Whether Tacloban City Ordinance No. 99-58 Applies to Physicians Engaged in the Exercise of Their Profession and in Maintaining a Medical Clinic

July 2, 2014 DILG LEGAL OPINION NO. 026-14 Dr. Lolita P. Quilaneta President Philippine Obstetrical & Gynecological Society Region 8 Chapter Rm. 31, OPD, Divine Word Hospital Tacloban City Dear Dr. Quilaneta : This has reference to your letter dated 16 June 2014 requesting the Department's legal opinion on the following issues: "I. Whether or not Tacloban City Ordinance No. 99-58 is applicable to Physicians engaged in the exercise and practice of their profession and in maintaining a medical clinic or office as a consequence of the practice of the medical profession; II. Whether or not a city can validly require Physicians to secure a Mayor's Business Permit before they can practice their profession; III. Whether or not a medical clinic may be taxed as a business establishment; IV. Whether or not persons, such as Physicians engaged in the practice of their profession and paying Professional Tax can be subject to any other national or local tax for the practice of such profession." In this regard, please be informed that the above-enumerated queries were already addressed by the Bureau of Local Government Finance-Department of Finance (BLGF-DOF) in a letter dated 10 March 2003 1 to Mr. Joselito M. Laniwan of Catarman, Northern Samar. Pertinent portion of the aforesaid letter dated 10 March 2003 of the BLGF is quoted hereunder, thus: "Section 139 (b) of the Local Government Code of 1991 (LGC) provides: Sec. 139. Professional Tax. (a) . . . "(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 such profession." On the other hand, Section 147 of the LGC provides: "Sec. 147. Fees and Charges. The municipality may impose and collect such reasonable fees and charges on business and occupation 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." DTSaHI 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. The income or receipts derived from the exercise of such profession are 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, the business or clinic shall be subject to the Mayor's permit fee and such other regulatory fees or service charges imposed by LGUs. Moreover, it may be stated that the professional tax is a 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. As regards the Mayor's permit fees, the same are enacted under the police power and it is mandatory for the owner or operator of any business or calling to secure such permit from the local government unit concerned before its operation. However, the amount thereof should be reasonable and commensurate to the cost of regulation, inspection and licensing. It should not be based on capital investment or gross receipts by the person or business liable thereof pursuant to Article 233 of the IRR, implementing Section 147 of the Code. In view thereof, a Mayor's permit fee may no longer be collected from professionals who are paying the professional tax like doctors and dentists. However, if they maintain a clinic, the operation of such clinic shall be subject to the payment of Mayor's permit fee, the business tax based on gross receipts, as well as the regulatory fees or service charges imposed by cities or municipalities. " (Emphasis Supplied) Notably, in the Notice issued by the City Government of Tacloban, you and several others, were advised to comply with the renewal of your Business Permit as "Medical Clinic" for the Year 2014 pursuant to Section 90 of Ordinance No. 99-58. Such being the case and taking into account the above disquisition, it appears that your Medical Clinic may be subjected to the payment of Mayor's permit fee, the business tax based on gross receipts, as well as the regulatory fees or service charges imposed by the City Government of Tacloban through its Ordinance No. 99-58. Thank you. Very truly yours, (SGD.) AUSTERE A. PANADERO Undersecretary Department of the Interior and Local Government ATTACHMENT Bureau of Local Government Finance Opinion dated March 10, 2003 Footnotes 1. Photocopy attached.