Marcos bans LGU pass-through fees on national roads

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  • President Ferdinand Marcos, Jr. issued an executive order prohibiting local government units from collecting pass-through fees on national roads and any other forms of fees from all types of vehicles transporting goods
  • Executive Order No. 41 prohibits LGUs from collecting toll fees and other charges for all motor vehicles transporting goods or merchandise while passing through any national roads and other roads not constructed and funded by them
  • EO 41 states the unauthorized imposition of pass-through fees has a significant impact on transportation and logistics costs, which are often passed on to consumers

President Ferdinand Marcos, Jr. has issued an executive order prohibiting local government units (LGUs) from collecting “pass-through” fees on national roads and any other forms of fees from all types of vehicles transporting goods.

Executive Order (EO) No. 41, signed by Executive Secretary Lucas Bersamin on September 25 and released on September 29, prohibits LGUs from collecting toll fees and other charges for all motor vehicles transporting goods or merchandise while passing through any national roads and other roads not constructed and funded by them.

“In the interest of public welfare, all LGUs are further strongly urged to suspend or discontinue the collection of fees such as, but not limited to, sticker fees, discharging fees, 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 LGUs,” the EO states.

The EO clarifies that according to Section 133(e) of Republic Act (RA) No. 7160, also known as the Local Government Code of 1991, local governments cannot impose taxes, fees, charges, or any other levies on goods transported through their areas under the pretense of charges, wharfage, bridge tolls, or any other form of taxation on such goods or merchandise.

It says, “The unauthorized imposition of pass-through fees has a significant impact on transportation and logistics costs, which are often passed on to consumers, who ultimately bear the burden of paying for the increase in prices of goods and commodities.”

The EO asserts the government aims to help Filipinos by bringing together all vital parts of the food supply chain to lower food logistics costs, which are important for controlling inflation in the country.

Building “a robust and collaborative partnership” between the national government and LGUs “is essential in effectively addressing the impacts of inflation and promoting economic prosperity across all regions,” it adds.

The order also notes reducing transport and logistics costs is one of the pillars of the current administration’s 8-point socio-economic agenda.

Within 30 days of EO 41 taking effect, the Department of Interior and Local Government (DILG) must obtain copies of all LGUs’ existing ordinances related to collecting pass-through fees on motor vehicles, including those linked to Sections 153 and 155 of RA 7160. DILG, in collaboration with the Department of Trade and Industry (DTI), Department of Transportation (DOTr), Department of Public Works and Highways (DPWH), Anti-Red Tape Authority (ARTA), and Department of Finance (DOF), will review these ordinances to confirm their alignment with RA 7160.

Also within 30 days from the effectivity of EO 41, DILG, DTI, DOTr, ARTA, DPWH, and DOF should jointly formulate and issue guidelines as may be necessary, or amend or consolidate existing rules, regulations, or issuances as may be appropriate, for the effective implementation of the EO.

DTI and DILG are also directed to jointly submit reports to the Office of the President, through the Office of the Executive Secretary, on the compliance of LGUs with EO 41.

Failure to comply with the EO will be grounds for the imposition of administrative and disciplinary sanctions against erring public officials or employees.

The EO will take effect immediately upon its publication in the Official Gazette or a newspaper of general circulation.

Stakeholders, especially truckers, have been complaining for years about the collection of pass-through fees from cargo trucks by every LGU, especially in Metro Manila, they pass on the way to their delivery destination.

DILG has consistently stated since 2006 — through eight memorandum circulars — that collecting pass-through fees is illegal, with the most recent one being Memorandum Circular (MC) No. 2018-033 in 2018.

In April 2021, ARTA, DILG, and DOF signed Joint Memorandum Circular (JMC) No. 2021-01, which outlines the rules for suspending illegal fees and taxes imposed by LGUs on the transportation of goods and products. This circular reaffirms the principles set out in MC 2018-033.

RELATED READ: LGU pass-through fees on cargo vehicles illegal, joint memo stresses

Alliance of Concerned Truck Owners and Organizations (ACTOO) vice president Rina Papa, in a statement, said they “welcome and sincerely appreciate this development.”

She expressed hope LGUs would comply with the order and acknowledged the efforts of ACTOO in reducing logistics costs and the DTI for supporting this direction set by Malacañang to lower logistics costs as part of the national economic recovery agenda.

Papa said they will also work on other initiatives, such as the suspension of toll increases at the North Luzon Expressway and Manila-Cavite Expressway and the suspension of excise and value-added taxes on oil products due to rising oil prices.

Confederation of Truckers Association of the Philippines (CTAP) president Maria Zapata, in a phone interview with PortCalls, also welcomes the development as it will help reduce “unnecessary charges” imposed on truckers.

Zapata, however, hoped the EO covered all roads and not just national roads because she said LGUs might use that distinction to still impose pass-through fees on local roads.

She also hopes LGUs this time will comply with the policy, noting that several DILG heads over the years have already issued memos saying pass-through fees are illegal but LGUs continue to impose, nonetheless.

The European Chamber of Commerce in the Philippines, meanwhile, said EO 41 “plays an essential role in tempering the inflation rate in the country and in ensuring Filipinos have easy access to essential goods and other necessities.” – Roumina Pablo