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
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 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

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