Real Property Tax Exemption of the Government Service Insurance System (GSIS) Properties Pursuant to Republic Act No. 8291; and the Supreme Court (SC) Decision in the Case of "Government Service Insurance System vs. City Treasurer and City Assessor of the City of Manila (G.R. No. 186242), Promulgated on December 23, 2009

April 25, 2014 BLGF MEMORANDUM CIRCULAR NO. 019-14 TO : All Regional Directors, Bureau of Local Government Finance, City and Municipal Assessors within Metro Manila Area, Provincial, City and Municipal Assessors and Others Concerned SUBJECT : Real Property Tax Exemption of the Government Service Insurance System (GSIS) Properties Pursuant to Republic Act No. 8291; and the Supreme Court (SC) Decision in the Case of "Government Service Insurance System vs. City Treasurer and City Assessor of the City of Manila (G.R. No. 186242), Promulgated on December 23, 2009 For the information and guidance of all concerned and in view of the similar reports received by this Bureau that some Local Government Units (LGUs) have been assessing the real properties owned by GSIS despite the exemption provided under Section 39 of R.A. 8291, as clarified under the Supreme Court (SC) Decision in the case of " Government Service Insurance System (GSIS) vs. City Treasurer and City Assessor of the City of Manila (G.R No. 186242), promulgated on December 23, 2000, quoted hereunder are Section 39 of R.A No. 8291 and portions of the Supreme Court Decision (G.R. No. 186242), as follows: SECTION 39, Republic Act No. 8291 : "xxx xxx xxx. "SEC. 39. Exemption from Tax, Legal Process and Lien . It is hereby declared to be the policy of the State that the actuarial solvency of the funds of the GSIS shall be preserved and maintained at all times and the contribution rates necessary to sustain the benefits under this Act shall be kept as low as possible in order not to burden the members of the GSIS and their employers. Taxes imposed on the GSIS tend to impair the actuarial solvency of its funds and increase the contribution rate necessary to sustain the benefits of this Act. Accordingly, notwithstanding, any laws to the contrary, the GSIS, its assets, revenues including all accruals thereto, and benefits paid, shall be exempt from all taxes, assessments, fees, charges or duties of all kinds. These exemptions shall continue unless expressly and specifically revoked and any assessment against the GSIS as of the approval of this Act are hereby considered paid . Consequently, all laws, ordinances, regulations, issuances, opinions or jurisprudence contrary to or in derogation of this provision are hereby deemed repealed, superseded and rendered ineffective and without legal force and effect. IaHAcT "Moreover, these exemptions shall not be affected by subsequent laws to the contrary unless this section is expressly, specifically and categorically revoked or repealed by law and a provision is enacted to substitute or replace the exemption referred to herein as an essential factor to maintain or protect the solvency of the fund , notwithstanding and independently of the guaranty of the national government to secure such solvency or liability. "The funds and/or the properties referred to herein as well as the benefits, sums or monies corresponding to the benefits under this Act shall be exempt from attachment, garnishment, execution, levy or other processes issued by the courts, quasi-judicial agencies or administrative bodies including Commission on Audit (COA) disallowances and from all financial obligations of the members, including his pecuniary accountability arising from or caused or occasioned by his exercise or performance of his official functions or duties, or incurred relative to or in connection with his position or work except when his monetary liability, contractual or otherwise, is in favor of the GSIS. (Emphasis ours.)" "xxx xxx xxx." Supreme Court Decision (G.R. No. 186242) : The 3rd Division of the Supreme Court in its Decision dated December 23, 2009, reiterated the above exemption of GSIS under its Charter viz. : Real property taxes assessed and due from GSIS considered paid "While recognizing the exempt status of GSIS owing to the reenactment of the full tax exemption clause under Sec. 39 of RA 8291 in 1997, the ponencia in City of Davao appeared to have failed to take stock of and fully appreciate the all-embracing condoning proviso in the very same Sec. 39 which, for all intents and purposes, considered as paid " any assessment against the GSIS as of the approval of this Act ." If only to stress the point, we hereby reproduce the pertinent portion of said Sec. 39: "xxx xxx xxx." "In sum the Court finds that GSIS enjoys under its charter full tax exemption. Moreover, as an instrumentality of the national government, it is itself not liable to Concepcion-Arroceros properties. Following the "beneficial use" rule, however, accrued real property taxes are due from the Katigbak property, leased as it is to a taxable entity. But the corresponding liability for the payment thereof devolves on the taxable beneficial user. The Katigbak property cannot in any event be subject of a public auction "sale, notwithstanding its realty delinquency. This means that the city of Manila has to satisfy its tax claim by serving the accrued realty tax assessment on MHC, as the taxable beneficial user of the Katigbak property and, in case of nonpayment, through means other than the sale at public auction of the leased property. CScTED "WHEREFORE, . . . . Accordingly, the real property tax assessments issued by the City of Manila to the Government Service Insurance System on the subject properties are declared VOID, except that the real property tax assessment pertaining to the leased Katigbak property shall be valid if served on the Manila Hotel Corporation, as lessee which has actual and beneficial use thereof. The City of Manila is permanently restrained from levying on or selling at public auction the subject properties to satisfy the payment of the real property tax delinquency." In the light of all the foregoing, the appraisal and assessment of the real properties of the GSIS shall be guided by the following: 1. That all real properties of the GSIS are exempt from the payment of real property tax. 2. That if the beneficial use thereof has been granted or enjoyed by a taxable person/entity, the liability for the payment of the real property tax shall be shouldered by the beneficial user; and 3. That in case the beneficial user fails to pay the real property tax, the property cannot in any event, be subject of a public auction sale notwithstanding its realty tax delinquency. Therefore, the LGU has to satisfy its tax claim by serving the accrued realty tax assessments to the beneficial user of GSIS properties, and in case of nonpayment, the LGU may collect the realty tax through other means other than the sale at public auction of the leased property. The Provincial Assessors and Treasurers are hereby instructed to disseminate the contents of this Circular, including the attachments, to the Municipal Assessors and Treasurers within their respective jurisdiction. CSDcTH (SGD.) SALVADOR M. DEL CASTILLO OIC-Executive Director