[CALLEJO, SR., J.]
Petitioner issued against respondent an Assessment Notice, dated March 28, 1994, for real property taxes due on the latter’s real properties, including its Siltation Dam and Decant System which was damaged by typhoon sometime in 1993. Respondent paid the tax demanded, but appealed the assessment before the Local Board of Assessment Appeals (LBAA) on the ground that the subject property is exempt from real property taxation under Section 234(e) of Republic Act (R.A.) No. 7160 or the Local Government Code of 1991, which provides for exemptions from Real Property Tax for “Machinery and equipment used for pollution control and environmental protection.” The LBAA as well as the Central Board of Assessment Appeals (CBAA) on appeal ruled against tax exemption. The Court of Appeals reversed the rulings of LBAA and CBAA and held that the subject property was exempt from real property taxation under Section 91 of R.A. No. 7942 or the Philippine Mining Act of 1995.
Whether the Siltation Dam and Decant System of Marcopper Mining Corporation is exempt from real property tax.
The disputed assessment notice having taken effect on January 1, 1995, (by virtue of Sec. 221 of R.A. No. 7160) its validity is determined by the provisions of R.A. No. 7160, effective January 1, 1992. R.A. No. 7942 has no bearing on the matter, for this law came into effect only on April 14, 1995. Hence, reference to R.A. No. 7942 by the CA and the respondent are all out of place.Title II of R.A. No. 7160 governs the administration, appraisal, assessment, levy and collection of real property tax. Section 234 thereof grants exemption from real property taxation based on ownership, character or usage.
As held in Mactan Cebu International Airport Authority v. Marcos, the exemption granted under Sec. 234(e) of R.A. No. 7160 to “[m]achinery and equipment used for pollution control and environmental protection” is based on usage. The term usage means direct, immediate and actual application of the property itself to the exempting purpose. Section 199 of R.A. No. 7160 defines actual use as “the purpose for which the property is principally or predominantly utilized by the person in possession thereof.” It contemplates concrete, as distinguished from mere potential, use. Thus, a claim for exemption under Sec. 234(e) of R.A. No. 7160 should be supported by evidence that the property sought to be exempt is actually, directly and exclusively used for pollution control and environmental protection.
The records yield no allegation or evidence by respondent that the subject property was actually, directly and exclusively used for pollution control and environmental protection during the period covered by the assessment notice under protest. Rather, the finding of the CBAA that said property “apparently out of commission and not apt to its function as would control pollution and protect the environment” stands undisputed; [and] that the siltation dam was damaged in 1993 when a typhoon hit Marinduque.