Extent of Authority of LGUs to Levy Taxes on Government Infrastructure Projects

DOJ OPINION NO. 065 , s. 2007 November 13, 2007 Hon. Augusto B. Santos Director-General National Economic and Development Authority 312 Saint Josemaria Escriva Drive Ortigas Center, Pasig City Sir : This refers to your request for clarificatory opinion on the query stated therein relating to the extent of the authority of local government units (LGUs) to levy taxes on government infrastructure projects. TIDaCE Specifically, you want to be advised of the kind of fees or taxes that LGUs can rightfully charge on contractors undertaking projects in behalf of the national government. You state that the above-stated issue was among the issues and problems that have been identified during the Pre-Forum Workshops conducted in connection with the recently concluded National Legal Forum on Infrastructure Development. It bears stress, at the outset, that the resolution of the issue herein raised would inevitably be an interpretation and/or examination of certain provisions of the Local Government Code of 1991. 1 Such function, however, properly pertains to the Oversight Committee, which is mandated by law to promulgate rules and regulations necessary for the implementation of the said Code, 2 and the Department of the Interior and Local Government (DILG), the lead agency designated by the President in the implementation of the Code. 3 Pursuant to settled policy and precedents, the Secretary of Justice does not rule on issues which fall within the primary jurisdiction of another Office in this case, the Oversight Committee and the DILG over which the rulings or actuations this Department exercises no revisory authority, unless the request comes from said office or agency. 4 This rule arises not only from practical considerations, but also out of due respect and deference for the competence and expertise of the office having primary jurisdiction to resolve the matter for its familiarity with policy repercussions of the question as well as from a logical recognition of the lawful exercise of an authority conferred by law. 5 This, notwithstanding, we would like to state some relevant observations for your information and enlightenment. The extent of the taxing power of LGUs is clear and explicit from a reading of Section 5, Article X of the 1987 Constitution, thus: ADCETI Section 5. Each local government unit shall have the power to create its own sources of revenues and to levy taxes, fees, and charges subject to such guidelines and limitations as the Congress may provide, consistent with the basic policy of local autonomy. Such taxes, fees, and charges shall accrue exclusively to the local governments. Reiterated verbatim in Section 129 6 of Republic Act No. 7160, 7 this delegation of the power to tax to the LGUs is justified by the fact that said power is not inherent in municipal corporations. 8 Additionally, the Constitution is categorical that said power to create its own sources of revenues, and to levy taxes, fees, and charges is subject only to such "guidelines and limitations" as Congress may prescribe, "consistent with the basic policy of local autonomy." 9 Hence, the 1991 Local Government Code not only enumerates the common limitations on the LGUs' taxing power. 10 It also provides for the specific rules and guidelines to govern the exercise by the respective LGUs of their taxing and other revenue-raising powers. 11 Any imposition by LGUs cannot, thus, go beyond the enumerated limitations and must comply with the specific provisions applicable to them . 12 Outside of said limitations and guidelines, such imposition can be assailed as ultra vires and unauthorized. aIcETS Apart from the basic principle that when the law is clear, interpretation does not apply only application, 13 the rationale for this is the equally settled rule that where a statute or rule, by its terms, is expressly limited to certain matters, it may not, by interpretation or construction, be extended on other matters. 14 Very truly yours, (SGD.) AGNES VST DEVANADERA Acting Secretary Footnotes 1. Republic Act No. 7160. 2. Section 533, supra . 3. Administrative Order No. 269, dated February 21, 1992, and Secretary of Justice Opinion No. 28, s. 1997. 4. Secretary of Justice Op. Nos. 16, s. 2006, citing opinions. 5. Id., No. 24, s. 1999; No. 7, s. 1997. 6. Chapter 1, Title One, Book II, R.A. No. 7160. 7. The Local Government Code of 1991. 8. Bernas, S.J., The 1987 Constitution of the Republic of the Philippines, A Commentary, 1996 ed., p. 971, citing cases. 9. Basco vs. PAGCOR ,197 SCRA 52, 65. 10. Op. Cit.,Section 133, Chapter 1, Title One, Book II. 11. Id. ,Sections 134-152, Articles One-Four, Chapter 2, Title One, Book II. 12. Estanislao vs. Costales ,196 SCRA 853, 860. 13. Pascual vs. Pascual-Bautista ,207 SCRA 561, 568-569, citing cases; Land Bank vs. Court of Appeals ,258 SCRA 404. 14. Collantes vs. Carnation Phils.,Inc., 145 SCRA 268.