Bureau of Local Government Finance Opinion

March 2, 2001 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION The City Assessor Kidapawan City S i r : This refers to your letter dated July 12, 2000, requesting reconsideration of the ruling dated May 28, 1998, issued by the BLGF Regional Director for Region XII, Cotabato City, which it held that PNOC is not liable from the payment of the realty taxes pursuant to Section 234 (c) of the Local Government Code of 1991. It appears that the abovementioned request is being made in view of your contention that the service contract (Geothermal Resources) of PNOC was signed and executed after the effectivity of R.A No. 7160. In this connection, attention is invited to the letter dated February 6, 2001, of this Bureau, copy enclosed, treating on a similar subject matter, the pertinent portion of which reads, as follows: "The sole issue to be resolved, therefore, is whether or not the PNOC-EDC's exemption from the payment of real property tax under the said Contract can be withdrawn by the application of certain provisions of the Local Government Code of 1991 (R.A. No. 7160), particularly the withdrawal of exemptions provision of Section 234 and the Repealing Clause under Section 534(f) thereof, without violating Article III, Section 10 of the 1987 Constitution. "xxx xxx xxx. "PNOC contends that the exemption it enjoys has not been withdrawn by the Local Government Code of 1991, notwithstanding Sections 234(4) thereof. We agree. DaHISE "xxx xxx xxx. "Simply stated, the withdrawal of exemption provisions under Section 234 and the repealing clause of Section 534(f) of the local Government Code of 1991, could not prevail over those exemptions existing or arising out of perfected contracts. Otherwise, the violation of the non-impairment of contracts contemplated under the 1987 Constitution, arises. "xxx xxx xxx. "Viewed in the light of the foregoing, and considering the pertinent provisions of the Constitution and the Code, and considering further the opinions rendered by the OGCC on the matter and that of the Decision of the Court of Appeals, this Bureau believes and so holds that PNOC-EDC's property . . . are exempt from the payment of real property taxes, the same way that its properties located in its operational areas , by virtue of its coal operating contract, are hereby considered exempt ." (Emphasis supplied) In view hereof, this Bureau confirms the abovecited opinion of the BLGF Regional Director for Region XII and thereby regrets that your abovementioned request for reconsideration cannot be given favorable consideration for lack of legal basis. Very truly yours, (SGD.) BENJAMIN A. GERONIMO Executive Director