Bureau of Local Government Finance Opinion

December 6, 1999 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 1st Indorsement Respectfully returned to the City Assessor, City of Manila, her within letter dated September 3, 1999, requesting opinion on the following issues: 1. The taxability of the different equipment in banks (especially computers, printers, CPU); 2. The taxability of machineries in schools; and 3. The taxability of machineries in hospitals. It is informed that generally, equipment which are actually, directly and exclusively used to meet the needs of the particular industry, business or activity whether or not it is attached, permanently or temporarily to the real property, are deemed to be 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 subject to real property taxes. However, machinery which are generally used for the purpose of carrying out the day to day general office activities, without hampering the flow of regular office transactions in a particular business or industry, such as computers, printers CPUs, may be considered as personal properties, therefore not subject to the payment of real property taxes. Anent the second issue, it is informed that Section 2 of Joint Treasury/Assessment Regulations No. 1-88 dated May 4, 1988 (copy enclosed), provides that ". . . all lands, buildings and improvements actually directly, and exclusively used for religious, charitable or educational purposes shall, effective as of January 1, 1988, be declared as `Exempt' as provided for under Section 28(3), Article VI, of the 1987 Constitution." However, Section 3 of the said Regulations further provides that "the exemption from real property tax, shall not include machineries even if these are actually, directly, and exclusively used for religious, charitable or educational purposes." With regard to the last issue, Section 218(d) of the same code provides that all lands, buildings, machineries and other improvements used by, among others, hospitals are considered as "Special Class" and shall have an Assessment Level of a 15%. DAEIHT We hope that the above discussions answer your abovementioned request for Opinion. (SGD.) ANGELINA M. MAGSINO Deputy Executive Director Officer-In-Charge