by Atty. Jose Sabino M. Padilla, III
Guideline on Mayor’s Permit – 2021
Non-Stock Non-Profit Educational Institutions (NSNPEI) enjoy a constitutional tax exemption.
There are only two (2) conditions for a educational institution to enjoy the constitutional tax exemption:
First, the educational institution is registered as a non-stock, non-profit educational corporation and;
Second, all assets and revenues are used actually, directly and exclusively for educational purposes.
A NSNPEI does not need the Tax Exemption Certificate imposed by the Bureau of Internal Revenue under RMO No. 20-2013 and RMO No. 44-2016 to enjoy the Constitutional tax exemption because Article XIV, Section 4(3) of the Philippine Constitution does not impose such condition.
The constitutional tax exemption does not extend to regulatory fees and service fees covering services provided by the local government unit. However, NSNPEIs should by guided by Article 244 [a] of the Implementing Rules and Regulations of the Local Government Code (“IRR-LGC”) which reads in part:
“ARTICLE 244. Common Revenue-Raising Powers. — Provinces, cities, municipalities, and barangays: (a) May impose and collect fees and service or user charges for any service rendered by LGUs in an amount reasonably commensurate to such service provided that no service charge shall be based on capital investments or gross sales or receipts of the persons or business liable therefor.”
Thus, while provinces, cities, municipalities, and barangays may impose and collect regulatory fees and service fees or user charges for any service rendered by LGUs, these fees must be [a] reasonably commensurate to such service provided and [b] cannot be based on capital investments or gross sales or receipts of the persons or business liable therefor. Regulatory and service fees imposed by local government units [a] must be reasonable, [b] must cover the cost of the service actually provided, [c] must cover the cost of printing the receipt and [d] must not be based on the capital investments of the person or entity which includes the land area, the gross income and/or number of employees of the person or entity.
It is under the foregoing parameters and limitations imposed by law and jurisprudence on regulatory and service fees that NSNPEIs should study the garbage fees, safety inspection fees, locational / zoning clearance fee, occupational fee, health fee and mayor’s permit fee issued it.
Mayor’s Permit Fee: If the mayor’s permit is a fee on business, it should not be paid by the NSNPEI because it is not a business.
Occupational Fee: The Occupational Fee is a fee imposed on every person engaged in the practice of the occupation or calling not requiring government examination. In other words, it is a fee imposed on the employee and not the employer. Thus, NSNPEIs, as employers, are not liable for the occupational fee. How to address:
[1] Have each employee pay the occupational fee through a consented deduction in pay. Thereafter, the the NSNPEI may deduct the fee from the salary of the employee and remit the same to the LGU.
Health Fee: The Health fee is a fee on the employee and not the employer. The obligation of the employer is that it shall see to it that their employees who are required to undergo physical and medical examinations have been issued the necessary medical certificates. How to address:
[1] Have each employee undergo physical and medical examination and secure the necessary medical certificate. In the process the employee shall pay the Health Fee.
Locational / Zoning Fee: Usually this is a fee charge on a business and/or a person conducting business such “sari-sari store,” “commercial establishments” and “industrial establishments.” On the other hand, if the Locational / Zoning Fee is based is based on capital investment, i.e., the area of the school, it violates Article 244 [a] of the IRR-LGC which mandates that no service charge shall be based on capital investments of the persons or business liable therefor.
Garbage Fee: This is a regulatory fee a NSNPEI must pay, However the garbage fee a] must be reasonable, [b] must cover the cost of the service actually provided, [c] must cover the cost of printing the receipt and [d] must not be based on the capital investments of the person or entity which includes the land area, the gross income and/or number of employees of the person or entity.
Fire Inspection Fee. This is a regulatory fee a NSNPEI must pay, However the fire inspection fee a] must be reasonable, [b] must cover the cost of the service actually provided, [c] must cover the cost of printing the receipt and [d] must not be based on the capital investments of the person or entity which includes the land area, the gross income and/or number of employees of the person or entity. Should you receive a Statement of Account for 2021 covering Mayor’s Permit and Regulatory / Service Fees, you can show this to the law firm for proper guidance.