Bureau of Local Government Finance Opinion

July 20, 2010 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Mr. Jaime A. Fabiaa Chief Executive Officer Pag-IBIG Fund Corporate Headquarters The Atrium of Makati Makati Ave., Makati City Sir : This refers to your subjoined letters dated June 1, 2010 and July 19, 2010, requesting for a ruling on the exemption from payment of local taxes and fees imposed on the real properties owned by Home Development Mutual Fund (HDMF) pursuant to Section 19 of Republic Act No. 9679 or the "Home Development Mutual Fund Law of 2009 ("Law"), otherwise known as Pag-IBIG (Pagtutulungan sa kinabukasan: Ikaw, Bangko, Industriya at Gobyerno) Fund". In the Declaration of Policy of the State, the Law, specifically Section 2 thereof, reads as follows: "SEC. 2. Declaration of Policy. It is the policy of the State to establish, develop, promote, and integrate a nationwide sound and viable tax-exempt mutual provident savings system suitable to the needs of the employed and other earning groups, and to motivate them to better plan and provide for their housing needs, by membership in the Home Development Mutual Fund, with mandatory contribution support of the employers in the spirit of social justice and the pursuit of national development." In view of this declaration, it is requested that real properties owned by HDMF shall be exempt from local taxation, pursuant to Section 19 of the Law, which provides: "SEC. 19. Exemption from Tax, Legal Process and Lien. All laws to the contrary notwithstanding, the Fund and all its assets and properties , all contributions collected and all accruals thereto and income or investments earnings therefrom, as well as all supplies, equipment, papers or documents shall be exempt from any tax, assessment, fee, charge , or customs or import duty; and all benefit payments made by the Pag-IBIG Fund shall likewise be exempt from all kinds of taxes, fees or charges, and shall not be liable to attachments, garnishments, levy or seizure by or under any legal or equitable process whatsoever, either before or after receipt by the person or persons entitled thereto, except to pay any debt of the member to the Fund. No tax measure of whatever, nature enacted shall apply to the Fund, unless it expressly revokes the declared policy of the State in Section 2 thereof granting tax exemption to the Fund. Any tax assessment against the Fund shall be null and void ." (boldfacing and underscoring supplied) caHCSD The foregoing provision of law is clear, plain and free from any ambiguity that the Fund (Pag-IBIG Fund) and all it assets and properties shall be exempt from any tax, assessment, fee, and charge, and since it leaves no room for further interpretation, it must be given its literal meaning. Therefore, upon the effectivity of the Law on August 27, 2009, any and all properties owned by the Fund shall be exempt from real property tax imposed pursuant to the pertinent provisions of the Local Government Code (LGC) of 1991 and as implemented under the respective local tax code of local government units (LGUs) concerned. To the same extent, the Fund, including its branches, regional and satellite offices, if any, shall be exempt from all taxes, fees and charges including permit and regulatory fees imposed by the local government unit. However, it is clarified that such exemption does not include payment of service charges or rentals for the use of property and equipment of public utilities owned by the local governments such as charges for actual consumption of water, electric power, toll fees for use of public roads and bridges and the like. This Bureau believes that this elucidation is consistent with the intent and purpose of the law and declared policy of the state that is "to establish, develop, promote, and integrate a nationwide sound and viable tax-exempt mutual provident savings system suitable to the needs of the employed and other earning groups." We hope that we have addressed your concerns. Very truly yours, (SGD.) MA. PRESENTACION R. MONTESA, CESO III Executive Director