Request for Exemption from Application of DILG MC No. 2011-151 on LGU Imposition of Pass-through Fees

October 15, 2012 DILG LEGAL OPINION NO. 059-12 Members of the Sangguniang Bayan c/o Hon. Fiel V. Culpe Vice-Mayor & Presiding Officer San Ricardo, Southern Leyte Dear Gentlemen/Mesdames : This has reference to your 12 December 2011 Resolution No. 181-2011 which requests for an exemption from the application of DILG MC No. 2011-151. In said Resolution, the SB expresses its sentiments on the fact that DILG MC No. 2011-151 is repugnant to the principles of local autonomy as it veered away from the real intent of the provisions of Sec. 133 (e) of the Local Government Code of 1991 which specifically prohibits, among others, imposition of fees on goods and merchandise only but not on vehicles which are the specific items being levied by Tax Ordinance No. 2011-34 of San Ricardo, Leyte. Upon perusal of Southern Leyte Sangguniang Bayan Ordinance No. 2011-34, we have noted that said ordinance amends the amount of fees enumerated under a previous ordinance enacted by the Sangguniang Bayan of Southern Leyte denoted as Ordinance No. 2010-36, which imposes an entry fee to all north and south bound vehicles entering the Municipality of Southern Leyte depending on the vehicle type. Before proceeding to determine whether the fees imposed under Ordinance No. 2010-36, as amended by 2011-34, is a pass through fee or not, hereunder is a discussion on what pass through fees are, 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. HIaTDS 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. Parenthetically, illegal fees or illegal collections are those imposed by the LGUs which are not covered by its specific taxing powers and common taxing powers. This also covers the imposition of the taxes, fees and charges enumerated under Section 133 of the Code. In addition to the foregoing, a tax, fee, or charge may be considered an illegal collection if it is imposed by the LGU absent any ordinance directing the imposition of the same. 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 prescribe 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 disabled 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." DILG Memorandum Circular No. 2011-151 was issued by the Department to deter LGUs from imposing and collecting fees, taxes, charges and other impositions which are beyond its taxing powers pursuant to Section 133 (e) of the Code. This does not cover other LGU impositions which are authorized by the Code such as the imposition of toll fees under Section 155. In the case of Ordinance No. 2010-36, as amended by 2011-34, this level is constrained from giving a categorical opinion on whether the fee or charge imposed under said ordinance is an illegal fee or charge, i.e. , pass through fee in this case; or an authorized fee/charge under Section 155 of the Code, due to lack of knowledge/information on the whether the road where the toll fee or charge imposed is FUNDED AND CONSTRUCTED by the Municipality of San Ricardo. Moreover, administrative fiat cannot cure an illegal issuance or act. Hence, a request for exemption is unavailing in this instance. DTEScI We hope foregoing sufficiently addresses your concern. Very truly yours, (SGD.) JESUS B. DOQUE IV Director III, Legal Service