Bureau of Local Government Finance Opinion

October 4, 2013 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Ms. Lina D. Capitulo Finance & Accounting Manager CONSOLIDATED TRAINING SYSTEMS, INC. 4F S&L Building 1500 Roxas Boulevard Ermita, Manila Madam : This refers to your letter dated September 30, 2013 in relation to your letter dated February 12, 2013 requesting for a ruling on the local tax exemption of the training facility of Consolidated Training Systems, Inc. (CTSI) in Tanza, Cavite and its Head Office in the City of Manila. ASETHC It is represented that CTSI is a non-stock non-profit educational institution which was registered with the Securities and Exchange Commission (SEC) on May 16, 1985. It is primarily engaged in formal and non-formal education and training, degree and non-degree educational programs for seamen, seafarers or graduates on Nautical Schools, specifically in providing training for fire fighting and fire prevention, first aid at sea, personal survival technique, survival craft, radio telephony, radar simulator course, radar observer course, and other allied courses as required by law to be taken by seamen. CTSI principal office is located in Ermita, Manila. It also rents a training facility located in Tanza, Cavite. The facility is being used to hold and conduct actual training for students in pursuance of the purpose and objective of CTSI. The training facility in Tanza, Cavite does not derive and collect any revenues. It does not have any official receipt or sales invoice. It is not registered as a branch and does not maintain and register books of accounts. It is simply a place for the physical activities of the student-trainees of CTSI. In connection with your letter request, this Office had sought the opinion of the Department of Justice (DOJ) for the proper interpretation of Section 193 of the Local Government Code of 1991 particularly the phrase "non-stock non-profit hospitals and educational institution". Such inquiry was prompted by the different interpretations of the provision, specifically on whether the phrase "non-stock non-profit" refers only to "hospitals" in which case educational institutions will outrightly be exempt from local taxes regardless of the status of their creation. In view of the opinion of the DOJ dated September 12, 2013, copy attached, this Bureau expressed the view that since CTSI is a non-stock, non-profit educational institution, it is not liable to pay business tax in Tanza, Cavite wherein its training facility is located and in City of Manila where the principal office is located. However, Tanza, Cavite and the City of Manila can collect Mayor's permit fee and other regulatory fee as implemented by a duly enacted ordinance. It bears emphasis, however, that the above views are expressed based on the facts presented in the above letters dated February 12, 2013 and September 30, 2013. However, if upon verification and investigation the same shall be proven to the contrary, then the views rendered shall be considered null and void. We hope that this will help clarify matters. SCIcTD Very truly yours, (SGD.) SALVADOR M. DEL CASTILLO OIC-Executive Director