Bureau of Local Government Finance Opinion

October 5, 1998 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 1st Indorsement Respectfully returned to the City Assessor, Cabanatuan City, his within letter dated July 22, 1998, requesting opinion concerning the taxability of the real properties owned by the Land Bank of the Philippines (LBP), a government owned or controlled corporation. It appears that the subject real properties of the LBP located thereat were assessed by that Office as taxable, which is the subject of the attached copy of the Certification dated August 31,1998. Mr. Panfilo C. Doctor Jr., Legal Officer V, LBP-Cabanatuan City, pointed out under his undated letter addressed to the City Mayor and the City Assessor thereat, that pursuant to Section 98 of Republic Act No. 3844, as amended, the real properties of LBP are exempt from the payment of real property taxes. Section 98 of the said Act reads as follows: "SEC 98. Tax Exemption . The Land Bank shall be exempt from all national, provincial, municipal and city taxes and assessments now enforced or hereinafter established. "The exemption authorized in the preceding paragraph of this section shall apply to all property of the Bank, to the resources, receipt, expenditures, profit and income of the Bank, as well as to all contracts, deeds, documents and transactions related to the conduct of the business of the Bank: Provided , however , That said exemption shall apply only to such taxes and assessments for which the Bank itself would otherwise be liable and shall not apply to taxes or assessed payable by persons or other entities doing business with the bank." Clearly, the real properties of the LBP were, indeed, exempt from the payment of real property taxes. In fact, the Department of Finance, under its letter dated February 12, 1990, copy also enclosed, addressed to the President of the said Bank, had the occasion to clarify the effects of the withdrawal of exemption provisions of PD 1931, dated June 11, 1984, and Executive Order No. 93, dated December 17, 1986. Among the subject matters resolved under the said letter of February 12, 1990 (when R. A. No. 7160, otherwise known as the Local Government Code of 1991, has not yet taken effect), is quoted hereunder: "As regards real property taxes, LBP is likewise deemed exempt, except its properties that may be under lease to taxable persons as stated in Section 40(a) of the Real Property Tax Code, as amended." The question, to be resolved, therefore, is whether or not the aforementioned real property tax exemption privileges enjoyed by the Bank were withdrawn by the provisions of R.A. No. 7160, particularly the pertinent portion of Sections 234 and 534 of the said Code, which are quoted hereunder. "Section 234. Exemptions from Real Property Tax . The following are exempted from payment of the real property tax: "xxx xxx xxx "Except as provided herein, any exemption from payment of real property tax previously granted to, or presently enjoyed by, all persons, whether natural or juridical, including all government-owned or controlled corporations are hereby withdrawn upon the effectivity of this Code. "xxx xxx xxx. "Section 534. Repealing Clause . . . . "(f) All general and special laws, acts, city charters, decrees, executive orders, proclamations and administrative regulations, or part or parts thereof which are inconsistent with any of the provisions of this Code are hereby repealed or modified accordingly ." (Emphasis supplied) Evidently, the abovequoted provisions of the said Code withdrew the tax exemption privileges granted to government owned and controlled corporations like the LBP considering that the same have repealed or modified not only the general laws, but also the special laws inconsistent therewith. THSaEC Accordingly, the subject real properties of the LBP are liable to the payment of real property taxes effective as of January 1, 1992 (the year R.A. 7160 took effect), and thereafter. Be guided accordingly. (SGD.) ANGELINA M. MAGSINO Deputy Executive Director Officer-in-Charge