Exemption from Payment of Real Property Tax of Gas Turbine Barges of the National Power Corp. Stationed in Navotas

May 20, 1996 DOF OPINION 1st Indorsement Respectfully returned to the Municipal Assessor, Navotas, Metro Manila, his within letter dated November 29, 1995 requesting clarification on whether or not the Gas Turbine Barges owned by the National Power Corporation (NPC) stationed and operational in that municipality are exempt from the payment of real property taxes. It appears that the abovementioned request was prompted by the views expressed under the subjoined letters dated February 20, 1996 and March 28, 1996 of Mr. A.L. Pangcog, General Counsel of NPC, contending that the said Gas Turbine Barges are not machineries that can be considered as real property subject to real property assessment for reason that: 1. A "barge" is a boat or vessel floating in and on the water, and considered as personal property; and 2. NPC power barges are registered as "vessels" as shown by the Certificate of Registry and Certificates of Inspection issued by Philippine Coast Guard. 3. The subject power barges "are vessels which are moved from one place to another," as evidenced by: (a) "Historical Summary of Power Barge Movements as of February 31, 1996," and (b) "Present Location of Power Barges as of January 31, 1996," copies attached. This Department finds the above contention of Mr. Pangcog, tenable. Article 290 (O) of the Implementing Rules and Regulations of R.A. 7160, otherwise known as the Local Government Code of 1991, defined machinery as follows: "(O) Machinery embraces machines, equipment, mechanical contrivances, instruments, appliances or apparatus, which may or may not be attached, permanently or temporarily to the real property. "Physical facilities for production, installations, and appurtenant, service facilities, those which are mobile, self powered, or self propelled and those not permanently or temporarily attached to the real property shall be classified as real property provided that: "(1) They are actually, directly, and exclusively used to meet the needs of the particular industry, business, or activity." Although the above definition of machinery includes those which are mobile, self powered, or self propelled, the subject turbine barges, for practical reasons, could not be considered as real property, in the same manner that other mobile machineries/equipment such as trucks, buses, ships, airplanes, and the like, which requires registration with the proper agency of the government, could not be considered as real property. Furthermore, attention is also invited to the provisions of Section 234 (c) of the Local Government Code of 1991 which states as follows: "Sec. 234. Exemptions from Real Property Tax. The following are exempted from payment of the real property tax: "xxx xxx xxx. "(c) All machineries and equipment that are actually, directly and exclusively used by . . . government-owned or controlled corporations engaged in the . . . generation and transmission of electrical power." As gleaned from the abovecited provisions of law, machineries and equipment of government-owned or controlled corporations, like the NPC, which are actually, directly and exclusively used in the generation and transmission of electric power, are exempt from the payment of real property taxes, beginning January 1, 1992, the effectivity of the said Code. Apparently, even if, for the sake of argument, the said turbine barges are included in the above definition of machinery that can be considered as real property, the same still falls under the exempt properties as enumerated under the aforequoted provisions of Section 234 of the said Code. Be guided accordingly. By authority of the Secretary: (SGD.) MA. CECILIA G. SORIANO Undersecretary