Bureau of Local Government Finance Opinion

February 28, 1997 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 1st Indorsement Respectfully referred to the City Treasurer, Quezon City. This refers to the letter dated February 18, 1997 of Mr. William S. Pamintuan, Sr. Vice President, Digital Telecommunications Philippines, Inc. (DIGITEL) requesting opinion on the issue raised by that Office relative to the availment of the exemption from the payment of the local business taxes pursuant to Section 4 of Local Finance Circular No. 5-93 of the Department of Finance. On November 11, 1995, said corporation informed the City Mayor of that City of said exemption and in reply, the said official, under a letter dated December 6, 1995 informed that DIGITEL failed to submit a BOI-certified true copy of the Certificate of Registration within sixty (60) days from receipt hereof, thus, the right to avail of the exemption has already prescribed. In this connection, enclosed for your information and guidance is a copy of the letter dated April 24, 1995 addressed to Mr. Onofre H. Francisco, Sr., Office of the City Legal Officer of Davao, the pertinent portion of which is quoted as follows: ". . . , it may be stated that guidelines issued by this Department relative to the levy and administration of local taxes, fees and charges pursuant to Article 287 of the IRR are only intended to, among others: "(a) guide local elective officials in the enactment of local tax ordinances or revenue codes; "(b) local treasury offices in collecting taxes and other local impositions, as well as in determining or computing tax discounts or penalties and surcharges; and "(c) the taxpaying public as to the proper interpretation and application of the law and rules governing local taxation." "Such guidelines, however, cannot, as they are not meant to, amend provisions of law, particularly the LGC of 1991. Accordingly, in reply to your query, it is the considered view of this Department that the 60-day period prescribed under LFC No. 5-93 abovementioned is only directory and not mandatory and, therefore, the failure of any business to observe the same will not render taxable what the law has expressly exempted from local taxation . Stated otherwise, said 60-day period is deemed to be not prescriptive ." Accordingly, and considering that DIGITEL is registered with the Board of Investments (BOI) as non-pioneer enterprise, said corporation shall be exempt from local business taxes from the date of registration which is July 25, 1995, for period of four years. It bears emphasis, however, that the exemption granted to pioneer and non-pioneer enterprises shall apply only upon presentation of the corresponding BOI certification. Moreover, said enterprises shall still be liable to pay the Mayor's permit and other regulatory fees or service charges that the local government unit may have imposed under a duly-enacted local tax ordinance, the exemption being applicable to local taxes only. HCSDca Be guided accordingly. (SGD.) LORINDA M. CARLOS Executive Director