UNITED COCONUT PLANTERS BANK v. ANG [G.R. No. 222448, November 24, 2021]

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UNITED COCONUT PLANTERS BANK v. ANG

 [G.R. No. 222448, November 24, 2021]

THIRD DIVISION, CARANDANG, J. 

 

Obligations and Contracts; Banking Law; Interest Rates; Mutuality of Contracts; Extrajudicial Foreclosure; Void Interest Stipulation 

Even if the interest stipulation in the loan obligation is nullified, the entire obligation does not become void; the unpaid principal debt still remains valid and only the stipulation as to the interest is rendered void. 

While a stipulation granting a bank the unilateral authority to determine, review, or reset interest rates violates the principle of mutuality of contracts and is therefore void, such nullity does not extinguish the principal loan obligation nor automatically invalidate a foreclosure sale. A debtor who remains in default on the principal obligation may still be subjected to foreclosure notwithstanding the invalidity of the interest stipulation.

 

On April 30, 1997, United Coconut Planters Bank (UCPB) granted Editha Ang and Violeta Fernandez a credit line amounting to approximately ₱16 million, evidenced by five promissory notes and secured by several real estate mortgages over their resort and other properties. 

The borrowers paid only about ₱2.35 million and thereafter defaulted on their amortizations. Consequently, UCPB demanded payment and initiated extrajudicial foreclosure proceedings. The mortgaged properties were sold at public auction on August 2, 1999, where UCPB emerged as the highest bidder. 

Ang and Fernandez later filed a petition seeking to nullify the foreclosure sale, alleging that the loan documents contained invalid provisions allowing UCPB to unilaterally determine and increase interest rates, in violation of the Civil Code and the Truth in Lending Act. 

The RTC eventually upheld the foreclosure sale but declared the interest stipulations void. On appeal, the Court of Appeals likewise declared the interest stipulations void and further nullified the foreclosure sale, ruling that the bank had failed to properly determine the borrowers’ true indebtedness. UCPB elevated the matter to the Supreme Court

 

 

Whether the stipulations allowing UCPB to determine, review, and reset interest rates were valid. 

NO. The Supreme Court held that the interest rate stipulations were void for violating the principle of mutuality of contracts under Article 1308 of the Civil Code. The Credit Agreement allowed UCPB to determine which market reference rate would apply and to review and reset such rates at its option. Although the agreement referred to objective market-based benchmarks such as the Manila Reference Rate and Treasury Bill Rates, the ultimate discretion to choose, review, and reset the applicable rate rested solely with the bank. 

The Court emphasized that a contract cannot leave its fulfillment solely to the will of one party. By granting UCPB unilateral authority to determine future interest rates, the stipulation deprived the borrowers of genuine consent regarding future interest adjustments. Accordingly, the provisions on interest rates were declared null and void.

  

 

Whether UCPB violated the Truth in Lending Act.

NO. The Court ruled that UCPB did not violate the Truth in Lending Act (R.A. No. 3765).

The RTC had found that the bank violated the law by allegedly requiring the borrowers to sign blank disclosure statements and promissory notes. However, the Supreme Court agreed with the Court of Appeals that the borrowers failed to specifically deny under oath the genuineness and due execution of the disclosure statements and financial documents presented by the bank. Consequently, these documents were deemed admitted pursuant to Rule 8 of the Rules of Court. 

Thus, the borrowers failed to establish any violation of the Truth in Lending Act. The promissory notes and disclosure statements remained valid.

 

 

Whether the extrajudicial foreclosure and auction sale remained valid despite the nullity of the interest rate provisions. 

YES. The Supreme Court held that the extrajudicial foreclosure and auction sale were valid despite the nullity of the interest stipulations. 

The Court explained that the invalidity of an interest provision does not extinguish the principal loan obligation. A void interest stipulation merely results in the substitution of the applicable legal interest rate. The creditor’s right to recover the principal debt remains intact, including the right to enforce the mortgage securing the obligation. 

The Court distinguished the case from Spouses Andal v. Philippine National Bank, where foreclosure was invalidated because the borrowers’ default was caused solely by the bank’s imposition of unconscionable interest rates and where the borrowers had already paid a substantial portion of the loan. In contrast, Ang and Fernandez paid only about ₱2.35 million out of a ₱16 million obligation and admitted that their inability to pay was due to dollar shortages and foreign exchange difficulties, not solely because of the questioned interest rates. 

Applying the doctrine in UCPB v. Spouses Beluso, the Court ruled that even if the bank’s demand contained excessive amounts, the demand remained valid as to the proper amount due. Consequently, the borrowers were still in default with respect to their unpaid principal obligation. Since the principal debt remained due and demandable, UCPB validly foreclosed the mortgaged properties. 

The Court further noted that the borrowers made no meaningful effort to settle even the undisputed principal amount despite years of litigation. Their continued failure to pay justified the foreclosure of the mortgaged properties. Accordingly, the Court reinstated the validity of the foreclosure sale and dismissed the borrowers’ petition.

 


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ANTONINO v. BANCO DE ORO UNIVERSAL BANK, INC. [G.R. No. 273446 and G.R. No. 273493, (2025)]

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ANTONINO v. BANCO DE ORO UNIVERSAL BANK, INC.

[G.R. No. 273446 and G.R. No. 273493, (2025)]

THIRD DIVISION, GAERLAN, J.

 

 Banking Law; Time Deposit Certificates (TDCs); Possession of Original TDCs; Burden of Proof; Laches; Bank's Fiduciary Duty; Damages

The possession of the original Time Deposit Certificates by the depositor is compelling evidence that the deposits have not been redeemed where the certificates themselves require surrender upon redemption. Banks, because of the fiduciary nature of their business, are held to the highest degree of diligence in verifying withdrawals and preserving records. Failure to observe such diligence renders the bank liable not only for the unpaid deposits and accrued interest but also for damages. Banks may be held liable for moral damages suffered by depositors due to negligence, even if there is no proof of bad faith or malice.

 

Remedios and Angelita Antonino made several US Dollar time deposit placements with Banco de Oro (BDO) San Lorenzo Branch, evidenced by various Time Deposit Certificates (TDCs). They claimed that the deposits were subject to an agreement for automatic rollover if left unredeemed because they resided most of the time in the United States.

Years later, after recovering the original TDCs from a safety deposit box kept in Banco Filipino, they demanded payment from BDO. The bank refused, claiming that the deposits had already been redeemed in 2001 and presented internal transaction records and a demand draft allegedly signed by Angelita as proof of withdrawal.

Angelita denied redeeming the deposits and presented a Bureau of Immigration certification and passport records showing that she was outside the Philippines on the date of the alleged withdrawal. A handwriting expert likewise testified that the signature on the demand draft was probably not hers.

The RTC and the Court of Appeals ruled in favor of Remedios and Angelita, ordering BDO to pay the proceeds of the time deposits covered by four TDCs. BDO elevated the matter to the Supreme Court.

  

1. Whether Remedios and Angelita sufficiently proved their entitlement to payment of the deposits covered by TDC Nos. 1117687, 1193123, 1193124, and 1193125 despite BDO’s claim that these had already been redeemed.

YES. The evidence preponderantly established that the four TDCs had not yet been redeemed. The Supreme Court sustained the factual findings of the RTC and CA. It emphasized that possession of the original TDCs by Remedios and Angelita strongly indicated that the deposits had not been redeemed because the terms and conditions of the TDCs expressly required surrender of the certificates upon redemption. If redemption had truly occurred, the original certificates should have been in the possession of BDO.

The Court found BDO’s evidence less persuasive. Its computer-generated transaction histories were merely internal records. More importantly, the alleged redemption through Angelita was contradicted by official BOI records and passport entries showing that she was not in the Philippines on the date of the supposed withdrawal. The Court gave full evidentiary weight to the BOI Certification as a public document enjoying the presumption of regularity.

The handwriting expert’s testimony further reinforced the conclusion that Angelita likely did not sign the demand draft. Consequently, BDO failed to establish that the deposits had already been paid.

 

 

2. Whether Remedios and Angelita were barred by laches due to their long delay in claiming the deposits.

No. Remedios and Angelita were not guilty of laches. The Court rejected BDO’s argument that the claim was stale due to the passage of time. The TDCs contained a provision stating that if not redeemed, renewed, or rolled over on maturity, they would automatically earn interest as savings deposits. Moreover, BSP regulations provide that matured time deposits not withdrawn or renewed shall be treated as savings deposits earning interest until actual withdrawal or renewal.

Given these contractual and regulatory provisions, the deposits remained active and interest-bearing. There was therefore no abandonment, neglect, or unreasonable delay that could justify the application of laches. To rule otherwise would undermine the very nature of investment instruments intended to appreciate over time.

 

 

3. Whether BDO was liable for moral damages, exemplary damages, attorney’s fees, and interest.

Yes. BDO was liable for damages and attorney’s fees. The Court reiterated that banks are engaged in a business impressed with public interest and are required to observe a degree of diligence higher than that of a good father of a family. BDO failed to exercise such diligence when it allegedly allowed redemption by a person whose identity and authority were not properly verified, failed to require surrender of the original TDCs, and could no longer produce critical documents supposedly supporting the redemption.

The Court found that Remedios and Angelita suffered mental anguish and anxiety from being deprived of their investments. Accordingly, it awarded:

• USD 100,000.70 plus accrued interest on the four valid TDCs;
• ₱100,000.00 moral damages;
• ₱300,000.00 exemplary damages;
• ₱150,000.00 attorney’s fees;
• Costs of suit; and
• 6% legal interest per annum on the total judgment award from finality of judgment until full payment.

 

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PREMIERE DEVELOPMENT BANK v. SPOUSES CASTAÑEDA [G.R. No. 185110, August 19, 2024]

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PREMIERE DEVELOPMENT BANK v. SPOUSES CASTAÑEDA

[G.R. No. 185110, August 19, 2024]

THIRD DIVISION, CAGUIOA, J.

 

 Obligations and Contracts; Application of Payments (Arts. 1252 and 1254, Civil Code); Separate Juridical Personality; Suretyship; Banking Law; Good Faith

The rule on application of payments under Article 1252 of the Civil Code applies only when the same debtor owes several debts to the same creditor. A creditor cannot apply the payment of an individual debtor to the separate obligations of a corporation merely because the debtor is a corporate officer, stockholder, or surety. The separate juridical personality of a corporation must be respected. Moreover, even where a creditor is contractually authorized to determine the application of payments, such authority must be exercised in good faith and cannot be used to prejudice the debtor by diverting payments to obligations of other persons or entities. A surety does not become the same juridical person as the principal debtor, and the suretyship relationship does not justify applying the surety’s personal payments to the corporation’s debts.

 

Spouses Engracio and Lourdes Castañeda obtained a personal loan from Premiere Development Bank (PDB) in the amount of ₱2.6 million, covered by Promissory Note (PN) No. 717-X. To secure the loan, a Manila Polo Club membership certificate was assigned and pledged as collateral.

Separately, two corporations connected with Engracio Castañeda had outstanding loans with PDB: Casent Realty and Development Corporation and Central Surety and Insurance Company, Inc. These corporate loans were secured by separate collateral and mortgage agreements. Engracio was an officer of both corporations and had executed surety agreements for certain corporate obligations.

When the spouses’ personal loan matured, they tendered a ₱2.6 million check intended as full payment of their personal loan. At around the same time, Central Surety tendered a separate ₱6 million check intended to pay one of its own corporate loans. Instead of applying each payment to the respective obligation for which it was tendered, PDB combined the two payments amounting to ₱8.6 million and distributed the amount among four different loan accounts belonging to the spouses, Central Surety, and Casent Realty.

PDB justified its action based on a provision in the promissory notes authorizing the bank to apply deposits and payments to any obligations of the borrower. The spouses objected and filed an action for specific performance, insisting that their ₱2.6 million payment should have been applied exclusively to their personal loan and that the collateral should consequently be released.

The RTC and the Court of Appeals ruled in favor of the spouses. PDB elevated the case to the Supreme Court.

 

Whether PDB validly applied the spouses’ ₱2.6 million payment to the separate loan obligations of Casent Realty and Central Surety on the theory that Engracio Castañeda was an officer and surety of the corporations and had authorized the bank to apply payments among obligations.

NO. The Supreme Court denied the petition and ruled that PDB improperly applied the spouses’ payment to the corporate obligations of Casent Realty and Central Surety. The Court held that Article 1252 of the Civil Code on application of payments presupposes a single debtor who owes several debts to the same creditor. In this case, the debtors were different persons: the spouses were debtors of the personal loan, while Casent Realty and Central Surety were debtors of the corporate loans. Because corporations possess a personality separate and distinct from their officers and stockholders, the obligations of the corporations could not be treated as the personal obligations of the spouses. Consequently, the spouses’ payment could not be applied to debts belonging to the corporations, nor could corporate payments be applied to the spouses’ personal loan.

The Court further explained that the contractual waiver authorizing the bank to apply payments to “any obligations” referred only to obligations of the same debtor. The provision did not authorize PDB to transfer payments between distinct juridical entities.

The Court likewise rejected PDB’s reliance on the surety agreements. Although the spouses had acted as sureties for certain corporate loans, a suretyship arrangement does not merge the legal personalities of the surety and the principal debtor. The surety remains a separate person whose liability arises only upon the principal debtor’s default and only within the limits expressly agreed upon. Thus, the existence of surety agreements did not authorize PDB to apply the spouses’ personal loan payments directly to the corporations’ obligations.

Moreover, applying Article 1254 of the Civil Code, the Court observed that even if the debts could somehow be considered together, the spouses’ personal loan was the more onerous obligation because they were principal debtors therein, whereas their liability on the corporate loans was merely secondary as sureties. Therefore, the payment should still have been applied first to the spouses’ personal debt.

The Court further held that the bank’s conduct amounted to bad faith. As a banking institution, PDB was expected to observe the highest standards of diligence and integrity. Its continued refusal to apply the spouses’ payment to the proper loan and its insistence on a legally untenable position forced the spouses to litigate for over two decades. Accordingly, the Court affirmed the release of the collateral and awarded the spouses ₱2,000,000.00 moral damages, ₱2,000,000.00 exemplary damages, and ₱50,000.00 attorney’s fees.

 

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Easycall Communications Phils., Inc. vs. Edward King, G.R. No. 145901, December 15, 2005

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Easycall Communications Phils., Inc. vs. Edward King

G.R. No. 145901, December 15, 2005

THIRD DIVISION, CORONA J. 

 

Corporate Office; Distinction between corporate officer and employee, and the proper jurisdiction

 

Corporate officers in the context of Revised Corporation Code are those officers of a corporation who are given that character either by the Corporation Code or by the corporation’s by-laws.

 

Edward King was initially hired by Easycall Communications as Assistant to the General Manager and later promoted to Vice President for Nationwide Expansion. His appointment and compensation were determined by the General Manager, not the Board of Directors. Due to alleged poor sales performance and excessive time spent in the field, the company asked for his resignation. When King refused, he was issued a notice of termination, citing loss of confidence. King filed a complaint for illegal dismissal before the NLRC. The Labor Arbiter ruled that his termination was valid due to loss of trust and confidence, which the NLRC affirmed. However, the NLRC also dismissed the case on jurisdictional grounds, holding that King was a corporate officer, and thus, his dismissal was an intra-corporate controversy within the jurisdiction of the SEC (under PD 902-A). 

King elevated the case to the Court of Appeals, which reversed the NLRC’s findings. The CA ruled that King was not a corporate officer as defined by the Corporation Code and that the NLRC had jurisdiction over his complaint. The appellate court further held that King was illegally dismissed, as there was no sufficient factual basis for loss of confidence and the requirements of due process were not complied with. The case was then brought before the Supreme Court via a petition for review on certiorari. 

 

Whether or not Edward King was a corporate officer or an employee for jurisdictional purposes. 

NO.  The Supreme Court denied the petition and affirmed the decision of the Court of Appeals. The Court ruled that Edward King was not a corporate officer within the purview of the Corporation Code or the company’s by-laws. Citing Section 25 of the Corporation Code, the Court emphasized that corporate officers are those who are either expressly mentioned in the Code—namely, the president, secretary, and treasurer—or those created by the corporation’s by-laws. Since Easycall failed to prove that the position of Vice President for Nationwide Expansion was created by its by-laws, and because King was appointed by the General Manager rather than elected by the Board of Directors, he could not be considered a corporate officer. As such, his removal did not fall under the jurisdiction of the SEC (as provided under PD 902-A) but under the NLRC, pursuant to the Labor Code.

 

Whether or not Edward King is illegally dismissed. 

YES. On the matter of the dismissal, the Court found that the alleged loss of trust and confidence was not supported by clearly established facts. The grounds cited by Easycall—King’s sales performance and time spent in the field—were found insufficient to justify dismissal. In fact, the company had previously praised his performance for the same period it later criticized, even promoting him twice during that time. This inconsistency weakened the credibility of Easycall’s claim of loss of confidence. Moreover, the company failed to observe due process, as King was given only one notice—of his termination—and was not given the opportunity to respond to specific charges in a formal setting. The mere existence of internal dialogues did not satisfy the requirement for notice and hearing.

Since petitioner failed to satisfy the burden of proof that was required of it, we cannot sanction its claim that respondent was a ‘corporate officer’ whose removal was cognizable by the SEC under PD 902-A and not by the NLRC under the Labor Code.

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Philippine Stock Exchange, Inc. v. Court of Appeals [G.R. No. 125469 | October 27, 1997]

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Philippine Stock Exchange, Inc. v. Court of Appeals

G.R. No. 125469 | October 27, 1997

SECOND DIVISION, TORRES, JR. J.

 

Business Judgement Rule 

 

Questions of policy and of management are left to the honest decision of the officers and directors of a corporation, and the courts are without authority to substitute their judgment for the judgment of the board of directors. The board is the business manager of the corporation, and so long as it acts in good faith, its orders are not reviewable by the courts. 

 

Puerto Azul Land, Inc. (PALI), a domestic real estate corporation, sought to list its shares in the Philippine Stock Exchange (PSE) after obtaining a Securities and Exchange Commission (SEC) permit to sell shares to the public. The PSE’s Listing Committee initially recommended approval. However, the PSE Board of Governors denied the application, citing unresolved legal claims over PALI’s assets, including a claim by the Marcos family and sequestration by the Presidential Commission on Good Government (PCGG). 

PALI appealed to the SEC, which reversed the PSE’s decision, ordering the immediate listing of PALI’s shares. The PSE challenged this order before the Court of Appeals, arguing that the SEC had no authority to interfere with the PSE’s business discretion. The appellate court upheld the SEC’s ruling, prompting PSE to elevate the case to the Supreme Court.

 

Whether the SEC had the authority to overturn the PSE’s decision denying PALI’s listing application. 

YES. he Supreme Court ruled in favor of the PSE, holding that the SEC acted arbitrarily in reversing the PSE’s decision. The PSE, as a corporate entity, had the discretion to deny the listing of PALI based on legitimate concerns about the ownership and integrity of its assets. The Court recognized that while the SEC has regulatory power, it cannot override business decisions made in good faith and within the corporation’s legal authority. Thus, absent bad faith or clear abuse of discretion, regulatory authorities cannot interfere with the reasonable exercise of corporate management decisions.

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Montelibano V. Bacolod-Murcia Milling Co. [G.R. No. L-15092 | May 18, 1962]

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MONTELIBANO V. BACOLOD-MURCIA MILLING CO.

G.R. No. L-15092 | May 18, 1962

EN BANC, REYES, J.B.L

 

Business Judgement Rule

 

It is a well-known rule of law that questions of policy or of management are left solely to the honest decision of officers and directors of a corporation, and the court is without authority to substitute its judgment for that of the board of directors; the board is the business manager of the corporation, and so long as it acts in good faith, its orders are not reviewable by the courts.

  

Plaintiffs-appellants, including Alfredo and Alejandro Montelibano and Gonzaga & Co., were sugar planters with milling contracts with Bacolod-Murcia Milling Co., Inc. The original 1919 milling contract stipulated a 45%-55% division of sugar production (mill-planters). In 1936, an amended contract increased the planters' share to 60%, extending the contract for an additional 15 years. Additionally, the milling company’s Board of Directors passed a resolution (August 20, 1936) stating that if other sugar centrals in Negros Occidental granted better terms to their planters, Bacolod-Murcia would provide the same to its own planters. 

By 1951-1952, other sugar mills had increased planters’ shares beyond 60%. Plaintiffs demanded similar adjustments based on the 1936 resolution. The milling company refused, arguing that the resolution was ultra vires (beyond corporate powers) and amounted to an unenforceable donation. The trial court ruled in favor of the defendant, dismissing the complaint. Plaintiffs appealed.

 

Whether the resolution passed by Bacolod-Murcia Milling Co. increasing planters’ shares upon fulfilment of a condition was a valid corporate act and enforceable against the company. 

YES. The Supreme Court reversed the lower court’s ruling, holding that the resolution was a valid corporate act and binding upon Bacolod-Murcia Milling Co. The resolution was not a donation but an amendment to the milling contract meant to induce planters to agree to a longer contract term. The resolution was passed in good faith and was within the authority of the Board of Directors. 

Thus, since the Board of Directors acted within its discretion and in furtherance of corporate objectives, the resolution was enforceable, requiring the milling company to grant the increased sugar shares to the planters.

 

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Metropolitan Waterworks and Sewerage System v. Central Board of Assessment Appeals, G.R. No. 215955, [January 13, 2021]

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Metropolitan Waterworks and Sewerage System v. Central Board of Assessment Appeals, G.R. No. 215955, [January 13, 2021]

SECOND, LOPEZ, M.V 

Local Taxation; Real Property Taxation; Remedies of Taxpayer in Local Tax Disputes (RPT); Exhaustion of Administrative Remedies

 

The tax-exempt status of a government instrumentality is not lost when it grants the beneficial use of its real property to a taxable person; only the exemption of the real property ceases in such case. Indeed, it is a fundamental principle in real property taxation that the assessment of real property shall be based on its actual use. The Court has consistently ruled that while the liability for taxes generally rests on the owner of the real property, personal liability for real property taxes may also expressly rest on the entity with the beneficial use of the real property at the time the tax accrues.

 

The case involves MWSS (Metropolitan Waterworks and Sewerage System) disputing the imposition of real property taxes by Pasay City for the taxable year 2008. Established by RA No. 6234 in 1971, MWSS was granted authority over waterworks and sewerage systems in Metro Manila, Rizal, and part of Cavite. In 1997, under RA No. 8041, MWSS entered a concessionaire agreement with Maynilad to service the West Zone, including Pasay City. Pasay City demanded P166,629.36 in real property taxes, prompting MWSS to protest, claiming exemption as a government instrumentality under the Local Government Code (LGC). The LBAA ruled against MWSS, asserting it is a government-owned corporation (GOCC) and subject to taxation. Despite acknowledging MWSS as a government instrumentality, the CBAA upheld the tax, arguing that MWSS's tax exemption under RA No. 6234 had been withdrawn by Section 234 of the LGC. The CA dismissed MWSS's appeal for failure to exhaust administrative remedies. Hence this petition. 

 

Whether it is correct to dismiss the appeal for failure to exhaust administrative remedies.

NO. The CA erred in dismissing MWSS's appeal solely on the ground of the alleged non-exhaustion of administrative remedies under the LGC. Administrative remedies are inapplicable when the issue presented is a pure question of law. A careful reading of MWSS's arguments and allegations reveals that it is assailing the authority of the city assessor and treasurer to assess and collect real property taxes against it. The issue of whether a local government is authorized to assess and collect real property taxes from a government entity is a pure question of law, which is beyond the LBAA and CBAA's jurisdiction. The protest contemplated under Section 252 of the LGC is required when there is question as to the reasonableness or correctness of the amount assessed, while an appeal to the LBAA under Section 226 is fruitful only where questions of fact are involved. When the very authority and power of the assessor to impose the assessment, and of the treasurer to collect real property taxes are in question, the proper recourse is a judicial action. Thus, despite the alleged non-exhaustion of administrative remedies, the Court gives due course to this petition on the ground that the controversy only involves a question of law.

 

Whether the City of Pasay is authorized to assess and collect real property taxes from MWSS.

NO. MWSS is a government instrumentality with corporate powers, not liable to the local government of Pasay City for real property taxes. The tax exemption that its properties carry, however, ceases when their beneficial use has been extended to a taxable person. The liability to pay real property taxes on government-owned properties, the beneficial or actual use of which was granted to a taxable entity, devolves on the taxable beneficial user. Beneficial use means actual use or possession of the property. Actual use refers to the purpose for which the property is principally or predominantly utilized by the person in possession thereof.

The respondents have not alleged that the beneficial use of any of MWSS’s properties was extended to a taxable person. In the absence of any allegation to the contrary, MWSS’s properties in Quezon City are not subject to the levy of real property taxes. Although there was an allegation that the beneficial use of MWSS's properties in Pasay were given to Maynilad by virtue of a concession agreement, this however, was not proved and was merely based on a sweeping conclusion that when MWSS entered into a concession agreement, all its properties were effectively turned over to the concessionaires for their operations. At any rate, the tax-exempt status of a government instrumentality is not lost when it grants the beneficial use of its real property to a taxable person; only the exemption of the real property ceases in such case.

Indeed, it is a fundamental principle in real property taxation that the assessment of real property shall be based on its actual use. The Court has consistently ruled that while the liability for taxes generally rests on the owner of the real property, personal liability for real property taxes may also expressly rest on the entity with the beneficial use of the real property at the time the tax accrues.

 

 

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