Mr. Maximo M. Pulido

June 8, 1992 DILG LEGAL OPINION NO. 141-92 OFFICE OF THE SECRETARY Mr. Maximo M. Pulido President/Manager Rural Bank of Sanchez Mira (Cag.),Inc., Sanchez Mira, Cagayan Dear Mr. Pulido : This refers to your letter dated February 28, 1992, requesting this Department's opinion on the authority of the municipalities under The Local Government Code of 1991 to raise the license fee on rural banks, engage in business within their respective territorial jurisdictions. It is alleged in your letter that the municipal treasurer of Sanchez Mira, Cagayan, pursuant to the resolution enacted by the sangguniang thereat and without the benefit of a public hearing, collected the amount of one thousand three hundred eighty pesos (P1,380.00) from the Rural Bank of Sanchez Mira (Cag.), Inc., which is twice the amount of municipal license fee previously imposed upon the said bank. In this regard, please be informed that Sections 186 and 187 of the Local Government Code of 1991 provide, that: "Sections 186. Power to Levy other taxes, fees, or charges. Local Government units may exercise the power to levy taxes, fees, or charges on any base or subject not otherwise specifically enumerated herein or taxed under the provisions of the National Internal Revenue Code, as amended or other applicable laws. Provided ,That the taxes, fees, or charges shall not be unjust, excessive, oppressive, confiscatory or contrary to declared national policy; Provided ,further, that the ordinance levying the taxes, fees, or charges shall not be enacted without any prior public hearing conducted for the purpose." "Section 187. Procedure for approval and Effectivity of Tax Ordinances and Revenue Measures; Mandatory Public Hearings. The procedure for approval of local tax ordinances and revenue measures shall be in accordance with the provisions of this Code: Provided ,that public hearings shall be conducted for the purpose prior to the enactment thereof: Provided ,further, that any question to the constitutionality or legality of tax ordinances or revenue measures may be raised on appeal within thirty (30) days from the effectivity thereof to the Secretary of Justice who shall render a decision within (60) days from the date of receipt of the appeal" Provided ,however, that such appeal shall not have the effect of suspending the effectivity of the ordinance and the accrual and payment of the tax, fee or charge levied therein: Provided ,finally, that within thirty (30) days after receipt of the decision or the lapse of the sixty-day period without the Secretary of Justice acting upon the appeal, the aggrieved party may file appropriate proceedings with a court of competent jurisdiction. As can be readily seen from the aforequoted provisions of the law, the power of the municipality to levy municipal license fee or to raise the amount of imposition thereof is subject to the proviso that there should be a public hearing before enactment of the ordinance for the purpose can be had. The failure to observe such proviso gives rise to a cause of action on the part of the person or persons affected to question the legality of the enactment thereof pursuant to the provision of Section 187 of the Code. We hope that we have enlightened you on the matter. Very truly yours, CESAR N. SARINO Secretary