Bureau of Local Government Finance Opinion

May 7, 1998 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 1st Indorsement Respectfully referred to the Provincial Treasurer, Malaybalay, Bukidnon for appropriate action. This refers to the letter dated October 1, 1997 of Mr. Isabelo S. Pacursa, Jr., Branch Manager of Ansuico, Incorporated (Red Ball Express), copy furnished the Department of Finance, relative to Section 33 of Provincial Tax Ordinance No. 92-03 of that province imposing annual fixed tax for every delivery truck and van or any motor vehicles of, or used by, manufacturers, producers, wholesalers, dealers or retailers in the delivery of certain products, other items or goods of commerce within the province of Bukidnon. In a letter dated July 28, 1997, it was represented that the main line of business of Red Ball Express is cargo forwarding or freight service. Its trucks and delivery vans are registered as "Truck-for-Hire" (TH) as denominated by the Land Transportation Office, with authorized lines to travel and deliver common cargoes within Davao City and to any point in the Philippines. As such, its delivery trucks or vans are not of manufacturers, producers, wholesalers, dealers, and retailers that are subject to the tax imposable under Section 141 of the Local Government Code of 1991 (LGC) which is being adopted by Section 33 of Tax Ordinance No. 92-03 of that province. It was contested further that the above imposition will not be proper or valid in view of the provisions of Section 133 (e), (j) and (1) of the said Code, quoted hereunder: "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: DTIaCS " xxx xxx xxx; "(e) Taxes, fees and charges and other impositions upon goods carried into or, out of, passing through, the territorial jurisdictions of local government units in the guise of charges for wharfage, tolls for bridges or otherwise, of other taxes, fees or charges in any form whatsoever upon such goods or merchandise; "xxx xxx xxx;" "(j) Taxes on the gross receipts of transportation contractors and persons engaged in the transportation of passengers or freight by hire and common carriers by air, land or water, except as provided in this Code; "xxx xxx xxx; "(1) Taxes, fees of charges for the registration of motor vehicle and for the issuance of all kinds of licenses or permits for the driving thereof, except tricycles; "xxx xxx xxx." It appears from the representations made by Red Ball Express that the position taken by said company is in full accord with the Code and its implementing rules. For further information of that Office, enclosed is a copy of the letter dated June 2, 1992 of the Department of Finance addressed to Mr. Romeo P. Santos, General Manager, Vanhaul, Inc., wherein the Department expressed the view that the Municipality of Taguig may not impose a business tax on the business of Vanhaul, Inc. as a transportation contractor under the provisions of Section 133(j) of the Local Government Code of 1991. Be guided accordingly. (SGD.) LORINDA M. CARLOS Executive Director