Bureau of Local Government Finance Opinion

December 11, 2000 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 1st Indorsement Respectfully returned to the City Treasurer, Tacloban City, the herein documents relative to Ordinance No. 2000-39 dated November 8, 2000 enacted by the Sangguniang Panglungsod (SP) of that city entitled "AN ORDINANCE AMENDING SECTIONS 27, 75, 76, 78, 79, 80, 83, 84, 85, 86 144 AND RELATED PROVISIONS OF THE 1999 REVENUE CODE OF THE CITY OF TACLOBAN OTHERWISE KNOWN AS ORDINANCE NO. 99-58." It appears that Ordinance No. 99-58, otherwise known as "The 1999 Revenue Code of Tacloban City" was enacted and unanimously approved by the SP on December 23, 1999 with the imprimatur of the Local Chief Executive, and was implemented only last July 2000. However, it is alleged that on November 8, 2000, for reasons only known to the SP, a copy of the questioned Ordinance No. 2000-39 was submitted to the City Mayor for approval without the benefit of a public hearing and publication. On the other hand, the City Mayor deemed the amendatory ordinance was ultra vires and prejudicial to public welfare, hence, he vehemently vetoed the said ordinance under letter dated November 23, 2000 for reasons stated therein. cCAaHD Perusal of Ordinance No. 2000-39 reveals the following: 1. The rates of taxes under Ordinance No. 99-58 were reduced which will tremendously affect the plans, programs and projects of the city for the ensuing year; 2. The rates of taxes have been adjusted after only four (4) months of implementation; 3. There appears to be no evidence that a public hearing was conducted prior to the enactment of said Ordinance No. 2000-39 as required under Section 187 of the Local Government Code of 1991 (LGC); and 4. Likewise, there is no proof that the ordinance was published for three (3) consecutive days in a newspaper of local circulation as mandated under Section 188 of the Code. In this connection, attention is invited to Section 191 of the Code, quoted hereunder: "SEC. 191. Authority of Local Government Units to Adjust Rates of Taxes. Local government units shall have the authority to adjust the rates as prescribed herein not oftener that once every five (5) years, but in no case shall such adjustment exceed ten percent (10%) of the rates fixed under this Code." The term adjustment may refer to upward (increase) or downward (decrease) of the rates fixed under the Code, and the extent of the authority of local governments to made such adjustments is limited to not exceeding 10% thereof, which should not be made oftener that once every five (5) years. However, it may be stated that under the abovequoted provision of Section 191, the intention of the framers of the law is to increase the rates, in consonance with Section 129 of the Code which provides: "SEC. 129. Power to Create Sources of Revenue. Each local government unit shall exercise its power to create its own sources of revenue and to levy taxes, fees and charges subject to the provisions herein, consistent with the basic policy of local autonomy. Such taxes, fees and charges, shall accrue exclusively to the local government units." HcaDIA Thus, the amendatory ordinance decreasing the rates of taxes is in contravention of the above provisions of law. As regards the enactment of an ordinance, Articles 275 and 276 of the Implementing Rules and Regulations (IRR), implementing Sections 187 and 188 of the LGC provides: " ART. 275. Procedure for Approval and Effectivity of Tax Ordinances and Revenue Measures . The procedure for approval of local tax ordinances and revenue measures shall be in accordance with the provisions of this Rules: Provided, That public hearings shall be conducted for the purpose prior to the enactment thereof: . . . ." "ART. 276. Publication of Tax Ordinance and Revenue Measures . (a) Within ten (10) days after their approval, certified true copies of all provincial, city and municipal tax ordinances or revenue measures shall be published in full for three (3) consecutive days in a newspaper of local circulation: Provided, however, That in provinces, cities and municipalities where there are no newspaper of local circulation, the same may be posted in at least two (2) conspicuous and publicly accessible places." "xxx xxx xxx. "(c) No tax ordinance or revenue measures shall be enacted or approved in the absence of a public hearing duly conducted in the manner herein prescribed." (underlining supplied) Clearly, the conduct of public hearing prior to the enactment of an ordinance and the publication of the same after its approval are mandatory requirements under the aforequoted provisions of law. In addition, the appropriateness of an ordinance means following a set of prescribed procedures as follows: 1. pre-publication or posting 2. written invitation to affected parties 3. public hearing 4. minutes of public hearing SaHIEA 5. approval of the Sanggunian and eventually the Mayor 6. post-publication The foregoing views are expressed for guidance of that Office and not a declaration of the illegality of Ordinance No. 2000-39 enacted by the SP thereof, such power belongs to the Department of Justice. That Office is, therefore, hereby advised to confer with the City Mayor on the matter. (SGD.) BENJAMIN A. GERONIMO Executive Director <http://www.blgf.gov.ph/downloads/opinion/localtax/2000/a2000-1203.pdf> last visited on October 2, 2013.