Jardine Davies vs. Aliposa

 G.R. No. 118900             February 27, 2003

JARDINE DAVIES INSURANCE BROKERS, INC., petitioner,

vs.

HON. ERNA ALIPOSA, in her capacity as Presiding Judge of Branch 150 of the Makati Regional Trial Court, CITY (previously Municipality) OF MAKATI and ROLANDO M. CARLOS, in his capacity as Acting Treasurer of Makati, respondents.

CASE SUMMARY:

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.

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.

* Better to read the summary as discussed by Justice Leonen in the case of Aala vs. Uy! Thanks Justice Leonen!

FACTS:

Sangguniang Bayan of Makati enacted Municipal Ordinance No. 92-072, otherwise known as the Makati Revenue Code.

PRCI, a taxpayer of Makati, appealed to the DOJ for the nullification of said ordinance, alleging that it was approved without previous public hearings.

DOJ came out with a resolution declaring "null and void and without legal effect".

Respondent municipality of Makati sought a reconsideration of the ruling of the DOJ. Pending resolution of its motion, said respondent filed a petition ad cautelam with the (RTC) of Makati. Respondent alleged, inter alia, that public hearings were conducted before the approval of the ordinance and hence the ordinance was valid. 

In the meantime, respondent continued to implement the ordinance. Petitioner Jardine Davies Insurance Brokers, Inc. was assessed and billed by Municipality of Makati for taxes, fees and charges under the ordinance. Petitioner did not protest the assessment based on said ordinance, in fact, paid the said amounts without any protest. 

Thereafter, petitioner Jardine wrote the municipal treasurer of Makati requesting since the ordinance was already declared by the DOJ null and void petitioner Jardine requested the credit of the overpayment they made out of such ordinance.

However, petitioner jardine request for tax credit/refund was denied. Respondent insisted that the questioned ordinance code was valid and enforceable pending the final outcome of its petition ad cautelam with the RTC of Makati.

Upon knowledge of such, petitioner jardine filed a complaint with the RTC of Makati against respondents Makati and its Acting Municipal Treasurer praying the declaration as NULL AND VOID the Municipal Ordinance No. 92-072, (Makati Revenue Code) of the Municipality of Makati and ordering Defendants to refund or issue as tax credit in favor of Plaintiff.

Respondents Makati and its Acting Municipal Treasurer filed a motion to dismiss the complaint on the ground of prematurity. They argued that petitioner’s cause of action was predicated on the appealed resolution of the DOJ, and unless and until nullified by final judgment of a competent court, the ordinance remained in full force and effect.

RTC issued an order granting the motion to dismiss of respondent and ordering the dismissal of the complaint. The trial court further ruled that jardine cause of action, if any, had prescribed. Citing Sections 187 and 195 of the Local Government Code of 1991, the trial court ratiocinated that petitioner failed to file an opposition or protest to the written notice of assessment of Municipality of Makati for taxes, fees and charges at rates provided for in the ordinance within 60 days from the notice of said assessment as required by Section 195 of the Local Government Code. Hence, petitioner was barred from demanding a refund of its payment or that it be credited for said amounts.

Jardine filed with the trial court a motion for reconsideration of the order of dismissal however denied.

Hence instant petition for review on certiorari under Rule 45 of the Rules of Court.

ISSUE:

Whether petitioner was proscribed from filing its complaint with the RTC of Makati for the reason that petitioner failed to appeal to the Secretary of Justice within 30 days from the effectivity date of the ordinance as mandated by Section 187 of the Local Government Code.

RULING:

Yes. Court agrees with the contention of respondents that petitioner was proscribed from filing its complaint with the RTC of Makati for the reason that petitioner failed to appeal to the Secretary of Justice within 30 days from the effectivity date of the ordinance as mandated by Section 187 of the Local Government Code which reads:

Sec. 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.

A municipal tax ordinance empowers a local government unit to impose taxes. The power to tax is the most effective instrument to raise needed revenues to finance and support the myriad activities of local government units for the delivery of basic services essential to the promotion of the general welfare and enhancement of peace, progress, and prosperity of the people. Consequently, any delay in implementing tax measures would be to the detriment of the public. It is for this reason that protests over tax ordinances are required to be done within certain time frames. In the instant case, it is our view that the failure of petitioners to appeal to the Secretary of Justice within 30 days as required by Sec. 187 of R.A. 7160 is fatal to their cause.

Therefore, the petition is DENIED. The order of the Regional Trial Court dismissing the complaint of petitioner is AFFIRMED.