Bureau of Local Government Finance Opinion

June 19, 1995 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Mr. Bienvenido S. Cosmiano Madrid, Surigao del Sur S i r : This refers to your letter dated February 20, 1995, requesting clarification of the provisions of Section 3(x), 5(k) and (e) of PD 231, otherwise known as the Local Tax Code, as amended. In this connection, it is informed that PD 231 has been specifically repealed by R.A. No. 7160, otherwise known as the Local Government Code of 1991 (LGC) which took effect on January 1, 1992. For your information and guidance, the aforementioned Sections 3(x), (k) and (e) of PD 231, are provided for under Sections 131(q), 133(f) and (l) of the LGC, which read as follows: "Sec. 131. Definition of Terms . When used in this Title, the term: "(a) . . . "(g) Motor Vehicle means any vehicle propelled by any power other than muscular power using the public roads, but excluding road rollers, trolley cars, streetsweepers, sprinklers, lawn mowers bulldozers, graders, fork-lifts amphibian trucks, and cranes if not used on public roads, vehicles which run only on rails or tracks, and tractors, trailers, and traction engines of all kinds used exclusively for agricultural purposes; "(a) . . ." "Sec. 133. Common Limitations on the Taxing 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: (a) . . . "(f) Taxes, fees or charges on agricultural and aquatic products when sold by marginal farmers or fishermen; "(1) Taxes, fees or charges for the registration of motor vehicle and for the issuance of all kinds of licenses or permits for the driving thereon, except tricycles; xxx xxx xxx It may be noted from the aforecited Section 138(f) of the LGC, that local government units (LGC) are prohibited from imposing taxes, fees or charges on the sale, barter or exchange of agricultural and marine products produced by a marginal farmer or fisherman himself and his immediate family. With regard to Section 133(l) of the Code, it is clear that LGUs are not authorized to impose taxes, fees and charges for the registration of motor vehicles as well as the issuance of licenses or permits for the driving thereof. Such prohibition in relation to the definition of motor vehicle, reveals, among others, that traction engines of all kinds used exclusively for agricultural purposes are not included. Hence, LGUs may impose at least fees, under a duly enacted ordinance, for the registration and issuance of permits or licenses for the driving of those excluded from the definition of motor vehicles. Such imposition may be justified by the extraordinary wear and tear caused on roads and streets by such vehicles and for reasons of public safety. Relative to your request for information and clarification regarding the taxes and fees allegedly imposed by the National Food Authority (NFA) on farmers who sell their products in the form of milled palay or rice, please be informed that the same has been referred to the said Authority for appropriate action, referred to the said Authority for appropriate action, under a 1st Indorsement of even date, copy enclosed. Very truly yours, LORINDA M. CARLOS Executive Director