Bureau of Local Government Finance Opinion

May 13, 2002 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 2nd Indorsement Respectfully returned to the Regional Director for Local Government Finance, Department of Finance, Region II, 17 Provincial Road, Caritan Sur, Tuguegarao City, the within preceding Indorsement dated February 12, 2002, relative to the letter dated December 18, 2001 of the Municipal Treasurer of Ramon, Isabela, requesting confirmation of the taxability status of the real properties owned by the National Irrigation Administration (NIA). It is represented that NIA is a government owned and controlled corporation (GOCC), created under Republic Act No. 3601 on June 22, 1963 and amended by Presidential Decree No. 552. It is further represented that the subject real properties (lands and buildings) are declared in the name of NIA under the attached various tax declarations and were assessed by the Municipal Assessor of Romblon, Isabela as taxable. That Office likewise informed that an ocular inspection has been conducted on the said real properties on February 6, 2002 and found that the "actual use of the respective real properties satisfy the classification described in the attached tax declarations." A review of the attached various tax declarations owned and declared in the name of NIA reveals that these properties are either Irrigated Riceland (IRL) and Residential Land (RL). The applicable provision of law on the matter is Section 234 of the Local Government Code of 1991 (R.A. No. 7160), which provides as follows: "Section 234. Exemption from Real Property Tax . The following are exempted from payment of real property tax. "xxx xxx xxx. "(c) All machineries and equipment that are actually, directly and exclusively used by the local water districts and government-owned or controlled corporation engaged in the supply and distribution of water and/or generation and transmission of electric power. (Emphasis supplied) "xxx xxx xxx." Evidently, the exemption from payment of real property tax of GOCC's (such as NIA), has been limited to machineries and equipment only, which the Administration actually, directly and exclusively used in the distribution of water. However, other real properties owned by NIA, which do not fall under the abovequoted provision of the Code, shall be considered as taxable. TcADCI This accordingly confirms the Opinion of that Office under its 1st Indorsement dated February 13, 2002. Be guided accordingly. (SGD.) JUANITA D. AMATONG Undersecretary and Officer-in-Charge, BLGF