Bureau of Local Government Finance Opinion

December 15, 2014 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Mr. Ricardo T. Cawed, CPA ICO-Regional Director Cordillera Administrative Region 2/F Don Monsylito Bldg. No. 16 Legarda Road Baguio City Sir : This refers to your letter dated November 24, 2014 relative to Ordinance No. 42, series of 2014, entitled "An Ordinance Requiring All Merchants/Traders Engaged in Transporting Livestock and Prescribing Schedule of Fees for This Purpose" enacted by the Sangguniang Bayan of Bangued, Abra. acHTIC It appears that said Ordinance was forwarded to the Office of the Sangguniang Panlalawigan of the Province of Abra, for review which was disapproved for being ultra vires , as embodied in the report dated October 27, 2014 of the Committee on Laws, Rules and Privileges. In this connection, it is the considered view of this Bureau that the impositions will not be proper or valid in view of Section 133 (e) of the Local Government Code (LGC) of 1991, quoted 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) . . .; "(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; "xxx xxx xxx." Hence, as to the query if by amending/changing some of its assailed/disapproved provisions will make the Ordinance valid, the answer is in the negative considering that the above provision specifically prohibits local governments from imposing such levy as it would tend to deter the free flow of commerce in the country, and cause considerable increase in the prices of commodities, to the prejudice of the consuming public. ScaCEH Moreover such impositions violate the provision of the fundamental principles under Section 130 of the same Code, the pertinent portion of which is quoted as follows: "Section 130. Fundamental Principles. The following fundamental principles shall govern the exercise of the taxing and other revenue-raising powers of local government units: "(a) . . .; "(b) Taxes, fees, charges and other impositions shall: (1) . . .; (4) not be contrary to law, public policy, national economic policy, or in restraint of trade; "xxx xxx xxx." We hope that this will help clarify matters. Very truly yours, (SGD.) SALVADOR M. DEL CASTILLO OIC-Executive Director