Bureau of Local Government Finance Opinion

December 18, 2000 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 1st Indorsement Respectfully returned to the Provincial Assessor, Daet, Camarines Norte, her within letter dated October 2, 2000 requesting clarification on whether or not this Bureau is in conformity with the implementation of the Resolution of the Sangguniang Bayan of Paracale duly approved by the Sangguniang Panlalawigan of Camarines Norte, granting exemption on all real properties owned by United Paragon and Mining Corporation (UPMC) located in said municipality. It appears that the subject request was prompted by the ruling made by this Bureau under its 1st Indorsement dated June 5, 2000, copy enclosed, relative to the letter dated August 3, 1999 of the Provincial Assessor, same province, requesting clarification and/or opinion on the following: "1. Whether that Office (Provincial Assessor's Office) still has the authority to change the taxability of the real properties (UPMC buildings and machineries) from taxable to exempt despite the tax exemption granted by the Sangguniang Bayan of Paracale, in consonance with Section 192 of the Local Government Code of 1991; and "2. Whether the decision of the Department of Finance adopted in the case of Marcopper Mining Corporation (MARCOPPER) in Boac, Marinduque is applicable in the particular case." cAHIST In this connection, please be is informed that this Bureau, particularly ruled on the subject request of the Provincial Assessor thereat concerning the taxability of machineries of UPMC which stopped operations on March 15, 1999, based on the case of the MARCOPPER Mining Corporation, and not on its buildings considering that the same will undoubtedly fall under the category of real property regardless of whether or not the company ceased its operations. The dispositive portion of the said ruling of this Bureau also states: "In view of the foregoing, the subject machineries and equipment of UPMC is no longer subject to the payment of real property taxes beginning the second quarter of 1999 until such time that the company will resume and operate the said machineries." Please be informed also that under the abovementioned ruling, particularly the penultimate paragraph thereof, this Bureau had inadvertently answered query No. 1 (with the exclusion of industrial buildings from the exemption of real property tax, as a result of its non-operation), to the affirmative, in addition to the exemption from payment of real property taxes of UPMC machineries which ceased operations. CcEHaI This Bureau, therefore, hereby reconsiders its previous ruling under its abovementioned 1st Indorsement dated June 5, 2000 particularly the answer to query No. 1, which should have referred solely to the tax exemption of the UPMC machineries which ceased operation and not to its building and improvements. It is informed further that as regards the exemption from payment of real property tax on buildings owned by UPMC, this Bureau in its said Indorsement dated June 5, 2000 explained that: "It may be observed, however, that the above authority to grant tax exemption privileges is provided under Article One Book II of the Code, which pertains to Local Government Taxation and not Real Property Taxation which is found under Title Two of the same Book Two of the Code. The exemption from real property tax is specifically provided under Section 234 thereof. Section 192 of the said Code was further clarified under Article 282 of the Implementing Rules and Regulations (IRR) of the said Code which states: aHATDI "ART. 282. Authority to Grant Tax Exemption Privileges . . . . (b) Local sanggunians granting tax exemptions, tax incentives and tax reliefs may be guided by the following: "(1) On the grant of tax exemption or tax reliefs: (i) The exemption or relief may be granted in cases of natural calamities, civil disturbances, general failure of crops or adverse economic conditions such as substantial decrease in the prices of agricultural or agri-based products." "xxx xxx xxx." It is evident from the abovequoted provision of law that the tax exemption or tax relief may be granted only in cases of natural calamities, civil disturbances, general failure of crops or adverse economic conditions such as substantial decrease in the prices of a agricultural or agri-based products. Be guided accordingly. cCaATD (SGD.) BENJAMIN A. GERONIMO Executive Director