Baguio city: The Bureau of Local Government Finance (BLGF) has mandated all local government units (LGUs) in the Cordillera region to cease the imposition of real property taxes on the machinery and equipment belonging to the Power Sector Assets and Liabilities Management Corp. (PSALM) and the National Power Corp. (NPC). Both entities are classified as government-owned or -controlled corporations (GOCCs).
According to Philippines News Agency, a memorandum circular released on October 3 by BLGF-Cordillera Director Mary Lou Gamboa instructed LGUs to adhere to the national directive. This action follows reports that some municipalities continue to impose such taxes on PSALM and NPC assets within their jurisdictions. Director Gamboa emphasized the need to inform all concerned LGUs, which have been appraising and assessing these properties, about the tax exemption.
La Trinidad Mayor Roderick Awingan stated that he has directed the municipal assessor’s office to review whether NPC-owned properties in the municipality qualify for the tax exemption. Awingan noted that the municipal government only received the memorandum on October 15. The Local Government Code specifies that provincial governments levy real property taxes, while municipalities are responsible for assessment and collection.
PSALM, formed under the Electric Power Industry Reform Act (Republic Act 9136), is tasked with overseeing the privatization of NPC assets to enhance the country’s power sector. The recent order reiterates a directive from May 15, 2025, by BLGF Executive Director Consolacion Agcaoili, which reminded LGUs across the nation to halt tax collection from PSALM and NPC. This directive is based on a 2009 Supreme Court ruling in the case of NPC vs. Province of Quezon and Municipality of Pagbilao, which determined that machinery and equipment of GOCCs used “actually, directly, and exclusively” in electricity generation and distribution are exempt from real property tax.
The Governance Commission for GOCCs (GCG) has certified PSALM and NPC as legitimate GOCCs. The circular stresses that clarifying the tax treatment of PSALM and NPC’s properties ensures consistent application of local tax laws and avoids unnecessary tax burdens. However, the BLGF also highlighted that other real properties of these corporations not used for power generation or distribution remain subject to taxation.