Bureau of Local Government Finance Opinion

March 10, 1994 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Atty. Delfin H. Decierdo Legal Counsel Metaphil Inc. 2290 Abominco Bldg. Pasong Tamo Ext. Makati, Metro Manila S i r : This refers to the letter dated February 21, 1994 of Metaphil, Inc. (MI) requesting interpretation on the provisions of the Local Government Code (LGC) of 1991 quoted as follows: "Sec. 133. Common Limitations on the Taxing and Other Revenue-raising Powers of Local Government Units . Unless otherwise provided herein the exercise of the taxing powers of provinces, cities, municipalities, and barangays shall not extend to the levy of the following: xxx xxx xxx "(m) Taxes, fees, or other charges on the Philippine products actually exported, except as otherwise provided herein: cd xxx xxx xxx "Sec. 143. Tax on Business . The municipality may impose taxes on the following businesses: xxx xxx xxx "(c) On exporters, and on manufacturers, millers, producers, wholesalers, distributors, dealers or retailers of essential commodities enumerated hereunder at a rate not exceeding one-half(1/2) of the rates prescribed under subsections (a),(b) and (d) of this Section: xxx xxx xxx It is your connection that Philippine products actually exported are tax exempt from the local business tax, except when the products exported fall under the essential products category. In this connection, please be informed that the prohibition in the abovequoted provision is the imposition of export taxes, fees and other levies on the products or goods thus exported. But the business tax on exporters as provided under Section 143, par. (c) of the LGC is a tax on the privilege to engage in a business of exporting. The former has as its reference the exported products, while the latter, the business of exporting itself. Hence, the provisions of Section 143, par. (c) do not fall within the ambit of nor would it be in conflict with the prohibition enunciated under Section 133, par. (b) of the LGC. It is pointed-out, however, that all exporters, regardless of whether they are exporters of essential or non-essential commodities, would be taxable at the rate provided under Section 143, par. (c) of the LGC. The qualifying phrase "of essential commodities" is construed to apply only to the class of businesses immediately preceding it. It could not be extended to the business of "exporting" for such is dissociated by the "comma" and the conjunction "and" following it. We hope this will clarify matters. Very truly yours, (SGD.) LORINDA M. CARLOS Executive Director Bureau of Local Government Finance