City of Batangas vs. Tolentino

An ordinance that revises the schedule of fair market values of real property for purposes of assessment and real property taxation, though a tax ordinance in nature, is governed exclusively by the procedural requirements of the Local Government Code’s Title on Real Property Taxation (Book II, Title II) — Sections 212 and 219, in relation to Articles 303, 310, and 324 of the Implementing Rules — and not by the general notice and public hearing mandates under Sections 186 and 187; moreover, a legislative enactment including a local ordinance enjoys a strong presumption of validity, and the party assailing it must prove its invalidity by clear and unequivocal evidence, a burden that cannot be shifted to the enacting authority.

The Department of the Interior and Local Government and the Department of Finance, through Joint Memorandum Circular No. 2010-01, directed all local government units to revise real property assessments every three years pursuant to Section 219 of the Local Government Code. The Sangguniang Panlungsod of Batangas City enacted Ordinance No. 20, series 2013, adopting new schedules of fair market values prepared by the City Assessor, to take effect in January 2014. Respondent Jose Virgilio Y. Tolentino, a Batangas City resident and taxpayer, opposed the ordinance during its public hearings, and after its approval appealed to the Secretary of Justice, arguing that the new values were excessive and confiscatory and that no written notice had been sent to affected property owners.

• Nature: The Sangguniang Panlungsod of Batangas City enacted Ordinance No. 20, series 2013, entitled “An Act Providing for a City Code on Appraisal and Assessment of Real Properties in the City of Batangas,” to update real property values in accordance with a new schedule of fair market values prepared by the City Assessor, as mandated by Section 219 of the Local Government Code and Joint Memorandum Circular No. 2010-01.
• Enactment Process: The Committee of Ways and Means held public hearings on September 25, October 1, 2, 3, and November 11, 2013. Notices were sent to various stakeholders informing them of the dates and venues. The ordinance was approved by the Sangguniang Panlungsod on November 25, 2013, signed by the city mayor on December 9, 2013, and published in the Batangas Post in three issues between December 9 and 31, 2013.
• Opposition and Appeal: Respondent Tolentino, a resident-taxpayer, attended the November 11, 2013 hearing and opposed the ordinance. Former Secretary of Justice Hernani Perez and Batangas Chamber of Commerce President Faustino Caedo likewise objected, with Caedo claiming he had not received a written notice. After the ordinance took effect, Tolentino appealed to the Secretary of Justice under Section 187 of the Local Government Code, alleging that the new market values were excessive, inequitable, and confiscatory, and that the absence of written notice to affected residents violated his right to due process.
• Secretary of Justice’s Finding: The Secretary of Justice voided the ordinance, finding that written notices of the public hearings were not sent to all interested or affected parties operating or doing business within the city, as required by Article 276(b) of the Implementing Rules. The Secretary gave weight to affidavits from residents and the chamber president stating they received no notice.
• Evidence of Compliance: The City of Batangas presented certifications from the Secretary of the Sangguniang Panlungsod indicating that written notices were sent to stakeholders and that the required public hearings were conducted.

• Nature of the Ordinance: Petitioners maintained that the Ordinance is not a tax ordinance but a mere ordinary legislation that states current market values to be used as a basis for real property tax assessments under the existing Batangas City Revenue Code of 2009; it imposes no new levy or exaction and is therefore not appealable to the Secretary of Justice under Section 187.
• Applicable Procedure: Because the Ordinance is not a tax measure, the statutory requirements for public hearings and written notices under Section 186 of the Local Government Code and Article 276 of its Implementing Rules do not apply to its enactment.
• Presumption of Regularity: Petitioners argued that the Court of Appeals misapplied the presumption of regularity by shifting to them the burden of proving compliance with procedural requirements; the ordinance is entitled to a presumption of validity, which Tolentino failed to overcome with clear and convincing evidence.

• Tax Ordinance: The Secretary of Justice and Tolentino countered that the Ordinance is a revenue measure because its objective is to generate revenue for Batangas City through real property taxation; it is thus subject to the Secretary of Justice’s review under Section 187 of the Local Government Code.
• Mandatory Notice Requirements: Respondents argued that as a tax ordinance, the Ordinance must strictly comply with the mandatory public hearing and written notice provisions of Section 186 and Article 276(b) of the Implementing Rules. The failure to send written notices to affected parties rendered the enactment null and void.
• Inapplicability of the Presumption of Regularity: The Secretary of Justice asserted that petitioners cannot invoke the presumption of regularity because they did not comply with the procedural requirements laid down by law.

• Application of Real Property Taxation Procedure: Whether the procedural prerequisites of Sections 186 and 223 of the Local Government Code and Article 276 of its Implementing Rules — particularly the requirement of written notice of public hearings — apply to the enactment of an ordinance that revises the schedule of fair market values of real properties for assessment purposes.
• Presumption of Validity: Whether the Court of Appeals correctly applied the presumption of validity to the Ordinance, or whether it improperly shifted the burden of proving procedural compliance to the local government unit.

• Application of Real Property Taxation Procedure: Although the Ordinance is a tax ordinance because its primary and substantial purpose is to generate revenue from real property taxation, it is an ordinance specifically dealing with the general revision of real property values. As such, its enactment is governed by the special provisions on Real Property Taxation found in Book II, Title II of the Local Government Code — particularly Sections 212 and 219 — and not by the general rules on local taxation under Title I. Sections 212 and 219, in conjunction with Articles 303 and 310 of the Implementing Rules, require only the preparation of a schedule of fair market values by the city assessor, its publication in a newspaper of general circulation or posting in conspicuous places, and its adoption by ordinance by the sanggunian. These provisions do not impose a requirement of public hearings or written notices to individual property owners. Article 324 of the Implementing Rules explicitly states that “[n]o public hearing shall be required before the enactment of a local tax ordinance levying the basic real property tax.” The procedure in Ty v. Trampe confirms that no public hearing is part of the process. Thus, the Ordinance’s validity could not be impugned for lack of written notices or public hearings; the city’s conduct of multiple public hearings and dissemination of notices to stakeholders already exceeded statutory demands. Even assuming, arguendo, that the notice requirement of Article 276(b) applied, Tolentino lacked standing to invoke it because the provision mandates written notices only to “interested or affected parties operating or doing business within the territorial jurisdiction of the LGU concerned,” and Tolentino did not claim to be such a party.
• Presumption of Validity: Legislative enactments, including local ordinances, enjoy a strong presumption of validity. The party assailing an ordinance carries the burden of proving its invalidity by clear and unequivocal evidence; the burden never shifts to the enacting authority to show compliance. The Court of Appeals and the Secretary of Justice effectively reversed this presumption when they required the City of Batangas to adduce proof of compliance with procedural requirements. Tolentino’s bare assertion that he did not receive a written notice, unsupported by any other substantial evidence, was insufficient to overcome the presumption. The undisputed presence of Tolentino and other opponents at the November 11, 2013 public hearing, combined with the certifications issued by the Secretary of the Sangguniang Panlungsod, further refuted the claim of procedural infirmity. Absent a clear showing of a legal breach, the Ordinance must be upheld.

• Presumption of Validity of Ordinances — An ordinance is presumed valid and constitutional, and the party challenging it bears the burden of proving its invalidity by clear, unequivocal, and convincing evidence. The presumption stems from respect for the legislative body’s wisdom and familiarity with local conditions. It may be overturned only when invalidity or unreasonableness appears on the face of the ordinance or is established by proper evidence. In the present case, the Court applied this doctrine to hold that the lower tribunals erred in shifting the burden to the city and annulling the ordinance based on unsubstantiated allegations of non-receipt of notice.
• Special Procedure for Real Property Valuation Ordinances — Under the Local Government Code, an ordinance adopting a revised schedule of fair market values for real property assessment is governed by the procedural regime of Book II, Title II (Real Property Taxation), and not by the general notice-and-hearing requirements of Title I (Local Government Taxation). The controlling provisions — Sections 212 and 219 of the Code and Articles 303, 310, and 324 of the Implementing Rules — solely require: (1) preparation of a schedule of fair market values by the assessor; (2) publication in a newspaper of general circulation or posting in the provincial capitol, city or municipal hall, and two other conspicuous places; and (3) enactment by ordinance. No public hearing is required, and consequently, no written notice of such hearing is mandated. This doctrine harmonizes the specific real property tax procedures with the general local taxation framework and was dispositive in rejecting the ground upon which the Secretary of Justice and the Court of Appeals invalidated the ordinance.

• “if the purpose is primarily revenue, or if revenue is, at least, one of the real and substantial purposes, then the exaction is properly called a tax.” — This formulation from Planters Products, Inc. v. Fertiphil Corporation was used to classify the ordinance as a tax ordinance for purposes of determining the proper appellate route to the Secretary of Justice, while simultaneously distinguishing the substantive procedural rules that governed its enactment.
• “No public hearing shall be required before the enactment of a local tax ordinance levying the basic real property tax.” (Article 324, Implementing Rules and Regulations of the Local Government Code) — This provision was central to the holding that the notice-and-hearing requirements of Article 276(b) do not apply to a general revision of real property values, as the latter directly pertains to the basic real property tax.
• “The presumption is all in favor of validity … The action of the elected representatives of the people cannot be lightly set aside. The councilors must, in the very nature of things, be familiar with the necessities of their particular municipality and with all the facts and circumstances which surround the subject and necessitate action.” — Quoted from U.S. v. Salaveria to reinforce the rule that a heavy burden rests on the challenger, not on the enacting authority.

• Lopez v. City of Manila, 363 Phil. 68 (1999) — Followed. The Supreme Court relied on Lopez for the proposition that an ordinance revising real property values is properly classified as a tax ordinance, making Section 187 of the Local Government Code the appropriate remedy for a taxpayer’s appeal. The procedural steps recognized in Lopez — preparation of the schedule, publication, and adoption by ordinance — confirmed that public hearings are not a prerequisite.
• Ty v. Trampe, 321 Phil. 81 (1995) — Followed. The case enumerated the steps in preparing a schedule of fair market values under harmonized provisions, demonstrating that no public hearing is required in the process, and was applied to support the conclusion that the city’s conduct of public hearings exceeded statutory mandates.
• Chavez v. Ongpin, 264 Phil. 695 (1990) — Distinguished. Unlike the ordinance in the present case which provided new values for tax computation, Executive Order No. 73 merely postponed the effectivity of an already existing real property tax increase and did not itself impose new values.
• City of Cagayan De Oro v. Cagayan Electric Power and Light Co. Inc., G.R. No. 224825, October 17, 2018 — Followed. The Court relied on its comprehensive exposition of the presumption of validity of ordinances and the allocation of the burden of proof.
• Smart Communications, Inc. v. Municipality of Malvar, Batangas, 727 Phil. 430 (2014) — Followed. The principle that an ordinance may be nullified only upon a clear and unequivocal breach of the Constitution or law was applied to support the rejection of Tolentino’s insufficient evidence.

• Sections 212 and 219, Republic Act No. 7160 (Local Government Code) — Section 212 requires the city assessor to prepare a schedule of fair market values for enactment by ordinance, with publication in a newspaper of general circulation or posting. Section 219 mandates a general revision of assessments every three years. These provisions constitute the exclusive procedural framework for the Ordinance, which does not include public hearings or individual written notices.
• Article 324, Implementing Rules and Regulations of the Local Government Code — Explicitly dispenses with any public hearing requirement for a local tax ordinance levying the basic real property tax. Applied to confirm that the general hearing and notice provisions were inapplicable.
• Section 187, Local Government Code — Provides that any question on the constitutionality or legality of a tax ordinance may be raised on appeal to the Secretary of Justice within 30 days from effectivity. Applied to confirm that Tolentino’s appeal was properly lodged because the ordinance is a tax measure.
• Article 276(b), Implementing Rules and Regulations of the Local Government Code — Prescribes the procedure for public hearings and the sending of written notices to interested or affected parties operating or doing business in the locality. Held inapplicable because the ordinance is governed by the special real property taxation provisions; even if applicable, the provision’s limited scope precluded Tolentino from raising the defense.

Hernando, Inting, Delos Santos, and J. Lopez, JJ., concur.