PHILIPPINE JURISPRUDENCE - FULL TEXT

The Lawphil Project - Arellano Law Foundation

G.R. No. L-4376             May 22, 1953
ASSOCIATION OF CUSTOMS BROKERS, INC., ET AL. vs.
MUNICIPALITY BOARD OF MANILA, ET AL.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-4376             May 22, 1953

ASSOCIATION OF CUSTOMS BROKERS, INC. and G. MANLAPIT, INC.,

petitioners-appellants,
vs.
THE MUNICIPALITY BOARD, THE CITY TREASURER, THE CITY
ASSESSOR and THE CITY MAYOR, all of the City of Manila, respondents-
appellees.

Teotimo A. Roja for appellants.

City Fiscal Eugenio Angeles and Assistant Fiscal Eulogio S. Serrano for appellees.

BAUTISTA ANGELO, J.:

This is a petition for declaratory relief to test the validity of Ordinance No. 3379
passed by the Municipal Board of the City of Manila on March 24, 1950.

The Association of Customs Brokers, Inc., which is composed of all brokers and
public service operators of motor vehicles in the City of Manila, and G. Manlapit, Inc.,
a member of said association, also a public service operator of the trucks in said City,
challenge the validity of said ordinance on the ground that (1) while it levies a so-
called property tax it is in reality a license tax which is beyond the power of the
Municipal Board of the City of Manila; (2) said ordinance offends against the rule of
uniformity of taxation; and (3) it constitutes double taxation.

The respondents, represented by the city fiscal, contend on their part that the
challenged ordinance imposes a property tax which is within the power of the City of
Manila to impose under its Revised Charter [Section 18 (p) of Republic Act No. 409],
and that the tax in question does not violate the rule of uniformity of taxation, nor does
it constitute double taxation.

The issues having been joined, the Court of First Instance of Manila sustained the
validity of the ordinance and dismissed the petition. Hence this appeal.

The disputed ordinance was passed by the Municipal Board of the City of Manila
under the authority conferred by section 18 (p) of Republic Act No. 409. Said section
confers upon the municipal board the power "to tax motor and other vehicles operating
within the City of Manila the provisions of any existing law to the contrary
notwithstanding." It is contended that this power is broad enough to confer upon the
City of Manila the power to enact an ordinance imposing the property tax on motor
vehicles operating within the city limits.

In the deciding the issue before us it is necessary to bear in mind the pertinent
provisions of the Motor Vehicles Law, as amended, (Act No. 3992) which has a
bearing on the power of the municipal corporation to impose tax on motor vehicles
operating in any highway in the Philippines. The pertinent provisions are contained in
section 70 (b) which provide in part:

No further fees than those fixed in this Act shall be exacted or demanded by
any public highway, bridge or ferry, or for the exercise of the profession of
chauffeur, or for the operation of any motor vehicle by the owner thereof:
Provided, however, That nothing in this Act shall be construed to exempt any
motor vehicle from the payment of any lawful and equitable insular, local or
municipal property tax imposed thereupon. . . .

Note that under the above section no fees may be exacted or demanded for the
operation of any motor vehicle other than those therein provided, the only exception
being that which refers to the property tax which may be imposed by a municipal
corporation. This provision is all-inclusive in that sense that it applies to all motor
vehicles. In this sense, this provision should be construed as limiting the broad grant of
power conferred upon the City of Manila by its Charter to impose taxes. When section
18 of said Charter provides that the City of Manila can impose a tax on motor vehicles
operating within its limit, it can only refers to property tax as a different interpretation
would make it repugnant to the Motor Vehicle Law.

Coming now to the ordinance in question, we find that its title refers to it as "An
Ordinance Levying a Property Tax on All Motor Vehicles Operating Within the City
of Manila", and that in its section 1 it provides that the tax should be 1 per cent ad
valorem per annum. It also provides that the proceeds of the tax "shall accrue to the
Streets and Bridges Funds of the City and shall be expended exclusively for the repair,
maintenance and improvement of its streets and bridges." Considering the wording
used in the ordinance in the light in the purpose for which the tax is created, can we
consider the tax thus imposed as property tax, as claimed by respondents?

While as a rule an ad valorem tax is a property tax, and this rule is supported by some
authorities, the rule should not be taken in its absolute sense if the nature and purpose
of the tax as gathered from the context show that it is in effect an excise or a license
tax. Thus, it has been held that "If a tax is in its nature an excise, it does not become a
property tax because it is proportioned in amount to the value of the property used in
connection with the occupation, privilege or act which is taxed. Every excise
necessarily must finally fall upon and be paid by property and so may be indirectly a
tax upon property; but if it is really imposed upon the performance of an act,
enjoyment of a privilege, or the engaging in an occupation, it will be considered an
excise." (26 R. C. L., 35-36.) It has also been held that

The character of the tax as a property tax or a license or occupation tax must be
determined by its incidents, and from the natural and legal effect of the
language employed in the act or ordinance, and not by the name by which it is
described, or by the mode adopted in fixing its amount. If it is clearly a
property tax, it will be so regarded, even though nominally and in form it is a
license or occupation tax; and, on the other hand, if the tax is levied upon
persons on account of their business, it will be construed as a license or
occupation tax, even though it is graduated according to the property used in
such business, or on the gross receipts of the business. (37 C.J., 172)

The ordinance in question falls under the foregoing rules. While it refers to property
tax and it is fixed ad valorem yet we cannot reject the idea that it is merely levied on
motor vehicles operating within the City of Manila with the main purpose of raising
funds to be expended exclusively for the repair, maintenance and improvement of the
streets and bridges in said city. This is precisely what the Motor Vehicle Law (Act No.
3992) intends to prevent, for the reason that, under said Act, municipal corporation
already participate in the distribution of the proceeds that are raised for the same
purpose of repairing, maintaining and improving bridges and public highway (section
73 of the Motor Vehicle Law). This prohibition is intended to prevent duplication in
the imposition of fees for the same purpose. It is for this reason that we believe that the
ordinance in question merely imposes a license fee although under the cloak of an ad
valorem tax to circumvent the prohibition above adverted to.

It is also our opinion that the ordinance infringes the rule of the uniformity of taxation
ordained by our Constitution. Note that the ordinance exacts the tax upon all motor
vehicles operating within the City of Manila. It does not distinguish between a motor
vehicle for hire and one which is purely for private use. Neither does it distinguish
between a motor vehicle registered in the City of Manila and one registered in another
place but occasionally comes to Manila and uses its streets and public highways. The
distinction is important if we note that the ordinance intends to burden with the tax
only those registered in the City of Manila as may be inferred from the word
"operating" used therein. The word "operating" denotes a connotation which is akin to
a registration, for under the Motor Vehicle Law no motor vehicle can be operated
without previous payment of the registration fees. There is no pretense that the
ordinance equally applies to motor vehicles who come to Manila for a temporary stay
or for short errands, and it cannot be denied that they contribute in no small degree to
the deterioration of the streets and public highway. The fact that they are benefited by
 their use they should also be made to share the corresponding burden. And yet such is
not the case. This is an inequality which we find in the ordinance, and which renders it
offensive to the Constitution.

Wherefore, reversing the decision appealed from, we hereby declare the ordinance null
and void.

Paras, C.J., Bengzon and Tuason, JJ., concur.

Montemayor, Reyes, Jugo and Labrador, JJ., concur in the result.

Separate Opinions

FERIA, J., concurring:

I concur on the ground that it is a license tax.

The Lawphil Project - Arellano Law Foundation

Republic of the Philippines

SUPREME COURT
Manila

EN BANC
 

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.

The City Legal Officer for petitioner.

Angara, Abello, Concepcion, Regala & Cruz for Caltex (Phils.).

Joseph Lopez for Sangguniang Panglunsod of Manila.

L.A. Maglaya for Petron Corporation.

CRUZ, J.:

The principal issue in this case is the constitutionality of Section 187 of the Local
Government Code reading as follows:

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.

Pursuant thereto, 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. 3 However, on motion for reconsideration with the required
certified true copy of the decision attached, the petition was reinstated in view of the
importance of the issues raised therein.
We stress at the outset that the lower court had jurisdiction to consider the
constitutionality of Section 187, this authority being embraced in the general definition of
the judicial power to determine what are the valid and binding laws by the criterion of
their conformity to the fundamental law. Specifically, BP 129 vests in the regional trial
courts jurisdiction over all civil cases in which the subject of the litigation is incapable of
pecuniary estimation, 4 even as the accused in a criminal action has the right to question
in his defense the constitutionality of a law he is charged with violating and of the
proceedings taken against him, particularly as they contravene the Bill of Rights.
Moreover, Article X, Section 5(2), of the Constitution vests in the Supreme Court
appellate jurisdiction over final judgments and orders of lower courts in all cases in
which the constitutionality or validity of any treaty, international or executive agreement,
law, presidential decree, proclamation, order, instruction, ordinance, or regulation is in
question.

In the exercise of this jurisdiction, lower courts are advised to act with the utmost
circumspection, bearing in mind the consequences of a declaration of unconstitutionality
upon the stability of laws, no less than on the doctrine of separation of powers. As the
questioned act is usually the handiwork of the legislative or the executive departments,
or both, it will be prudent for such courts, if only out of a becoming modesty, to defer to
the higher judgment of this Court in the consideration of its validity, which is better
determined after a thorough deliberation by a collegiate body and with the concurrence
of the majority of those who participated in its discussion. 5

It is also emphasized that every court, including this Court, is charged with the duty of a
purposeful hesitation before declaring a law unconstitutional, on the theory that the
measure was first carefully studied by the executive and the legislative departments and
determined by them to be in accordance with the fundamental law before it was finally
approved. To doubt is to sustain. The presumption of constitutionality can be overcome
only by the clearest showing that there was indeed an infraction of the Constitution, and
only when such a conclusion is reached by the required majority may the Court
pronounce, in the discharge of the duty it cannot escape, that the challenged act must
be struck down.

In the case before us, Judge Rodolfo C. Palattao declared Section 187 of the Local
Government Code unconstitutional insofar as it empowered the Secretary of Justice to
review tax ordinances and, inferentially, to annul them. He cited the familiar distinction
between control and supervision, the first being "the power of an officer to alter or
modify or set aside what a subordinate officer had done in the performance of his duties
and to substitute the judgment of the former for the latter," while the second is "the
power of a superior officer to see to it that lower officers perform their functions in
accordance with law." 6 His conclusion was that the challenged section gave to the
Secretary the power of control and not of supervision only as vested by the Constitution
in the President of the Philippines. This was, in his view, a violation not only of Article X,
specifically Section 4 thereof, 7 and of Section 5 on the taxing powers of local
governments, 8 and the policy of local autonomy in general.
We do not share that view. The lower court was rather hasty in invalidating the
provision.

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.

An officer in control lays down the rules in the doing of an act. If they are not followed,
he may, in his discretion, order the act undone or re-done by his subordinate or he may
even decide to do it himself. Supervision does not cover such authority. The supervisor
or superintendent merely sees to it that the rules are followed, but he himself does not
lay down such rules, nor does he have the discretion to modify or replace them. If the
rules are not observed, he may order the work done or re-done but only to conform to
the prescribed rules. He may not prescribe his own manner for the doing of the act. He
has no judgment on this matter except to see to it that the rules are followed. In the
opinion of the Court, Secretary Drilon did precisely this, and no more nor less than this,
and so performed an act not of control but of mere supervision.

The case of Taule v. Santos 9 cited in the decision has no application here because the
jurisdiction claimed by the Secretary of Local Governments over election contests in the
Katipunan ng Mga Barangay was held to belong to the Commission on Elections by
constitutional provision. The conflict was over jurisdiction, not supervision or control.

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.

The issue of non-compliance with the prescribed procedure in the enactment of the
Manila Revenue Code is another matter.

In his resolution, Secretary Drilon declared that there were no written notices of public
hearings on the proposed Manila Revenue Code that were sent to interested parties as
required by Art. 276(b) of the Implementing Rules of the Local Government Code nor
were copies of the proposed ordinance published in three successive issues of a
newspaper of general circulation pursuant to Art. 276(a). No minutes were submitted to
show that the obligatory public hearings had been held. Neither were copies of the
measure as approved posted in prominent places in the city in accordance with Sec.
511(a) of the Local Government Code. Finally, the Manila Revenue Code was not
translated into Pilipino or Tagalog and disseminated among the people for their
information and guidance, conformably to Sec. 59(b) of the Code.

Judge Palattao found otherwise. He declared that all the procedural requirements had
been observed in the enactment of the Manila Revenue Code and that the City of
Manila had not been able to prove such compliance before the Secretary only because
he had given it only five days within which to gather and present to him all the evidence
(consisting of 25 exhibits) later submitted to the trial court.

To get to the bottom of this question, the Court acceded to the motion of the
respondents and called for the elevation to it of the said exhibits. We have carefully
examined every one of these exhibits and agree with the trial court that the procedural
requirements have indeed been observed. Notices of the public hearings were sent to
interested parties as evidenced by Exhibits G-1 to 17. The minutes of the hearings are
found in Exhibits M, M-1, M-2, and M-3. Exhibits B and C show that the proposed
ordinances were published in the Balita and the Manila Standard on April 21 and 25,
1993, respectively, and the approved ordinance was published in the July 3, 4, 5, 1993
issues of the Manila Standard and in the July 6, 1993 issue of Balita, as shown by
Exhibits Q, Q-1, Q-2, and Q-3.
The only exceptions are the posting of the ordinance as approved but this omission
does not affect its validity, considering that its publication in three successive issues of a
newspaper of general circulation will satisfy due process. It has also not been shown
that the text of the ordinance has been translated and disseminated, but this
requirement applies to the approval of local development plans and public investment
programs of the local government unit and not to tax ordinances.

We make no ruling on the substantive provisions of the Manila Revenue Code as their
validity has not been raised in issue in the present petition.

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.

SO ORDERED.

Narvasa, C.J., Feliciano, Padilla, Bidin, Regalado, Davide, Jr., Romero,

Bellosillo, Melo, Quiason, Puno, Vitug, Kapunan and Mendoza, JJ., concur.

 
#
Footnotes

1 Annex "E," rollo, pp. 37-55.

2 Annex "A," rollo, pp. 27-36.

3 Rollo, p. 256.

4 Sec. 19(1).

5 Art. VIII, Sec. 4(2), Constitution.

6 Mondano v. Silvosa, 97 Phil. 143; Hebron v. Reyes, 104 Phil. 175; Tecson v. Salas, 34
SCRA 282.

7 Sec. 4. The President of the Philippines shall exercise general supervision over local
governments. Provinces with respect to component cities and municipalities, and cities
and municipalities with respect to component barangays shall ensure that the acts of their
component units are within the scope of their prescribed powers and functions.

8 Sec. 5. Each local government unit shall have the power to create its own sources of
revenues and to levy taxes, fees, and charges subject to such guidelines and limitations
as the Congress may provide, consistent with the basic policy of local autonomy. Such
taxes, fees, and charges shall accrue exclusively to the local governments.

9 200 SCRA 512.

 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION
 

G.R. No. 119172 March 25, 1999

BELEN C. FIGUERRES, petitioner,

vs.
COURT OF APPEALS, CITY OF ASSESSORS OF MANDALUYONG CITY
TREASURER OF MANDALUYONG, and SANGGUNIANG BAYAN OF
MANDALUYONG, respondents.

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 Mandaluyong to prevent them from
enforcing certain ordinances revising the schedule of fair market values of the various
classes of real property in that municipality and the assessment levels applicable
thereto.

Petitioner Belen C. Figuerres is the owner of a parcel of land, covered by Transfer

Certificate of Title No. 413305, and located at Amarillo Street, Barangay Mauway, City
of Mandaluyong. In 1993, she received a notice of assessment, dated October 20,
1993, from the municipal assessor of the then Municipality of Mandaluyong, containing
the following specifics:

TYPE AREA BASE VALUE MARKET ASSESSMENTS ASSESSED

PER SQ.M VALUE LEVEL VALUE

Residential 530sq.m. P2,500.00 P1,325,000.00 20 P265,006·.00 1

The assessment, effective in the year 1994, was based on Ordinance Nos. 119 and
125, series of 1993, and Ordinance No. 135, series of 1994, of the Sangguniang Bayan
of Mandaluyong. Ordinance No. 119, series of 1993, which was promulgated on April
22, 1993, contains a schedule of fair market values of the different classes of real
property in the municipality. 2 Ordinance No. 125, series of 1993, which was
promulgated on November 11, 1993, on the other hand, fixes the assessment levels
applicable to such classes of real property. 3 Finally, Ordinance No. 135, series of 1994,
which was promulgated on February 24, 1994, amended Ordinance No. 119, §6 by
providing that only one third (1/3) of the increase in the market values applicable to
residential lands pursuant to the said ordinance shall be implemented in the years 1994,
1995, and 1996. 4

Petitioner brought a prohibition suit in the Court of Appeals against the Assessor, the
Treasurer, and the Sangguniang Bayan to stop them from enforcing the ordinances in
question on the ground that the ordinances were invalid for having been adopted
allegedly without public hearings and prior publication or posting and without complying
with the implementing rules yet to be issued by the Department of Finance. 5

In its decision, dated February 8, 1995, 6 the Court of Appeals threw out the petition.
The appellate court said in part:

Petitioner's claim that Ordinance Nos. 119, 125 and 135 are null and void since they were
prepared without the approval and determination of the Department of Finance is without
merit.

The approval and determination by the Department of Finance is not needed under the
Local Government Code of 1991, since it is now the city council of Mandaluyong that is
empowered to determine and approve the aforecited ordinances. Furthermore, contrary
to the claim of petitioner that the Department of Finance "has not promulgated the
necessary rules and regulations for the classification, appraisal and assessment of real
property as prescribed by the 1991 Local Government Code," Department of Finance
Local Assessment Regulation No. 1-92 dated October 6, 1992, which is addressed to
provincial, city, and municipal assessors and others concerned with the proper
implementation of Section 219 of R.A. No. 7160, provides for the rules relative to the
conduct of general revisions of real property assessment pursuant to Sections 201 and
219 of the Local Government Code of 1991.

Regarding petitioner's claim that there is need for municipal ordinances to be published in
the Official Gazette for their effectivity, the same is also without merit.

Sec. 511 of R.A. No. 7160 provides that —

xxx xxx xxx

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 purposes. The Official Gazette may publish ordinances with
penal sanctions for archival and reference purposes.

Thus, the posting and publication in the Official Gazette of ordinances with penal
sanctions is not a prerequisite for their effectivity. This finds support 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.

Moreover, petitioner failed to exhaust the administrative remedies available to him as

provided for under Section 187 of R.A. No. 7160, before filing the instant petition with this
Court.
 xxx xxx xxx

In fact, aside from filing an appeal to the Secretary of Justice as provided under Section
187 of R.A. No. 7160, the petitioner . . . could have appealed to the Local Board of
Assessment Appeals, the decision of which is in turn appealable to the Central Board of
Assessment Appeals as provided under Sections 226 and 230 of the said law. According
to current jurisprudence, administrative remedies must be exhausted before seeking
judicial intervention. (Gonzales v. Secretary of Education, 5 SCRA 657). If a litigant goes
to court without first pursuing the available administrative remedies, his action is
considered premature and not yet ripe for judicial determination (Allied Brokerage
Corporation v. Commissioner of Customs, 40 SCRA 555).

As the petitioner has not pursued the administrative remedies available to him, his
petition for prohibition cannot prosper (Gonzales v. Provincial Auditor of Iloilo, 12 SCRA
711).

WHEREFORE, the petition is hereby DENIED due course and is hereby DISMISSED. 7

Petitioner Figuerres assails the above decision. She contends that —

1. THE HONORABLE COURT OF APPEALS PATENTLY ERRED IN

FINDING LACK OF EXHAUSTION OF ADMINISTRATIVE REMEDIES
ON THE PART OF HEREIN PETITIONER WHEN UNDER THE
CIRCUMSTANCES EXHAUSTION OF ADMINISTRATIVE REMEDIES
IS NOT REQUIRED BY LAW AND WOULD HAVE BEEN A USELESS
FORMALITY.

2. THE HONORABLE COURT OF APPEALS ERRED WHEN IT

STATED THAT THE CITY COUNCIL OF MANDALUYONG IS
EMPOWERED TO DETERMINE AND APPROVE THE AFORECITED
ORDINANCES WITHOUT TAKING INTO ACCOUNT THE
MANDATORY PUBLIC HEARINGS REQUIRED BY R.A. No. 7160.

3. WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS

PATENTLY ERRED IN STATING THAT THERE IS NO NEED FOR
PUBLICATION OF TAX ORDINANCES.

4. THERE IS NON COMPLIANCE BY PUBLIC RESPONDENTS OF

ASSESSMENT REGULATION No. 1-92 DATED OCTOBER 6, 1992,
EVEN IF THE HONORABLE COURT OF APPEALS MENTIONED THE
EXISTENCE OF THE SAID ASSESSMENT REGULATIONS. 8

On the other hand, the Municipality of Mandaluyong contends:

(1) the present case does not fall within any of the exceptions to the doctrine of
exhaustion of administrative remedies;

(2) apart from her bare allegations, petitioner Figuerres has not presented any evidence
to show that no public hearings were conducted prior to the enactment of the
ordinances in question;
(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 accordance with the relevant
provisions of R.A. No. 7160; and

(4) the Municipality of Mandaluyong complied with the regulations of the Department of
Finance in enacting the ordinances.

Exhaustion of administrative remedies

In Lopez v. City of Manila, 9 we recently held:

. . . Therefore, where a remedy is available within the administrative machinery, this

should be resorted to before resort can be made to the courts, not only to give the
administrative agency the opportunity to decide the matter by itself correctly, but also to
prevent unnecessary and premature resort to courts. . . .

With regard to questions on the legality of a tax ordinance, the remedies available to the
taxpayer are provided under Sections 187, 226, and 252 of R.A. 7160.

Sec. 187 of R.A. 7160 provides, that the taxpayer may question the constitutionality or
legality of a tax ordinance on appeal within thirty (30) days from effectivity thereof, to the
Secretary of Justice. The petitioner 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.

Under Section 226 of R.A. 7160, an owner of real property who is not satisfied with the
assessment of his property may, within sixty (60) days from notice of assessment, appeal
to the Board of Assessment Appeals.

Should the taxpayer question the excessiveness of the amount of tax, he must first pay
the amount due, in accordance with Section 252 of R.A. No. 7160. Then, he must request
the annotation of the phrase "paid under protest" and accordingly appeal to the Board of
Assessment Appeals by filing a petition under oath together with copies of the tax
declarations and affidavits or documents to support his appeal.

Although cases raising purely legal questions are excepted from the rule requiring
exhaustion of administrative remedies before a party may resort to the courts, in the
case at bar, the legal questions raised by petitioner require, as will presently be shown,
proof of facts for their resolution. Therefore, the petitioner's action in the Court of
Appeals was premature, and the appellate court correctly dismissed her action on the
ground that she failed to exhaust available administrative remedies as above stated.

Petitioner argues that resort to the Secretary of Justice is not mandatory but only
directory because R.A. No. 7160, §187 provides that "any question on the
constitutionality or legality of tax ordinances or revenue measures" may be appealed to
the Secretary of Justice. Precisely, the Secretary of Justice can take cognizance of a
case involving the constitutionality or legality of tax ordinances where, as in this case,
there are factual issues involved.
There need be no fear that compliance with the rule on exhaustion of 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 the effectivity of the ordinance and the accrual and payment of
the tax, fee, or charge levied therein," it likewise requires the Secretary of Justice to
"render a decision within sixty (60) days from the date of receipt of the appeal," after
which "the aggrieved party may file appropriate proceedings with a court of competent
jurisdiction."

Public hearings on tax ordinance.

Petitioner is right in contending that public hearings are required to be 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 conducted for the purpose."

However, it is noteworthy that apart from her bare assertions, petitioner Figuerres has
not presented any evidence to show that no public hearings were conducted prior to the
enactment of the ordinances in question. On the other hand, the Municipality of
Mandaluyong claims that public hearings were indeed conducted before the subject
ordinances were adopted, 10 although it likewise failed to submit any evidence to
establish this allegation. However, in accordance with the presumption of validity in
favor of an ordinance, their constitutionality or legality should be upheld in the absence
of evidence showing that the procedure prescribed by law was not observed in their
enactment. In an analogous case, United States 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 this contention, the Court held:

From the judgment of the Court of First Instance the defendant appealed to this court
upon the theory that the ordinance in question was adopted without authority on the part
of the municipality and was therefore unconstitutional. The appellant argues that there
was no proof adduced during the trial of the cause showing that said ordinance had been
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 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
contrary. 12

Furthermore, the lack of a public hearing is a negative allegation essential 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 ordinances and to discharge the burden of proving that no public
hearings were conducted prior to the enactment thereof, we are constrained to uphold
their constitutionality or legality.

Publication and posting of schedule of fair market values

Petitioner is also right that publication or posting of the proposed schedule of fair market
values of the difference classes of real property in a local government unit is required
pursuant to R.A. No. 7160, §212 which in part states:

. . . The schedule of fair market values shall be published in a newspaper 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.

In Ty v. Trampe, 14 it was held that, if the local government unit is part of Metro Manila,
the abovequoted portion of §212 must be understood to refer to the schedule of fair
market values of the different classes of real property in the district to which the city or
municipality belongs, as prepared jointly by the local assessors concerned.

In addition, an ordinance imposing real property taxes (such as Ordinance Nos. 119 and
135) must be posted or published as required by R.A. No. 7160, §188 which provides:

Sec. 188. Publication of Tax Ordinances and Revenue Measures. — Within ten (10) days
after their approval, certified true copies of all provincial, city, and municipal tax
ordinances or revenue measures shall be published 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 (2) conspicuous and publicly accessible places.

Hence, after the proposed schedule of fair market values of the different classes of real
property in a local government unit within Metro Manila, as prepared jointly by the local
assessors of the district to which the city or 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 manner
provided by §188 of R.A. No. 7160.

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 for violations thereof by means of a
fine of not less than P1,000.00 nor more than P5,000.00, or imprisonment of not less
than one (1) month nor more than six (6) months, or both, in the discretion of the court,
not only §188 but §511(a) also must be observed:

Ordinances with penal sanctions shall be posted at prominent places in the provincial
capitol, city, municipal or barangay hall, as the case may be, for a minimum period of
three (3) consecutive weeks. Such ordinances shall also be published in a newspaper of
general circulation, where available, within the territorial jurisdiction of the local
government unit concerned, except in the case of barangay ordinances. Unless
otherwise provided therein, said ordinances shall take effect on the day following its
publication, or at the end of the period of posting, whichever occurs later.

In view of §§188 and 511(a) of R.A. No. 7160, an ordinance fixing the assessment
levels applicable to the different classes of real property in a local government unit and
imposing penal sanctions for violations thereof (such as Ordinance No. 125) should be
published in full for three (3) consecutive days in a newspaper of local circulation, where
available, within ten (10) days of its approval, and posted in at least two (2) prominent
places in the provincial capitol, city, municipal, or barangay hall for a minimum of three
(3) consecutive weeks.

Apart from her allegations, petitioner has not presented any evidence to show that the
subject ordinances were nor disseminated in accordance with these provisions of R.A.
No. 7160. On the other hand, the Municipality of Mandaluyong presented a certificate,
dated November 12, 1993, of Williard S. Wong, Sanggunian Secretary of the
Municipality of Mandaluyong that "Ordinance No. 125, S-1993 . . . has been posted in
accordance with §59(b) of R.A. No. 7160, otherwise known as the Local Government
Code of 1991." 15 Thus, considering the presumption of validity in favor of the
ordinances and the failure of petitioner to rebut such presumption, we are constrained to
dismiss the petition in this case.

Compliance with regulations issued by the

Department of Finance

Also without merit is the contention of petitioner that Ordinance No, 119 and Ordinance
No. 135 are void for not having been enacted in accordance with Local Assessment
Regulation No. 1-92, dated October 6, 1992, of the Department of Finance, which
provides guidelines for the preparation of proposed schedules of fair market values of
the different classes of real property in a local government unit, such as time tables for
obtaining information from owners of affected lands and buildings regarding the value
thereof. As in the case of the procedural requirements for the enactment of tax
ordinances and revenue measures, however, petitioner has not shown that the
ordinances in this case were enacted in accordance with the applicable regulations of
the Department of Finance. The Municipality of Mandaluyong claims that, although the
regulations are merely directory, it has complied with them. 16 Hence, in the absence of
proof that the ordinances were not enacted in accordance with such regulations, said
ordinances presumed to have been enacted in accordance with such regulations.

WHEREFORE, the decision of the Court of Appeals is AFFIRMED.

SO ORDERED.

Bellosillo, Puno, Quisumbing and Buena, JJ., concur.

Footnotes

1 CA Rollo; p. 56.

2 Id., pp. 21-48.

3 Id., pp. 16-19.

 4 Id., p. 51.

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.

7 Rollo, pp. 21-24.

8 Rollo, pp. 5-6.

9 G.R. No. 127139, Feb. 19, 1999.

10 Rejoinder, Rollo, p. 68.

11 34 Phil. 825 (1916).

12 Id. at 826.

13 Industrial Finance Corporation v. Tobias, 78 SCRA 28 (1977).

14 250 SCRA 500, 516-517 (1995).

15 CA Rollo, p. 20.

16 Rejoinder, Rollo, p. 68.

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-45355 January 12, 1990

THE PROVINCE OF MISAMIS ORIENTAL, represented by its PROVINCIAL

TREASURER, petitioner,
vs.
CAGAYAN ELECTRIC POWER AND LIGHT COMPANY, INC. (CEPALCO),
respondent.

Jaime A. Chaves for petitioner.

Quiason, Makalintal, Barot & Torres for respondent.

GRIÑO-AQUINO, J.:
The issue in this case is a legal one: whether or not a corporation whose franchise
expressly provides that the payment of the "franchise tax of three per centum of the
gross earnings shall be in lieu of all taxes and assessments of whatever authority upon
privileges, earnings, income, franchise, and poles, wires, transformers, and insulators of
the grantee." (p. 20, Rollo), is exempt from paying a provincial franchise tax.

Cagayan Electric Power and Light Company, Inc. (CEPALCO for short) was granted a
franchise on June 17, 1961 under Republic Act No. 3247 to install, operate and
maintain an electric light, heat and power system in the City of Cagayan de Oro and its
suburbs. Said franchise was amended on June 21, 1963 by R.A. No. 3570 which added
the municipalities of Tagoloan and Opol to CEPALCO's sphere of operation, and was
further amended on August 4, 1969 by R.A. No. 6020 which extended its field of
operation to the municipalities of Villanueva and Jasaan.

R.A. Nos. 3247, 3570 and 6020 uniformly provide that:

Sec. 3. In consideration of the franchise and rights hereby granted, the grantee shall pay
a franchise tax equal to three per centum of the gross earnings for electric current sold
under this franchise, of which two per centum goes into the National Treasury and one
per centum goes into the treasury of the Municipalities of Tagoloan, Opol, Villanueva and
Jasaan and Cagayan de Oro City, as the case may be: Provided, That the said franchise
tax of three per centum of the gross earnings shall be in lieu of all taxes and
assessments of whatever authority upon privileges earnings, income, franchise, and
poles, wires, transformers, and insulators of the grantee from which taxes and
assessments the grantee is hereby expressly exempted. (Emphasis supplied.)

On June 28, 1973, the Local Tax Code (P.D. No. 231) was promulgated, Section 9 of
which provides:

Sec. 9. Franchise Tax.—Any provision of special laws to the contrary notwithstanding,

the province may impose a tax on businesses enjoying franchise, based on the gross
receipts realized within its territorial jurisdiction, at the rate of not exceeding one-half of
one per cent of the gross annual receipts for the preceding calendar year.

In the case of newly started business, the rate shall not exceed three thousand pesos per
year. Sixty per cent of the proceeds of the tax shall accrue to the general fund of the
province and forty per cent to the general fund of the municipalities serviced by the
business on the basis of the gross annual receipts derived therefrom by the franchise
holder. In the case of a newly started business, forty per cent of the proceeds of the tax
shall be divided equally among the municipalities serviced by the business. (Emphasis
supplied.)

Pursuant thereto, the Province of Misamis Oriental (herein petitioner) enacted Provincial
Revenue Ordinance No. 19, whose Section 12 reads:

Sec. 12. Franchise Tax.—There shall be levied, collected and paid on businesses
enjoying franchise tax of one-half of one per cent of their gross annual receipts for the
preceding calendar year realized within the territorial jurisdiction of the province of
Misamis Oriental. (p. 27, Rollo.)
The Provincial Treasurer of Misamis Oriental demanded payment of the provincial
franchise tax from CEPALCO. The company refused to pay, alleging that it is exempt
from all taxes except the franchise tax required by R.A. No. 6020. Nevertheless, in view
of the opinion rendered by the Provincial Fiscal, upon CEPALCO's request, upholding
the legality of the Revenue Ordinance, CEPALCO paid under protest on May 27, 1974
the sum of P 4,276.28 and appealed the fiscal's ruling to the Secretary of Justice who
reversed it and ruled in favor of CEPALCO.

On June 26, 1976, the Secretary of Finance issued Local Tax Regulation No. 3-75
adopting entirely the opinion of the Secretary of Justice.

On February 16, 1976, the Province filed in the Court of First Instance of Misamis
Oriental a complaint for declaratory relief praying, among others, that the Court exercise
its power to construe P.D. No. 231 in relation to the franchise of CEPALCO (R.A. No.
6020), and to declare the franchise as having been amended by P.D. No. 231. The
Court dismissed the complaint and ordered the Province to return to CEPALCO the sum
of P4,276.28 paid under protest.

The Province has appealed to this Court, alleging that the lower court erred in holding
that:

1) CEPALCO's tax exemption under Section 3 of Republic Act No. 6020 was not
amended or repealed by P.D. No. 231;

2) the imposition of the provincial franchise tax on CEPALCO would subvert the
purpose of P.D. No. 231;

3) CEPALCO is exempt from paying the provincial franchise tax; and

4) petitioner should refund CEPALCO's tax payment of P4,276.28.

We find no merit in the petition for review.

There is no provision in P.D. No. 231 expressly or impliedly amending or repealing

Section 3 of R.A. No. 6020. The perceived repugnancy between the two statutes should
be very clear before the Court may hold that the prior one has been repealed by the
later, since there is no express provision to that effect (Manila Railroad Co. vs. Rafferty,
40 Phil. 224). The rule is that a special and local statute applicable to a particular case
is not repealed by a later statute which is general in its terms, provisions and application
even if the terms of the general act are broad enough to include the cases in the special
law (id.) unless there is manifest intent to repeal or alter the special law.

Republic Acts Nos. 3247, 3570 and 6020 are special laws applicable only to CEPALCO,
while P.D. No. 231 is a general tax law. The presumption is that the special statutes are
exceptions to the general law (P.D. No. 231) because they pertain to a special charter
granted to meet a particular set of conditions and circumstances.
The franchise of respondent CEPALCO expressly exempts it from payment of "all taxes
of whatever authority" except the three per centum (3%) tax on its gross earnings.

In an earlier case, the phrase "shall be in lieu of all taxes and at any time levied,
established by, or collected by any authority" found in the franchise of the Visayan
Electric Company was held to exempt the company from payment of the 5% tax on
corporate franchise provided in Section 259 of the Internal Revenue Code (Visayan
Electric Co. vs. David, 49 O.G. [No. 4] 1385).

Similarly, we ruled that the provision: "shall be in lieu of all taxes of every name and
nature" in the franchise of the Manila Railroad (Subsection 12, Section 1, Act No. 1510)
exempts the Manila Railroad from payment of internal revenue tax for its importations of
coal and oil under Act No. 2432 and the Amendatory Acts of the Philippine Legislature
(Manila Railroad vs. Rafferty, 40 Phil. 224).

The same phrase found in the franchise of the Philippine Railway Co. (Sec. 13, Act No.
1497) justified the exemption of the Philippine Railway Company from payment of the
tax on its corporate franchise under Section 259 of the Internal Revenue Code, as
amended by R.A. No. 39 (Philippine Railway Co. vs. Collector of Internal Revenue, 91
Phil. 35).

Those magic words: "shall be in lieu of all taxes" also excused the Cotabato Light and
Ice Plant Company from the payment of the tax imposed by Ordinance No. 7 of the City
of Cotabato (Cotabato Light and Power Co. vs. City of Cotabato, 32 SCRA 231).

So was the exemption upheld in favor of the Carcar Electric and Ice Plant Company
when it was required to pay the corporate franchise tax under Section 259 of the
Internal Revenue Code, as amended by R.A. No. 39 (Carcar Electric & Ice Plant vs.
Collector of Internal Revenue, 53 O.G. [No. 4] 1068). This Court pointed out that such
exemption is part of the inducement for the acceptance of the franchise and the
rendition of public service by the grantee. As a charter is in the nature of a private
contract, the imposition of another franchise tax on the corporation by the local authority
would constitute an impairment of the contract between the government and the
corporation.

Recently, this Court ruled that the franchise (R.A. No. 3843) of the Lingayen Gulf
Electric Power Company which provided that the company shall pay:

tax equal to 2% per annum of the gross receipts . . . and shall be in lieu of any and all
taxes . . . now or in the future . . . from which taxes . . . the grantee is hereby expressly
exempted and . . . no other tax . . . other than the franchise tax of 2% on the gross
receipts as provided for in the original franchise shall be collected.

exempts the company from paying the franchise tax under Section 259 of the
National Internal Revenue Code (Commissioner of Internal Revenue vs.
Lingayen Gulf Electric Power Co., Inc., G.R. No. 23771, August 4, 1988).
On the other hand, the Balanga Power Plant Company, Imus Electric Company, Inc.,
Guagua Electric Company, Inc. were subjected to the 5% tax on corporate franchise
under Section 259 of the Internal Revenue Code, as amended, because Act No. 667 of
the Philippine Commission and the ordinance or resolutions granting their respective
franchises did not contain the "in-lieu-of-all-taxes" clause (Balanga Power Plant Co. vs.
Commissioner of Internal Revenue, G.R. No. L-20499, June 30, 1965; Imus Electric Co.
vs. Court of Tax Appeals, G.R. No. L-22421, March 18, 1967; Guagua Electric Light vs.
Collector of Internal Revenue, G.R. No. L-23611, April 24, 1967).

Local Tax Regulation No. 3-75 issued by the Secretary of Finance on June 26, 1976,
has made it crystal clear that the franchise tax provided in the Local Tax Code (P.D. No.
231, Sec. 9) may only be imposed on companies with franchises that do not contain the
exempting clause. Thus it provides:

The franchise tax imposed under local tax ordinance pursuant to Section 9 of the Local
Tax Code, as amended, shall be collected from businesses holding franchise but not
from business establishments whose franchise contain the "in-lieu-of-all-taxes-proviso".

Manila Electric Company vs. Vera, 67 SCRA 351, cited by the petitioner, is not
applicable here because what the Government sought to impose on Meralco in that
case was not a franchise tax but a compensating tax on the poles, wires, transformers
and insulators which it imported for its use.

WHEREFORE, the petition for review is denied, and the decision of the Court of First
Instance is hereby affirmed in toto. No costs.

SO ORDERED.

Narvasa, Cruz, Gancayco and Medialdea, JJ., concur.