Bureau of Local Government Finance Opinion

February 5, 2003 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Poblador Bautista & Reyes Law Offices 5th Floor SEDCCO I Bldg. 120 Rada corner Legaspi Sts. Legaspi Village Makati City Attention: Atty. Marie Cecile Roque-Quintos Atty. Meghan G. De Guia Gentlemen : This refers to the letter dated October 18, 2001 requesting in behalf of your client, Miriam College Foundation, Inc. (MCFI) ruling on whether or not the donation of a parcel of land to a non-stock non-profit educational institution is exempt from local transfer tax. We understand that MCFI is a non-stock non-profit educational institution. It received a donation of a parcel of land together with all the improvements thereon located in Quezon City (the "Property") from the Maryknoll Sisters Parish Work, Inc. (MPSWI) (the "Donation"). We understand from MCFI that the Property is currently being used for its High School Buildings. 1 The local government of Quezon City is assessing local transfer tax on the Donation pursuant to Section 135 of the Local Government Code of 1991. The issue is whether or not the Donation is subject to local transfer tax. IaHAcT It is our opinion that the Donation is exempt from local transfer tax. We quote Section 4(4) Article XIV of the 1987 Constitution, as follows: "(4) Subject to the conditions prescribed by law, all grants, endowments, donations, or contributions used actually, directly, and exclusively for educational purposes shall be exempt from tax." Section 25 of Batas Pambansa Blg. 232, as amended by Republic Act No. 7798, 2 (otherwise known as the "Educational Act of 1982") also provides that "(t)axes shall not be due on donations to educational corporations." Subject to the determination by the City Assessor of Quezon City that the Property is in fact being used by MCFI exclusively for its High School Buildings, and as such, is being used actually, directly and exclusively for educational purposes, it is our opinion that based on the above-quoted provisions of law, the Donation is exempt from local transfer tax. Please be guided accordingly. Very truly yours, (SGD.) MA. PRESENTACION R. MONTESA Executive Director Footnotes 1. Based on the Certification MCFI dated 10 September 2002. 2. R.A. No. 7798, the law that amended the Education Act of 1982, was passed into law on 25 August 1995.