Bureau of Local Government Finance Opinion

November 5, 2012 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Ms. Florida R. Oca OIC-City Treasurer Cabanatuan City Madam : This has reference to your letter dated October 1, 2012, requesting clarification regarding the request of a certain Dr. Melchor M. Sarangaya to avail the incentive of "Realty Tax Holiday for the first Five years of Operation," as provided for under Section 33 of Republic Act No. 9442, otherwise known as the "Magna Carta for the Disabled Persons and for Other Purposes". Based on the documents presented, it could be inferred that Dr. Sarangaya, a resident of Mayapyap Norte, Cabanatuan City, is a father to an eighteen year old son who is suffering from Autism Spectrum Disorder. Since he is the one taking care of his son with disability, he alleged that he is a qualified recipient of the incentive as provided for under Section 33 of the said Act, thus, should be given the "five years realty tax holiday" as provided therein. Said Section 33 of Republic Act No. 9442 states that: " SEC. 33. Incentives. Those caring for and living with a person with disability shall be granted the following incentives; "(a) Persons with disability shall be treated as dependents under Section 35(A) of the National Internal Revenue Code, as amended and as such, individual taxpayers caring for them shall be accorded the privileges granted by the code insofar as having dependents under the same section are concerned, and "(b) Individuals or nongovernmental institutions establishing homes, residential communities or retirement villages solely to suit the needs and requirements of persons with disability shall be accorded the following: "(i) Realty tax holiday for the first five years of operation ; and "(ii) Priority in the building and/or maintenance of provincial or municipal roads leading to the aforesaid home residential community or retirement village." (Underlining and emphasis ours) Upon careful perusal of the aforecited provision, it could be gleaned that the said incentives apply to: 1. Income tax of individuals caring for and living with a person with disability; and 2. Real property tax of individuals or non-governmental institutions establishing and operating homes exclusively to cater and care for such disabled persons. Hence, priority is likewise given to road constructions leading to the said homes. Under the rule on Statutory Construction, when a list of two or more specific descriptors is followed by more general descriptors, the otherwise wide meaning of the general descriptors must be restricted to the same class, if any, of the specific words that precede them. For example, where "cars, motor bikes, motor powered vehicles" are mentioned, the word "vehicles" would be interpreted in a limited sense (therefore vehicles cannot be interpreted as including airplanes). Thus, it could be inferred that the HOME mentioned above refers to private institutions for persons with disability and should not be interpreted based on its plain meaning. Accordingly, the realty tax holiday referred to under R.A. No. 9442 applies only on the first five (5) years of operation of homes established by individuals or non-governmental institutions solely to cater to the needs of such disabled persons. In view hereof, and based on the information submitted, this Bureau is of the opinion that Dr. Melchor M. Sarangaya qualifies to avail the income tax incentives, but not the realty tax holiday, as provided for under Section 33 of the said Act. Further, it is worth emphasizing that all charitable institutions and all lands, buildings and improvements which are actually, directly and exclusively used for charitable purposes are exempt from real property tax (Sec. 234 (b), Local Government Code of 1991) We trust that this clarifies matters. Very truly yours, (SGD.) SALVADOR M. DEL CASTILLO OIC-Executive Director