Exhaustion of Admin Remedies

303 SCRA 448 (1999)

Since 1979, real property taxes in Manila is based upon the 1979 fair market values. This was until
the city assessor received a memorandum on the failure of the cities on revising it. Ordinance 7894
was thus enacted which substantially increase the taxes on real properties. Petitioner aggrieved,
filed a special proceeding to declare it null. RTC issued TRO, city on the other hand enacted
Ordinance 7905 which reduced the increases (to 50%). RTC IFO petitioner, MFR by respondent
granted (thus granting their MTD mainly due to failure to exhaust admin remedies and that
complaint moot because of new ordinance). Petitioner MFR denied thus went to SC raising that they
can raise the question of constitutionality of a city ordinance either on RTC or SOJ on appeal. SC
affirmed RTC ruling that the present case does not fall any exception for dispensing with the rule on
exhaustion of admin remedies.
DOCTRINE
GR: where law provides for remedies, relief to courts can be sough only after exhausting the
provided remedies. This is because the presumption that the administrative body, if given
the chance to correct its mistake or error, may amend its decision on a given matter and
decide it properly and prevent unnecessary and premature resort to courts.
Except:
o (1) When the question raised is purely legal, (2) when the administrative body is in
estoppel; (3) when the act complained of is patently illegal; (4) when there is urgent
need for judicial intervention; (5) when the claim involved is small; (6) when
irreparable damage will be suffered, (7) when there is no other plain, speedy and
adequate remedy, (8) when strong public interest is involved; (9) when the subject of
controversy is private land; and (10) in quo-warranto proceeding
IMPORTANT PEOPLE
[Petitioner] Jaime C Lopez
[Respondent] City of Manila; Benjamin Vega (Presiding Judge RTC Manila Br 39)
FACTS

1. (Background law) Sec. 219 of RA 7160 (Local Government Code of 1991) requires the
conduct of the general revision of real. Such took effect on Jan 1, 1992 but the revision of
real property valuation was not yet enforced in Manila. The process of such however was
already started by the city assessor then.
a. In 1992, the schedule of real property values in the city was prepared and submitted
to the City Council of Manila, but for unknown reason, was not acted but continuously
updated. (Such until 1995, the basis for collection of real estate taxes was the 1979
real estate market values)
2. Lourdes Laderas (City Assessor of Manila), received Memorandum Circular No. 04-95 dated
March 20, 1995, from the Bureau of Local Government Finance of Department of Finance
which relates to the failure of most of the cities and municipalities of Metropolitan Manila to
conduct the general revision of real property. Thus she had a dialogue with City Mayor and
Council for the completion of the task.
3. (Revision) The City Assessor then began the process of general revision based on the
updated fair market values
a. Thus in 1995, the tax value of the property as compared from the 1979 market
values increased ranges from 600% to 3,330%, with general average increase of
1,700%.
b. Laderas felt that the increase may have adverse reactions from the public, thus
reducing the increase in valuation of real properties to 1,020%.
c. City Assessor submitted schedule of fair market values to the City Council for its
appropriate action. Council then conducted public hearings as required by law.
4. (Ordinance enacted) Proposed ordinance was then published in the Manila Standard and
Balita. The City Council enacted Manila Ordinance No. 7894, entitled: "An Ordinance
1
 Prescribed as the Revised Schedule of Fair Market Values of Real Properties the City of
Manila" and was then approved by the City Mayor
a. Notices of the revised assessments were distributed to the real property owners of
Manila pursuant to Sec. 223 of R.A. 7160.
5. (Petitioners grievance) Petitioner Jaime Lopez had his Tax on Land value increased by
five hundred eighty percent (580%) while tax on improvement value increased by two
hundred fifty percent (250%).
6. (Filing of special proceeding) Thus he filed in 1996, a special proceeding for the
declaration of nullity with Preliminary injunction and prayer for TRO of the City of
Manila Ordinance No. 7894. He alleged that said ordinance appears to be "unjust, excessive,
oppressive or confiscatory."
7. (RTC Br 5 issued TRO; Ordinance repealed by another Ordinance) RTC Manila Branch
5 issued the TRO
a. Meanwhile, on the same date, Manila Ordinance No. 7905 repealed the previous
ordinance thereby reducing the value for computation of tax due by 50% [and
improvements shall in no case exceed by two hundred percent (200%) of the levied
thereon in calendar year 1995 and the tax increase on commercial and industrial
land, building and other structures shall not exceed by three hundred percent
(300%)]
i. Thus the tax increased of petitioner's residential land was reduced to one
hundred fifty-five percent (155%), while the tax increase for residential
improvement was eighty-two percent (82%).
8. (Motion for inhibition and Transfer to Br 39; Br 39 IFO petitioner) Respondent filed
motion of inhibition of the judge due to markedly indulgent attitude. Judge inhibited
herself thus case rereffled to Br 39. It was here where the motion to dismiss by respondent
for failure of the petitioner to exhaust administrative remedies was acted upon.
a. Court IFO petitioner issuing the writ of injunction and denied MTD by the respondent
because said motion was not detailed to avoid a repetition of the situation in Branch
5 (bias daw)
9. (On MFR; RTC IFO respondent, MTD granted) Respondent: MFR on the denial of MTD
raising here the enactment and approval of the City Mayor of Manila Ordinance No. 7905.
a. RTC granted thee MTD mainly because petitioner failed to exhaust the
administrative remedies and that the petition had become moot and academic
when Manila Ordinance No. 7894 was repealed by Manila Ordinance No. 7905.
10. (SC) MFR denied thus to SC via Rule 45 raising
i. That when the trial court ruled that it has jurisdiction over the case, the
question of exhaustion of administrative remedies becomes moot and
academic. He claims that resort to administrative remedies on
constitutionality of law merely permissive as provided by Sec. 187 of R.A.
7160:
. . . 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. . . .
ii. That the question of the constitutionality of the city ordinance may be raised
on appeal either to Secretary of Justice or the RTC, both having concurrent
jurisdiction accdg to BP 129.
b. Respondent: that the adjustment of the fair market values of real properties in the
City of Manila was long overdue, being updated only after fifteen (15) years (also that
petitioner filed the case, merely to take advantage of the situation to gain political
mileage and help advance his mayoralty bid.)

RELATED ISSUE with HOLDING

2
 The petition does not fall under the exceptions on the rule on Exhaustion of
Administrative Remedies
GR: where law provides for remedies, relief to courts can be sough only after exhausting the
provided remedies. This is because the presumption that the administrative body, if given
the chance to correct its mistake or error, may amend its decision on a given matter and
decide it properly and prevent unnecessary and premature resort to courts.
Except: (remember yung 14 sa list ni maam? Sa case na ito 10)
o (1) When the question raised is purely legal, (2) when the administrative body is in
estoppel; (3) when the act complained of is patently illegal; (4) when there is urgent
need for judicial intervention; (5) when the claim involved is small; (6) when
irreparable damage will be suffered, (7) when there is no other plain, speedy and
adequate remedy, (8) when strong public interest is involved; (9) when the subject of
controversy is private land; and (10) in quo-warranto proceeding
In this case in questions of legality of a tax ordinance, the remedies available are provided in
Section 187, 226, and 252 of R.A. 7160.
Sec. 187 of R.A. 7160 provides, that the taxpayer may question the constitutionality or
legality of tax ordinance on appeal within thirty (30) days from effectivity thereof, to the
Secretary of Justice. The petitioner after finding that his assessment is unjust, confiscatory, or
excessive, must have brought the case before the Secretary of Justice for question of legality
or constitutionality of the city ordinance.
Under Section 226 of R.A. 7160, an owner of real property who in not satisfied with the
assessment of his property may, within sixty (60) days from notice of assessment, appeal to
the Board of Assessment Appeals.
Should the taxpayers question the excessiveness of the amount of tax, he must first pay the
amount due, in accordance with Section 252 of R.A. 7160. Then, he must request the
annotation of the phrase "paid under protest" and accordingly appeal to the Board of
Assessment Appeals by filing a petition under oath together with copies of the tax declarations
and affidavits or documents to support his appeal.

SC hesitated in going through the case since the cause of action goes through the exercise
of discretion by government agencies and the determination whether or not the tax is
excessive, oppressive or confiscatory which is thus a question of fact. SC scrutinized the
records and ruled that the trial court is correct that the petition does not fall under any of
the exceptions to excuse compliance from the rule of exhaustion (see above). SC quoted the
RTC:
(1) Question raised is not of law but of fact.
(2) There is no showing that administrative bodies are in estoppel.
(3) It does not appear that Ordinance No. 7894 or the Ordinance No. 7905
are patently illegal.
(4) The matter does not need a compelling judicial intervention.
(5) The claim of the petitioner is not small.
(6) The court does not see any irreparable damage since he could always
ask for a refund of the excess amount he paid under protest or be
credited thereof if the administrative bodies mentioned in the law.
(7) The court is of the opinion that administrative relief provided for in the
law are plain, speedy and adequate.
(8) While the controversy involves public interest, judicial intervention as
the petitioner would like this court to do should be avoided as
demonstrated herein below in the discussion of the third issue.
(9 and 10) Obviously not applicable in the instant case.

b) RTC erred in not applying sections 212 and 221 of RA 7160 that sec 212 prohibits
general revision of real property assessment before the approval of the schedule of the fair
market values. Therefore 1995 assessment illegal NO (also technical part daming
numbers so I wont go here na taxation na ito haha) SC agrees with RTC that

3
 issue became moot with the enactment of the second ordinance and petitioner
failing to amend said cause of action.

Enactment of second ordinance and failing to amend cause of action rendered this
moot and academic
The tax rates on level prescribed by Ordinance 7894 upon which the petition was anchored
no longer exist because the tax rates in Ordinance No. 7894 have been amended/impliedly
repealed by Ordinance No. 7905.
o RTC followed the advice of the SC in of NHA v CA (121 SCRA 777) that the case
may be decided in its totality resolving all interlocking issues in order to render
justice to all concerned and end litigation once and for all.
SC added that it is necessary to stress that Manila Ordinance No. 7905 is favorable to the
taxpayers when it specifically states that the reduced assessment levels shall be applied
retroactively to January 1, 1996.
o Such ordinance is a social legislation to soften the impact of the tremendous increase
in the value of the real properties subject to tax.
Therefore, in enacting this ordinance, the due process of law was considered by the City of
Manila so that the increase in realty tax will not amount to the confiscation of the property.

DISPOSITIVE PORTION
Petition Denied