Z Corporation owns a building equipped with machinery, appliances, furniture, computers, air

conditioning units and elevators. One (1) floor is dedicated for seminars, trainings and continuing
education of employees and another as multi-faith prayer area. The land on which the building stands is
owned by Y Cooperative, Z Corporation’s lessor. In view of the enhanced community quarantine, the
board of directors of Z Corporation decided to volunteer the building for use by the LGU as Covid-19
center for three (3) months. Discuss the tax implications. Comment your answers.

With regard to the machinery, appliances, furniture, computers, air conditioning units and elevators,
Only the machinery, air conditioning units is subject to real property tax if such machinery is
permanently attached, and if not permanently attached, it is essential and principal element of an
industry without which such industry, work or activity cannot function. Going by this logic, the
machinery, if used essentially for the business or attached by destination and elevators by destination
are taxable under real property tax.

The land which is owned by Y cooperative is exempt from tax. Real property owned by a duly registered
cooperative is exempt from real property taxes.

The building of corporation Z is taxable under real property tax but is entitled to a tax exemption or
deduction for the 3 months in which it was used for public purpose for the benefit of the local
government in which it was situated. The 1 st floor is exempted as to the area designated solely as the
multi faith prayer area, because under our laws, places dedicated to faith/ religion shall be exempt from
real property tax if used directly, exclusively and solely for the purpose.