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NACHURA, J.:
SMART COMMUNICATIONS, INC., G.R. No. 155491 This is a petition for review on certiorari under Rule 45 of the Rules
Petitioner, of Court filed by Smart Communications, Inc. (Smart) against the City of
Davao, represented by its Mayor, Hon. Rodrigo R. Duterte, and the
Present:
Sangguniang Panlungsod of Davao City, to annul the Decision1[1] dated July
19, 2002 of the Regional Trial Court (RTC) and its Order2[2] dated
- versus - YNARES-SANTIAGO, J.,
September 26, 2002 in Sp. Civil Case No. 28,976-2002.
Chairperson,
AUSTRIA-MARTINEZ,
The Facts
CHICO-NAZARIO,
DECISION
4
[4] City Ordinance No. 519, series of 1992, amending Ordinance No. 230, series of
1991, otherwise known as the Tax Code of the City of Davao.
Notwithstanding any exemption granted by any law On March 2, 2002, respondents filed their Answer8[8]in which they
or other special law, there is hereby imposed a tax on
contested the tax exemption claimed by Smart. They invoked the power
businesses enjoying a franchise, at a rate of seventy-five
percent (75%) of one percent (1%) of the gross annual granted by the Constitution to local government units to create their own
receipts for the preceding calendar year based on the sources of revenue.9[9]
income or receipts realized within the territorial jurisdiction
of Davao City.
On May 17, 2002, a pre-trial conference was held. Inasmuch as only
legal issues were involved in the case, the RTC issued an order requiring
the parties to submit their respective memoranda and, thereafter, the case
Smart contends that its telecenter in Davao City is exempt from
would be deemed submitted for resolution.10[10]
payment of franchise tax to the City, on the following grounds: (a) the
issuance of its franchise under Republic Act (R.A.) No. 72945[5]subsequent
to R.A. No. 7160 shows the clear legislative intent to exempt it from the On July 19, 2002, the RTC rendered its Decision 11[11] denying the
provisions of R.A. 7160;6[6](b) Section 137 of R.A. No. 7160 can only apply petition. The trial court noted that the ambiguity of the “in lieu of all
to exemptions already existing at the time of its effectivity and not to taxes” provision in R.A. No. 7294, on whether it covers both national and
future exemptions; (c) the power of the City of Davao to impose a local taxes, must be resolved against the taxpayer. 12[12] The RTC
franchise tax is subject to statutory limitations such as the “in lieu of all ratiocinated that tax exemptions are construed in strictissimi juris against
taxes” clause found in Section 9 of R.A. No. 7294; and (d) the imposition of the taxpayer and liberally in favor of the taxing authority and, thus, those
franchise tax by the City of Davao would amount to a violation of the who assert a tax exemption must justify it with words too plain to be
8
[8] Id. at 21-26.
5
[5] An act granting Smart Information Technologies, Inc. (Smart) a franchise to
establish, install, maintain, lease and operate integrated
9
[9] CONSTITUTION, Art. X, Sec. 5.
telecommunications/computer/electronic services, and stations throughout the Philippines 10
[10] Records, p. 62.
for public domestic and international telecommunications, and for other purposes.
11
[11] Supra note 1.
6
[6] Smart’s franchise lapsed into law on March 27, 1992 without the President’s
signature in accordance with Article VI, Section 27(1) of the Constitution. 12
[12] Id. at 104.
7
[7] Records, pp. 7-8. 13
[13] Id. at 106.
violation of the non-impairment clause of the Constitution, the trial court FRANCHISE TAX MAY BE IMPOSED ON PETITIONER BY
RESPONDENT CITY.
cited Mactan Cebu International Airport Authority v. Marcos,14[14]and
declared that the city’s power to tax is based not merely on a valid
delegation of legislative power but on the direct authority granted to it by [b.] THE LOWER COURT ERRED IN HOLDING THAT
the fundamental law. It added that while such power may be subject to PETITIONER’S FRANCHISE IS A GENERAL LAW AND DID NOT
REPEAL RELEVANT PROVISIONS REGARDING FRANCHISE TAX
restrictions or conditions imposed by Congress, any such legislated
OF THE LOCAL GOVERNMENT CODE, WHICH ACCORDING TO
limitation must be consistent with the basic policy of local autonomy.15[15] THE COURT IS A SPECIAL LAW.
Smart filed a motion for reconsideration which was denied by the [c.] THE LOWER COURT ERRED IN NOT HOLDING
THAT SECTION 137 OF THE LOCAL GOVERNMENT CODE,
trial court in an Order16[16]dated September 26, 2002.
WHICH, IN RELATION TO SECTION 151 THEREOF, ALLOWS
RESPONDENT CITY TO IMPOSE THE FRANCHISE TAX, AND
SECTION 193 OF THE CODE, WHICH PROVIDES FOR
Thus, the instant case. WITHDRAWAL OF TAX EXEMPTION PRIVILEGES, ARE NOT
APPLICABLE TO THIS CASE.
Smart alleges that the “in lieu of all taxes” clause in Section 9 of its
franchise exempts it from all taxes, both local and national, except the Section 151. Scope of Taxing Powers. — Except as
otherwise provided in this Code, the city may levy the taxes,
national franchise tax (now VAT), income tax, and real property tax.18[18]
fees, and charges which the province or municipality may
impose: Provided, however, That the taxes, fees and
charges levied and collected by highly urbanized and
On January 1, 1992, two months ahead of Smart’s franchise, the independent component cities shall accrue to them and
Local Government Code (R.A. No. 7160) took effect. Section 137, in distributed in accordance with the provisions of this Code.
relation to Section 151 of R.A. No. 7160, allowed the imposition of
franchise tax by the local government units; while Section 193 thereof
18
[18] Id. at 258.
The rates of taxes that the city may levy may
exceed the maximum rates allowed for the province
The “in lieu of all taxes” clause in Smart’s franchise is put in issue
or municipality by not more than fifty percent (50%)
except the rates of professional and amusement before the Court. In order to ascertain its meaning, consistent with
taxes. fundamentals of statutory construction, all the words in the statute must
be considered. The grant of tax exemption by R.A. No. 7294 is not to be
interpreted from a consideration of a single portion or of isolated words or
clauses, but from a general view of the act as a whole. Every part of the
Section 193. Withdrawal of Tax Exemption
Privileges. — Unless otherwise provided in this Code, tax statute must be construed with reference to the context.19[19]
exemptions or incentives granted to, or presently enjoyed
by all persons, whether natural or juridical, including
government-owned or controlled corporations, except local Smart is of the view that the only taxes it may be made to bear
water districts, cooperatives duly registered under RA No. under its franchise are the national franchise tax (now VAT), income tax,
6938, non-stock and non-profit hospitals and educational
institutions, are hereby withdrawn upon the effectivity of and real property tax.20[20] It claims exemption from the local franchise tax
this Code. (Emphasis supplied.) because the “in lieu of taxes” clause in its franchise does not distinguish
between national and local taxes.21[21]
Smart argues that it is not covered by Section 137, in relation to We pay heed that R.A. No. 7294 is not definite in granting
Section 151 of R.A. No. 7160, because its franchise was granted after the exemption to Smart from local taxation. Section 9 of R.A. No. 7294
effectivity of the said law. We agree with Smart’s contention on this imposes on Smart a franchise tax equivalent to three percent (3%) of all
matter. The withdrawal of tax exemptions or incentives provided in R.A. gross receipts of the business transacted under the franchise and the said
No. 7160 can only affect those franchises granted prior to the effectivity of percentage shall be in lieu of all taxes on the franchise or earnings thereof.
the law. The intention of the legislature to remove all tax exemptions or R.A. No 7294 does not expressly provide what kind of taxes Smart is
incentives granted prior to the said law is evident in the language of
19
[19] Aquino v. Quezon City, G.R. No. 137534, August 3, 2006, 497 SCRA 497, 507.
Section 193 of R.A. No. 7160. No interpretation is necessary. 20
[20] Rollo, p. 258.
21
[21] Id.
II. The “in lieu of all taxes” Clause in R.A. No. 7294
exempted from. It is not clear whether the “in lieu of all taxes” provision in doubt, then the intention of the legislature must be resolved in favor of the
the franchise of Smart would include exemption from local or national State.24[24]
taxation. What is clear is that Smart shall pay franchise tax equivalent to
three percent (3%) of all gross receipts of the business transacted under
In this case, the doubt must be resolved in favor of the City of
its franchise. But whether the franchise tax exemption would include
Davao. The “in lieu of all taxes” clause applies only to national internal
exemption from exactions by both the local and the national government
revenue taxes and not to local taxes. As appropriately pointed out in the
is not unequivocal.
separate opinion of Justice Antonio T. Carpio in a similar case 25[25] involving
a demand for exemption from local franchise taxes:
The uncertainty in the “in lieu of all taxes” clause in R.A. No. 7294
on whether Smart is exempted from both local and national franchise tax
must be construed strictly against Smart which claims the exemption. [T]he "in lieu of all taxes" clause in Smart's franchise refers
only to taxes, other than income tax, imposed under the
Smart has the burden of proving that, aside from the imposed 3%
National Internal Revenue Code. The "in lieu of all taxes"
franchise tax, Congress intended it to be exempt from all kinds of clause does not apply to local taxes. The proviso in the first
franchise taxes – whether local or national. However, Smart failed in this paragraph of Section 9 of Smart's franchise states that the
grantee shall "continue to be liable for income taxes payable
regard.
under Title II of the National Internal Revenue Code." Also,
the second paragraph of Section 9 speaks of tax returns
filed and taxes paid to the "Commissioner of Internal
Tax exemptions are never presumed and are strictly construed Revenue or his duly authorized representative in accordance
against the taxpayer and liberally in favor of the taxing authority. 22[22] They with the National Internal Revenue Code." Moreover, the
same paragraph declares that the tax returns "shall be
can only be given force when the grant is clear and categorical. 23[23] The subject to audit by the Bureau of Internal Revenue." Nothing
surrender of the power to tax, when claimed, must be clearly shown by a is mentioned in Section 9 about local taxes. The clear intent
is for the "in lieu of all taxes" clause to apply only to taxes
language that will admit of no reasonable construction consistent with the
under the National Internal Revenue Code and not to local
reservation of the power. If the intention of the legislature is open to
[22] Commissioner of Internal Revenue v. Visayan Electric Company, 132 Phil. 203,
22
[24] Philippine Long Distance Telephone Company, Inc. v. City of Davao, 415 Phil.
24
[23] Commissioner of Internal Revenue v. Rio Tuba Nickel Mining Corporation, G.R.
23
[25] Philippine Long Distance Telephone Company, Inc. v. City of Davao, 447 Phil.
25
Nos. 83583-84, September 30, 1991, 202 SCRA 137. 571, 594 (2003).
taxes. Even with respect to national internal revenue taxes, on telecommunications companies.26[26] As admitted by Smart in its
the "in lieu of all taxes" clause does not apply to income tax.
pleadings, it is no longer paying the 3% franchise tax mandated in its
franchise. Currently, Smart along with other telecommunications
If Congress intended the "in lieu of all taxes" clause companies pays the uniform 10% value-added tax.27[27]
in Smart's franchise to also apply to local taxes, Congress
would have expressly mentioned the exemption from
municipal and provincial taxes. Congress could have used The VAT on sale of services of telephone franchise grantees is
the language in Section 9(b) of Clavecilla's old franchise, as
equivalent to 10% of gross receipts derived from the sale or exchange of
follows:
services.28[28] R.A. No. 7716, as amended by the Expanded Value Added
Tax Law(R.A. No. 8241), the pertinent portion of which is hereunder
x x x in lieu of any and all taxes of any kind,
quoted, amended Section 9 of R.A. No. 7294:
nature or description levied, established or
collected by any authority whatsoever,
municipal, provincial or national, from which
the grantee is hereby expressly exempted, x x SEC. 102. Value-added tax on sale of
x. (Emphasis supplied). services and use or lease of properties. — (a) Rate
and base of tax. — There shall be levied assessed and
collected, a value-added tax equivalent to ten
percent (10%) of gross receipts derived from the sale
However, Congress did not expressly exempt Smart from
or exchange of services, including the use or lease of
local taxes. Congress used the "in lieu of all taxes" clause
properties.
only in reference to national internal revenue taxes. The
only interpretation, under the rule on strict construction of
tax exemptions, is that the "in lieu of all taxes" clause in
Smart's franchise refers only to national and not to local The phrase “sale or exchange of services”
taxes. means the performance of all kinds of services in the
Philippines for others for a fee, remuneration or
consideration, including those performed or rendered
26
[26] Id. at 593.
It should be noted that the “in lieu of all taxes” clause in R.A. No. 27
[27] Rollo, p. 269.
7294 has become functus officio with the abolition of the franchise tax [28] Section 108, National Internal Revenue Code, as amended by the Tax Reform
28
32
[32] Rollo, pp. 303-309. IV. Tax Exclusion/Tax Exemption
[33] Philippine Long Distance Telephone Company, Inc. v. Province of Cebu, G.R.
33
No. 151208, October 16, 2006; Philippine Long Distance Telephone Company, Inc. v.
Province of Laguna, G.R. No. 151899, August 16, 2005, 467 SCRA 93; Philippine Long Smart gives another perspective of the “in lieu of all taxes” clause
Distance Telephone Company, Inc. v. City of Bacolod, G.R. No. 149179, July 15, 2005,
in Section 9 of R.A. No. 7294 in order to avoid the payment of local
463 SCRA 528; Philippine Long Distance Telephone Company, Inc. v. City of Davao,
supra note 25; Philippine Long Distance Telephone Company, Inc. v. City of Davao, supra [34] Philippine Long Distance Telephone Company, Inc. v. City of Davao, supra note
34
tax exemption should be applied in strictissimi juris against the taxpayer 7925, in connection with the franchise of Globe (R.A. No. 7227),37[37] which
and liberally in favor of the government applies equally to tax exclusions.36 was enacted on March 19, 1992.
[36]
V. Section 23 of R.A. No. 7925 as the “most favored treatment clause” or the “equality clause,” the
provision in the franchise of Globe exempting it from local taxes is
automatically incorporated in the franchise of Smart.38[38] Smart posits that,
To further its claim, Smart invokes Section 23 of the Public
[37] An Act approving the merger between Globe Mackay Cable and Radio
37
Telecommunications Policy Act (R.A. No. 7925): Corporation and Clavecilla Radio System and the consequent transfer of the franchise of
Clavecilla Radio System granted under Republic Act No. 402, as amended, to Globe
35
[35] Rollo, pp. 276-277. Mackay Cable and Radio Corporation, extending the life of said franchise and repealing
certain sections of RA No. 402, as amended.
[36] Philippine Long Distance Telephone Company, Inc. v. City of Davao, supra note
36
24, at 775. 38
[38] Rollo, p. 256.
since the franchise of Globe contains a provision exempting it from [41]
Congress, in approving Section 23 of R.A. No. 7925, did not intend it to
municipal or local franchise tax, this provision should also benefit Smart by operate as a blanket tax exemption to all telecommunications entities.42[42]
virtue of Section 23 of R.A. No. 7925. The provision in Globe’s franchise The language of Section 23 of R.A. No. 7925 and the proceedings of both
invoked by Smart reads: Houses of Congress are bereft of anything that would signify the grant of
tax exemptions to all telecommunications entities, including those whose
(b) The grantee shall further pay to the Treasurer of the exemptions had been withdrawn by R.A. No. 7160.43[43] The term
Philippines each year after the audit and approval of the “exemption” in Section 23 of R.A. No. 7925 does not mean tax exemption.
accounts as prescribed in this Act, one and one-half per The term refers to exemption from certain regulations and requirements
centum of all gross receipts from business transacted under
this franchise by the said grantee in the Philippines, in lieu imposed by the National Telecommunications Commission.44[44]
of any and all taxes of any kind, nature or description
levied, established or collected by any authority
whatsoever, municipal, provincial or national, from Furthermore, in the franchise of Globe (R.A. No. 7229), the
which the grantee is hereby expressly exempted,
legislature incontrovertibly stated that it will be liable for one and one-half
effective from the date of the approval of Republic Act
per centum of all gross receipts from business transacted under the
Numbered Sixteen hundred eighteen.39[39]
franchise, in lieu of any and all taxes of any kind, nature, or description
levied, established, or collected by any authority whatsoever, municipal,
provincial, or national, from which the grantee is hereby expressly
We find no reason to disturb the previous pronouncements of this exempted.45[45]The grant of exemption from municipal, provincial, or
Court regarding the interpretation of Section 23 of R.A. No. 7925. As aptly national is clear and categorical – that aside from the franchise tax
explained in the en banc decision of this Court in Philippine Long Distance
42
[42] Id.
Telephone Company, Inc. v. City of Davao,40[40] and recently in Digital
43
[43] Id.
Telecommunications Philippines, Inc. (Digitel) v. Province of Pangasinan,41
[44]
44
Philippine Long Distance Telephone Company, Inc. v. City of Davao, supra note
39 25.
[39] Section 9 of R.A. No. 4540. (Emphasis supplied).
45
[40]
40
Philippine Long Distance Telephone Company, Inc. v. City of Davao, supra note [45] Section 11 of R.A. No. 7229 provides: “All other provisions of Republic Act No.
24. 402, as amended by Republic Act Nos. 1618 and 4540, and the provisions of Batas
Pambansa Blg. 95 which are not inconsistent with the provisions of this Act and are still
41
[41] G.R. No. 152534, February 23, 2007, 516 SCRA 541. unrepealed shall continue to be in full force and effect.”
collected by virtue of R.A. No. 7229, no other franchise tax may be field" so to speak. This could not have been the intent of
collected from Globe regardless of who the taxing power is. No such Congress in enacting §23 of Rep. Act 7925. Petitioner's
theory will leave the Government with the burden of having
provision is found in the franchise of Smart; the kind of tax from which it is
to keep track of all granted telecommunications franchises,
exempted is not clearly specified. lest some companies be treated unequally. It is different if
Congress enacts a law specifically granting uniform
advantages, favor, privilege, exemption, or immunity to all
As previously explained by the Court, the stance of Smart would telecommunications entities.46[46]
lead to absurd consequences.
The acceptance of petitioner's theory would result in VI. Non-impairment Clause of the Constitution
absurd consequences. To illustrate: In its franchise, Globe is
required to pay a franchise tax of only one and one-half
percentum (1½%) of all gross receipts from its transactions
Another argument of Smart is that the imposition of the local
while Smart is required to pay a tax of three percent (3%) on
all gross receipts from business transacted. Petitioner's franchise tax by the City of Davao would violate the constitutional
theory would require that, to level the playing field, any prohibition against impairment of contracts. The franchise, according to
"advantage, favor, privilege, exemption, or immunity"
petitioner, is in the nature of a contract between the government and
granted to Globe must be extended to all
telecommunications companies, including Smart. If, later, Smart.47[47]
Congress again grants a franchise to another
telecommunications company imposing, say, one percent
(1%) franchise tax, then all other telecommunications However, we find that there is no violation of Article III, Section 10
franchises will have to be adjusted to "level the playing
of the 1987 Philippine Constitution. As previously discussed, the franchise
In view of the above-mentioned provision, Section 3 of R.A. No. 4540, the
pertinent portion of which is quoted herein, is incorporated into R.A. No. 7229: of Smart does not expressly provide for exemption from local taxes.
"(b) The grantee shall further pay to the Treasurer of the Philippines each year Absent the express provision on such exemption under the franchise, we
after the audit and approval of the accounts as prescribed in this Act, one and
one-half per centum of all gross receipts from business transacted under this are constrained to rule against it. The “in lieu of all taxes” clause in
franchise by the said grantee in the Philippines, in lieu of any and all taxes of Section 9 of R.A. No. 7294 leaves much room for interpretation. Due to this
any kind, nature or description levied, established or collected by an authority [46] Philippine Long Distance Telephone Company, Inc. v. City of Davao, supra note
46
whatsoever, municipal, provincial or national, from which the grantee is hereby 24, at 776.
expressly exempted, effective from the date of the approval of Republic Act
Numbered Sixteen hundred eighteen.” 47
[47] Rollo, pp. 310-313.
ambiguity in the law, the doubt must be resolved against the grant of tax save only where a tax exemption has been granted for a
exemption. valid consideration. x x x.
48
[48] CONSTITUTION, Art. XII, Sec. 11.
49
[49] G. R. No. 115455, August 25, 1994, 235 SCRA 630, 685.
vs.
PHILIPPINE JURISPRUDENCE - FULL TEXT COURT OF APPEALS, CITY OF ASSESSORS OF MANDALUYONG CITY
TREASURER OF MANDALUYONG, and SANGGUNIANG BAYAN OF
The Lawphil Project - Arellano Law Foundation MANDALUYONG, respondents.
G.R. No. 119172 March 25, 1999
MENDOZA, J.:
-------------------------------------------------------------------------------- This is a petition for review on certiorari of the decision of the Court of
Appeals, dated February 8, 1995, dismissing a prohibition suit brought by
petitioner against the respondent officials of the Municipality, now City, of
Republic of the Philippines Mandaluyong to prevent them from enforcing certain ordinances revising
the schedule of fair market values of the various classes of real property in
SUPREME COURT
that municipality and the assessment levels applicable thereto.
Manila
In its decision, dated February 8, 1995, 6 the Court of Appeals threw out
the petition. The appellate court said in part: The secretary to the Sanggunian concerned shall transmit official copies of
such ordinances to the chief executive officer of the Official Gazette within
seven (7) days following the approval of the said ordinances for publication
Petitioner's claim that Ordinance Nos. 119, 125 and 135 are null and void purposes. The Official Gazette may publish ordinances with penal
since they were prepared without the approval and determination of the sanctions for archival and reference purposes.
Department of Finance is without merit.
Thus, the posting and publication in the Official Gazette of ordinances with WHEREFORE, the petition is hereby DENIED due course and is hereby
penal sanctions is not a prerequisite for their effectivity. This finds support DISMISSED. 7
in the case of Tañada v. Tuvera (146 SCRA 446), wherein the Supreme
Court declared that municipal ordinances are covered by the Local
Government Code. Petitioner Figuerres assails the above decision. She contends that —
Moreover, petitioner failed to exhaust the administrative remedies 1. THE HONORABLE COURT OF APPEALS PATENTLY ERRED IN FINDING LACK
available to him as provided for under Section 187 of R.A. No. 7160, before OF EXHAUSTION OF ADMINISTRATIVE REMEDIES ON THE PART OF HEREIN
filing the instant petition with this Court. PETITIONER WHEN UNDER THE CIRCUMSTANCES EXHAUSTION OF
ADMINISTRATIVE REMEDIES IS NOT REQUIRED BY LAW AND WOULD HAVE
BEEN A USELESS FORMALITY.
xxx xxx xxx
Sec. 187 of R.A. 7160 provides, that the taxpayer may question the
(2) apart from her bare allegations, petitioner Figuerres has not presented
constitutionality or legality of a tax ordinance on appeal within thirty (30)
any evidence to show that no public hearings were conducted prior to the days from effectivity thereof, to the Secretary of Justice. The petitioner
enactment of the ordinances in question;
after finding that his assessment is unjust, confiscatory, or excessive, may
bring the case before the Secretary of Justice for questions of legality or
constitutionality of the city ordinance.
(3) although an ordinance concerning the imposition of real property taxes
is not required to be published in the Official Gazette in order to be valid,
still the subject ordinances were disseminated before their effectivity in
Under Section 226 of R.A. 7160, an owner of real property who is not
accordance with the relevant provisions of R.A. No. 7160; and satisfied with the assessment of his property may, within sixty (60) days
from notice of assessment, appeal to the Board of Assessment Appeals.
Although cases raising purely legal questions are excepted from the rule
. . . Therefore, where a remedy is available within the administrative requiring exhaustion of administrative remedies before a party may resort
machinery, this should be resorted to before resort can be made to the to the courts, in the case at bar, the legal questions raised by petitioner
courts, not only to give the administrative agency the opportunity to require, as will presently be shown, proof of facts for their resolution.
decide the matter by itself correctly, but also to prevent unnecessary and Therefore, the petitioner's action in the Court of Appeals was premature,
premature resort to courts. . . . and the appellate court correctly dismissed her action on the ground that
she failed to exhaust available administrative remedies as above stated.
were conducted prior to the enactment of the ordinances in question. On
the other hand, the Municipality of Mandaluyong claims that public
Petitioner argues that resort to the Secretary of Justice is not mandatory hearings were indeed conducted before the subject ordinances were
but only directory because R.A. No. 7160, §187 provides that "any question
adopted, 10 although it likewise failed to submit any evidence to establish
on the constitutionality or legality of tax ordinances or revenue measures" this allegation. However, in accordance with the presumption of validity in
may be appealed to the Secretary of Justice. Precisely, the Secretary of
favor of an ordinance, their constitutionality or legality should be upheld in
Justice can take cognizance of a case involving the constitutionality or the absence of evidence showing that the procedure prescribed by law
legality of tax ordinances where, as in this case, there are factual issues
was not observed in their enactment. In an analogous case, United States
involved. v. Cristobal, 11 it was alleged that the ordinance making it a crime for
anyone to obstruct waterways had not been submitted by the provincial
board as required by §§2232-2233 of the Administrative Code. In rejecting
There need be no fear that compliance with the rule on exhaustion of this contention, the Court held:
administrative remedies will unduly delay resort to the courts to the
detriment of taxpayers. Although R.A. No. 7160, §187 provides that an
appeal to the Secretary of Justice "shall not have the effect of suspending
From the judgment of the Court of First Instance the defendant appealed
the effectivity of the ordinance and the accrual and payment of the tax, to this court upon the theory that the ordinance in question was adopted
fee, or charge levied therein," it likewise requires the Secretary of Justice
without authority on the part of the municipality and was therefore
to "render a decision within sixty (60) days from the date of receipt of the unconstitutional. The appellant argues that there was no proof adduced
appeal," after which "the aggrieved party may file appropriate proceedings
during the trial of the cause showing that said ordinance had been
with a court of competent jurisdiction." approved by the provincial board. Considering the provisions of law that it
is the duty of the provincial board to approve or disapprove ordinances
adopted by the municipal councils of the different municipalities, we will
Public hearings on tax ordinance. assume, in the absence of proof to the contrary, that the law has been
complied with. We have a right to assume that officials have done that
which the law requires them to do, in the absence of positive proof to the
Petitioner is right in contending that public hearings are required to be contrary. 12
conducted prior to the enactment of an ordinance imposing real property
taxes. R.A. No. 7160, §186 provides that an ordinance levying taxes, fees,
or charges "shall not be enacted without any prior public hearing Furthermore, the lack of a public hearing is a negative allegation essential
conducted for the purpose." to petitioner's cause of action in the present case. Hence, as petitioner is
the party asserting it, she has the burden of proof. 13 Since petitioner
failed to rebut the presumption of validity in favor of the subject
However, it is noteworthy that apart from her bare assertions, petitioner ordinances and to discharge the burden of proving that no public hearings
Figuerres has not presented any evidence to show that no public hearings
were conducted prior to the enactment thereof, we are constrained to city, and municipal tax ordinances or revenue measures shall be published
uphold their constitutionality or legality. in full for three (3) consecutive days in a newspaper of local circulation:
Provided, however, That in provinces, cities and municipalities where there
no newspapers of local circulation, the same may be posted in at least two
Publication and posting of schedule of fair market values (2) conspicuous and publicly accessible places.
Petitioner is also right that publication or posting of the proposed schedule Hence, after the proposed schedule of fair market values of the different
of fair market values of the difference classes of real property in a local classes of real property in a local government unit within Metro Manila, as
government unit is required pursuant to R.A. No. 7160, §212 which in part prepared jointly by the local assessors of the district to which the city or
states: municipality belongs, has been published or posted in accordance with
§212 of R.A. No. 7160 and enacted into ordinances by the sanggunians of
the municipalities and cities concerned, the ordinances containing the
schedule of fair market values must themselves be published or posted in
. . . The schedule of fair market values shall be published in a newspaper
the manner provided by §188 of R.A. No. 7160.
of general circulation in the province, city, or municipality concerned, or in
the absence thereof, shall be posted in the provincial capitol, city or
municipal hall and in two other conspicuous public places therein.
With respect to ordinances which fix the assessment levels (such as
Ordinance No. 125), being in the nature of a tax ordinance, §188 likewise
applies. Moreover, as, Ordinance No. 125, §7 provides for a penal sanction
In Ty v. Trampe, 14 it was held that, if the local government unit is part of
for violations thereof by means of a fine of not less than P1,000.00 nor
Metro Manila, the abovequoted portion of §212 must be understood to
more than P5,000.00, or imprisonment of not less than one (1) month nor
refer to the schedule of fair market values of the different classes of real
more than six (6) months, or both, in the discretion of the court, not only
property in the district to which the city or municipality belongs, as
§188 but §511(a) also must be observed:
prepared jointly by the local assessors concerned.
Also without merit is the contention of petitioner that Ordinance No, 119 3 Id., pp. 16-19.
and Ordinance No. 135 are void for not having been enacted in accordance
4 Id., p. 51.
with Local Assessment Regulation No. 1-92, dated October 6, 1992, of the
Department of Finance, which provides guidelines for the preparation of 5 CA Rollo, pp. 1-15.
6 Per Associate Justice Jorge S. Imperial and concurred in by Associate
Justices Pacita Cañizares-Nye and Conrado M. Vasquez, Jr.
12 Id. at 826.
15 CA Rollo, p. 20.