Abra Valley College, Inc. vs. Hon. Juan Aquino, Judge of CFI Abra, etc.

G.R no. L-39086 June 15, 1988

Paras, J.

Facts:

- Petitioner Abra Valley College, Inc., an educational corporation and institution of higher learning duly
incorporated with SEC, is the owner of the lot and building where it operates.
o While it housed buildings for elementary, highschool, and college classes, it was found that the Director
and his family live on the second floor of the main building.
o It was also revealed later (raised for the first time before the SC) that the first floor was also leased for
commercial purposes.
- Because of this, the Municipal Treasurer of Bangued, Abra, assessed petitioner for real property taxes. Since the
property is not being used exclusively for educational purposes, then it is not exempted from tax.
o Because of failure to pay real property tax, the lot was seized and later on sold to one Paterno Millare.
- Petitioner filed a complaint to declare null and void the seizure and sale of its property.
o CFI: ruled for the government, and held valid the seizure and sale.
Hence, this petition.

Held:

- Correct interpretation of used exclusively for educational purposes: the exemption extends to facilities
which are incidental to and reasonably necessary for the accomplishment of the main purposes.
o Pet: the primary use of the lot remains to be for educational purposes; the residential second floor and
commercial use of the first are just incidental matters.
o Resp: the lot is being used for 3 purposes: educational, residential, and commercial. Hence, the exemption
is not applicable.
o SC: Article VI, sec. 22, par. 3 of the 1935 Constitution exempts from real taxes the following:
Cemeteries, churches and parsonages or convents appurtenant thereto, and all lands,
buildings, and improvements used exclusively for religious, charitable or educational purposes
x x x.
Commonwealth Act no. 470, Sec.54, par. C basically reiterates the same.
o Through jurisprudence, the Court clarifies that the term used exclusively also considers
incidental use.
Bishop of Nueva Segovia vs. Provincial Board of Ilocos Norte: the exemption of payment of land
tax in favor of the convent includes the adjacent garden and a lodging place devoted for the
incidental use of the parish priest and of religious functions.
Herrera vs. QC Board of Assessment Appeals: the exemption in favor of property used
exclusively for charitable or educational purposes is not limited to property actually indispensable
thereof, but extends to facilities which are incidental to and reasonably necessary for the
accomplishment of said purposes.
- While the use of the second floor for residential purposes may be considered as incidental use, the lease of
the first floor for commercial purposes cannot be considered as such. Hence, the tax on the property is
valid.
o However, since only a portion of the school grounds is being leased for commercial purposes, it is only
fair that half of the assessed tax be returned to the school.

Judgment Affirmed with Modification.