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Monitoring of the Suspension of LGU Imposition and Collection of Illegal Fees and Taxes

Several policies pertaining to the imposition and collection of pass-through fees has already been issued in the past. Despite these issuances, however, the Department continues to receive complaints that some local governments still charge fees, taxes and charges on the transportation of goods and products carried into or out of, or passing through the territorial jurisdictions of these LGUs in the guise of sticker fee, discharging fee, delivery fee, market fee, toll fee and/or mayor's permit fee, among others.

Section 133 of the Local Government Code of 1991 provides the common limitations on the taxing powers of LGUs, which include various fees, taxes and other charges on transporting goods carried into or out, or passing through, their respective territorial jurisdictions.

Pursuant to Section 133 of the Code, all Local Chief Executives are strongly encouraged to : 

Refrain from enforcing any existing ordinance authorizing the levy of fees and taxes on inter-province transport of goods or merchandise, regulatory fees in local ports, and other additional taxes, fees or charges in any form upon the transport of goods or merchandise. (This does not include taxes, fees, and charges on passengers passing through the territorial jurisdiction of an LGU, which was inadvertently included as a subject of a prohibited imposition under DILG MC No. 2017-23); and

Cause the immediate repeal of the ordinance imposing the above-cited fees and taxes. Further, local government units are directed to strictly observe DILG MC No. 2008-112, s. 2008, particularly on the exemption from truck ban, quote:

Trucks and delivery vans carrying rice and other perishable items such as fish, vegetables, dairy and poultry products and frozen meat products, animal feeds, and export goods; xxxx"

EO 41  series of 2023

• Section 1 of the said EO, prohibits the collection of toll fees and charges upon all motor vehicles transporting goods or merchandise while passing through any national roads and such other roads not constructed and funded by LGUs pursuant to Section 144 of RA No. 7160.

• Consequently, paragraph 2 of the same section strongly urges all LGUs to suspend or discontinue the collection of fees, such as but not limited to, sticker fees, discharging gees, delivery fees, market fees, toll fees, entry fees, or Mayor's Permit fees that are imposed upon all motor vehicles transporting goods and passing through any local public roads constructed and funded by said GUs.

• Section 133 (e) of Republic Act No. 7160, or the "Local Government Code of 1991," which provides that exercise of the taxing powers of provinces, cities, municipalities, and barangays 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 local government units

• Relative thereto, all Local Chief Executives (LEs) are hereby reminded of the aforementioned provisions, and that the collection of pass-through fees is prohibited by law and shall be discontinued at the soonest time possible. Further, all LCEs are likewise enjoined to exercise supervision over their local traffic and/or law enforcement officers to ensure that no officials are exacting fees/charges illicitly, and that their acts are within the scope of their prescribed powers and functions.

Updates

• Updates on Fees and Charges

Legal Bases / References

• MC 2024 - 111 Reiteration of the Implementation of Executive Order No. 41, S. 2023

• Unnumbered Memo 2024.04.02 Request for Updates Re LGU Ordinances Related to Pass Through Fees Pursuant to Executive Order 41, S. 2023

• Unnumbered Memo 2024.03.01 ISSUES AND CONCERNS OF LOCAL PRODUCERS IN THE TRANSPORTATION OF THEIR GOODS AND PRODUCTS AND CLOSURE OF THEIR BUSINESS

• Unnumbered Memo 2024.03.01 IMPLEMENTATION OF THE FOOD LANE PROJECT BY THE DEPARTMENT OF AGRICULTURE

• Unnumbered Memo 2023.10.13 Supplemental Memo Submission of Ordinances on Pass Through Fees Pursuant to Executive Order 41 S. 2023

• Unnumbered Memo 2023.10.05 Submission of Ordinances Related To Pass-Through Fees Pursuant to Executive Order 41 S., 2023

• Unnumbered Memo 2023.10.05 Submission of Special Status Report on the Compliance of Local Government Units to Executive Order 41 S. 2023

• EO 41 Series of 2023 PROHIBITING THE COLLECTION OF PASS-THROUGH FEES ON NATIONAL ROADS AND URGING LOCAL GOVERNMENT UNITS TO SUSPEND THE COLLECTION OF ANY FORM OF FEES UPON ALL TYPES OF VEHICLES TRANSPORTING GOODS UNDER SECTION 153 OR 155 OF REPUBLIC ACT NO. 7160 OR THE “LOCAL GOVERNMENT CODE OF 1991”

• MC 2017 - 23 Suspension of LGU Imposition of Illegal Fees and Taxes

• Letter from the Department of Agriculture (DA) dated 06 January 2017, requesting the DILG for an issuance that shall support the suspension of fees and taxes and truck ban hours by LGUs

• Unnumbered Memo 2014.05.25 re: Request for Local Ordinances on the Imposition and Collection of Toll Fees and Other Fees for the Use of Access Roads

• MC 2011 -  151 Suspension of LGU Imposition and Collection of Illegal Fees and Taxes

• MC 2011 - 122 Reiteration of DILG Memorandum Circulars on the Suspension of LGU Imposition and Collection of Pass through Fees

• MC 2009 - 76 Reiterating Strict Compliance to Pertinent Laws, Rules and DILG Circulars Prohibiting LGUs from Charging Fees on Passing through Vehicles, Especially Those Carrying Agricultural Goods and Products and Exempting Such Vehicles from Truck Ban Implementation

• MC 2006 - 70 Suspension of LGU Imposition and Collection of Illegal Fees and Taxes

• R.A. No. 7160 or the Local Government Code of 1991