Can a Barangay Collect Taxes or Fees for Quarrying Activities? Authority and Limits

Introduction

In the Philippines, the regulation and taxation of quarrying activities—such as the extraction of sand, gravel, stones, and other quarry resources—fall under a structured framework of local governance. The barangay, as the smallest unit of local government, plays a vital role in community-level administration. However, its powers are circumscribed by national laws, particularly the Local Government Code of 1991 (Republic Act No. 7160, or LGC). This article explores whether a barangay has the authority to collect taxes or fees specifically for quarrying activities, the legal basis for such authority (or lack thereof), and the inherent limits imposed by law. Understanding this is crucial for operators, local officials, and residents, as improper imposition of taxes can lead to legal disputes, administrative sanctions, or nullification of ordinances.

Legal Framework Governing Local Taxation

The Philippine Constitution (1987) devolves powers to local government units (LGUs) to promote autonomy, but taxation remains regulated to prevent overlap and abuse. Article X, Section 5 of the Constitution mandates that LGUs shall have the power to create their own sources of revenue and to levy taxes, fees, and charges, subject to guidelines set by Congress.

The primary law implementing this is the LGC, which delineates taxing powers among provinces, cities, municipalities, and barangays. Key principles include:

Uniformity and Equity: Taxes must be uniform, equitable, and for public purposes (LGC, Section 130).
Non-Duplication: LGUs cannot impose taxes on matters already taxed by higher levels of government or national laws, unless expressly allowed.
Delegation Limits: Barangays, being the basic political unit, have the most restricted taxing authority compared to higher LGUs.

Additionally, other laws intersect with quarrying, such as the Philippine Mining Act of 1995 (Republic Act No. 7942), which governs mineral resources but distinguishes quarry resources (non-metallic) from minerals. Quarry permits are typically issued by provincial governors or the Department of Environment and Natural Resources (DENR), not barangays.

Authority of Barangays to Collect Taxes or Fees

Barangays derive their taxing powers from Sections 142 to 152 of the LGC. Under Section 142, a barangay may levy taxes, fees, and charges as follows:

Taxes on Retailers: On stores or retailers with fixed annual sales not exceeding P50,000, at a rate not exceeding 1% of gross sales.
Service Fees and Charges: For services rendered, such as barangay clearance, certification, or use of barangay facilities.
Fees for Barangay-Owned Properties: Reasonable fees for the use of barangay-owned properties or facilities, like markets or halls.
Other Fees: Including those for commercial breeding of animals, operation of tricycles, or other community-based activities.

Notably absent from this list is any direct authority for barangays to impose taxes or fees on quarrying activities. Quarrying involves the extraction of natural resources, which is explicitly reserved for provincial taxation under Section 138 of the LGC. This section allows provinces to impose a tax on the business of quarrying sand, gravel, and other quarry resources at a rate not exceeding 10% of the fair market value per cubic meter, extracted from public or private lands.

While barangays do not collect this provincial tax directly, they benefit from revenue sharing:

30% to the province,
30% to the component municipality or city,
40% to the barangay where the quarry resources are extracted (LGC, Section 138).

This sharing mechanism ensures barangays receive a portion without needing to enact their own tax ordinances on quarrying. Attempts by barangays to impose separate taxes or fees on quarrying—such as "extraction fees," "environmental fees," or "regulatory fees"—are generally ultra vires (beyond authority) unless they fall under incidental services.

For instance:

A barangay might charge a fee for issuing a clearance or certification required for quarry operations, as this is a service fee under Section 142.
If quarrying affects barangay roads or properties, a fee for repair or maintenance could be justified as a charge for use of facilities.
However, these must be reasonable and directly tied to services rendered, not disguised as taxes on the quarrying business itself.

The Department of the Interior and Local Government (DILG) and the Bureau of Local Government Finance (BLGF) have issued opinions reinforcing that barangays lack inherent power to tax resource extraction. For example, BLGF opinions have clarified that only provinces can tax quarry operations, with barangays limited to their share.

Limits on Barangay Authority

Even where barangays have some leeway, strict limits apply to prevent abuse:

Constitutional and Statutory Constraints:
- Taxes must not be unjust, excessive, oppressive, confiscatory, or contrary to law (LGC, Section 130).
- No double taxation: Barangays cannot tax what is already taxed by provinces or national government (e.g., excise taxes under the National Internal Revenue Code).
- Ordinances must undergo public hearings and approval by the sangguniang barangay, with review by higher LGUs if needed.
Procedural Requirements:
- Enactment of a tax ordinance requires a majority vote of the sangguniang barangay and publication (LGC, Sections 54-59).
- Fees must be based on actual cost recovery, not profit-oriented, to distinguish them from taxes.
Environmental and Regulatory Limits:
- Quarrying is subject to DENR regulations, including Environmental Compliance Certificates (ECCs). Barangays can participate in environmental monitoring but cannot impose fees that usurp DENR's role.
- Republic Act No. 9003 (Ecological Solid Waste Management Act) and other laws allow barangays to charge for waste-related services, but not broadly for quarrying impacts.
Judicial Oversight:
- The Supreme Court has ruled in cases like Province of Bulacan v. Court of Appeals (G.R. No. 126232, 1997) that taxation of quarry resources is exclusively provincial, emphasizing revenue sharing over independent barangay taxation.
- In Lubrica v. Municipality of Boljoon (G.R. No. 174896, 2010), the Court invalidated local fees that were excessive or not tied to services, applying similar logic to barangays.
- Challenges to barangay ordinances can be filed via petitions for certiorari or prohibition in regional trial courts, or through administrative remedies with the DILG.
Penalties for Overreach:
- Unauthorized collection can result in refunds, administrative discipline for officials (under Republic Act No. 6713, Code of Conduct for Public Officials), or criminal liability for estafa or graft.

Practical Implications and Best Practices

For quarry operators:

Secure provincial permits and pay the provincial tax; barangays should only receive their share automatically.
Contest any barangay-imposed fees through the sangguniang panlungsod/bayan or courts if they appear unauthorized.

For barangay officials:

Focus on service-based fees and advocate for fair revenue sharing.
Consult DILG or BLGF before enacting ordinances to avoid nullification.

In areas with active quarrying, barangays can leverage their share for community projects, such as infrastructure repairs or environmental rehabilitation, without needing to collect directly.

Conclusion

In summary, barangays in the Philippines do not have the direct authority to collect taxes on quarrying activities, as this power is vested in provinces under the LGC. Their role is limited to receiving a 40% share of provincial collections and imposing reasonable fees for ancillary services. These limits ensure a balanced distribution of powers, preventing fiscal chaos while supporting local development. Any expansion of barangay authority would require amendments to the LGC or specific legislation, underscoring the need for operators and officials to adhere strictly to existing laws to avoid legal pitfalls.