Bureau of Local Government Finance Opinion

February 17, 2012 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 1st Indorsement Respectfully referred to the City Assessor and the City Treasurer, both of Lipa City. HADTEC The within set of papers refer to the letter-request dated February 15, 2012 of Atty. Leonides F. Balmeo, Tax Counsel, Balmeo and Go Law Offices, Suite 309 Margarita Building, J. P. Rizal St., corner Cardona St., Makati City, for confirmation of opinion, in behalf of their client, the Isleworth Property, Inc. (IPI), that the Industrial Buildings owned by IPI, declared under Tax Declaration Nos. 00975 up to 00981 and situated within the Lima Technology Center, Lipa City, Batangas, which as alleged, is an area duly proclaimed by the Office of the President as Special Economic Zone pursuant to Proclamation Nos. 1102 and 1148 dated December 1997 and January 1998, respectively, are exempt from payment of real property tax starting CY 1997. The said request was apparently made in view of the Notice of Publication and Auction Sale dated January 16, 2012 sent by the Office of the said City Treasurer of Lipa City covering the subject real properties of IPI. HADTEC Atty. Balmeo argues that: (a) the factory buildings have remained idle and without any commercial, industrial, agricultural, business and residential use, hence, the same is not liable for real property tax; and (b) the same are exempt from real property tax under Section 4 of R.A. No. 7916, as amended by R.A. No. 8748. Further, the following information were submitted: 1. IPI owns parcels of land and factory buildings within the Lima Technology Center, an area allegedly proclaimed as Special Economic Zone pursuant to Proclamation Nos. 1102 and 1148 dated December 2, 1997 and January, 1998, by the Office of the President of the Philippines; 2. The subject industrial buildings (Factories) were previously operated as a textile mill by South Sea Textile Manufacturing, Inc., which prior to 1998 ceased operations and pulled out due to losses; HADTEC 3. On January 27, 1998, Lima Land, Inc. bought all the shares of stock of IPI; and 4. Since 1997, the said buildings remained idle. In this connection, and in order that appropriate action could be taken hereon, representatives of this Bureau will conduct a fact-finding investigation and/or ocular inspection in the Offices of the said City Assessor and the City Treasurer, in order to determine the veracity of the issues raised. Thus, premises considered, it is hereby requested that any action to be conducted by the Office of the said City Treasurer on the subject real properties of IPI be temporarily deferred pending the fact-finding investigation and/or ocular inspection of this Bureau. HADTEC (SGD.) SALVADOR M. DEL CASTILLO OIC-Executive Director