Systems Plus Computer College of Caloocan City vs. Local Government of Caloocan City

A petition for mandamus does not lie where an adequate administrative remedy—such as appeal to the Local Board of Assessment Appeals under Section 226 of the Local Government Code—is available, and mandamus cannot be used to direct the exercise of judgment or discretion in property tax assessment.

Petitioner Systems Plus Computer College is a non-stock, non-profit educational institution organized in 1997, located at 141-143 10th Avenue, Caloocan City. It enjoys real property tax exemption on its buildings but not on the parcels of land it occupies, which are owned by its sister companies, Consolidated Assembly, Inc. and Pair Management and Development Corporation. The constitutional basis for the claimed exemption is Article VI, Section 28(3) of the 1987 Constitution, which exempts from taxation all lands, buildings, and improvements actually, directly, and exclusively used for religious, charitable, or educational purposes. The Local Government Code of 1991 provides the administrative framework for property assessment and appeals therefrom.

Petitioner Systems Plus Computer College is a non-stock, non-profit educational institution established in 1997 with business address at 141-143 10th Avenue, Caloocan City. It enjoys property tax exemption from the local government on its buildings but not on the parcels of land it rents for ₱5,000 monthly from its sister companies, Consolidated Assembly, Inc. and Pair Management and Development Corporation.

On January 8, 1998, petitioner requested respondent city government of Caloocan, through respondent Mamerto Manahan, City Assessor and Administrator, to extend tax exemption to the parcels of land, claiming the same were being used actually, directly, and exclusively for educational purposes pursuant to Article VI, Section 28(3) of the 1987 Constitution and other applicable provisions of the Local Government Code. On February 5, 1998, respondent city government, on recommendation of respondent Atty. Nestor Francisco, City Legal Officer, denied the request on the ground that the subject parcels of land were owned by Consolidated Assembly and Pair Management, which derived income therefrom in the form of rentals and other local taxes assumed by petitioner. From the landowners' standpoint, the properties were not actually, directly, and exclusively used for educational purposes.

On February 15, 1999, petitioner and the two sister companies entered into separate agreements which in effect novated their existing contracts of lease on the subject parcels of land and converted them to donations of the beneficial use thereof. Four days later, on February 19, 1999, petitioner wrote respondent City Assessor informing the latter of the new agreements and seeking reconsideration of the earlier denial. A duly notarized certification jointly issued by Consolidated Assembly and Pair Management, stating that they no longer received income by way of rentals from the subject properties, accompanied by corresponding board resolutions, was submitted. Nevertheless, on July 21, 1999, respondent city government again denied the application, reasoning that petitioner appeared to be an agency for its sister corporations to evade payment of real property taxes, that the grant of tax exemption rests upon the theory that it will benefit the body of people and not lessen the burden of individual or corporate owners, and that there was no showing that the properties were "actually, directly, and exclusively" used for educational purposes.

Twice denied, petitioner filed a petition for mandamus with the respondent RTC of Caloocan City, Branch 121, which dismissed it for being premature. Petitioner's timely motion for reconsideration was likewise denied, prompting the filing of the instant petition for certiorari imputing grave abuse of discretion on the part of the trial court.

• Mandamus Lies Against Public Respondents: Petitioner argued that the trial court erred in ruling that mandamus does not lie against the public respondents.
• No Need to Exhaust Administrative Remedies: Petitioner contended that it was not contesting any assessment made by respondent City Assessor, and therefore the administrative remedy of appeal to the Local Board of Assessment Appeals under Section 226 of the Local Government Code did not apply.
• Clear Legal Right to Enforce: Petitioner maintained that it was seeking to enforce, through the petition for mandamus, a clear legal right under the Constitution and the pertinent provisions of the Local Government Code granting tax exemption on properties actually, directly, and exclusively used for educational purposes.

• Availability of Mandamus: Whether mandamus lies against the public respondents, particularly the City Assessor, in the exercise of his function of assessing properties for taxation purposes.
• Exhaustion of Administrative Remedies: Whether petitioner failed to exhaust available administrative remedies before seeking judicial intervention.

• Availability of Mandamus: No. Mandamus does not lie against the respondent City Assessor in the exercise of his function of assessing properties for taxation purposes, because while the duty to conduct assessments is ministerial, the actual exercise thereof is necessarily discretionary.
• Exhaustion of Administrative Remedies: Yes, petitioner failed to exhaust available administrative remedies. Under Section 226 of RA 7160, appeal to the Local Board of Assessment Appeals is available from an adverse ruling of the city assessor, and petitioner could not bypass this remedy.

• Availability of Mandamus: Mandamus is defined as a writ commanding a tribunal, corporation, board, or person to do an act required by law when it unlawfully neglects the performance of a duty, there being no other plain, speedy, and adequate remedy in the ordinary course of law. Well-settled is the rule that mandamus may not be availed of to direct the exercise of judgment or discretion in a particular way, or to retract or reverse an action already taken in the exercise of either. While the City Assessor's duty to conduct assessments is a ministerial function, the actual exercise thereof is necessarily discretionary. The determination of the taxability of the subject real properties squarely falls within the assessor's power to assess properties for taxation purposes. Mandamus is therefore unavailing.

• Exhaustion of Administrative Remedies: Where administrative remedies are available, a petition for mandamus does not lie. Under Section 226 of RA 7160, any owner or person having legal interest in property who is not satisfied with the action of the city assessor in the assessment of his property may, within sixty days from receipt of the written notice of assessment, appeal to the Local Board of Assessment Appeals. Petitioner argued it was not contesting any assessment, but this proceeds from a misunderstanding of the term "assessment," which under Section 199(f) of the Local Government Code includes the discovery, listing, classification, and appraisal of properties. The determination made by the City Assessor regarding the taxability of the subject properties falls within this broader definition. Petitioner's claim of a clear legal right to tax exemption gratuitously presumes the existence of facts it must first prove before the City Assessor, whose action is appealable to the Local Board of Assessment Appeals and, if necessary, the Central Board of Assessment Appeals. The doctrine of exhaustion of administrative remedies precludes bypassing administrative agencies and directly seeking redress from the courts, even on the pretext of raising a supposedly pure question of law.

• Doctrine of Exhaustion of Administrative Remedies — Before seeking judicial intervention, a party must first avail of all means afforded by administrative processes. When the law provides for remedies against the action of an administrative board, body, or officer, relief to the courts can be made only after exhausting all such remedies. The Court applied this doctrine by holding that petitioner should have appealed to the Local Board of Assessment Appeals under Section 226 of the Local Government Code before filing mandamus with the RTC.

• Mandamus Does Not Lie to Compel Discretionary Acts — Mandamus may not be availed of to direct the exercise of judgment or discretion in a particular way, or to retract or reverse an action already taken in the exercise of either. While the duty to conduct property assessments may be ministerial in nature, the actual exercise of that duty is necessarily discretionary. The Court applied this principle to the City Assessor's determination of whether the subject properties qualified for tax exemption.

• Broad Definition of "Assessment" — Under Section 199(f) of the Local Government Code, "assessment" is not limited to the valuation of property but encompasses the act or process of determining the value of a property subject to tax, including the discovery, listing, classification, and appraisal of properties. The Court relied on this definition to reject petitioner's argument that it was not contesting an "assessment" and therefore need not appeal to the Local Board of Assessment Appeals.

• "The petitioner cannot bypass the authority of the concerned administrative agencies and directly seek redress from the courts even on the pretext of raising a supposedly pure question of law without violating the doctrine of exhaustion of administrative remedies." — This passage articulates the ratio decidendi on the exhaustion requirement, emphasizing that even a purported pure question of law does not excuse bypassing administrative processes.

• "While its duty to conduct assessments is a ministerial function, the actual exercise thereof is necessarily discretionary. Well-settled is the rule that mandamus may not be availed of to direct the exercise of judgment or discretion in a particular way, or to retract or reverse an action already taken in the exercise of either." — This passage defines the boundary between ministerial duty and discretionary execution in the context of mandamus, explaining why the writ was unavailable against the City Assessor.

• "Under Section 199(f), Title II, Book II, of the Local Government Code of 1991, 'assessment' is defined as the act or process of determining the value of a property, or proportion thereof subject to tax, including the discovery, listing, classification and appraisal of properties." — This passage supplies the statutory definition of "assessment" that defeated petitioner's argument that it was not contesting an assessment and therefore was not required to appeal to the Local Board of Assessment Appeals.

• Militante vs. Court of Appeals, 330 SCRA 318 (2000) — Cited for the proposition that where administrative remedies are available, a petition for mandamus does not lie.
• Lopez vs. City of Manila, 303 SCRA 448 (1999) — Cited in support of the doctrine that when the law provides remedies against the action of an administrative board, body, or officer, relief to the courts can be made only after exhausting all such remedies.
• Zabat vs. Court of Appeals, 338 SCRA 551 (2000) — Cited for the rule that before seeking judicial intervention, it is a precondition that a party first avail of all means afforded by administrative processes.
• JG Summit Holdings, Inc. vs. Court of Appeals, 345 SCRA 143 (2000) — Cited for the principle that mandamus may not be availed of to direct the exercise of judgment or discretion, or to retract or reverse an action already taken in the exercise of either.

• Article VI, Section 28(3), 1987 Constitution — Provides that charitable institutions, churches, parsonages or convents appurtenant thereto, mosques, non-profit cemeteries, and all lands, buildings, and improvements actually, directly, and exclusively used for religious, charitable, or educational purposes shall be exempt from taxation. Petitioner invoked this provision as the basis for its claimed tax exemption on the subject land.
• Section 226, Republic Act No. 7160 (Local Government Code of 1991) — Establishes the Local Board of Assessment Appeals and provides that any owner or person having legal interest in property who is not satisfied with the action of the city assessor may, within sixty days from receipt of the written notice of assessment, appeal to the Board of Assessment Appeals. The Court held this remedy was available and should have been exhausted.
• Section 199(f), Title II, Book II, Local Government Code of 1991 — Defines "assessment" as the act or process of determining the value of a property subject to tax, including the discovery, listing, classification, and appraisal of properties. The Court relied on this broad definition to reject petitioner's argument that it was not contesting an assessment.
• Rule 65, Section 3, Revised Rules of Court — Defines mandamus as a writ commanding a tribunal, corporation, board, or person to do an act required by law when it unlawfully neglects the performance of a duty, there being no other plain, speedy, and adequate remedy in the ordinary course of law.

Puno (Chairman), Panganiban, Sandoval-Gutierrez, and Carpio-Morales, JJ., concurred.