Bureau of Local Government Finance Opinion

February 28, 2011 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 1st Indorsement Respectfully returned to Ms. SHARON ABIOG-ONDA, President, Philippine Councilors League, Palawan Chapter and Member, Sangguniang Bayan, Brook's Point, Palawan, her within letter dated 10 December 2010 seeking clarification on the legality of imposing entrance fees on products entering the Municipal Public Market, with reference to Section 133 (e) of the Local Government Code (LGC) of 1991. Perusal of the attached excerpt of the Market Code of the Municipality of Brook's Point, Palawan (Section 7C.04 Market Entrance Fee) , shows that a market entrance fee is imposed on transient vendors of any commodity or merchandise being brought into the public market. Relatedly, Section 133 (e) of the LGC provides as follows: "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: (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; " ( Emphasis ours ) Clearly, local government units (LGUs) are barred from imposing fees and charges upon goods or merchandise carried into or out of, or passing through their territorial jurisdictions in the guise of, among others, taxes, fees, or charges in any form whatsoever upon such goods or merchandise. However, in the instant case at bar, the applicable provision of law in the imposition of market entrance fee is Section 147 of the LGC, quoted hereunder: TAHcCI "SEC. 147. Fees and Charges. The municipality may impose and collect such reasonable fees and charges on business and occupation and, except as reserved to the province in Section 139 of this Code, on the practice of any profession or calling, commensurate with the cost of regulation, inspection and licensing before any person may engage in such business or occupation, or practice such profession or calling." Based on the preceding citation, municipalities and cities, in relation to Section 151 of the LGC, are authorized to impose and collect reasonable fees and charges on business or occupation commensurate with the cost of regulation and inspection. In the case of market entrance fees imposed on transient vendors, the regulation entails expenses since LGUs have to assign personnel who will conduct the surveillance and inspection of goods or merchandise brought inside the market premises for sale or for other purposes. Surveillance and inspection are necessary to ensure that the goods or merchandise sold, especially foodstuff, are safe for human consumption. In the case of fresh fish and meat and the like, market personnel have to make sure that the merchandise are not from illegal sources. It is a basic doctrine in jurisprudence that the power to regulate emanates from the inherent police power of LGUs for the welfare and well-being of its inhabitants as embodied in Section 16 of the LGC, which provides: "SEC. 16. General Welfare. Every local government unit shall exercise the powers expressly granted, those necessarily implied therefrom, as well as powers necessary, appropriate, or incidental for its efficient and effective governance, and those which are essential to the promotion of the general welfare. Within their respective territorial jurisdictions, local government units shall ensure and support, among other things, . . ., promote health and safety, . . ., and preserve the comfort and convenience of their inhabitants." Further, Section 186 of the same Code provides: "SEC. 186. Power to Levy Other Taxes, Fees or Charges. Local government units may exercise the power to levy taxes, fees or charges on any base or subject not otherwise specifically enumerated herein or taxed 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." ( Emphasis ours ) The above premises considered, it is the view of this Bureau that the imposition of market entrance fees on transient vendors of goods or merchandise being brought into the public market is within the legal framework as long as the impositions are not unjust, excessive, oppressive, confiscatory or contrary to declared national policy. Moreover, LGUs have to ascertain that the enabling ordinance levying such impositions had complied with all the requirements in the enactment of a valid ordinance pursuant to Sections 187, 188 and 189 of the LGC. Be guided accordingly. CITSAc (SGD.) MA. PRESENTACION R. MONTESA, CESO III Executive Director