Bureau of Local Government Finance Opinion

November 25, 2004 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 3rd Indorsement Respectfully returned to the OIC-Regional Director for Local Government Finance, Department of Finance, Region I, 2/F Mabanag Justice Hall Building, Gen. Luna Street, San Fernando City, La Union, his within 2nd Indorsement dated July 1, 2004, relative to the query of the Provincial Assessor of that province on whether or not La Union Medical Center (LUMC) is subject to the payment of real property tax. It is represented that LUMC is managed and controlled by the Provincial government of La Union; and created pursuant to R.A. No. 9259, "An Act Creating a Body Corporate to be known as the La Union Medical Center and for Other Purposes," which, among others, serves the following purposes and objectives: a) To establish, operate, manage and maintain a general hospital in the Province of La Union specifically in the Municipality of Agoo, for the benefit and welfare primarily of the people of La Union; b) To promote and develop a center for the delivery of quality and affordable medical and surgical care to the people of La Union in particular, and Region I in general; c) To facilitate, encourage and/or undertake the training of provincial and paramedical health care providers on the practical and scientific conduct and implementation of medical services and related activities; d) To extend medical services to the general public, to help prevent, relieve or alleviate afflictions and maladies of the people, especially the poor and less fortunate in life, without regard to the race, creed or political belief. Likewise, Sections 8 and 10 of R.A. No. 9259 provide as follows: "SEC. 8. Program for indigents . The Board of Trustees shall ensure that the LUMC shall institute a program for indigent patients. The number of beds allocated for indigent patients shall not be less than twenty percent (20%) of the total number of hospital beds. "SEC. 10. Appropriations . The provincial government shall provide the funds necessary for the start-up operations and maintenance of the LUMC." It seems that the subject property is owned by the Province of La Union and as such shall enjoy the realty tax exemption enumerated under Section 234(a) of R.A. No. 7160, otherwise known as the Local Government Code of 1991 quoted as follows: "SEC. 234. Exemptions from Real Property Tax . The following are exempted from payment of the real property tax: "(a) Real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial use thereof has been granted, for consideration or otherwise, to a taxable person; (Emphasis supplied) "xxx xxx xxx." Evidently, in order to qualify for exemption from the payment of real property tax, all lands, buildings and improvements should either be owned by the national government or any of its political subdivisions. The LUMC is being administered by a Board of Trustees composed, among others, of the Governor; the Vice Governor; and the Chairmen of the different Committees of the Sangguniang Panlalawigan thereat and draws its funds from the provincial government for its maintenance. STaHIC In view of the foregoing, this Bureau is of the opinion that La Union Medical Center is exempt from the payment of real property tax. Be guided accordingly. (SGD.) MA. PRESENTACION R. MONTESA Executive Director