Bureau of Local Government Finance Opinion

April 29, 2015 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 2nd Indorsement Respectfully returned to Ms. MELBA B. SULLIVAN, OIC-Regional Director, Bureau of Local Government Finance, Region VI, the herein 1st Indorsement dated March 31, 2015 relative to the letter dated March 20, 2015 of Ms. ELSIE S. JIMENEA, City Treasurer of Silay City, regarding the conflicting opinions of the letter dated March 10, 2003 signed by the former Executive Director of Bureau of Local Government Finance, Ma. PRESENTACION R. MONTESA and letter dated December 6, 1999 signed by then Secretary of Finance EDGARDO B. ESPIRITU, which pertains to the taxability of dental clinics under the Local Government Code (LGC) of 1991. In relation to the opinion by Secretary Espiritu, the Bureau of Local Government Supervision, Department of the Interior and Local Government (DILG) had issued an advisory dated July 23, 2013 to all DILG Regional Directors and DILG ARMM Secretary for the dissemination of the same. ACTIHa In this connection, the contents of the conflicting opinions issued by this Bureau and the Department of Finance are summarized as follows: 1. December 6, 1999 (Edgardo B. Espiritu, DOF Secretary) Using as basis Sections 139 (b) and 147 of the Local Government Code, professionals, requiring government examination, like dentists, are required to pay professional tax to the province where they are practicing but are exempt from paying Mayor's permit or license fee for the practice of such profession. Dental clinics as a direct consequence of the practice of such profession cannot be imposed a graduated tax on the premise that it is a "business establishment offering to render professional service." 2. March 10, 2003 (Mr. Joselito Laniwan, Licensing Officer, Catarman, Northern Samar) Again using as basis Section 139 (b) and 147 of the Local Government Code, professionals, like dentist and doctors, who maintain clinics, are subject to the payment of Mayor's Permit, Business Tax as well as regulatory fees and service charges imposed by Cities and Municipalities. Relative to the above opinions and for the immediate resolution of the herein issue, please be informed that the opinion embodied in the letter dated December 6, 1999 addressed to Dr. Flor S. Enriquez, former President of the Philippine Dental Association on the request for opinion on whether cities or municipalities may validly require dentists to secure a Mayor's Permit before they can practice their profession and whether a dental clinic may be taxed as a business establishment, it was held as follows: HCSAIa a. Such professional who has paid the corresponding professional tax to the province where he practices his profession shall be entitled to practice his profession in any part of the Philippines without being subjected to any other national or local tax, license or fee, including the Mayor's Permit or license fee, for the practice of such profession. b. As to dental clinics, they are established as a direct consequence of the practice of the dental profession. They are, necessarily, for the exercise of such a profession. c. Therefore, to impose a graduated tax on a dental clinic on the premise that it is a "business establishment rendering or offering to render professional services" would be to impose a local tax on the practice of profession. This would be in contravention of the Local Government Code. It is the view of this Bureau that said opinions still hold until such time that the same are modified or rescinded accordingly by the same administrative authority or by the Court of competent jurisdiction. In this connection, all previous rulings and/or opinions issued by this Bureau relative to the herein subject matter which are inconsistent with the views expressed herein are hereby modified and/or repealed accordingly. We hope this will help clarify matters. Very truly yours, (SGD.) SALVADOR M. DEL CASTILLO OIC-Executive Director