TEODORO
BERDIN, VICENTE G.R. No. 135928
ALEGARBES, and ABELARDO DE
VERA, in Their Personal
Capacities Present:
and as Representatives of the
TUBIGON MARKET VENDORS
ASSOCIATION,
Petitioners, QUISUMBING,* J.,
Chairperson,
CARPIO,**
- versus - CARPIO
MORALES,
TINGA,
and
VELASCO,
JR., JJ.
HON.
EUFRACIO A. MASCARIÑAS,
Municipal
Mayor; CRESENCIANA L.
BALATAYO,
Municipal Treasurer; Promulgated:
SAMUEL
PURISIMA, INP Station
Commander; THE MUNICIPAL
COUNCIL
and/or MUNICIPALITY
OF
TUBIGON,
Respondents.
x-------------------------------------------------------------------------------x
Tinga, J.:
This is
a petition[1]
filed under Rule 45 seeking to review and set aside the
Petitioners
Teodoro Berdin, Vicente Alegarbes,
and Abelardo de Vera (petitioners), are the
President, Vice President, and Adviser, respectively, of the Tubigon Market Vendors Association (Association), an
association of vendors doing business in Tubigon,
On
Petitioner
Berdin, as President of the Association, wrote to respondent Municipal
Treasurer requesting a copy of Tax Ordinance No. 88-11-36.[5] The
request was followed by the filing of a protest before respondents Municipal
Mayor and Municipal Treasurer.[6] The
Association also requested the suspension of the implementation of the
ordinance pending final determination of its legality by appropriate
authorities. Thereafter, on
Acting
on petitioners’ request, Eufronio M. Pizarras, Provincial
Treasurer, referred the letter of petitioner Berdin
to the Municipal Treasurer on 15 March 1989, and requested the latter official
to forward a copy of Tax Ordinance No.
88-11-36 to the Department of Finance (DOF), through the Provincial Treasurer,
for review and approval pursuant to Sec. 8 of Executive Order (E.O.) No. 249
dated 25 July 1987.[8]
Meanwhile,
on
Final
Demand Letters were sent to petitioners de Vera and Berdin on
Thereafter,
on 4 September 1989, petitioners filed a Complaint[13] with
the RTC of Bohol against respondents Mayor, Treasurer, and INP Station
Commander of Tubigon, Bohol, as well as the Municipal Council and/or
Municipality of Tubigon, to enjoin respondents from
enforcing Tax Ordinance No. 88-11-36, to declare the ordinance a nullity and,
in the event said ordinance is found to be invalid, to order respondents to
reimburse excess taxes paid by petitioners. The case was docketed as Civil Case
No. 4577.[14]
Tax Ordinance No. 88-11-36 was
amended by Tax Ordinance No. 89-10-49[15] dated
Even before the Provincial Treasurer
approved of Tax Ordinance No. 89-10-49, petitioners had earlier referred Tax
Ordinance No. 89-10-49 to the Provincial Prosecutor for review. The Provincial
Prosecutor issued Opinion No. 90-1[18] dated
3 January 1990 and found Tax Ordinance No. 89-10-49 valid except insofar as it
provided for the padlocking of establishments as among the civil remedies
available against a delinquent taxpayer. Said official wrote the Sangguniang Bayan and
suggested an amendment to Tax Ordinance No. 89-10-49 by deleting “padlocking of
the establishment” as among the civil remedies.[19]
Meanwhile, on
Thereafter, on
Petitioners wrote the Provincial
Treasurer on
Petitioners elevated the finding of
the Provincial Treasurer to the Secretary of Finance on
Thereafter, the Deputy Director and
Officer-in-Charge of the Bureau of Local Government Finance, by authority of
the Secretary of Finance, informed the Provincial Treasurer that their
department cannot review Ordinance No. 88-11-36 as requested by petitioners.[28] The
Provincial Treasurer transmitted a copy of this letter to petitioners.[29]
Four
years later, on
WHEREFORE,
judgment is hereby rendered as follows:
1 –
declaring Municipal Revenue Ordinance No. 88-11-36, series of 1988, enacted by
the Sangguniang Bayan of Tubigon, Bohol as valid and therefore the same can be
enforced;
2 –
declaring Municipal Ordinance No. 89-10-49 dated October 11, 1989 valid, except
insofar as it provides for the “padlocking of the establishment” as the civil remedies available against a
delinquent taxpayer;
3 –
denying the prayer for mandamus and reimbursement;
4 –
dissolving the injunctive order dated
May 11, 1990 directing the defendants to desist from enforcing Municipal
Ordinance No. 88-11-36;
5 –
granting Final Injunction restraining defendants from padlocking the business
establishments of the plaintiffs, thus making permanent the injunctive order of
May 11, 1990 to that effect; and
6 –
dismissing defendants’ counterclaim for insufficiency of evidence.
Costs
against the plaintiffs.
SO ORDERED.[31]
Petitioners
filed a Notice of Appeal with the RTC,[32] which
gave due course to the appeal and ordered the transmittal of the case records
to the Court of Appeals (CA).[33]
On
The issues raised by petitioners in
their Memorandum[36] may be
summarized as follows: (1) whether the ordinances are valid and enforceable;
(2) whether publication was necessary; and (3) whether there was exhaustion of
administrative remedies.
The
petition is meritorious but only in regard to the need for publication.
Petitioners adopt a three-level
argument with regard to the validity and enforceability of Tax Ordinance No.
88-11-36. First, they assert the ordinance does not exist by virtue of respondent
officials’ delay in furnishing them with a copy of the questioned ordinance.
Second, if Tax Ordinance No. 88-11-36 did exist, it was not validly enacted for
failure to hold public hearings and to have the same published pursuant to Sec.
43 of the Local Tax Code. Finally, petitioners claim, even if Tax Ordinance No.
88-11-36 was validly enacted, the same contains objectionable provisions which
would render it invalid and unenforceable.
Petitioners’ misgivings on the
existence of Tax Ordinance No. 88-11-36 are baseless. The reason for the delay
was adequately explained and was even attributed to petitioners’ failure to pay
for the cost of reproduction of the ordinance.
The right of the people to
information on matters of public concern is recognized under Sec. 7, Art. III
of the 1987 Constitution[37] and
is subject to such limitations as may be provided by law. Thus, while access to
official records may not be prohibited, it certainly may be regulated. The
regulation may come either from statutory law and from the inherent power of an
officer to control his office and the records under his custody and to exercise
some discretion as to the manner in which persons desiring to inspect, examine,
or copy the record may exercise their rights.[38]
The Municipal Treasurer in the case at bar exercised this discretion by
requiring petitioners to pay for the cost of reproduction of Tax Ordinance No.
88-11-36. Such a requirement is reasonable under the circumstances considering
that the ordinance is quite voluminous consisting of more than a hundred pages.
Petitioners
then assail Tax Ordinance No. 88-11-36 and Tax Ordinance No. 90-10-49 for
failure to hold public hearings pursuant to Sec. 50 of the Local Tax Code.
Respondents, on the other hand, claim that a public hearing was no longer
necessary considering that the ordinances in question were merely revisions of
an existing tax ordinance and not new enactments.
The
pertinent provisions of law on this matter are Secs. 49[39]
and 50[40] of
the Local Tax Code.
A perusal of these provisions would
yield a conclusion that the local board or council has the power to impose a
tax or fee (1) on a tax base or subject specifically enumerated in the Local
Tax Code, (2) on a tax base similar to those authorized in the Local Tax Code
but which may not have been specifically enumerated therein, and (3) on a tax
base or tax subject which is not similar or comparable to any tax base or
subject specifically mentioned or otherwise provided for in the Local Tax Code.
Public hearing apparently is not necessary when the tax or fee is imposed on a
tax base or subject specifically enumerated in the Local Tax Code.
The basis for the above distinction
is that when a tax base or subject is specifically enumerated in the Local Tax
Code, the existence of the power to tax is beyond question as the same is
expressly granted. Even in the determination of the rates of the tax, a public
hearing, even if ideal, is not necessary because the law itself provides for a
ceiling on such rates. The same does not obtain in a situation where what is
about to be taxed is not specifically enumerated in the Local Tax Code because
in such a situation, the issues of whether to tax or not and at what rate a tax
is to be imposed are crucial. Consequently, a public hearing is necessary and
vital.
A scrutiny of the taxes or fees
imposed by Tax Ordinance No. 88-11-36 shows that some of them belong to the
second and third categories of taxes or fees that may be imposed by a
municipality that require public hearing. Petitioners are thus correct in
saying that a public hearing is necessary for its enactment. With respect to Tax
Ordinance No. 89-10-49, however, we hold that no public hearing is necessary as
it does not impose any tax or fee. Said ordinance is actually a restatement, with
illustrations, of the provisions of the Local Tax Code on civil remedies for
the collection of the local taxes and fees imposed by Tax Ordinance No.
88-11-36.
Although
a public hearing is necessary for the enactment of Tax Ordinance No. 88-11-36, still
we uphold its validity in view of petitioners’ failure to present evidence to
show that no public hearing was conducted.[41] Petitioners,
as the party asserting a negative allegation, had the burden of proving lack of
public hearing.[42]
Although the Sangguniang Bayan had the control of records or the better
means of proof regarding the facts alleged and respondent public officials
assumed an uncooperative stance to petitioners’ request for copies of the
Minutes of their deliberation, petitioners are not relieved from this burden.[43] Petitioners could easily have resorted to the
various modes of discovery under Rules 23 to 28 of the Rules of Court.[44] Furthermore,
petitioners could have compelled the production of these documents through a subpoena
duces tecum or they
could have required testimony on this issue by officials in custody of the
documents through a subpoena ad testificandum. However,
petitioners made no such effort.
Petitioners next claim that the
impositions contained in Tax Ordinance No. 88-11-36 exceeded the maximum
allowed by the Local Tax Code. In particular, petitioners assert that (1) the
taxes imposed by the ordinance are not based on the taxpayers’ ability to pay;
(2) the taxes imposed are unjust, excessive, oppressive, discriminatory and
confiscatory; (3) the ordinances are contrary to law, public policy and are in
restraint of trade; (4) the ordinances violate the rule of a progressive system
of taxation; and (5) the ordinances are contrary to the declared national
policy.
These questions have already been raised
in their protest and resolved by the
Moreover, as the presumption of
regularity of official conduct was not overcome by petitioners, the findings of
the Provincial Treasurer must be upheld.
There is likewise no merit in petitioners’
contention that the Provincial Treasurer’s finding on the fishery rental fees
is flawed. The Local Tax Code provides in Sec. 21 thereof that municipalities,
in the exercise of their authority to grant exclusive fishery rights and
license individual fishing gears in municipal waters, may levy or fix rentals
or fees therefore in accordance with said section and in conjunction with other
operative laws and regulations on municipal fisheries. One such operative law is P.D. No. 704[46] which provides
for the jurisdiction
of the Bureau of Fisheries and Aquatic
Resources in Sec. 4.[47] Thus,
it was correct for the Provincial Treasurer to rule that the fishery rental
fees in Tax Ordinance No. 88-11-36 may be given due course provided that prior
approval from the Bureau of Fisheries and Aquatic Resources has been obtained,
pursuant to the provisions of P.D. No. 704, as amended.
Petitioners further fault the
Municipal Treasurer for the latter’s failure to furnish the Provincial
Treasurer with a copy of Tax Ordinance No. 88-11-36 after its approval. By not
furnishing the latter official with a copy of the tax ordinance, the Municipal
Treasurer frustrated a review thereof.
In this regard, we hold that the
submission of Tax Ordinance No. 88-11-36 to the Assistant Regional Director, DOF
Regional Office No. 7, Cebu City complied with the requirement of review
pursuant to Secs. 49 and 50 of the Local Tax Code, as said official is the alter
ego of the Secretary of Finance, under an expanded application of the
doctrine of qualified political agency, where “the President’s power of control
is directly exercised by him over the members of the Cabinet who, in turn, and by his
authority, control the
bureaus and other offices under their
respective jurisdictions in the executive department.”[48]
We now resolve the issue of
exhaustion of administrative remedies.
A perusal of the applicable
provisions of the Local Tax Code
would show that there are three administrative remedies available to an
aggrieved taxpayer. A tax ordinance may either be (1) reviewed or suspended by the Provincial Treasurer[49]
or the Secretary of Finance,[50] (2)
the subject of a formal protest with the Secretary of Finance,[51]
or (3) questioned as to its legality and referred for opinion to the Provincial
Fiscal.[52]
In the case at bar, petitioners
question the validity of Tax Ordinance No. 88-11-36 for the following reasons:
(1) no public hearing was conducted; (2) the taxes imposed therein are not
based on the taxpayers’ ability to pay; (3) the taxes imposed are unjust,
excessive, oppressive, discriminatory and confiscatory; (4) the ordinances are
contrary to law, public policy and are in restraint of trade; (5) the
ordinances violate the rule of a progressive system of taxation; and (6) the
ordinances are contrary to the declared national policy.
Of these issues, the first, second,
fourth and fifth issues should have been referred for opinion to the Provincial
Fiscal pursuant to Sec. 47[53]
of the Local Tax Code, because they are not among those mentioned in Sec. 44[54]
of the Local Tax Code. The other remaining issues, on the other hand, are
proper subjects of a protest which should have been brought to the Secretary of
Finance.
However, petitioners did not even
bring the issues relative to the legality or validity of Tax Ordinance No.
88-11-36 to the Provincial Fiscal. What they brought for the consideration of
the Provincial Fiscal was Tax Ordinance No. 89-10-49. Thus, in Opinion No.
90-1,[55]
the Provincial Fiscal found said ordinance valid except insofar as it provided
for the padlocking of the establishment as among the civil remedies available
against a delinquent taxpayer. The ruling of the Provincial Treasurer declaring
Tax Ordinance No. 89-10-49 valid and in order is of no moment because, under
Sec. 47, the opinion of the Provincial Fiscal is appealable to the Secretary of
Justice.
With respect to the remaining issues
proper for a formal protest, petitioners did not bring the same to the Secretary
of Finance. What they filed instead
was a petition with the Municipal Mayor requesting for a suspension of the
implementation of the ordinance “pending final determination of its legality by
appropriate authorities.” Petitioners thereafter went to the Provincial
Treasurer reiterating their request for a review and suspension of the
ordinance. In fact, the first time petitioners wrote the DOF was on
Obviously,
petitioners did not formally protest Tax Ordinance No. 88-11-36 as the same may
properly be brought not before the Provincial Treasurer but before the
Secretary of Finance. What the Provincial Treasurer merely conducted was a
review of Tax Ordinance No. 88-11-36 under Sec. 44 of the Local Tax Code,
limiting itself to the issues proper for a review thereof. Thus, said official
initially suspended some of the provisions of Tax Ordinance No. 88-11-36 for
their failure to comply with the rates prescribed by the Local Tax Code and
eventually decided in favor of its validity after the Sangguniang Bayan modified
the objectionable provisions thereof via Municipal Revenue Ordinance No.
90-01-54. That what was filed before the Provincial Treasurer was merely a
review is evident from the DOF’s refusal to review
the findings of the Provincial Treasurer, which, it said, was made pursuant to
Sec. 44 of the Local Tax Code.
Even if we were to consider petitioners’
appeal with the Secretary of Finance as a formal protest, despite its unseasonableness, still, it would be unavailing since they did
not offer proof on how and in what manner Tax Ordinance No. 88-11-36 could be invalid.
In fact, the Deputy Director and Officer-in-Charge of the Bureau of Local
Government Finance, by authority of the Secretary of Finance, noted that
petitioners’ counsel “did not state the grounds of his protest as provided
under Section 45 of the Local Tax Code, as amended, in relation to Section 44
thereof.”[56] Verily,
mere allegation that an ordinance is invalid on the grounds enumerated in Sec.
44 of the Local Tax Code will not work to rebut the presumption of the
ordinance’s validity.
Clearly,
for failure to file a formal protest with the Secretary of Finance, or a legal
question with the Provincial Fiscal on Tax Ordinance No. 88-11-36’s validity,
petitioners cannot be said to have exhausted administrative remedies available
to them.
The underlying principle of the rule
on exhaustion of administrative remedies rests on the presumption that the
administrative agency, if afforded a complete chance to pass upon the matter,
will decide the same correctly.[57]
There are both legal and practical reasons for the principle. The
administrative process is intended to provide less expensive and speedier solutions
to disputes. Where the enabling statute indicates a procedure for
administrative review and provides a system of administrative appeal or
reconsideration, the courts—for reasons of law, comity, and convenience—will
not entertain a case unless the available administrative remedies have been
resorted to and the appropriate authorities have been given an opportunity to
act and correct the errors committed in the administrative forum.[58]
From the above disquisitions, it
follows that the validity of the questioned tax ordinances must be upheld.
However, their enforceability is another matter that merits further
deliberation considering the apparent lack of publication or posting of the
questioned ordinances.
Petitioners assert that pursuant to
Sec. 43 of the Local Tax Code, certified true copies of the ordinance should
have been published for three (3) days in a newspaper or publication widely
circulated within the jurisdiction of the local government, or posted in the local
legislative hall or premises and two other conspicuous places within the
territorial jurisdiction of the local government within ten (10) days after its
approval.
Provincial Circular No. 22-73 states:
All
taxes, fees and charges authorized by the Code to be imposed by local
governments, may only be collected by the treasurer concerned if an ordinance
embodying the same has been duly enacted by the local board or council and
approved in accordance with the provisions of the Code.
Section 43 of the Code provides that
within ten (10) days after their approval, certified true copies of all
provincial, city, municipal and barrio ordinance levying or imposing taxes,
fees or other charges shall be published for three (3) consecutive days in a
newspaper or publication widely circulated within the jurisdiction of the local
government, or posted in the local legislative hall or premises and in two
other conspicuous places within the territorial jurisdiction of the local
government. In either case, copies of all provincial, city, municipal and
barrio revenue ordinances shall be furnished the treasurers of the respective
component and mother units of a local government for dissemination.
While non-compliance with the
foregoing provisions of the Code will not render the tax or revenue ordinances
null and void, still there must be publication and dissemination as provided in
the Code to obviate abuses in the exercise of the taxing powers and preclude
protests from the people adversely affected. Such publication and dissemination
of tax ordinances will not only be in consonance with the objectives of the
Code to secure fair, just and uniform local impositions but will also enhance
the efficient collection of valid taxes, fees and other charges. [Emphasis supplied]
Thus, it would seem that while lack
of publication does not render a tax ordinance null and void, said requirement
must still be complied with in order “to obviate abuses in the exercise of the
taxing powers and preclude protests from the people adversely affected.” Publication
is thus a condition precedent to the effectivity and
enforceability of an ordinance to inform the public of its contents before
rights are affected by the same.
The
records are bereft of any indication that evidence was presented to prove
petitioners’ negative allegation that there was no publication. Neither is
there a positive declaration on the part of respondents that there was
publication or posting. Even the RTC and the CA decisions are silent on this
issue. Consequently, an uncertainty exists on whether the ordinances were
indeed published or not. We resolve this uncertainty in favor of petitioners
and accordingly rule that the questioned tax ordinances must be published
before the new tax rates imposed therein are to be collected from the affected
taxpayers.
This does not mean however that the
municipality is deprived of the income that would have been collected under the
subject tax ordinances because taxes may still be collected at the old rates previously
imposed.
While we partially grant this
petition, we note with disapproval petitioners’ commission of forum shopping
prior to the filing of this petition. Petitioners simultaneously prayed for the
same relief of suspension of the ordinance in four different fora. It should be remembered that petitioners initially filed
a protest of Tax Ordinance No. 88-11-36 with the Municipal Mayor and the
Municipal Treasurer on
WHEREFORE, premises considered, the
instant petition is GRANTED IN PART. The decision of the Court of Appeals in
CA-G.R. SP No. 39045 is hereby MODIFIED in that the Sangguniang
Bayan of Tubigon, Bohol is hereby DIRECTED to cause the publication of Tax
Ordinance No. 88-11-36, Tax Ordinance No. 89-10-49, and Municipal Revenue
Ordinance No. 90-01-54 for three (3) days in a newspaper or publication widely
circulated within the jurisdiction of the local government, or their posting in
the local legislative hall or premises and two other conspicuous places within
the territorial jurisdiction of the local government. In all other respects,
the decision of the Court of Appeals in CA-G.R. SP No. 39045 affirming the
Costs against petitioners.
SO ORDERED.
DANTE O. TINGA
Associate Justice
WE CONCUR:
(On
Official Leave)
LEONARDO A. QUISUMBING
Associate Justice
Chairperson
ANTONIO T. CARPIO CONCHITA CARPIO MORALES
Associate
Justice Associate Justice
PRESBITERO J. VELASCO,
JR.
Associate Justice
ATTESTATION
I attest that the conclusions in the above
Decision had been reached in consultation before the case was assigned to the
writer of the opinion of the Court’s Division.
ANTONIO T. CARPIO
Associate Justice
Acting
Chairperson, Second Division
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution,
and the Division Acting Chairperson’s Attestation, it is hereby certified that
the conclusions in the above Decision had been reached in consultation before
the case was assigned to the writer of the opinion of the Court’s Division.
REYNATO S. PUNO
Chief
Justice
[1]Rollo,
pp. 8-29.
[2]
[3]
[4]
Chapter
II. Municipal
Taxes
(A) Real Property Tax
(B) Business Tax, and
(C) Tax on Advertisements
Chapter
III. Permit and
Regulatory Fees
(A) Mayor’s Permit Fees on Business
(B) Permit Fees for Gaffer, Referee, Bettaker, Promoter and Cashier
(C) Cart and Sledge Registration Fee
(D) Large Cattle Registration and Transfer
Fees
(E) Registration/Permit Fees on Bicycles,
Tricycles, Pedicabs and Motorcabs
(F) Poundage Fee
(G) Registration Fees on Fishing Boats and
Motorboats
(H) Permit Fee on Parades
(I) Registration Fee on Calesa
or Caretela
(J) Permit Fee on Film-Making and Video Tape
Coverage, and
(K) Permit Fee on Agricultural Machineries and
other Heavy Equipment
Chapter
IV. Other Permit
and Regulatory Fees
(A) Permit Fee on Sand and
Gravel
(B) Building Permit Fees
(C) Permit Fee
on Storage of
Flammable, Combustible or
Explosive Subtances
(D) Permit and Inspection Fees
on Machineries and Engines
(E) Permit Fee for Excavation
(F) Permit Fee for Inspection
and Verification of Subdivisions
(G) Permit Fee for the Use
of Sidewalks, Alleys, Roads, Streets, Parks, Plazas, Public Structures and
Buildings; Other Personal/Real Owned by the State
(H) Permit Fee for Hunting
(I) Permit Fees for other
activities
Chapter V. Service Fees
(A) Secretary’s Fees
(B) Local Registry Fees
(C) Clearance, Certification and Other Similar
Fees
(D) Service Fee for Health Examination
(E) Sanitary Inspection Fee
(F) Service Charge for Garbage Collection
Chapter
VI. Municipal
Charges
(A) Market Fees
(B) Fishery Rentals or Fees
(C) Slaughter and Corral Fees
(D) Rental of
(E)