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DILG warns LGUs to stop collecting pass through fees or face sanctions

September 18, 2018

The Department of the Interior and Local Government (DILG) reiterates its warning to all local government units (LGUs) to stop collecting pass-through fees on goods and services or face sanctions.

"The DILG has been persistent in reminding LGUs to refrain from imposing pass-through charges on goods and services. For the nth time, desist collection for there are prevailing sanctions for those proven guilty of violation," says DILG OIC-Secretary Eduardo M. Año.

Año says local officials who fail to take action on the collection of pass-through fees may face administrative disciplinary actions or charged with abuse of authority under Section 190 and Section 60 of the Local Government Code.

Section 90 specifically states that the enforcement of any tax ordinance or revenue measure after due notice of the disapproval or suspension shall be sufficient ground for administrative disciplinary action against concerned local officials and employees. On the other hand, Section 60 stipulates the 'Grounds for Disciplinary Actions' specifically Section 60 (e) Abuse of Authority.

The DILG issued the warning as it has been receiving complaints from citizens on the continuous imposition of taxes, fees and charges on transported goods and passengers passing through local government units' (LGUs) jurisdiction despite various policies issued by the Department.

The DILG released the first memorandum on LGU imposition of illegal fees and taxes in 2006 followed by a reiteration memorandum for the same purpose on 2009. In 2011, two memoranda were issued to reiterate the Department's stand on the imposition of charges.

Two memoranda, DILG MC 2017-23 and DILG MC 2018-133, were again released by DILG for the year's 2017 and 2018 providing the guidelines for the same issue.

Section 133 of the Local Government Code specifically provides that the exercise of the taxing powers of LGUs shall not extend to the levy of taxes, fees, and charges and other impositions upon goods carried into or out of, or passing through, the territorial jurisdictions of LGUs in the guise of charges for wharfage, tolls for bridges or otherwise, or other taxes, fees, or charges in any form whatsoever upon such goods or merchandise, among others.

According to Año, reports from the ground state that some LGUs are collecting taxes, fees and other charges on transportation of goods and products carried into or out of, or passing through their territorial jurisdiction in the guise of sticker fee, discharging fee, delivery fee, market fee, and/or mayor's permit, among others.

"We have not been complacent on this predicament. The Department has made it clear what its stand is. Kulang talaga ng pagsunod sa mga pamahalaang lokal," he says.

In Memorandum Circular 2018-133 released recently, Año also enjoins the Philippine National Police (PNP) to ensure that no fees and taxes on inter-province transport of goods and merchandise, regulatory fees in local ports, and other additional taxes, fees or charges in any form upon transport of goods and merchandise are being collected by LGUs. He likewise prohibits the police organization from committing the same.

"Inaasahan natin na makakatuwang natin ang PNP sa hakbang natin na tiyaking hindi na ito magaganap pa sa bansa. Kaakibat nito, sila [PNP] man ay hindi dapat maging sangkot sa iligal na gawaing ito," he explains.

In the same directive, Año also urges LGUs to strictly observe exemptions on truck bans, particularly those carrying rice and other perishable items such as fish, vegetables, dairy and poultry products, and frozen meat products, animal feeds, and export goods.