Bureau of Local Government Finance Opinion

May 4, 2001 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Ms. Rosalina B. Cruz Administrator Academia De Sta. Martha 79 N. Cuevas St. Kalawaan, Pasig City M a d a m : This refers to your letter dated March 23, 2001 requesting the issuance of exemption from payment of business and/or income and other taxes as provided by law. Representations are made that the Academia de Sta. Martha Inc. (ASMI), an educational institution recognized by the Department of Education, Culture and Sports (DECS) is registered with the Securities and Exchange Commission (SEC) as a non-stock/non-profit corporation. Article 283 of the Implementing Rules and Regulations (IRR) implementing Section 193 of the Local Government Code (LGC) of 1991 provides hereunder: "Article 283. Withdrawal of Tax Exemption Privileges or Incentives . Unless otherwise provided for in this Rules, beginning January 1, 1992, all local tax exemption privileges or incentives granted to and presently enjoyed by any person, whether natural or juridical, including government-owned or controlled corporations, are considered withdrawn, except the following: "(a) . . . "(c) Non-stock and non-profit hospitals and educational institutions; ". . . ." It is clear from the abovequoted provisions of law that non-stock and non-profit educational institutions shall continue to enjoy tax exemption provided for under Section 3(4), Art. XIV of the Constitution, quoted as follows: "All revenues and assets of non-stock, non-profit educational institutions used actually, directly, and exclusively for educational purposes shall be exempt from taxes and duties. . . . . HTCISE Accordingly, the City of Pasig cannot impose business tax and Mayor's Permit fees on ASMI. It bears emphasis, however, that payment of regulatory fees, such as, but not limited to, garbage fees, sanitary inspection and electrical inspection fees, may be legally required under Art. 244 of the IRR implementing Section 153 of the LGC. As regards the verbal request that exemption from the payment of real property tax be included in the basic letter-request, please be informed that real properties (land, buildings and improvements) owned by educational institutions, which are actually, directly and exclusively used for educational purposes shall be exempt from the payment of said tax, pursuant to Section 28(3), Article VI of the 1987 Constitution which was copied almost verbatim under Section 234(b) of the LGC, which are quoted hereunder: Section 28(3) of the Constitution: "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." (Emphasis ours) Section 234(b) of the LGC: "Sec. 234. Exemptions from Real Property Tax . The following are exempted from real property tax: "(a) . . .; "(b) Charitable institutions, churches, parsonages or convents appurtenant thereto, including mosques, nonprofit or religious cemeteries and all lands, buildings, and improvements which area actually, directly and exclusively used for religious, charitable or educational purposes ; (Emphasis supplied) "xxx xxx xxx". This exemption from real property tax, however, shall not extend to machineries owned by educational institutions, even if these machineries are actually, directly, and exclusively used for educational purposes, pursuant to Section 3 of the Joint Local Treasury and Assessment Regulations (JLTAR) No. 1-88 dated May 4, 1988 of the Department of Finance, which is likewise quoted below: "Sec. 3. The exemption from real property taxes , however, shall not include machineries even if these are actually, directly and exclusively used for religious, charitable or educational purposes ." (Emphasis supplied) Attached is the latest opinion of this Bureau treating on the exemption of educational institutions from payment of real property tax of the Coordination Council of Private Educational Associations (COCOPEA) with the exclusion of machineries owned by the subject association. The City Treasurer of Pasig is being furnished a copy hereof for his information and guidance. aAcHCT Very truly yours, (SGD.) BENJAMIN A. GERONIMO Executive Director