Bureau of Local Government Finance Opinion

January 3, 2012 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION The City Treasurer Iligan City Madam : This pertains to your letter seeking clarification of the provision under Section 28 (3) of Article VI of the 1987 Philippine Constitution which is quoted below: "SEC. 28. (3) All charitable institutions, churches, parsonages or convents appurtenant thereto including mosques, non-profit or religious cemeteries and all lands, buildings and improvements which are actually, directly and exclusively used for religious, charitable or educational purposes, shall be exempt from taxation." In this regard, please be informed that the aforequoted provision of law which was further reiterated under Section 234 (b) of R.A. No. 7160, otherwise known as the Local Government Code (LGC) of 1991, specifically provides that: "all charitable institutions, churches, parsonages or convents appurtenant thereto including mosques, non-profit or religious cemeteries and all lands, buildings, and improvements which are actually, directly and exclusively used for religious, charitable or educational purposes," shall be exempt from the payment of the real property tax. Further, attention is invited to Section 217 of the same Code which provides as follows: "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 supplied) ESCDHA The Supreme Court in the case of City of Baguio vs. Fernando Busuego , 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. "Where the 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). Clearly, for as long as the declared property is actually, directly and exclusively used for religious, charitable or educational purposes, the said property shall be exempt from realty tax whoever owns it, and whoever uses it pursuant to the aforequoted provisions of law. In view hereof, and considering the cited scenario wherein a building was granted real property tax exemption for being actually, directly and exclusively used for educational purposes, it follows, therefore, that the land where the said building was erected, shall not likewise be subject to real property tax payment. We trust that this clarifies the abovementioned request. Very truly yours, (SGD.) SALVADOR M. DEL CASTILLO OIC-Executive Director