Bureau of Local Government Finance Opinion

November 15, 2000 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION The Officer-In-Charge City Assessor's Office City of Manila M a d a m : This refers to your letter dated June 7, 2000, in effect requesting opinion as to whether or not computers CPU's owned by Technological Institutes, such as the Systems Technology Institute (STI) and AMA, and used by their students, fall within the definition of "machinery" pursuant to Section 199(o) of the Local Government Code of 1991 (R.A. 7160); and therefore, considered as real property. That Office submits that computers of the abovementioned institutes are actually, directly and exclusively used to meet the needs of the particular industry, and may not be considered as personal properties, therefore, are subject to the payment of real property taxes. Under our numerous pronouncements on the subject matter, the latest of which is contained under the letter dated January 15, 1998, copy attached, this Bureau clarified that machinery, although not permanently attached, but are actually, directly and exclusively used in the manufacture/production of goods "is considered real property." Similarly, the subject computers which are actually, directly and exclusively used by the students of STI and AMA, are therefore considered real property. Accordingly, and inasmuch as the exemption extends to all lands, buildings and improvements actually, directly and exclusively used for educational purposes pursuant to Section 234(a) and Section 28(3), Article VI of the constitution, the subject computers of STI and AMA computer schools, are, likewise exempt from the payment of real property tax, notwithstanding the Joint Local Treasury Assessment Regulations (JLTAR) No. 1-88 dated May 4, 1988 of the Department of Finance (DOF). Be guided accordingly. DaCEIc Very truly yours, (SGD.) BENJAMIN A. GERONIMO Executive Director