The Local Government Code has given local government units the power to enact ordinances, not just for the maintenance of peace and order but to generate income or revenue for the local government. This power to generate income or revenue is contained in the Code and the local sanggunians may promulgate the appropriate ordinance for the collection of taxes or other fees. Without a validly enacted ordinance imposing the tax or fee, the local government cannot collect. Since an ordinance of this kind is not usually met with enthusiasm, questioning its legality becomes the last resort of tax payers against its implementation. One of the issues or defects that can be raised before the courts is the lack of public hearing. The Local Government Code requires the conduct of public hearing as part of the second reading of the tax or revenue ordinance. This rule, however has an exception which was the subject of Berdin, et al., vs Mascarias, et al., (G.R. No. 135928, 06 July 2007).
Increase in Tax
The petitioners, Berdin et al., were vendors occupying several stalls of the Municipality of Tubigon. Pursuant to an ordinance enacted by the Sangguniang Bayan, there was an increase in the rental fees of the stalls being occupied by the petitioners and also with their business tax. Demand letters were sent to the vendors for them to pay the tax due but they appealed to the treasurer to defer the collection of the taxes pending the resolution of their protest. Eventually, the issue went to the Regional Trial Court which later found the ordinance to be in order except for the remedy of padlocking of establishments. The petitioners then went to the Court of Appeals which adopted the decision of the RTC in toto. The case went to the Supreme Court and one of the issues raised is the lack of public hearing.
The Ordinance is Valid
The Local Government Code provides that the Sanggunian may impose 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.” The Court added that “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.” If the ordinance therefore, only contains subjects which are specifically enumerated in the Local Government Code, there is no need to conduct a public hearing. The Court explained 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.” If the subject then, is a new imposition, there is a need for a public hearing. The ordinance in question contains new subjects and therefore there is a need for the conduct of a public hearing. The Supreme Court however, still declared the ordinance valid because the petitioners failed to prove that indeed there was no public hearing conducted. “Petitioners, as the party asserting a negative allegation, had the burden of proving lack of public hearing.”