Bureau of Local Government Finance Opinion

December 20, 2002 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Mr. Manuelito C. Monteverde Branch Manager Philippine National Bank (PNB) Divisoria Branch 869 Sto. Cristo Street Binondo, Manila S i r : This refers to your letter dated October 4, 2002 addressed to the Hon. Undersecretary Juanita D. Amatong, regarding your request for clarification on the assessment of realty tax purposes of various properties owned by the Bank. It appears that you filed an appeal before the Local Board of Assessment Appeals (LBAA) on October, 2000, but the Board has not come up with a decision. In this connection, since the matter is pending resolution before the LBAA, this Bureau cannot act on your request for opinion as the same may pre-empt the final outcome of the appeal filed. However, by way of information, this Bureau, under its 2nd Indorsement dated January 30, 2001, copy attached, rendered an opinion treating on a similar subject matter, the pertinent portion of which reads, as follows: "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. TAIESD "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, which states:" "Art. 290(o). Definition of Terms . When used in this Rule, the term: "xxx xxx xxx." "(o) Machinery embraces machines, equipment, mechanical contrivances, instruments, appliances or apparatus, which may or may not be attached, permanently or temporarily to the real property. "Physical facilities for production, installations and appurtenant service facilities, those which are mobile, self powered, or self propelled and those not permanently attached to the real property shall be classified as real property provided that: "(1) They are actually, directly and exclusively used to meet the needs of the particular industry, business, or activity; and "By their very nature and purpose are designed for, or necessary to manufacturing, mining, logging, commercial, industrial, or agricultural purposes. "Machinery which are of general purpose use including but not limited to office equipment, typewriters, telephone equipment, breakable or easily damaged containers (glass or cartons), micro computers, fax, telex machines, cash dispensers, furnitures and fixtures, freezers, refrigerators, display cases or racks, fruit juice or beverage automatic dispensing machines which are not directly and exclusively used to meet the needs of a particular industry, business or activity shall not be considered within the definition of machinery under this Rule. "xxx xxx xxx." We trust that this clarifies matters. Very truly yours , (SGD.) MA. PRESENTACION R. MONTESA Executive Director