[G.R. No. 143076.
June 10, 2003] PHILIPPINE RURAL Local Government Code on the ground that the said provisions
ELECTRIC COOPERATIVES ASSOCIATION, INC.
(PHILRECA); AGUSAN DEL NORTE ELECTRIC
COOPERATIVE, INC. (ANECO); ILOILO I ELECTRIC
COOPERATIVE, INC. (ILECO I); and ISABELA I ELECTRIC
COOPERATIVE, INC. (ISELCO I), petitioners, vs. THE
SECRETARY, DEPARTMENT OF INTERIOR AND LOCAL
GOVERNMENT, and THE SECRETARY, DEPARTMENT OF
FINANCE, respondents.
FACTS:
On May 23, 2000, a class suit was filed by petitioners in their own
behalf and in behalf of other electric cooperatives organized and
existing under P.D. No. 269 who are members of petitioner Philippine
Rural Electric Cooperatives Association, Inc. (PHILRECA). Petitioner
PHILRECA is an association of 119 electric cooperatives throughout
the country. Petitioners Agusan del Norte Electric Cooperative, Inc.
(ANECO), Iloilo I Electric Cooperative, Inc. (ILECO I) and Isabela I
Electric Cooperative, Inc. (ISELCO I) are non-stock, non-profit
electric cooperatives organized and existing under P.D. No. 269, as
amended, and registered with the National Electrification
Administration (NEA).
From 1971 to 1978, in order to finance the electrification projects
envisioned by P.D. No. 269, as amended, the Philippine Government,
acting through the National Economic Council (now National
Economic Development Authority) and the NEA, entered into six (6)
loan agreements with the government of the United States of America
through the United States Agency for International Development
(USAID) with electric cooperatives, including petitioners ANECO,
ILECO I and ISELCO I, as beneficiaries. The six (6) loan agreements
involved a total amount of approximately US$86,000,000.00. These
loan agreements are existing until today.
Petitioners contend that pursuant to the provisions of P.D. No. 269, as
amended, and the above-mentioned provision in the loan agreements,
they are exempt from payment of local taxes, including payment of
real property tax. With the passage of the Local Government Code,
however, they allege that their tax exemptions have been invalidly
withdrawn. In particular, petitioners assail Sections 193 and 234 of the
discriminate against them, in violation of the equal protection clause.
Further, they submit that the said provisions are unconstitutional
because they impair the obligation of contracts between the Philippine
Government and the United States Government.
ISSUE:
Whether or not the petition for Prohibition under Rule 65 of the
Rules of Court with prayer for the issuance of a temporary
restraining order seeking to annul as unconstitutional sections 193
and 234 of R.A. No. 7160 otherwise known as the Local
Government Code be granted?
HELD:
No.
We hold that there is reasonable classification under the Local
Government Code to justify the different tax treatment between
electric cooperatives covered by P.D. No. 269, as amended, and
electric cooperatives under R.A. No. 6938.
First, substantial distinctions exist between cooperatives under P.D.
No. 269, as amended, and cooperatives under R.A. No. 6938. These
distinctions are manifest in at least two material respects which go into
the nature of cooperatives envisioned by R.A. No. 6938 and which
characteristics are not present in the type of cooperative associations
created under P.D. No. 269, as amended.
a. Capital Contributions by Members
A cooperative under R.A. No. 6938 is defined as:
[A] duly registered association of persons with a common
bond of interest, who have voluntarily joined together to
achieve a lawful common or social economic end, making
equitable contributions to the capital required and
accepting a fair share of the risks and benefits of the
undertaking in accordance with universally accepted
cooperative principles.[10]
The classification of tax-exempt entities in the Local Government
Code is germane to the purpose of the law. The Constitutional mandate
that every local government unit shall enjoy local autonomy, does not
mean that the exercise of power by local governments is beyond
regulation by Congress. Thus, while each government unit is granted
the power to create its own sources of revenue, Congress, in light of its
broad power to tax, has the discretion to determine the extent of the
taxing powers of local government units consistent with the policy of
local autonomy.
Section 193 of the Local Government Code is indicative of the
legislative intent to vest broad taxing powers upon local government
units and to limit exemptions from local taxation to entities
specifically provided therein. Section 193 provides:
Section 193. Withdrawal of Tax Exemption Privileges. Unless
otherwise provided in this Code, tax exemptions or incentives granted
to, or presently enjoyed by all persons, whether natural or juridical,
including government-owned and controlled corporations, except local
water districts, cooperatives duly registered under R.A. No. 6938,
non-stock and non-profit hospitals and educational institutions, are
hereby withdrawn upon the effectivity of this Code.[24]
The above provision effectively withdraws exemptions from local
taxation enjoyed by various entities and organizations upon effectivity
of the Local Government Code except for a) local water districts; b)
cooperatives duly registered under R.A. No. 6938; and c) non-
stock and non-profit hospitals and educational
institutions. Further, with respect to real property taxes, the Local
Government Code again specifically enumerates entities which are
exempt therefrom and withdraws exemptions enjoyed by all other
entities upon the effectivity of the code. Thus, Section 234 provides:
SEC. 234. Exemptions from Real Property Tax. The following are
exempted from payment of the real property tax:
(a) Real property owned by the Republic of the Philippines or any of
its political subdivisions except when the beneficial use thereof had
been granted for consideration or otherwise, to a taxable person;
(b) Charitable institutions, churches, parsonages or convents
appurtenant thereto, mosques, nonprofit or religious cemeteries and all
lands, buildings and improvements actually, directly, and exclusively
used for religious, charitable or educational purposes;
(c) All machineries and equipment that are actually, directly and
exclusively used by local water districts and government-owned or
controlled corporations engaged in the supply and distribution of water
and/or generation and transmission of electric power;
(d) All real property owned by duly registered cooperatives as
provided for under R.A. No. 6938; and
(e) Machinery and equipment used for pollution control and
environmental protection.
Except as provided herein, any exemption from payment of real
property tax previously granted to, or presently enjoyed by, all
persons, whether natural or juridical, including all government-owned
or controlled corporations are hereby withdrawn upon the effectivity
of this Code.[25]
In Mactan Cebu International Airport Authority v.
Marcos,[26] this Court held that the limited and restrictive nature of the
tax exemption privileges under the Local Government Code is
consistent with the State policy to ensure autonomy of local
governments and the objective of the Local Government Code to grant
genuine and meaningful autonomy to enable local government units to
attain their fullest development as self-reliant communities and make
them effective partners in the attainment of national goals. The
obvious intention of the law is to broaden the tax base of local
government units to assure them of substantial sources of revenue.
While we understand petitioners predicament brought about by
the withdrawal of their local tax exemption privileges under the Local
Government Code, it is not the province of this Court to go into
the wisdom of legislative enactments. Courts can only interpret laws.
The principle of separation of powers prevents them from re-inventing
the laws.
 Finally, Sections 193 and 234 of the Local Government Code - - - - -- 1%
permit reasonable classification as these exemptions are not limited to
existing conditions and apply equally to all members of the same class. in excess of
Exemptions from local taxation, including real property tax, are ₱6,500,000.00
granted to all cooperatives covered by R.A. No. 6938 and such
exemptions exist for as long as the Local Government Code and the
provisions therein on local taxation remain good law. xxxx
WHEREFORE, the instant petition is DENIED and the
Section 21. – Tax on Businesses Subject to the Excise, Value-Added
temporary restraining order heretofore issued is LIFTED.
or Percentage Taxes under the NIRC. – On any of the following
businesses and articles of commerce subject to excise, value-added or
percentage taxes under the National Internal Revenue Code hereinafter
G.R. No. 181845 August 4, 2009 THE CITY OF MANILA,
referred to as NIRC, as amended, a tax of FIFTY PERCENT (50%) of
LIBERTY M. TOLEDO, in her capacity as THE TREASURER
ONE PERCENT (1%) per annum on the gross sales or receipts of the
OF MANILA and JOSEPH SANTIAGO, in his capacity as the
preceding calendar year is hereby imposed:
CHIEF OF THE LICENSE DIVISION OF CITY OF
MANILA, petitioners, vs. COCA-COLA BOTTLERS
(A) On persons who sell goods and services in the course of trade or
PHILIPPINES, INC., Respondent.
business; and those who import goods whether for business or
otherwise; as provided for in Sections 100 to 103 of the NIRC as
FACTS:
administered and determined by the Bureau of Internal Revenue
pursuant to the pertinent provisions of the said Code.
Prior to 25 February 2000, respondent had been paying the City of
Manila local business tax only under Section 14 of Tax Ordinance No.
xxxx
7794,6 being expressly exempted from the business tax under Section
21 of the same tax ordinance. Pertinent provisions of Tax Ordinance
(D) Excisable goods subject to VAT
No. 7794 provide:
(1) Distilled spirits
Section 14. – Tax on Manufacturers, Assemblers and Other
Processors. – There is hereby imposed a graduated tax on
(2) Wines
manufacturers, assemblers, repackers, processors, brewers, distillers,
rectifiers, and compounders of liquors, distilled spirits, and wines or
xxxx
manufacturers of any article of commerce of whatever kind or nature,
in accordance with any of the following schedule:
(8) Coal and coke
xxxx
(9) Fermented liquor, brewers’ wholesale price, excluding the
ad valorem tax
over ₱6,500,000.00 up to
xxxx
₱25,000,000.00 - - - - - - - - - - - - - - - ₱36,000.00 plus 50% of
PROVIDED, that all registered businesses in the City of Manila that
are already paying the aforementioned tax shall be exempted from
payment thereof.
Petitioner City of Manila subsequently approved on 25 February 2000,
Tax Ordinance No. 7988,7 amending certain sections of Tax Ordinance
No. 7794. Petitioner City of Manila assessed respondent on the basis
of Section 21 of Tax Ordinance No. 7794, as amended by the
aforementioned tax ordinances, for deficiency local business taxes,
penalties, and interest, in the total amount of ₱18,583,932.04, for the
third and fourth quarters of the year 2000.
Respondent filed a protest with petitioner Toledo on the ground that
the said assessment amounted to double taxation, as respondent was
taxed twice, i.e., under Sections 14 and 21 of Tax Ordinance No. 7794,
as amended by Tax Ordinances No. 7988 and No. 8011. Petitioner
Toledo did not respond to the protest of respondent.
Consequently, respondent filed with the Regional Trial Court (RTC) of
Manila, Branch 47, an action for the cancellation of the assessment
against respondent for business taxes, which was docketed as Civil
Case No. 03-107088.
On 14 July 2006, the RTC rendered a Decision9 dismissing Civil Case
No. 03-107088. The CTA En Banc rendered its Decision on 18
January 2008, dismissing the Petition for Review of petitioners and
affirming the Resolutions dated 24 May 2007, 8 June 2007, and 26
July 2007 of the CTA First Division.
ISSUE:
WHETHER OR NOT THE ENFORCEMENT OF [SECTION] 21 OF
THE [TAX ORDINANCE NO. 7794, AS AMENDED]
CONSTITUTES DOUBLE TAXATION.
HELD:
Petitioners obstinately ignore the exempting proviso in Section 21 of
Tax Ordinance No. 7794, to their own detriment. Said exempting
proviso was precisely included in said section so as to avoid double
taxation.
Double taxation means taxing the same property twice when it should
be taxed only once; that is, "taxing the same person twice by the same
jurisdiction for the same thing." It is obnoxious when the taxpayer is
taxed twice, when it should be but once. Otherwise described as
"direct duplicate taxation," the two taxes must be imposed on the same
subject matter, for the same purpose, by the same taxing authority,
within the same jurisdiction, during the same taxing period; and the
taxes must be of the same kind or character.18
The Court finds that there is indeed double taxation if respondent is
subjected to the taxes under both Sections 14 and 21 of Tax Ordinance
No. 7794, since these are being imposed: (1) on the same subject
matter – the privilege of doing business in the City of Manila; (2) for
the same purpose – to make persons conducting business within the
City of Manila contribute to city revenues; (3) by the same taxing
authority – petitioner City of Manila; (4) within the same taxing
jurisdiction – within the territorial jurisdiction of the City of Manila;
(5) for the same taxing periods – per calendar year; and (6) of the same
kind or character – a local business tax imposed on gross sales or
receipts of the business.
The distinction petitioners attempt to make between the taxes under
Sections 14 and 21 of Tax Ordinance No. 7794 is specious. The Court
revisits Section 143 of the LGC, the very source of the power of
municipalities and cities to impose a local business tax, and to which
any local business tax imposed by petitioner City of Manila must
conform. It is apparent from a perusal thereof that when a municipality
or city has already imposed a business tax on manufacturers, etc. of
liquors, distilled spirits, wines, and any other article of commerce,
pursuant to Section 143(a) of the LGC, said municipality or city may
no longer subject the same manufacturers, etc. to a business tax under
Section 143(h) of the same Code. Section 143(h) may be imposed only
on businesses that are subject to excise tax, VAT, or percentage tax
under the NIRC, and that are "not otherwise specified in preceding
paragraphs." In the same way, businesses such as respondent’s,
already subject to a local business tax under Section 14 of Tax
Ordinance No. 7794 [which is based on Section 143(a) of the LGC],
can no longer be made liable for local business tax under Section 21 of
the same Tax Ordinance [which is based on Section 143(h) of the
LGC].
WHEREFORE, premises considered, the instant Petition for Review
on Certiorari is hereby DENIED. No costs.
G.R. No. L-31156 February 27, 1976 PEPSI-COLA BOTTLING
COMPANY OF THE PHILIPPINES, INC., plaintiff-appellant, vs.
MUNICIPALITY OF TANAUAN, LEYTE, THE MUNICIPAL
MAYOR, ET AL., defendant appellees.
FACTS:
On February 14, 1963, the plaintiff-appellant, Pepsi-Cola Bottling
Company of the Philippines, Inc., commenced a complaint with
preliminary injunction before the Court of First Instance of Leyte for
that court to declare Section 2 of Republic Act No. 2264.1otherwise
known as the Local Autonomy Act, unconstitutional as an undue
delegation of taxing authority as well as to declare Ordinances Nos. 23
and 27, series of 1962, of the municipality of Tanauan, Leyte, null and
void.
On July 23, 1963, the parties entered into a Stipulation of Facts, the
material portions of which state that, first, both Ordinances Nos. 23
and 27 embrace or cover the same subject matter and the production
tax rates imposed therein are practically the same, and second, that on
January 17, 1963, the acting Municipal Treasurer of Tanauan, Leyte,
as per his letter addressed to the Manager of the Pepsi-Cola Bottling
Plant in said municipality, sought to enforce compliance by the latter
of the provisions of said Ordinance No. 27, series of 1962.
On October 7, 1963, the Court of First Instance of Leyte rendered
judgment "dismissing the complaint and upholding the
constitutionality of [Section 2, Republic Act No. 2264] declaring
Ordinance Nos. 23 and 27 legal and constitutional; ordering the
plaintiff to pay the taxes due under the oft the said Ordinances; and to
pay the costs."
From this judgment, the plaintiff Pepsi-Cola Bottling Company
appealed to the Court of Appeals, which, in turn, elevated the case to
Us pursuant to Section 31 of the Judiciary Act of 1948, as amended.
ISSUE:
Do Ordinances Nos. 23 and 27 constitute double taxation and impose
percentage or specific taxes?
HELD:
Undoubtedly, the taxing authority conferred on local governments
under Section 2, Republic Act No. 2264, is broad enough as to extend
to almost "everything, accepting those which are mentioned therein."
As long as the text levied under the authority of a city or municipal
ordinance is not within the exceptions and limitations in the law, the
same comes within the ambit of the general rule, pursuant to the rules
of exclucion attehus and exceptio firmat regulum in cabisus non
excepti 19 The limitation applies, particularly, to the prohibition against
municipalities and municipal districts to impose "any percentage tax or
other taxes in any form based thereon nor impose taxes on articles
subject to specific tax except gasoline, under the provisions of the
National Internal Revenue Code." For purposes of this particular
limitation, a municipal ordinance which prescribes a set ratio between
the amount of the tax and the volume of sale of the taxpayer imposes a
sales tax and is null and void for being outside the power of the
municipality to enact. 20 But, the imposition of "a tax of one centavo
(P0.01) on each gallon (128 fluid ounces, U.S.) of volume capacity" on
all soft drinks produced or manufactured under Ordinance No. 27 does
not partake of the nature of a percentage tax on sales, or other taxes in
any form based thereon. The tax is levied on the produce (whether sold
or not) and not on the sales. The volume capacity of the taxpayer's
production of soft drinks is considered solely for purposes of
determining the tax rate on the products, but there is not set ratio
between the volume of sales and the amount of the tax.21
Nor can the tax levied be treated as a specific tax. Specific taxes are
those imposed on specified articles, such as distilled spirits, wines,
fermented liquors, products of tobacco other than cigars and cigarettes,
matches firecrackers, manufactured oils and other fuels, coal, bunker
fuel oil, diesel fuel oil, cinematographic films, playing cards,
saccharine, opium and other habit-forming drugs. 22 Soft drink is not
one of those specified.
ACCORDINGLY, the constitutionality of Section 2 of Republic Act
No. 2264, otherwise known as the Local Autonomy Act, as amended,
is hereby upheld and Municipal Ordinance No. 27 of the Municipality
of Tanauan, Leyte, series of 1962, re-pealing Municipal Ordinance No.
23, same series, is hereby declared of valid and legal effect. Costs
against petitioner-appellant.
G.R. No. L-24813 April 28, 1969 DR. HERMENEGILDO
SERAFICA, plaintiff-appellant, vs. THE TREASURER OF
ORMOC CITY, THE MUNICIPAL BOARD OF ORMOC CITY,
HON. ESTEBAN C. CONEJOS, as Mayor of Ormoc City and
ORMOC CITY, defendants-appellees.
FACTS:
Plaintiff, Dr. Hermenegildo Serafica, seeks a declaration of nullity of
Ordinance No. 13, Series of 1964, of Ormoc City, imposing a "tax of
five pesos (P5.00) for every one thousand (1,000) board feet of lumber
sold at Ormoc City by any person, partnership, firm, association,
corporation, or entities", pursuant to which the Treasurer of said City
levied on and collected from said plaintiff, as owner of the Serafica
Sawmill, the aggregate sum of P1,837.84, as tax on 367,568 board feet
of lumber sold, in said City, during the third quarter of 1964. After
appropriate proceedings, the lower court rendered judgment upholding
the validity of said ordinance and denying the relief prayed for by Dr.
Serafica. Hence, this appeal by the latter.
ISSUE/S:
(1.) the ordinance in question imposes, in effect, double taxation,
because the business of lumberyard is already regulated under said
Charter and the sale of lumber is "a mere incident to the business of
lumber yard";
(2.) the tax imposed is "unfair, unjust, arbitrary, unreasonable,
oppressive and contrary to the principles of taxation";
(3.) "the public was not heard and given a chance to air its views"
thereon.
HELD:
1. Suffice it to say that regulation and taxation are two different
things, the first being an exercise of police power, whereas the
latter is not, apart from the fact that double taxation is not
prohibited in the Philippines.
2. Upon the fact that the tax in question is imposed regardless of
the class of lumber sold, although there are several categories
thereof, commanding different prices. Plaintiff has not proven,
however, or even alleged the prices corresponding to each
category, so that, like the lower court, We have no means to
ascertain the accuracy of the conclusion drawn by him, and
must, accordingly, rely upon the presumption that the City
Council had merely complied with its duty and that the
ordinance is valid, unless and until the contrary has been duly
established.
3. The last objection is based upon Provincial Circular No. 24 of
the Department of Finance, dated March 31,
1960, suggesting that, "in the enactment of tax ordinances ..
under the Local Autonomy Act ... where practicable, public
hearings be held wherein the views of the public ... may be
heard." This is, however, a mere suggestion, compliance with
which is not obligatory, so that failure to act in accordance
therewith cannot and does not affect the validity of the tax
ordinance.
Indeed, since local governments are subject, not to the control, but
merely to the general supervision of the President, it is to say the least,
doubtful that the latter could have made compliance with said circular
obligatory. 6
We have not overlooked the fact that, pursuant to Sec. 2 of Republic
Act No. 2264 as amended "no city, municipality or municipal district
may levy or impose. Neither have We overlooked the proviso in Sec. 2
of said Act prohibiting the imposition of "any percentage tax on sales
or other taxes in any form based thereon," for this injunction is
directed exclusively to "municipalities and municipal districts," and
does not apply to cities.
WHEREFORE, the decision appealed from should be, as it is hereby
affirmed, with costs against plaintiff herein. It is so ordered.
[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.
FACTS:
Petitioner Jardine Davies Insurance Brokers, Inc., a duly-
organized corporation with principal place of business at No. 222 Sen.
Gil J. Puyat Avenue, Makati, Metro Manila, was assessed and billed
by Makati the amount of P63,822.47 for taxes, fees and charges under
the ordinance for the second quarter of 1993. It was again billed by
respondent Makati the same amount for the third quarter of 1993 and
the same amount for the fourth quarter of 1993. Petitioner did not
protest the assessment for its quarterly business taxes for the second,
third and fourth quarters of 1993 based on said ordinance effective
April 1, 1993. Petitioner, in fact, paid the said amounts on April 26,
1993 (for the second quarter), July 12, 1993 (for the third quarter) and
October 19, 1993 (for the fourth quarter), respectively, without any
protest. Respondent Makati issued the corresponding receipts in favor
of petitioner.[6]
On January 30, 1994, petitioner wrote the municipal treasurer of
Makati requesting that respondent Makati compute its business tax
liabilities in accordance with the Metro Manila Revenue Code and not
under the ordinance considering that said ordinance was already
declared by the DOJ null and void. Petitioner likewise requested that
respondent Makati credit the overpayment in the total amount of
P27,854.91 for the second to fourth quarters of 1993 against its 1994
liabilities for 1994, or in the alternative, for Makati to refund the said
amount to petitioner.
Petitioner filed a complaint on March 7, 1994 with the RTC of
Makati against respondents Makati and its Acting Municipal
Treasurer.
On August 29, 1994, the RTC issued an order granting the motion
to dismiss of respondent and ordering the dismissal of the complaint.
The trial court ruled that plaintiffs 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 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.
ISSUE:
Whether or not RESPONDENT JUDGE ERRED IN DISMISSING
THE CASE ON THE GROUND OF PENDENCY OF ANOTHER
ACTION CONTESTING THE LEGALITY OR
CONSTITUTIONALITY OF THE MAKATI REVENUE CODE IS
STILL BEING DETERMINED IN BRANCH 148 OF THE
REGIONAL TRIAL COURT OF MAKATI.
HELD:
The petition has no merit.
The Court agrees with petitioner that as a general precept, a
taxpayer may file a complaint assailing the validity of the ordinance
and praying for a refund of its perceived overpayments without first
filing a protest to the payment of taxes due under the ordinance. In this
case, petitioner, relying on the resolution of the Secretary of Justice
in The Philippine Racing Club, Inc. v. Municipality of Makati case,
posited in its complaint that the ordinance which was the basis of
respondent Makati for the collection of taxes from petitioner was null
and void. However, the 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.
In Reyes v. Court of Appeals,[14] we ruled that failure of a taxpayer
to interpose the requisite appeal to the Secretary of Justice is fatal to its
complaint for a refund:
Clearly, the 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.
Moreover, petitioner even paid without any protest the amounts of
taxes assessed by respondents Makati and Acting Treasurer as
provided for in the ordinance. Evidently, the complaint of petitioner
with the Regional Trial Court was merely an afterthought. In view of
our foregoing disquisitions, the Court no longer deems it necessary to
resolve other issues posed by petitioner.
IN LIGHT OF ALL THE FOREGOING, the petition is
DENIED. The order of the Regional Trial Court dismissing the
complaint of petitioner is AFFIRMED.
HAGONOY MARKET VENDOR ASSOCIATION, petitioner,
vs. MUNICIPALITY OF HAGONOY, BULACAN, respondent.
FACTS:
On October 1, 1996, the Sangguniang Bayan of Hagonoy, Bulacan,
enacted an ordinance, Kautusan Blg. 28,[2] which increased the stall
rentals of the market vendors in Hagonoy. Article 3 provided that it
shall take effect upon approval. The subject ordinance was posted
from November 4-25, 1996.[3]
In the last week of November, 1997, the petitioners members were
personally given copies of the approved Ordinance and were informed
that it shall be enforced in January, 1998. On December 8, 1997, the
petitioners President filed an appeal with the Secretary of Justice
assailing the constitutionality of the tax ordinance. Petitioner claimed
it was unaware of the posting of the ordinance.
Respondent opposed the appeal. It contended that the ordinance took
effect on October 6, 1996 and that the ordinance, as approved, was
posted as required by law. Hence, it was pointed out that petitioners
appeal, made over a year later, was already time-barred.
The Secretary of Justice dismissed the appeal on the ground that it was
filed out of time, i.e., beyond thirty (30) days from the effectivity of
the Ordinance on October 1, 1996, as prescribed under Section 187 of
the 1991 Local Government Code
After its motion for reconsideration was denied, petitioner
appealed to the Court of Appeals. Unfortunately, its petition for review
was dismissed by the Court of Appeals for being formally deficient as
it was not accompanied by certified true copies of the assailed
Resolutions of the Secretary of Justice.
Hence, this appeal.
ISSUE:
Whether or not the appeal of the petitioner should be dismissed?
HELD:
We hold that the petition should be dismissed as the appeal of the
petitioner with the Secretary of Justice is already time-barred. The
applicable law is Section 187 of the 1991 Local Government Code
which provides:
SEC. 187. Procedure for Approval and Effectivity of Tax
Ordinances and Revenue Measures; Mandatory Public Hearings. -
The procedure for the 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 receipt of the
appeal: Provided, however, That such appeal shall not have the
effect of suspending the effectivity of the ordinance and 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.
The aforecited law requires that an appeal of a tax ordinance or
revenue measure should be made to the Secretary of Justice within
thirty (30) days from effectivity of the ordinance and even during
its pendency, the effectivity of the assailed ordinance shall not be
suspended. In the case at bar, Municipal Ordinance No. 28 took effect
in October 1996. Petitioner filed its appeal only in December
1997, more than a year after the effectivity of the ordinance in
1996. Clearly, the Secretary of Justice correctly dismissed it for
being time-barred. At this point, it is apropos to state that the
timeframe fixed by law for parties to avail of their legal remedies
before competent courts is not a mere technicality that can be easily
brushed aside. The periods stated in Section 187 of the Local
Government Code are mandatory.[10] Ordinance No. 28 is a revenue
measure adopted by the municipality of Hagonoy to fix and collect
public market stall rentals. Being its lifeblood, collection of revenues
by the government is of paramount importance. The funds for the
operation of its agencies and provision of basic services to its
inhabitants are largely derived from its revenues and collections. Thus,
it is essential that the validity of revenue measures is not left
uncertain for a considerable length of time.[11] Hence, the law
provided a time limit for an aggrieved party to assail the legality of
revenue measures and tax ordinances.
IN VIEW WHEREOF, the petition is DISMISSED for lack of
merit. No pronouncement as to costs.
G.R. No. 118233 December 10, 1999 ANTONIO Z. REYES,
ELISEO P. OCAMPO and EDITHA ARCIAGA-
SANTOS, petitioners, vs. COURT OF APPEALS, HON.
SECRETARY OF JUSTICE FRANKLIN DRILON and MAYOR
JINGGOY ESTRADA (JOSE EJERCITO) OF THE
MUNICIPALITY OF SAN JUAN, METRO
MANILA, respondents.
FACTS:
The Sangguniang Bayan of San Juan, Metro Manila implemented
several tax ordinances as follows:
Ordinance No. Title tax on the
assessed value of
87 An ordinance all real estate
imposing a property in San
municipal tax of Juan, Metro
fifty percent Manila in excess
(50%) of one of P50,000.00
percent (1%) of value as provided
the gross receipt in the New Urban
on business of Land Reform
printing and Law, also known
publication as R.A. 7279.

91 An ordinance 100 An ordinance

imposing a imposing new
transfer tax rates of business
equivalent to fifty taxes of the
percent (50%) of Municipality of
one percent (1%) San Juan Metro
of the total Manila
consideration on
the sale, donation, 101 An ordinance
barter or any other levying an annual
mode of "Ad Valorem" tax
transferring on real property
ownership or title and an additional
of real property tax accruing to the
situated in San special education
Juan, Metro fund (SEF)
Manila, or its fair
market value, On May 21, 1993, petitioners filed an appeal with the Department of
whichever is Justice assailing the constitutionality of these tax ordinances allegedly
higher because they were promulgated without previous public hearings
thereby constituting deprivation of property without due process of
95 An ordinance law.
imposing fifty
percent (50%) of On June 10, 1993, respondent Secretary of Justice dismissed the
one percent (1%) appeal for having been filed out of time. The Court of Appeals
for social housing affirmed the decision of the Secretary.
ISSUE:
Whether or not the Court of Appeals erred in affirming the decision of
the Secretary of Justice who dismissed the prohibition suit, on the
ground that it was filed out of time?
HELD:
Sec. 187 of R.A. 7160, cited by respondent Secretary, provides as
follows:
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 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.
Clearly, the 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 appeals, 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.5 For
this reason the courts construct these provisions of statutes as
mandatory.6
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. 7 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.
WHEREFORE, the present petition is DISMISSED for lack of merit
and the assailed decision of the Court of Appeals is AFFIRMED. No
pronouncement as to costs.
G.R. No. 112497 August 4, 1994 HON. FRANKLIN M. DRILON,
in his capacity as SECRETARY OF JUSTICE, petitioner, vs.
MAYOR ALFREDO S. LIM, VICE-MAYOR JOSE L.
ATIENZA, CITY TREASURER ANTHONY ACEVEDO,
SANGGUNIANG PANGLUNSOD AND THE CITY OF
MANILA, respondents.
FACTS:
The Secretary of Justice had, on appeal to him of four oil companies
and a taxpayer, declared Ordinance No. 7794, otherwise known as the
Manila Revenue Code, null and void for non-compliance with the
prescribed procedure in the enactment of tax ordinances and for
containing certain provisions contrary to law and public policy.1
In a petition for certiorari filed by the City of Manila, the Regional
Trial Court of Manila revoked the Secretary's resolution and sustained
the ordinance, holding inter alia that the procedural requirements had
been observed. More importantly, it declared Section 187 of the Local
Government Code as unconstitutional because of its vesture in the
Secretary of Justice of the power of control over local governments in
violation of the policy of local autonomy mandated in the Constitution
and of the specific provision therein conferring on the President of the
Philippines only the power of supervision over local governments.2
The present petition would have us reverse that decision. The
Secretary argues that the annulled Section 187 is constitutional and
that the procedural requirements for the enactment of tax ordinances as
specified in the Local Government Code had indeed not been
observed.
Parenthetically, this petition was originally dismissed by the Court for
non-compliance with Circular 1-88, the Solicitor General having failed
to submit a certified true copy of the challenged decision.
ISSUE:
Whether or not Section 187 of the Local Government Code is
constitutional?
HELD:
Section 187 authorizes the Secretary of Justice to review only the
constitutionality or legality of the tax ordinance and, if warranted, to
revoke it on either or both of these grounds. When he alters or
modifies or sets aside a tax ordinance, he is not also permitted to
substitute his own judgment for the judgment of the local government
that enacted the measure. Secretary Drilon did set aside the Manila
Revenue Code, but he did not replace it with his own version of what
the Code should be. He did not pronounce the ordinance unwise or
unreasonable as a basis for its annulment. He did not say that in his
judgment it was a bad law. What he found only was that it was illegal.
All he did in reviewing the said measure was determine if the
petitioners were performing their functions in accordance with law,
that is, with the prescribed procedure for the enactment of tax
ordinances and the grant of powers to the city government under the
Local Government Code. As we see it, that was an act not of control
but of mere supervision.
Significantly, a rule similar to Section 187 appeared in the Local
Autonomy Act, which provided in its Section 2 as follows:
A tax ordinance shall go into effect on the fifteenth day
after its passage, unless the ordinance shall provide
otherwise: Provided, however, That the Secretary of
Finance shall have authority to suspend the effectivity
of any ordinance within one hundred and twenty days
after receipt by him of a copy thereof, if, in his opinion,
the tax or fee therein levied or imposed is unjust,
excessive, oppressive, or confiscatory, or when it is
contrary to declared national economy policy, and when
the said Secretary exercises this authority the effectivity
of such ordinance shall be suspended, either in part or
as a whole, for a period of thirty days within which
period the local legislative body may either modify the
tax ordinance to meet the objections thereto, or file an
appeal with a court of competent jurisdiction;
otherwise, the tax ordinance or the part or parts thereof
declared suspended, shall be considered as revoked.
Thereafter, the local legislative body may not reimpose
the same tax or fee until such time as the grounds for
the suspension thereof shall have ceased to exist.
That section allowed the Secretary of Finance to suspend the
effectivity of a tax ordinance if, in his opinion, the tax or fee levied
was unjust, excessive, oppressive or confiscatory. Determination of
these flaws would involve the exercise of judgment or discretion and
not merely an examination of whether or not the requirements or
limitations of the law had been observed; hence, it would smack of
control rather than mere supervision. That power was never questioned
before this Court but, at any rate, the Secretary of Justice is not given
the same latitude under Section 187. All he is permitted to do is
ascertain the constitutionality or legality of the tax measure, without
the right to declare that, in his opinion, it is unjust, excessive,
oppressive or confiscatory. He has no discretion on this matter. In fact,
Secretary Drilon set aside the Manila Revenue Code only on two
grounds, to with, the inclusion therein of certain ultra vires provisions
and non-compliance with the prescribed procedure in its enactment.
These grounds affected the legality, not the wisdom or reasonableness,
of the tax measure.

WHEREFORE, the judgment is hereby rendered REVERSING the

challenged decision of the Regional Trial Court insofar as it declared
Section 187 of the Local Government Code unconstitutional but
AFFIRMING its finding that the procedural requirements in the
enactment of the Manila Revenue Code have been observed. No
pronouncement as to costs.