Request for Exemption from the Payment of Mayor's Permit Fee by an Educational Institution

January 25, 2016 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Mr. Hilbert L. Biag, CPA, MBM President Lord Reigns Christian Academy Purok 7, Bugallon Proper Provincial Rd., Ramon, Isabela SUBJECT : Request for Exemption from the Payment of Mayor's Permit Fee by an Educational Institution Sir : This refers to your letter dated 28 October 2015, seeking exemption from Mayor's permit fee and other regulatory fees of Lord Reigns Christian Academy (LRCA). Representation is made that LRCA is a non-stock and non-profit education institution, duly registered with the Securities and Exchange Commission (SEC) and a grantee of tax exemptions from the Bureau of Internal Revenue (BIR). It is submitted that the Business Permits and Licensing Officer of Ramon, Isabela, issued an assessment sometime in July 2015 which LRCA eventually "paid under protest". In view of the above payment made, request is also being made that the "exemption" granted to Academia De Sta. Martha (ASMI) under our letter of May 4, 2001 be granted also to LRCA so that proper action could be taken for the refund of the Mayor's Permit fee. At the onset, while this Bureau is consistent with its views that educational institutions like LRCA are exempt from local business taxes for so long as they are organized under the pertinent provisions of law as non-stock, non-profit educational institutions , such views are expressed in line with Article 283 of the Implementing Rules and Regulations (IRR) implementing Section 193 of the Local Government Code (LGC) of 1991 is quoted hereunder: "Article 283. Withdrawal of Tax Exemption Privileges or Incentives . Unless otherwise provided for in this Rules , beginning January 1, 1992, all local tax exemption privileges or incentives granted to and presently enjoyed by any person, whether natural or juridical, including government-owned or controlled corporations, are considered withdrawn, except the following : "(a) . . . "(c) Non-stock and non-profit hospitals and educational institutions ; "xxx xxx xxx.'' (Emphasis ours) and also as provided for in Section 3 (4), Article XIV of the Constitution, thus: "All revenues and assets of non-stock, non-profit educational institutions used actually, directly, and exclusively for educational purposes shall be exempt from taxes and duties . . . ." (Emphasis ours) Accordingly and in view of the abovequoted provisions of laws, LRCA shall be exempt from local business taxes. It must be stressed however, that the exemption from local taxes of educational institutions does not apply to the payment of permit fees because exemption from taxes does not carry with it the exemption from the payment of fees for regulation, inspection, surveillance and service rendered by a local government unit (LGU). This is for the reason that taxes are for revenue purposes while fees and charges are payment for expenses incurred to protect public interest and in furtherance of the general welfare clause of the Constitution as well as of the LGC (Section 16, General Welfare clause) . Relatedly, even the exemptions granted to non-stock, non-profit educational institutions under Section 4 (3), Article XIV of the 1987 Constitution, supra , do not constitute exemption from regulatory fees as they specifically refer to tax privileges and exemption from customs duties. The provision does not extend to regulatory fees and charges imposed by an LGU. SDAaTC Notably, the collection of fees and service charges by LGUs, Mayor's Permit fee included, are authorized under Section 147, in relation to Section 151 of the LGC, quoted as follows: " SEC. 147 . Fees and Charges . The municipality may impose and collect such reasonable fees and charges on business and occupation and, except as reserved to the province in Section 139 of this Code, on the practice of any profession or calling, commensurate with the cost of regulation, inspection and licensing before any person may engage in such business or occupation, or practice such profession or calling. (Underscoring ours) We hope that we have clarified matters. Very truly yours, (SGD.) JOCELYN T. PENDON OIC-Executive Director ATTACHMENT Lord Reigns Christian Academy Purok 7, Bugallon Proper, Provincial Road, Ramon, Isabela Email: [emailprotected] Gov. Rec. No. A-043, s. 2007 October 28, 2015 Ms. Jocelyn T. Pendon OIC-Executive Director BLGF SUBJECT : Request for Exemption on the Payment of Business Tax and Mayor's Permit Fee Madam: We are a non-stock and non-profit educational institution, duly registered with the Securities and Exchange Commission (SEC) and granted tax exemptions from the Bureau of Internal Revenue (BIR). Sometime July 2015, the office of the Business Permits and Licensing Officer notified us that we should secure business permit by paying the corresponding Mayor's/Business permit fee and other regulatory fees. Attached is our letter dated July 3, 2015 their answer denying our exemptions considering that our legal basis are BLGF Rulings. Citing as a concrete reference is the case of Academia de Sta. Martha, Inc. (ASMI), that the City of Pasig cannot impose business and Mayor's Permit fees. (BLGF Ruling 2001-05-04) . However, we eventually paid the required fees under protest. It is then my urgent request that the same Exemption granted to ASMI be issued to us and inform the office of the BPLO of Ramon Isabela, to cause the refund of the Mayor's permit fee collected or consider as tax credit (BLGF Ruling 2001-06-27) . Thank you for your immediate action regarding this matter. Truly yours, (SGD.) HILBERT L. BIAG, CPA MBM President