Bureau of Local Government Finance Opinion

February 9, 1999 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 3rd Indorsement Respectfully returned to the City Assessor, Pasig City, his within preceding Indorsement dated November 23, 1998, relative to the request of Mr. Eduardo T. Gonzales, President, Development Academy of the Philippines (DAP) Pasig City for exemption from the payment of real property tax on the real properties (land and building) owned by the Academy situated in Pasig City, in the same manner that the DAP real properties located in Tagaytay City had been granted exemption. This Bureau, in its 2nd Indorsement dated July 30, 1998, in response to the request of the City Treasurer for exemption from the payment of real property tax of DAP, Tagaytay City, ruled that "the real properties of DAP, which this Bureau believes and so holds to be actually, directly and exclusively used for educational purposes are therefore, exempt from the payment of real property taxes pursuant to Section 234(b) of R.A. No. 7160 and Section 28(3), Article VI of the New Constitution." The City Assessor of Pasig, in his 2nd Indorsement dated November 23, 1998 submitted, among others that DAP (Pasig City) should be considered as an exception to the abovementioned ruling of the Bureau for the following reasons: 1. Section 234(b) of R.A. No. 7160 and Section 28(3) of Article VI of the New Constitution of the Philippines set the conditions before the land, buildings, and improvements of educational institution shall be granted exemption from the payment of real property taxes, that is, they must be actually, directly and exclusively used for educational purposes, 2. The Academy's real properties located in Tagaytay City are actually, directly and exclusively used for educational purposes, whereas, those which are located in Pasig City "are being used or leased to other entities, and therefore are not actually, directly and exclusively used for educational purposes;" 3. Section 234(a) of R.A. No. 7160 provides that even real property owned by the Republic of the Philippines or any of its political subdivision is not exempt from real property tax if the beneficial use thereof has been granted for consideration or otherwise to a taxable person. The DAP President, however, claims that "real properties (land and buildings) owned by the Development Academy of the Philippines (DAP), wherever located or situated are exempted from the payment of real estate taxes." IcAaEH It is informed in this connection, that Section 234(b) of R.A. No. 7160, otherwise known as the Local Government Code of 1991; and Section 28(3) Article VI of the Constitution specifically provides that only lands, buildings, and other improvements actually, directly, and exclusively used for educational purposes are considered exempt from the payment of real property taxes. Although, in this particular case, the subject real properties are, admittedly, owned by an educational institution (DAP), the same (DAP Pasig City) can not be considered exempt from the payment of real property taxes for the reason that, as submitted by the City Assessor, the properties are "not actually, directly, and exclusively used for educational purposes." In view thereof, this Bureau hereby clarifies that the exemption from payment of real property taxes granted by this Bureau under its 2nd Indorsement dated July 20, 1998 in the case of the real properties owned by DAP and located in Tagaytay City cannot be applied to its real properties located in Pasig City. Be guided accordingly. (SGD.) ANGELINA M. MAGSINO Deputy Executive Director Officer-in-Charge