Repubtic of the philippines

DEPARTUEI{T OF THE INTERIOR AIID IOCAL GOVERITIITNT

DILC-NAPotcoM Buttffi:",tf;itfif Ouezon Avenue, euezon city
".

OFFICE OF THE UNDERSECRETARY FOR LOCAL GOVERNMENT

HON. DINDOCODOY
Mayor
THE SANGGIJNIANG BAYAN OF LLORENTE DILG Legal Opinion No. 17, S. 2014
Thru: HON.TANYHUGO
Vice-Mayor & Presiding Officer
1 4 tlAY 2014
Municipality of Llorente, Eastern Samar

Dear Gendemen/Mesdames:

We write regarding the 04 February 2014 letter of Rosie I. Becina, et al., sand and gravel
operators of Llorente, Eastern samar, which request this Department action in relation to
Section 5F-02 (a) of Municipal Tax Ordinance No. 02, s. 2011.

Based on Ms. Besina, et al.'s letter, the Municipality of Llorente, Eastern Sarnar enacted
Municipal Tax Ordinance No. 02, s. 2011 (hereinafter, the "Ordinance") irnposing an
annual environmental protection fee of one hundred pesos (p100.00) per cubic meter of
mineral from mirring operators of ordinary stones, sand, gravel, earth and other quarry
resources extracted from public la_nds or from beds of seas, lakes, rivers, streams, creeks
and other public waters wirhin its territorial jurisdiction.

Ms. Besina, ef a1, question the legality and constitutionality of Section 5F-02 (a)t of the
Ordinance on the following grouncls:

1) The Ordinance was allegedly enacted without the benefit of a public hearing,
publication and the sending of written notices to irterested or affected parties
pnrsuant to Section 276 of the Implementing Rules and Regulatiors (IRR) of
Republic Act No. 7160 (the "Codd' for brevity);

t) The fee imposed by the Ordi:rance is allegedly unreasonable and is based on ,.per
cubic meter" which violates Sections 227,231,233,224 of the IRR of the Code.
The present local price of gravel and sand is P400.00 per cubic meter. The p100.00
per cubic meter fee is tl0()9o higher than what is being currently taxed by the
province which is ouly P25.00 per cubic meter of sand and gravel. Moreover, the
P100.00 fee per cubic meter is actually a tax in the guise of a fee since the

''Sc.
5F{l ColLctloo of Fa.. Thso thdl be collsctd (slc) tho bflortno f3!:

(a) Frcm mhing operafofs of odinary stnss, sard, gravol, esfi and ot4gr qudry resoorcs erta.td fiorn pubtic tands o.
ftlm t|e bds of soas, lals, dvqs, steans, qekg drd oh. Dublb lags sihh ib bnibrial iudsdiliql. an
eirrironmnbl F@dir fse at t|e r& of one tuMrcd ps6 (ftp100.00) per qlbic mebr of mherat per yej.

ur'
 Page 2 of 5

Municipality cannot collect tax on sand and gravel as tlis power is vested with the
province; and

3) The fee imposed is anti-business, anti-labor, violates the equal protection clause
and constitutes double taxation.

Hence, this request.

At the outset, it should be emphasized that this Departrnent's mandate does not extend ro
matters that are justiciable in nature, and neither does it extend to the determination of
the validity or legality of presumptively valid acts2, such as ordinances enacted by the
local sanggunians.

Nonetheless, this Department has the duty to ensute that the acts of LGUs are withi-n the
scope of their prescribed powers and functions pursu.rnt to this Department's power of
supervision over the same. Hence, on this note, the Departrnent shall limit its discussion
and/or comments on the issue in relation to the peninent provisions of the Code:

Scopeof the Taxing and Regulato\y

Authority of LGUs

Pursuant to Section 129 of the Code and Arttcle 274 of its IRR, LGUs may exercise the
power to levy taxes, fees and charges pursuant to their respective taxing authority, rie.,
Sections 134-141 of the Code for Provinces; Sections 142-149 atd Section 156 for
Municipalities; Sections 132-149 and Section 156 for Cities pursuant to Section 151; and
Section 152 for Barangays. LGUs may also levy fees and charges pursuant to Sectionsl53-
155 of the Code.

In addition to the foregoing, LGUs have residual taxing powers pursuant to Section 186 of
the Code as they have the power to levy other taxes, fees or charges on any base not
otherwise specifically enumerated in the Code or taxed under the provisions of the
National Internal Revenue Code, as amended, or other applicable laws, subiect to certain
limitations.

The axing power of LGUs, being a subordinate taxing power, are govemed by the
fundamental principles enumerated under Section 13S of the Code, and are subject to the

, lrffirolaldum orde. tlo. 201G02

x Soc{ion l3{1, Fundamgnbl Prtnclpl!8. - lbe follo\ding firndanffhl prin ipl shall go\m he slercise of he hxing a|d otlr rovenueraising po{reB ol
loclgovemmd unitE:

{a) Taxatirn shall be unib.m in 6aci local govemrcnt unit;

(b) Tares, fus, daq6 ard otEr inpcilions sttdl:

(1) be ewibDl ad based 6 h, 6 p.aMle m fie ta$aye/s abiliv b pay;

{2} b lvbd ard colldd only ior public p{rDGs;

 Page 3 of 5

lirnitations imposed by the Constitution, common limitations set forth under Section 1334
of the Code, the procedural requiremenc provided under Sections l8F and 1886 thereof,
and the preemption or exclusionary rule as erplained tn Victorias Milling Co., Iac. w.
Maniciplity of Vicorias, Negtw Occideaal (L-21168, 27 September 1968).7

(3) not be uniust, ercssiv, opprssive, or coofBatory;

(4) not bo coot"ary h hw, publi. policy, national economic policy, or in h6 tstrsint of bade;

(c) The collection of local hxe5, fo3, char! drd dri impqtitioB shall in no cse bo tot b any yivab porson;

{d) The rev6nug collstgd pirEuant b be Fwisions of his Crd6 shall inurs soliy to he beneft of, dd be subject to he dispooiton by, he lo.al
government unit lovying he h, to6, draqe 0r ober inpGilioo unhss ohooise spcif.ally pro/ired hercin; dd,

(e) Eadl loaal goroarrnenl unl 9ll, 6 fa 6 practcdie, 6/oh/e a pr0gr6siv6 sysbm o( balih.
a S.c{on 1fl. Con||rd| Lhli b||t oo tho T.rlE to aa oa Loc.l Govlfnnllt Unlb. - Unless od|e||iee pro{tled hech, he !rcb of h btitg
ptrers 0t provhcs, olios, nrmkf8lioC ad brargays shdl ml oftid b tr levy d he blostng:

(a) InconE ter,6rcgpt r.ion l ied o.r bfl&s ad ot|er f'|rrislirE0'bttq|s;

(b) Documnlary sbmp bt;

{c) Tar3 oo estab3, inhodbnce, gifls, legaci dd oher acqubilions nFdis causa, orcspt 6 ohdrise p.ovk ed herein;

(d) Cosb.IE &lios, Ggbtsaton feos of vssl and diaftge on *|an,ls, bnnago dues, and all oher kinds ot crlshnE f9, dtaq6 and duss ercpt
rhadag on $haNes cmstuclad and mintaind by he local govemm$t unlt concmed;

(e) Tdes, les, and chaQs and ot!r imposiliors upon goods cadd into or out of, or passing bough. tle brritorial jurMbliois ot locl go/mmnt
unils In fio guisa ot dlaDes for whgd4e, blls foa brijgG or ohe ise, oa oh6l taxos, tos, or cha{es in dy lonn whabovor upon sudl goods of
melEhandise;

(l) Taxs, f6s oa d6qos on 4ridllbral aM aquEtic poductr $i6n sold by rlle4insl f6fiE s or fEhednn;

(g) TaGs ol btlsil6s nbrFbes cddid b b!' 0E Boa.d ol Inv6hnb ar pidrc. o. ndq*noor to a pift)d of sir (6) aid hnr (1) faB, Gspecitvdy
tom dt dab of rcgbtsdlbn;

0) Etci!6 lar65 d| adidc irrner,&d mder tle naliood InBml RevgllE Codg, as amrdd, ad bres, fes or d|aqes o.t ptoloorn prcducb;

(i) Percenq or valw-added br (VAT) on sds, barbG or er(,|d|gs or sinilg tsansadiorF ort goods or s.wic6 rcpt 6 othor,^dse prwidd horein;

0 Taxes on hs g|6s receipb ot Sanspodaton cont'actoc d prsons Gngqed in 0l hdnspo.tatjon of pss6igeF or freight by hirc and cofimoi
clriels by air, land or ryabr, ercspt 6 provided in hb Codo;

(l) Taxs on prorniufiE paid by way or rchsuEnce or Btocssion;

(l) Taxes, foos or chaEes for t|6 .sgisbatbn of mohr vehiclss d for h igsuance of sll kinds of licnss or perinits for 019 dtivkE hotrof, oxcept
bicycls;

(n) Tax6s, teos, or of|er charyes dr Philippine prcducts acttsl|y 6xporbd, qcept as oheft$so provided hercin;

(n) Tarss, b5, or daqes, dl Countysilo and Baagay &sinss Ellb|prb6s sd cooperltves duly legisbrod undsr R.A. No. 681 0 and Ropublic Act
Numbqd !iil9{iF hurdrcd ftny4ight (R,q. ilo. 6$A) odterri! horn 6 he 'Cooperaliv Code of 0te PhilppirEs' rspdivdy; and

(o) Tds, toes o. da8s of ary tird on he Nalird Go,qnms[ its Aencils ard hstumq|blities, and bcal g. rnmont lnits.
5 Soc{o|| 187.hlcaduo br ADerovd rd
El'lcdvitt o, Trr, OrdlnaE6 .nd Ror.r ! I||!!|r;
tuUlc }bnngr.,Ihe F@du|r ltr
4pru/d 0f loaaltat o.rlild|ces ad r6|ue nEas|lrls slEl bo in accoddrc6 rih be plvisixF ol hb'|.rd.bry
Co&: Proriled, ftat p|j|ic hgadnos sfial be
condlrcled fof tB puDce pft)r b hs d|actrEr tEreot: ftov{d, turher, That aiy quBtbn on ho cqdftni('lalv or tsgality of br oditarEts or
revsnue masurs nEy be rdlled oo apped f,ihh hirty (30) days trlm he 6fht;'ty bercof b be SeqBhry ot Jusb6 rno shall rcrder a d{isbn f,itth
silt (O) days fr!fi tro db of rcopt d he appd: Povild, ho*v6r, Thal sudr appol shall not have he offect ol sAprdhg tl fadniv o{ he
o.dinare and 0E sccrualad paynent of h bI, fto, or ciaee l{6d hereinrPro\/itd, tualy,Ihatwihin fiidy (30) days ansr receipl of f|e docbid! or
tto l+sd h 6irty-d8t pedod wihout he SedEbry of Jwtce aclirg upo.r ho appd, fie aggdevod pdty may fle 4proprkb Focsdings rih a court
o{ cqrpbnt jurMidion.
6 Soc{ior 188. Publk.thn of Ttx Odln.nco! .nd Rqvonua llo.tu.!.. - Wltrin bn (10) days afte( heir apprcval cartfsd t!6 copies ol all prcvincial,
cily, ad munklpl bx ordinancs or rcvenue [|60rqi shall be publbhd in full fcr hr6e (3) conseqrli'/e dals h I n#p4er of loaal circr|hlion:
Providd, h0w6rcr, That in provinces, dtis dd muni4alilies ||itoE h6r6 are no n6|6pap$ of l@l cilqllatjdl, h ssdF riat b p6bd in at le6l t$o
(2) conEtcuoos and publkt accessbl places.
7 Relors to .n inslance whe.ein t|e Naltuoal
Got/emmnt elecls to hr a parlkrlar area, hplirdly vihholdirig lrom he local 0ovemment he d6legabd
poxr to tax h sarlb fiold. This doGtine Fimiplv r6b upan ho intdrlidl d Co.Bro3s. Co{lvssdy, shdid CoogrEss elow munidpal coeoralioars b
covr fields of taralion it alrcady ocqDi6s her he do.fine of prcedptton $l not eptt.
 Page 4 of5

Basis of the LGUs Taxing and

Regulatory Power on Extraction of
Sand. Gravel and other O_uatry
Resources

The autlority of provinces or highly urbanized cities (HUCs) or independent component

cities (ICCs) to levy and collect not more than ten percent (10%) of the fair market value
in the locality per cubic meter of ordinary stones, sand, gravel, earth, and other quarry
resources extracted from public lands and public waters within its territorial jurisdiction
pursuart to Section 1388 ofthe Code is dual-purpose as it is not only imposed for revenue
generation but also for regulation as part of the devolved function of the Department of
tlre Environment and Natural Resources (DENR) pursuanr to Section 17 (a) and (b) (3)
(iii) of the Code in relation to Republic Act (RA) No. 7942 (The Philippine Mining Acg
and RA No. 7076 (Small Scale Mining Act) and other applicable laws and regulations on
environment and natutal resources.

This is evident on the second paragraph of Section 138 of the Code, which higNghts the
authority of the provincial governore to act on applications for extraction of sand, gravel
and other quarry resources pursuant to an ordi.D.ance,

Moreover, unlike other subject or base of tax, the proceeds of the taxes collected pursuant
thereto does not exclusively accrue to the LGU, but is distributed in accordance with the
sharing percentage provided under the last paragraph of Section 138.

This DeDartmentb Obseruation on

Sectioa 5F-02 (a.) of Municipal Tax
Ordiaance No. 02. s. 2011

Section 5F-02 (a) of Municipal Tax Ordinance No. 02, s. 20ll (hereinafter, the
"Ordinance") appears to be patterned after the 1o paragraph of Section 138 of the Code,
save for the rate of the taxlfee imposed and the name of the imposition. Moreover, the
Ordinance's base or subject, .r:e., extraction of sand, gravel and other quarry sources, is
sirnilar to Section 138 of the Code.

. Sctloo 13& T|I oo Saod, Gnvel Jd Othe. q!.ttt Rqourcr.. - Iho Fq/irra mat lvy and cdled not mo.e tar tn percd{ (10%) d hl ma*et
vahe h ho locality per drbic mbr ot odhaty sbr6, sand, grav|, 6dr,
d ohf qu y resoucrs, 6 defned uda be l|i'lirngl lnhlnal Rewnue
Code, as an'|dd, oxtsacbd fiom Ftlic hds or nlln he bods ol seas, la*es, dvols, str
E, qeels, ad oh6r Fbh ss8s ribh ib bdbrial
Frtrdllitrn.

The pdnit b efact sand, graiel dd ober qua[y rc5ourc6 shsll b issuod gxdrFivly by he pro./incial govemor, puFuart to he ordinance of he
sangguniaig panlalaniga.l.

the pmceds of h9 br on sand, grarl and ofler qualy resourcr shall be distibuted as folows:

{1) Province - nirt p.reht (3CPA);

(2) Coflnon nt Cny o( l,fnicipalily rh.e he sd!, !r6rd, dd other quary ro6oueo6 a{r ltrdd - thtty pr.ent (3S6); ad
(3) EaraBry {dE e he sand, gra/d, aid o[Er quady Esorrns de enfebd - Fo.ty pdEent (4096).

,Or tre li,byo. d HUCS ad lCCs pu.sus b Sedbn l5l ofh Code
 Page 5 of5

As discussed above, the power of LGUs to levy taxes, fees and charges are subject to
certain limitations. Hence, notwithstanding their residual taxing powers under Section
186 of the Code, LGUs are precluded from imposing taxes, fees or charges on base or
subiects which other LGUs are particularly authorized to impose pursuant to the Code
and the same applies to taxes imposed under the provisions of the National Intemal
Revenue Code and other laws,
'"2.:
" Section 786, Power To katt Othcr Taxes, Fees or Charges. - Local

gozternment units may exercise the poaur to boy taxes, fees or charges on an!
base or subiect not othenoise specificall! enumerateil herein or taxeil
uniler the orovisions of the National Intetnal Reaenue Coile, as
ameniled, or other awlicable laws: Proviiled, That the taxes, fees, or
charges shall not be tmiust, exccssive, ovoressioe. confiscatory or
conhary to declarcil tutional policg: Proriileil, further, That the
ordinance levaing sach taxes, fees or charges shall not be macteil
without an! piot Wblic heafiig conihrcteil for the owpose."

Moreover, the fundamental principle that the taxes, fees, charges, and other impositions
shall not be unjust, excessive, oppressive, or confiscatory should be observed i_n addition
to the mandatory requirement of a prior public hearing.

Based on the foregoing, it appears that the Municipality exceeded its authority when it
imposed an "environmental protection fee" on the extraction of sand, gravel and other
quarry resources, a base or subject that is already taxed by the Province pursuant to
Section 138 of the Code. Moreover, the fees imposed appears to be excessive based on the
Ordinance and the factual allegation of the complainants.

In view thereof and pursuant to this Department's power of supervision and the
correlative duty of ensuring that the acts of LGUs are within the scope of their prescribed
powers and functions, may we request your comments in relation to the issue and/or
corrective action in relation thereto, ,i. e,, review and amendment/repeal of the
questioned provision in the Ordinance in accordance with the pertinent provisions
of the Code.

Your immediate action on this matter is highly appreciated.

Very truly yours,

'ADERO

Undersecretary \y DII-C-OUSLC

{ DIR. PORO A. NOVAI HR. EDCEL IAII BORTATE [R. VICETITITO S, OCEilAR
""/ Bqy. Soom, Llorento, E. Samar DILc-Rgioo Vlll Aguinaldo S'beel, grgy. 03, Llo.nb,
Kanhuraw Hllls, Tacbban City E. Samar

$s, RoslE L BECT)|A [S. JIJOY LABRAGUE

Naltonal Hbhway, Brgy. 'l l , Lloenb, E. Sarlar San Fem6.do St, Bey. m, Uornte, E. Sanar