Bureau of Local Government Finance Opinion

March 23, 2012 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 4th Indorsement Respectfully returned to the OIC-Regional Director for Local Government Finance, Department of Finance, Region XIII, CARAGA Administrative Region, Butuan City , his within preceding Indorsement relative to the request for opinion of the OIC-Provincial Assessor of Agusan del Norte and City Treasurer of Cabadbaran City, pertaining to the real property tax exemption of AGUSAN DEL NORTE ELECTRIC COOPERATIVE (ANECO), on its electric posts/poles located in their respective jurisdiction. DTEHIA ANECO, in a letter dated April 7, 2011 addressed to the City Treasurer of Cabadbaran, Agusan del Norte, claimed exemption from real property tax payment based on Memorandum No. * 2011-008 dated February 16, 2011 issued by the National Electrification Administration (NEA), citing the Memorandum issued by the Department of Energy (DOE) dated September 29, 2010 which provides that, "the DOE hereby takes the position that electric poles are not subject to real property tax." The said opinion of the DOE is in light with the Supreme Court Decision dated January 31, 1964 in the case entitled, Board of Assessment Appeals, et al. vs. MERALCO (10 SCRA 68) (G.R. No. L-15334) , wherein the Court ruled that "steel towers of an electric company do not constitute real property for the purpose of real property tax." ". . ." It is informed in this regard, that the subject Supreme Court Decision promulgated in 1964 (prior to the Real Property Tax Code, PD 464, as amended) was already deemed repealed and/or amended by the passage of the Local Government Code of 1991 (R.A. No. 7160) specifically the definition of machinery specified under Section 199 (o) thereof. In this connection, enclosed is a copy of this Bureau's letter dated May 25, 2012 addressed to the Secretary of the Department of Energy (DOE) clarifying the Memorandum issued by said office dated September 29, 2010. Be guided accordingly. (SGD.) SALVADOR M. DEL CASTILLO OIC-Executive Director