BLGF Opinion Dated 25April2000 (Tax on Quarry)

8/10/2019 BLGF Opinion Dated 25April2000 (Tax on Quarry)

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Republic of the PhilippinesDepartment of Finance

BUREAU OF LOCAL GOVERNMENT FINANCE

April 25, 2000

Mr. Themistocles R. Montalban

Cayag-an, San Pedro

Albuera, Leyte

S i r :

This refers to your letter dated February 7, 2000 requesting clarification on several

issues raised therein.

It is your claim that Section 133(h) of the Local Government Code (LGC) of 1991

provides the limitation on the power of local government units to impose taxes, where taxes

are already imposed under the National Internal Revenue Code, while Section 138 of the

same Code refers to the authority of the Provincial Government to impose a tax of not more

than 10% of the market value per cubic meter on sand and gravel.

On the other hand, quarry resources is defined under Section 151(H)(4) of the

National Internal Revenue Code (NIRC) as any common stone or other common mineral

resources as the Bureau of Mines and Geo-Sciences may declare to be quarry resources.

Thus, the following queries were posed:

1. Is Section 138 of the LGC not in conflict with Section 133 thereof?

2. If sand and gravel is classified as quarry products or non-metallic mineralresources, then the Provincial Government can not impose sand and gravel tax

because the NIRC, under Section 151(2) already imposes an excise tax at 2% on

quarry resources based on the market value of the gross output.

Sections 133(h) and 138 of the LGC provide as follows:

Section 133. Common Limitations on the Taxing Powers of Local

Government Units. Unless otherwise provided herein, the exercise of the

taxing powers of provinces, cities, municipalities, and barangays shall not

extend to the levy of the following:

(a) x x x;

(h) Excise tax on articles enumerated under the National Internal

Revenue Code, as amended, and taxes, fees or charges on petroleum products;

x x x.


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Section 138. Tax on Sand, Gravel and Other Quarry Resources.

The province may levy and collect not more than ten percent (10%) of fair

market value in the locality per cubic meter of ordinary stones, sand, gravel,

earth, and other quarry resources, as defined under the National Internal

Revenue Code, as amended, extracted from public lands or from the beds of

seas, lakes, rivers, streams, creeks and other public waters within its territorial

jurisdiction.

The permit to extract sand, gravel and other quarry resources shall be

issued exclusively by the provincial governor, pursuant to the ordinance of the

sangguniang panlalawigan.

The proceeds of the tax on sand, gravel and other quarry resources

shall be distributed as follows:

(1) Province Thirty percent (30%);

(2) Component City or Municipality where the sand, gravel and other

quarry resources are extracted Thirty percent (30%); and

(3) Barangay where the sand, gravel, and other quarry resources are

extracted Forty percent (40%).

It appears that the prohibition in Section 133(h) is the imposition of tax on the

products or goods while the tax as provided under Section 138 is a tax on the privilege to

engage in the quarrying or extraction of said products.

It is worthwhile to mention that the imposition of a national tax to a person/business

establishment does not exempt the same from being subjected to a local tax. The reason for

this is the fact that said taxes are imposed by two separate and distinct taxing authorities

which are the National Government in the case of a national tax, and the provincial

government with respect to provincial tax.

With respect to the issuance of permit to extract sand and gravel the following issues

are being raised:

1. What is then the function of the Bureau of Mines on the matter particularly inregard to the environmental protection and problems which results in the

excessive extraction of sand and gravel, particularly along river beds?

2. What is the function of the Municipal Government in this regard?

3. Can the inhabitants or land owners along the rivers oppose to the extraction ofsand and gravel along the river beds, if as a result of the extraction of sand and

gravel along the river beds it destroys the river banks and the bringing of water

from the river to the irrigation system to the rice field is made impossible?

In this connection, enclosed for your information and reference is a copy of RA 7942,

otherwise known as the Philippine Mining Act of 1995, Chapter VIII pertains to the issuance


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of permits by the Provincial Governor and by the Mines and Geo-Science Bureau, while

Chapter XI of the same Act provides for the safety and Environment Protection.

The third issue has been referred to the Commissioner, Bureau of Internal Revenue,

under a 1stIndorsement of even date, copy enclosed, inasmuch as the matter falls under the

jurisdiction of said Bureau.

It is hoped that this will help clarify matters.

Very truly yours,

(SGD) ANGELINA M. MAGSINO

Deputy Executive Director

Officer-In-Charge

BLM/tld

ccs#2000-0221