2nd Indorsement to the City Assessor of Masbate City

May 3, 2002 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION MEMORANDUM FOR : Undersecretary Juanita D. Amatong FROM : Assistant Secretary Emmanuel P. Bonoan SUBJECT : 2nd Indorsement to the City Assessor of Masbate City This refers to your request for us to review the proposed Second Indorsement to be sent to the City Assessor of Masbate City. This proposed Second Indorsement is a response to the letter of the Assistant City Treasurer of Masbate, who in a First Indorsement to the BLGF stated that the Masbate Colleges Hospital Pharmacy and Masbate Colleges Hospital Laboratory failed to provide copies of its By-Laws. Such by-laws, according to the Assistant City Treasurer will be necessary in evaluating the request for the entities' real property tax exemption. The 2nd Indorsement requests the City Assessor of Masbate to look into the subject matter taking into consideration Section 206 of the Local Government Code. However, to expedite matters, we believe that a letter to the Assistant Treasurer of Masbate would be proper to directly answer his query. We believe that for purposes of proving the tax exempt status of an entity, the presentation of its by-laws is not mandatory as long as there can be other documents that can be presented to support its claim of tax exemption e.g. Articles of Incorporation, certifications, title of ownership, affidavits, mortgage deeds, etc. ASETHC We are attaching a draft letter for your review and consideration. April 29, 2002 Mr . Ricardo E. Badillo Assistant City Treasurer Masbate City Dear Mr. Badillo : This refers to your 1st Indorsement dated October 18, 2001 requesting for an opinion of the Bureau on the documents required to be submitted to prove the tax exempt status of an entity. It was represented that the By-Laws of Masbate Colleges Hospital Pharmacy and Masbate Colleges Hospital are not available for reason that the said Hospital failed to provide copies of the said By-Laws with the Department of Trade and Industry, Masbate Provincial Office. Section 206 of the Local Government Code of 1991 provides that: "Proof of Exemption of Real Property from Taxation. Every person by or for whom real property is declared, who shall claim tax exemption for such property under this Title shall file with the provincial city or municipal assessor within thirty (30) days from the date of the declaration of real property sufficient documentary evidence in support of such claim including corporate charters, title of ownership, articles of incorporation, by-laws, contracts, affidavits, certifications and mortgage deeds, and similar documents." "If the required evidence is not submitted within the period herein prescribed, the property shall be listed as taxable in the assessment roll. However, if the property shall be proven to be tax exempt, the same shall be dropped from the assessment roll." In resolving whether the submission of by-laws is a mandatory provision, attention should be given to the rule of statutory construction. There are statutory requisitions intended for guidance of officers in the conduct of business devolved upon them which do not limit their power or render its exercise in disregard of the requisitions ineffectual. Such are generally regulations designed to secure order, system and dispatch in proceedings, and by a disregard of which the rights of the parties interested may not be injuriously affected. Provisions of this character are not usually regarded as mandatory, unless accompanied by negative words importing that the acts required shall not be done in any other manner or time than that designated. 1 Since the law speaks of " sufficient documentary evidence " to support the claim for tax exemption, it could be construed that the enumeration following the word "documentary evidence" serves merely to give examples of the documents that could be submitted and not to specify the particular kinds thereof. HSIADc Thus, in one case it was held that: "The next argument of the petitioner is that granting that Customs Administrative Order 389 is valid and binding, yet "jute bags" cannot be included in the phrase "cylinders and other containers" mentioned therein. It will be noted, however, that the Philippine Tariff Act of 1909 and the Tariff and Customs Code, which Administrative Order 389 seeks to implement, speak of "containers" in general . The enumeration following the word "containers" in the said statutes serves merely to give examples of containers and not to specify the particular kinds thereof . Thus, sec. 23 of the Philippine Tariff Act states, "containers such as casks, large metals, glass or other receptacles," and sec. 105(x) of the Tariff and Customs Code mentions "large containers," giving as examples "demijohn, cylinders, drums, casks and other similar receptacles of metal, glass or other materials." There is, therefore, no reason to suppose that the customs authorities had intended, in Customs Administrative Order 389 to circumscribe the scope of the word "container," any more than the statutes sought to be implemented actually intended to do." 2 (emphasis supplied) Considering the foregoing, it is not mandatory that the by-laws be presented as long as there are still other documentary evidence as enumerated under the law that could prove the entities tax exempt status. We hope to have addressed your concerns. This opinion is being issued on the basis of the foregoing facts as represented. However, if upon its investigation, it will be disclosed that the facts are different, then this opinion shall be considered null and void. (SGD.) JUANITA D. AMATONG Undersecretary and Officer-in-Charge, BLGF Footnotes 1. Statutory Construction by Agpalo, page 248. 2. Asturias Sugar Central vs . Commissioner of Customs , September 30, 1969.