Legality of Charging of Hauling Fees by the Municipality of Taysan, Batangas in the Transport of Raw Materials

May 2, 2017 DILG LEGAL OPINION NO. 006 S. 2017 HECTOR S. TAN President Maptan Construction and Equipment Rentals, Inc. Poblacion West, Taysan Batangas Dear Mr. Tan : This refers to your letter dated 26 January 2017 requesting for this Department's ruling concerning the charging of Hauling Fees by the Local Government of Taysan, Batangas. Per your letter, the company is being charged/assessed of Hauling Fees by the Municipality of Taysan, Batangas, pursuant to its Sangguniang Bayan Resolution No. 2013-045. You submitted the view that "hauling fees" are of the same nature as that of "pass through fees" the imposition of which is prohibited under DILG Memorandum Circular No. 2011-122 dated 26 August 2011 entitled "Reiteration of DILG Memorandum Circulars on the Suspension of LGU Imposition and Collection of Pass Through Fees." Hence, your request for a ruling on the following issues, as quoted: cTDaEH "1. Whether or not HAULING FEES being charged/assessed from our company for transporting raw materials (gypsum, petcoke, coal, clinker, silica) finished products (cement in bags) are within the taxing power or revenue making power of the Municipality of Taysan, Batangas? 2. Whether or not the Municipality of Taysan, Batangas can legally/validly collect HAULING FEES from a company like ours which is engaged in transporting raw materials (gypsum, petcoke, coal, clinker, silica) from Batangas Port and PNOC, Mabini Port to Republic Cement Plant, Mapulo, Taysan, Batangas and finished products (cement in bags) from Republic Cement Plant, Mapulo, Taysan, Batangas to their various clients and vice versa. 3. Whether or not the HAULING FEES being charged/assessed from our company are covered by Memorandum Circular No. 2011-122 and No. 2011-151 issued by the then Jesse M. Robredo citing the limitations on the taxing power of Local Government Units?" The Department stands consistent to its position in DILG Legal Opinion No. 18 s. 2011. The Department opined therein that a proposed ordinance intending to impose hauling fees contravenes Section 133 (e) of Republic Act No. 7160, otherwise known as the Local Government Code of 1991 (LGC). Specifically, it stated as follows: "xxx the proposed ordinance which intends to impose control over the transport, hauling and disposal of scrap materials entering and/or in transit within the Municipality of Bauan, Batangas, in the guise of controlling the municipal and industrial waste within the municipality xxx appears to contravene Section 133 (e) of the Republic Act No. 7160 (R.A. No. 7160), otherwise known as the "Local Government Code of 1991," to wit: 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: ITAaHc xxx xxx xxx (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;" Hence, the imposition of Hauling Fees by the Local Government of Taysan, Batangas, is in direct contravention of Memorandum Circular No. 2017-23 dated 6 February 2017 on Suspension of LGU Imposition and Collection of Illegal Fees and Taxes which enjoins all local chief executives to: "3.1.1 Refrain from enforcing any existing ordinance authorizing the levy of fees and taxes on inter-province transport of goods, regulatory fees from passengers in local ports, and other additional taxes, fees or charges in any form upon transporting goods and passengers; and 3.1.2. Cause the immediate repeal of the ordinance imposing the above-cited fees and taxes." In view thereof, to ensure LGU's compliance with Section 133 of the LGC, as bolstered by Item 3.1.2 of the aforementioned Memorandum Circular, the Department wrote a letter addressed to the Sanggunian of the Municipality of Taysan, Batangas, requiring the legislative body to repeal Sanggunian Bayan Resolution No. 2013-045 as the same transgressed the above-mentioned provision of law and MC. In case, the concerned Sanggunian fails to abide with this Department's directive on the matter, herein aggrieved party may institute the appropriate remedy with the regular courts. This is in consideration that the Department is bereft of authority to rule on the substantive validity of the assailed resolution in complete observance of the time-honored principle on the presumption of regularity of legislative acts. We hope to have assisted you accordingly. Very truly yours, (SGD.) AUSTERE A. PANADERO Undersecretary