Aala vs. Uy

 G.R. No. 202781

CRISANTO M. AALA, ROBERT N. BALAT, DATU BELARDO M. BUNGAD, CESAR B. CUNTAPAY, LAURA S. DOMINGO, GLORIA M. GAZMEN-TAN, and JOCELYN P. SALUDARES-CADAYONA, Petitioners,

vs.

HON. REY T. UY, in his capacity as the City Mayor of Tagum City, Davao del Norte, MR. ALFREDO H. SILAWAN, in his capacity as City Assessor of Tagum City, HON. DE CARLO L. UY, HON. ALLAN L. RELLON, HON. MARIA LINA F. BAURA, HON. NICANDRO T. SUAYBAGUIO, JR., HON. ROBERT L. SO, HON. JOEDEL T. CAASI, HON. OSCAR M. BERMUDEZ, HON. ALAN D. ZULUETA, HON. GETERITO T. GEMENTIZA, HON. TRISTAN ROYCE R. AALA, HON. FRANCISCO C. REMITAR, in their capacity as City Councilors of Tagum City, Davao del Norte, HON. ALFREDO R. PAGDILAO, in his capacity as ABC representative, and HON. MARIE CAMILLE C. MANANSALA, in her capacity as SKF representative, Respondents.

FACTS:

Petitioners assail the validity of City Ordinance No. 558, s-2012. They claim that the ordinance imposes exorbitant real estate taxes because of the Sangguniang Panlungsod's erroneous classification and valuation of real properties.

Petitioners are concerned residents of Tagum City who would be directly affected by the implementation of the questioned ordinance. Well-aware of the doctrines on the hierarchy of courts and exhaustion of administrative remedies, they beg this Court's indulgence to allow immediate and direct resort to it. According to petitioners, this case is exempt from the application of the doctrine on hierarchy of courts. They anchor their claim on the ground that the redress they desire cannot be obtained in the appropriate courts. Furthermore, petitioners assert that the issue they have raised is purely legal and that the case involves paramount public interest, which warrants the relaxation of the rule on exhaustion of administrative remedies. 

Respondents attack the propriety of the remedy of which petitioners have availed themselves. Respondents point out that the extraordinary remedy of certiorari is only directed against judicial and quasi-judicial acts. According to respondents, the Sangguniang Panlungsod of Tagum City exercised a legislative function in enacting the questioned ordinance and is, thus, beyond the scope of a petition for certiorari. Moreover, there is a plain, speedy, and adequate remedy available to petitioners under the law.  Citing Section 187 of the Local Government Code of 1991, respondents argue that petitioners should have exhausted administrative remedies by filing an appeal before the Secretary of Justice.

ISSUE:

Whether direct resort of the petitioner before the SC is correct.

RULING:

No. Under Section 187 of the Local Government Code of 1991, aggrieved taxpayers who question the validity or legality of a tax ordinance are required to file an appeal before the Secretary of Justice before they seek intervention from the regular courts. Section 187 of the Local Government Code of 1991 provides:

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 on 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 sixty (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.

In Reyes v. Court of Appeals, this Court declared the mandatory nature of Section 187 of the Local Government Code of 1991:

[T]he law requires that the dissatisfied taxpayer who questions the validity or legality of a tax ordinance must file his appeal to the Secretary of Justice, within 30 days from effectivity thereof. In case the Secretary decides the appeal, a period also of 30 days is allowed for an aggrieved party to go to court. But if the Secretary does not act thereon, after the lapse of 60 days, a party could already proceed to seek relief in court. These three separate periods are clearly given for compliance as a prerequisite before seeking redress in a competent court. Such statutory periods are set to prevent delays as well as enhance the orderly and speedy discharge of judicial functions. For this reason the courts construe these provisions of statutes as mandatory.

The same principle was reiterated in Jardine Davies Insurance Brokers, Inc. v. Aliposa. In Jardine, the then Sangguniang Bayan of Makati enacted Municipal Ordinance No. 92-072, otherwise known as the Makati Revenue Code, which provided for the schedule of "real estate, business, and franchise taxes . . . at rates higher than those in the Metro Manila Revenue Code." Under this ordinance, Jardine Davies Insurance Brokers, Inc. (Jardine) was assessed taxes, fees, and charges. Jardine believed that the ordinance was void. It filed before the Regional Trial Court a case seeking a refund for alleged overpayment of taxes. The trial court dismissed the complaint. Aggrieved, Jardine filed before this Court a Petition for review raising pure questions of law. Ruling on the Petition, this Court observed that Jardine essentially questioned the validity of the tax ordinance without filing an appeal before the Secretary of Justice, in violation of Section 187 of the Local Government Code of 1991.

The present case, however, the issues involved are not purely legal. There are factual issues that need to be addressed for the proper disposition of the case. In other words, this case is still not ripe for adjudication.

To question the validity of the ordinance, petitioners should have first filed an appeal before the Secretary of Justice. However, petitioners justify direct resort to this Court on the ground that they are entangled in a "catch- 22 situation." They believe that filing an appeal before the Secretary of Justice would merely delay the process and give the City Government of Tagum ample time to collect real property taxes. 

The questioned ordinance was published in July 2012. Had petitioners immediately filed an appeal, the Secretary of Justice would have had enough time to render a decision. Section 187 of the Local Government Code of 1991 gives the Secretary of Justice 60 days to act on the appeal. Within 30 days from receipt of an unfavorable decision or upon inaction by the Secretary of Justice within the time prescribed, aggrieved taxpayers may opt to lodge the appropriate proceeding before the regular courts. 

The "catch-22 situation" petitioners allude to does not exist. Under Section 166 of the Local Government Code of 1991, local taxes "shall accrue on the first (1st) day of January of each year."When the questioned ordinance was published in July 2012, the City Government of Tagum could not have immediately issued real property tax assessments. Hence, petitioners had ample time within which to question the validity of the tax ordinance.

In cases where the validity or legality of a tax ordinance is questioned, the rule that real property taxes must first be paid before a protest is lodged does not apply. Taxpayers must first receive an assessment before this rule is triggered. In Jardine, this Court ruled that prior payment under protest is not required.

The factual issues raised by petitioners could have been properly addressed by the lower courts had they adhered to the doctrines of hierarchy of courts and exhaustion of administrative remedies.