Bureau of Local Government Finance Opinion

January 30, 2012 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 1st Indorsement Respectfully referred to the City Assessor and the City Treasurer, both of Mandaluyong City, for the favor of appropriate action. HADTEC This has reference to the letter dated May 11, 2011 of Ms. JOAN C. ANG, President, Peaksun Enterprises and Export Corporation, asking for a rebate on real property taxes paid on the real property (Portion of a Building) located at 3rd Floor, Peaksun Condominium, 1505 Princeton St. same city. The claim is anchored on the allegation that a portion of the said establishment, specifically the entire third floor area, is being leased to Home of the Lord Christian Assembly (HCLA), a duly recognized religious organization which is exempt from taxation under the Philippine Constitution specifically Article VI, Section 28 (3) which states that; "Sec. 28. (1) The rule of taxation shall be uniform and equitable, the congress shall evolve a progressive system of taxation. HADTEC "(2) . . . "(3) Charitable institutions, churches and parsonages or convents appurtenant thereto, mosques, non-profit cemeteries, and all lands, buildings, and improvements actually, directly, and exclusively used for religious, charitable, or educational purposes shall be exempt from taxation." To verify the veracity of the alleged claim, representatives of this Bureau conducted an ocular inspection on the subject property on July 15, 2011. As submitted in the attached Ocular Inspection report, it was validated that the subject portion of the said building was indeed actually, directly and exclusively being used for religious purposes by the said religious group, thus, falls within the exemption provisos under the aforequoted provision of the Constitution, and also under Section 234 of the Local Government Code (LGC) of 1991, which states in part, that: HADTEC "Section 234. Exemptions from Real Property Tax . "a) . . . "b) Charitable institutions, churches, parsonages or convents appurtenant thereto, mosques, non profit or religious cemeteries and all lands, buildings and improvements actually, directly and exclusively used for religious , charitable or educational purposes ;" (underscoring supplied) Evidently, real properties, although owned by taxable persons or entity, like in this case, Peaksun Enterprises and Export Corporation, which are actually, directly and exclusively being used by the Home of the Lord Christian Assembly for religious purposes, are exempt from payment of the real property tax. HADTEC In view hereof, attention is also invited to Section 217 of the LGC which states that: "SEC. 217. Actual Use of Real Property as Basis for Assessment . 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." (Underlining supplied) Likewise the Supreme Court in the case of City of Baguio vs. Fernando Busuego , under G.R. No. L-29772 dated September 18, 1980, states that "the sole determinative factor for exemption from realty taxes is the "USE" to which the property is devoted. And where "use" is the test, the ownership is immaterial. (Martin on the Rev. Adm. Code, 1961, Vol. II, p. 487, citing Apostolic Prefect of Mt. Province vs. Treasurer of Baguio City , 71 Phil. 547). HADTEC Thus, this Bureau opines that the subject 3rd Floor of Peaksun Condominium should be exempt from real property tax, effective CY 2001, the year following its occupancy by the HCLA, as evidenced by the attached Contracts of Lease for CY 2000 and 2011. Be guided accordingly. (SGD.) SALVADOR M. DEL CASTILLO OIC-Executive Director