Bureau of Local Government Finance Opinion

March 28, 2012 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 2nd Indorsement Respectfully returned to the Regional Director for Local Government Finance, Department of Finance, Region III, Benigno Aquino Memorial Hall, Provincial Capitol Compound, San Fernando City, Pampanga, the within preceding Indorsement dated March 16, 2011, relative to the letter February 7, 2011 of the OIC-City Assessor's Office, Gapan City, requesting opinion as to whether or not the Dr. Gloria D. Lacson Foundation Colleges, Inc. is exempt from payment of real property tax. As represented, portions of the building (ground floor) of the abovementioned Foundation College is being leased to a private individual for commercial purposes. IAEcCa In this connection, attention is invited to Sections 198 and 217 of R.A. No. 7160, also known as the Local Government Code of 1991, which read as follows: Section 198 : "SEC. 198. Fundamental Principles. The appraisal, assessment, levy and collection of real property tax shall be guided by the following principles: "xxx xxx xxx. "(b) Real Property shall be classified for assessment purposes on the basis of it actual use . (Underscoring supplied) Section 217 : "SEC. 217. Actual Use of Real Property as Basis for Assessments. Real Property shall be classified, valued and assessed on the basis of its actual use regardless of where located, whoever owns it, and whoever uses it. " (Underscoring ours) Evidently, actual use is the basis of taxation, whoever owns it. In the case entitled City of Baguio vs. Busuego under G.R. No. L-29770, the Supreme Court clarified that: "where the use is the test, ownership is immaterial." In view hereof, this Bureau agrees with the opinion of the said Regional Director that the ground floor area of the Dr. Gloria D. Lacson Foundation Colleges, Inc. which is being leased to private individual for commercial use shall be subject to the payment of real property tax while the second floor area, which is actually, directly and exclusively being used for educational (Care Giver Course and Computer Education) purposes shall remain exempt. Be guided accordingly. aSTcCE (SGD.) SALVADOR M. DEL CASTILLO OIC-Executive Director