Bureau of Local Government Finance Opinion

April 16, 1996 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 1st Indorsement Respectfully referred to the City Treasurer, Surigao City, the herein letter dated January 22, 1996 of Mr. Edgar M. Garcia, General Manager, GARCIA AND SONS, INC.,requesting this Office to instruct the City Treasurer to cease and desist from collecting local tax imposed on businesses in the distribution and sale of oil, gasoline and other petroleum products. cdll It appears that on December 30, 1995, GARCIA AND SONS, INC., sent a formal communication requesting that Office to cease and desist from collecting business taxes on the sale of PETRON GASUL (LPG), and to refund any and all local taxes collected since the effectivity of the Local Government Code of 1991 (LGC) by virtue of the provisions of Article 232(h) of the Implementing Rules and Regulations (IRR), implementing Section 143(h) of the LGC. However, despite said request, that Office still insisted on collecting local business taxes on the sale of LPG, hence, said taxes were paid under protest. In this connection, enclosed for reference and guidance is a copy of the 4th Indorsement dated July 11, 1994 of this Department addressed to the Regional Director for Local Government Finance of Region II, Tuguegarao, Cagayan, bearing on a similar query, the pertinent portion of which is quoted hereunder: "In this connection, attention is invited to the provisions of Article 232 (h) of the Implementing Rules and Regulations, implementing Section 143 (h) of the Local Government code (LGC) of 1991, quoted hereunder: "Art. 232. Tax on Business. ... xxx xxx xxx "(h) ...any business engaged in the production, manufacture, refining, distribution or sales of oil, gasoline and other petroleum products shall not be subject to any local tax ... "It is clear from the abovequoted provision that any business engaged in, among others, the distribution or sale of petroleum products shall not be subject to any local tax ..." Considering therefore, that LPG is a petroleum products, the business of distributing or selling the same shall, therefore, be not subject to any local tax. However, GARCIA AND SONS, INC.,is still liable to pay the Mayors permit fee and other regulatory fees and charges imposed under a duly enacted ordinance of that City. That Office, is, therefore, hereby instructed to, cease and desist from collecting any local taxes imposed on businesses engaged in the production, manufacture, refining, distribution or sale of oil, gasoline and other petroleum products. Also, the taxes collected since the effectivity of the LGC should be refunded to said company by way of tax credits. Report of action taken hereon within ten (10) days from receipt hereof is requested. By Authority of the Secretary: LORINDA M. CARLOS Executive Director Bureau of Local Government Finance