Bureau of Local Government Finance Opinion

April 25, 2000 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Mr. Themistocles R. Montalban Cayag-an, San Pedro Albuera, Leyte Sir : This refers to your letter dated February 7, 2000 requesting clarification on several issues raised therein. It is your claim that Section 133 (h) of the Local Government Code (LGC) of 1991 provides the limitation on the power of local government units to impose taxes, where taxes are already imposed under the National Internal Revenue Code, while Section 138 of the same Code refers to the authority of the Provincial Government to impose a tax of not more than 10% of the market value per cubic meter on sand and gravel. On the other hand, quarry resources is defined under Section 151 (H) (4) of the National Internal Revenue Code (NIRC) as any common stone or other common mineral resources as the Bureau of Mines and Geo-Sciences may declare to be quarry resources. Thus, the following queries were posed: 1. Is Section 138 of the LGC not in conflict with Section 133 thereof? 2. If sand and gravel is classified as quarry products or non-metallic mineral resources, then the Provincial Government can not impose sand and gravel tax because the NIRC, under Section 151 (2) already imposes an excise tax at 2% on quarry resources based on the market value of the gross output. IcDHaT Sections 133 (h) and 138 of the LGC provide as follows: "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: "(a) . . .;" "(h) Excise tax on articles enumerated under the National Internal Revenue Code, as amended, and taxes, fees or charges on petroleum products; "xxx xxx xxx." "Section 138. Tax on Sand, Gravel and Other Quarry Resources. The province may levy and collect not more than ten percent (10%) of fair market value in the locality per cubic meter of ordinary stones, sand, gravel, earth, and other quarry resources, as defined under the National Internal Revenue Code, as amended, extracted from public lands or from the beds of seas, lakes, rivers, streams, creeks and other public waters within its territorial jurisdiction. "The permit to extract sand, gravel and other quarry resources shall be issued exclusively by the provincial governor, pursuant to the ordinance of the sangguniang panlalawigan. "The proceeds of the tax on sand, gravel and other quarry resources shall be distributed as follows: "(1) Province Thirty percent (30%); "(2) Component City or Municipality where the sand, gravel and other quarry resources are extracted Thirty percent (30%); and "(3) Barangay where the sand, gravel, and other quarry resources are extracted Forty percent (40%)." It appears that the prohibition in Section 133 (h) is the imposition of tax on the products or goods while the tax as provided under Section 138 is a tax on the privilege to engage in the quarrying or extraction of said products. cASEDC It is worthwhile to mention that the imposition of a national tax to a person/business establishment does not exempt the same from being subjected to a local tax. The reason for this is the fact that said taxes are imposed by two separate and distinct taxing authorities which are the National Government in the case of a national tax, and the provincial government with respect to provincial tax. With respect to the issuance of permit to extract sand and gravel the following issues are being raised: 1. What is then the function of the Bureau of Mines on the matter particularly in regard to the environmental protection and problems which results in the excessive extraction of sand and gravel, particularly along river beds? 2. What is the function of the Municipal Government in this regard? 3. Can the inhabitants or land owners along the rivers oppose to the extraction of sand and gravel along the river beds, if as a result of the extraction of sand and gravel along the river beds it destroys the river banks and the bringing of water from the river to the irrigation system to the rice field is made impossible? In this connection, enclosed for your information and reference is a copy of RA 7942, otherwise known as the Philippine Mining Act of 1995, Chapter VIII pertains to the issuance of permits by the Provincial Governor and by the Mines and Geo-Science Bureau, while Chapter XI of the same Act provides for the safety and Environment Protection. The third issue has been referred to the Commissioner, Bureau of Internal Revenue, under a 1st Indorsement of even date, copy enclosed, inasmuch as the matter falls under the jurisdiction of said Bureau. It is hoped that this will help clarify matters. caADSE Very truly yours, (SGD.) ANGELINA M. MAGSINO Deputy Executive Director Officer-in-Charge <http://www.blgf.gov.ph/downloads/opinion/localtax/2000/a2000-0221.pdf> last visited on October 2, 2013.