Questioning a local tax measure

The principle of exhaustion of administrative remedies in case of questions regarding the legality of local tax ordinances is provided under Section 187 of the Local Government Code, which mandates:
Section 187. Procedure for Approval and Effectivity of Tax Ordinances and Revenue Measures; Mandatory Public Hearings. – The procedure for approval of local tax ordinances and revenue measures shall be in accordance with the provisions of this Code: Provided, That public hearings shall be conducted for the purpose prior to the enactment thereof: Provided, further, That any question on the constitutionality or legality of tax ordinances or revenue measures may be raised on appeal within thirty (30) days from the effectivity thereof to the Secretary of Justice who shall render a decision within sixty (60) days from the date of receipt of the appeal: Provided, however, That such appeal shall not have the effect of suspending the effectivity of the ordinance and the accrual and payment of the tax, fee, or charge levied therein: Provided, finally, That within thirty (30) days after receipt of the decision or the lapse of the sixty-day period without the Secretary of Justice acting upon the appeal, the aggrieved party may file appropriate proceedings with a court of competent jurisdiction. (Emphases supplied)

The provision, the constitutionality of which was sustained in Drilon v. Lim,[1] has been construed as mandatory[2] considering that –

A municipal tax ordinance empowers a local government unit to impose taxes. The power to tax is the most effective instrument to raise needed revenues to finance and support the myriad activities of local government units for the delivery of basic services essential to the promotion of the general welfare and enhancement of peace, progress, and prosperity of the people. Consequently, any delay in implementing tax measures would be to the detriment of the public. It is for this reason that protests over tax ordinances are required to be done within certain time frames. x x x.[3]

The obligatory nature of Section 187 was underscored in Hagonoy Market Vendor Asso. v. Municipality of Hagonoy:[4]

x x x [T]he timeframe fixed by law for parties to avail of their legal remedies before competent courts is not a “mere technicality” that can be easily brushed aside. The periods stated in Section 187 of the Local Government Code are mandatory. x x x Being its lifeblood, collection of revenues by the government is of paramount importance. The funds for the operation of its agencies and provision of basic services to its inhabitants are largely derived from its revenues and collections. Thus, it is essential that the validity of revenue measures is not left uncertain for a considerable length of time. Hence, the law provided a time limit for an aggrieved party to assail the legality of revenue measures and tax ordinances.[5]

Despite these cases, the Supreme Court, in Ongsuco, et al. v. Hon. Malones,[6] held that there was no need for petitioners therein to exhaust administrative remedies before resorting to the courts, considering that there was only a pure question of law, the parties did not dispute any factual matter on which they had to present evidence. Likewise, in Cagayan Electric Power and Light Co., Inc. v. City of Cagayan de Oro,[7] the High Court relaxed the application of the rules in view of the more substantive matters.

[1] G.R. No. 112497, August 4, 1994, 235 SCRA 135.

[2] Reyes v. Court of Appeals, 378 Phil. 232 (1999). See also subsequent case of Figuerres v. Court of Appeals, 364 Phil. 683 (1999).

[3] Reyes v. Court of Appeals, supra, at 238, and Jardine Davies Insurance Brokers, Inc. v. Hon. Aliposa, 446 Phil. 243, 254-255 (2003).

[4] Hagonoy Market Vendor Asso. v. Municipality of Hagonoy, 426 Phil. 769 (2002).

[5] Id. at 778.

[6] Ongsuco, et al. vs. Hon. Malones, 619 Phil. 492, 508 (2009).

[7] G.R. No. 191761, November 14, 2012, 685 SCRA 609.