Bureau of Local Government Finance Opinion

November 17, 1994 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 1st Indorsement Respectfully referred to the City Treasurer, Iloilo City, for appropriate action the herein letter dated October 14, 1994 of Rev. Fr. Antonio P. Reyes, Director/Principal, Pius XII Institute of Catechetical and Social Studies (Pius XII for brevity),Jaro, Iloilo requesting exemption from the imposition of tax by that city. Representations are made that Pius XII is an educational institution duly registered as a non-stock, non-profit corporation with the Securities and Exchange Commission. It appears that the Office of the City Mayor required a tax exemption permit in order for Pius XII to sell catechetical books to students at a cheaper price. In this connection, attention is invited to the views expressed by the Department of Finance (then Ministry) on the case of San Beda College under a letter dated February 25, 1983, copy enclosed which this Bureau finds not inconsistent with the provisions of the Local Government Code (LGC) of 1991, the pertinent portion of which is quoted as follows: "xxx xxx xxx "2. The mere fact that San Beda College, within its premises, maintains a swimming pool, bookstore , canteen and parking lot, all for the exclusive use of its students, faculty members and employees, it cannot be concluded that it is engaged in business as the term is defined under Section 3 (e) of the Local Tax Code, as amended, to wit: Business means a commercial activity customarily engaged in as a means of livelihood (Emphasis supplied.)" Based on the foregoing, local government units cannot impose Mayors permit fees and other license fees on educational institutions similarly situated as San Beda College, but payment of regulatory fees, sanitary inspection and electrical inspection fees, may be legally required under Article 244 of the Implementing Rules and Regulations (IRR)implementing Sec. 153 of the LGC, quoted hereunder: "ART. 244. Common Revenue-Raising Powers . Under this Rules, provinces, cities, municipalities and barangays. "(a) May impose and collect fees and service or user charges for any service rendered by it in an amount reasonably commensurate to such service, provided, however, that no service charge shall be based on capital investments or gross sales or receipts of the person or business liable therefor. "xxx xxx xxx" Report of the action taken hereon within ten (10) days from receipt hereto is requested. Fr. Reyes is being furnished a copy of this referral. LORINDA M. CARLOS Executive Director