Republic of the Philippines DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT DILG-NAPOLCOM Center, EDSA comer Quezon Avenue, West Triangle, Quezon City hitp: www. cig.com.ph 23 AUG 2018 SEC. CARLOS DOMINGUEZ III DILG OPINION NO. 22. 8, Department of Finance DOF Bldg., BSP Complex Roxas Blvd., Manila ATIN: JOCELYN T. PENDON OIC, Office of the Executive Director Bureau of Local Government Finance (BLGF) Dear Sec. Domiguez: ‘This is in response to BLGF Opinion No. 002.2016 dated 05 March 2016 addressed to the undersigned Undersecretary for Local Government, Department of the Interior and Local Government (DILG) with the subject “Clarification as to the Conflicting Opinions Issued by the Department of Finance (DOF) and the Bureau of Local Government Finance (BLGF) Concerning Professionals Maintaining Clinics/Office Incidental to the Practice of Their Professions”. BLGF Opinion No. 002.2016 No. is a reply to this Department's letter dated 18 February 2016 addressed to then DOF Secretary Cesar V. Purisima seeking that Department's position on the aforementioned issue. Said Opinion attempted to rectify the inconsistencies between DOF Opinion dated 06 December 1999 and BLGF Opinion dated 10 March 2003. In such an attempt, it held that the DOF previous positions on the matter contained in BLGF Opinion dated 25 February 2015, addressed to Dr. Anthony Asis, is to be considered the prevailing opinion. ‘The assailed Opinion is herein below quoted: “a. Such professional who has paid the corresponding professional tax to the Province where he practices his profession 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, including the Mayor's Permit or license fee, for the practice of such profession . As to dental clinics, they are established as a direct consequence of the Practice of the dental profession. They are, necessarily, for the exercise of such a profession.© Therefore, to impose a graduated tax on a dental clinic on the premise that it is a “business establishment rendering or offering to render professional services” would be to impose a local tax on the practice of profession. This would be in contravention of the Local Government Code.” Given these developments, this Department's issuances and opinions that were made to adopt whatever is the prevailing view/position of the BLGF and/or DOF on the matter, have likewise been subject to changes. Inevitably, this brought confusion among DILG Field Offices, LGUs, and the concerned professionals as well. It generated numerous queries/objections; and recently, a request for revocation of DILG MC No. 2016-170 from the National Association of Business Permits and Licensing Officers (NABLO), A policy review was conducted by this Department's Legal and Legislative Liaison Service (LLLS) which recommended the revocation of the assailed DILG Memorandum Circular. In the course of its review, some issues were identified. Hence, the issuance of herein DILG Opinion. Section 147 and Section 139 (b) of R.A. No. 7160, otherwise known as the “Local Government Code of 1991” (GC), provide as follows: ‘Section 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.” “Section 139. Professional Tax. - wax (©) 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.” (Emphasis Supplied) Itis our considered view that both provisions should not be interpreted to outpace one another. Otherwise, Section 139 shall be rendered useless, the municipalities and component cities thereby powerless to impose and collect reasonable fees and charges on business and occupations established within its jurisdiction. Simply, these provisions have to be reconciled.The exemption for ‘payment of national or local tax, license, or fee” provided by Section 139, which is mentioned in Section 147 of the LGC, specifically refers to practice of profession. Such that, a municipality may not impose a local tax, license, or fee for the sole purpose of practicing a profession to someone who has paid the corresponding, professional tax to the province where he practices his profession or where his principal office is located. This should not be understood to have stripped the LGUs' right to impose and collect reasonable fees and charges for the actual establishment of a clinic/office, the amount commensurate to the cost of regulation for the purpose of ensuring the general welfare of the public. Thus, a delineation has to be created between ‘imposition of tax. license, or fee for the practice of profession” and “imposition of reasonable fees and charges for the actual establishment of clinic/office’. Establishment of a clinic/office is merely a consequence to the practice of profession; it does not equate to practice of profession per se, One may practice his profession without putting up a clinic/office, such as in cases of employment. Consequently, while the municipality is precluded to impose tax, license, or fee for the practice of profession when the same has already been paid to the provincial government, it retains the power to impose and collect reasonable fees and charges for the actual establishment of a clinic/office by way of requiring a Mayor's Permit. The rationale is this. The requirement of a Mayor's Permit, and the corresponding imposition/collection of fees and charges, is not for the purpose of imposing a tax, license or fee for the privilege of practicing a profession. It is basically for the concerned LGU to know all the activities and establishments within its jurisdiction, to ensure that no illegal activities are being conducted to the detriment of its constituents. This is plainly an exercise by the Local Chief Executive (LCE) of the power under Section 455(b)(2) and Section 444 (b)(2) of the LGC, which is to: “enforce all laws and ordinances relative to the governance of the municipality (city!) and the exercise of its corporate powers provided under Section 22 of this Code, implement all approved policies, programs, projects, services and activities of the municipality (city)...xxx’? As we uy to process the crux of the inconsistencies of views/opinions on this matter, it appeared that the imposition of a Mayor's Permit Fee has been equated to imposition of a Professional Tax and further complexed with the imposition of tax on business establishments. ‘Thus, we clarify. Establishing a clinic/office is not practice of profession in itself, it is merely an incident or a consequence thereof. * Section 455(b)(2), R.A. No. 7160. * Section 444(b)(2), R.A. No. 7160.As discussed above, the Mayor's Permit is not for the Purpose of imposing a professional tax, license, or fee, for the privilege of practicing a profession. It is solely for the concerned LGU to know all the activities and establishments within its jurisdiction, to ensure that no illegal activities are being conducted to the detriment of ite constituents. By imposing a Mayor's Permit Fee on clinics/offices established by Professionals, these clinies/offices are not being classified as business entities. All the more that a Mayor's Permit Fee is not a business tax. The Mayor’s Permit Fee is a reasonable charge for the cost of the permit itself, the Processing, and the proper verification to ensure tha a The clinic/office is to be established by a legitimate Professional who currently holds a valid/updated/renewed license to practice issued by the appropriate regulatory agency; b The Professional Tax due to the province has been paid prior to the application/renewal of the Mayor's Permit with the City or Municipality; ¢- The general public is protected against illegal practices/activities from unscrupulous individuals; 4. The Local Government can track down the number of professionals practicing every Kind of profession within its territorial jurisdiction, which makes the relevene data ‘eadily available when needed by the national government, its departments or Finally, we opine that what is prohibited is a case wherein, aside from requiring a Mayor's Permit and collecting the corresponding Mayor's Permit Fee, the Gity/Municipality further imposes a Professional Tax, license, or fee, for the Practice of profession. This is so because the Professional Tax is due to the Province where the profession is being practiced or the principal office is located pursuant vo Section 139 (b) of the LGC, This Opinion is hereby being rendered without Prejudice to concurring or dissenting opinion to be issued by the Department of Finance AUSTERE A. PANADERO Undersecretary wt v