Aala vs. Uy

A petition directly filed with the Supreme Court challenging the validity of a local tax ordinance must be dismissed when it raises mixed questions of fact and law and the petitioner has not exhausted the mandatory administrative appeal to the Secretary of Justice under Section 187 of the Local Government Code, unless clearly established exceptions excuse such non-compliance.

On July 12, 2011, the Sangguniang Panlungsod of Tagum City conducted a public hearing on a proposed ordinance adopting a new schedule of market values and assessment levels for real properties. An initial version, City Ordinance No. 516, s-2011, was enacted and approved by Mayor Rey T. Uy, but was returned by the Sangguniang Panlalawigan of Davao del Norte with a directive to introduce revisions recommended by the Provincial Assessor’s Office. In response, the Sangguniang Panlungsod enacted City Ordinance No. 558, s-2012 on March 19, 2012, approved by the mayor on April 10, 2012. The ordinance was transmitted to the Sangguniang Panlalawigan and received on April 12, 2012. On April 30, 2012, two residents filed an opposition asserting that the ordinance classified properties by location rather than actual use and would impose exorbitant taxes. The provincial board’s committee held a hearing, returned the ordinance on May 4, 2012, and eventually, on June 18, 2012, issued a resolution declaring certain sections invalid. The Sangguniang Panlungsod, invoking Section 56(d) of the Local Government Code, passed a resolution on July 9, 2012 asserting the ordinance’s validity on the ground that the provincial board had failed to act within 30 days from receipt. The ordinance was published in a local newspaper on July 13–19, 2012. Fearing immediate tax collection, seven residents and taxpayers elevated the matter directly to the Supreme Court on August 13, 2012.

• Nature of the Action: An original petition for certiorari, prohibition, and mandamus under Rule 65 of the Rules of Court, seeking to nullify City Ordinance No. 558, s-2012 of Tagum City, Davao del Norte, which adopted a new schedule of market values and assessment levels for real properties, on the ground that it was enacted with grave abuse of discretion amounting to lack or excess of jurisdiction.
• Ordinance’s Genesis: The Sangguniang Panlungsod initially passed City Ordinance No. 516, s-2011, which was returned by the Sangguniang Panlalawigan for revision. The revised ordinance, City Ordinance No. 558, s-2012, was enacted on March 19, 2012, approved by Mayor Rey T. Uy on April 10, 2012, and transmitted the same day to the Sangguniang Panlalawigan, which received it on April 12, 2012.
• Opposition at the Provincial Level: On April 30, 2012, Engineer Crisanto M. Aala and Colonel Jorge P. Ferido, Tagum residents, filed an Opposition/Objection before the Sangguniang Panlalawigan, docketed as Case No. DOCS-12-000362. They argued that the ordinance violated the Local Government Code by classifying real properties based on location rather than actual use, and that it would impose exorbitant real estate taxes. After a hearing, the Committee on Ways and Means/Games and Amusement issued Committee Report No. 5 on May 4, 2012, returning the ordinance and directing the Sangguniang Panlungsod to address the oppositors’ concerns. The Sangguniang Panlungsod requested reconsideration, but on June 18, 2012, the Sangguniang Panlalawigan issued Resolution No. 428 declaring certain sections of the ordinance invalid, specifically Sections III C 1, 2, and 3, Sections III D (1) and (2), and Sections G 1(b) and 4(g).
• Declaration of Validity by the Sangguniang Panlungsod: On July 9, 2012, the Sangguniang Panlungsod passed Resolution No. 874, s-2012, asserting that City Ordinance No. 558, s-2012 was valid under Section 56(d) of the Local Government Code because the Sangguniang Panlalawigan had failed to take action within 30 days from its receipt of the ordinance on April 12, 2012. The ordinance was subsequently published in the July 13–19, 2012 issue of Trends and Time, a newspaper of general circulation in Tagum City.
• Petitioners’ Substantive Allegations: Petitioners, residents and taxpayers of Tagum City, claimed that the ordinance created only two categories—commercial and industrial—because the sections enumerating commercial and industrial zones effectively listed all streets and barrios. They argued this constituted a blanket classification that ignored the principle of actual use, in violation of Section 217 of the Local Government Code. They alleged that residential land market values surged from ₱600.00 to ₱5,000.00 per square meter, an 833% increase, and that the Sangguniang Panlungsod had usurped the City Assessor’s function in preparing the schedule of fair market values under Section 212. Petitioners contended that the ordinance discriminated against poor landowners and imposed exorbitant real property taxes contrary to the equal protection clause, due process clause, and the rule on uniformity in taxation.

• Hierarchy of Courts: Petitioners argued that the case fell within the exceptions to the doctrine of hierarchy of courts because the redress they sought could not be obtained in the lower courts, the issues presented were purely legal, and the matter involved paramount public interest warranting immediate resolution by the Supreme Court.
• Exhaustion of Administrative Remedies: Petitioners asserted that the appeal to the Secretary of Justice under Section 187 of the Local Government Code did not provide a plain, speedy, and adequate remedy. They claimed that the 60-day period for the Secretary’s decision would cause unreasonable delay, that the Secretary could not suspend the ordinance’s implementation, and that they were caught in a “catch-22 situation” because they could not afford to pay the tax under protest as a prerequisite to challenging the assessment.
• Grave Abuse of Discretion: Petitioners maintained that the Sangguniang Panlungsod committed grave abuse of discretion by enacting an ordinance that classified virtually all lands in Tagum City as commercial or industrial based on location alone, without regard to actual use, contrary to Section 217 of the Local Government Code, and by usurping the City Assessor’s authority to fix the schedule of fair market values under Section 212.
• Constitutionality of the Ordinance: Petitioners contended that the ordinance imposed exorbitant real property taxes and discriminated against poor landowners, thereby violating the equal protection clause, the due process clause, and the rule on uniformity in taxation.

• Impropriety of Certiorari: Respondents argued that certiorari under Rule 65 lies only against judicial and quasi-judicial acts, whereas the enactment of an ordinance is a legislative function, placing it beyond the scope of the writ.
• Failure to Exhaust Administrative Remedies: Respondents stressed that petitioners should have first filed an appeal with the Secretary of Justice within 30 days from the ordinance’s effectivity, as mandated by Section 187 of the Local Government Code, before resorting to the courts.
• Violation of Hierarchy of Courts: Respondents maintained that the Supreme Court, Court of Appeals, and Regional Trial Courts share concurrent jurisdiction over petitions for certiorari, prohibition, and mandamus, and that direct resort to the Supreme Court was improper, especially since the petition raised factual issues.
• Actual Use Not Abandoned: Respondents countered that the ordinance did not create a blanket two-category classification. It provided for four categories—agricultural, residential, commercial, and industrial—and the principle of actual use would still govern the assessment and computation of real property tax. Properties located in designated commercial or industrial zones would be assessed based on their actual predominant use, such that a parcel partly used for agriculture would be taxed accordingly.
• Presumption of Validity Under Section 56(d): Respondents invoked the presumption of validity under Section 56(d) of the Local Government Code, asserting that the Sangguniang Panlalawigan acted beyond the 30-day period, having issued its resolution only on June 18, 2012, more than 30 days after receipt on April 12, 2012.

• Hierarchy of Courts: Whether the petition qualifies for any recognized exception to the doctrine of hierarchy of courts, thereby permitting direct invocation of the Supreme Court’s original jurisdiction.
• Exhaustion of Administrative Remedies: Whether the petitioners’ failure to appeal the tax ordinance to the Secretary of Justice under Section 187 of the Local Government Code is excused by any of the established exceptions to the rule on exhaustion of administrative remedies.

• Hierarchy of Courts: Direct resort to the Supreme Court was not warranted because the petition raised mixed questions of fact and law. Determining whether respondents committed grave abuse of discretion, whether the ordinance created an improper blanket classification, and whether the schedule of fair market values conformed to the principle of actual use required the presentation and evaluation of evidence—functions that the Supreme Court, not being a trier of facts, could not perform in the first instance. The recognized exceptions to the hierarchy doctrine—such as pure questions of law, transcendental importance, or patent nullity—were absent, given that the factual issues were indispensable to the resolution of the case.
• Exhaustion of Administrative Remedies: The mandatory appeal mechanism under Section 187 of the Local Government Code was not complied with, and no exception justified the omission. The issues were not purely legal; they were intertwined with factual disputes that rendered the case not ripe for direct judicial adjudication. The alleged “catch-22 situation” was illusory. The ordinance was published in July 2012, but local taxes accrue only on January 1 of each year under Section 166, so no immediate assessment could have been made, affording petitioners ample time to appeal. Moreover, the requirement of prior payment under protest under Section 195 does not apply when the taxpayer challenges the very authority of the assessor or the validity of the ordinance itself, as settled in Jardine Davies Insurance Brokers, Inc. v. Aliposa. Thus, petitioners could have challenged the ordinance’s validity before the Secretary of Justice without first paying the tax.

• Doctrine of Hierarchy of Courts — The Supreme Court is a court of last resort. While it shares original jurisdiction over petitions for certiorari, prohibition, and mandamus with the Court of Appeals and Regional Trial Courts, parties must respect the hierarchy. Direct recourse to the Supreme Court is allowed only when there are compelling reasons clearly stated in the petition or when recognized exceptions apply, such as: (1) genuine issues of constitutionality requiring immediate resolution; (2) transcendental importance; (3) novelty; (4) constitutional questions better decided by the Court; (5) time is of the essence; (6) acts of a constitutional organ are involved; (7) no other plain, speedy, and adequate remedy exists; (8) the petition affects public welfare or policy; (9) the order complained of is a patent nullity; and (10) appeal is an inappropriate remedy. The Court will decline to act when factual questions are raised, as it is not a trier of facts.
• Doctrine of Exhaustion of Administrative Remedies — Before seeking judicial intervention, a party must exhaust all available administrative remedies. Under Section 187 of the Local Government Code, a taxpayer questioning the constitutionality or legality of a tax ordinance must appeal to the Secretary of Justice within 30 days from its effectivity. The Secretary must decide within 60 days; within 30 days from receipt of the decision or from the lapse of the 60-day period without action, the aggrieved party may file appropriate proceedings in a court of competent jurisdiction. These periods are mandatory.
• Rule on Prior Payment under Protest in Tax Cases (Jardine Davies Principle) — When a taxpayer challenges the very validity of a tax ordinance or the authority of the assessor to impose the tax—rather than merely disputing the reasonableness of an assessment increase—the requirement of prior payment under protest is inapplicable. The taxpayer may directly question the ordinance’s legality through the administrative appeal mechanism without first paying the assessed tax.

• “The doctrine on hierarchy of courts is a practical judicial policy designed to restrain parties from directly resorting to this Court when relief may be obtained before the lower courts.”
• “This Court is not a trier of facts.” — The initial reception and appreciation of evidence are functions that the Supreme Court cannot perform; these belong to the trial courts.
• “Hence, if a taxpayer disputes the reasonableness of an increase in a real estate tax assessment, he is required to ‘first pay the tax’ under protest. … In the case at bench, however, the petitioners are questioning the very authority and power of the assessor … and of the treasurer to collect the tax. These are not questions merely of amounts of the increase in the tax but attacks on the very validity of any increase.”
• “The factual issues in this case should have been raised and ventilated in the proper forum.”

• People v. Cuaresma, 254 Phil. 418 (1989) — Established that the Supreme Court’s original jurisdiction over certiorari, prohibition, and mandamus is concurrent with lower courts, and that the doctrine of hierarchy of courts dictates the proper venue.
• Diocese of Bacolod v. Commission on Elections, G.R. No. 205728, January 21, 2015 — Enumerated the ten exceptions to the doctrine of hierarchy of courts; the Court found none applicable to the petition.
• Reyes v. Court of Appeals, 378 Phil. 234 (1999) — Declared the mandatory nature of the appeal to the Secretary of Justice under Section 187 of the Local Government Code, including the three sequential periods prescribed for compliance.
• Jardine Davies Insurance Brokers, Inc. v. Aliposa, 446 Phil. 243 (2003) — Held that failure to first appeal to the Secretary of Justice is fatal to a judicial challenge against a tax ordinance, and clarified that prior payment under protest is not required when the validity of the ordinance itself is being assailed.

• Section 187, Republic Act No. 7160 (Local Government Code of 1991) — Mandates that any question on the constitutionality or legality of a tax ordinance be raised on appeal to the Secretary of Justice within 30 days from effectivity; the Secretary must decide within 60 days, after which judicial recourse may be taken. This provision was not complied with.
• Section 56(d), Republic Act No. 7160 — Provides that if the sangguniang panlalawigan fails to act on a component city ordinance within 30 days from submission, the ordinance is presumed valid. Invoked at the local level but not controlling for the procedural dismissal.
• Section 217, Republic Act No. 7160 — Requires real property to be classified, valued, and assessed based on its actual use regardless of location. Underlay the petitioners’ substantive challenge, which was not reached.
• Section 195, Republic Act No. 7160 — Governs protest of assessment and the requirement of payment under protest. Distinguished by the Court as inapplicable to a challenge directed against the validity of the ordinance itself.

Chief Justice Maria Lourdes P.A. Sereno, Associate Justices Antonio T. Carpio, Presbitero J. Velasco, Jr., Teresita J. Leonardo-De Castro, Diosdado M. Peralta, Lucas P. Bersamin, Mariano C. Del Castillo, Jose Catral Mendoza, Bienvenido L. Reyes, Estela M. Perlas-Bernabe, Francis H. Jardeleza, and Alfredo Benjamin S. Caguioa.

• N/A — The decision was unanimous with no registered dissents.