G.R. No. L-39086
June 15, 1988
Facts
Abra Valley College is a school recognized by the government and is offering Primary, High School and College Courses. The second floor of the main building of the school is occupied by the Director and his family is whereas ground floor of the college building is being used and rented by a commercial establishment, the Northern Marketing Corporation.
The private respondents maintain that the college lot and building in question which were subjected to seizure and sale to answer for the unpaid tax.
However, the petitioner contends that the primary use of the lot and building for educational purposes, and not the incidental use thereof, determines the exemption from property taxes under Section 22 (3), Article VI of the 1935 Constitution. Hence, the seizure and sale of subject college lot and building, which are contrary thereto as well as to the provision of Commonwealth Act No. 470, otherwise known as the Assessment Law, are without legal basis and therefore void.
Issue
Whether or not the petitioner is exempt from tax liability since the Constitution exempt properties “used exclusively for educational purposes” from payment of taxes?
Held
No. Section 22, paragraph 3, Article VI of the 1935 Constitution and Section 54, paragraph c, Commonwealth Act No. 470 exempt from real property tax “…all lands, buildings, and improvements used exclusively for religious, charitable, scientific or educational purposes.” In Nueva Segovia v. Provincial Board of Ilocos Norte, the Court held that the term “used exclusively” considers incidental use also. Moreover, the term also includes facilities incidental to and reasonably necessary for the accomplishment of said purposes (Herrera vs. Quezon City Board of Assessment Appeals and Commissioner of Internal Revenue vs. Bishop of the Missionary District).
In this case, the use of the second floor of the main building in the case at bar for residential purposes of the Director and his family may find justification under the concept of incidental use, which is complimentary to the main or primary purpose — educational. However, the lease of the first floor thereof to the Northern Marketing Corporation cannot by any stretch of the imagination be considered incidental to the purpose of education.
Hence, the school building as well as the lot where it is built, should be taxed, because the first floor thereof is being used for commercial purposes.