Bureau of Local Government Finance Opinion

July 13, 2015 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Hon. Marie Judy L. Damasin OIC SB Secretary (Administrative Officer I) Office of the Sangguniang Bayan Monkayo, Compostela Valley Madam : This refers to your letter dated April 22, 2015 requesting legal opinion if there are other preconditions which allows LGU to adjust, amend, revise or update its Revenue Code aside from Section 191 of the Local Government Code (LGC) of 1991. In this connection, please be informed that Section 191 of the LGC refers to the adjustment of rates of taxes only. cAaDHT On the other hand, the imposition of regulatory fees, services charges and other related impositions, Mayor's Permit fee included, are made in the exercise of the police power of the local government unit (LGU), which is expressly provided under Section 16 (General Welfare Clause) of the LGC can be adjusted anytime it is deemed fit and proper. However, this Bureau has consistently expressed the view that fees and charges that the local government units may impose should only commensurate to the cost of issuing the license or permit and the expenses incurred in the conduct of the necessary inspection or surveillance. This is pursuant to Article 233 of the Implementing Rules and Regulations (IRR) implementing Section 147 of the LGC, quoted as follows: "Article 233. 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 under Article 228 of this Rule, on the practice of any profession or calling before any person may engage in such business or occupation, or practice such profession or calling provided that such fees and charges shall only be commensurate to the cost of issuing the license or permit and the expenses incurred in the conduct of the necessary inspection or surveillance. No such fee or charge shall be based on capital investment or gross sales or receipts of the person or business liable thereof ." (Emphasis ours) As can be discern from the wordings of the abovequoted provision of the LGC, it may be deduced that the clear intent of the law is to give the local sanggunians the discretion to determine the appropriate rates of regulatory fees to be adopted in their locality. This is for the simple reason that the sanggunian , being the local law-making body, is in the best position to determine the appropriateness of such fee or charge based on the economic condition prevailing in the locality guided however by the principle that such fees and charges shall commensurate to the cost of regulation that may be incurred in the conduct of inspection, surveillance and other related activities to justify such impositions. HCaDIS We hope that this will help clarify matters. Very truly yours, (SGD.) SALVADOR M. DEL CASTILLO OIC-Executive Director