Real Properties (Machinery) Owned by Union Cement Corporation (UCC for Short), Now Holcim Philippines, Inc. Situated in Davao City, which are No Longer Utilized in the Operations of the Business

January 9, 2006 BLGF MEMORANDUM FOR : Exec. Dir. M.P.R. Montesa SUBJECT : Real Properties (Machinery) Owned by Union Cement Corporation (UCC for Short), Now Holcim Philippines, Inc. Situated in Davao City, which are No Longer Utilized in the Operations of the Business This pertains to the attached proposed action concerning the abovementioned machinery of Holcim Philippines, Inc. which are no longer utilized in the operations of the business. It may be recalled that this Bureau under its 2nd Indorsement dated September 13, 2004, ruled that, if indeed, the subject machinery ceased to be actually, directly, and exclusively used to meet the needs of the business, the same should be dropped from the roll of taxable real properties. In this regard, the BLGF Regional Office, Region XI, Davao City, conducted its ocular inspection of the said machinery and findings warrant that certain machinery now owned by Holcim have indeed ceased operations. However, the City Legal Officer of Davao City opines that a mere declaration that machineries have become idle or are no longer used is insufficient to warrant the dropping from the taxable roll of real properties. He believes that it is imperative to overcome the presumption that the subject machinery still tend to meet the need of the business by showing proof that the same have become absolutely unserviceable and can no longer be repaired or, by removing it from the building which they are attached to. CIHAED In this connection, and as you have agreed upon with Director Malvar, and considering further the Report of Inspection conducted by the BLGF Regional Office-Region XI, this Bureau, under the herein attached proposed action, for your approval and/or signature, maintains its stand on the subject matter as embodied under the abovementioned 2nd Indorsement dated September 13, 2004. Considering, however, the notation of Dir. Malvar that: "Although the machinery are not operational, it may be necessary to dismantle or make it really not operational before it will not be subject to the RPT", we deem it necessary that further study be made in consultation with our competent lawyers. It is worth mentioning that this Bureau has rendered opinions/rulings that machinery which are not actually, directly and exclusively used to meet the needs of the industry should be dropped from the taxable roll of real properties, while building , for so long as it remains standing, the same should remain in the taxable roll of real properties unless otherwise demolished. For your consideration and/or instructions, please. cHESAD (SGD.) MERCY N. SANTOS Division Chief, PASS