DOJ Opinion No. 123, s. 1985

DOJ OPINION NO. 123 , s. 1985 October 1, 1985 Minister Jesus N. Hipolito Ministry of Public Works and Highways Bonifacio Drive, Port Area Manila Sir : This is with reference to your letter regarding the request of the Barangay Captain of Bulanao, Tabuk, Kalinga-Apayao for assistance in the implementation of Ordinance No. 08 of the Barangay Council of Bulanao which imposes a 5% tax on the gross proceeds due the contractor of any project undertaken within the jurisdiction of Barangay Bulanao the amount to be deducted by the District Office for remittance to the Barangay Treasurer. cdll You state that the Provincial Fiscal of Tabuk, Kalinga-Apayao has rendered an opinion upholding the legality of the ordinance in question but that your office believes otherwise, "because the tax being imposed is in the nature of a contractor's tax which is already levied by the national government and therefore, may no longer be a proper subject for a separate tax to be levied by the imposition of the tax in question because you believe that it is not among those that the Barangay Council of Bulanao may impose. We take it that we are called upon to review on appeal the opinion rendered by the Provincial Fiscal pursuant to Section 47 of the Local Tax Code (P.D. No. 231) which provides that the opinion of the Provincial or City Fiscal on the legality of a tax ordinance may be appealed to the Secretary [now Minister] of Justice whose decision shall be final and executory unless contested in court by the aggrieved party within thirty days from receipt thereof. We are constrained to refrain from passing upon the validity of subject Ordinance No. 08 of the Barangay Council of Bulanao for the following reasons: 1. The mode of review provided in Section 47 of the Local Tax Code is not applicable to the instant case because there is a specific provision (Section 92) in the Local Government Code (B.P. Blg. 337) which prescribes the code of review applicable to barangay ordinances, including a barangay tax ordinance. Said procedure does not empower the Minister of Justice to review the opinion of the Provincial or City Fiscal whose action on the matter is deemed final (see par. 4, Sec. 92). 2. Pursuant to settled precedents, the Minister of Justice does not pass upon the validity of duly enacted ordinances, the matter being properly a matter for the courts to resolve (Op. No. 181, s. 1984; Op. dated March 24, 1969; Op. dated Nov. 21, 1968). An ordinance carries with it the presumption of validity although the question of its reasonableness is open to judicial inquiry (Victorias Milling Co. Inc. vs. Mun. of Victorias, Neg. Occ., 25 SCRA 192 [1968]). Nevertheless, in view of the importance of the issue involved, we are constrained to express our views thereon. prcd There is generally no prohibition against double or multiple taxation in our jurisdiction, it being widely recognized that there is nothing inherently obnoxious in the imposition of license fees or taxes with respect to the same occupation, calling or activity by both the state and its political subdivisions. Double taxation becomes obnoxious only where the taxpayer is taxed twice for the benefit of the same governmental entity or by the same jurisdiction for the same purpose, but not in a case where one tax is imposed by the State and the other by the City or Municipality. (Pepsi-Cola Bottling Co. of the Phil., Inc. vs. Mun. of Tanauan, Leyte, 69 SCRA 460 [1976]; Commissioner of Internal Revenue vs. Hawaiian-Philippine Co., 11 SCRA 256 [1964]; Punzalan vs. Mun. Board of Manila, 95 Phil. 46 [1954]). However, it is an elementary rule of law that municipal corporations, unlike the sovereign state, have no inherent power of taxation. The exercise of such power is dependent upon legislative or constitutional grant. And whenever such power is granted to municipal corporations, such grant of power is to be construed in strictissimi juris . (Op. No. 189, s. 1952; City of Ozamiz vs. Lumapas, 65 SCRA 33 [1975]). The Local Government Code provides that the power of the barangay to levy taxes, impose fees and charges, and raise revenues shall be exercised through the sangguniang barangay subject to limitations prescribed by law (Section 102, B.P. Blg. 337). Section 26 of the Local Tax Code (P.D. No. 231) defining the scope of the taxing power of barrios [now barangay] provides that the exercise of the taxing and other revenue-raising powers of the barrio is limited to the taxes, fees, charges and contributions mentioned in Sections 27, 28 and 29 of the Code which provide, respectively, as follows: "SEC. 27. License taxes and fees . A barrio may levy taxes or fees on the following, at rates that shall not exceed twenty-five per cent, in the case of a barrio in a municipality, and ten per cent, in the case of a barrio in the city, of a similar tax or fee already imposed by the city or municipality: (a) Stores or retailers with fixed business establishments whose capital investment is five thousand pesos or less, signs, signboards, and billboards displayed or maintained in any place exposed to public view, except those displayed at the place where the profession or business advertised is conducted; and (b) Gamecocks owned by residents of the barrios and on the cockfights conducted therein. Nothing herein shall be construed as to authorize the barrio council to permit cockfights. (As amended by PD No. 426.) SEC. 28. Service charges . Barrios may collect reasonable charges for services rendered in connection with the regulation of the use of barrio-owned properties or service facilities such as palay, copra or tobacco drier and the like. SEC. 29. Contributions . In addition to the above-specified taxes and other revenue-raising powers, the barrio council may solicit monies, materials, and other contributions from the following sources: (a) Monies, materials and voluntary labor for specific public works and cooperative enterprises of the barrio raised from residents, landholders, producers, and merchants of the barrio; (b) Monies from grant-in-aid, subsidies, contributions, and revenue made available to barrios from municipal, provincial or national funds; and (c) Monies from private agencies and individuals." prcd It has been held that a provision in the charter empowering the municipal corporation to levy or collect taxes "in accordance with law" or "as provided by law" does not confer a general taxing power upon the local legislative body but merely empowers it to provide for the levy and collection of taxes which it is authorized by law to collect. In other words, the authority of municipal corporations to impose taxes is limited to those cases specifically provided by law. (Icard vs. The City of Baguio, 83 Phil. 870 [1949]; Op. No. 189, s. 1952). In the instant case, subject Ordinance No. 08 of the Barangay Council of Bulanao imposing a 5% tax on the gross proceeds due a contractor on any project undertaken within the jurisdiction of Barangay Bulanao, does not seem to fall under any of the categories of taxes, fees, charges and contributions mentioned in Sections 27, 28 and 29 of the Local Tax Code. However, as stated earlier, a recourse to the court is the remedy available to impugn the validity of a duly enacted tax ordinance. Please be guided accordingly. Very truly yours, (SGD.) ESTELITO P. MENDOZA Minister of Justice