Bureau of Local Government Finance Opinion

July 11, 1996 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Mr. Jose V. Merto Plant Manager De Senn Quarry Corporation 5/F Emmanuel House Building 115 Aguirre St., Legaspi Village Makati City S i r : This refers to your letter dated June 20, 1996 requesting a ruling whether private lands are included in the imposition and collection of extraction fee or tax. Said request is being made in view of the letter dated February 5, 1996 of Mr. Glenn F. Baricuati, PENRO-OIC, requiring De Senn Quarry Corporation (DSQC) to pay the required extraction fee before the request for renewal of the Small Scale Quarry Permit shall be given due course, pursuant to Section 38 of Ordinance No. 93-25, otherwise known as the Sand, Gravel and Other Quarry Resources Ordinance of 1993 enacted by the Province of Cebu. It appears, however, that the quarry area covered by such permit is a titled private property. Hence, it is contended that under said Section 38, implementing Section 138 (not 128) of the Local Government Code of 1991 (LGC), the amount of tax imposed and to be collected should come from quarry resources extracted from public lands, and does not include private lands. On the other hand, the Provincial Legal Officer of Cebu, in a 2nd Indorsement dated January 9, 1995 submitted, among others, that "per Memorandum of Agreement between the Department of Environment and Natural Resources and the Province of Cebu, the authority to grant permits to extract quarry resources from private lands is devolved to the province; otherwise, there would be a vacuum on such sphere of authority if the authority of the province is limited to the extraction of quarry resources from public lands." In this connection, it may be stated that the power of local government units to levy taxes, fees or charges are not limited to those specifically enumerated in the LGC, but extends to any other tax base or subject pursuant to Sec. 186 of the said Code, quoted as follows: "Sec. 186. Power to Levy Other Taxes, Fees or Charges . Local government units may exercise power to levy taxes, fees or charges on any base or subject not otherwise specifically enumerated herein or taxes under the provisions of the "National Internal Revenue Code, as amended, or other applicable laws: Provided, That the taxes, fees, or charges shall not be unjust, excessive, oppressive, confiscatory or contrary to declared national policy: Provided, further, That the ordinance levying such taxes, fees or charges shall not be enacted without any prior public hearing conducted for the purpose." It bears emphasis that the conditions or requirements set forth in the aforequoted Section shall be strictly complied with. However, it appears that Section 38 of Ordinance No. 93-25 pertains only to quarry resources extracted from public lands. There is no provision relative to the imposition and collection of extraction fee or tax on private lands. In relation thereto, it may be worth mentioning that before any tax, fee or charge may be collected from a taxpayer, the same must first be levied under a duly-enacted tax ordinance of the local government concerned. Hence, in the absence of a tax ordinance levying a fee on quarry resources extracted from private lands, there will be no basis for the collection of said fee from DSQC. We trust that this clarifies matters. prLL Very truly yours, (SGD.) LORINDA M. CARLOS Executive Director