Bureau of Local Government Finance Opinion

June 6, 2006 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION The OIC-Regional Director Bureau of Local Government Finance Department of Finance Region VII, 3rd Floor, BF Building N. Escario Street Cebu City M a d a m : This pertains to the attached letter dated November 8, 2005 in reference to the letter dated October 24, 2005 of the Assistant Provincial Assessor of Negros Oriental, requesting comment relative to BLGF Memorandum Circular No. 15-2004 dated October 25, 2004, which in effect reversed the exemption status of GLOBE Telecommunications, Inc., (GLOBE, for brevity) and other telecommunication companies in line with Supreme Court Decision (G.R. No. 143867), dated August 22, 2001, and the Central Board of Assessment Appeals (CBAA) Decision (Case No. V-17) dated January 31, 2002. In this connection, attention is invited to the attached BLGF Memorandum Circular No. 04-2006 dated May 2, 2006, clarifying the issue, citing the recent Supreme Court Decision in the case of RCPI vs. Provincial Assessor of South Cotabato (G.R. No. 144486) dated April 13, 2005, and in effect partly modified Memorandum Circular No. 15-2004 dated October 25, 2004, the dispositive portions of which read as follows: "xxx xxx xxx "In view hereof, and considering GLOBE's legislative franchise (R.A. No. 4540), which exemption shall continue to be in full force and effect despite the passage in March 19, 1992 of R.A. No. 7229 (An Act Approving the Merger between Globe Mackay Cable and Radio Corporation and Clavecilla Radio Systems) and considering further the provision of Section 221 of R.A. No. 7160, also known as the Local Government Code of 1991, the taxability of the subject real properties (land, buildings and other improvements including its machinery shed and radio relay station tower) shall take effect on January 1 of the year following the effectivity of the franchise of GLOBE. STaAcC "However, if the said real properties of GLOBE were declared for the first time, the same shall be assessed for the period during which it would have been liable but in no case exceeding ten (10) years prior to the date of initial assessment pursuant to Section 222 of the same Code. Provided, however, that such taxes shall be computed on the basis of the applicable Schedule of Market Values in force during the corresponding period. Provided, further, that the total liability shall include the current year in addition to the ten (10) years back taxes. "This Circular shall only be applicable to telecommunication companies with the same exemption provisions as that of RCPI and GLOBE in their franchises, otherwise, this Circular shall not apply. "BLGF Memorandum Circular No. 15-2004, dated October 25, 2004, is partly modified with regard to the exemption of GLOBE from payment of real property tax with respect to the radio equipment, accessories and spare parts needed in the business as provided in their franchise. "xxx xxx xxx." Be guided accordingly. Very truly yours, (SGD.) MA. PRESENTACION R. MONTESA Executive Director