Bureau of Local Government Finance Opinion

May 16, 2001 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 1st Indorsement Respectfully returned to the City Assessor, Angeles City, his within letter dated October 26, 2000 requesting clarification on whether or not the machineries and equipment like computers, fax machines, etc. which are used in banks, computer schools and other offices fall within the definition of machinery under Article 290(o) of the Implementing Rules and Regulations (IRR) of the Local Government Code of 1991 (R.A. No. 7160). It appears that that Office wants to be clarified as to the taxability of the subject computers and fax machines and other equipment used in banks, schools and other offices. As regards the computers which are used in schools, attention is invited to the letter dated February 6, 2001 of this Bureau, copy enclosed, treating on a similar subject matter, the dispositive portion of which reads as follows: "It is worthwhile to note that the Department of Finance (DOF), concurs in the 2nd Indorsement dated January 23, 1992, copy enclosed, of this Bureau, concerning the request of the Catholic Educational Association of the Philippines (CEAP), for the Department of Finance to issue a Department Order taking into consideration the Constitutional provisions regarding tax exemption for real properties actually, directly and exclusively used for religious, charitable and educational purposes. In the said ruling, BLGF clarified that "the said provisions of the Constitution did not include 'machinery in the kinds of real properties that are exempt from real property taxation, (hence) the Department of Finance, contrary to the contention made, is in no position to provide for the exemption of the machineries from real property taxes." DcICEa "In conclusion, therefore, this Bureau, much to its regret, hereby denies your petition for the recall/repeal of JLTA No. 1-88 and thereby reiterates that the ruling embodied under the 2nd Indorsement dated January 23, 1992 that is, the exemption from real property taxes, should not include machineries, even if these are actually, directly and exclusively used for religious, charitable and educational purposes to be in order. This Bureau will no longer entertain similar requests for reconsideration of this nature in the future." With regard to those equipment which are used in banks and other offices, attached is the 2nd Indorsement dated January 30, 2001, which clarified, thus: "Accordingly, this Bureau agrees with the contention of the BBA that ATMs, which are actually, directly and exclusively used to improve banking services not to mention the convenience it provides to bank clients, are considered real properties subject to real property taxes." "Other equipment/machines, however, which are not essentially being used directly and exclusively in the banking business like air conditioning units (window and packaged type), small generating sets and other mechanical devices of the same nature which are considered as falling under the category of machinery of general purpose use should not be considered real properties, in line with the clarification under Article 290(o) of the Implementing Rules and Regulations of R.A. No. 7160, . . .;" Be guided accordingly. (SGD.) BENJAMIN A. GERONIMO Executive Director