Bureau of Local Government Finance Opinion

January 19, 1999 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Mr. Cesar A. Ramos No. 301-C Antipolo St. Mandaluyong City S i r : This refers to your subjoined letters dated May 28 and July 6, 1998, posing several queries, to wit: 1. If the machineries mentioned in the said letter were to be taxed at present, shall it be appraised and assessed based on its present market value? 2. If the said machineries were to be declared for the first time, shall it be assessed based on its market value for the last ten (10) years prior to 1998?; and 3. What valuation will the Assessor use to appraise and assess the machines? Will it be its Book or Residual Value? In this connection, attached is the 2nd Indorsement dated August 20, 1998 of the City Assessor of Quezon City in response to the foregoing queries, to which this Bureau hereby expresses its concurrence, thus clarifying that: 1. The appraisal and assessment of machinery shall be based on the current and fair market value subject to such factor as economic obsolescence and/or depreciation pursuant to Section 224 of the Local Government Code of 1991, (RA No. 7160); 2. If subject machineries were to be declared for the first time, they shall be assessed for the taxes for the period during which it would have been liable but in no case for more than ten (10) years prior to the date of initial assessment (Section 222 of RA No. 7160); 3. The Assessor uses the Book Value in the appraisal and assessment of machineries. The value of machineries shall have reference to its original or acquisition cost or as may be derived from documents such as Official Receipts, invoices, Letters of Credits (LOI) from Banks, Bureau of Customs' declarations and others.(Section 224 & 225 of the Local Government Code). cCESTA We trust that this will clarify the subject matters. Very truly yours, (SGD.) ANGELINA M. MAGSINO Deputy Executive Director Office-in-Charge