Bureau of Local Government Finance Opinion

June 9, 2014 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 3rd Indorsement Respectfully returned to the Regional Director for Local Government Finance, Region IV-A, the herein preceding indorsement relative to the 1st Indorsement dated February 3, 2014 of the OIC-Regional Director of the Department of the Interior and Local Government (DILG, REGION IV-B), regarding the letter dated January 28, 2014, of the Hon. Municipal Mayor Jose Ildefonso M. Maliwanag of the Municipality of Mansalay, Oriental Mindoro, requesting advice on the possible fees that may be collected in the operation of a PPA Cargo Port, such as servicing the loading and unloading of agricultural products like rice and industrial products, like cement and construction materials. In this connection, attention is invited to Section 133 (e) and (f), Book II of the Local Government Code (LGC) of 1991, which provides: "Section 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: "xxx xxx xxx; "(e) Taxes, fees and charges and other impositions upon goods carried into or out of, or passing through, the territorial jurisdictions of local government units in the guise of charges for wharfage, tolls for bridges or otherwise, or other taxes, fees or charges in any form whatsoever upon such goods or merchandise; "(f) Taxes, fees or charges on agricultural and aquatic products when sold by marginal farmers or fishermen;" It is the opinion of that Office that the Municipality of Mansalay cannot extend to the levy nor impose any taxes, fees or charges in the conduct of such activities relative to the mentioned operation of PPA Cargo Port, that is: "servicing the loading and unloading of agricultural products like rice and industrial products like cement and construction materials." Hence, the request for confirmation of the foregoing opinion and/or further clarification. In this connection, it is worth mentioning that in the case of in the case of Manila International Airport Authority vs. Court of Appeals , the Supreme Court held that: "Many government instrumentalities are vested with corporate powers but they do not become stock or non-stock corporations, which is a necessary condition before an agency or instrumentality is deemed a government-owned or controlled corporation. Examples are the Mactan International Airport Authority, the Philippine Ports Authority , the University of the Philippines and Bangko Sentral ng Pilipinas . All these government instrumentalities exercise corporate powers but they are not organized as stock or non-stock corporations as required by Section 2(13) of the Introductory Provisions of the Administrative Code. These government instrumentalities are sometimes loosely called government corporate entities. However, they are not government-owned or controlled corporations in the strict sense as understood under the Administrative Code, which is the governing law defining the legal relationship and status of government entities." (Emphasis ours.) In this connection, it is the view of this Bureau that a government instrumentality like PPA falls under Section 133 (o) of the LGC which states: "Section 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: "xxx xxx xxx; "(o) Taxes, fees or charges of any kind on the National Government, its agencies and instrumentalities, and local government units." Accordingly, this Bureau concurs in your opinion and expresses the view that the taxing powers of the Municipality of Mansalay may not extend to the levy nor impose any taxes, fees or charges on the operation of PPA Cargo Port pursuant to Section 133 (o) not (e) nor (f) of the LGC. Be guided accordingly. (SGD.) SALVADOR M. DEL CASTILLO OIC-Executive Director