Reyes vs. Court of Appeals

A question on the constitutionality or legality of a tax ordinance must be raised on appeal to the Secretary of Justice within thirty days from its effectivity, non-compliance being fatal, and an ordinance is presumed valid unless the challenger proves non-observance of mandatory public hearings. Applied to five San Juan revenue ordinances challenged months after effectivity without proof that hearings were omitted, the appeal was properly dismissed.

Antonio Z. Reyes, Eliseo P. Ocampo and Editha Arciaga-Santos are parties subject to the revenue measures of the Municipality of San Juan, Metro Manila, then headed by Mayor Jinggoy Estrada, with the Secretary of Justice exercising appellate review over local tax ordinances. The Local Government Code of 1991, R.A. No. 7160, supplies the governing framework, requiring mandatory public hearings prior to enactment of tax ordinances and revenue measures under Sections 186 and 187 and prescribing a thirty-day period from effectivity to appeal constitutionality or legality to the Secretary of Justice.

The Sangguniang Bayan of San Juan, Metro Manila implemented five revenue measures: Ordinance No. 87 imposing a municipal tax of fifty percent of one percent of gross receipts on printing and publication business; Ordinance No. 91 imposing a transfer tax equivalent to fifty percent of one percent of total consideration or fair market value, whichever higher, on transfers of real property in San Juan; Ordinance No. 95 imposing fifty percent of one percent for social housing tax on assessed value of real estate in excess of P50,000.00 as provided in R.A. 7279; Ordinance No. 100 imposing new rates of business taxes; and Ordinance No. 101 levying an annual ad valorem tax on real property and additional tax for the special education fund.

Thereafter, the ordinances took effect on September 24, 1992 in the case of Ordinance No. 87, until October 22, 1992 in the case of Ordinance Nos. 91 and 95, and until October 29, 1992 in the case of Ordinance Nos. 100 and 101. On May 21, 1993, petitioners filed an appeal with the Department of Justice assailing the constitutionality of the ordinances. According to petitioners, the measures were promulgated without previous public hearings as required by the Local Government Code of 1991, thereby constituting deprivation of property without due process of law.

Because no timely appeal followed within thirty days from effectivity, the Secretary of Justice on June 10, 1993 dismissed the appeal as filed out of time under Section 187 of R.A. No. 7160. Undaunted, petitioners filed a petition for certiorari and prohibition with the Court of Appeals to stop enforcement. The factual predicates sustained below were that effectivity occurred in September-October 1992 while the Department appeal was received only on May 21, 1993, and that petitioners offered no evidence beyond bare assertion that mandatory public hearings had been omitted.

• Lack of Public Hearings and Due Process: Petitioner argued that the questioned tax ordinances are violative of the Constitution because no public hearings were ever held before passage and approval as required by the Local Government Code of 1991, thereby depriving property without due process.
• Inoperability and Thirty-Day Period: Petitioner maintained that the wording of Section 187 requiring appeal within thirty days from effectivity is a reductio ad absurdum, since an unconstitutional ordinance is considered never to have become effective, so no prescriptive period could toll; failure to conduct hearings rendered the ordinances inoperative as though never passed.
• Timeless Challenge to Constitutionality: Petitioner argued that the constitutionality of a tax ordinance, or any law, can be questioned at any time despite a limited statutory period.
• Constitutionality Not as Lis Mota: Petitioner maintained that constitutionality may be questioned even if not originally raised or not the lis mota, if determination thereof is necessary to decide the case.

• Timeliness of Appeal to the Secretary of Justice: Whether the Court of Appeals erred in affirming the Secretary of Justice who dismissed the suit on the ground that it was filed out of time.
• Lack of Mandatory Public Hearings: Whether lack of mandatory public hearings prior to enacting Municipal Ordinance Nos. 87, 91, 95, 100 and 101 renders them void on the ground of deprivation of property without due process.
• First-Time Challenge to Section 187: Whether the constitutional validity of Sec. 187 of the Local Government Code could be raised for the first time on appeal.

• Timeliness of Appeal to the Secretary of Justice: No. The dismissal was proper, the appeal having been filed months after effectivity in violation of the mandatory 30-day period under Sec. 187 of R.A. No. 7160.
• Lack of Mandatory Public Hearings: No. The ordinances were not rendered void, petitioners having failed to discharge the burden of proving lack of hearings against the presumption of validity.
• First-Time Challenge to Section 187: No. Constitutional scrutiny was unwarranted where the issue was not raised at the first opportunity, not shown to be the lis mota, and unnecessary after resolution of the first two issues.

• Timeliness of Appeal to the Secretary of Justice: The law requires a dissatisfied taxpayer questioning validity or legality to appeal to the Secretary of Justice within 30 days from effectivity, with 30 days thereafter to go to court after decision or 60 days of inaction, as prerequisites to judicial redress to prevent delay and ensure orderly discharge of functions. Construed as mandatory because the taxing power finances basic services and delays harm the public, the periods barred petitioners whose ordinances took effect September-October 1992 but who appealed only on May 21, 1993.
• Lack of Mandatory Public Hearings: While an ordinance levying taxes shall not be enacted without prior public hearing, invalidity was not established because bare assertions do not overcome the presumption of validity in favor of an ordinance. Following Figuerres vs. Court of Appeals, lack of hearing being a negative allegation essential to the cause of action, the burden rested on petitioners despite Sanggunian control of records, and their failure to prove omission required upholding constitutionality; regularity of an officially promulgated ordinance, moreover, may not be impeached by parol or oral testimony.
• First-Time Challenge to Section 187: The constitutionality of an act of Congress will not be passed upon unless raised at the first opportunity in an appropriate case, insisted upon and adequately argued, and necessary to determination, particularly where it is the very lis mota. Entertaining the attack on Sec. 187 was unwarranted where it was not specifically raised below and no genuine necessity remained after sustaining the untimeliness dismissal and presumption of validity, revealing no grave abuse of discretion or reversible error by the appellate court.

• Mandatory statutory periods for tax protests — Periods fixed by statute for appealing tax ordinances to the Secretary of Justice and then to court are construed as mandatory to prevent delays and enhance orderly and speedy discharge of judicial functions. Applied here, the three periods in Sec. 187 — 30 days from effectivity to appeal, 60 days for the Secretary to decide, 30 days to go to court — were prerequisites, and non-compliance was fatal.
• Presumption of validity of ordinances and burden of proof on negative allegation — An ordinance is presumed valid and its constitutionality upheld absent evidence that prescribed procedure was not observed; one alleging lack of mandatory public hearings, as a negative allegation essential to the cause of action, bears the burden of proof. Applied here, petitioners' bare assertions did not rebut the presumption for Ordinance Nos. 87, 91, 95, 100 and 101.
• Non-impeachment of legislative regularity by parol evidence — For certainty where doubt would be intolerable, regularity of enactment of an officially promulgated statute or ordinance may not be impeached by parol evidence or oral testimony of officers, members, or interested strangers, supplementing the presumption of regularity of official conduct absent clear showing to the contrary.
• Requisites for judicial review of constitutionality — Constitutionality will not be passed upon unless the question is raised at the first opportunity, specifically insisted upon and adequately argued in an appropriate case, and necessary to determination, particularly where it is the very lis mota presented. Applied here, the belated and unnecessary attack on Sec. 187 of R.A. No. 7160 was declined.
• Power to tax of local government units — The power to tax is the most effective instrument to raise revenues to finance myriad local activities for basic services essential to general welfare, peace, progress, and prosperity. Applied here, it justified strict enforcement of time frames against delays in implementing tax measures.

• "Clearly, the law requires that the dissatisfied taxpayer who questions the validity or legality of a tax ordinance must file his appeal to the Secretary of Justice, within 30 days from effectivity thereof." — States the controlling Sec. 187 prerequisite that rendered the May 1993 appeal fatal after September-October 1992 effectivity.
• "WHEREFORE, the instant appeal, having been filed out of time, is hereby DISMISSED." — Reproduces the Secretary of Justice's June 10, 1993 disposition affirmed by the appellate court and the Supreme Court.
• "However, in accordance with the presumption of validity in favor of an ordinance, their constitutionality or legality should be upheld in the absence of evidences showing that procedure prescribed by law was not observed in their enactment . . . ." — Defines the evidentiary rule from Figuerres vs. Court of Appeals applied to reject the unproven lack-of-hearing claim.
• "The constitutionality of an act of Congress will not be passed upon by the Court unless at the first opportunity that question is properly raised and presented in an appropriate case, and is necessary to a determination of the case, particularly where the issue of constitutionality is the very lis mota presented." — States the justiciability limitation invoked to decline first-time scrutiny of Sec. 187.

• Figuerres vs. Court of Appeals, G.R. No. 119172, March 25, 1999 — Controlling precedent followed: public hearings are required under R.A. No. 7160 before real-property tax ordinances, but bare assertions without evidence do not overcome the presumption of validity and the challenger bears the burden on the negative allegation.
• Mactan Cebu International Airport Authority vs. Marcos, 261 SCRA 667, 690 (1996) — Cited for the principle that the power to tax is the most effective revenue instrument for local government services, supporting strict timeliness to avoid detrimental delay.
• Shioji vs. Harvey, 43 Phil. 333 (1922); Alvero vs. De la Rosa, 76 Phil. 428, 434 (1946) — Cited through Agpalo on statutory construction for construing statutory periods as mandatory.
• National Economic Protectionism Association vs. Ongpin, 171 SCRA 657, 665 (1989); People vs. Vera, 65 Phil. 56, 57 (1937); Dumlao vs. Comelec, 95 SCRA 392, 403 (1980) — Cited for the rule that constitutionality must be raised at the first opportunity and be necessary, particularly as lis mota.
• City of Baguio vs. Marcos, 27 SCRA 324, 351-352 (1969) — Cited for the rule that constitutional validity not specifically raised below, insisted upon, and adequately argued should not be entertained.
• People vs. Pajenado, 31 SCRA 812, 817 (1970) — Cited for retaining the burden of proof on the party asserting averments despite the adversary's better means of proof.

• Sec. 187, R.A. No. 7160 (Local Government Code of 1991) — Procedure for approval and effectivity of tax ordinances and revenue measures; mandates prior public hearings, allows appeal on constitutionality or legality to the Secretary of Justice within 30 days from effectivity without suspending effectivity, and allows court recourse within 30 days from decision or after 60-day inaction. Applied to dismiss the May 21, 1993 appeal from ordinances effective September-October 1992.
• Sec. 186, R.A. No. 7160 — Provides that an ordinance levying taxes, fees, or charges shall not be enacted without prior public hearing conducted for the purpose. Invoked as the alleged due-process defect, but held unproven by petitioners.
• R.A. 7279 (New Urban Land Reform Law) — Referenced as basis for Ordinance No. 95 imposing social housing tax on assessed value of real estate in excess of P50,000.00.

Davide, Jr., C.J., Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, Panganiban, Purisima, Pardo, Buena, Gonzaga-Reyes, Ynares-Santiago and De Leon, Jr., JJ., concur.