Bureau of Local Government Finance Opinion

November 9, 2000 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 1st Indorsement Respectfully referred to the City Treasurer of Marikina, for appropriate action the herein subjoined letters dated September 29, 2000 and October 3, 2000 of Fregillana, Jr., D.D., Attorney & Counselor-at-Law, requesting in behalf of their client, St. Scholastica Academy-Marikina, Inc., (SSA-MI) a ruling on the tax-exempt character of the school canteen of said school. Representations are made that SSA-MI is a non-stock, non-profit educational institution organized and existing under and by virtue of the laws of the Republic of the Philippines. In the operation of the school, it has a small canteen within its premises exclusively catering to the needs of its student, faculty and other personnel. On September 19, 2000, the Bureau of Business Permits and License of that city required the school to secure a separate permit for the said school canteen on the ground that the school is leasing portions of it to the different concessionaires, invoking the Marikina Revenue Code of 1995. However, it is the contention of Counsel that since the school canteen is being operated as one of its necessary facilities and merely incidental to its operation, there is no need to secure such a permit. SHECcD Counsel claims that despite explanations made to said Bureau that the school is not engaged in canteen business apart from its operation as a school, the Bureau Chief insisted that the school should still secure a business permit for the canteen. In the letter dated October 3, 2000, Counsel confirms for purposes of complying with the requirements to avail itself of being exempt from taxation as a non-stock and non-profit educational institution, it is cancelling all the lease contracts it has with the concessionaires effective November 1, 2000 and instead will itself start to operate the canteen, but still as one of the facilities of the school exclusively to serve the needs of the students. In this connection, it is informed that this Bureau has consistently expressed the view that non-stock educational institutions are not business establishment and, therefore, not subject to the Mayor's permit fees. The operation therefore of a school canteen for the exclusive use of its students, faculty members and other personnel can not be concluded that it is engaged in business. In view thereof, that Office is hereby directed to conduct an ocular inspection/verification as to the veracity of the claim that effective November 1, 2000, SSA-MI will no longer lease its canteen space to concessionaires and will itself operate the canteen. The Counsel of SSA-MI is being furnished a copy of this Indorsement for their information and ready reference. Report of action taken hereon within five (5) days from receipt hereof is requested. Be guided accordingly. SCIAaT (SGD.) BENJAMIN A. GERONIMO Executive Director <http://www.blgf.gov.ph/downloads/opinion/localtax/2000/a2000-1001.pdf> last visited on October 2, 2013.