Bureau of Local Government Finance Opinion

January 7, 1993 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 1st Indorsement Respectfully returned to the Municipal Treasurer, Daet, Camarines Norte. This refers to your letter dated September 29, 1992 inquiring whether the proposed Mayor's Permit Fees of the municipality on the businesses enumerated therein are just, reasonable and not confiscatory. In this connection, it is informed that Article 233, Part 3, Rule XXX of the Implementing Rules and Regulations (IRR) of the Local Government Code of 1991, provides as follows: "Art. 233. Fees and Charges . The municipality may impose and collect such reasonable fees and charges on businesses and occupations and, except as reserved to the province in Article 229 of this Rule, on the practice of any profession or calling before any person may engage in such business or occupation, or practice such profession or calling provided that such fees or charges shall only be commensurate to the cost of issuing the license or permit and the expenses incurred in the conduct of the necessary inspection or surveillance. "No such fee or charge shall be based on capital investment or gross sales or receipts of the person or business liable therefor." It is clear, therefore, that before any person may engage in any profession, occupation, or calling, the local government unit may require a Mayor's permit. However, the fee therefor shall only be commensurate to the cost of issuing the license and expenses incurred in the conduct of the necessary inspection or surveillance and shall not be based on capital investment or gross sales or receipts. Moreover, Mayor's permit fees are exacted under the police power under which municipal corporations are authorized to enact ordinances to provide for the health, safety and general welfare of the citizenry and promote favorable peace and order conditions in the locality. Further, attention is invited to the pertinent provisions of Section 186 of the aforementioned Code which states that "the ordinance levying such taxes, fees or charges shall not be enacted without any prior public hearing conducted for the purpose ". (Emphasis supplied) Consistent with previous actions on similar queries, it is the view of this Department that the Sanggunian Members are in the best position to determine that the rates of Mayor's permit fees to be levied are just, reasonable and not confiscatory and unless the contrary is proven, that office has no alternative but to collect the rates fixed in duly-enacted and approved tax ordinances of the municipality. For their part, taxpayers may either agree to pay the rates of fees levied or file their respective protests which should be resolved pursuant to the provisions of the said Code. By authority of the Secretary: LORINDA M. CARLOS Executive Director Bureau of Local Government Finance