Clarification on MC No. 2011-151 Which Suspends the Imposition and Collection of Pass Through Fees

February 23, 2012 DILG LEGAL OPINION NO. 019-12 Mr. Florentino N. Nares Punong Barangay Barangay Muladbucad Grande Guinobatan, Albay Dear PB Nares : We write regarding your 08 February 2012 letter which requests this Department's clarification on MC No. 2011-151, which suspends the imposition and collection of pass through fees vis--vis the collection of toll fees as authorized under Section 155 of the Local Government Code of 1991. Based on your factual narration the Sangguniang Barangay of Muladbucad Grande, Guinobatan, Albay enacted Barangay Ordinance No. 02, s. 2009 which imposed toll fees on vehicles passing through the barangay roads owned and operated by Muladbucad Grande. In compliance with MC No. 2011-151, your Barangay suspended the implementation of aforesaid ordinance despite ambivalence as to its applicability considering that in your opinion, the fee imposed therein is not a pass through fee but a "toll fee" for the use of barangay road owned and operated by Muladbucad Grande. Hereunder is our discussion on the issue, viz. : Pass through fees are TAXES, FEES, CHARGES AND OTHER IMPOSITIONS UPON GOODS CARRIED INTO OR OUT OF, OR PASSING THROUGH the territorial jurisdiction of the LGUs in the guise of a toll, charges for wharfage or others taxes, fees, or charges in any form upon goods or merchandise. ASCTac Local ordinances imposing/collecting taxes, fees or charges are considered illegal and runs counter to Section 133 (e) of the Code. Notably, Section 133 of the Code enumerates the common limitations on the taxing powers of the Local Government Units. Nevertheless, LGUs may regulate the USE of its roads or other public facilities as provided under Section 155 of the Code through the imposition of toll fees or charges thereon PROVIDED THAT IT IS FUNDED AND CONSTRUCTED BY THE LOCAL GOVERNMENT UNIT concerned, viz. : SEC. 155. Toll Fees or Charges. The sanggunian concerned may prescribed the terms and conditions and fix the rates for the imposition of toll fees or charges for the use of any public road, pier or wharf, waterway, bridge, ferry or telecommunication system funded and constructed by the local government unit concerned: Provided, That no such toll fees or charges shall be collected from officers and enlisted men of the Armed Forces of the Philippines and members of the Philippine National Police on mission, post office personnel delivering mail, physically-handicapped, and disables citizens who are sixty-five (65) years or older. When public safety and welfare so requires, the sanggunian concerned may discontinue the collection of the tolls, and thereafter the said facility shall be free and open for public use." It must be borne in mind however that the imposition of toll fees, as authorized by the Code, is subject to Section 133 of the Code, particularly paragraph "e" thereof, which proscribes the imposition of taxes, fees and charges and other impositions upon goods passing through the territorial jurisdiction of LGUs in the guise of tolls. Hence, the Sanggunian, in prescribing the terms and conditions and fixing the rates for the imposition of charges for the use of any LGU funded and constructed public facility, should observe Section 133 of the Code. Upon examination of the questioned barangay ordinance, it has been observed that the rates for the use of the barangay road depends on the type of goods loaded on the vehicle and the classification of the vehicle based on capacity. On the other hand, vehicles with no load are charged with lower fees compared to those loaded with goods. This seemingly transgresses Section 133 (e) of the Code. As such, the Sangguniang Barangay should initiate the rectification of the ordinance in compliance with pertinent provisions of the Code. We hope to have enlightened you on the foregoing. DHETIS Very truly yours, (SGD.) JESUS B. DOQUE IV Director III, Legal Service