Bureau of Local Government Finance Opinion

March 15, 2001 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 2nd Indorsement Respectfully returned, thru the BLGF Regional Director, Department of Finance, Region XI, Helen K. Lee Bldg., corner Juan Luna and Juan dela Cruz Sts., Davao City, to the Assessor, Tupi, South Cotabato. The within set of papers refers to the request of the said Municipal Assessor for a ruling on the following: 1. Taxability of telecommunication companies, particularly PILIPINO TELEPHONE CORPORATION (PILTEL); and 2. The specific kinds of real properties that should be considered as used and not used in the operation of the franchise. HCSEcI It appears that the abovementioned request is being made in view of the following: a) The claim of PILTEL, under its letter dated April 18, 2000, thru its Legal Counsel, Atty. Noel P. Aperocho, that "PILTEL is exempt from the payment of real property taxes on all its real properties, buildings and machineries which are being used for telecommunications business or operation as provided for under its legitimate franchise;" b) The alleged refusal of PILTEL to file sworn statements on their remaining undeclared real properties located in Brgys. Kablon and Poblacion, same municipality; and c) The alleged opinion rendered by the Office of the Municipal Assessor of Tupi, granting real property tax exemption to Liberty Broadcasting Network, Inc. (LBNI) on their real properties which includes, among others, 2 residential lots where the various improvements, structures are constructed/installed, building, machineries, tower, equipment and accessories, which the said Office presumed to be "doubly doubtful." Anent the first issue, attention is invited to the 1st Indorsement dated February 9, 2001, copy enclosed, of this Bureau, treating on a similar subject matter, which ruled as follows: "Similarly, therefore, when the exemption of PT&T was restored by virtue of the 'ipso facto' or most favored treatment clause which appeared in its (PT&T's) franchise, the exemption enjoyed by LBNI, which franchise also contains the same 'ipso facto' or most favored treatment clause, is likewise considered restored despite the . . . withdrawal of exemption under Section 234 of the Code." Clearly, therefore, the real property tax exemption of any telecommunication company, which franchise contains the same "ipso facto" or most favored treatment clause, can be considered restored beginning January 1, 1993, the year after the franchise of SMART took effect. PILTEL, however, which franchise, R.A. No. 6030 (as amended by R.A. Nos. 6531 and 7293), copies attached, does not contain the same "ipso facto" or most favored treatment clause, cannot therefore be granted the same exemption on account of the equality of treatment given to SMART, PT&T and LBNI. In view hereof, this Bureau is of the opinion that the real properties owned by PILTEL, although directly used in the operation of its franchise, shall be liable to the payment of real property tax beginning January 1, 1992. Moreover, the filing of sworn statements for their abovementioned remaining undeclared real properties is mandatory pursuant to Section 202 of R.A. No. 7160, which is quoted below: "Sec. 202. Declaration of Real Property by the Owner or Administrator . It shall be the duty of all persons, natural or juridical, owning or administering real property, including the improvements therein, within the city or municipality, or their duly authorized representatives, to prepare, or cause to be prepared, and file with the provincial, city or municipal assessor, a sworn statement declaring the true value of their real property, whether previously declared, taxable or exempt, which shall be the current and fair market value of the property, as determined by the declarant. Such declaration shall contain a description of the property sufficient in detail to enable the assessor or his deputy to identify the same far assessment purposes. The sworn declaration of real property herein referred to shall be filed with the assessor concerned once every three (3) years during the period from January first (1st) to June thirtieth (30th) commencing with the calendar year 1992." (Emphasis supplied) With regard to the second issue, please be informed that the conduct of an investigation/ocular inspection is important in determining the real properties that can be considered being directly used and not used in the operation of its franchise. A technical assistance can be rendered by the BLGF Regional Office and/or this Bureau upon request of the local government unit concerned. CaSHAc Be guided accordingly. (SGD.) BENJAMIN A. GERONIMO Executive Director