Bureau of Local Government Finance Opinion

March 9, 1999 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 1st Indorsement Respectfully returned, that the Provincial Assessor of Quezon, Lucena City, to the Municipal Assessor of Tayabas, same province, his within letter dated November 9, 1998, requesting an opinion concerning the taxability of the real property (building) owned by the Young Men's Christian Association (YMCA) of Quezon located at Barangay Isabang, Tayabas, said province. It appears that the subject real property has been assessed as taxable under tax Declaration No. 38-006-1856 with an assessed value of P6,000,000.00 effective 1999. Mr. Nomer V. Alzate, the Corporate Secretary of YMCA of Quezon claims under his October 30, 1998 letter, that the said real property is exempt from the payment of real property taxes for reason that it is a non-profit, non-stock corporation organized under the laws of the Philippines for civic, religious, educational and charitable purposes as well as the promotion of the physical, mental, and spiritual welfare of the youth. On the other hand, the Municipal Assessor of Tayabas, in a letter dated November 9, 1998, submitted that the subject real property can not be considered exempt from the payment of real property taxes because YMCA is collecting fees from both members and non-members who occupy or use the building and its facilities. SAHIDc In this connection, and in order that appropriate action could be taken on the matter, this Bureau directed the conduct of an investigation/ocular inspection of the subject real property of YMCA, which revealed, among others, that: 1. The land on which the subject real property (building) of YMCA was erected is declared in the name of Ms. Ma. U. Constantino under Tax Declaration No. 38-066-1238 (Attachment "1"); 2. The subject YMCA building was assessed by the said Municipal Assessor's Office as "taxable" (Commercial) under Tax Declaration No. 38-066-1856 effective 1999 (Attachment "2"); 3. Per Certificate of Occupancy dated March 19, 1998 (Attachment "3") duly approved by the Office of the Municipal Engineer/Building Official, Municipality of Tayabas, the said building was designed and constructed as "Commercial" under Building Permit No. 97-12-00257, under the name of YMCA of Quezon Province;" 4. The purpose for which YMCA was formed, as embodied under its Constitution and By-Laws, as amended on December 8, 1979 (Attachment "4") are quoted hereunder: "Section 2. The enduring purposes of the Association shall be: a) To develop a well-balanced Christian personality, mission in life and usefulness of individuals, as well as to promote unity among Christians and understanding among people of all faiths, to the end that the Brotherhood of Man Under the Fatherhood of God may be fostered in an atmosphere of mutual respect and tolerance; b) To promote on equal basis the physical, mental and spiritual welfare of the boys and the youth and to emphasize reverence for God, social discipline, responsibility for the common good, respect for human dignity, and the observance of the Golden Rule." 5. An interview made with Mr. Lorenzo Flores, Administrator, disclosed the following: 5.1 The swimming pool and covered basketball court cost P1.3M and P3M, more or less, respectively: 5.2 Investments of YMCA came from membership fees, donations, contributions, fund-raising, and subsidy allocations from YMCA-National. 6. A certified xerox copy of the Schedule of Facility Rates which enumerates the rates per use of each facility (Attachment "F"), appears to support the abovementioned conclusion of the said Municipal Assessor that, "the subject real property can not be considered exempt from the payment of real property taxes because YMCA is collecting fees from both members and non-members who occupy or use the building and its facilities." Evidently, YMCA-Quezon Province caters not only to its members but also to the general public for fees. Even the said members are only entitled to a certain discount from the regular rates charged for the use of its facilities. TDCAHE As stated in the report, the subject building could not be deemed to have been actually, directly and exclusively constructed for religious, charitable or educational purposes considering that the predominant use of the same is for recreational purposes and housing of guests/clients, whether members or non-members. In this connection, attention is invited to our Ist Indorsement dated August 2, 1989, treating on a similar subject matter, the pertinent portion of which reads as follows: "Accordingly, all lands, buildings, and improvements of the YMCA, except machineries, which are actually directly and exclusively used for charitable or educational purposes shall be exempt from the payment of real property taxes." "However, such real properties of the YMCA referred to in the 1st Indorsement dated March 10, 1993, copy enclosed, of the Department of Finance (then Ministry), particularly those which have been 'leased by the YMCA to a private person' and are 'open to the public for fees' shall remain subject to payment of real property taxes." However, attention is also invited to Section 234(b) of R.A. 7160, otherwise known as the Local Government Code of 1991, which provides as follows: ESHAcI "SEC. 234. Exemption from Real Property Tax . The following are exempted from payment of the real property tax. "xxx xxx xxx. "(b) All charitable institutions, churches, parsonages or convents appurtenant thereto including mosques, non-profit or religious cemeteries and all lands, buildings, and other improvements which are actually, directly and exclusively used for religious, charitable or educational purposes." Evidently, only real properties actually, directly and exclusively used for religious, charitable or educational purposes are exempt from the payment of real property taxes. 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. Be guided accordingly. (SGD.) ANGELINA M. MAGSINO Deputy Executive Director Officer-in-Charge