Bureau of Local Government Finance Opinion

May 26, 1999 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 9th Indorsement Respectfully returned, thru the Regional Director for Local Government Finance, Department of Finance, Region XII, corner Corcuerra and Lim Senior Streets, Cotabato City, to the Provincial Assessor of North Cotabato, Kidapawan City. The within set of papers refers to the request of Mr. Eduardo B. Gomez, Deputy Administrator for Finance and Administration, National Food Authority (NFA), for assistance regarding the assessment of their real properties located at North Cotabato, Kidapawan City, particularly concerning the Satake Generator and Ricemill and Kaneko Mechanical Drier. In the response to the directive of this Bureau under its 7th Indorsement dated September 29, 1998, for an Investigation concerning the subject matter, that Office submitted the following findings, to wit: "1. The Satake Rice Mill with complete accessories appears in good condition, hence, functional. This fact have been admitted by the employee who was assigned to escort us in the inspection. Accordingly, the machine has not been in operation since 1994 due to scarce supply of palay occasioned by the importation of rice and for some other reasons. To operate the rice mill it needs large volume of sacks of palsy because it is not feasible when the volume is small. (Emphasis supplied) "2. The Satake Generator also appears in good condition but accordingly, the same is not in operation since 1994 . (Emphasis supplied) "3. The Kaneko Mechanical Drier is composed of six (6) units. This is in actual operation at the time of our inspection . Accordingly, the same is in operation only this month of November, 1998 ." (Emphasis supplied) A perusal of the submitted copies of tax declarations reveals the following assessments made on the subject real properties, to wit: 1. Satake Generator & Ricemill T. D. No. Assessed Value Effectivity Remarks 34959 P3,127,730.00 1984 NEW 34960 2,814,960.00 1985 - 37291 2,814,960.00 1984 Taxable to Exempt 39808 2,814,960.00 1987 Exempt to Taxable 13699 28,800.00 1992 w/ erroneous comp. 04001-07777 4,785,432.00 1992 correction of T.D. No. 13699 2. Kaneko Mechanical Drier 13700 P1,635,500.00 1992 - It may be recalled, in this regard, that under our attached 7th Indorsement dated September 29, 1998, this Bureau ruled in part, as follows: "Clearly, prior to the effectivity of R.A. No. 7160, the Local Government Code of 1991, the real property tax exemption privileges granted to NFA under its charter remained in full force and effect, the abovementioned assessment of the subject real properties of the NFA appears to be not in order. "Additionally, it is equally important to note that in a 1st Indorsement dated April 4, 1997, . . . , this Bureau, resolved that "when machineries are no longer actually used for its purpose by reason of closure or cessation of production, the same should be transferred from the Taxable Roll to the Exempt Roll and not be subjected to the payment of real property taxes during the period of non-use." In view hereof, and considering the findings of the investigation conducted by the Office of the said Regional Director, the said Provincial Assessor is hereby given instructions, as follows: 1. Satake Generator Set and Ricemill : 1.1 The Satake Generator Set, although had been found to be inoperational since 1994 only, should be transferred from the "Taxable Roll" to "Exempt Roll" of real properties effective 1987, or prior to the effectivity of the Local Government Code of 1991, pursuant to the abovementioned 7th Indorsement of this Bureau and remain in that state until such time that the subject machinery will be operational. ITcCaS 1.2 The Satake Ricemill, although functional, should likewise be transferred from the "Taxable Roll" to "Exempt Roll" of real properties pursuant to the above opinion of this Bureau effective 1987, and until such time that NFA would again start to operate the subject machinery. 2. Kaneko Mechanical Drier : 2.1 Transfer the Kaneko Mechanical Drier from the "Taxable Roll" to "Exempt Roll" of real properties for the period from 1992 to 1998; and 2.2 Transfer the subject machinery from the "Exempt Roll" to "Taxable Roll" of real properties beginning January 1, 1999, the year immediately following its resumption of operation. Please be guided accordingly. (SGD.) ANGELINA M. MAGSINO Deputy Executive Director Officer-in-Charge