Bureau of Local Government Finance Opinion

November 12, 2012 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Mr. Wilfredo G. Toledo Municipal Assessor Quezon, Bukidnon Sir : This refers to your letter dated August 22, 2012, requesting opinion as to what should be the correct assessment level that should be applied on the real properties owned by the First Bukidnon Electric Cooperative (FBEC) located in said municipality, that are actually, directly and exclusively being used in the generation and transmission of electric power. In this connection, attention is invited to Section 4 of the Local Finance Circular No. 1-07 dated June 28, 2007, copy enclosed, which provides as follows: "Section 4. Imposition of Real Property Taxes on Electric Cooperatives (ECs). "(1) Provinces, Cities and Municipalities within Metropolitan Manila Area may impose real property taxes on all ECs' real properties beginning 1998, subject to the applicable assessment level fixed by the sanggunian concerned for 'Commercial' properties but not exceeding the assessment level provided for under Section 218 of the Code. "xxx xxx xxx "(2) ECs are not covered by the exemption proviso under Section 234 (c) of the LGC granting exemption to NEA's machineries and equipment in view of the fact that these are not GOCCs but Cooperatives which are governed by RA 6938. ATCaDE "(3) ECs are not considered as falling under 'Special Classes' of real properties provided under Section 216 of the same Code. "(4) The appraisal of real properties of ECs shall be subject to the applicable Schedule of Market Values (SMV) in force during period of delinquency, if any. "xxx xxx xxx." In view hereof, this Bureau believes that although FBEC is engaged in the generation and transmission of electric power, its real properties are still subject to the payment of real property tax considering that the same does not fall under the exempt proviso of Section 234 (c) of the LGC of 1991 (R.A. No. 7160). Accordingly, the assessment level that should be applied on the subject real properties of FBEC should be for "Commercial" properties fixed by enabling ordinance by the Sangguniang Panlalawigan of Bukidnon, but not exceeding the rates prescribed under Section 218 of the said Code. Be guided accordingly. Very truly yours, (SGD.) SALVADOR M. DEL CASTILLO OIC-Executive Director