Figuerres vs. Court of Appeals

A taxpayer who challenges the validity of real property tax ordinances on both legal and factual grounds must first exhaust administrative remedies under §§187, 226, and 252 of the Local Government Code before seeking judicial relief, and the presumption of validity in favor of municipal ordinances shields them from invalidation absent positive proof that the procedural requisites for their enactment — public hearings, publication or posting, and compliance with Department of Finance regulations — were not observed.

Petitioner Belen C. Figuerres is the owner of a 530-square-meter residential parcel of land covered by Transfer Certificate of Title No. 413305, located at Amarillo Street, Barangay Mauway, Mandaluyong. The Sangguniang Bayan of the then Municipality of Mandaluyong enacted a series of ordinances revising the schedule of fair market values and assessment levels for real property taxation pursuant to the Local Government Code of 1991 (Republic Act No. 7160), which devolved to local sanggunians the power to determine and approve such ordinances without need of Department of Finance approval. The Department of Finance had issued Local Assessment Regulation No. 1-92, dated October 6, 1992, providing guidelines for the conduct of general revisions of real property assessment under §§201 and 219 of the Code.

Petitioner Belen C. Figuerres owns a 530-square-meter residential parcel of land covered by Transfer Certificate of Title No. 413305, located at Amarillo Street, Barangay Mauway, Mandaluyong. In 1993, she received from the municipal assessor a notice of assessment, dated October 20, 1993, fixing the base value of her property at ₱2,500.00 per square meter, yielding a market value of ₱1,325,000.00 and an assessed value of ₱265,006.00 at the 20% assessment level, effective for the year 1994.

The assessment was based on three ordinances enacted by the Sangguniang Bayan of Mandaluyong. Ordinance No. 119, series of 1993, promulgated on April 22, 1993, contained a schedule of fair market values of the different classes of real property in the municipality. Ordinance No. 125, series of 1993, promulgated on November 11, 1993, fixed the assessment levels applicable to such classes of real property and provided a penal sanction of a fine of not less than ₱1,000.00 nor more than ₱5,000.00, or imprisonment of not less than one month nor more than six months, or both, for violations thereof. Ordinance No. 135, series of 1994, promulgated on February 24, 1994, amended Ordinance No. 119, §6 by providing that only one-third of the increase in market values applicable to residential lands would be implemented in 1994, 1995, and 1996.

Petitioner brought a prohibition suit in the Court of Appeals against the Assessor, the Treasurer, and the Sangguniang Bayan, seeking to enjoin enforcement of the ordinances on the ground that they were invalid for having been adopted without public hearings, without prior publication or posting, and without compliance with implementing rules yet to be issued by the Department of Finance. The Court of Appeals dismissed the petition, holding that DOF approval was no longer required under the Local Government Code, that the necessary DOF regulations had already been issued, that publication in the Official Gazette was not a prerequisite for effectivity, and that petitioner had failed to exhaust administrative remedies under §187 of R.A. No. 7160. Petitioner elevated the matter to the Supreme Court, reiterating her challenges to the ordinances' validity on grounds of non-exhaustion of administrative remedies being excused, lack of mandatory public hearings, lack of publication, and non-compliance with DOF Assessment Regulation No. 1-92. The Municipality of Mandaluyong countered that the case fell within no exception to the exhaustion doctrine, that petitioner had presented no evidence of absent public hearings, that the ordinances had been disseminated in accordance with the Local Government Code, and that the municipality had complied with DOF regulations.

• Exhaustion of Administrative Remedies: Petitioner contended that exhaustion of administrative remedies was not required under the circumstances and would have been a useless formality, arguing that the appeal to the Secretary of Justice under §187 was merely directory, not mandatory, because the provision states that questions on constitutionality or legality "may" be appealed.
• Public Hearings: Petitioner argued that the Court of Appeals erred in upholding the ordinances without taking into account the mandatory public hearings required by R.A. No. 7160 before enactment of tax ordinances.
• Publication: Petitioner maintained that publication of tax ordinances was necessary for their validity and that the subject ordinances had not been duly published or posted.
• DOF Regulations Compliance: Petitioner asserted that public respondents failed to comply with Department of Finance Local Assessment Regulation No. 1-92, dated October 6, 1992, in enacting the ordinances.

• Exhaustion of Administrative Remedies: Respondent Municipality of Mandaluyong contended that the case did not fall within any of the exceptions to the doctrine of exhaustion of administrative remedies.
• Public Hearings: Respondent argued that apart from petitioner's bare allegations, no evidence had been presented to show that public hearings were not conducted prior to the enactment of the ordinances.
• Publication: Respondent maintained that although publication in the Official Gazette was not required for validity, the subject ordinances had been disseminated before their effectivity in accordance with the relevant provisions of R.A. No. 7160.
• DOF Regulations Compliance: Respondent claimed that the municipality had complied with the regulations of the Department of Finance in enacting the ordinances and that the regulations were merely directory.

• Exhaustion of Administrative Remedies: Whether petitioner was required to exhaust administrative remedies under §§187, 226, and 252 of R.A. No. 7160 before seeking judicial relief, notwithstanding her contention that the questions raised were purely legal.
• Public Hearings: Whether the subject ordinances were invalid for having been enacted without the public hearings required by §186 of R.A. No. 7160.
• Publication and Posting: Whether the subject ordinances were invalid for lack of publication or posting as required by §§188, 212, and 511(a) of R.A. No. 7160.
• DOF Regulations Compliance: Whether the subject ordinances were void for non-compliance with Department of Finance Local Assessment Regulation No. 1-92.

• Exhaustion of Administrative Remedies: Yes. Petitioner's action was premature because the legal questions she raised required proof of facts for their resolution, placing the case outside the exception for purely legal questions.
• Public Hearings: No, the ordinances were not invalidated on this ground. Although public hearings are required under §186, the presumption of validity favoring ordinances prevailed, petitioner having presented no evidence that no public hearings were conducted.
• Publication and Posting: No, the ordinances were not invalidated on this ground. Publication and posting are required under §§188, 212, and 511(a), but the presumption of validity and the certificate of posting submitted by the municipality sufficed, petitioner having failed to present contrary evidence.
• DOF Regulations Compliance: No, the ordinances were not invalidated on this ground. In the absence of proof that the ordinances were not enacted in accordance with DOF regulations, they were presumed to have been so enacted.

• Exhaustion of Administrative Remedies: The doctrine of exhaustion of administrative remedies requires that where a remedy is available within the administrative machinery, it should be resorted to before recourse to the courts, both to give the administrative agency the opportunity to decide correctly and to prevent unnecessary and premature litigation. For questions on the legality of a tax ordinance, the Local Government Code provides three remedies: under §187, a taxpayer may appeal to the Secretary of Justice within thirty days from effectivity on questions of constitutionality or legality; under §226, an owner dissatisfied with an assessment may appeal to the Board of Assessment Appeals within sixty days from notice; and under §252, a taxpayer questioning the excessiveness of the tax must first pay under protest and then appeal to the Board of Assessment Appeals. Although cases raising purely legal questions are excepted from the exhaustion requirement, the legal questions raised by petitioner — whether public hearings were conducted, whether publication was made, whether DOF regulations were followed — required proof of facts for their resolution. The Secretary of Justice can take cognizance of cases involving factual issues, and the sixty-day decision period under §187 mitigated concerns of undue delay. Petitioner's argument that the appeal was merely directory because the statute uses "may" was rejected, as the word "may" simply confers authority on the Secretary of Justice to act on the appeal.

• Public Hearings: Section 186 of R.A. No. 7160 mandates that an ordinance levying taxes, fees, or charges shall not be enacted without a prior public hearing. Petitioner was correct on this legal point. However, apart from bare assertions, petitioner presented no evidence that no public hearings were conducted. The Municipality of Mandaluyong claimed that public hearings were held, though it likewise submitted no evidence. In accordance with the presumption of validity favoring ordinances, their constitutionality or legality must be upheld absent evidence showing that the prescribed procedure was not observed. Citing United States vs. Cristobal, the Court held that in the absence of positive proof to the contrary, it will be assumed that officials did what the law required. Furthermore, the lack of a public hearing is a negative allegation essential to petitioner's cause of action, and as the party asserting it, she bore the burden of proof.

• Publication and Posting: Section 212 of R.A. No. 7160 requires that the schedule of fair market values be published in a newspaper of general circulation or, in its absence, posted in the provincial capitol, city, or municipal hall and in two other conspicuous public places. For local government units within Metro Manila, Ty vs. Trampe clarified that this refers to the schedule prepared jointly by the local assessors of the district. Section 188 requires that tax ordinances be published in full for three consecutive days in a newspaper of local circulation within ten days of approval, or posted in at least two conspicuous places where no such newspaper exists. Section 511(a) adds that ordinances with penal sanctions must be posted for a minimum of three consecutive weeks and published in a newspaper of general circulation where available. Thus, Ordinance No. 125, which carried penal sanctions, was subject to both §§188 and 511(a). Despite these requirements, petitioner presented no evidence of non-compliance. The Municipality submitted a certificate from the Sanggunian Secretary dated November 12, 1993, stating that Ordinance No. 125 had been posted in accordance with the Code. Given the presumption of validity and petitioner's failure to rebut it, the ordinances were upheld.

• DOF Regulations Compliance: Local Assessment Regulation No. 1-92 provides guidelines for the preparation of proposed schedules of fair market values, including timetables for obtaining valuation information from affected property owners. Petitioner contended that Ordinance Nos. 119 and 135 were void for non-compliance with these regulations. As with the procedural requirements for enactment, however, petitioner presented no evidence of non-compliance. The Municipality claimed it had complied and that the regulations were merely directory. In the absence of proof that the ordinances were not enacted in accordance with the regulations, they were presumed to have been so enacted.

• Doctrine of Exhaustion of Administrative Remedies — Where a remedy is available within the administrative machinery, it must be resorted to before recourse to the courts, to afford the administrative agency the opportunity to decide the matter correctly and to prevent premature judicial intervention. Applied here: petitioner was required to appeal to the Secretary of Justice under §187, the Board of Assessment Appeals under §226, and pay under protest under §252 before seeking judicial relief, because her legal questions required factual determination and thus did not fall within the purely-legal-question exception.

• Presumption of Validity of Ordinances — Municipal ordinances are presumed to have been enacted in accordance with law, and their constitutionality or legality will be upheld in the absence of positive proof that the procedure prescribed by law was not observed in their enactment. Applied here: petitioner's bare allegations of no public hearings, no publication, and no DOF regulation compliance were insufficient to rebut the presumption; the burden of proving these negative allegations rested on petitioner as the party asserting them.

• Burden of Proof for Negative Allegations — A negative allegation essential to a party's cause of action must be proven by the party asserting it. Applied here: because the lack of a public hearing was a negative allegation essential to petitioner's cause of action, she bore the burden of proving that no public hearings were conducted, which she failed to discharge.

• "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." — This passage articulates the ratio decidendi for the exhaustion ruling, explaining why petitioner's legal challenges did not qualify for the purely-legal-question exception.

• "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." — This quotation from United States vs. Cristobal, adopted by the Court, states the canonical formulation of the presumption that officials complied with statutory procedures, which underpins the presumption of validity favoring ordinances.

• "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." — This passage synthesizes the publication requirements under §§212 and 188 for real property tax ordinances in Metro Manila local government units, clarifying the two-step process: first the schedule, then the ordinance.

• Lopez vs. City of Manila, G.R. No. 127139, Feb. 19, 1999 — Recently decided controlling authority cited for the doctrine that administrative remedies must be exhausted before resort to courts.
• Tañada vs. Tuvera, 146 SCRA 446 — Cited by the Court of Appeals for the proposition that municipal ordinances are covered by the Local Government Code and that publication in the Official Gazette is not a prerequisite for their effectivity.
• United States vs. Cristobal, 34 Phil. 825 (1916) — Followed for the principle that in the absence of positive proof to the contrary, it will be assumed that officials complied with the law, establishing the presumption of validity favoring ordinances.
• Ty vs. Trampe, 250 SCRA 500 (1995) — Followed for the rule that for local government units within Metro Manila, the schedule of fair market values under §212 refers to the schedule prepared jointly by the local assessors of the district to which the city or municipality belongs.
• Industrial Finance Corporation vs. Tobias, 78 SCRA 28 (1977) — Cited for the proposition that a negative allegation essential to a party's cause of action must be proven by the party asserting it.
• Gonzales vs. Secretary of Education, 5 SCRA 657 — Cited by the Court of Appeals for the rule that administrative remedies must be exhausted before seeking judicial intervention.
• Allied Brokerage Corporation vs. Commissioner of Customs, 40 SCRA 555 — Cited by the Court of Appeals for the rule that resort to court without first pursuing administrative remedies renders the action premature.

• Section 186, R.A. No. 7160 (Local Government Code of 1991) — Requires that an ordinance levying taxes, fees, or charges shall not be enacted without a prior public hearing conducted for the purpose. The Court confirmed this requirement applies to real property tax ordinances but held the presumption of validity shielded the ordinances absent evidence of non-compliance.
• Section 187, R.A. No. 7160 — Provides that any question on the constitutionality or legality of tax ordinances may be appealed to the Secretary of Justice within thirty days from effectivity; the Secretary must render a decision within sixty days, after which the aggrieved party may file appropriate court proceedings. Applied as the primary administrative remedy petitioner was required to exhaust.
• Section 188, R.A. No. 7160 — Requires publication of tax ordinances in full for three consecutive days in a newspaper of local circulation within ten days of approval, or posting in at least two conspicuous places where no such newspaper exists. Applied to Ordinance Nos. 119, 125, and 135.
• Section 212, R.A. No. 7160 — Requires publication or posting of the schedule of fair market values of different classes of real property. As clarified by Ty vs. Trampe, for Metro Manila local government units this refers to the schedule prepared jointly by the local assessors of the district.
• Section 226, R.A. No. 7160 — Allows an owner dissatisfied with an assessment to appeal to the Board of Assessment Appeals within sixty days from notice of assessment. Identified as an administrative remedy petitioner failed to exhaust.
• Section 252, R.A. No. 7160 — Requires a taxpayer questioning the excessiveness of a tax to first pay the amount due under protest before appealing to the Board of Assessment Appeals. Identified as another administrative remedy available to petitioner.
• Section 511(a), R.A. No. 7160 — Requires that ordinances with penal sanctions be posted for a minimum of three consecutive weeks and published in a newspaper of general circulation where available, taking effect on the day following publication or at the end of the posting period, whichever is later. Applied to Ordinance No. 125, which imposed penal sanctions.
• Department of Finance Local Assessment Regulation No. 1-92, dated October 6, 1992 — Provides guidelines for the preparation of proposed schedules of fair market values and the conduct of general revisions of real property assessment pursuant to §§201 and 219 of the Local Government Code. The Court held that non-compliance was not proven and the ordinances were presumed enacted in accordance with these regulations.

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