Charitable institution even if receiving payment

A charitable institution does not lose its character as such and its exemption from taxes simply because it derives income from paying patients, whether out-patient, or confined in the hospital, or receives subsidies from the government, so long as the money received is devoted or used altogether to the charitable object which it is intended to achieve; and no money inures to the private benefit of the persons managing or operating the institution.

"Exclusive" means possessed and enjoyed to the exclusion of others; debarred from participation or enjoyment. "Exclusively" means "in a manner to exclude; as enjoying a privilege exclusively."

If real property is used for one or more commercial purposes, it is not exclusively used for the exempted purposes but is subject to taxation. The words "dominant use" or "principal use" cannot be substituted for the words "used exclusively" without doing violence to the Constitutions and the law. Solely is synonymous with exclusively. (Lung Center v. QC. G.R. No. 144104)

Lung Center did not necessarily overturn the case of Abra Valley College v. Aquino (G.R. No. L-39086. June 15, 1988. 245 Phil. 83). Lung Center simply provided a stricter interpretation.

In Abra Valley, the Supreme Court said that the primary use of the school lot and building is the basic and controlling guide, norm and standard to determine tax exemption, and not the mere incidental use thereof. Under the 1935 Constitution, the trial court correctly held that the school building as well as the lot where it is built should be taxed, not because the second floor of the same is being used by the Director and his family for residential purposes (incidental to its educational purpose), but because the first floor thereof is being used for commercial purposes. However, since only a portion is used for purposes of commerce, it is only fair that half of the assessed tax be returned to the school involved.

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