THE GOVERNMENT OF THE PHILIPPINE ISLANDS, PLAINTIFF AND APPELLANT, VS. SEVERO GALAROSA, DEFENDANT AND APPELLEE.

This is an action to recover a cockpit license tax and a fine
imposed by the Collector of Internal Revenue for failure to pay the tax
at the time required by law. Judgment was for defendant and an appeal
was taken.

It appears that, prior to the 18th of December, 1911, persons
operating a cockpit in the municipality of Bulusan, Sorsogon, paid a
license tax of P100 quarterly, one-half of which went to the Government
and the other half to the municipality. On the date mentioned the
municipal council passed an ordinance, No. 125, having as one of its
objects the reduction of the license tax in the barrio of San Vicente,
Bulusan, from P100 per quarter to P65 per quarter, P50 of which should go to the Government and P15 to the municipality. This
ordinance was disapproved hy the provincial board (the record does not
show when) and no appeal was taken from that action. At the time of the
passage of ordinance No. 125, resolution No. 48 of the same council,
passed October 26, 1910, was in force which provided for a uniform
additional tax of P50 throughout the municipality. About the first of
January, 1912, the defendant obtained a license to operate a cockpit in
the barrio of San Vicente. He paid for that privilege the regular
quarterly license tax of P50 imposed by section 144 of Act No. 1189 and
the additional tax provided for in said ordinance No. 125 which
additional tax under said ordinance was P15 instead of P50, the amount
fixed by ordinance No. 48. This tax of P65 per quarter was paid during
the year 1912 and the first quarter of 1913, a total of five quarters.

These facts coming to the knowledge of the Collector of Internal
Revenue he demanded of the defendant the payment of P175, the
difference between the tax for five quarters paid under ordinance No.
125 and that required to be paid by ordinance No. 48; and, upon the
refusal of defendant to pay as requested, issued an order under section
145 of Act No. 1189 imposing upon him a fine of P100, the total license
tax for one quarter, and commanding him to pay the additional tax of
P175. Notice of this order was given to defendant on the 30th of April,
1914; but he took no action until the 29th of June when he filed an
appeal with the Court of First Instance of Sorsogon. On the 20th of
October, 1914, this action was brought in the Court of First Instance
of Sorsogon to recover of the defendant both the additional tax and the
fine imposed. On the same day a motion was made to dismiss the appeal
taken by defendant from the order of the Collector of Internal Revenue
and to affirm that order on the ground that the appeal had not been
taken in time. After the hearing on that motion the court rendered a
decision, a part of which is as follows:

“In view of the fact that the court acquired no jurisdiction of the
appeal in the present case unless the appeal was taken in the time and
manner required by law, it being clear that the parties could not
confer such jurisdiction by agreement:

“It is decreed that the appeal taken by Severo Galarosa from the
order of the Collector of Internal Revenue dated April 4, 1914, be and
the same is hereby dismissed as to that portion which brings up for
review that part of the order of the Collector of Internal Revenue of
the 4th of April, 1914, which imposed a fine of P100, and that that
part of said order is hereby affirmed.

“Nevertheless, it being the object of the action to obtain judgment
not only for the fine imposed but also for the amount of the tax
claimed to be due from the defendant as a cockpit license obtained in
the municipality of Bulusan, and this action having for its purpose the
recovery of said tax in accordance with section 50 of Act 1189, the
action will proceed as to that feature and will be tried at the next
term of this court.”

The present action went to trial; and, on the 29th of March, 1915,
the court dismissed the case relieving the defendant of both the fine
and the additional tax claimed. In its decision the court, after
stating the facts substantially as herein before set out, said:

“It appears that the provincial board disapproved ordinance No. 125
passed by the municipal council of Bulusan, but the reasons therefor do
not appear; and the plaintiff contends that, on account of such
disapproval, the defendant must pay the additional tax fixed by
ordinance No. 48 of the municipality of Bulusan, approved the 26th of
October, 1910, which provided that the tax to be paid in said
municipality over and above the general tax should be P50 quarterly.
The plaintiff claims the sum of the additional tax for the five
quarters during which the defendant held his license, and, besides, the
sum of P100 fine imposed by reason of the refusal of the defendant to
pay the tax when demanded.

“The question presented for determination is whether ornot ordinance
No. 125 under which Severo Galarosa was granted a license was valid and
effective notwithstanding the disapproval of the provincial board.
Attention has already been called to the fact that the provincial board
gave no reason for its disapproval; but the reason therefor must have
been that the municipal council had no authority to pass such an
ordinance. Such reason is, however, with- out foundation as Act No.
1189, as amended by Act No. 1338, expressly confers such authority on
the council. Nor is the approval of the provincial board a prerequisite
to the validity and efficacy of a municipal ordinance. All that is
necessary to its validity and efficacy is that it be within the powers
of the council, that it be approved by the council, and that ten days
elapse after its approval.

“But even though it be conceded that said ordinance was validly
annulled by the provincial board, or was repealed by the municipal
board which passed it, that fact would not affect rights acquired under
it by persons who were induced to act in the belief that the ordinance
was valid and would be a protection to them. The defendant Galarosa was
induced to obtain a cockpit license by the reduction of the license
tax; he never would have taken out a license if ordinance No. 48 had
been in force. Indeed, he refused to take out a license after he had
been informed that the tax had been increased. The Government was
estopped and could not repudiate its own acts so long as they were
within its powers even though it exceeded those powers in the
performance of the acts. Moreover, the Government gained by the
reduction of the tax because, by reason of the reduction, licenses were
taken out which had not been taken out prior to the reduction; and, if
the Government were not estopped, the result would be that it would be
permitted to defraud taxpayers by inducing them to establish
enterprises by offering them favorable conditions in order that, after
they were established, it could make the conditions more onerous than
when the enterprises were inaugurated.”

We are of the opinion that the trial court erred in several
particulars. It held, first of all, that the provincial board had no
authority to disapprove ordinance No. 125. Even if this were true it
would not change the result. The action of the provincial board was
filial, it not having been appealed (Chanco vs. Municipality
of Romblon, 15 Phil. Rep., 101). Therefore, whether its action was
correct in law or not is now of no consequence. We might say, however,
that we are of the opinion that the action of the provincial board was
well founded in law. Section 41 of Act No. 82 as amended by Acts Nos.
676 and 1791, provides in part as follows:

“The municipal secretary shall, within thirty-six hours after any
session of the council or the issuance of an executive order, forward a
correct copy of each act, resolution, and ordinance passed thereat, and
of every executive order, properly numbered, to the provincial board.
The board shall promptly pass upon the legality of the same, entering
its action upon the minutes and advising the proper municipal secretary
of such action. The secretary shall thereupon notify the council, and
that body shall note the receipt of notification upon its minutes. The
provincial board shall approve all acts, ordinances, resolutions, and
orders which are within the powers conferred upon the council or
president making the same and declare null and void such as are not
within said powers. If the board shall be in doubt as to the legality
of any such act, ordinance, resolution, or order it shall declare the
same suspended and refer the question to the fiscal for his opinion.
Such opinion shall be given promptly, and upon its receipt the board
shall take action thereon in accordance with law and immediately advise
the municipal secretary thereof. The municipal secretary shall also,
within the thirty-six hours aforesaid, forward to the provincial
treasurer a copy of each act, resolution, or ordinance authorizing or
necessitating the collection of municipal revenues. After the same have
been passed upon by the provincial board, all acts, ordinances,
resolutions, and orders shall be filed with the provincial governor,
who shall keep a complete file of the same conveniently arranged in
consecutive order by municipalities for reference, which shall be open
for public inspection, and in case the municipal secretary neglects or
omits to forward any such he shall immediately demand a copy. Repeated
negligence in forwarding acts, resolutions, or ordinances shall be
cause for suspension and removal. Any attempt to enforce such act,
ordinance, resolution, or executive order, after the disapproval or
suspension thereof shall be brought to the attention of the municipal
council, and shall be sufficient ground for the dismissal of the
officer or officers attempting to enforce the same. Should the council
or the president be dissatisfied with the decision of the provincial
board, an appeal may be taken by it or him to the Governor-General, who
shall decide the same question which was presented to the provincial
board and either affirm or reverse the decision of the provincial
board. If the decision of the provincial board is affirmed, the act,
ordinance, resolution, or executive order involved shall be null and
void. If, however, he shall reverse the decision of the provincial
board, then and in that case notice of his decision shall be given to
the provincial board and to the council of the municipality appealing,
and upon receipt of notice by the appellant, the act, ordinance,
resolution, or executive order shall be revived and come into force
again. Pending the decision on appeal from a decision of the provincial
board annulling any act, ordinance, resolution, or executive order, the
same shall have no force and effect Nothing in this section shall be
construed to deprive any judicial tribunal of power to hold void for
want of statutory authority any act, ordinance, or resolution of a
municipal council or executive order of a municipal president the
validity of which shall be involved in any cause arising before such
tribunal, without respect to the decision of the executive authorities.”

From these provisions it is clear that the provincial board has
power to pass upon the legality of a municipal ordinance and to
disapprove, that is, annul it, if in its judgment the ordinance is
illegal. Certainly if a municipal council passed an ordinance which it
had no power to pass the provincial board could disapprove and annul it.

The trial court cites paragraph 5 of section 144 of Act No. 1189, as
amended by Act No. 1338, in support of its declaration that ordinance
No. 125 was within the power of the municipal board to pass. Let us
see. Paragraph 5 of that section reads as amended:

“Every proprietor of a theater, museum, cockpit, or concert hall
shall pay two hundred pesos. Every edifice used for the purpose of
operatic and dramatic or other representations, plays, or performances,
for admission to which entrance money is received, not including halls
rented or used occasionally for concerts or theatrical representations,
shall be regarded as a theater: Provided, That whenever any
such edifice is under lease on the taking effect of this Act the tax
shall be paid by the lessee, unless otherwise stipulated by the parties
to said lease: And provided further, That the municipal
council of any municipality may by ordinance provide that any cockpit
maintained therein shall pay a higher license tax than that in this
paragraph provided, and in such cases the additional license tax
provided by such ordinance above that herein provided shall be
collected in the same manner as herein specifically provided for and
disposed of in the manner provided in this Act for the disposal of the
receipts from license tax on cockpits.”

We note that the only authority conferred by this Act on municipal
councils with respect to cockpit licenses fixed by the Act was one
permitting it to exact a “higher license tax” than the one
prescribed by the Act itself. There was no authority to fix a license
fee lower than that provided for by the Act. In spite of this, however,
the municipal council of Bulusan attempted, by ordinance No. 125, to
reduce the license fee fixed by the statute. This the provincial board
held it had no authority to do and, therefore, disapproved the
ordinance.

The record is silent as to when and how the
provincial board disapproved. In such case we are compelled to assume
that it was done within the time and in the manner prescribed by law,
as it is a presumption established by statute “that official duty has
been regularly performed.” (Code Civ. Proa, sec. 334, par. 14.)

From these observations it necessarily follows the ordinance 125
never had a legal existence, and that, therefore, Section 144 of Act
No. 1189, as amended, and ordinance No. 48, constituted the law in
force at the time the license in question was issued to defendant.
Instead of paying P65 quarterly he should have paid P100. The
collection of a less sum was an error on the part of the officials
collecting the license tax and did not serve to deprive the Government
of what was due it under the law.

Secondly, the trial court held that even though ordinance 125 was
properly declared invalid and was legally annulled by the provincial
board, nevertheless, the Government was estopped to assert its rights
under the statute to a larger sum than that fixed by the ordinance for
the reason that the officials of the Government, the municipal council,
had, by the act of passing the ordinance, induced the defendant to do
something which he would riot have done if the ordinance had not been
passed. We believe this to be error also. Every person of full age is
presumed to know the law, and the sums which he should pay for given
privileges; and the fact that Government officials, through ignorance
or inadvertence, issue licenses for sums less than those prescribed by
law does not absolve him from payment of the legal fee when called upon
by the Government to do so. Substantially the same may be said to the
contention founded on induction. Ordinance No. 125 added nothing to the
situation. It was illegal even without the disapproval of the municipal
board. It was contrary to paragraph 5 of section 144 of Act No. 1189 as
amended. As between an individual and his government, the individual
cannot plead the void act of an official to shield him from the demand
of the government that he fulfill an obligation which he has contracted
with the government and the benefits accruing to him as a result of
that obligation have been received. The government can neither be
estopped nor prejudiced by the illegal acts of its servants.

There are other questions presented by the record; but as the
judgment must be reversed on the grounds already set out it is
unnecessary to consider them. It remains only to refer to the fine
imposed. That the Collector of Internal Revenue was within his powers
in imposing it there can be no question. Section 145 of Act No, 1189 as
amended by Act No. 2126 provides:

“Every person subject to the payment of a specific occupation
license tax who is delinquent in the payment of such tax for the period
of ten days or more shall, in addition to the payment of the tax due,
be fined administratively in a sum equal to the amount of his license
tax for the period of one quarter; and any such person who for a period
of ten days or more refuses or fails to pay such delinquent tax and
fine when required to do so, shall be fined in a sum not exceeding one
thousand pesos, or be imprisoned for a term not exceeding six months,
in the discretion of the court.”

The fine was imposed in strict accordance with the statute and should, accordingly, be paid.

We do not stop to consider the act of the trial court whereby, after
dismissing the appeal taken from the imposition of the fine and
affirming the order imposing it, it relieved the defendant of its
payment. Inasmuch as the question arising from its imposition was
litigated in this action and in view of the fact that judgment must be
passed ordering its payment, comment on the action of the trial court
in reference thereto is unnecessary.

The judgment appealed from is reversed and judgment is hereby
decreed and will be entered against the defendant Severo Galarosa for
the sum of P275, without costs in this instance. So ordered.

Torres, Carson, and Araullo, JJ., concur.