JARDINE DAVIES INSURANCE BROKERS, INC. vs. HON.

ERNA ALIPOSA
G.R. No. 118900
February 27, 2003

FACTS:
On July 5, 1993, the Department of Justice (DOJ), on petition of the Philippine Racing
Club, Inc., declared null and void Municipal Ordinance No. 922-072, otherwise known as the
Makati Revenue Code, which provides, inter alia, for the schedule of real estate, business and
franchise taxes in the Municipality of Makati at rates higher than those in the Metro Manila
Revenue Code. Pending resolution of its motion for reconsideration of the Resolution of the
DOJ, the respondent Makati filed a petitionad cautelam with the Regional Trial Court of Makati
alleging validity of the Ordinance. In the meantime, respondent Makati continued to implement
the ordinance. Petitioner was assessed and billed by the respondents for taxes, fees and
charges under the ordinance for the second, third, and fourth quarters of 1993. Petitioner paid
its quarterly business taxes without protest. On January 30, 1994, petitioner requested the
respondent Makati to compute its business tax liabilities in accordance with the Metro Manila
Revenue Code and not under the ordinance considering that it was already declared by the DOJ
null and void. Petitioner asked that it be credited for the amount it overpaid or to refund its
overpayment. When the respondent Makati denied the request, petitioner filed a complaint
with the Regional Trial Court of Makati. The RTC dismissed the complaint on ground of
prescription, holding that petitioner failed to file an opposition or protest within 60 days from
the notice of assessment. Petitioner moved for reconsideration alleging that it was not required
to first file a protest with the respondent Makati before instituting its action for a refund of its
overpayment or for it to be credited for said overpayments. The motion for reconsideration
was, however, denied by the trial court. Hence, petitioner brought the matter before the
Supreme Court.

ISSUE: Whether payment under protest is necessary. NO.

Whether the period for filing a complaint prescribed. YES

HELD:
No. The Court agrees with petitioner that as a general precept, a taxpayer may file a
complaint assailing the validity of the ordinance and praying for a refund of its perceived
overpayments without first filing a protest to the payment of taxes due under the ordinance.
This was our ruling in Ty v. Judge Trampe: . . . Hence, if a taxpayer disputes the reasonableness
of an increase in a real estate tax assessment, he is required to “first pay the tax” under protest.
Otherwise, the city or municipal treasurer will not act on his protest. In the case at bench,
however, the petitioners are questioning 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 are not questions merely of amounts of the increase in the tax but attacks on the very
validity of any increase.

Yes. In this case, petitioner, relying on the resolution of the Secretary of Justice in The
Philippine Racing Club, Inc. v. Municipality of Makati case, posited in its complaint that the
ordinance which was the basis of respondent Makati for the collection of taxes from petitioner
was null and void. However, the Court agrees with the contention of respondents that
petitioner was proscribed from filing its complaint with the RTC of Makati for the reason that
petitioner failed to appeal to the Secretary of Justice within 30 days from the effectivity date of
the ordinance as mandated by Section 187 of the Local Government Code which reads: Sec. 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.