Bureau of Local Government Finance Opinion

January 27, 2003 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 2nd Indorsement Respectfully returned to the Regional Director for Local Government Finance, Department of Finance, Region IV, People's Mansion Compound, Batangas City. This refers to the letter dated June 27, 2002 of the City Assessor of Calamba City, "seeking recommendation as to the policies and guidelines that should be implemented and the appropriate action that should be taken" seemingly with regard to the transfer of tax declarations for the real properties (5 parcels of land including the improvements erected therein) acquired by the Bank of the Philippine Islands (BPI) through auction sale. It appears that the abovementioned request is being made in view of the alleged refusal of the Asian Computer College (ACC for brevity), to waive its rights over the two (2) buildings erected on the two (2) lots included in the abovementioned 5 parcels of land acquired by the BPI thru foreclosure proceedings. Apparently, ACC leased the said 2 buildings from the previous owners, Sps. Jaime C. Carritos and Nenita V. Carritos prior to the acquisition by BPI. A perusal of the within set of papers, reveals the following occurrence of events, to wit: 1. In the attached Affidavit of Consolidation executed by Mr. Dennis S. David, President of BPI, on April 4, 2002, it is informed that on May 12, 1993; May 17, 1994; May 25, 1995; October 16, 1996; May 22, 1997; and January 26, 2001 , said Spouses Carritos executed Deeds of Real Estate Mortgage over five (5) parcels of land located in Bian and Calamba, Laguna, with all improvements existing thereon , described in and covered by Transfer Certificates of Title (TCT) Nos. T-210152; T-252499; T-252500; T-254187; and T-254188, to the BPI being the Mortgagee; 2. On June 5, 2000 , a Contract of Lease was executed by and between Mr. Jaime Carritos and Ms. Emiliana P. Rodriguez, Administrator, Asian Computer College for one (1) commercial space and one (1) bodega space of the Richpot Building located at 210 Brgy. Mayapa, Calamba City for a period of fifteen (15) years starting May 15, 2000 and expiring on May 15, 2015; 3. A stipulation on the said Contract of Lease also provides that "the LESSEE shall not make any alterations and improvements shall become the property of the LESSOR upon the termination of the lease; 4. Meanwhile, the City Assessor of Calamba City, in his attached letter dated June 27, 2002, submitted, among others that, "on failure of the mortgagor to pay the loan when the same became due and payable, the Mortgagee (BPI) had foreclosed the mortgage and caused the mortgaged properties to be sold in public auction through the Ex-Officio sheriff of the Regional Trial Court of Calamba City. With the Bank of the Philippine Islands being the highest bidder in the auction the land was sold to them and so the declaration of ownership was transferred to its name." 5. In this regard, the said Regional Director submitted that the said auction sale was conducted on September 4, 2000 , and the period of redemption expired on September 26, 2001 ; 6. The Mortgagor failed to redeem the foreclosed properties, as indicated in the said Affidavit of Consolidation. As a consequence thereof, BPI was awarded Transfer Certificates of Title under Entry Nos. 554279 and 554280. ESHcTD Considering therefore that BPI had already acquired ownership of the subject real properties thru foreclosure proceedings, the said bank now intends to effect the transfer of tax declarations for the said properties from the previous owner to its name. However, in the process, it was found that two (2) of the five (5) tax declarations (T.D. Nos. 03844 and 03845 representing the improvements erected on the lots covered by the abovementioned TCTs-T-210152 and T-252500, respectively) had already been issued in the name of the Asian Computer College, as acknowledged by the previous owner, Sps. Carritos, effective 2001, and are both declared as "NEW". A perusal of the subject tax declarations reveals as follows: ASSESSMENT ASSESSED T.D. NO. KIND CLASS. LEVEL VALUE TAXABILITY 03844 School Bldg. Institutional 15% P435,710.00 T 4 storey w/ Deck 03845 School Bldg. Institutional 15% P297,540.00 T Utilized 2000 Needless to say, cancellation or transfer of the existing tax declarations (T.D. Nos. 03844 and 03845) in the name of Asian Computer College is deemed unnecessary at this time. Lastly, attention is invited to Section 234(b) of the same Code (R.A. No. 7160), which provides as follows: "SEC. 234. Exemptions from Real Property Tax . The following are exempted from payment of the real property tax: "xxx xxx xxx. "(b) All charitable institutions, churches, parsonages or convents appurtenant thereto including mosques, nonprofit or religious cemeteries and all lands, buildings and improvements which are actually, directly and exclusively used for religious, charitable or educational purposes ;" Clearly, real properties which are actually, directly and exclusively used for educational purposes are exempt from the payment of real property taxes. The Office of the said Regional Director is hereby advised to conduct an ocular inspection on the subject real properties, to determine whether the same are actually, directly and exclusively used for educational purposes. If findings warrant, the same should, therefore, be dropped from the Roll of Taxable Real Properties, and entered in the Exempt Roll of Real Properties. DEIHAa Please be guided accordingly. (SGD.) MA. PRESENTACION R. MONTESA Executive Director