Bureau of Local Government Finance Opinion

April 16, 2001 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION The Provincial Assessor of Negros Occidental Bacolod City M a d a m : This refers to Resolution No. 99-029, adopted by the Sangguniang Bayan of Sipalay, that province, requesting a review of this Bureau's findings under the 1st Indorsement dated September 26, 1995, copy attached, and the reversal of its decision relative to the reclassification of Tailings Pond No. 3 of Maricalum Mining Corporation (MMC) from industrial to cogonal. This Bureau has taken consideration of the information submitted by that Office under the 4th Indorsement dated July 23, 1999, that the subject real property is still being utilized as Tailings Pond. It may be recalled that the issues behind the subject ruling, particularly with regard to the classification of tailings Pond No. 3, have been properly ventilated under our 4th Indorsement dated January 15, 1996 and 6th Indorsement dated April 24, 1996, copies attached, the latter categorically clarifying, thus: ". . . the said 4th Indorsement of this Bureau, after vividly defining 'tailing' and 'Mill Tailings,' for which the subject pond was intended, made clear that the 'parcels of land where tailings pond No. 3 is located are deemed not different from the other tailings ponds (Nos. 1 and 2) . . . considering that the same serves the same purpose of containing mining refuse or wastes.' If, in its current operational stage, water is pumped back towards the mill after solids have settled, which is a natural process, the primary purpose for which tailings pond No. 3, that is to contain the mining wastes, could not be altered as such reuse of stored water within the pond is only incidental to the basic intention of the said pond. SDHacT "With respect to the third argument, it is very clear that the principal issue the Supreme Court passed upon under the abovecited case (G.R. No. 106041 dated January 29, 1993), is solely that of the taxability of tailings dam structure. Thus, it declared the same to be an 'improvement' subject to the payment of real property taxes. Hence, the instant case, where the correct classification is at issue, could not in any way be safely correlated with the said Supreme Court Decision. "In view of all the foregoing, the abovementioned request for reconsideration is hereby denied for lack of merit." In view thereof, and considering that the aforementioned Resolution No. 99-029 of the Sangguniang Bayan of Sipalay has been unable to present new and exceptional reasons in order to give due course to the herein request for reconsideration of the said 1st Indorsement dated September 26, 1995 and its subsequent 4th Indorsement dated January 15, 1996 and 6th Indorsement dated April 24, 1996, thus Bureau, much to its regret, has been left with no other recourse but to maintain the same stand it has previously taken. CacISA Moreover, it is worth mentioning hereon that this Bureau, in line with the provisions of R.A. No. 7942, the Philippine Mining Act of 1995, has clarified under its letter dated September 15, 1998, that: "Accordingly, this Bureau concurs in the contention expressed above by the MGB (Mines and Geosciences Bureau) and MMC (Manila Mining corporation) that the subject tailings pond is primarily used as an anti-pollution infrastructure and, therefore, the same is considered exempt from the payment of real property taxes pursuant to the abovecited provision of Sec. 91 of R.A. No. 7942." Section 91 of R.A. No. 7942 is quoted hereunder: "Sec. 91. Incentives for Pollution Control Devices . Pollution control devices acquired, constructed or installed by contractors shall not be considered as improvements on the land or building where they are placed, and shall not be subject to real property and other taxes or assessments: Provided, however, That payment of mine wastes and tailings fees is not exempted." Apparently, the said Tailings Pond No. 3 of Maricalum Mining Corporation, which, as submitted, is still utilized as such (tailings pond), should be declared exempt from real property taxes, regardless of its classification, in line with the abovementioned provisions of R.A. No. 7942 and the said letter dated September 15, 1998 of this Bureau. With regard to the MMC's request concerning the assessment of Sulzer Generator Set which has a previous book value of P86,177,330.00 in 1994; and allegedly increased to P305,387,490.00 but later on adjusted to P202,185,300.00 and finally lowered to P198,130,760.00 or an ultimate increase of 129.91% in 2000, that Office is requested to submit soonest, copies of Field Appraisal and Assessment Sheets (FAAS) and the corresponding Tax Declarations (TDs) of the said generator set, as well as the computation of real property taxes including the applied depreciation allowance, in order that this Bureau will be guided in taking appropriate action on the subject matter. Very truly yours, (SGD.) BENJAMIN A. GERONIMO Executive Director April 16, 2001 The Regional Director for Local Government Finance Department of Finance, Region VI Iloilo Sports Complex Iloilo City S i r : This refers to the request of Maricalum Mining Corporation (MMC) concerning the taxability of Tailings Pond No. 3 and assessment of Sulzer Generator Set which has a previous book value of P86,177,330.00 in 1994; and allegedly increased to P305,387,490.00 but later on adjusted to P202,485,300.00 and finally lowered to P198,130,760.00 or an ultimate increase of 129.91% in CY 2000. In a 2nd Indorsement dated November 7, 2000, you submitted that the application of MMC for exemption from payment of real property taxes for Pollution Control Devices should not be given due course as the exemption only applies to devices, machineries or improvements for pollution control installed after the effectivity of the Philippine Mining Act of 1995 (R.A. No. 7942). It is also your contention that machineries installed at the tailings pond cannot be considered exempt from realty tax in the context of the aforecited provision of law (R.A. No. 7942) for reasons that these devices like the rubber steel pipeline and others are used in the operation of Waste Water Treatment Plant. DHIcET In this connection, enclosed is a copy of our letter of the same date addressed to the Provincial Assessor of Negros Occidental, which maintains the stand of this Bureau that Tailings Pond No. 3, should be declared exempt from real property taxes, regardless of its classification, in line with the provisions of R.A. No. 7942 and the letter dated September 15, 1998 of this Bureau. Embodied also in the said letter is the request of this Bureau for the Provincial Assessor of Negros Occidental to submit copies of Field Appraisal and Assessment Sheets (FAAS) and the corresponding Tax Declarations (TDs) covering the said generator set, as well as the computation of real property taxes including the applied depreciation allowance in order to determine the regularity of the assessment made by the Municipal Assessor of Cauayan on the same. Very truly yours, (SGD.) BENJAMIN A. GERONIMO Executive Director