Clarification Regarding the Power of Local Government Units to Impose Revenue Measures

October 7, 1992 DILG OPINION NO. 324-92 LEGAL SERVICE Mr. Romulo N. Millan Business Efficiency Services 60 Sousa Avenue Cotabato City S i r : This has reference to your letter addressed to the Chairman of the Oversight Committee dated July 27, 1992, requesting for clarification regarding the power of local government units to impose revenue measures, more specifically, the power to levy market fees, slaughterhouses fees, etc., which letter was referred to this Office for the taking of appropriate action on the matter. It is stated therein that Presidential Decree No. 231, which imposed said fees, was specifically repealed by Rep. Act No. 7160, more particularly known as the Local Government Code of 1991. Moreover, it was alleged therein that the local government unit should adopt new tax ordinances imposing said fees in view of the new mandate of the law. In reply to the query, the power of local government units to enact tax ordinances is expressly provided by the said Code, specifically Section 129 thereof, which states, in part, that: "Each local government unit shall exercise its power to create its own sources of revenues and to levy taxes, fees, and charges subject to the provisions herein." The taxing authority of the LGUs is exercised by the sanggunian of the local government units through an appropriate ordinance (Section 132, supra). As regards the power to impose market fees, slaughterhouses fees, terminal fees, etc., Section 458 (3) (ii) of the same Code also provides, in part, that the Sangguniang Panlungsod shall: "Regulate or fix license fee for any business or practice of profession within the city and the conditions under which the license for said business or practice of profession may be revoked and enact ordinances levying taxes thereon." Based on the foregoing abovecited provisions of law, it is indubitable that local government units, specifically cities, are clothed with authority to impose revenue measures. These include the imposition of market fees, slaughterhouses fees and other economic enterprises fees. However, this would require that the ordinances should first be passed by the local sanggunian concerned before these taxes and fees could be imposed as this is being required by law. Hoping that we have enlightened you on the matter. Very truly yours, DIR. JACOB F. MONTESA Department Legal Counsel Department of Interior and Local Government