Bureau of Local Government Finance Opinion

July 16, 2012 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Ms. Joan C. Ang President Peaksun Enterprises and Export Corporation 2/F Peaksun Bldg., 1505 Princeton St. Mandaluyong City Madam : This pertains to your request for an opinion from this Bureau on a possible rebate on real property taxes paid on the real property (portion of a building) being leased to Home of the Lord Christian Assembly (HCLA) located at 3rd Floor, Peaksun Condominium, 1505 Princeton St., Mandaluyong City, on reasons stated therein. In this connection, enclosed is a copy of our 1st Indorsement dated January 30, 2012 addressed to the City Treasurer and City Assessor, both of Mandaluyong City, the dispositive portions of which are quoted hereunder: "To verify the veracity of the alleged claim, representatives of this Bureau conducted an ocular inspection on the subject property on July 15, 2011. As submitted in the attached Ocular Inspection report, it was validated that the subject portion of the said building was indeed actually, directly and exclusively being used for religious purposes by the said religious group, thus, falls within the exemption provisos under the aforequoted provision of the Constitution, and also under Section 234 of the Local Government Code (LGC) of 1991, which states in part, that: 'Section 234. Exemptions from Real Property Tax. 'a) . . . . 'b) Charitable institutions, churches, parsonages or convents appurtenant thereto, mosques, non-profit or religious cemeteries and all lands, buildings and improvements actually, directly and exclusively used for religious , charitable or educational purposes ;' (underscoring supplied) "Evidently, real properties, although owned by taxable persons or entity, like in this case, Peaksun Enterprises and Export Corporation, which are actually, directly and exclusively being used by the Home of the Lord Christian Assembly for religious purposes, are exempt from payment of the real property tax. SDAaTC "Moreover, Section 217 of the Local Government Code of 1991 provides that: 'SEC. 217. Actual Use of Real Property as Basis for Assessment. 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.' (Underlining supplied) "Likewise the Supreme Court in the case of City of Baguio vs. Fernando Busuego, under 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. And where '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). "Thus, this Bureau opines that the subject 3rd Floor of Peaksun Condominium should be exempt from real property tax, effective CY 2001, the year following its occupancy by the HCLA, as evidenced by the attached Contracts of Lease for CY 2000 and 2011. "xxx xxx xxx." Further, quoted hereunder is Section 253 of the Local Government Code (LGC) of 1991, which speaks of the claim for refund of tax credit: "SEC. 253. Repayment of Excessive Collections. When an assessment of basic real property, or any other tax levied under this Title, is found to be illegal or erroneous and the tax is accordingly reduced or adjusted, the taxpayer may file a written claim for refund or credit for taxes and interests with the provincial or city treasurer within (2) years from the date the taxpayer is entitled to such reduction or adjustment. "The provincial or city treasurer shall decide the claim for tax refund or credit within sixty (60) days from receipt thereof. In case the claim for tax refund or credit is denied, the taxpayer may avail of the remedies as provided in Chapter 3, Title II, Book II of this Code." Viewed from the abovequoted provision of the LGC, the taxpayer must satisfy the requisites to be able to claim for tax refund or tax credit, viz. : 1) A written claim must be filed with the office of the local treasurer; and 2) The claim must be made within the two-year prescriptive period reckoned from the date of the payment of such tax or from the date the taxpayer is entitled to a refund or credit. We trust that your query has been addressed accordingly. ACcTDS Very truly yours, (SGD.) SALVADOR M. DEL CASTILLO OIC-Executive Director