Ty vs. Trampe

P.D. No. 921 was not expressly or impliedly repealed by R.A. No. 7160; the two statutes must be harmonized, so that the schedule of values for real property in Metropolitan Manila is prepared initially by each local assessor under Section 212 of R.A. No. 7160 and then jointly agreed upon by the assessors of the Local Treasury and Assessment District under Section 9 of P.D. No. 921. A schedule of market values prepared solely by the municipal assessor is therefore illegal and void.

Petitioners Alejandro B. Ty and MVR Picture Tube, Inc. are registered owners of lands and buildings in Pasig, then a municipality in Metropolitan Manila. The challenged real property tax assessments were based on a schedule of market values prepared by the Municipal Assessor of Pasig. The statutory backdrop includes P.D. No. 464, the Real Property Tax Code; P.D. No. 921, which governed the preparation of schedules of values in Metropolitan Manila through joint action of city assessors in local treasury and assessment districts; and R.A. No. 7160, the Local Government Code of 1991, which took effect on January 1, 1992 and expressly repealed P.D. No. 464 but not P.D. No. 921.

Petitioners Alejandro B. Ty, a resident and registered owner of lands and buildings in Pasig, Metro Manila, and MVR Picture Tube, Inc., a corporation and likewise a registered owner of lands and buildings in the same municipality, owned real properties that became the subject of new real estate tax assessments. On January 6, 1994, the respondent Municipal Assessor of Pasig sent a notice of assessment covering certain real properties of petitioners located in Pasig. The assessments were based on a new schedule of market values prepared by the respondent assessor. In a letter dated March 18, 1994, petitioners, through counsel, requested the Municipal Assessor to reconsider the subject assessments.

After the request failed to satisfy them, petitioners on March 29, 1994 filed with the Regional Trial Court of the National Capital Judicial Region, Branch 163, presided over by respondent Judge Aurelio C. Trampe, a Petition for Prohibition with a prayer for a restraining order and/or writ of preliminary injunction. They sought to declare null and void the new tax assessments and to enjoin the collection of real estate taxes based on those assessments. During the proceedings in the lower court on April 11, 1994, the parties agreed that the issues in the petition were legal, and no evidence was presented in that court.

The lower court observed that the new assessments had tremendously increased the valuations of petitioners' properties, ranging from 418.8% to 570%; one property rose from P855,360.00 to P4,121,280.00, while another rose from P857,600.00 to P4,374,410.00. The RTC nevertheless found the questioned assessments consistent with the "tremendously increased . . . price of real estate anywhere in the country," citing real property prices in Pasig, including the Ortigas Commercial Complex. In their Comment, the respondent Assessor and Treasurer admitted that the new assessments "seemed to be excessive" but justified them by saying that no assessments had been made since 1983.

Petitioners' Motion for Reconsideration was denied, and they filed the present Petition for Review directly before the Supreme Court, raising pure questions of law. The RTC's factual findings on the increases, and the parties' agreement that the issues were legal, were material to the Supreme Court's disposition.

• Repeal of P.D. No. 921: Petitioners contended that P.D. No. 921 was not impliedly repealed by R.A. No. 7160 and remained the applicable statute, so that compliance with its explicit requirement of collegial and joint action by all assessors in the Metropolitan Manila area was strict and mandatory.
• Effect of Prior Supreme Court Rulings: Petitioners invoked three related cases promulgated on December 16, 1993, after R.A. No. 7160 had taken effect, which ruled that a schedule of market values and the corresponding assessments prepared solely by the city assessor failed to comply with P.D. No. 921 and were illegal and void.
• Exhaustion of Administrative Remedies: Petitioners maintained that the lower court erred in blaming them for failing to exhaust the administrative remedies provided by law.
• Confiscatory and Unconstitutional Assessments: Petitioners argued that the new tax assessments were oppressive and confiscatory, illegal and void ab initio, and unconstitutional as a deprivation of property without due process of law.

• Implied Repeal: Respondents averred that Section 9 of P.D. No. 921 and Section 212 of R.A. No. 7160 were clearly and unequivocally incompatible because they dealt with the same subject matter, the preparation of a schedule of values for real property within the Metropolitan Manila Area; under P.D. No. 921 the schedule was prepared jointly by the city assessors of the district, while under R.A. No. 7160 it was prepared by the provincial, city and municipal assessors of the municipalities within Metropolitan Manila.
• Dependence on P.D. No. 464: Respondents claimed that Section 9 of P.D. No. 921 merely supplemented Section 15 of P.D. No. 464 as to the preparation of the schedule of values in Metro Manila, and that with the express repeal of P.D. No. 464, P.D. No. 921 could not exist independently on its own.
• Non-applicability of Prior Rulings: Respondents argued that although the cited Supreme Court decisions were promulgated after R.A. No. 7160 took effect, the assessments in those cases were made in 1990, prior to the effectivity of the Code, so the doctrine could not apply to assessments prepared in 1994 under R.A. No. 7160.
• Exhaustion of Administrative Remedies: Respondents argued that the case was premature because petitioners neither appealed the assessments to the Board of Assessment Appeals under Section 226 nor paid the real estate tax under protest under Section 252 of R.A. No. 7160.
• Reasonableness of the Increase: The respondent Assessor and Treasurer admitted that the new assessments "seemed to be excessive" but justified them by the absence of assessments since 1983 and the tremendous increase in real property prices.

• Repeal of P.D. No. 921: Whether Republic Act No. 7160, otherwise known as the Local Government Code of 1991, repealed the provisions of Presidential Decree No. 921.
• Exhaustion of Administrative Remedies: Whether petitioners were required to exhaust administrative remedies prior to seeking judicial relief.
• Constitutionality of the Assessments: Whether the new tax assessments were oppressive and confiscatory, and therefore unconstitutional.

• Repeal of P.D. No. 921: No. R.A. No. 7160 did not expressly repeal P.D. No. 921, and implied repeal is not favored; the two laws can be harmonized, so P.D. No. 921 remains good law and the schedule prepared solely by the respondent municipal assessor is illegal and void.
• Exhaustion of Administrative Remedies: No. The controversy involved pure questions of law, an established exception to the exhaustion rule; the Board of Assessment Appeals acts to ascertain facts, and payment under protest concerns the reasonableness of the amount, whereas petitioners attacked the authority to impose any increase.
• Constitutionality of the Assessments: Not resolved. The case was disposed of on other grounds, and courts will not pass upon constitutional questions unless their resolution is necessary to decide the case.

• Repeal of P.D. No. 921: P.D. No. 921 and R.A. No. 7160 were compared. P.D. No. 921, promulgated on April 12, 1976, aimed to evolve a progressive revenue-raising program in Metropolitan Manila, divided the area into four Local Treasury and Assessment Districts, and regulated the duties and functions of treasurers and assessors in the cities and municipalities therein. R.A. No. 7160, effective January 1, 1992, declared genuine and meaningful local autonomy and sought to decentralize powers, authority, responsibilities and resources to local government units. The two laws were not co-extensive: R.A. No. 7160 covered almost all governmental functions delegated to local government units nationwide, while P.D. No. 921 embraced only Metropolitan Manila and was limited to the administration of financial services, especially real estate tax assessment and collection. Section 9 of P.D. No. 921 required the schedule of values for real property in Metropolitan Manila to be prepared jointly by the city assessors of the districts, with the City Assessor of Manila as Chairman; Section 212 of R.A. No. 7160 required the schedule to be prepared by the provincial, city and municipal assessors of the municipalities within Metropolitan Manila for their respective local government units for enactment by the sanggunian. Harmony was found possible and desirable: first, the assessor in each municipality or city in Metropolitan Manila prepares a proposed schedule under Section 212 of R.A. No. 7160; second, the Local Treasury and Assessment District meets under Section 9 of P.D. No. 921, and the assessors compare, discuss, and jointly agree on a schedule for their district, taking into account P.D. No. 921's preamble that the program should not unduly burden taxpayers; third, the jointly agreed schedule is published and submitted to the sanggunian for enactment by ordinance under Section 212 of R.A. No. 7160. This harmonization fulfills both P.D. No. 921's preamble and the operative principle of decentralization under Section 3 of R.A. No. 7160. P.D. No. 921 can exist outside P.D. No. 464 as a support, supplement and extension of R.A. No. 7160, which replaced P.D. No. 464. Because P.D. No. 921 remains good law, the ruling in the Mathay, Javier and Puyat-Reyes cases remains applicable, and the schedule of values prepared solely by the respondent municipal assessor is illegal and void. The respondent Judge was admonished for consigning a legislative enactment and three unanimous en banc decisions to the statutes' graveyard without attempting to reconcile or harmonize the laws involved.
• Exhaustion of Administrative Remedies: Although administrative remedies must generally be exhausted before resort to judicial action, an exception exists where the controversy does not involve questions of fact but only questions of law. The parties themselves agreed during the lower court proceedings on April 11, 1994 that the issues in the petition were legal, and no evidence was presented. Section 229(b) of R.A. No. 7160 provides that the proceedings of the Local Board of Assessment Appeals shall be conducted solely for the purpose of ascertaining facts, so appeals to the Board may be fruitful only where questions of fact are involved. Section 252 requires payment under protest where there is a question as to the reasonableness of the amount assessed. Here, petitioners questioned the very authority and power of the assessor, acting solely and independently, to impose the assessment and of the treasurer to collect the tax; these were not questions merely of the amount of the increase but attacks on the validity of any increase. In the Mathay, Javier and Puyat-Reyes cases, the petitions were referred to the Board of Assessment Appeals not for the exercise of its appellate jurisdiction but only as a fact-finding commission because factual issues were raised; in the present case, there were no such factual issues, so there was no reason to require exhaustion or referral.
• Constitutionality of the Assessments: No need was found to pass upon the third issue because the case had already been definitively disposed of through the first two issues. It is axiomatic that the constitutionality of a law, regulation, ordinance or act will not be resolved by courts if the controversy can be settled on other grounds. The essential requisites for judicial inquiry into constitutionality are an actual case or controversy involving a conflict of legal rights susceptible of judicial determination, the constitutional question must be raised by a proper party, it must be raised at the earliest opportunity, and its resolution must be necessary to the decision of the case. Since the case was resolved on other grounds, the constitutional question was not reached. Under Section 253 of R.A. No. 7160, a taxpayer may file a written claim for refund or credit for taxes and interests where an assessment is found illegal or erroneous.

• Repeal by implication is not favored — An implied repeal will not be allowed unless it is convincingly and unambiguously demonstrated that the two laws are so clearly repugnant and patently inconsistent that they cannot co-exist. The Court applied this rule to hold that P.D. No. 921 was not impliedly repealed by R.A. No. 7160.
• Categories of implied repeal — Under Mecano vs. Commission on Audit, implied repeal occurs (1) where provisions in the two acts on the same subject matter are in irreconcilable conflict, the later act to the extent of the conflict constituting an implied repeal of the earlier one; or (2) where the later act covers the whole subject of the earlier one and is clearly intended as a substitute, it operates to repeal the earlier law. Implied repeal by irreconcilable inconsistency takes place when the two statutes cover the same subject matter, are so clearly inconsistent and incompatible that they cannot be reconciled or harmonized, and both cannot be given effect. The Court found neither category applicable because the two laws could be harmonized.
• Generalia specialibus non derogant — A general law is not regarded as having amended or repealed a special law unless the intent to repeal or alter is manifest, even if the terms of the general act are broad enough to include the matter in the special statute. The Court used this principle in rejecting the claim that R.A. No. 7160, a general local government code, had repealed P.D. No. 921, a special law for Metropolitan Manila.
• Harmonization of statutes — Courts confronted with apparently conflicting statutes should endeavor to reconcile them instead of declaring one invalid as against the other; they should harmonize them if possible and give effect to both. The Court applied this by outlining the three-step harmonized procedure for preparing the schedule of values in Metropolitan Manila.
• Exhaustion of administrative remedies; exception for pure questions of law — As a rule, administrative remedies must first be exhausted before resort to judicial action can prosper, but an exception exists where the controversy does not involve questions of fact but only questions of law. The Court applied the exception because the parties agreed the issues were legal and petitioners attacked the assessor's authority rather than the reasonableness of the amount.
• Avoidance of constitutional questions — Courts will not pass upon the constitutionality of a law, regulation, ordinance or act if the controversy can be settled on other grounds. The Court applied this by refusing to resolve the constitutional challenge to the assessments after disposing of the case on statutory and administrative grounds.

• "It is a basic rule of statutory construction that repeals by implication are not favored. An implied repeal will not be allowed unless it is convincingly and unambiguously demonstrated that the two laws are so clearly repugnant and patently inconsistent that they cannot co-exist." — This states the ratio decidendi for the first issue and the standard the Court used to reject the alleged implied repeal of P.D. No. 921 by R.A. No. 7160.
• "It is obvious that harmony in these provisions is not only possible, but in fact desirable, necessary and consistent with the legislative intent and policy." — This articulates the Court's harmonization approach to Section 9 of P.D. No. 921 and Section 212 of R.A. No. 7160, which underlies the holding that the schedule had to be prepared jointly by the district assessors.
• "Although as a rule, administrative remedies must first be exhausted before resort to judicial action can prosper, there is a well-settled exception in cases where the controversy does not involve questions of fact but only of law." — This is the controlling formulation for the second issue and explains why petitioners were not required to appeal to the Board of Assessment Appeals or pay under protest.
• "It is axiomatic that the constitutionality of a law, regulation, ordinance or act will not be resolved by courts if the controversy can be, as in this case it has been, settled on other grounds." — This states the Court's reason for not reaching the third issue on the oppressive and confiscatory nature of the assessments.

• Villegas vs. Subido, 41 SCRA 190 [1971] — Cited for the rule that repeals by implication are not favored and that a subsequent general statute is not construed as repealing a special enactment unless the legislative purpose to do so is manifest.
• Mecano vs. Commission on Audit, 216 SCRA 500 (December 11, 1992) — Cited for the two categories of implied repeal and the requisites of implied repeal by irreconcilable inconsistency; the Court used this standard to compare P.D. No. 921 and R.A. No. 7160.
• Gordon vs. Veridiano, 167 SCRA 51 (November 8, 1988) — Cited for the policy that courts should endeavor to reconcile apparently conflicting statutes instead of declaring one invalid as against the other.
• Mathay, Jr. vs. Macalincag; Javier vs. Macalincag; Puyat-Reyes vs. Secretary of Finance, 228 SCRA 519 (December 16, 1993) — The Court held that these cases remained controlling because P.D. No. 921 was still good law; they ruled that a schedule of market values prepared solely by the city assessor failed to comply with P.D. No. 921 and was illegal and void.
• Macasiano vs. National Housing Authority, 224 SCRA 236 [1993] — Cited for the rule that the constitutionality of an act will not be determined unless the constitutional question is the very lis mota and its resolution is necessary to decide the case.
• Laurel vs. Garcia, 187 SCRA 797 [1990] — Cited for the same rule on judicial avoidance of constitutional questions where the case can be disposed of on another ground.
• United States vs. Reyes, 10 Phil. 423 [1908] — Cited in Villegas vs. Subido as an early authority for the doctrine that repeals by implication are not favored.
• Manila Railroad Co. vs. Rafferty, 40 Phil. 224 — Cited for the principle that a general statute is not construed as repealing a special or specific enactment unless the legislative purpose to do so is manifest.

• Section 15, P.D. No. 464 (Real Property Tax Code), promulgated on May 20, 1974 — Required preparation of a Schedule of Market Value for different classes of real property before any general revision of assessments, to be submitted to the Secretary of Finance for review. It was the prior law that P.D. No. 921 supplemented, and it was expressly repealed by R.A. No. 7160.
• Section 9, P.D. No. 921 — Required the Schedule of Values for real property within the Metropolitan Area to be prepared jointly by the City Assessors of the districts created under Section 1, with the City Assessor of Manila as Chairman, in accordance with P.D. No. 464 and its implementing rules. The Court held this provision was not repealed and had to be harmonized with R.A. No. 7160.
• Section 1, P.D. No. 921 — Divided Metropolitan Manila into four Local Treasury and Assessment Districts and placed Pasig in the Second District with Quezon City, Marikina, Mandaluyong and San Juan. This defined the district whose assessors had to act jointly.
• Section 212, R.A. No. 7160 — Required a schedule of fair market values to be prepared by the provincial, city and municipal assessors of the municipalities within the Metropolitan Manila Area for the different classes of real property in their respective local government units, for enactment by ordinance of the sanggunian, and to be published. The Court harmonized this with Section 9 of P.D. No. 921.
• Section 534, R.A. No. 7160 — The repealing clause expressly repealed P.D. Nos. 381, 436, 464, 477, 626, 632, 752 and 1136 but did not include P.D. No. 921; paragraph (f) contained a general repealing clause for inconsistent laws. The Court held this showed no express repeal of P.D. No. 921 and no implied repeal.
• Section 226, R.A. No. 7160 — Allowed an owner or person with legal interest dissatisfied with the assessor's action to appeal to the Local Board of Assessment Appeals within sixty days from receipt of the written notice of assessment. The Court held this remedy was not required because the case involved pure questions of law.
• Section 252, R.A. No. 7160 — Required payment under protest, with the taxpayer first paying the tax and filing a written protest within thirty days, for protests against assessments. The Court held this was not required because petitioners attacked the authority to impose any increase, not the reasonableness of the amount.
• Section 229(b), R.A. No. 7160 — Provided that proceedings of the Local Board of Assessment Appeals shall be conducted solely for the purpose of ascertaining facts. The Court used this to explain that appeals to the Board are fruitful only where questions of fact are involved.
• Section 253, R.A. No. 7160 — Provided that when an assessment is found illegal or erroneous and the tax is reduced or adjusted, the taxpayer may file a written claim for refund or credit for taxes and interests within two years. The Court noted this remedy for payments already made prior to the decision's finality.
• Sections 1, 2, 3(f), and 536, R.A. No. 7160 — Section 1 provides the title, Section 2 declares the policy of genuine and meaningful local autonomy, Section 3(f) allows local government units to group themselves, consolidate or coordinate their efforts, services and resources, and Section 536 fixes the effectivity of the Code. These provisions were cited to describe the Code's decentralization policy and to contrast it with the limited Metropolitan Manila scope of P.D. No. 921.

Narvasa, C.J., Feliciano, Padilla, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, Francisco and Hermosisima, Jr., JJ., concur.