Bureau of Local Government Finance Opinion

April 25, 2001 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 2nd Indorsement Respectfully returned to the Regional Director for Local Government Finance, Department of Finance, Region VII, 3rd Floor, BF Building, N. Escario Street, Kamputhaw, Cebu City, the within preceding Indorsement dated March 19, 2001, relative to the letter dated March 14, 2001 of the City Assessor of Tagbilaran City, which, in effect, is requesting reconsideration of the ruling embodied under our 2nd Indorsement dated January 30, 2001, which ruled that: "This Bureau agrees with the contention of the BBA that ATMs, which are actually, directly and exclusively used to improve banking services not to mention the convenience it provides to bank clients, are considered real properties subject to real property taxes. "Other equipment/machines, however, which are not essentially being used directly and exclusively in the banking business like air conditioning units (window and packaged type), small generating sets and other mechanical devices of the same nature which are considered as falling under the category of machinery of general purpose use should not be considered real properties in line with the clarification under Article 290(o) of the IRR of R.A. No. 7160, . . ." In the abovementioned letter dated March 14, 2001, the said City Assessor advanced the following observations: 1. That all Assessor's Offices in Region VII have been assessing air conditioning units window and packaged type) including generating sets as real properties subject to real property taxes allegedly as result of the series of seminars concluded by BLGF on Revenue Enhancement Program in the entire Region VII wherein instruction was made that air conditioning units (window and packaged type) including generating sets are considered machineries subject to real property tax; and HICSTa 2. The assessment of air conditioning units is predicated on the theory that the same is attached to the immovable or real property, contending that the Civil Code considers the same as real property by incorporation or destination. Records of this Bureau show that no ruling or particular pronouncement has been issued which considers the aforementioned equipment/machines [like air-conditioning units (window and packaged type), small generating sets and other mechanical devices of the same nature which are considered as falling under the category of machinery of general purpose use] as real properties liable to the payment of real property taxes. It is also important to mention hereon, that the usual consultations with the Department of Finance Officials have been made before the said ruling, dated January 30, 2000, was finalized. Accordingly, this Bureau, much to its regret, is inclined to maintain its stand on the matter as embodied under the abovecited 2nd Indorsement January 30, 2000. Anent the recommendation for the issuance of a circular concerning the herein issue, it can be rest assured that the same shall be included in the Manual on Real Property Assessment for Provincial, City and Municipal Assessors which is now being finalized by this Bureau. CDHacE (SGD.) BENJAMIN A. GERONIMO Executive Director