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Bureau of Local Government Finance Opinion: CD Technologies Asia, Inc. © 2017
Bureau of Local Government Finance Opinion: CD Technologies Asia, Inc. © 2017
2nd Indorsement
Respectfully referred to the Regional Director for Local Government Finance,
Department of Finance, Region III, Benigno Aquino Memorial Hall, Provincial Capitol
Compound, San Fernando City, Pampanga, the within preceding Indorsement dated
March 12, 2012 of the City Assessor of Angeles City, relative to the request of Mr.
Emmanuel Y. Angeles, University Chancellor of Angeles University Foundation (AUF), to
drop the property from the roll of taxable properties, and thereafter to reclassify the
property as tax exempt.
It appears from the attached sub-joined letters, both dated February 27, 2012 of
Mr. Angeles addressed to said City Assessor that the following real properties of AUF
was allegedly been classified as taxable, to wit: aATHES
"b) Recreational Facilities. — The school must have save and attractive
playgrounds and adequate facilities for suitable sports and games."
4. Moreover, the tax exemption extends to facilities which are incidental to,
and reasonably necessary for the accomplishment of the main
purpose of an exempt entity. This principle was reiterated in the 2007
case of City Assessor of Cebu City v. Association of Benevola de
Cebu, Inc. Quoting the rule in Herrera v. Quezon City Board of
Assessment Appeals, —
"Moreover, the exemption in favor of property used exclusively for
charitable or educational purposes 'is not limited to property actually
indispensable' therefore (Cooley on Taxation, Vol. 2, p. 1430), but extends
to facilities which are 'incidental to and reasonably necessary for' the
accomplishment of said purposes, such as, in the case of hospitals, 'a
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school for training nurses, a nurses' home, property use to provide housing
facilities for interns, resident doctors, superintendents, and other members
of the hospital staff, and recreational facilities for students nurses, interns
and residents' (84 C.J.S., 621), such as 'athletic elds', including a 'farm
used for the inmates of the institution (Cooley on Taxation, Vol. 2, p.
1430)."
"Section 234. Exemptions from Real Property Tax. — The following are exempted
from payment of real property tax:
"xxx xxx xxx.
However, the Supreme Court, in the case of City of Baguio vs. Fernando S.
Busuego, G.R. No. L-29772 promulgated on September 18, 1990, held that "the sole
determinative factor for exemption from realty taxes is the USE to which the property is
devoted. And where 'use is the test, the ownership is immaterial' (Martin on the Revenue
Administration Code, 1961, Vol. II, p. 487, citing Apostolic prefect of Mt. Province vs.
Treasurer of Baguio City, 71 Phi. 547)."
Premises considered, for the said properties of AUF to be exempt from the
payment of real property tax, it must conform with the test as stated in the case above
cited as well as with the provision of Sec. 217 of the Local Government Code of 1991
which provides that:
"Section 217. Actual Use of Real Property as Basis for Assessment. — Real
Property shall be classi ed, valued and assessed on the basis of its actual use
regardless of where located, whoever owns it, and whoever uses it."
"Moreover, attention is also invited to the clari catory portion in Supreme Court
(SC) Decisions, as embodied under CBAA Decision Case No. L-08:
Classi cation/Actual Use in clarifying the term 'actually, directly and exclusively
used,' to wit:
'1. Abra Valley College, Inc. vs. Aquino (G.R. No. L-39086, June 15, 1988,
162 ACRA 106), citing Herrera vs. Quezon City Board of Assessment
Appeals (G.R. No. L-1570, September 30, 1961, 3 SCRA 1860) and
Commissioner of Internal Revenue vs. Bishop of the Missionary
District (14 SCRA 991):
. . . Moreover, the exemption in favor of property used exclusively for
charitable or educational purposes is not limited to property actually
indispensable therefore (Cooley on Taxation, Vol. 2, p. 1430), but
extends to facilities which are incidental to and reasonably
necessary for the accomplishment of said purposes, such as in the
case of hospitals, a school for training nurses, a nurses home, a
property used to provide housing facilities for student nurses,
interns, and residents (18 C. Juris Secundum 621) such as athletics
elds, including a farm used for inmates of the institutions. (Cooley
on Taxation, Vol. 2, p. 1430)cTAaDC
In view of the above discussion, and if indeed, upon further veri cation by that
Of ce, the subject properties of AUF which are being used actually, directly and
exclusively for educational purposes, including those real properties which are found to
be incidental to and reasonably necessary in achieving the educational purposes of
AUF, should be dropped from the roll of "taxable" properties and entered in the "exempt"
roll of real properties. Otherwise, those properties shall remain in the "taxable" roll of
real properties.
In addition thereto, if indeed the subject Dormitory is owned by the school and
erected within the AUF campus, the same should be dropped from the roll of "taxable"
properties and entered in the "exempt" roll of real properties. Otherwise it shall remain
in the "taxable" roll of real properties.
Be guided accordingly. TEIHDa