TAXREV Topic: ASSAILING VALIDITY OF AN ORDINANCE

JARDINE DAVIES INSURANCE BROKERS INC. v. G.R. No. 118900 [446 PHIL 243-255]
HON. ERNA ALIPOSA Date: February 27, 2003
Ponente: CALLEJO, SR., J
JARDINE DAVIES INSURANCE BROKERS, INC., HON. ERNA ALIPOSA, in her capacity as Presiding Judge of
petitioner. Branch 150 of the Makati RTC and ROLANDO M. CARLOS,
in his capacity as Acting Treasurer of Makati, respondents.
DOCTRINES / SYLLABUS
1. A TAXPAYER MAY FILE A COMPLAINT ASSAILING THE VALIDITY THEREOF AND PRAYING FOR A
REFUND OF ITS PERCEIVED OVERPAYMENTS WITHOUT FIRST FILING A PROTEST. —This was our ruling
in Ty v. Judge Trampe: Hence, if a taxpayer disputes the reasonableness of an increase in a real estate tax assessment, he
is required to "first pay the tax" under protest. Otherwise, the city or municipal treasurer will not act on his protest. In the
case at bench, however, the petitioners are questioning the very authority and power of the assessor, acting solely and
independently, to impose the assessment and of the treasurer to collect the tax. These are not questions merely of amounts
of the increase in the tax but attacks on the very validity of any increase.
2. ANY QUESTION AS TO CONSTITUTIONALITY OR LEGALITY THEREOF MUST BE RAISED ON APPEAL
TO THE SECRETARY OF JUSTICE (SOJ) WITHIN 30 DAYS FROM EFFECTIVITY DATE THEREOF. —
Section 187 of the LGC which reads: Any question on the constitutionality or legality of tax ordinances or revenue measures
may be raised on appeal within 30 days from the effectivity thereof to the SOJ who shall render a decision within 60 days
from the date of receipt of the appeal. 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. Within 30 days after receipt of the decision or the lapse of
the 60-day period without the SOJ acting upon the appeal, the aggrieved party may file appropriate proceedings with a court
of competent jurisdiction.
3. FAILURE OF A TAXPAYER TO INTERPOSE THE REQUISITE APPEAL TO THE SECRETARY OF JUSTICE
IS FATAL TO ITS COMPLAINT FOR A REFUND. — 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 periods are clearly given for compliance as a prerequisite before
seeking redress in a competent court.
NATURE OF THE CASE: PFR on certiorari under Rule 45
FACTS
1. On 1993, the DOJ, on petition of the Philippine Racing Club, Inc., declared null and void the Makati Revenue Code, which
provides, inter alia, for the schedule of real estate, business and franchise taxes in the Municipality of Makati at rates higher
than those in the Metro Manila Revenue Code.
2. Pending resolution of its MR of the Resolution of the DOJ, Makati filed a petition ad cautelam with the RTC of Makati
alleging validity of the Ordinance. In the meantime, respondent Makati continued to implement the ordinance.
3. Petitioner was assessed and billed by the respondents for taxes, fees and charges under the ordinance for the second, third,
and fourth quarters of 1993. Petitioner paid its quarterly business taxes without protest.
4. On 1994, petitioner requested Makati to compute its business tax liabilities in accordance with the Metro Manila Revenue
Code and not under the ordinance considering that it was already declared by the DOJ null and void. Petitioner asked that it
be credited for the amount it overpaid or to refund its overpayment.
5. When Makati denied the request, petitioner filed a complaint. RTC dismissed the complaint on ground of prescription,
holding that petitioner failed to file an opposition or protest within 60 days from the notice of assessment.
6. Petitioner moved for reconsideration alleging that it was not required to first file a protest with Makati before instituting
its action for a refund of its overpayment or for it to be credited for said overpayments. The MR was, however, denied by
RTC. Hence, petitioner brought the matter before the SC.
ISSUE
W/N petitioner’s failure to interpose the requisite appeal to the Secretary of Justice is fatal to its complaint for a refund.
RATIO
YES. The Court agreed with the 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. However, it held that the petitioner was proscribed from filing its complaint with the trial court for the reason that
petitioner failed to appeal to SOJ w/n 30 days from the effectivity date of the ordinance as mandated by Sec. 187 of LGC.
In Reyes v. CA, the Court ruled that failure of a taxpayer to interpose the requisite appeal to the Secretary of Justice is fatal to its
complaint for a refund. The Court, therefore, denied the petition.
RULING
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The order of the RTC dismissing the complaint of petitioner
is AFFIRMED. SO ORDERED.
VILLAROMAN