In accordance with the Local Government Code (LGC), the Sangguniang Panglungsod (SP) of Baguio City enacted Tax Ordinance No. 19, Series of 2014, imposing a P50.00 tax on all the tourists and travellers going to Baguio City. In imposing the local tax, the SP reasoned that the tax collected will be used to maintain the cleanliness of Baguio City and for the beautification of its tourist attractions. (D) is punishable by administrative penalty only.
Claiming the tax to be unjust, Baguio Travellers Association (BTA), an association of travel agencies in Baguio City, filed a petition for declaratory relief before the Regional Trial Court (RTC) because BTA was apprehensive that tourists might cancel their bookings with BTA’s member agencies. BTA also prayed for the issuance of a Temporary Restraining Order (TRO) to enjoin Baguio City from enforcing the local tax on their customers and on all tourists going to Baguio City.
The RTC issued a TRO enjoining Baguio City from imposing the local tax. Aggrieved, Baguio City filed a petition for certiorari before the Supreme Court (SC) seeking to set aside the TRO issued by the RTC on the ground that collection of taxes cannot be enjoined. Will the petition prosper? (5%)
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Yes, the petition for certiorari filed by Baguio City will prosper. Under Sec. 187 of the LGC, any challenge to the legality of a tax ordinance must be appealed to the Secretary of Justice within 30 days from
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Quick check
What is the mandatory administrative remedy to question the legality of a local tax ordinance under Section 187 of the LGC?
Under Section 187 of the LGC, any challenge to the legality of a tax ordinance must be appealed to the Secretary of Justice within thirty days.
Does questioning the legality of a local tax ordinance suspend the collection of the local tax?
Section 187 of the LGC explicitly provides that an appeal shall not suspend the effectivity of the ordinance or the collection of the tax.
What is the legal effect when an RTC issues a TRO enjoining the collection of a local tax during a Section 187 challenge?
Issuing a TRO enjoining local tax collection violates explicit statutory prohibition under Section 187 of the LGC and constitutes grave abuse of discretion.
How long does the Secretary of Justice have to decide an appeal questioning a local tax ordinance under the LGC?
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Is a petition for declaratory relief before the RTC the proper initial remedy to challenge a local tax ordinance?
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Learn more about these topics
1. Local Tax Appeals
Under Section 187 of the Local Government Code, any contest on the constitutionality or legality of a local tax ordinance must be appealed to the Secretary of Justice within thirty days from its effectivity. The Secretary of Justice is mandated to decide the appeal within sixty days from receipt. Recourse to judicial courts before exhausting this mandatory administrative remedy renders the action premature for failure to observe the doctrine of exhaustion of administrative remedies.
2. Tax Collection Injunction
Section 187 of the Local Government Code expressly mandates that an appeal questioning the legality of a local tax ordinance shall not have the effect of suspending the effectivity of the ordinance and the accrual and collection of the tax. The issuance by a court of a temporary restraining order or preliminary injunction enjoining the collection of a local tax constitutes grave abuse of discretion, as it directly violates explicit statutory prohibitions against enjoining tax collection.
3. Declaratory Relief Limits
A petition for declaratory relief is improper when challenging the legality or constitutionality of a local tax ordinance. The statutory procedure prescribed under Section 187 of the Local Government Code provides a specific and exclusive administrative mechanism. Where a statute provides a specific administrative appeal procedure to question a tax ordinance, taxpayers cannot bypass statutory remedies by resorting directly to judicial actions for declaratory relief.