Bureau of Local Government Finance Opinion

July 31, 2003 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION The Provincial Assessor Daet, Camarines Norte M a d a m : Reference is made to your letter of April 24, 2003, relative to the letter dated March 20, 2003 of the Legal Counsel of the Government Service Insurance System (GSIS), Naga Branch, in effect, requesting confirmation that GSIS is exempt from the payment of real property tax. It is represented that GSIS lands located at Dogongan, Daet, Camarines Norte, declared under TD Nos. 017-0127 and 017-0009 and covered by TCT Nos. T-25188 and T-25189, were assessed as taxable, by the Municipal Treasurer of Daet, Camarines Norte. Meanwhile, the Legal Counsel of GSIS, Naga Branch, argued that GSIS is exempt from real property tax payment as provided for under PD No. 1146 enacted in May, 1977, and as amended by Republic Act No. 8291, enacted in 1997, which are quoted below: Sec. 33, PD No. 1146 "SEC. 33. Exemption from Tax, Legal Process and Lien . It is hereby declared to be the policy of the State that the actuarial solvency of the funds of the System shall be preserved and maintained at all times and that the contribution rates necessary to sustain the benefits under this Act shall be kept as low as possible in order not to burden the members of the System and/or their employers. Taxes imposed on the System tend to impair the actuarial solvency of its funds and increase the contribution rate necessary to sustain the benefits under this Act. Accordingly, notwithstanding any laws to the contrary, the System, its assets, revenues including all accruals thereto, and benefits paid, shall be exempt from all taxes , assessments, fees, charges or duties of all kinds. These exemptions shall continue unless expressly and specifically revoked and any assessment against the System as of the approval of this Act are hereby considered paid. cEaTHD "Moreover, these exemptions shall not be affected by subsequent laws to the contrary, such as the provisions of Presidential Decree No. 1931 and other similar laws that have been or will be enacted, unless this section is expressly and categorically repealed by law and a provision is enacted to substitute the declared policy of exemption from any and all taxes as an essential factor for the solvency of the Fund. . . ." (Emphasis supplied) Sec. 39, R.A. No. 8291 "SEC. 39. Exemption from Tax, Legal Process and Lien . It is hereby declared to be the policy of the State that the actuarial solvency of the funds of the System shall be preserved and maintained at all times and that contribution rates necessary to sustain the benefits under this Act shall be kept as low as possible in order not to burden the members of the GSIS and their employers. Taxes imposed on the System tend to impair the actuarial solvency of its funds and increase the contribution rate necessary to sustain the benefits under this Act. Accordingly, notwithstanding any laws to the contrary, the GSIS, its assets, revenues including all accruals thereto, and benefits paid, shall be exempt from all taxes , assessments, fees, charges or duties of all kinds. These exemptions shall continue unless expressly and specifically revoked and any assessment against the GSIS as of the approval of this act are hereby considered paid. Consequently, all laws, ordinances, regulations, issuances, opinions or jurisprudence contrary to or in derogation of this provision are hereby deemed repealed, superseded and rendered ineffective and without legal force and effect. "Moreover, these exemptions shall not be affected by subsequent laws to the contrary, unless this section is expressly, specifically and categorically revoked or repealed by law and a provision is enacted to substitute or replace the exemption referred to herein as an essential factor to maintain or protect the solvency of the fund, notwithstanding and independently of the guaranty of the national government to secure such solvency or liability. . . ." (Emphasis ours) Relatedly, attention is invited to the pertinent portions of DOJ Opinion No. 165, s. 1994, which provide as follows: "xxx xxx xxx "This Department has previously confirmed GSIS' exemption from real property tax under Presidential Decree No. 1146 despite section 234 of the Local Government Code , which withdrew the exemption of government-owned and controlled corporations from real property tax. In Opinion No. 165, s. 1994 it was ruled that: '. . . the Local Government Code of 1991 (RA No. 7160), a general law has not expressly and explicitly revoked Section 33 of the GSIS Charter which is a special law, or is there in the aforesaid Local Government Code of 1991, a provision on the substitution of the declared state policy on tax exemption of the System. 'Accordingly, this opinion officially confirms that the exemption of the GSIS from the payment of all taxes, assessments, fees, charges and duties of all kinds under Section 33 of its Charter has not been superseded by the Local Government Code of 1991 .' (Emphasis added)" (p. 4, Opinion No. 48; Italics ours) Corollarily, under the attached 3rd Indorsement dated January 17, 2001, the BLGF has categorically ruled that the tax exemption privileges granted to GSIS under Sec. 33 of PD No. 1146, as amended by R.A. No. 8291 shall continue, despite the enactment of the Local Government Code of 1991 (R.A. No. 7160), unless expressly and specifically revoked. This accordingly confirms your opinion that GSIS is indeed exempt from the payment of real property tax. Accordingly, subject properties should be dropped from the roll of taxable properties and entered in the exempt roll of real properties. ISTHED Be guided accordingly. Very truly yours, (SGD.) MA. PRESENTACION R. MONTESA Executive Director