Bureau of Local Government Finance Opinion

February 7, 2000 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Mr. Numer V. A. Alzate Corporate Secretary Young Men's Christian Association (YMCA) of Quezon Province. Inc. Km. 125 Diversion Road, Barrio Isabang Tayabas, Quezon S i r : This refers to your letter dated August 3, 1999 appealing for reconsideration of the ruling embodied under our 1st Indorsement dated March 9, 1999, the dispositive portion of which reads as follows: "In view of the foregoing, and considering that YMCA of Quezon is likewise collecting fees for the use of its facilities, this Bureau finds the assessment made by the Municipal Assessor of Tayabas, on its real property declared under Tax Declaration No. 38-066-1856 as taxable effective 1999, in order. However, if there are other real properties of YMCA of Quezon which are actually, directly, and exclusively used for religious, charitable and educational purposes, the same should be declared exempt from the payment of real property taxes." It is your contention that YMCA should be exempt from the payment of real property taxes for the following reasons: 1. The Association (YMCA) is a non-stock/non-profit organization established under the Philippine Laws to engage in the traditional movements and ideals of a YMCA organization. 2. Its gains and properties shall not accrue to anyone or use other than its purpose, and no compensation shall be paid to its Board of Directors and Committees in doing their respective duties. 3. The concept of operation and service of any and all YMCA organizations are to provide sufficient and decent lodging for the working class of the society where it operates, and extend and make available facilities for sport and recreation to the youth and young boys for them to train individually or in groups, clubs, classes or teams, both facilities at moderate rates. 4. The Hostel and Dormitory (second floor of subject building) are patterned on a "Home Away From Home" concept of providing decent, clean and modest accommodations, not only for its members, but also to low-budget travellers, the working class like government employees, social workers and less privileged of the society, for fees that are non-commercial/socialized/moderate or within the reach of the many. SIcEHD 5. Sports and Recreational Facilities (Basketball gym, swimming pool, physical fitness gym, etc.) charge moderate fees that are within the reach of the many to provide the youth to develop physical fitness and high standard of Christian character given the prevailing adverse moral climate due to drug abuse and other vices that beset our youth of today. It is also your contention that the fees collected on the use of Hostel/dormitory and Sport/Recreational/Facilities are pegged merely on the basis that it is lower than the prevailing commercial rates on comparative facilities. Moreover, no provisions for profit, feasibility study, ROI or such other measures of profitability are inputted on said fees. It is also cited that the fees collected hardly meet the payroll of the Association's (YMCA) skeletal force of 14 office and duty workers tending two (2) shifts of operations. On the other hand, in a report of investigation/ocular inspection, copy enclosed, dated January 25, 1999 conducted on the subject real properties of YMCA, the representatives of this Bureau established that the subject property are not actually, directly and exclusively used for religious, charitable or educational purposes considering that the same are basically utilized, as may be observed in Item 2.3 of the attached report, for recreational purposes and for housing of guests/clients for specified fees. Even the members of the said association are only entitled to a certain discount from the regular rates. Apparently, the properties in question are not actually, directly and exclusively used by YMCA for charitable or educational purposes considering that they are collecting fees for the rental of the subject properties and therefore cannot be classified as exempt under Section 234 (b) of R.A. No. 7160, otherwise known as the Local Government Code of 1991, which provides as follows: "Section 234. Exemption from Real Property Tax . The following are exempted from payment of the real property tax. "xxx xxx xxx "(b) All charitably; 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." In view of the foregoing, and considering that the subject real property of YMCA of Quezon is not actually, directly and exclusively used for religious, charitable or educational purposes, the abovementioned request cannot be given favorable consideration for lack of legal basis. cSCTEH Very truly yours, (SGD.) ANGELINA M. MAGSINO Deputy Executive Director Officer-in-Charge