JARDINE DAVIES INSURANCE BROKERS, INC. vs.

ALIPOSA

G.R. No. 118900 February 27, 2003

CALLEJO, SR., J.:

FACTS:

Philippine Racing Club, Inc. ("PRCI" for brevity), a taxpayer of Makati, appealed to
the Department of Justice ("DOJ" for brevity) for the nullification of Municipal Ordinance
No. 92-072, otherwise known as 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, alleging that it was approved
without previous public hearings, in violation of the Local Government Code and Article 276
of its Implementing Rules, and that some of the ordinance’s provisions were
unconstitutional.

The DOJ issued a resolution declaring "null and void and without legal effect" the said
ordinance for having been enacted in contravention of Section 187 of the Local Government
Code of 1991 and its implementing rules and regulations. Respondent Makati sought for
reconsideration of such ruling. Pending such resolution, respondent Makati filed a petition ad
cautelam with the RTC and alleges that public hearings were conducted before the approval
of the ordinance and hence the ordinance was valid.

Meanwhile, petitioner Jardine Daview Insurance Brokers Inc., was assessed and
billed by Makati in accordance with the ordinance. Petitioner did not protest and paid the
amounts. Respondent Makati issued the corresponding receipts thereof.

Petitioner then wrote a letter to the municipal treasurer of Makati requesting that
Makati compute its business tax liabilities in accordance with the Metro Manila Revenue
Code and not under the ordinance. In addition to that, petitioner requested to credit the
overpayment to their liabilities or in the alternative, for Makati to refund the amount to the
petitioner. Respondent Makati denied the request of petitioner to credit/refund; and further
insisted that the said ordinance is valid and enforceable pending the final outcome of its
petition ad cautelam. RTC held that the ordinance is valid.

Petitioner filed a complaint against respondents alleging that in view of the resolution
of the DOJ declaring the Makati Revenue Code "null and void and without legal effect," the
provisions of the Metro Manila Revenue Code continued to remain in full force and effect;
however, petitioner was assessed and billed by respondent Makati for taxes, fees and
charges at rates fixed in the ordinance despite the nullity thereof.

Respondent Makati filed a motion to dismiss on the ground of prematurity and

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 granted the motion to dismiss and ordered the dismissal of the complaint. The
trial court ruled that plaintiff’s cause of action, if any, had prescribed. 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.
A motion for reconsideration was filed but was denied by the RTC.

Hence, this petition for review.

ISSUES:

Whether or not the petition for certiorari will prosper

RULING:

No. 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.

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.

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.

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.

Hence, the petition is denied.