republic Act No. 1161, is a government agency aimed at providing social protection for various benefits such as disability, sickness, and retirement. The SSS owned a five-storey building in Bacolod City that occupied four parcels of land. In early 1970, the City of Bacolod levied taxes on these properties and subsequently declared them forfeited in favor of the city. In response, on July 27, 1970, the SSS appealed to the City Mayor, contesting the forfeiture on the basis of their claim to tax exemption as a go

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Facts:

Parties and Property

• Petitioner: Social Security System (SSS), a government agency established under Republic Act No. 1161, mandated to develop and perfect a social security system providing protection against disability, sickness, old age, and death.
• Respondents: City of Bacolod and Miguel Reynaldo, City Treasurer of Bacolod City.
• The SSS maintains several regional offices, including a five-storey building in Bacolod City known as the SSS Building, which occupies four parcels of land.

Taxation and Forfeiture Proceedings

• In 1970, the real properties (the SSS Building and its four parcels of land) were assessed for taxation at P1,744,840.00.
• The SSS failed to pay the realty taxes, including penalties, for the years 1968, 1969, and 1970, the sum amounting to P104,956.06.
• In early 1970, the City of Bacolod, through its treasurer, levied the said properties for delinquent real estate taxes.
• On April 3, 1970, the city declared the properties forfeited in its favor.
• In response, the SSS submitted a letter on July 27, 1970, to the City Mayor (delivered through the city treasurer) seeking reconsideration on the forfeiture proceedings based on the allegation that, as a government agency, it is exempt from real estate taxes.

Litigation History

• Following the inaction on its protest, the SSS filed an action in the Court of First Instance of Negros Occidental.
• The complaint sought the nullification of the forfeiture proceedings and the issuance of a writ of preliminary injunction to prevent the consolidation of the city’s ownership over the forfeited properties.
• The lower court granted the preliminary injunction upon the SSS posting a cash bond of P105,000.00.
• Ultimately, the lower court rendered a decision dismissing the complaint, holding that the SSS did not qualify for the exemption under Section 29 of the City Charter of Bacolod, and thus the properties were taxable like any other corporate-owned real estate.

Statutory and Precedential Background

• Section 29 of Commonwealth Act No. 326 (the Charter of the City of Bacolod) provides for the exemption from taxation for lands and buildings owned by various government entities and for properties used exclusively for religious, charitable, scientific, or educational purposes.
• The lower court narrowed the exemption to those government agencies performing sovereign or governmental functions and relied on prior rulings such as NACOCO versus Bacani.
• The SSS, despite being a government agency, was characterized by the lower court as engaging in proprietary functions rather than sovereign functions.
• The case also referenced the Social Security Act as amended by Presidential Decree No. 24, which suggests broad immunity from various forms of taxation for the SSS.

Issue:

Whether the properties owned by the Social Security System are exempt from realty taxes under Section 29 of the City of Bacolod Charter.

• The interpretation of Section 29 regarding the exemption of "lands and buildings owned by the Commonwealth or Republic of the Philippines" when such property is utilized for governmental or proprietary purposes.

Whether the distinction between governmental agencies exercising constituent (sovereign) functions versus those engaging in ministrant or proprietary functions is relevant in determining tax exemption.

• Consideration of previous jurisprudence, such as NACOCO versus Bacani, and its applicability to the present case.

Whether statutory provisions, including Commonwealth Act No. 470 and Republic Act No. 104, support the exemption of public properties from real estate taxes.

• The legislative intent behind exempting properties owned by the government from taxation.
• The impact of Presidential Decree No. 24 in consolidating the exemption status of the SSS.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)