Chavez vs. Ongpin 3.
Realty Owners Association of the Philippines (ROAP) intervened in this
June 6, 1990 | Medialdea, J. | Attributes of a Sound Tax System
Petitioner: Francisco I. Chavez
Respondents: Jaime Ongpin, in his capacity as Minister of Finance, and Fidelina
Cruz, in her capacity as acting municipal treasurer of the Municipality of Las Pinas
SUMMARY:
E.O. 73 was enacted to provide for the collection of real property taxes based on
the 1984 real property values, as provided for under the real property tax code.
Chavez filed a case to declare E.O. 73 as unconstitutional for mandating an
excessive increase in real property taxes. The Court ruled that the attack on E.O.
73 has no legal basis as the general revision of assessments is a continuing
process mandated by Section 21 of Presidential Decree No. 464. Further, the
Court ruled that the the acceleration of the general revision of assessments to Jan.
1, 1987 is necessary in order for local governments to “augment their financial
resources to meet the rising cost of rendering effective services to the people.”
Lastly, without E.O. 73, the basis for collection of real property taxes will still be
the 1978 revision of property values. Certainly, to continue collecting real property
taxes based on valuations arrived at several years ago, in disregard of the
increases in the value of real properties that have occurred since then, is not in
consonance with a sound tax system.
DOCTRINE:
Fiscal adequacy, which is one of the characteristics of a sound tax system,
requires that sources of revenues must be adequate to meet government
expenditures and their variations.
FACTS:
1. A petition was filed to declare as unconstitutional E.O. 73, which provides 3.
for the collection of real property taxes based on the 1984 real property
values, as provided for under the real property tax code. The Court, on
March 31, 1987, then issued an Order suspending the implementation of
E.O. 73 until June 30, 1987.
2. Chavez is a taxpayer and an owner of 3 parcels of land. In his petition, he
alleges that E.O. 73 is unconstitutional because it:
a. Accelerated the general revision of assessments to January 1,
1987, thereby mandating an excessive increase in real property
taxes by 100% to 400% on improvements, and up to 100% on DISPOSITION:
land; and
b. Increases the value of real property values and assessments ACCORDINGLY, the petition and the petition-in-intervention are hereby DISMISSED.
which, in turn, would lead to an increase in real property taxes.
case and alleges that E.O. 73 is unconstitutional as it imposes an additional
1% tax on all property owners.
ISSUE/S:
1. W/N E.O. 73 is unconstitutional insofar as the revision of the assessments
and the effectivity thereof are concerned- NO
RATIO:
On whether E.O. 73 is unconstitutional insofar as the revision of the
assessments and the effectivity thereof are concerned - NO
1. The attack on E.O. 73 has no legal basis as the general revision of
assessments is a continuing process mandated by Section 21 of P.D. 464.
Court said that it is P.D. 464 that must be attacked.
a. (For your reference) Section 21 of P.D. 464 provides that:
beginning 1978, the provincial/city assessor shall make a general
revision of real property assessments in the province/city to take
effect on January 1, 1979, and once every five years thereafter. If
property values in a province/city have greatly changed since the
last general revision, the provincial/city assessor may undertake a
general revision of assessments in the province or city.
2. Further, the government recognized the financial burden to taxpayers that
will result from an increase in real property taxes. Hence, E.O. 1019 was
issued, deferring the implementation of the increase in real property taxes
resulting from the revised real property assessments, from Jan. 1, 1985 to
Jan. 1, 1988. However, E.O. 73 repealed E.O. 1019 by changing the date to
Jan. 1, 1987 because of the “urgent need for local governments to augment
their financial resources to meet the rising cost of rendering effective
services to the people.”
Finally, the the Court agrees with the OSG that without E.O. 73, the basis
for collection of real property taxes will still be the 1978 revision of property
values. Certainly, to continue collecting real property taxes based on
valuations arrived at several years ago, in disregard of the increases in the
value of real properties that have occurred since then, is not in consonance
with a sound tax system. Fiscal adequacy, which is one of the
characteristics of a sound tax system, requires that sources of revenues
must be adequate to meet government expenditures and their variations.