Bureau of Local Government Finance Opinion

July 14, 1997 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION The Municipal Treasurer Babak, Davao M a d a m : This refers to Resolution No. 080, S. 1996, enacted by the Sangguniang Bayan, that municipality, seeking clarification from this Department on the interpretation of Sec. 139 (b) of R.A. 7160, otherwise known as the Local Government Code of 1991 (LGC) as to whether or not professionals who are paying the professional tax but having their private clinics should no longer pay the business permit to operate. It appears that Article 7 of the Revised Revenue Code of that municipality requires owners/operators of business establishments (stores, shops, clinics and the like) to pay the Mayor's permit fee to operate. However, professionals who are paying professional taxes like dentists and doctors who have their own private clinics questioned said permit fee citing Section 139 (b) of the LGC. Section 139 (b) of the LGC provides as follows: "Sec. 139. Professional Tax . . . . "(b) Every person legally authorized to practice his profession shall pay the professional tax to the province where he practices his profession or where he maintains his principal office in case he practices his profession in several places; Provided however, That such person who has paid the corresponding professional tax 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 for the practice of his profession ". (Emphasis supplied.) "xxx xxx xxx." On the other hand, Section 147 of the same Code provides as follows: "Sec. 147. 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 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." It may be deduced from the aforequoted provisions of Sections 139 and 147 of the Code that: 1. The exemption of a professional from any national or local tax, license, or fee after payment of the professional tax is for the practice of his profession . 2. However, the income or receipts derived from the exercise of such profession is not deemed exempt from national taxes, as for example the income tax, or from local taxes imposed on the business he is engaged in. 3. A professional however, may be considered exempt from the Mayor's permit fee but if he is engaged in business like operating a medical or dental clinic, the business or clinic shall be subject to the Mayor's permit fee and such other regulatory fees or service charges imposed by local government units. Moreover, it may be worth mentioning that the professional tax is a fixed tax on the professional imposable by a province or city, while the business tax is a tax on the business, based on gross receipts, levied by a municipality or city. cHSTEA Accordingly, if this issue has remained unresolved in that municipality, be informed that a Mayor's permit fee may no longer be collected from professionals who are paying the professional tax like doctors and dentists having their own private clinics. However, such clinics shall be subject to the payment of said Mayor's permit fee, the business tax based on gross receipts, as well as the regulatory fees or service charges imposed by the municipality of Babak under a duly-enacted ordinance. We take this opportunity to express our regrets that due to a heavy workload, we were not able to reply immediately to this query. Kindly extend our apologies to the Sangguniang Bayan thereat. Very truly yours, (SGD.) LORINDA M. CARLOS Executive Director