Bureau of Local Government Finance Opinion

August 15, 2011 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 2nd Indorsement Respectfully returned to the ICO-Regional Director for Local Government Finance, Region III, San Fernando, Pampanga, the herein preceding indorsement relative to the letter of Mr. Marcelino D. Andawi, City Treasurer, Olongapo City, requesting for opinion whether it is valid for the City Government to refuse the issuance of a Mayor's Permit to Sun Cellular due to non-payment of real property tax. ECISAD It appears that a Memorandum, dated July 1, 2011 of Atty. Christopher B. Arpon, AVP-Legal/Sun Cellular and Digitel was addressed to Hon. James Gordon, Jr., City Mayor, Olongapo City, requesting that Sun Cellular be allowed to secure a business permit for 2011, pending settlement of other issues, in this case the real property tax. Atty. Arpon cited the letter opinion dated May 16, 2011 of DILG Undersecretary for Local Government, Usec. Austere A. Panadero to the effect that it is contrary to law for the LGUs to withhold issuance of business permits on account of non-payment of real property tax and other local taxes, fees and charges and that payment of real property taxes is not a condition sine qua non for the issuance of business permits per provision of the Local Government Code (LGC) of 1991. In fact, in one instance, Usec. Panadero further informed that the Department (DILG) called the attention of a Municipal Mayor for his refusal to issue business permits to establishments in his locality simply because of their failure to pay their real property taxes. Accordingly, the Municipal Mayor was cautioned not to make additional requirements that are not sanctioned by the Local Government Code of 1991. With due respect to the opinion of the DILG, City Treasurer Andawi had some reservation as to the specific provision(s) in the LGC which were made as legal basis of said opinion. Further, Treasurer Andawi considered the non-issuance of a Mayor's Permit to Sun Cellular as one of the collection strategies of the City Treasurer's Office in the implementation of the City's duly enacted tax ordinance. Relative thereto, Section 4A.10 of the City's Revenue Code of 2007, quoted hereunder, provides the collection strategy of inter-relating the different taxes, fees and charges being paid by a taxpayer for the effective and efficient collection: "Section 4A.10. Permit Refused; To Whom. Permit may be refused: (a) to any person who failed to secure a barangay clearance; (b) to any person who has violated any ordinance or regulations relating to a license previously granted or who failed to pay tax or fee for a business being conducted but not licensed, or failed to pay a fine, penalty, tax or other debt or liability to the city within thirty (30) days from the date of demand. In the case of an existing license to any person, the same may be revoked by the city upon his refusal to pay indebtedness or liability to the former." (Emphasis provided) In addition, the City Treasurer cited that the Local Treasury Manual provides as follows: aSDCIE "Section 234. Mayors Permit . . . . "xxx xxx xxx "8) Revocation of Permit The Mayor's Permit may be revoked on the following grounds: a) When a person doing business under the provisions of the revenue code of the city or municipality violates any of its provisions. b) When the person refuses to pay indebtedness or liability to the city/municipality. "xxx xxx xxx." In view of the foregoing, that Office cited Section 15 of the LGC which explicitly provides for the authority (taxing powers) to impose and collect fees and charges to Local Government Units. It may be appended that such powers or authority include the power to regulate any business undertaking within the territorial jurisdiction of an LGU concerned. In the exercise of this power the LGU has to enact a tax ordinance or revenue measures pursuant to the provisions of the LGC so as to carry out this statutory powers in consonance with the tenets of Section 16 of the LGC, which provides: "General Welfare Every local government unit shall exercise the powers expressly granted, those necessarily implied thereon, as well as powers necessary, appropriate, or incidental for its efficient and effective governance, and those which are essential to the promotion of the general welfare . . . . ." Correspondingly, and in addition to the point raised by the City Treasurer of Olongapo City, that Office cited Section 234 of the Local Treasury Manual, which states that: EHACcT 3) Inspection and other Requirements. Upon submission of the application, it shall be the duty of the proper authorities to verify if other city/municipal requirements regarding the operation of the business or activity such as sanitary requirements, installation or power and light requirements, as well as other safety requirements are complied with. The permit to operate shall be issued only upon compliance with such safety requirements and after the payment of the corresponding inspection fees and other impositions required by the Revenue Code and other city/municipal tax ordinances . (Emphasis provided) With these presents, it is the position of that Regional Office to concur with the stand of the City Treasurer of Olongapo City to refuse, or more appropriately, to suspend the issuance of a Mayor's Permit to Sun Cellular until the issue on the real property tax payment is resolved. In resolving the issue, reference is made on the provision of Section 455 (3) (iv) of the LGC quoted as follows: "Section 455. Chief Executive, Powers, duties and Compensation . . . . . "(b) For efficient, effective and economical governance the purpose of which is the general welfare of the City and its inhabitants pursuant to Section 16 of this Code, the City Mayor shall: "(3) . . . (iv) Issue licenses and permits and suspend or revoke the same for any violation of the conditions upon which said licenses or permits had been issued, pursuant to law or ordinance." From the language of the aforequoted provision of law, it is clear that the power of the mayor to issue business licenses and permits necessarily includes the corollary power to suspend, revoke or even refuse to issue the same. However, the power to suspend or revoke these licenses and permits is expressly premised on the violations of the conditions of these permits and licenses. The laws specifically refer to the "violation of the condition(s)" on which the licenses and permits were issued. Similarly, the power to refuse to issue such licenses and permits is premised on non-compliance with the prerequisites for the issuance of such licenses and permits. It appears that Sun Cellular failed to pay the tax, in this case the real property tax, to the city within thirty (30) days from the date of demand. This is one of the conditions to refuse the issuance of a permit as provided under Section 4A.10 of the Revenue Code of 2007 of that city. Thus, the refusal of the City of Olongapo to issue a Mayor's Permit to Sun Cellular due to non-payment of the real property tax is in full accord with the LGC, and the city's Revenue Code of 2007. cIaCTS It is worth mentioning that in a Resolution issued by the Supreme Court in the case of Social Justice, et al. vs. Hon. Jose L. Atienza, Jr. (G.R. 156052, February 13, 2008, it was cited that: "Statutes and ordinances are presumed valid unless and until the courts declare the contrary in a clear and unequivocal terms. The mere fact that the ordinance is alleged to be unconstitutional or invalid will not entitle a party to have its enforcement enjoined. The presumption is all in favor of validity." Considering therefore that the subject city's Revenue Code 2007 has been approved and implemented after having complied with the procedures and basic requirements under the pertinent provisions of the LGC, specifically Sections 187 and 188 thereof, the City Treasurer of Olongapo has no other option but to implement said Revenue Code in this case Section 4A.10 thereof; otherwise, he can be charged of remission and/or dereliction of duty for not implementing a valid ordinance. Be guided accordingly. (SGD.) MA. PRESENTACION R. MONTESA, CESO III Executive Director