Bureau of Local Government Finance Opinion

May 7, 2012 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Mr. Ermie D. Fernandez City Assessor Tacurong, Sultan Kudarat Sir : This has reference to your letter dated February 18, 2011 seeking opinion regarding the assessment made on the properties of National Transmission Corporation (TRANSCO) which is now maintained and operated by the National Grid Corporation of the Philippines (NGCP) being a concessionaire. Under Republic Act No. 9511 dated December 1, 2008, entitled: "AN ACT GRANTING THE NATIONAL GRID CORPORATION OF THE PHILIPPINES A FRANCHISE TO ENGAGE IN THE BUSINESS OF CONVEYING OR TRANSMITTING ELECTRICITY THROUGH HIGH VOLTAGE BACK-BONE SYSTEM OF INTERCONNECTED TRANSMISSION LINES, SUBSTATIONS AND RELATED FACILITIES, AND FOR OTHER PURPOSES." TDAcCa The pertinent facts of which are as follows: On February 3, 2009, the City Mayor of Tacurong received a letter from NGCP, a private corporation , stating their official take over of the nationwide transmission grid operations commenced on January 15, 2009. Thus the City Assessor's Office of Tacurong reclassified the assessment of TRANSCO from special class to industrial class . NGCP, through a letter dated December 8, 2010 addressed to the ICO-City treasurer of Tacurong, Sultan Kudarat expressed their objection on the re-classification made by the Assessor's Office arguing that: The properties subject of assessment are owned by the National Transmission Corporation (TransCo.), a government-owned and controlled corporation (GOCC). NGCP was granted a privilege to operate and maintain the transmission assets merely as concessionaire but the ownership over the properties remained with TransCo. In order to resolve the issue, reference should be made with Section 216, of the Local Government Code, which is the appropriate provision that should be applied in the case presented. "Section 216. Special Classes of Real Property . All lands, buildings, and other improvements thereon actually, directly and exclusively used for hospitals, cultural, or scientific purposes, and those owned and used by local water districts, and government- owned or -controlled corporations rendering essential public services in the supply and distribution of water and/or generation and transmission of electric power shall be classified as special. " From the above quoted provision, it could be inferred that for a real property to be classified as special class, the same must conform to the requisites provided for under the said provision. While it is true that ownership over the said facilities are retained by TransCo, a government owned and controlled corporation, the operation, use and maintenance of which are enjoyed by NGCP which is a private entity, being a concessionaire of the said transmission assets. Thus, since ownership and use of the said transmission assets is lodged on two different entities, it no longer conforms with the primordial requirement as provided for under Sec. 216 of the LGC, which specifically provides that it must be OWNED and USED by government-owned and or controlled corporations rendering essential public services in the supply and distribution of water and or generation and transmission of electric power. DECcAS In view thereof, the Bureau hereby confirms the assessment made by that office reclassifying the assessment of TRANSCO from special to industrial class with an assessment level of 80% or that level fixed by the sanggunian in its Ordinance. Very truly yours, (SGD.) SALVADOR M. DEL CASTILLO OIC-Executive Director